Financial Planner vs. Advisor: Which One Do You Need? – PillarWM
“Financial planner” and “financial advisor” are standard labels used for experts who help high net worth and ultra-high net worth clients manage their money, particularly liquid assets. The main distinction is that every financial planner is a financial advisor, but not every financial advisor is a financial planner. Let’s take a look at some insights we obtained from a very important debate topic: financial planner vs. advisor – how are they different? Before we answer this question for you, we suggest you give our Ultimate Guide a read. It lays down essential guidelines on how to choose a financial advisor or planner to manage your wealth.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
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A financial planner is an industry expert who helps individuals and families create programs to meet their long-term financial goals. On the other hand, financial advisor is a wider term for professionals who help manage money and wealth, including investments, portfolio, and other such accounts. Considering the proliferation of the financial sector today, many financial advisors and planners might carry out the same tasks.
This blog will discuss the similarities and differences between financial advisors and planners and answer some fundamental questions such as: Do I need a financial planner or advisor?Is a financial planner worth it?Is it worth paying a financial advisor 1%?
Financial Planner vs. Advisor: Similarities and Differences
Now that we know what financial planners ad advisors, let’s put an end to the long-gone battle of financial planner vs. advisor.
A financial planner is a professional that helps companies and individuals create a program to meet long-term financial goals. On the other hand, financial advisor broad term for all those professionals who help manage your money, including investments, insurance, etc. A financial planner focuses explicitly on building financial plans to help clients reach their ultimate goals, whereas a financial advisor is anyone who can help clients manage their money.
A financial planner is just one type of financial advisor specializing in creating comprehensive plans to help clients achieve their long-term goals. As a financial advisor, a financial planner will assess your current situation and make recommendations on improving it. A financial planner might also have particular areas of expertise like retirement planning or education funding planning.
A financial planner is a professional who is qualified to provide long-term financial planning services to individuals and organizations.
Financial advisors also provide financial services but include brokers, bankers, insurance agents, and accountants.
Any broker, broker-dealer, or financial advisor/planner who trades in securities is regulated by the Financial Industry Regulatory Authority.
Many financial planners and advisors offer the same services. Be sure to ask questions before hiring an advisor or planner.
What Is a Financial Planner?
A financial planner is a qualified expert in the financial sector who helps individuals and families meet their long-term financial objectives. They consult with clients to analyze their goals, learn about their risk adversity, gain knowledge about their life or corporate stages and look for a number of beneficial investments for them.
Financial planners who exclusively provide financial advice and manage money for clients are known as fiduciaries. They are obligated to act in their clients’ best interests and are expected to manage assets for the client’s benefit rather than their own. However, there are several specifications in fiduciaries as well. For instance, Registered Investment Advisors (RIAs) are fiduciaries who advise high net worth and ultra-high net worth individuals on investments. Most RIAs work on a fee-only basis, which means that they cannot sell investment products to their clients that are not in the clients’ best interests. They cannot work on a commission basis either.
Not all financial planners need to be RIAs to operate under the fee-only model. Fee-only planners that are not RIAs also exist. They usually make money on an hourly rate, a yearly fixed rate, or as a percentage of the assets they handle. Conversely, financial planners who work on a commission basis generally earn money (a commission) for recommending a company’s investment products to their clients. They can also make money by opening accounts for clients.
In general, financial planners provide a broader range of services, such as tax and estate planning, whereas advisors typically focus on investing and asset allocation and diversification.
A financial planner may offer more services than an advisor, who may focus primarily on investments. You may or may not want more services than investment planning.
You could benefit from having a financial advisor if you don’t have enough expertise to make investment decisions. You may benefit from an advisor helping you with budgeting or saving for retirement.
These terms tend to be interchangeable, but some advisors focus primarily on investment management, while planners offer long-term services in tax, estates, retirement, and insurance.
Hiring a financial planner is worthwhile if you need help with your finances, such as managing debt, budgeting, and planning for retirement. You may have money to invest but don’t know where to start.
A financial planner can help you with budgeting, saving for retirement, trading in securities, choosing a life insurance policy, managing your taxes, and writing an estate plan.
