Financial Advice Blog

The difference between an investment advisor and a financial planner

Knowing what kind of personal finance expert to enlist the services of can be a challenge. Here we explain the difference between an investment advisor and a financial planner.

You may have reached a point in your life where your finance skills aren’t quite cutting it for achieving your financial goals. If you’re questioning if you need a financial planner versus an investment advisor, you might be at a bit of a standstill. Navigating the world of personal finances can be a tricky space to grasp. Recognising you need the help of a qualified finance professional is one thing.  Knowing what kind of expert to enlist the services of can be another challenge.

What are your financial objectives?

Firstly, let’s look at some of the reasons why you might have decided it’s time to seek help with your finances.

Once you have an understanding of your financial objectives, you can then look at financial planner versus investment advisor comprehensively. Let’s break down what services they each provide and how they might be able to assist with your financial needs.

What is a financial planner?

A financial planner is a qualified financial professional who will meet with individuals and couples to develop a financial plan to help them achieve their goals. A good financial planner will take the time to understand you before designing a tailored financial strategy.  They will take into consideration factors such as your age, savings capacity, investments, debt, family plans, career or business aspirations, and importantly, your personal goals.  They should also accommodate any changes in your circumstances or economic variables as they arise over time.

Here’s an example of how a financial planner could assist:

Taylor and Sam have just celebrated their first wedding anniversary and are renting a two-bedroom apartment in Bondi. Taylor is currently 20 weeks pregnant with their first child so they’re starting to think about their future living situation. They’ve sought the services of Financial Spectrum because they’re eager to save for a deposit on a home and they want to know the most effective ways to save for their children’s education.  They need immediate help managing a budget for when Taylor goes on maternity leave.  Given they’ll be expanding their family, they’d like to put insurance in place to protect the family from unexpected events and get their wills and estate planning sorted.

What is an investment advisor?

People usually enlist the services of an investment advisor to advise specifically on investing and managing assets. They generally have financial direction and significant funds to invest and are specifically seeking a more detailed investment strategy.

Here’s an example of how an investment advisor could help:

Michael and Jenny are a retired couple with a self-managed super fund (SMSF).  Their pension is sorted and they know how long their money is going to last.  They own their home, as well as a holiday house. They have investments set up and already know what asset classes they want to invest in. They’ve sought out the services of an investment adviser to help them pick which assets to buy and sell within their SMSF.

What is the difference between an investment advisor and a financial planner?

As in the above examples, making sense of an investment advisor and a financial planner — and which one is best for you — will become clearer once you have a greater understanding of your goals.

If your main objective is to seek the services of a qualified financial professional to help you develop a holistic, long-term financial strategy to meet goals like buying or upgrading a home, funding your children’s education or retiring sooner, then a financial planner would be a great option for you.  They can also assist with services to protect your wealth such as insurances and estate planning.

On the other side of the coin, if you already have financial direction and are specifically seeking a more detailed investment strategy, then an investment advisor may be able to offer the best guidance.  Where a financial planner can provide a holistic financial strategy that includes investments, an investment advisor has a deeper focus on investment practices only.

Are an investment advisor and a financial advisor the same thing?

If you’re getting caught up in making sense of financial planner versus investment advisor versus financial advisor — don’t worry, it can be a complex area to navigate. You’ll often hear ‘financial advisor’ being used as a blanket term.  ‘Financial advisor’ could be referring to a financial planner, an investment advisor, an insurance agent, a banker or a stockbroker.

Which financial service is best for me?

At Financial Spectrum we understand there isn’t a one-size-fits-all solution to everyone’s financial needs.  This is why we commit to developing tailored financial strategies for our clients.

To give you the best advice possible, we start with a complimentary financial strategy session.  This helps you establish whether we can meet your needs and if we’re a good fit for doing so.  If you decide to become a client, we will discuss your current financial situation, financial challenges, relationship with money and goals for how you’d like your life to be now and into the future. Next, we’ll model various financial strategies to meet your goals.  Together we’ll refine these further before presenting back a strategic financial plan.  We are committed to providing ongoing support and can continue to review your portfolio as your circumstances evolve.

Whether you’re in need of the services of a financial advisor, a financial planner or an investment advisor — or if you’re unsure — we’re here to simplify the process and offer meaningful guidance that will actually benefit you.

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