People often throw around two terms when it comes to finding a financial planning professional - Financial Planner and Financial Advisor. There’s some confusion about these two roles, and how they’re different. In a world where you just want to get the best financial advice available from a professional who cares, it’s tough to know who’s actually acting in your best interest. It doesn’t help that the DOL Fiduciary Rulehas been popping up all over the news, getting changed, and then ultimately scrapped. It’s all very confusing to everyone who has been trying to follow along (including us advisors!). For a lot of people, it almost feels like there’s no clear path to finding a financial professional who you can trust.
Unfortunately, this is a common pitfall in the financial industry. We assume that everyone outside our world understands the difference between common terms we use every day. But the fact is they don’t, and it’s unfair of financial professionals to make that assumption. I wouldn’t know what my medical professional or engineering clients were talking about if they tried to explain different roles within their field - why do financial professionals assume that the American public knows the difference between a financial “planner” and a financial “advisor”?
Let’s take a second to break apart these definitions, and to discuss how they impact you as you search for someone to give you the financial advice you need.
Is There a Difference?
The truth is that financial “advisors” and financial “planners” are fairly interchangable terms. However, if we’re getting technical, there are a few key differences to keep an eye out for.
Financial advisors are just that - someone who gives you financial advice. They often fall into the category of investment managers, or someone who focuses on your long-term savings strategy. They may not dive into the nitty gritty of your day-to-day budget and spending habits. You will also find that many “advisors” use the term loosely. Insurance sales people, for example, often call themselves financial advisors. Advisor is a fairly loose term. While it applies to people like myself who offer fee-only financial planning services, it can also be applied to a wide range of other finance professionals, including those who sell investment and insurance products.
Financial planners, on the other hand, are a much narrower group within the world of personal finance. Financial planners usually focus on delivering comprehensive financial plans to their clients. These plans address everything from everyday budgeting to long-term, values-based savings goals. Planners can also focus on behavioral financial planning, or helping you build a plan that focuses on investing strategies and goals that support positive financial habits. In short - financial planners are often more detailed in their work with clients, and you can expect them to help you build a true “plan” that addresses all of your financial concerns.Finally, the biggest difference between financial advisors and financial planners is the level of certification that’s required to be a financial planner. CFP®s are backed by the CFP Board, and are more regulated than non-certified financial “advisors.”The CFP Board is a regulatory body that has a specific set of rules for financial planners to follow, and an entrance exam that all CFP®s have to pass. CERTIFIED FINANCIAL PLANNER™.
What Do We Call Ourselves at Quarry Hill?
Like many professionals in the financial planning world, I use the terms advisor and planner interchangeably. However, when push comes to shove, I define myself as a financial planner. Why? Because I’m a CERTIFIED FINANCIAL PLANNER™ who is also a member of NAPFA, XY Planning Network, and FPA. These organizations support the financial planners who are fee-only and fiduciary, which is something I feel passionately about.
I also believe that the financial planning landscape often doesn’t serve clients when we don’t clearly communicate our role and our beliefs. That’s why, when I founded Quarry Hill Advisors, I dedicated myself to being a fee-only and fiduciary financial planner. I hold my CFP® marks and meet both the annual regulation and continuing education requirements from the CFP Board. This is, in part, because I love what I do. I genuinely love being a financial planner.
More than that, though, it’s because I want to ensure that all of my current and future clients are receiving the best level of service possible. Being a financial planner who is dedicated to continuing to learn, grow, and run my business according to a strict set of regulations is one of the many ways I can show clients that I’m dedicated to them. However, I understand that deciphering the difference between a planner and an advisor isn’t easy. That’s why, if you ever have any questions about what you should look for in a financial professional, my door is open. Feel free to contact me any time with questions - I’m happy to help clarify anything you want to know!