Planner or Advisor?
The terms “financial advising” and “financial planning” are often used interchangeably by professionals and there is often confusion about what exactly is the difference (if any). When you are simply looking for the best financial advice it can be difficult to know who’s actually acting in your best interest. The DOL Fiduciary rule has been changed and now scrapped - it’s confusing for everyone trying to follow along – including the professionals! The lens for finding a financial professional you can trust appears no clearer.
Unfortunately the financial industry doesn’t do a good job of explaining the different terms we use every day to those outside our industry. If my medical professional friends tried to explain differences in their industry I’d struggle to understand what they were talking about – why do financial professionals assume that the American public knows the difference between a financial “planner” and a financial “advisor”? As you look for someone to give you the financial advice you need you will want to understand the two terms. Let’s take a look at the two definitions now.
The Difference
In reality the two terms financial “advisors” and financial “planners” are fairly interchangeable. Technically there are some differences that you may want to keep an eye out for.
Financial advisors are just that – someone who gives you financial advice. They could fall into the category of investment manager or someone who focuses on your long-term savings strategy. You should also know that a number of advisors use the term loosely. Insurance sales people 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 are a narrower group within the world of personal finance. Financial planners usually focus on delivering comprehensive financial plans to their clients. These can address everything from day to day budgeting to values based long-term savings plans. Planners can also focus on behavioral financial planning such as helping to 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 their clients, and you can expect them to help you build a true “plan” that addresses all of your financial concerns.
What do we do at Aberdour Investments?
Like most financial professionals I use the terms advisor and planner interchangeably. If forced to put myself in one camp I call myself a financial planner. As a member of XY Planning Network and NAPFA I have chosen to align myself with organizations that support financial planners who are fee-only and fiduciary, which is something I feel passionately about.
Dedicating myself to continuing to learn, grow and run my business according to these values is one way I can show clients that I’m dedicated to them. Understanding the difference between a planner and an advisor isn’t easy. If you ever have questions as to what to look for in a financial professional feel free to contact me with any questions. I’m happy to clarify anything you may want to know.