Financial Advisor vs Planner vs Coach vs Everything Else: What’s the Difference?
by Katya Delaney
By Katya Delaney
There are dozens of professions, from doctors to bus drivers, that require occupational licensing from the state or federal government. You might be surprised to learn that financial advisors and financial planners are not among them.
The titles “Financial Advisor” and “Financial Planner” themselves are not recognized by the Securities and Exchange Commission (SEC) or any other government organization, so they mean very little. If you’re looking for professional help with your money, such titles can be a useful starting place, but you’ll need to do additional research, into a person’s experience and education to know that they’ve got the chops for the job.
In particular, pay attention to professional designations, those initials like CFP®, CFA, or CPA, that people list after their names. Unlike titles, those certifications typically denote that the holder has completed coursework in the field, logged several years’ experience, passed an exam, and completed ongoing education requirements.
Not sure if a financial advisor has your best interests at heart? This interview checklist makes it easy to find out.
That said, the services offered by people who call themselves financial planners and financial advisors do differ, although the terms can sometimes be used interchangeably. Both financial advisors and financial planners may have areas of specialization, such as retirement, tax, or estate planning. Here’s what you can generally expect:
Financial planners typically work with clients to create a holistic financial plan that takes into account your overall financial situation, including all of your debts, investment accounts, and workplace benefits. They’ll talk to you about your short- and long-term goals and help devise a strategy to achieve them.
Designations to look for:
Certified Financial Planner (CFP®). CFP®s must meet the standards of the CFP Board, including three years of planning experience and financial planning education. They must pass a certification exam and complete 30 hours of continuing education every two years.
Financial planners are one kind of financial advisor. Others focus more specifically on the investment portion of your financial picture, with some managing your portfolio by buying and selling stocks and funds on your behalf.
Designations to look for:
Chartered Financial Analyst (CFA). CFAs must meet the standards of the CFA Institute, including 250 hours of self-study and four years of work experience in the field. They must pass a rigorous series of three exams.
Personal Financial Specialist (PFS). To attain a PFS designation, individuals must be a licensed accountant, have two years experience in financial planning, and complete an additional 75 hours of financial planning education. They must pass an exam administered by the American Institute of CPAs (AICPA) and complete 60 hours of professional education every three years.
Note: There are dozens of other certifications that advisors may hold. Find out the basics about each of them with this tool from the Financial Industry Regulatory Authority.
Professionals who use these titles may have received certification from an industry association, but they typically aren’t registered with the SEC (check here) and haven’t passed investment or securities exams. That means that they’re legally barred from giving investment advice.
If you’re looking for guidance around budgeting or debt repayment, a financial coach may be a good option. If you’re interested in investing and growing your assets, however, you likely want to work with a registered investment advisor.
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