As a fee, financial planners will charge a percentage of the value of your investments. They may charge a fee for writing a financial plan, and they may charge an hourly fee for specific services.
A financial plan specifies the individual’s financial goals, starting with a baseline of current net worth, income, expenses, and debt and creating a plan for retirement income and building wealth.
Financial advisors work with their clients to establish a portfolio of investments that integrate the client’s goals and risk tolerance. They will monitor and rebalance the portfolios.
You will usually pay a fee equal to a percentage of the value of the assets that the advisor manages for you. You will pay a charge for the administration of your brokerage account.
Choosing the Right Financial Planner
If you want to hire a financial planner, you should first make a list of all the services you need and then find a planner who can deliver those services. In addition, you should consider what you will be paying for, how much does the said planner cost, and how you will have to pay them (fixed-rate, percentage rate, or a commission basis).
Financial planners come from several different backgrounds. Not every planner specializes in everything. If you are considering hiring a financial planner, ask them about their educational and professional background. Check out their credentials and discover what they did to earn them. Before hiring someone, we recommend interviewing at least three to four financial planners before choosing one. Make sure you ask all the candidates the following vital questions:
• Do you have any references?
• How much do you charge?
• What is your area of specialization?
• Will you be acting as my fiduciary?
• What services will you provide?
• How will we settle conflicts?
Is a Financial Planner Worth It?
So is a financial planner worth it? If you have assets between $5 million to $500 million and can afford a financial planner’s fee, hiring one can be an excellent investment.
If you are one of those who hate managing their money, you can get someone to do it for you! In this case, hiring a financial planner is kind of a no-brainer. Hiring a financial planner can save you from making bad financial decisions, open more investment opportunities, and can help you increase your investment returns. Think of hiring a financial planner as getting a second opinion. It is always assuring, isn’t it?
To talk to a financial advisor from Pillar Wealth Management, click here to schedule a meeting or a consultation right away!
What Is a Financial Advisor?
In simple words, a financial advisor is a professional who provides advice and consulting services to families and individuals regarding their finances for compensation. Financial advisors can help their clients reach their financial goals much quicker by creating strategies and suggesting ways to reduce costs, eliminate debts and increase wealth.
Financial advisors are capable of providing several services, including but not limited to tax planning, brokerage, investment management, and estate planning. You can think of financial advisors as a “one-stop-shop” that provides everything from insurance products to portfolio management services. Once you find a financial advisor, take help from our guide titled 5 Critical Shifts for Maximizing Portfolio Growth Strategies for Families Worth $5 Million to $500 Million to strengthen and grow your portfolio. If you are interested in family or individual wealth protection, we recommend purchasing our guide: The Art of Protecting Ultra-High Net Worth Portfolios and Estates.
How Does a Financial Advisor Work?
A financial advisor is your financial consulting partner. Suppose you wish to retire in 30 years or send your child to a private university in 20 years. To accomplish these goals, you need money, and to manage that money, you need a skilled professional that will help you make your plans a reality. A financial advisor will determine the amount of money you should save, the kinds of accounts you should maintain, the types of insurance, etc.
A financial advisor will work with you to get a complete picture of your assets, liabilities, income, and expenses. They will also ask you about your future pensions and income sources, project retirement needs, and describe any long-term financial obligations. The initial assessment may also include examining other financial management topics, such as insurance issues and your tax situation. The advisor needs to be aware of your current estate plan and other professionals on your planning team, such as accountants and lawyers.
The financial advisor synthesizes all of this initial information that you provide into a comprehensive financial plan. This plan will serve as a roadmap towards achieving your financial goals. This plan will contain models of potentially best and worst-case scenarios.
A financial advisor’s job is to help you with every aspect of your financial life. In fact, you could work with a financial advisor without having them manage your portfolio or recommend any investments at all.
Suppose you need help choosing the best financial advisor. In that case, you should refer to our Ultimate Guide to Choosing the Best Financial Advisor made especially for investors with $5 million to $500 million in liquid assets.
Is It Worth Paying a Financial Advisor 1%?
