Difference Between Investment Advisor & Financial Planner: Which Is Right for You?

1. Investment Advisor

All those entities or professionals who helps you manage your money fall under the category of investment advisors. They usually charge a fee and in exchange, helps you with financial management tasks. It may involve managing investments, recommendation for investing in stocks or creation of a comprehensive investment plan. To be an investment advisor in India. The organization should hold a registration with the Securities and Exchange Board of India (SEBI). It is also recommended that your investment advisor should hold a certification from National Institute of Securities Market (NISM). CapitalVia is one such SEBI registered investment advisor, who provides research-based recommendations by NISM certified researchers, to investors for investing in the financial markets in cash, commodity and forex sectors.

Investment advisors specialize in estate planning, retirement planning and investment management, tax saving or any other aspect from the financial world. They may also cater top different income levels. For instance, someone who is struggling with a debt trap may look out for a financial counsellor, on the other hand, a high net worth individual may consider working only with a dedicated wealth manager.

The comparison between a investment planner and financial advisor is usually like a funnel with the investment advisor at the top. When we go deeper into the funnel, there lies the financial planner who can be considered as a sub type of investment advisor.

2. Financial Planner

Financial planner is a type of financial advisor who provides assistance to individuals and companies in creating an investment portfolio for the fulfilment of long-term investment goals. This may include investing using various different investment instruments.

A financial planner may specialize in a particular sector like tax saving, retirement planning, simple investment etc. There are various different licenses and certificates that may be held by a financial planner including CFA (Chartered Financial Analyst), CFP (Chartered Financial Planner), CIMA (Certified Investment Management Analyst) etc. The eligibility to certify for these certifications include different set of experience and qualification requirement.

Similar to a financial counsellor or a private wealth manager, financial planner also falls under the category of financial advisors. A financial planner helps to create a comprehensive outlook plan which helps an individual or company achieve their investment goal in the pre-defined investment horizon.

The financial planner studies about the different financial aspects of his client including income, liabilities and assets, and suggest subtle changes in order to improve the current situation. It may involve investing towards a particular investment goal like higher education, child marriage etc.

3. Financial Planner Vs Investment Advisor

Usually, whenever an investor or customers needs any help with respect to managing his funds, he approaches some sort of Investment advisor.

It is important to understand your financial planning landscape before finalizing on any financial planner. Financial planners can be anyone, they may be stockbrokers, insurance sales agents, or in fact individuals with no financial expertise. Therefore, it is necessary for the investor to his due diligence before putting down money to any sort of advisor.

A person who helps their client to manage their money is known as a Investment advisor, whereas a financial planner is one who helps in creating financial plans to help the clients in their journey of achieving financial goals.

4. Investment Advisor vs Financial Planner – Which one is right for you?

The financial situation of every individual is unique and thus are the financial needs. It is better to understand your needs before choosing out an investment advisor of financial planner to work with. There are high chances that you may come across an investment advisor who has worked with someone with a similar situation as yours which can prove out to be an extra advantage for you. It is better to ask your friends and family and ask for referrals for investment advisors and financial planners.

Further, check out for the necessary certifications required. If you have already short listed your preferred investment instrument, an investment advisor specializing in that particular investment instrument can prove out to be beneficial for you, but if you are still confused with the same, you need a financial planner who will analyze your financial aspects and help you plan an investment journey based on those parameters.

Once you have decided one out of investment advisor and financial planner, start searching for relevant options and try approaching them. Check out for feedback of old clients and customers, necessary certifications and qualifications before finalizing one. Afterall, choosing a financial planner or investment advisor is a lifelong relationship.

Always remember, that the governing body in case of investment advisors and financial planners is SEBI in India. In case anything goes wrong, you can always approach the SEBI complaint and redressal system (SCORE) and file a dispute. SEBI will look into your issue and provide you with an appropriate resolution. Choosing a financial advisor of investment advisor is a critical decision of one’s life and should be done with utmost care and study.