You may have reached a point in your life where the rudimentary finance skills you learnt at school 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, but knowing what kind of expert to enlist the services of can be another challenge unto itself.
What are your objectives?
Firstly, let’s look at why you might have decided it’s time to seek financial help:
- Saving — You’d like to start putting away money to save up for something substantial like a house, school fees or any other major asset.
- Budgeting — You may be hitting some snags when it comes to cash flow management and would like to more effectively control your finances.
- Investing — Perhaps you have a lump sum of money you’d like to invest but don’t know where to get the best return.
- Debt management — You need to get a handle on debt, whether that be credit card, loan repayments, or mortgage.
- Business operations — You may be seeking advice on how to fund a business plan or new venture.
- Inheritance — If you’ve recently received an inheritance, you might be in need of a financial plan to manage the funds.
- Taxation — If you reach tax time and you’re a little over your head, a financial professional can help you manage a tax strategy.
- Superannuation and retirement planning — If you’re wanting to get a head start on your retirement plans to future proof your finances.
- Insurance — You need assistance finding the right insurance options to protect you and your family from the unexpected.
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 best assist with your financial needs.
What is a financial planner?
A financial planner is a qualified financial professional who will meet with individuals to objectively assess their current financial and personal situation before developing a long-term plan to help them achieve their goals. A good financial planner will design a tailored financial strategy, taking into consideration different things like your age, savings capacity, investments, debt, family and career plans, and importantly, your personal goals. A financial planner should take the time to get to know you before helping you roadmap a long-term strategy. 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 naturally, 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 in Sydney’s Eastern Suburbs
- They want to know the most effective ways to save for their children’s education
- They’d like help managing their budget for when Taylor goes on maternity leave
- They’d like to put insurances in place for peace of mind that the family will be protected from unexpected events
- Now they are a family they want to get their wills and estate planning sorted
What is an investment advisor?
Individuals or businesses usually enlist the services of an investment advisor to advise specifically on investing and managing assets. They generally already have financial direction, 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 into. 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. So when you hear ‘financial advisor’, this could be referring to a qualified financial professional like a financial planner, an investment advisor, an insurance agent, a money manager, 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, which is why we are committed to developing tailored financial strategies for our clients.
In order to give you the best advice possible, we follow a nine-step process which begins with an introductory call and a questionnaire before we meet in person or over Zoom. We will discuss your current personal 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, before presenting back to you a course of action. We are committed to providing ongoing support and will 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.