Investment Advisor Vs Financial Planner

     A financial plannershould assist you in creating a tax plan also. This tax plan will be in syncwith your overall financial plan.


A few decades ago, there was confusion with whatsales and marketing are. People thought they are one and the same. But it is tobe understood that sales is just an important ingredient of the functions ofmarketing. Sales lies in persuading and convincing a person to buy a productthat is suitable. Marketing involves all the activities right from theconception of the product, to branding, advertising and retailing. It is an allpervasive function from the product being ready to reach the market andultimately to being sold to the customer. 


Today here prevails a similar confusion with who isan investment advisor and who is the financial planner.  It is quite common to find these terms usedinterchangeably, but it is necessary to understand that an investment advisorand a financial planner have the similar and vast differences as between salesand marketing. 



Whyis this confusion?


There is a real confusion among the investorsregarding who a financial planner is and who is an investment advisor. Theseterms are used very loosely, so it is necessary that one understands thefunction of each of these professionals and approach the right people.


The main confusion in these terminologies arisesout of a person’s own perception. This arises due to most professionalsoffering financial services like insurance advisors, mutual fund distributorsand stock brokers calling themselves financial planners. This term has beenused very loosely by many to suit their own convenience and image.  This is more like a compounder professing tobe a doctor, when he/she knows purely only about the medicine that one has todispense. A compounder will not have the expertise to diagnose the disease thatneeds to be treated.


Who is the FinancialPlanner?


Financial planner is involved in planning all thefinances of a person. His job includes drawing up an appropriate plan thatcovers all financial needs and goals in the short, medium and long run. Such aplanner is like an architect of a building and helps to analyze and draw acomplete map of how his or her client’s finances need to be planned. Itincludes considering the need for liquidity, cash management for various needs,goals planning and feasibility, long term cash flow, estate planning and riskmanagement.


Who is an InvestmentAdvisor?


In contrast an investment advisory/advisor is aperson or group that helps his client to decide on the financial products thathe or she should invest in. Such an advisor understands what his or her clientactually wants after communicating with him or her and understanding the need.An investment advisor makes a thorough analysis of the various securitiesbefore doing so.


Hence investment advisory is just one of theingredients of financial planning.


Goal Achievability:

A financial planner will be able to tell you, is itpossible to achieve all your financial dreams with your current and projectedearning capacity. If it is not possible, then the financial planner will beable to tell you what could be achieved with your earning capacity and toachieve all your dreams what kind of earning capacity you should have.

Risk Management Plan:

A financial Plan also covers creating a riskmanagement plan. A risk management plan includes creating an emergency reserve,assessing the human life value and suggesting a term insurance; identifyingmedical insurance cover required and suggesting a health insurance plan; andalso suggesting a general insurance policy to cover the natural perils likefire, flood, earthquake … against your properties.

Investment Plan:

A financial plan that suggests investments comesonly after all the aspects have been analyzed fully. The best investment advicecan only flow out after a deep analysis of a client’s need and after thepreparation of a financial plan. Financial Planning should precede theinvestment planning.

Existing PortfolioRevamp:

It is also necessary tounderstand that a financial planner also looks at past investments. He then makesnecessary changes to make them amicable to achieve a client’s financial goalsover a period of time. Also he will assist you in restructuring your existingoutstanding loans. If necessary he will create a debt pay-off plan also.

Tax Planning:

A financial plannershould assist you in creating a tax plan also. This tax plan will be in syncwith your overall financial plan.


A financialplanner will do a periodic review on your financial plan and investment plan. Ifyou are preponing or postponing one of your goal or if you have got a jobpromotion, then you may need a financial plan review. If direct tax code hasgot implemented or one of your investment schemes underperforming, then you mayneed an investment review.

In anutshell a financial planner will not only give you an investment advice heassists you in managing your personal finance in a complete, comprehensive anda holistic way.

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