Financial Planner, Financial Advisor, What’s the difference?

“The best fund in the world won’t change your life, financial planning will” – Paul Armson.

 

Regardless of your financial state, everyone can benefit from taking stock of where they are financially and what they need to do to achieve better financial wellbeing. So where do you begin? Talk to a financial advisor or a financial planner? But what’s the difference between financial advice and financial planning, isn’t it the same thing?

 

A Financial Adviser’s job is to help you manage your money by analysing your finances, assessing your options and explaining the risks before recommending the best product to achieve your objectives. Most often, their focus is on the financial product solution and providing the best product for you based on your circumstances right now. This can be effective and many clients will come to a financial planner or advisor requesting a specific product. However, the Financial Advisor’s focus is generally narrower and centres on a single process such as your investment portfolio without considering the bigger picture.

 

A Financial Planner, on the other hand, will provide a broader service. They will help you to see what you have right now, identify your financial goals and objectives and set out the steps of what you need to do to achieve those goals and live the life you want to live without running out of money or dying with too much. They look at what needs to happen to get you to where you want to be financially and will make the appropriate recommendations to help you get there.

 

Most Financial Planners are also Financial Advisors however, unlike a Financial Advisor; a Financial Planner may have additional areas of expertise, such as retirement planning, estate planning or lifestyle funding. The key difference between them is that a Financial Planner should prepare a comprehensive written financial plan incorporating an overall strategy showing you what you need to achieve your financial goals. This service is a standalone, impartial financial analysis of your specific financial and personal circumstances and is usually remunerated by a direct fee payment, agreed in advance.

 

The review is a 6-step systematic process that ensures a greater understanding of the client, what has shaped their outlook, what their current financial position is, how this is likely to progress in the future if left unchanged and the aspirations they have for themselves and their family. https://www.olearys.ie/about-us/what-we-do/

 

A good Financial Planner helps you to understand the impact of your financial situation on your lifestyle advising you on:

  • What you need to do differently
  • How much you need to save
  • Your retirement plan and what pension will work best for you
  • What type of insurance you may need & how much (this would include life insurance, income protection, mortgage protection, serious illness, cancer cover, health insurance, etc)
  • How much to keep in your emergency fund
  • Estate planning
  • What changes might improve your tax situation
  • What rate of return you will need to earn to achieve your goals over a given timeframe
  • What level of investment risk is appropriate for you

 

Financial Planners help you to achieve your life objectives by working with you to achieve your financial ones. They look beyond the financial advice by offering a more holistic approach to financial planning taking into account your personal circumstances when working out how you can achieve financial independence.

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