The finance world is full of professionals filling unique roles in a dynamic ecosystem. Personal financial services are delivered by professionals operating under a surprisingly large range of professional titles.
Beyond the basics, there are dozens more titles that aren’t even covered in the title of this article.
For most individuals and families, four types of financial professionals have a larger chance than most of ending up in your financial plans:
There are certainly similarities between all of the above. They are all financial service professionals that offer some form of mentorship to their clients. But these terms are NOT interchangeable.
Let’s go over these financial job titles and remove the confusion surrounding them.
Financial advisors are personal financial service providers. It’s a deliberately broad term used to describe professionals who help others manage money. Financial advisors can then be broken down into other titles, including financial planners.
They offer hands-off advice that is purely meant to help you build wealth. They provide long-term financial advice (and planning) intended to help you reach long-term goals.
Financial advisors are capable of helping you with many of the finer details of your financial life. But they focus on helping you reach broad, comprehensive financial goals like:
These financial professionals normally work with clients who need a few financial services in practice:
A financial planner is a specific type of financial advisor. So, unlike the other titles on this list, they do fall under the same umbrella as others. But it’s worth reiterating that not every financial advisor is a financial planner.
Financial planners serve the same market segments as other financial advisors. This title is perhaps the broadest. FINRA’s qualifications for “financial planners” are such that very many people can claim the title, including many:
In terms of responsibilities, financial planners help people manage money. More specifically, their most common duties include:
This is a less strict category. You should look for many of those same licenses financial advisors are expected to have. Then they normally have expertise in at least one key area of finance:
Financial coaches work with individuals and focus on fundamental financial ideas and habits. They work with clients to enhance their financial behaviors.
This difference alone sets financial coaches apart from other professionals. A coach is someone who teaches you, through lessons, demonstration, and task delegation, where appropriate.
Financial coaches work closely with their clients to get a clear picture of their financial life. They then:
Financial coaches are much like other coaches. You can think of a financial coach as a personal trainer. But instead of training your muscles, they train your mentality and habits surrounding money.
A financial consultant is more similar to a coach than to any of the other titles. Consultants work with individuals or organizations to assist with financial decision-making.
Like coaches, consultants are trained but aren’t specifically FCA-regulated. They are able to review an individual or organization’s financial situation and current goals.
They then discuss these issues and make strategic suggestions. But they also consult with their clients directly to make a plan.
The differences between financial consultants and coaches are very grey. They aren’t different in terms of regulation, adding to the difficulty.
The most important differences here are between:
Within groups a and b, there are many similarities, and no meaningful regulatory or even descriptive differences. However, the differences between the groups are very meaningful:
The confusion between the major financial service providers is understandable. There are many individual financial professions.
The differences between financial advisors vs planners or coaches vs consultants are not very meaningful. But the differences between the two camps are very important to understand.
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