Financial Advisor vs. Financial Planner: What’s the Difference, and Who Should You Hire? 

As your income and net worth grow, so does the complexity of your financial life and the impact of each decision you make. From investing and tax planning to retirement and estate strategies, having a trusted professional by your side can make all the difference. In fact, research from Northwestern Mutual shows that people who work with a financial advisor feel significantly more confident in their ability to navigate financial setbacks, stay on course for retirement, and achieve their long-term goals. 

But it’s important to understand that “financial advisor” is a broad term. While it’s often used interchangeably with “financial planner,” the two aren’t always the same. Each role varies in focus, expertise, and the services they offer.  

Understanding the difference between a financial advisor and a financial planner is the first step in finding the right partner to guide your financial journey. Let’s break down what sets them apart and how to choose the one that’s right for you. 

What Is a Financial Advisor? 

A financial advisor is a professional who helps individuals manage their money and make informed financial decisions. Services may include investment management, retirement planning, tax strategies, insurance guidance, and estate planning. 

Financial advisors may work for brokerage firms, banks, insurance companies, or independently. Some focus on selling financial products, while others offer more comprehensive, goals-based advice across all areas of your financial life. 

Although the title “financial advisor” isn’t legally regulated, advisors who sell investment products are generally required to hold specific securities licenses administered by the Financial Industry Regulatory Authority (FINRA) or the North American Securities Administrators Association (NASAA). 

Independent financial advisors may also hold professional certifications, such as the Certified Financial Planner™ (CFP®) or Chartered Financial Analyst (CFA®) designation, to demonstrate expertise. Independent advisors are typically regulated by state securities authorities or the U.S. Securities and Exchange Commission (SEC). 

Types of Financial Advisors 

Financial advisors can differ significantly in terms of their background, advice, and compensation. Below are some of the most common types of advisors and how they differentiate themselves: 

• Bank Representatives and 401(k) Providers. These advisors typically work for banks or financial institutions and offer basic financial guidance as part of broader banking or workplace retirement services.  

• Independent Financial Advisors. Independent advisors aren’t tied to a specific institution, enabling them to offer a broader range of services and products. These advisors often take a more comprehensive approach to financial planning, offering services like retirement planning, tax strategies, estate planning, and investment management.  

Standards of Care 

Not all financial professionals are held to the same ethical and legal obligations. The standard of care they follow can significantly influence the guidance you receive.  

Here are the two primary standards: 

• Fiduciary Standard. Fiduciary advisors are legally and ethically required to act in your best interest. This means they must put your needs ahead of their own compensation, disclose conflicts of interest, and offer advice tailored to your specific financial goals. 

• Suitability Standard. Financial professionals held to the suitability standard must provide guidance on products that are “suitable” based on factors like your age, goals, and risk tolerance. However, these products may not be the most cost-effective or in your best interest. 

Compensation Models 

How a financial advisor gets paid can also impact the advice they provide. Here are the three most common models: 

Compensation Model	How They’re Paid	Typical Affiliations	Considerations
Commission-Based	Earn commissions from selling financial products like insurance, annuities, or funds	Banks, insurance companies, brokerage firms	May have sales incentives; service could be influenced by product compensation
Fee-Based	Earn both client fees and commissions on product sales	Independent or hybrid advisory firms	Potential conflicts of interest; transparency about compensation is important
Fee-Only	Paid solely by the client via hourly, flat, or AUM-based fees	Independent advisors, fiduciary planners	No commissions; typically more objective and often held to a fiduciary standard

What Is a Financial Planner? 

A financial planner is a type of financial advisor who focuses on creating comprehensive, long-term financial plans. Instead of concentrating solely on investments or selling products, these advisors take a holistic view of your financial life—including your income, expenses, savings, debt, taxes, insurance, and personal goals—to develop a strategy tailored to your needs. 

Financial planners can guide you through major life transitions such as marriage, homeownership, starting a business, or preparing for retirement, aligning each financial decision with your broader goals. 

Many financial planners hold the Certified Financial Planner™ (CFP®) designation, which reflects rigorous education, experience, and adherence to a fiduciary standard. CFP® professionals are often fee-only—meaning they’re compensated directly by clients rather than through commissions—helping to ensure their advice is free from product-driven incentives. 

CFP® professionals also tend to maintain stronger, more consistent relationships with their clients. According to data from the CFP Board, 44% of their clients receive plan reviews more than once a year—nearly twice the rate of clients working with non-CFP® professionals. 

Key Differences Between a Financial Advisor and Financial Planner 

While all financial planners are financial advisors, not all financial advisors are financial planners. Understanding the difference between a financial advisor and financial planner can help you determine which type of professional best meets your needs. 

