What’s the difference between a financial planner and a financial advisor?

Whenever you jump into a conversation on Reddit and the subject of a financial advisor comes up, look out, as it can get the emotions going. For many people on this social platform, the question is whether they want to pay someone else to manage their money and potentially lose thousands. 

In the case of one Redditor posting in r/FinancialPlanning, they feel there is a question that doesn’t get asked enough: What’s the difference between a financial planner and a financial advisor?

Unfortunately, these terms are often interchangeable online, but they are very different jobs with different requirements. 

The Question 

This question stems from someone from Edward Jones knocking on the door to this Redditor’s house and offering unsolicited financial advice. It’s a unique situation to have door-to-door financial advice still taking place, and it’s still notable that this person was approached at all. 

The awkwardness of this situation aside, the original poster felt compelled to ask what the Edward Jones individual wanted to do, and unsurprisingly, there was a conversation about rebalancing portfolios and making automatic contributions. By all accounts, this is stuff the Redditor can do alone. 

Ultimately, this individual made an appointment with a financial advisor and is now trying to understand how financial advisors and planners differ and which is better. 

Two Different Jobs

Financial Advisor 

When you think about a financial advisor, you should think about an individual who can provide you with financial guidance and advice around various financial matters. This goes beyond investments and relates to advice around tax laws, insurance, and other financial needs. 

The job title “financial advisor” is relatively broad, and this individual must hold a North American Securities Administrations Association Series 65 license. Administered by FINRA, this license ensures that this individual is properly licensed to work with the public and provide financial advice. 

Building on the idea that this is a broad job title, a financial advisor doesn’t just have to be a stockbroker. It can be an insurance agent, money manager, estate planner, or even a banker you’d meet in a bank, just as this Redditor is doing. 

Financial Planner

A financial planner has an entirely different set of knowledge and skills. These individuals specialize in creating personal and comprehensive financial plans for their clients. This role requires someone to be deeply knowledgeable about estate planning, investments, insurance, and savings, as they want to offer a range of services to their clients. 

In this role, a certified financial planner (CFP) is likely what you want to look for, as this title requires someone to meet a very strict set of ethical and educational requirements. A financial planner should be registered with the Securities and Exchange Commission (SEC) and the proper state regulators so that you can verify their credentials. 

In the most simple terms, a financial planner assists with creating a comprehensive financial plan, while an advisor offers investing advice. 

Which Should You Use

While Reddit will tell you not to bother with either, a fiduciary financial planner is undoubtedly the better choice. This is someone who is required to give you investment advice that doesn’t tie into any interests they may have, so the advice is only what’s best for you and your money. 

The most significant difference here may be that all financial planners are financial advisors, but the other way isn’t accurate. The best thing to be aware of is that you want a fiduciary, which means they work under the “suitability standard,” which requires them to provide sound financial advice. 

Of course, Reddit is telling this individual not to bother with anyone and to skip the meeting while noting that Edward Jones isn’t worth their time either. The comments also amplify the idea that “anyone can call themselves a financial advisor” and that the original poster wants a fee-only planner who is a fiduciary and can bring them value, if they want to meet with anyone.

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