Financial Planner vs. Financial Advisor: What It Means to Be a Certified Financial Planner™
One of the first things you learn about the financial planning profession is that there are a lot of different careers and roles available. A financial professional may advertise themself as a planner, advisor, analyst, or Certified Financial Planner™. What do these different titles really mean? Are some better than others? And which should you pursue in your financial planning career?
While many financial planning titles sound similar, there are significant differences. For example, a financial planner is a type of financial advisor, but not every financial advisor is a financial planner. Additionally, not every financial planner is a Certified Financial Planner™. Understanding these nuances can help you determine which path is best for you as a financial professional.
Financial Advisor
“Financial advisor” is a broad term that covers a variety of different services. Generally speaking, a financial advisor is a person who helps clients manage their money.
In most cases, a financial planner helps individuals (or companies) define and work toward long-term financial goals. A financial planner may help a client create a budget, make an investment plan, or decide how to save for retirement. Some financial planners manage their own practice while others work for nonprofit organizations, banks, or wealth management firms.
A financial advisor who works with the public must hold a Series 65 license, which is administered by the Financial Industry Regulatory Authority (FINRA). There are also over 100 other certifications that a financial advisor may attain, depending on their expertise and the services they provide.
Financial Planner
While it’s generally understood that a financial planner is a type of financial advisor, it’s essential to know that almost anyone can claim the title of “financial planner,” even if they have no professional credentials. For example, an insurance agent or an accountant may be considered a financial planner, but a person doesn’t need to hold a license, degree, or certification to call themself a financial planner.
In most cases, a financial planner helps individuals (or companies) define and work toward long-term financial goals. A financial planner may help a client create a budget, make an investment plan, or decide how to save for retirement. Some financial planners manage their own practice while others work for nonprofit organizations, banks, or wealth management firms.
Some financial planners specialize in certain areas, such as retirement or estate planning. There are also several certifications or licenses that a financial planner may hold. Some common financial planner credentials are Chartered Financial Analyst (CFA®), Certified Investment Management Analyst® (CIMA®), Chartered Financial Consultant® (ChFC®), and Certified Financial Planner™ (CFP®).
Certified Financial Planner™
The Certified Financial Planner™ (CFP®) designation [link to CFP blog] is a prestigious credential that indicates someone who has met rigorous requirements to deepen their knowledge of financial planning. Many consumers look for a professional credential like a CFP® certification when choosing a financial professional to work with.
To obtain a CFP® certification, you must complete university-level coursework in financial planning topics and obtain a bachelor’s degree from an accredited school. You must pass the CFP® exam and complete thousands of hours of professional experience. Additionally, you must pass a background check and commit to upholding the CFP Board’s high ethical standards in your practice.
Should You Pursue CFP® Certification?
Getting your CFP® certification requires a lot of dedication and a significant time commitment. But there are many benefits. This credential proves that you have the knowledge and practical experience to give your clients the best financial advice. It shows that you take your practice seriously and are committed to meeting high ethical standards.
Because financial planners aren’t required to be certified, getting your CFP® certification can set you apart in this profession.
It can encourage clients to trust you with their finances and give you a leg up on other candidates when you’re looking for a job. Only you can decide what’s best for you and your career, but CFP® certification is something I’d highly recommend.
Choosing the Right Career Path in Financial Planning
There are many types of professionals in the financial world, including self-styled financial planners, licensed financial advisors, and experts with credentials such as a CFA® charter or CFP® certification. While it’s not necessary to have a license to call yourself a financial planner, most consumers prefer to work with someone who has some sort of professional certification or license.
These professional designations can make you attractive to employers as well. Getting your CFP® certification or a similar credential is a great way to advance your financial planning career and ensure you offer your clients the best support.
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