What to Look for in Both

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The terms “financial advisor” and “financial planner” are often used interchangeably in the personal finance world. But while both professional titles involve someone who guides your financial decisions, there is a slight difference between the two. Knowing this contrast can help you better choose which one you need to hire in certain circumstances.

In short, a financial advisor tends to assist clients with more specific, immediate financial matters. They may specialize in retirement, investments, taxes or estate planning. A financial planner, on the other hand, can be more simply defined as a person who provides lifelong financial planning to clients and helps them see the bigger picture of their finances as a whole.

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What to look for in a financial advisor and planner

Though there’s a slight difference between the goals’ of financial advisor vs. a financial planner’s, they share similarities when it comes to what to look for in hiring either. The main thing to note is the credentials that your prospective advisor or planner has.

Because really anyone can claim to be a financial advisor or planner, experts in the financial services industry urge consumers to seek those with official designations and avoid unqualified ones. Having an official designation means that the person passed certain exams or completed specific education and work experience thresholds. An advisor or planner who lacks these credentials therefore possibly skipped exams and training.

The process of finding someone with an appropriate financial license is much like finding someone to help you when you’re sick and need help with your body, argues Skip Schweiss, former president for the Financial Planning Association® (FPA®), a membership organization for certified financial planners. Schweiss urges people to find “the most qualified” advisors and planners, just as they would seek a “top-notch doctor.” He adds that “consumers should know if they’re getting a real financial planner.”

Credentials to look out for

So, how do you know if a financial advisor or planner is “real?” One that has credentials might hold several licenses and designations, and the most common is Certified Financial Planner™ (CFP®). “Many people see CFP as the gold standard,” says Schweiss. “A lot of advisors say it gives them more credibility with clients.”

Other licenses to look out for include Chartered Financial Analyst (CFA®), Chartered Financial Consultant® (ChFC®) and Certified Investment Management Analyst® (CIMA®). Stephanie Mackara, principal wealth advisor at Charleston Investment Advisors, would add a registered investment advisor (RIA) to this list as well, as they are obligated to provide advice to investors that is “uniquely aligned with the investor’s financial goals and needs,” Mackara says.

Tips for finding accredited financial advisors or planners

There are multiple free resources online to verify an individual’s professional financial qualifications, experience, education, as well as any disciplinary history. Here are a few:

There are also tools that do the homework for you. For example, Zoe Financial pairs clients with pre-vetted financial advisors with CFP, CFA or CPA (Certified Public Accountant) designations. Its advisors usually charge an annual rate between 0.5% and 1.5% of a client’s assets under management.

If you’re interested in finding an advisor with hourly rates, Garrett Planning Network finds you financial advisors and planners in your ZIP Code who charge by the hour.

Note that the rates for hiring financial advisors or planners vary depending on multiple factors, including the form of compensation and whether they will offer their services on a continual basis.

If you’re not yet ready to pay for a financial planner or advisor, but want to start getting your finances in order, you could consider using low-cost or free tools like a robo-advisor, which creates and manages a custom investment portfolio based on your goals and risk tolerance, or a budgeting app, which tracks your income and spending and can help you create a budget. Select ranked Betterment as the best robo-advisor and Mint as the best free budgeting app.


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