Financial advisor, financial planner, wealth manager, and accountant – what’s the difference?

Beth Rivera is a private investor, business owner, and CEO of Best Financial Planners. Her business experience and education has resulted in success in buying, building, and managing multiple companies.

Managing your finances can be intimidating for many people; it’s easy to just bury your head in the sand and just hope it all works out. However, there comes a time in most people’s lives where they can use some help to get a handle on their finances. But who do you go to? It can be difficult to know exactly where to turn when there are so many different types of professionals. Do you need an accountant, a financial advisor, a planner, or a wealth manager? 

Whatever you need, there is definitely a professional out there that can help you. This article will clear up any confusion about all the different areas of expertise, and help highlight who to choose.

Accountant vs Financial Advisor

Both accountants and financial advisors are experts in their fields and have received extensive education and qualifications which allow them to manage people’s money. They can both help businesses and individuals with their money and set them on a plan for growth. However, it’s key to know how they differ.

What do Accountants do?

Accountants are generally involved in financial forecasting, building financial statements and auditing work. That means on a day-to-day basis, they are doing bookkeeping, managing financial transactions, tax preparation, and monitoring business performance. It is quite key for them to stay up to date with tax law and ensure that your finances are reported properly.

Usually, accountants are known to be quite detail-oriented and are great with numbers, which will ensure that they can quickly identify any potential risks. They are particularly important if you are a business owner, freelancer, or contractor.

You may want to reach out to an accountant if you need help with:

• Tax preparation
• Bookkeeping 
• Auditing
• Forecasting
• Business plan writing

What do Financial Advisors do?

Like accountants, financial advisors are there to help you meet your financial goals. However, financial advisors are more involved in the actual management of your money, including investments and other accounts. 

You may want to reach out to a financial advisor if you’re looking for help with tasks such as:

• Retirement planning
• Budgeting cash flow
• Making investments
• Reducing debt
• Estate or inheritance tax planning

Like many professional areas, there are different types of financial advisors depending on your specific situation.  “Financial advisor” as a general term includes subsets of the financial advisory group, such as financial planners, wealth managers, stockbrokers, and more. We’ll look in more detail at some of these below.

Financial Planners

A financial planner is a specific type of financial advisor that focuses on you and your long-term goals. They work with you to create a financial plan, providing a roadmap for how you will reach these goals. This could be providing for your children’s education, saving for a house, making sure you are secure in your retirement, or how much inheritance you want to leave.

Financial planners need to build up a good relationship with their clients, so they are sure to understand their needs and goals. This is a long-term relationship, whereby the planner manages a strategic investment portfolio to ensure returns and risk are balanced for each individual situation. Budgeting and cash flow planning will have been discussed, and the financial planner may work closely with accountants or solicitors to make sure everything is on track.

Generally, a financial planner’s client list will include middle-class people who want to make their money stretch as far as it can.

Wealth Managers

The basis of wealth management is that there is already a level of wealth upon which to build. While a financial planner deals with day-to-day aspects of planning your cash, wealth managers primarily focus on preserving and increasing that existing wealth.

As such, the clients of wealth managers are usually higher net worth, or ultra-high net worth individuals.

Wealth managers will usually include parts of financial planning in their service, as well as portfolio management, estate planning and any other services required depending on the client’s wealth. As with financial planning, wealth managers will build a close relationship with their clients. However, due to the complexity of the portfolios and wealth plans involved, more frequent reviews and meetings will be required.

Overall, the goal of wealth managers is to preserve and grow wealth, and then ensure that it is properly managed both during and after the life of the client.

Conclusion

When it comes to managing your finances, there’s no shortage of professionals to help. However, it’s important to know what you need help with in order to find the right one. If you are looking for someone to help with taxes and bookkeeping, then an accountant might be the perfect fit. However, if you need someone to help manage your money and plan for the future, some kind of financial advisor would be better. This could be a financial planner or wealth manager depending on your level of wealth.

Either way, be sure to check the qualifications of whomever you contact and meet with them once if not twice to make sure it’s a good personal fit for you. This is someone who you are going to be dealing with a lot for years to come.