Financial Planner Definition: What’s a Financial Planner?

financial planner definitionFinancial planners can make a huge difference for your finances, but not enough people seek their help.

But maybe it’s because you don’t exactly know what a financial planner does.

Keep reading to learn the financial planner definition and how they can help you with your financial goals.

Financial Planner Definition: What Is a Financial Planner?

A financial advisor is a professional who helps clients reach their financial goals. They do this by studying the client’s situation and putting together a program to get the client to where they want to be in the future.

These financial goals might include things like risk management, retirement, estate planning, asset allocation, and tax planning.

Can’t I Be My Own Financial Planner?

You probably could, but let’s put it this way: you wouldn’t be a very good one.

You can’t do what you don’t know how to do.

For example, imagine you know nothing about cutting hair. Though you can pick up a pair of scissors and chop some of your hair off, you can’t style your hair the way you want. If you tried, it would look bad.

The same goes for your financial planning.

You can make your own plan to reach your financial goals, but if you don’t know what you’re doing, that plan probably won’t work out well.

Certified vs. Uncertified Financial Planners

Financial planners can be designated as a Registered Financial Planner by the RFPI (Registered Financial Planner Institute) or as a CFP (Certified Financial Planner) if they follow the requirements of the Certified Financial Planner Board of Standards.

But not all financial planners have these certifications.


Not All Financial Planners Are the Same

Different financial planners specialize in different financial fields. Some might be more experienced in divorces while others work with business executives.

In fact, financial planners aren’t regulated by either the federal government or their state. That means a person doesn’t have to have any certification to work as an independent financial advisor.

You’ll want to avoid hiring these people as advisors.

Always Go with a CFP

Because a CFP, or a certified financial planner, has certifications, you know for sure they are a professional and know what they’re talking about. If you pick an advisor that doesn’t have any certifications, you may end up with some bad advice.

When a CFP takes you on as their client, they become your fiduciary. In other words, they are legally required to act in their client’s best interest rather than their own.

This is important because some financial planners make most of their money from commissions.

Types of Financial Planners

There are a few different types of financial planners out there, and generally speaking, you’ll want to avoid advisors who make their money from commissions. These advisors may try to sell you something you don’t really need.

But knowing the different types will help you choose which one is best for you.

Commission Only

These advisors make their money by selling you products that will help you reach your financial goals. However, you do not have to buy these products, and there are no other fees required for their services.

Combination of Commission and Fee

You do have to pay to receive these planner’s services. But they may also make a commission from selling you products that will help with your financial plan.


The price you pay for their services will be offset by the commissions of purchased products.


These advisors can’t earn money from commissions. They will never earn any money from the products you may or may not buy.


An advisor that works with a financial firm makes their money through a usual salary.

When to Get the Help of a Financial Planner

Just because you want to make some changes to your financial plan doesn’t mean you need to hire a financial advisor. You can make a few small changes here and there on your own without much trouble.

It’s when you’re going through some major financial changes or have fallen into some kind of financial disaster that you need to seek financial help.

Here are a few examples of what those situations might look like.

  • You’re planning for retirement
  • You’re getting a divorce
  • You’re getting married
  • You’ve recently had children (or are planning for future children)
  • You’re buying a home
  • You’re selling a home
  • You’ve recently lost a spouse
  • You’ve fallen into a financial crisis
  • You’re received a large chunk of extra money
  • You’re looking for ways to invest your money
  • You’re buying or selling a business
  • You’re funding some kind of education
  • You’re caring for parents or other family members

These situations can put a serious strain on your finances. Instead of struggling through it on your own, getting a financial advisor can help you get back on track in the fastest and easiest way possible.

How to Choose a Financial Advisor

One of the most important parts of choosing a financial planner is looking at their past work. You should ask for references and then actually follow through. Ask past clients what they thought of the financial planner’s services and if it helped them.

You also want to look for advisors with credentials. Remember, a financial advisor with the right credentials is better than a financial advisor without any credentials, no matter how cheap/expensive they are.

Some of the other questions you’ll want to ask your financial planner include:

  • How much do you charge?
  • In what financial field do you specialize?
  • Will you be my fiduciary?
  • What services do you provide?
  • How will the two of us settle disputes?

And don’t just settle with the first financial planner you find. You should interview at least three before you make your final decision. You have to make sure your financial planner is a good fit for you.

If You Need a Financial Planner, Get One

Getting a financial planner doesn’t mean you are irresponsible with your money. In fact, it tends to mean exactly the opposite. You should never feel embarrassed about getting financial help. Knowing the financial planner definition just helps you make better financial decisions in the future.

Do you need some help with your finances? Take a look at some of our services and see how they can help you.

By | May 31st, 2018|Financial News|

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