What is the difference between financial adviser and financial planner?

Meaning of "Financial adviser"

The phrase “financial adviser” refers to the company that provides the financial services regulated under the Financial Advisers Act (FAA) which include advice and marketing of life insurance and investment products. The phrase “financial adviser representatives” refers to the individual persons representing the firm in carrying out the work of advising and marketing of life insurance and investment products. The FAA focuses mainly in the manner life insurance and investments are sold to the individuals. The FAA set a legal standard which representatives must adhere to. Unfortunately, this standard is very low. Because the standard is so low, those representatives who are able to meet this minimum standard would still have a long way towards obtaining professionalism. Moreover, many consumers would still find the conduct of their advisers to be unsatisfactory despite them able to meet the legal requirements stipulated by FAA due to the low legal standard.

Meaning of "Financial Planner"

In addition to life insurance and investment advice, a financial planner provides a more comprehensive and wholistic financial services including cash flow analysis, balance sheet analysis, tax planning, children’s education planning, estate planning and retirement planning. The planner is also required to adhere to a strict set of process prescribed by the professional standards. However, the work of the financial planner is not regulated by any legislation (other than those specify by FAA). However, the conduct and the work done by the financial planner are judged by the professional standard set by the industry. One of the important qualities of a professional is to be able to surpass legal standards and not just merely fulfilling it. Two professional standards that are common in the industry are Certified Financial Planner^TM (CFP^®) and Chartered Financial Consultant^® (ChFC^®). These professionals are required to fulfill stringent requirements in areas of competency, experience and ethical conduct.