When it comes to understanding and properly managing finances, there are two main areas of professional services that can help you: financial planners and financial advisors.
These are terms that people often use interchangeably, leading to some confusion about which professional you need and when.
So let’s look into the differences between financial planners and financial advisors – plus how to determine which one you need support from!
Financial planners provide comprehensive, long-term strategies
Financial planners (like our team here at Step Up Financial) are professionals who work with individuals and families to develop a comprehensive plan for their finances.
Rather than immediate advice, a financial planner works with you to determine your short-term and long-term financial goals and provides a detailed strategy to help you achieve them.
Working with a financial planner will help you understand your current and desired financial situations, your tolerance for risk and an overall timeframe in which you can achieve what you want.
Qualified financial planners typically have a degree in finance or a related field and must also pass the Certified Financial Planner (CFP) exam.
Financial advisors offer support and guidance
Financial advisors previously weren’t required to have a certification up until January 2019, when new education and training standards were implemented that meant new financial advisors had to have a Bachelor’s degree or equivalent, while existing financial providers had to seek out and obtain that level of qualification if they didn’t already have it.
A financial advisor will typically help you by providing advice and guidance on achieving the financial goals and plans you’ve set for yourself.
Financial advisors generally specialise in specific areas like investments, retirement planning, insurance or tax (but it’s important to note that many financial planners can also provide support in these areas too).
So if your financial situation needs help in one certain area, finding a specialist financial advisor in that area can help you with detailed advice.
Which one do you need?
It’s not necessarily a matter of choosing between a financial planner or a financial advisor, but rather trying to determine which one you need right now.
Both these professions offer valuable financial support to clients and you will gain a lot of knowledge and advice from both. But to figure out which one you might need now, it helps to consider questions like:
- Are your goals more short-term or long-term?
If your financial goals are short-term or you have a specific method you’d like to use to achieve them, a specialist financial advisor is likely to be more suitable.
If you’ve got significant long-term goals, a financial planner will help you establish a detailed plan to reach these goals, as well as provide support and guidance along the way.
- Do you want continued advice and maintenance for your progress?
Once you’ve established your financial plan, a financial planner will typically offer ongoing advice and guidance which allows them to monitor your progress and adjust the plan as your needs change.
Meanwhile, financial advisors are better equipped at providing advice or guidance on specific goals or financial products without needing that comprehensive view of your overall finances.
- How complex is your financial situation?
If your finances are fairly straightforward and there are only one or two areas where you’d like support – perhaps you want to optimise your superannuation or are seeking advice on a potential investment – then a financial advisor will be more useful here.
If your situation is more complex and there are a number of intertwined elements of your finances, a financial planner will help you with an in-depth approach that incorporates all those different elements.
There's no wrong choice
Ultimately, whether you need a financial planner or a financial advisor, there isn’t a wrong choice.
Both of these professions offers skilled advice and can help you achieve financial success, whatever that looks like for you.
If you think you might need support from a financial planner, contact our friendly team today to discuss your goals and concerns.