Investment Planning

Investment Advisor vs. Financial Planner:
Which Is Right for You?

This article is written by Mr. Houston to help you make a decision about which to use.

Here is the good news,

Affordable Life Plans does Financial Planning and Braxton Financial Group is an Investment Advising Firm. You get both when you work with either firm.

Whether you’re investing in mutual funds or simply looking to transform your wealth with a financial plan, you may be considering working with a financial advisor. Investment advisors and financial planners are two of the most common types of financial advisors that clients work with. These advisors ultimately offer guidance on different financial topics, but one thing they have in common is your money. If you’re thinking about working with one of these advisors, it’s important that you understand what each can do.

Investment Advisor vs. Financial Planner

Both investment advisors and financial planners are alike in that they help you with managing your assets, but the services they provide also differ in some notable ways. An investment advisor assists you with handling your investments and securities so that you’ll have a strong investment portfolio. These advisors first assess your financial situation and also determine your investment risk tolerance.

Following this, they propose an investing strategy specifically tailored to helping you meet your goals. You can also give them permission to purchase investments for you. Investment advisors typically possess a lot of knowledge about market patterns, so if you’re planning on investing in stocks, mutual funds or other securities, they’ll be able to propose the most reasonable strategy in relation to your personal financial situation.

Registered investment advisors (RIAs) operate under a fiduciary standard. This means they must legally operate in your best interest. Additionally, these advisors are registered with the U.S. Securities and Exchange Commission (SEC). They typically earn money through one of two ways:

• Fee-only: These advisors charge a flat or asset-based rate for their services. This is their only method of compensation.
• Fee-based: Conversely, these advisors simultaneously charge clients standard fees and earn commissions from the sale of financial products.

Don’t forget that, despite the differences above, both fee-based and fee-only advisors act as fiduciaries. That means all SEC-registered advisors, regardless of how they make their money, are bound by law to act in your best interest.

Commission-based investment advisors earn commissions from investment transactions with clients. While fee-based advisors have a fiduciary duty to their clients, commission-based advisors do not.

Should I Get an Investment Advisor or a Financial Planner?

Financial planners provide clients with advice aimed at helping them enhance their wealth. Some have the certified financial planner (CFP) certification, while others hold the chartered financial consultant (ChFC) certification. The services financial planners aid their clients with could include retirement planning, estate planning, investment or insurance planning.

As their name indicates, investment advisors focus on investing and the creation of investment portfolios. While financial planners often engage in investing to a certain degree, advisors take things a step further. This difference shows itself in the form of strategy creation, diversification and asset-allocation planning. All investment advisors must have a Series 65 license.

The type of investment advisor or financial planner you choose depends solely on your goals. If you want to create a stronger portfolio, an investment advisor who is a fiduciary might be useful.

If improving your overall financial situation is of more importance to you, a financial planner might be the better option. Similar to investment advisors, financial planners come in fee-based, fee-only and commission-based variations.

How Do Investment Advisor and Financial Planner Fees Differ?

The fees for both an investment advisor and a financial planner vary based on the specific advisor and the financial guidance you want in return. An investment advisor will normally earn money through one of three ways. He may charge you an hourly fee, a flat rate or a percentage of the investments he manages for you, he may sell you financial products from which he’ll earn commission or some combination of those two. Investment advisors who charge a percentage of investments typically charge anywhere between 0.20% and 2.00%.

The average price most financial planners charge typically ranges between $1,000 and $3,000 for a full financial plan. However, prices vary for fee-only, fee-based or commission-based planners. Therefore, the amount of money will also largely depend on the type of advisor you choose. Both fee-only and fee-based planners earn money from the financial plans they create for clients. Commission-based planners, however, only make money from the financial products they sell to clients.

If you choose to get guidance from your financial planner on more than one occasion, he might charge you a certain percentage of your managed assets. So you’ll have to decide whether you want to create or continually manage a financial plan. Managing a plan with a financial planner will cost you more money over time than simply getting a one-time plan. Overall, the price range for a financial planner chiefly depends on the type of planner you hire, the assets under your management (AUM), the products you buy and the services you require.

Want to speak with a financial advisor about your investment options? Make an appointment with a financial advisor today. >>