What’s the Difference Between a Financial Planner & Financial Advisor?

June 24th, 2019

financial-planner-or-advisorThough some people use the titles interchangeably, financial planners and financial advisors are two different entities that revolve around helping clients meet specific financial objectives. However, planners and advisors work differently. Necessary qualifications and education are also different.

What Does a Financial Planner Do?

Beyond the province of Quebec, anyone can call themselves a “financial planner.” In Canada, you do not need a designation to be called a financial planner, meaning that someone who holds a single investment fund license can add “financial planner” to their list of skills.

Unfortunately, the long list of financial planner designations makes figuring out if someone is qualified or not exasperating for the consumer. For example, there are the Personal Finance Planner (PFP), Registered Finance Planner (RFP), and the Certified Financial Planner (CFP) designations to consider.

The PFP is designed to serve the banking industry and is provided by CSI, a company that sells courses and provides licenses to those in banking. While the PFP is common, you won’t often see it outside of Canada’s large banks.

The RFP used to be more ubiquitous, but there are fewer RFPs in Canada at present.

Lastly, the CFP is an internationally recognized standard that is utilized by over 18,000 professionals in Canada. The CFP designation is attained and managed by the Financial Planner Standards Council (FPSC), a non-profit organization focused on advocating superior financial advisement for consumers. This is the recommended qualification to seek out if you plan on using a financial planner instead of an advisor.

What Does a Financial Advisor Do?

Simply speaking, a financial advisor is a person who gives advice pertaining to financial products and services. These individuals also advise a client on areas such as risk management (insurance), education funds, retirement, banking, borrowing, and so on. The typical financial advisor will hold a number of licenses to sell and broker items such as mutual funds and insurance policies. Any financial advisor who plans to sell such financial products is required to hold the specific license and, therefore, have successfully and satisfactorily completed education in that given area.

The role of a financial advisor includes the following duties:

  • Setting financial goals
  • Building investment plans
  • Designing an investment portfolio
  • Advising on retirement plans and investments
  • Choosing investments that meet your specific goals
  • Tracking progress

In short, the primary focus is investments.

What is the main difference between a planner and advisor?

As mentioned above, an advisor focuses on investments and calculating potential losses and gains. A planner, on the other hand, could have a broader range of designations, such as tax, estate, insurance, investment, retirement, and other important components of your personal finances.

To separate a planner from an advisor, look for the following:

  • Does the individual have specific designations?
  • Do they have special licenses for selling financial products?
  • How long have they worked in the financial industry?
  • Do they have experience in multiple facets of financial planning or just one?
  • Do they supply an in-depth financial plan or brief investment and retirement calculations?

Thus, the advisor is mainly for investments while the planner looks at all facets of your financial status. Both, however, can give you advice for figuring out your investments and financial strategies.

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