Are You Working With an Investment Advisor or a Financial Planner?

The Investment Advisers Act of 1940 states that an ‘…‘‘investment adviser’’ means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities…’

Unfortunately, there is little regulation over what people giving financial advice can call themselves – adviser, advisor (yes, there is a difference), financial consultant or wealth manager – just to name a few.  Therefore, even though we have this definition above there is much confusion among consumers.

Investment advisors are often money managers and sales people who only give advice on investments. In many cases, they are not permitted to even comment on other important areas such as tax or estate planning issues because they have not had any training in those fields. In contrast, financial planners generally provide more comprehensive planning including investments and other areas such as:

  • Cash flow analysis (planning and budgeting)
  • Retirement planning
  • Tax planning
  • Investment planning
  • Estate planning
  • Health insurance planning
  • Employee benefits
  • Risk management and insurance planning

There can also be other differences between financial planners and investment advisors. Investment advisors typically give advice that is ‘prudent’ based on your risk tolerance, and may invest your account based on a predetermined portfolio. However, a financial planner is more likely to create a detailed and unique financial plan based on your specific needs and goals. Having your own financial plan instead of a collection of investments can help determine if you are on track.  Maybe you need to save more to achieve your goals or maybe you can afford to invest more conservatively or retire early.  Just knowing if you are on track or not toward reaching your goals is one of the primary benefits of the planning process.

If you decide to seek out a financial planner, the most qualified advisers are likely to be a Certified Financial Planner™ or CFP®. A lot has changed since 1940 and the CFP® designation is often considered the gold standard for consumers looking for a financial planner.

Are You Working With an Investment Advisor or a Financial Planner? appeared on

About the author

Michael Helveston, CFP®, CRPC®

Mike Helveston, CFP®, CRPC® is Director of Adviser Services at Rodgers & Associates. He manages the team of advisers and is responsible for maintaining the firm’s financial planning process. In addition, he provides comprehensive tax, estate and investment planning advice to guide our high-net-worth clients toward their financial goals. Mike joined Rodgers & Associates in 2007 after starting in the profession over 15 years ago with Vanguard.

Mike is a contributor to Forbes, has been quoted in the Wall Street Journal and has also appeared on television and radio discussing various financial planning issues.

Mike has served the community as a volunteer mortgage counselor with Tabor Community Services, a student financial literacy volunteer for Junior Achievement and as a mentor through Bridge of Hope. His hobbies include running, golfing with friends, listening to music and watching professional sports. He resides in Downingtown, PA with his wife and three children.

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