Aug 12, 2021
Not all financial professionals are created equal. That's why it's important to know the two most common types are financial advisors and Certified Financial Planners™, better known as CFPs®, that you may typically run across when searching for an advisor.
What’s a financial advisor?
A financial advisor is an expert in financial planning, investment management, and other areas of financial services, such as estate planning.
Advisors mainly help clients achieve their financial goals, whether short-term planning for a new home or long-term planning for retirement. Some financial advisors advise clients on a broad range of topics, while others focus on a specific niche. One key difference to note, financial advisors are not required to be a fiduciary like CFPs® are–more on that below.
What’s a Certified Financial Planner™?
A Certified Financial Planner™ (CFP®) is an advisor who has received an accredited designation that demonstrates an in-depth knowledge of financial planning. These advisors meet rigorous education, training, and ethical standards. Only those who have fulfilled these requirements can call themselves CFP® professionals. All CFP®s are financial advisors, but not all advisors are CFP®s.
To become a CFP®, an advisor must complete a multi-year and multi-step process, which includes taking educational courses and meeting additional requirements once they obtain their designation. Also, the advisor must pass the CFP® Board exam, have at least two years of real-life financial planning experience, and commit to following a code of ethics and standards set forth by the CFP® board. If they don’t abide by the ethical standards, they risk losing their certification.
After certification, CFPs® also focus on financial planning, investment strategies, and wealth management.
Generally, CFPs® offer two main types of services—financial advice and financial planning. A CFP® can help with a particular financial challenge or work with you to develop a comprehensive financial plan.
Similar to a financial advisor, CFPs® may focus their practice in certain areas, such as equity compensation or insurance planning. Others may have expertise in dealing with certain kinds of situations, such as military families or clients with multiple businesses and complex finances.
Finding an advisor that's right for you
Whether you decide to work with a financial advisor or CFP®, find an advisor that puts your interests first–this is what’s known as a fiduciary. Many financial advisors are fiduciaries, but some are not. All CFP® professionals however are fiduciaries as they have committed to the CFP® board and are required to act in their client’s best interests.
Whether you’re just getting started in your career, saving for the future, or trying to pay your bills and get out of debt–know that there’s an advisor for you. You can find a financial professional here today. When reviewing available advisors, you will also see if they have a CFP® designation by their name or not. Altruist is happy to report that if you’re searching for an advisor through us, they do work as a fiduciary. No matter what stage you are in, partnering with a professional and prioritizing financial planning can help you reach your goals.
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