Financial advisor vs. financial planner: which should I choose?

1 min readLast updated January 24, 2024by Unbiased team

The services provided by financial advisors and financial planners often overlap, but there are several key differences between them.

Summary  

  • Financial planners focus almost exclusively on the planning side of financial management. 

  • Financial advisors can offer a wide range of services and support within the financial management sphere. 

  • Financial advisors and financial planners charge different fees depending on the scope and service offered. 

  • Knowing the difference can ensure you get the right advice and guidance. 

What is a financial advisor? 

A financial advisor’s responsibility is to help clients manage their money in the most effective and growth-oriented way possible.  

Financial advisors can specialize in a broad range of finance-related areas such as estate planning, debt repayment,  investment management, retirement planning, and tax management, as well as many other aspects of the financial industry.  

Many people find financial advisors through financial information resources like Unbiased. This ensures that they get matched with a reputable, SEC-regulated expert who can meet their needs.   

How much does a financial advisor cost? 

When answering the question “How much does a financial advisor cost?” it’s important to realize that there are three main ways that a financial advisor may structure their fees:  

  • Fee-only 

  • Fee-based 

  • Commission 

A 2023 study by Advisory HQ indicates that a financial advisor may charge between $120 and $300 per hour, depending on who the advisor is and what their level of experience is.  

Some financial advisors prefer to charge based on the type of advice being requested by the client. It is always best to enquire first before hiring someone to advise you on financial matters.  

What is a financial planner? 

Where a financial advisor offers advice and guidance across a broad spectrum of financial affairs, financial planners deal almost exclusively with the planning side of things.  

A financial planner is a financial expert who can provide clients with clear, step-by-step plans for reaching their financial goals – whether they be debt repayment, savings, or otherwise.  

How much does a financial planner cost? 

According to Business Insider, financial planners' rates depend very much on the scope and service they provide.  

They may charge an hourly fee of $500 for a once-off session, or they may charge per project. They may also charge an annual fee of between $2,000 to $4,000 (or more) depending on your needs.  

Alternatively, they may charge a commission of between 0.59% and 1.18% of the value of your assets. Essentially, how much a financial planner costs depends on the planning required and the sums of money involved.  

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

The main difference between a financial advisor and a financial planner is that the former may offer both financial advice and planning services. In contrast, a financial planner focuses on creating personalized financial plans for their clients.  

Financial advisor vs. financial planner: which should I choose? 

Knowing which is best to choose between a financial advisor and a financial planner depends on individual circumstances and the sort of advice you’re seeking.  

If you need assistance with developing a thorough, long-term financial plan for your life as a whole, a financial planner would be a more appropriate choice for you.  

Alternatively, if you are looking for guidance in developing an investment portfolio, navigating a confusing financial situation like estate management, or require advice on dealing with a specific financial problem, then opt for a financial advisor.  

​​​How to choose a financial advisor 

Knowing how to choose a financial advisor is key to finding one that perfectly suits your needs, budget, and expectations.  

Here are some tips for choosing one that aligns with your financial circumstances and goals: 

  • Consider your budget: Different financial advisors charge different fees, and naturally, some are pricier than others. Consider what you are willing to pay and whether the financial advisors available to you can fulfill your needs.  

  • Know what kind of advice you are seeking: The more you understand about your current situation and what kind of outcomes you are hoping to achieve, the easier it will be to find a good financial advisor.  

  • Learn about different types of advisors: There are many different types of financial advisors, so make sure you have a decent grasp on who they are, what they specialize in, and whether or not they’d be a good fit for your circumstances.  

  • Get matched by Unbiased: Unbiased is an online financial resource that matches clients with expert financial advisors. If you’re not sure how to find a good advisor, let Unbiased do the hard work for you.  

How to choose a financial planner 

Knowing how to choose a financial planner is crucial for selecting one that can deliver the services you are in need of. The role of a financial planner may be more straightforward than that of a financial advisor, but taking the right approach is still necessary for a positive client experience.  

  • Check your budget: Some financial planners charge hourly rates, while others will charge you for the entirety of a financial plan up-front. Consider what you are willing to pay for a robust financial plan and which financial planners are accessible to you within it.  

  • Research: Financial planners typically have a strong online presence in order to spread the word about their services. Use the internet to discover high-ranking financial planners in your area.  

  • Know your goals: What kind of long-term financial plan are you most interested in achieving? Understanding your motivations and goals in this area can lead you to a financial planner with expertise that is most relevant to your situation.  

Seek expert financial advice 

Both financial planners and advisors can offer clients a world of good in terms of reaching financial clarity and developing robust strategies for money management and growth.  

Now that you understand the difference between a financial advisor and a financial planner, you can make an informed decision about which one to choose for your circumstances.  

If you’re still unsure about the financial advisor vs financial planner deliberation or simply want to learn more about what they offer, Unbiased can help. Get matched now for expert financial advice that suits your unique needs and circumstances.  

Writers

Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.