A financial advisor and financial planner are not the same — here's what to look for in both (2024)

FAQs

A financial advisor and financial planner are not the same — here's what to look for in both? ›

A financial advisor answers your one-off concerns, while a planner helps your finances holistically. The Mint app has shut down as of Jan. 1, 2024. For alternatives, check out CNBC Select's ranking of the best budgeting apps.

Generally speaking, financial planners address and keep tabs on multiple areas of their clients' finances. They develop long-term, strategic plans in these areas and update them on a regular basis over the years. Financial advisors tend to focus on specific transactions and short-term situations.

Financial planners, on the other hand, are a better fit for someone looking to map out their financial goals and make a long-term plan. Advisors can help with all of your financial needs, though. Ideally, you'd find someone who has experience working with clients in situations similar to your own.

The average pay for a financial planner is about $58,000 per year. The average salary for a financial advisor is around $80,000 per year. While it's easy to see how similar a financial advisor vs. financial planner is, they are actually quite different.

A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.

A fiduciary is someone who must act in your best interest. A financial advisor is a job title that anyone advising about your finances can use. If you're in the market for a financial advisor, you should strongly consider a financial advisor who is a fiduciary or a fiduciary financial advisor.

Fees can be a huge drag on your portfolio's performance over time, so it's vital to know what you're paying and how much they cost you. Bankrate's investing calculator can show how much those fees will cost you over time. Spoiler: You could easily pay tens of thousands over a career. Uncertain qualifications.

Visit FINRA BrokerCheck or call FINRA at (800) 289-9999. Or, visit the SEC's Investment Adviser Public Disclosure (IAPD) website. Also, contact your state securities regulator. Check SEC Action Lookup tool for formal actions that the SEC has brought against individuals.

At what net worth should I get a financial advisor? ›

Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.

In other words, even professionals can't beat the market with consistency. That means that the right expectation is typically to target a portfolio that tracks the market as closely as possible with a balance between risk (stocks) and stability (bonds) that matches your goals and risk tolerance.

You should meet with your advisor at least once a year to reassess basics like budget, taxes and investment performance. This is the time to discuss whether you feel you are on the right track, and if there is something you could be doing better to increase your net worth in the coming 12 months.

Of high-net-worth individuals, 70 percent work with a financial advisor. You can compare that to just 37 percent in the general population.

Financial planners generally have more education, certification and experience requirements than financial advisers. Compared to financial advisers, financial planners usually form longer-term relationships with investors.

So can a financial adviser make you rich? The answer is yes. But it would take a very long time unless you already have a reasonable amount of money. Definitely one of the key benefits to working with a financial advisor is long term slow wealth creation and wealth protection.

A financial planner works with clients to help them manage their money and reach their long-term financial goals. They advise and assist clients on a variety of matters, from investing and saving for retirement to funding a college education or a new business while preserving wealth.

Not everyone needs a financial advisor, especially since it's an additional cost. But having the extra help and advice can be paramount in reaching financial goals, especially if you're feeling stuck or unsure of how to get there.

Private wealth managers tend to deal with higher-net-worth clients. A financial advisor may have clients with $100,000 to $5 million in assets, for instance, while a private wealth advisor may work with clients who have upward of $20 million. Private wealth managers often become more involved in asset management.

What Financial Advisors Do. Generally speaking, financial advisors help manage your money and guide your financial decision-making. They work with you in creating a financial plan designed for your unique goals. For example, that might include saving $1 million for retirement.