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Difference Between Financial Advisors and Financial Planners


May 5, 2014

Written by Rick Huff

Generically, there shouldn’t be any difference between a Financial Advisor (FA) and a Financial Planner (FP).

Realistically, there could be a mountain of difference. A lot of the difference has to do with how the individual is compensated.

Financial Advisor is a term associated with a registered investment advisors (RIA). An RIA is under a fiduciary standard; they must act in your best interest. That includes being objective and recommending what is best for you.

A Financial Planner is not under such a standard; and they typically ‘sell products’ to their clients and take commissions on what they sell. FPs only have to meet ‘suitability’ standards; example – is the product they are selling to you suitable in your situation. Suitability is a wide and voluminous cavern; it allows almost any product in almost any situation.

This is not an implication that all Financial Planners are less than ethical and moral.

This difference means you should scrutinize those advisors you are considering working with, ask about their compensation methodology and where their loyalties truly lie.  To find out more about Financial Planners and Advisors,contact us at HSC Wealth Advisors!

Also, check out the following for more information and insight into the differences:

www.NAPFA.org

www.letsmakeaplan.org

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