What is a financial planner?
Financial planners create comprehensive financial strategies to help individuals or companies manage short-term spending while achieving long-term goals. They consider various factors such as taxes, budgets and investments.
Financial planners typically apply a holistic approach to their strategies, assessing the company’s financial well-being. Reviewing the company’s financial health helps planners address long-term goals.
What is a financial advisor?
A financial advisor provides financial guidance to an organization. They might advise on various subjects, including tax laws and potential investments.
Financial advisors typically evaluate an organization’s needs before providing guidance on how to build wealth. They may also specialize in specific areas, such as securities.
Similarities between financial planners and financial advisors
Both roles primarily involve offering guidance regarding finances. They’re also concerned with helping organizations improve their economic standings, remain within budget, meet financial goals and make sound investments without too much risk.
Differences between financial planners and financial advisors
When deciding which role to hire, consider how each one is unique.
Investment-focused vs. goal-focused
Financial advisors help an organization grow its wealth without assuming too much risk. For them, effectively allocating assets and maximizing returns are key concerns. Financial planners concentrate more on establishing long-term strategies to guide a company toward specific outcomes.
A financial planner typically looks at the organization’s entire financial portfolio, while a financial advisor focuses on concentrated areas of potential growth.
Services offered
Financial advisors typically offer companies a broad range of services to improve their economic outlook, including investment management or tax strategies. They might also guide companies toward lucrative markets and offer advice on potential investments.
Advisors can assist executives in the risk-management process to avoid potential obstacles to growth. Hiring an advisor can also help you create an accurate valuation of your business that can reveal untapped areas of potential value.
In contrast, financial planners develop strategies to help companies maintain financial security. Their services may involve budgeting, debt management and other tasks to keep businesses in good economic standing.
Planners may also develop financial projections or conduct cash flow analyses to help organizations balance incoming profits and expenditures.
Credentials
Financial planners often hold a Certified Financial Planner (CFP) designation to indicate their extensive training, specifically in comprehensive economic planning. Some planners may be Certified Investment Management Analysts (CIMA), a designation that indicates specialization in investments.
Financial advisors may hold a range of licenses or certifications depending on their expertise. The Series 65 license is one common credential. This designation requires professionals to pass a test regarding financial concepts and qualifies them to provide investment advice.
The Chartered Financial Analyst (CFA) designation, issued by the CFA Institute, requires advisors to pass three examinations and accrue 4,000 hours of related experience. Professionals with this credential have advanced proficiency in managing risk, assets and investments. These advisors may eventually apply their skills in senior and executive positions.
Compensation
Another key difference between a financial advisor and a financial planner is pay. According to Indeed Salaries, the average salary for a financial advisor is $72,174 per year. In contrast, a financial planner makes an average salary of $77,218 per year. While these figures may vary based on location, experience level and education, consider them when hiring.
When to hire a financial planner
The decision to hire a financial planner vs. a financial advisor often depends on timing. If your business currently needs assistance analyzing profits, recording expenses, managing assets and assessing liabilities, consider a financial planner.
Hiring a planner can help you establish financial goals and develop an effective course of action. They can also offer guidance as to which areas your organization may benefit from investing in. This can help strengthen its economic health, creating a solid foundation for future growth.
When to hire a financial advisor
To expand your company’s financial reach, consider hiring a financial advisor. They may offer a more comprehensive investment plan that carefully analyzes the potential risks of a new endeavor. For businesses with complex economic portfolios, a financial advisor who specializes in a particular area may offer valuable insight.
Frequently asked questions about hiring a financial advisor vs. financial planner
Do I need to hire both a financial planner and a financial advisor?
Due to the overlap between financial planners and advisors, employers typically hire one or the other. Carefully evaluating the benefits of each role can help you choose the best fit for your team.
However, if you’ve already hired a financial advisor or financial planner and need to fill a skills gap, you might hire for both positions. For some companies, a collaborative approach to financial goal-setting and investing works best. Additionally, offering a training and development program may help your existing team members bridge the skills gap.
What makes a successful financial planner or advisor?
While both positions’ responsibilities differ, financial planners and advisors can benefit from soft skills, such as communication to relay complex information and establish connections with clients.
Consider applicants with nontraditional backgrounds and focus on skills-based hiring to find the best addition to your team.
How can I set a new financial employee up for success?
Whether you’re hiring a financial planner or a financial advisor, building a foundation for success starts with effective onboarding. To help your new hire become comfortable, consider communicating with them before their first day. This might involve sending them essential resources such as the employee handbook, organization chart or the agenda for their first day.
Setting up their workspace in advance can also help them jump into training procedures. Along the way, ask for feedback so you can adjust your onboarding process as needed.
