What Is A Financial Planner?

A working definition featuring semantics, regulation, and my thoughts.

I’ve been building my website this month - and this week, I’ve been writing the “Frequently Asked Questions” section. As I started to note the questions that people have asked over the years, it occurred to me that some deserve a deeper dive.

Questions like: What even is a financial planner? What do you do? Is that the same thing as an investment advisor or a financial advisor? How do I know if and/or when I should hire a financial planner? What does working with someone really look like?

Let’s start with semantics.

Why There Are So Many Names?

The terms “financial advisor,” “investment advisor,” and “financial planner" are often used interchangeably, which is confusing.

In reality, the terms themselves are largely unregulated. Anyone can essentially call themselves a "financial advisor" without needing to meet specific educational, ethical, or licensing requirements. But (big but), the activity of giving investment advice is indeed regulated. If someone wants to legally give investment advice in the US for a fee, they need to be registered with either the Securities and Exchange Commission (SEC) or a relevant state securities regulator and follow their rules.

Without getting into the weeds on the different paths, just know that there are multiple types of licensing exams with various purposes (Series 65, Series 7 & 66) that allow a person to legally give investment advice for a fee. Many states also waive these exam requirements for people that hold advanced certifications like the CERTIFIED FINANCIAL PLANNER® certification (moi), Chartered Financial Analyst® and a few others.

Because the term itself isn’t regulated, many insurance agents who earn commission from product sales call themselves financial advisors which is icky but legal. That’s not to say there are not good eggs in the insurance world, there are, but I’m skeptical.

If you’d like to check to see if someone can legally give investment advice, look them up here, and check to see that they have no “disclosures” (complaints).

What About Other Types of Financial Advice?

While giving investment advice is heavily regulated - giving other types of financial advice (that isn’t tax, legal, or investment related) isn’t really.

Enter: Financial Coaches

These are professionals who don’t give investment specific advice (so as they don’t have to deal with the regulatory side) but they can provide budget coaching, debt management strategies, and financial education.

While they can also call themselves advisors or planners, they won’t be listed in the FINRA database linked above because they don’t give investment advice. Generally, they provide support on a more limited scope.

Like anything, the quality is varied (think problematic unqualified "finfluencers"). That said, there are some really wonderful coaches out there doing great work that I’ve referred clients to.

Why “Financial Planner”?

Unfortunately, the term Financial Planner is also not regulated, but I call myself a Financial Planner because I have met the requirements to become a CERTIFIED FINANCIAL PLANNER® professional and that’s more important.

The CFP® mark is arguably the most widely recognized and respected designation for financial planning. It signifies expertise in comprehensive financial planning, covering many areas like cash flow, investments, retirement planning, insurance, tax planning, estate planning, and (more recently) behavioral finance - to name a few. Being a CFP® professional means that I am a fiduciary who is legally obligated to act in my client’s best interest. (I wish this was a given across the industry but it’s not).

The reason I call myself a “financial planner” is because that most accurately describes what I do. I do give investment advice, but I also ask questions, listen, reflect, encourage, console, and yes, do a whole lot of planning.

Okay So What Is A Financial Planner?

Ah yes, the original question.

A smidge of context: Historically, financial advisors or investment advisors pretty much only managed and traded investment accounts. Before the internet, this was a manual process and your relationship with your advisor was primarily transactional.

The rise of comprehensive financial planning as we think of it today didn’t take shape until around the late 60s, which isn’t that long ago! Combine that with the creation of index funds in the late 70s, the rise of the internet, and rapid development of FinTech tools and all of sudden, you can automatically invest $50 into a broadly diversified portfolio with a few clicks on your phone.

For most people, this has rapidly shifted the value of financial advice away from what stock to buy, to something much more holistic, comprehensive, and personal.

To put in my own words: A financial planner is a problem-solving excel nerd who becomes a trusted partner in the continuous process of aligning your money with your unique life vision. I’m part advisor, part coach, part cheerleader, part realist, part idealist.

At its best, financial advice isn’t a product but rather, a relational process. To do that well requires humility, continuous learning, and a desire to know people deeply. This is what I strive for in my work.

“At the end of the day people won't remember what you said or did, they will remember how you made them feel.” ― Maya Angelou