Financial Advisors vs. Financial Planners

By Jeff White | AUG 30, 2023

Financial advisors and planners play very similar roles for their clients. Each sells their financial expertise as a service to help clients in a variety of ways with their financial well-being. Financial advisors encompass a broader term that covers pretty much all services in the financial planning industry while financial planners are a subset of financial advisors that focus on educating clients to meet long-term financial goals. SmartAsset’s free financial advisor matching tool can help you find the right type of professional for you. 

What Is a Financial Advisor?

A financial advisor is a professional that works with clients to provide financial advice as a service. They can cover any finanical topic and their services range from consulting on a specific item to managing a clients full financial picture. 

“Financial advisor” is generally a broader term compared to “financial planner.” Advisors can support clients with money management in a variety of ways. This includes investment management, retirement planning, estate planning and can also include aspects of financial planning. Some financial advisors might only be specialized in helping to manage wealth, while others focus on minimizing tax burdens.

Financial advisors will often have some kind of qualification or certification, including certified financial planner (CFP), chartered financial consultant (ChFC) or chartered financial analyst (CFA).

What Is a Financial Planner?

Financial planners are a type of financial advisor who emphasize on educating clients, providing risk management, cash flow analysis, education planning, retirement planning, investing and more. Some of these areas overlap with other financial advisors, but the main goal that a financial planner has is in their name - they help build plans to help clients reach their overall financial goals. 

Financial planners typically create comprehensive plans by assessing clients’ current situations and making recommendations in service of the clients’ goals. Financial planners may also have certain specializations, such as retirement planning or planning for education costs. Sometimes a financial planner is used as a term for clients who are generally referring to a financial advisor. 

Choosing Between Financial Advisors and Financial Planners

The choice between working with a financial advisor or a financial planner will likely require prioritization on the client's part, as well as preparing a list of questions to guide you in your particular financial situation. These two categories can encompass a wide range of financial professionals. It's important to focus on core factors that affect you and your financial health, such as whether or not a particular financial professional is qualified enough for your needs, what kinds of clients they work with and whether or not they’re a fiduciary.

Some factors that may differ between financial advisors and financial planners include the kinds of services they provide, as well as costs. You can look at the Form ADV that advisor firms have to file with the SEC in order to find specific fee schedules for advisor firms and see whether they charge fees as a percentage of assets under management (AUM) or some other way. 

Advisors usually are paid for their work as fee-only, fee-based or via commission. However, some financial advisors and many financial planners will charge an hourly or other kind of flat rate. In either case, it's important to always note what extra fees that you as the client might be responsible for in the short term or long term.

Bottom Line

Choosing between a financial advisor and a financial planner might seem difficult. However, if you keep your personal financial goals in mind as you do your research about different firms and financial professionals, you'll be in a better place to end up working with someone who is equipped to support you on your financial journey. While financial planners are a type of financial advisor, they may not always have the breadth expertise and services to support your much longer term financial goals.

Tips for Deciding Whether You Need a Financial Advisor

• You have a list of questions, but how do you actually get connected to an advisor? Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Don’t forget to ask yourself some questions, too. Financial advisors have different areas of expertise, so it’s important to consider why you want an advisor before diving into the search. If you’re looking for help crafting a financial plan, a certified financial planner (CFP) may be useful. If you’re going through a divorce, you might want the assistance of a certified divorce financial analyst (CDFA).

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