If you are currently working with a financial advisor, the easiest way to determine it is worth paying a financial advisor 1%is to look at what they have helped you accomplish so far. For example, if an advisor has helped you or someone you know to earn a consistent return of 15% on their investment portfolio forfive years, then 1% is a huge steal. Similarly, if an advisor has helped you pay off colossal debt or reach a significant money goal, they are worth it.
If you don’t have an advisor, you must understand your goals. If you have minimal financial knowledge and are afraid that you might make bad decisions, consider hiring one.
If you have a dream, you need a plan to accomplish it. To make it happen, you need to carry out a cost and benefit analysis to determine whether or not it is the right time to pay the 1% fee for an advisor. Ask yourself questions such as how much financial advisors cost and charge and the benefits of hiring a financial advisor if in doubt. This will help you decide whether it is worth paying 1% to an advisor or not.
To achieve outstanding portfolio performance, we suggest you refer to our Performance Guide on Improving Portfolio Performance, created especially for high net worth and ultra-high net worth clients. If you have a net worth of more than $10 million, take a look at our guide titled the 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning for exclusive insights from financial experts.
Cost Differences between Planners and Advisors
Before hiring a financial planner or financial advisor, you must understand what you are paying for. Because of several payment models and varying specialization areas, it is hard to tell if you are getting the service at a fair price.
Unfortunately, there is no one definite cost for financial advisors or planners. The fee that they charge will depend on their compensation preferences and whether they will provide their advisory service on an ongoing basis.
Hence, we can safely say that we cannot generalize which of the two will be more expensive.
However, we can tell you that many financial advisors and planners that provide ongoing service charge a percentage of the assets under their management. Most planners and advisors charge between $1500 and $2500 for a whole financial plan, $300 to $500 by the hour, or 0.60% to 1% of managed assets for ongoing work.
To speak to a financial advisor or planner to learn more about what they do, schedule a meeting with Pillar Wealth Management today by clicking here.
When to Get a Financial Planner vs. an Advisor
Financial planners and advisors offer many of the same financial services. However, a financial planner may be the better choice if you are looking for long-term planning advice, are going through a major life change, need help with budgeting or managing debt, or want to make sure you are saving enough for retirement.
If you want help with investing, defining an investment strategy, or increasing the tax efficiency of your investments, a financial advisor can help you.
How to Choose a Financial Planner or Advisor
When looking for a financial planner or advisor, make sure they are properly trained and licensed, preferably someone with decades of experience. Check their certifications with the relevant licensing body.
Before hiring an advisor, talk to them about how they are paid and what they charge for their services. Make sure that they can provide the services you need and that their approach to money management aligns with your goals and values.
How Do I Know if This Is the Right Financial Advisor or Planner for Me?
Perhaps the most important element of the advisor-client relationship is the quality of the communication. Your advisor should be sympathetic to your situation and motivated to work with you on your finances. You should be able to talk openly with them about your concerns and feel that you will have a good rapport with them.
Besides the quality of the relationship, you should consider the cost of the advisor’s services. The fees you pay will impact the returns on your investments.
In addition, you will want to confirm that the advisor can provide the services you need to achieve your short- and long-term financial goals.
Should You Choose a Financial Advisor or Financial Planner?
Choose a financial planner for long-term advice and a broader range of services. A financial advisor is a good choice if you’re interested primarily in investments.
The Final Verdict: Do I Need a Financial Planner or Advisor?
Every one of us has a unique financial situation. Hence, we all have different financial needs. Determining these needs will help you decide whether you need to hire a financial planner or an advisor. Ideally, look for someone with prior experience working with clients who have been or are presently in financial situations similar to yours. You can also ask your family, friends, and coworkers for referrals.
We suggest contacting Pillar Wealth Management today. We have more than 64 years of experience providing high-quality financial advisory, planning, and wealth management services to high and ultra-high net worth clients with liquid assets of $5 million to $500 million. We can help settle the financial planner vs. advisor debate for you and recommend you an expert to suit your financial needs.
To speak to a financial advisor or planner from our team of experts or learn more about what they do, click here and schedule a meeting!
To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.
We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.
You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.
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