Untangling the Difference Between Financial Advisors, Planners and Brokers

Financial monikers can be tricky for ordinary people in Idaho to understand. Not everyone has an advanced degree in accounting or wealth management, let alone an intimate understanding of what greases the wheels of industry. Industry experts in the financial field go by names like financial advisor, planner and broker, but the terms might as well be Greek to the average layman.

Fortunately, the differences aren’t difficult to understand once the roles of each individual player are understood. Take a look at the jobs of different financial advisors and see if you can eventually learn how to tell them apart.

First in the list is the financial advisor. Here, the name is actually very self-explanatory. An advisor gives advice to his clients on where to invest their money, what sort of savings accounts to use and various liabilities to avoid. Underneath the broad title of advisors there are several sub-categories that operate in slightly different ways.

A fee-based advisor is legally able to sell products to their clients. This sort of practice is popular with industry newcomers because it allows them to accrue income from multiple sources. They can charge their clients for the services they provide, while also taking a percentage of profit from sales made to them.

Although many fee-based advisors in places like Idaho operate ethical and well-respected establishments, other have been accused of exploitation and conflict of interest. As a prospective client, you may want to meet with your financial advisor and determine their interests and outlook on ethical issues.

As a counterpoint to fee-based advisors, fee-only advisors are not allowed to market any products to their clients. This effectively makes conflict on interest a non-issue. Fee-only advisors are trusted by many of the largest, best-respected companies and individuals in Idaho.

Financial brokers are regulated more loosely than advisors. Like fee-based advisors, they are able to sell their own products to clients and are not obligated to reveal to them all the sources of their income. Brokers are useful for individuals looking to purchases significant quantities of stock or negotiate large investments. As always, speak with potential brokers to ascertain your compatibility before shaking hands. Most brokers do a great job.

A financial planner is held to the highest standard of the three. They are required to be absolutely loyal to their client’s interests. Large businesses in Idaho and elsewhere hire them as some of their most trusted advisors.

Tanner Wadsworth is a finance writer reporter for Fusion 360, an SEO and content marketing agency. Information provided by Sanctuary Wealth Management. Follow on Twitter