Travis employs many of the disciplines of success that he learned as a Division 1 hockey player – namely, persistence, practice, and a having passion for what you do – to his role as Principal and Client Advisor.
We recently had a client ask us what the difference was between an Investment Advisor and a Financial Planner. It’s a great question because people in the financial services industry often throw around different titles, certifications, or degrees. It confuses many people, including the clients that they work with or prospective clients looking for their next advisor.
To bring clarity to this question, and hopefully direct those who are seeking financial advice to the right type of advisor, here’s my distinction:
What is a Financial Planner?
Financial planners or financial advisors, typically provide comprehensive financial and wealth planning services for their clients. This includes investment management, estate planning, tax planning, insurance planning, and retirement planning to just name a few.
But not all financial planners provide these services, or they say that they do, but may not have the expertise in all of these areas, so it’s important to ask a lot of questions and do your homework.
Services of a Financial Planner
Glassman Wealth Services is a financial planning firm. We handle all of the investment decisions internally for our clients and help oversee their estate planning, tax planning, insurance planning and retirement planning. As a Financial Planner, our clients can expect that we’re up to speed on all of the current issues.
Ongoing Financial Advice
Many people looking to engage a financial planner want someone to advise them beyond their investment strategies, especially when they are experiencing a major life event, like selling a company or retiring.
Our clients look to us to help educate them on what financial decisions they will need to make and where they will find those answers. Even more, we help our clients figure out which questions they should be asking. That’s often the toughest part.
Often, that advice needs to be coordinated with other financial professionals like a client’s CPA and estate planning attorney. We like to lead these efforts for our clients to make sure their investment portfolio is in sync with their changing financial plan.
Financial Reporting and Tracking
Most financial planners will provide some type of performance reporting to let you know how you are doing. Frankly, we have found that most performance reports are not very relevant, and we have worked to deliver dynamic and meaningful performance reports to our own clients.
Beyond this, some advisors, like us, track their clients’ outside accounts that they don’t manage like their 401ks, college savings plans, etc. Our clients really like the convenience of this feature as they can log into their client online portal at any time and see all of their accounts in one place.
A Word About Financial Designations
Financial planners and investment advisors may be Certified Financial Planning™ Certificants (CFP®s), and follow the continued education requirements for that certification. If an advisor is a CFP®, this designation will follow their name.
Finally, a financial planning relationship is often more in-depth than an investment advisor relationship as the financial planner may be more involved helping their clients with a wider variety of financial issues.
What is an Investment Advisor?
An Investment Advisor is hired by an individual or family to manage their investment portfolio. This includes determining the proper asset allocation, fund or stock selection, their risk tolerance, and may consider asset location.
Do we have clients that look at us as an Investment Advisor? Of course we do. Not all of our clients need or require financial planning discussions. For these clients, they come to us for investment advice and we work to fulfill those needs.
The Investments Advisor should provide the client with timely performance reports so they are aware of how much money they have and how they are doing. The client should expect to have frequent conversations with their investment advisor, via in-person meetings, phone calls, and email correspondence to fully understand the goals and performance of their portfolio.
Which type of advisor do you need?
Every client has different needs, every firm has different services, and every advisor has different specialties. The key for someone looking for an Investment Advisor or Financial Planner/Advisor is to understand what they really need and then use that criteria to find the right fit.