What do financial planners do?

Jenna working at a computer in front of a window

What is the difference between a financial advisor and a financial planner? What is a wealth manager? What is a financial coach? 

All of these terms are confusing! 

Unlike doctors or attorneys who have to take specific exams to earn their titles, the title “financial advisor” is not a regulated term. 

Instead, the SEC pays attention to who is giving investment advice, but not what they call themselves. 

Here’s how people in the financial industry tend to think about these terms: 

Financial Advisor

This is the most commonly used term for a financial professional who advises clients on some aspect of the investing process. You’ll find a whole host of people that use this title, from insurance agents that sell variable annuities, to people that sell other investment products like stocks and bonds, to people that do comprehensive financial planning. 

When you are vetting a potential financial advisor, it’s very important to understand who pays their bills (i.e. are they working on commission?) and what they actually do for a living. Are they selling a particular investment, or are they paid only by you?

It’s also important to understand the scope of their advice. Are they advising on insurance, investments, or are they looking at your entire financial picture? 

Wealth Manager

People call themselves wealth managers when they are trying to aim for clients that have a certain amount of wealth. They could be doing comprehensive financial planning, or they could be solely managing investments.

Financial Planner

This is often used by professionals who focus on comprehensive financial planning. They typically cover topics like investments, cash flow, life insurance, disability insurance, retirement planning, and so on. They may or may not offer investment management. The focus tends to be on holistic advice. 

Financial Coach

Financial Coaches tend to provide financial advice but do not advise on investments. However, this is not the case 100% of the time, so be sure to check with any financial coach if you are looking for investment advice to be sure they are registered to do so. 

A lot of financial coaches will help people get out of debt, learn how to budget, and learn how to manage variable income. 

Will they help prepare your taxes? 

As you decide who might be the best fit for you in terms of your financial needs, it’s also good to know that your financial professional might also serve as an Enrolled Agent or as Certified Public Accountants, or CPAs. Both of these professionals can represent you in front of the IRS, if it would ever come to that. 

Other financial professionals may offer tax strategies, but the depth of the advice can vary greatly between advisors. 

The Right Fit for You

Finding the right financial professional for you isn’t easy. By better understand the types of financial professionals, you can look for someone who specializes in what type of financial advice you need. 

Sign up for our newsletter