How Financial Planners and Financial Advisors Are Different

Brian Poncelet

There’s a lot of confusion among Canadians regarding what it takes to be labeled a “financial advisor.” Professionals with various backgrounds advertise themselves as “financial advisors” but what is the skillset a true “financial advisor” should possess?

Brian Poncelet who is a CFP in Mississagua, ON points out, the terms “financial planner” and “financial advisor” are pretty much utilized interchangeably in marketing materials, which only increases confusion of the masses. The easiest way to clear this is up is to look at the old “all squares are rectangles, but not all rectangles are squares” saying. Because all financial planners are financial advisors, but not all financial advisors are financial planners. The biggest issue is that most of the general public don’t understand this. Understanding this distinction is important because it’s not okay for people to think their retirements are secure in the hands of people who aren’t truly qualified to offer “professional” advice.

Consumers are frustrated because both titles are used interchangeably. Unfortunately, generic terms do not have a specific definition associated with them. It’s not easy to correlate the competencies, services, or product offerings that people offer simply because they label themselves as “financial advisors” or “financial planners.”

Financial planners, on the other hand, must go through testing to get their designated license. Financial planners in Canada have a 30-year history as professionals whose clients should fully expect to receive an outlined, multi-prong approach to improve their current and future financial status. Every financial planner should develop a strategy for their client that meets their personal financial goals. This is why a true financial planner must form a relationship with their client to clearly understand their financial goals.

A true professional financial planner must possess deep and broad knowledge far beyond the basics. Even though many financial planners are also licensed to sell financial products, the use of the title “financial planner” must connote knowledge, skills, abilities, service and professional responsibility beyond that required of someone whose credentials do not extend beyond product license.

The biggest difference between a financial planner and a financial advisor is that a planner has a responsibility by law. All financial planners must have a requisite knowledge, skills and professional abilities to offer financial advice.  It’s time to take things to the next level and adopt, into law, a unified restriction to either ban the term financial advisor or place restrictions on who can use the term as to not confuse the public.

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