When you are looking for financial advice for yourself, your family or your business, there isn’t a single, straightforward choice regarding who to turn to. Professionals working in the financial services industry fulfil a broad range of different roles. Whether you are looking for advice on investments, asset management, tax planning or more, your first step is to find out who is the best person to speak to.
So what exactly is the difference between a financial planner, a wealth manager and a financial advisor? And what distinguishes an independent financial advisor from just a financial advisor?
To help save you time in getting the right advice, here’s an overview of what the different roles mean and who you are best turning to depending on your financial objectives.
Financial advisor
Let’s start with what is potentially the most confusing term of them all, as it is the least specific and therefore sometimes the least helpful in narrowing down your options.
Financial advisor is used as something of a catch-all term across the finance industry for anyone whose day-to-day job involves making recommendations about financial products and services. You therefore find financial advisors working in banking, in insurance, in estate and investment management, in the stock markets and more.
They may have more specific job titles such as mortgage advisor or insurance advisor which provide more of a guide to what they can help with. But often financial companies will be deliberately vague about this. Regardless of what you are actually looking for, a ‘financial advisor’s’ job may be to sit you down, carry out an interview to assess your financial circumstances, and then try to sell you products based on whatever answers you give.
Strictly speaking, financial planners and wealth managers are types of financial advisor. But you would normally expect these more specialised roles to be differentiated with a more descriptive job title. Financial advisor is the term to look for if you are after general advice about managing your finances, or if you are looking for specific recommendations about specific products and services in areas like banking and insurance.
Independent financial advisor
As their name suggests, IFAs operate at a remove from financial institutions and are therefore supposedly in a better position to offer independent, objective advice. To put it another way, you could see IFAs as the option to turn to if you want advice without a sales pitch – although the caveat to this is that many IFAs work on a commission basis for larger institutions.
IFAs tend to operate as small firms or consultants whose main saleable asset is their expertise in a range of financial matters. Some specialise in certain areas, so if you want to know more about your capital finance or personal pension options than what your bank manager tells you, a suitably qualified IFA will be able to give you a broader, whole-market picture of what is available. Many IFAs focus their services on high-net-worth individuals, charging premium fees in return for highly specialised and personalised advice.
Financial planner
Financial planners offer a specific type of advisory service, namely long-term financial management. This may cover one or more specialist areas, including investments, tax, estates, retirement and end-of-life/inheritance. Financial planners often deal in both personal and commercial finance, and especially in how the two intersect, such as planning to take a pension out of your business or divesting of your stake in it when you retire.
The overall focus of a financial planner is therefore helping a client to achieve long-term goals and financial stability. Whereas you would typically turn to a financial advisor for information about specific products and services, a financial planner is there to give you a much bigger picture. If you are looking for advice in areas such as funding your retirement, making your assets more tax efficient or reducing the Inheritance Tax your children are likely to have to pay on your estate, a tax planner is the person for the job.
Wealth manager
Also known as asset managers, there is quite a bit of overlap between the role of wealth managers and financial planners in the sense that they both take a big-picture approach to personal (and commercial) finance and have expertise across a variety of disciplines. But if a financial planner’s main focus is on stability and long-term goals, wealth managers specialise in making assets work their hardest and provide the most value.
Or, to put it another way, they specialise in growing existing wealth.
More than just an advisory role, wealth managers take a hands-on approach to managing investment portfolios, planning for tax efficiency, handling assets in property, company stocks and more. They will usually be proactive in liaising with other professionals in your employ, such as accountants, bank managers, lawyers and, yes, other financial advisors. To sum it up, if you are interested in knowing how you can make more money from your assets, look for a wealth manager.
Speak to an expert
Xeinadin is one of Ireland’s premier wealth management firms. With a steadfast commitment to understanding and realising each client’s financial aspirations, we harness the collective expertise across our business to navigate the complexities of wealth management with professionalism and efficiency. Get in touch with our team to find out more.
