Finance management does not occur by accident. An individual should follow, adapt, and improvise certain financial strategies and also work toward implementing those strategies. Learning how to balance financial demands is one of the biggest challenges that individuals come across very often. Financial planners and financial advisors can help you out with various aspects of finances. However, the terms financial planner and financial advisor can be often confusing and misleading for many. This article aims to establish the major differences between the functions of a financial planner and a financial advisor.
Difference Between a Financial Planner and a Financial Advisor
Financial Planners
Financial planners assist their clients by strategizing and managing the financial assets of their clients for their future. The common services provided by financial planners include:
- Retirement planning
- Estate planning
- Investment planning
- Insurance planning
Financial advisors can hold two types of certifications. They are:
- Certified Financial Planner (CFP) certification
- Chartered Financial Consultant (ChFC) certification
As the name suggests, financial advisors primarily focus on investments. Financial advisors also emphasize on creating investment portfolios.
The clients can seek the help of both investment advisors and financial planners to meet their financial goals. If you are looking to build a solid long term financial foundation, you can seek the help of a financial planner. On the other hand, an investment advisor will help you to make successful investments.
Financial Advisors
Different real-life financial scenarios such as transforming your financial assets or investment in mutual funds and the stock market might require you to work with financial advisors.
Who are Financial Advisors?
Financial advisors can utilize their expertise in various aspects of finance and generate a tailored financial plan for their clients. Financial advisors are also responsible for executing trades in the market to represent their clients. Here are some of the situations where you might need to hire a financial advisor.
Sometimes debts may spiral out of control, and financial management may become a huge burden. Guidance from financial experts during trying times like a debt burden can be helpful. With the expertise and knowledge of a financial advisor, the process of setting up a budget based on necessary expenditure can be made simple.
Another situation where you might be required to hire a financial advisor is when you are switching your career. Switching your career can impact your financial stability. You may also be switching your job to a better paid one, or you may be starting off with a private business venture. Unless it’s planned right, the chances of failure are high. Hiring a financial advisor can help you analyze possible outcomes. A financial advisor can help you set up both long term and short term goals while you are switching your career.
Hiring a financial advisor can be helpful if you have invested in the stock market. Stock market trade can be a viable source of income, but a sudden drop in the stock market price can be a crisis. Hiring a financial advisor who is accustomed to stock market trading can help you out in such situations.
