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Financial Planners, Advisors, and Brokers: The Meaning Behind Financial Titles

When you consider hiring a financial professional to help you with your affairs, there are multiple financial titles, specialties, credentials, and “letters” found on business cards to sift through and understand their meaning. Three of the most common titles you’ll encounter when seeking help from an individual related to their finances and/or investments are Financial Planners, Financial Advisors, and Brokers.

What is a Broker?

A Broker is usually someone who acts in a capacity of transacting purchases and sales of investment products for clients. They may give basic advice about stocks, companies, and how the process of trading works, but usually their overall knowledge of a client’s specific financial affairs (their net worth, cash flow, taxes, estate plan, etc.) is limited.

They are working from a transactional and usually commissionable scope. This is a professional who can help you buy and sell the securities you may already know you want to buy or sell, but beyond that, they would not be the person you would go to for larger financial decisions or future planning strategies.

What is a Financial Advisor?

Some would argue that a Financial Advisor and Financial Planner are the same, but they can differ greatly.

It may be a bit confusing because an advisor can offer planning services and still refer to themselves as a Financial Advisor. However, we have found that most Financial Advisors focus primarily on a client’s investments. This means that, to a degree, they give ongoing advice about what investment products to use, how to balance portfolios, what accounts should be invested with what, and so on.

Some advisors may review a client’s taxes or estate plan, but the majority do not. This is a capacity that is fine for someone who may still be working and accumulating assets, or doesn’t have a need for an estate plan (no home ownership, no children, etc.).

What is a Financial Planner?

Lastly, and most encompassing, is the Financial Planner.

Now, the title can be very relatable to Financial Advisor, but it’s the services rendered that make up all the difference. Usually, if someone is calling themselves a Financial Planner, they manage all five areas of financial planning for their clients. This includes insurance, taxes, estate, investments, and cash flow/retirement. But an advisor can also work with clients at this level so long as they are offering full planning services to their clients.

Confused yet?

The title of a financial professional is not what you need to be as concerned about—it’s the level of service they aid clients with.

If you only need investments transacted, a broker can help you. If you only need your IRA investment holdings managed and balanced throughout each year, a common Financial Advisor will suffice. But, if you need full service financial planning, pro-active tax advice, estate plan strategizing, cash flow and retirement outlook planning, AND your investments handled, you will need someone who offers comprehensive financial planning.

Which financial professional is best for me? 

From our perspective, we find that people often benefit the most from someone who can help them solve and prevent problems they might not even know they have, or may be susceptible to. This is where comprehensive planning far outweighs the other titles.

Whether that is a Certified Financial Planner™, an Advisor offering comprehensive planning services, or a Financial Planner engaged in client financial planning—you simply want to be sure that the professional you choose is going to continually give the advice in all areas of your financial needs, keep your best interest as top priority, and set a standard for the type of relationship you agree to pay them for.

Check the background of this firm/advisor on FINRA’s BrokerCheck.