I often hear clients use the terms Financial Advisor and Financial Planner interchangeably. Some professionals call themselves Wealth Managers. With all these poorly defined terms, it’s no wonder many people new to personal finance are confused about what people like me can offer.

You can’t possibly hire the right person is you don’t know what you are looking for.

This month’s Wealth Management 101 is all about the titles we use, what they each (typically) mean, and what the professionals who hold them do.

Financial Advisor

Many types of professionals use the title Financial Advisor. It is a generic term that usually refers to a registered financial professional.^[1]However, because it is a generic term, non-registered individuals sometimes use it too.

Other titles you might see include investment advisor, asset manager, investment counselor, investment manager, and portfolio manager.

For our purposes, I’ll define the colloquial Financial Advisor narrowly.

A Financial Advisor is a professional who is licensed as an investment advisor and is in the business of offering investment advice. Such professionals generally have a Series 7 and/or Series 66 license issued by The Financial Industry Regulator Authority (FINRA) and are registered with the Securities and Exchange Commission (SEC) or a state securities regulator.

Importantly, these professionals may or may not offer Financial Planning services.

"A Financial Advisor might offer only investing advice."

When you engage with a Financial Advisor who offers only investing advice, you can expect to talk about your investing goals, how much risk you are able to tolerate, and how long your money will remain invested.

Based on those factors, and a few other details, this type of professional will make recommendations for a portfolio of investments for the money you’ve placed with them. Once you agree to the proposal, their role is to monitor progress, report results, and recommend changes to investments that they manage for you.^[2]

Financial Planner

Financial Planner is a less often used title. A Financial Planner is someone who offers Financial Planning services. This person may or may not offer investing advice and may or may not be licensed and/or registered.

Learn more about Financial Planning Services

Typically, a professional who carries the title Financial Planner has earned their CERTIFIED FINANCIAL PLANNER™ certificate through the CFP Board.

When you engage with a Financial Planner, you can expect to talk about your investing goals but also other life goals that have to do with money. In fact, goal setting is the first step in the process.

A Financial Planner will also gather details about your ability to tolerate risk, your investments, future savings, earned benefits, and any other resources you might have to reach your goals.

"A Financial Planner will help you decide how much to save and where to save."

They will then use those details to formulate a Financial Plan which will be accompanied by a suite of recommendations for you to implement that plan. A Financial Planner may or may not offer detailed advice about investments. Their advice will be more about how much to save, where to save it, and how much risk you should be taking.

Wealth Manager

Wealth Manager, like Financial Advisor, is not a legal term but a colloquial one. Within the finance community, Wealth Management is typically understood to encompass both investing advice and Financial Planning. Someone who calls themselves a Wealth Manager likely offers both sets of services as compliments to each other.

When you engage with a Wealth Manager, you’ll start by talking about your goals. But this time, you’ll cover all your money goals from investing goals to life goals.

In my Wealth Management practice, I always insist on drawing up a Financial Plan before offering any investing advice. Having a well thought out Financial Plan in plan allows me to craft more tailored investing advice for each client.

In an ongoing Wealth Management relationship, your Wealth Manager will be responsible for updating your Financial Plan regularly and reviewing that with you. They will also be responsible for monitoring the progress of the investments you hold with them, reporting results, and recommending changes.

"..a good Wealth Manager will also help you with life insurance planning, tax planning, cash management, and cash flow..."

And, in a perfect would, a good Wealth Manger will also help you with life insurance planning, tax planning, cash management and cash flow, estate planning, and gifting strategies.

Which one is right for me?

If we understand that a Financial Advisor gives investing advice, that a Financial Planner offers Financial Planning services, and a Wealth Manager typically does both (plus a little extra); which one is right for you?

Naturally, that depends on the kind of guidance you need.

If you feel confident that Financial Planning isn’t important for you but that you need investing advice, then a Financial Advisor is likely a good choice.

If you feel confident that investing advice isn’t important for you but Financial Planning is, then a qualified Financial Planner is likely a good choice.

If you feel that you need both investing advice and Financial Planning (plus those extra services we talked about), then look for a professional who offer Wealth Management or calls themselves a Wealth Manager.

Not sure which is right for you? Call me and let’s talk it over.

Learn more about what I can offer!

^{[1] An individual or company that’s registered as such with either the Securities and Exchange Commission (SEC) or a state securities regulator}

^{[2] They will not offer monitoring of detailed advice for investments you don’t hold with them.}

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