Financial Planner vs. Financial Adviser: What’s The Difference?

By Indeed Editorial Team

Updated June 8, 2022 | Published September 10, 2020

Updated June 8, 2022

Published September 10, 2020

A person sits in an office chair facing a monitor with windows behind them while holding a landline phone to their ear.

If you're hoping to enter the finance industry, you need to learn more about your options so you can determine which career path is right for you. Unfortunately, it can be difficult to distinguish between the different career opportunities because, in some cases, job titles are used interchangeably. This is certainly the case with financial advisers and financial planners, but despite their usage, there are distinct differences in the roles, responsibilities and requirements for these two professions.

In this article, we explain what financial planners and financial advisers are and explore the differences between these roles.

Key takeaways:

  • Financial advisers tend to take a narrower view than financial planners when offering financial guidance.

  • Financial planners generally have more education, certification and experience requirements than financial advisers.

  • Compared to financial advisers, financial planners usually form longer-term relationships with investors.

Financial planner vs. financial adviser

Some of the primary differences between financial planners and financial advisers include:

How often they meet with clients

While a financial adviser might fulfill a short-term purpose that requires one or two meetings, financial planners typically have an ongoing, long-term goal. Because of this, they usually have regular, ongoing meetings with their clients each month or quarter.

Education requirements

Though both professions often require a bachelor's degree, this qualification is much more strictly and universally enforced for financial planners. Additionally, financial planners must have a Certified Financial Planner (CFP) certification and adhere to the CFP board's four E's (education, examination, experience and ethics) to practice in their profession. Financial advisers only need certifications for specific roles and responsibilities.

Relationship with clients

One of the biggest differences between a financial adviser and a financial planner relates to the relationships that they have with their clients. Financial advisers work on a suitability standard of care, meaning they can suggest suitable strategies and products for their clients, but they don't have to be the best options for their particular situation.

Aside from not being obligated to inform clients about the nuances of using a particular product, they also aren't governed by laws or regulations, which means that they tend to neglect to educate their clients about alternative investment strategies. A financial planner, on the other hand, works on a fiduciary standard of care, which requires them to act solely in their client's best interest.

Compensation

Generally, a financial planner charges a percentage for managing someone's investment portfolio, but they occasionally charge flat or hourly fees for their services. Financial advisers are usually compensated through commission, fee-based payments or a flat fee.

Base level experience required

Though both positions typically include on-the-job training, financial planners are required to get several years of experience before they can become certified. Finance professionals looking to enter this field often decide to get this hands-on training through an apprenticeship with a certified financial planner (CFP) or another related finance professional. 

Financial advisers usually only have a year of on-the-job training where they work under the supervision of experienced professionals. As with most other professions, some financial advisers choose to complete an internship to gain experience, but it isn't a requirement.

Related: FAQ: How Do You Become a Finance Professional? (Plus Skills)

What is a financial planner?

Financial planners are a type of financial advisor that primarily assist individuals and organizations as they develop plans that help them achieve their long-term financial goals. They typically adopt a more comprehensive and in-depth approach, but they can specialize in things like estate planning, retirement, taxes and/or investments. 

Some financial planners may manage a client's investment portfolio entirely, from college through retirement. Sometimes the title is applied broadly, but within the finance industry, it's reserved for professionals that hold the CFP designation.

To become a certified financial planner, you must have a bachelor's degree in economics, business, accounting or finance, as well as three years of experience in the field before you can complete extensive coursework and take and pass the exams. 

Though a bachelor's degree is all that's required, many financial planners decide to pursue a Master of Business Administration (MBA) degree to increase their earning potential and advance their careers. Even after you get your CFP designation, you must adhere to the Certified Financial Planner Board of Standards' disciplinary procedures, ethics regulations and code of conduct.

Aside from a CFP designation, financial planners commonly hold a variety of designations and licenses, including:

  • Certified Investment Management Analyst (CIMA)

  • Chartered Financial Consultant (ChFC)

  • Chartered Financial Analyst (CFA)

Another notable feature of a certified financial planner is that they are a fiduciary, meaning they have a responsibility to act in the best interest of their client. These finance professionals usually work in office settings like corporate offices, government agencies, credit unions and banks.

Related: CFP vs. CFA: What’s the Difference?

What is a financial adviser?

A financial adviser is any professional that helps you manage your finances. In exchange for a fee, a financial adviser assists their clients with a wide range of money-related tasks, such as:

  • Developing a comprehensive tax and estate plan

  • Brokering the buying and selling of funds and stocks

  • Giving clients suggestions about their investments

  • Managing various investments

  • Providing advice about the amount of money clients should save

Because "financial adviser" is such a broad term, it encompasses several subset careers, including:

  • Bankers

  • Estate planners

  • Wealth managers

  • Money managers

  • Insurance agents

  • Stockbrokers

Regardless of the subset, most financial adviser positions require candidates to have at least a bachelor's degree. There aren't any requirements regarding the field of study, but many financial advisers pursue a degree in mathematics, business, economics, accounting or finance.

For a financial adviser to have the authority to purchase and sell securities directly for their clients, these professionals, known as stockbrokers, must pass exams administered by the Financial Industry Regulatory Authority (FINRA) as well as register with state regulators and FINRA. Additionally, the broker-dealers that these financial advisers work for must be registered with the Securities and Exchange Commission (SEC).

Investment advisers, which are professionals that provide guidance about their clients' securities, must register with state securities regulators or the SEC, depending on the size of their operation. These financial advisors must have and maintain North American Securities Administration Association (NASAA) Series 65 and Series 66 licenses.

Related: 7 Skills To Be a Financial Adviser and How To Highlight Them

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