Here's a quick breakdown to help you compare: 

Category	Financial Advisor	Financial Planner
Primary Focus	Offers investment management, retirement planning, insurance, tax strategies, and product-based advice	Develops holistic, long-term financial plans that cover all areas of your financial life
Affiliations	Broker-dealers, insurance firms, banks, or independent firms	Usually independent or part of fiduciary-focused financial planning firms
Licensing/Credentials	Often holds Series 6, 7, 63, or 65 licenses to sell investment products; may also hold advanced credentials.	Most hold the Certified Financial Planner™ (CFP®) designation
Compensation Models	Commission-based, fee-based, or fee-only	Typically fee-only (flat fee, hourly, or % of assets under management)
Standards of Care	May follow fiduciary or suitability standard depending on licensing and affiliation	Most follow the fiduciary standard, especially CFP® professionals
Best For	Those seeking investment help or access to financial products	Those looking for comprehensive, personalized guidance across all areas of their financial life

Common Credentials for Financial Advisors vs. Financial Planners 

A 2022 survey from The American College of Financial Services found that the top factor people consider when choosing a financial advisor is demonstrated expertise through education and certifications. Professional licenses and designations can offer meaningful insight into an advisor’s training, areas of specialization, and the quality of advice they’re qualified to provide.  

While not all advisors hold advanced credentials, those who do have typically completed rigorous education requirements and adhere to strict ethical standards. Here are some of the most widely recognized credentials in the financial services industry: 

• CERTIFIED FINANCIAL PLANNER™ (CFP®). Considered the gold standard for financial planning, the CFP® designation signifies in-depth knowledge across key areas such as retirement, tax, insurance, estate, and investment planning. CFP® professionals are held to a fiduciary standard, meaning they’re required to act in your best interest. 

• Chartered Financial Analyst (CFA®). Globally respected, the CFA® designation is focused on investment analysis, portfolio management, and financial ethics.  

• Chartered Financial Consultant (ChFC®). The ChFC® covers comprehensive financial planning with additional emphasis on areas like insurance, estate planning, and specialized financial strategies.  

• Certified Public Accountant (CPA). CPAs are tax and accounting experts who can also offer financial planning services, particularly those who hold the Personal Financial Specialist (PFS) credential. 

• Series 6, 7, 63, 65, and 66 Licenses. These are regulatory licenses rather than credentials, but they’re essential for advisors who sell investment products or provide certain types of financial advice.  

The more complex your financial situation, the more important it is to work with someone who holds the right combination of credentials and licenses. 

How to Choose Between a Financial Advisor and Financial Planner 

When it comes to choosing a financial advisor vs. a financial planner, first get clear on your goals and the type of support you’re seeking. While the two roles often overlap, the right fit depends on your priorities, the complexity of your financial situation, and how you prefer to work with a professional. 

Start by asking yourself a few key questions: 

• What are my short- and long-term financial goals? If you're focused on building a portfolio, managing risk, or planning for retirement income, a financial advisor with investment expertise may be a good fit. If you need broader guidance covering budgeting, taxes, insurance, debt, and estate planning, a financial planner may be more appropriate. 

• Do I need one-time advice or an ongoing relationship? Financial planners often work with clients long-term, helping you navigate major life milestones with a comprehensive plan. While some financial advisors take a more transactional approach, many independent advisors also offer ongoing planning. 

• What type of payment structure am I comfortable with? Fee-only planners charge flat or hourly rates or a percentage of assets under management, offering transparency. In some cases, financial advisors can earn commissions, potentially affecting the objectivity of their advice. 

• Is it important that they act as a fiduciary? Fiduciaries—most commonly found among fee-only financial planners and independent Registered Investment Advisors (RIAs)—must prioritize your best interest, while financial professionals under the suitability standard are only required to sell products that are “good enough.” 

Ultimately, both financial advisors and financial planners can provide valuable support—it’s just a matter of finding someone whose services, qualifications, and approach align with what you’re looking for.  

Tips for Choosing the Right Financial Advisor or Planner  

Once you know the type of support you’re looking for, the next step is finding someone qualified and trustworthy. Start by exploring reputable directories like: 

• NAPFA.org for fee-only, fiduciary financial planners 

• LetsMakeAPlan.org to search for CERTIFIED FINANCIAL PLANNER™ professionals 

• BrokerCheck to view licenses and potential disciplinary actions 

• SEC’s IAPD to verify registration and professional history for Registered Investment Advisors (RIAs) 

When you meet with potential advisors, ask about their credentials, compensation model, and whether they operate under a fiduciary standard. A reputable advisor will welcome your questions and offer clear, honest answers. 

As you evaluate your options, be mindful of potential red flags, such as: 

• Vague or evasive responses about how they’re paid 

• Pressure to buy specific financial products 

• Reluctance to share details about their background, qualifications, or how their business operates 

• Disciplinary history or unresolved complaints on BrokerCheck or the SEC’s website 

Whether you choose a financial advisor or a financial planner, working with someone you trust and feel comfortable with is key. Look for a professional who isn’t just knowledgeable but is also approachable, transparent, and responsive to your needs.  

If something feels off during the interview process, or if the communication doesn’t feel clear or respectful, don’t ignore that instinct. Keep looking until you find someone who feels like the right fit for you and your financial future. 

Bottom Line 

Choosing between a financial advisor and a financial planner comes down to your goals, the complexity of your financial life, and the type of guidance you’re seeking. While the two roles often intersect, understanding their differences can help you make an informed decision.  

Take time to research, ask questions, and verify qualifications using trusted resources. Most importantly, choose someone you trust and feel confident partnering with for the long term. The right financial professional can help you build a clear, strategic path toward the future you want. 

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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. 

This piece was authored by Hazel Secco, CFP®, CDFA®, CEO & Founder of Align Financial Solutions.