What’s the difference between Financial Advisors, Financial Planners, and Wealth Managers? They may seem like synonyms but in reality they are very different.
Unlike positions in the medical field where there is a clear distinction between positions like physician’s assistant, resident, and doctor, titles in the financial industry are not as clearly defined.
Why Are There So Many Different Monikers?
First on the list is Financial Advisor. This term is the most common that you will hear. Many people use this title interchangeably. It can be used for insurance agents who sell annuities, to individuals that sell investment products like stocks and bonds, to people that do comprehensive financial planning. You have to do your research and understand how they charge you for their services.
The next designation is Wealth Manager. A Wealth Manager typically aims for clients who have a certain amount of money. If someone meets this threshold they qualify to become a client. Services from Wealth Managers vary from solely managing investments all the way to comprehensive financial planning. Be sure to ask what services are offered and how they are compensated for each one.
Third is Financial Coach. They typically provide financial advice but do not give guidance on investment strategies. Many financial coaches offer recommendations on how to help people get out of debt, and how to make a budget.
Last but not least is Financial Planner. I work with clients as a Financial Planner. We work with clients on detailed financial planning. Usually we cover areas like cash flow, investments, gifting strategies, charitable giving, retirement planning, etc. The focus is on expansive advice that includes all of the financial details of a client’s life.
What Services Do Financial Planners Offer?
A Financial Planner works with you in all areas of your financial life that you are concerned about. Working as a Financial Planner, I focus on areas including but not limited to, cash flow, investments, retirement planning, taxes, insurance, estate planning, college planning, etc.
You and what you want out of life is the focus of my process. I work with you to clarify your priorities so you can bring the future into clearer focus.
Because I have a emphasis on people with equity ownership, the process touches on a few areas:
- The valuation of the business
- Investment risk of the company
- Tax strategy for liquidation of ownership
These are specific topics, and most people decide to hire a Financial Planner when they feel uncertain. This might be when you have a high percentage of your portfolio in company stock. Maybe you want to gift your shares to a charity. Thinking about retirement and what to do next?
How Do I Know What Services I Need?
What level of service is appropriate? Would you like a thought partner that would enable you to make informed decisions? Do you want someone to manage your investments? Do you want someone to give you a strategy, and you can do the rest yourself? These answers help you determine if you want a one-time engagement or an ongoing relationship.
Money is interconnected with everything in life so one area impacts others. If you are thinking about an important decision, it makes sense and is reassuring to have a comprehensive approach to ensure that you are emphasizing and making progress towards what is most important to you.
How Much Does it Cost?
First, Financial Advisors are paid in many different ways. Some advisors are paid when they sell you a product, such as life insurance or stocks and bonds. They receive a commission by the company they work for depending on what they sell.
Second, some Financial Planners are fee-only. This means that the client pays them. Some planners charge one-time fees, ongoing fees, or a percentage of the assets managed.
Third, other Financial Advisors are fee based. These advisors charge ongoing fees and get commissions from products.
How Much Do Your Services Cost?
I am a fee-only Financial Planner and that means I am only paid by you, the client. I charge a percentage of the assets managed. The exact fee is determined by the amount of your assets.
How Do Financial Planners Add Value For You?
What would you consider a success from our time working together? When partnering together, you get clarity on what you desire, how to prioritize your wants, and develop a path to make those intangible goals tangible.
Here are a few of the many ways I will help you:
- Alignment of spending with values and goals
- Creating a debt payoff plan
- Student loans repayment strategies
- Asset allocation analysis
- Tax minimization
- Reviewing annual tax return
- Roth conversion analysis
- Understanding and maximizing your incentive stock options
- Gift planning
- Developing and envisioning financial and life goals
These are just a few examples of the many ways that I enrich your life.
If you have any questions about the financial planning services I offer, how much they cost, and how they can benefit you, please reach out for a friendly consultation.