The Difference Between A Financial Counselor and Financial Planner

In the world of finance, professional titles come in a variety of flavors. From financial planners and wealth managers to financial counselors and investment advisors, the gamut of designations runs deep. It can often be confusing for people to distinguish between these different titles and roles. After all, looking for financial advice can be a tricky task when you don’t know whom to turn to.

Many people are especially confused between financial counselors and financial planners. Although the kind of services provided by each differ, most individuals don’t know which one is right for their particular circumstances. A quick internet search doesn’t help much either and can often leave people even more bewildered than they originally were.

In case you are also wondering how the two differ and which one is best suited for your needs, here’s what you need to know about financial counselors and financial planners.

Who is a financial counselor?

A financial counselor is a qualified investment professional who provides advice and advocacy to individuals who face debt and are struggling to meet their daily expenses. Financial counselors generally tend to work with families that face severe financial difficulties, particularly those with limited incomes.

A financial counselor may work for the government or various non-profit organizations that help low-income communities manage their day-to-day finances. The primary area of focus for financial counselors is to help individuals reduce debt and create assets by teaching them to manage their money more efficiently.

Prospective financial counselors are required to earn a degree in either finance or accounting. Further certification can be obtained through the Certified Personal finance Counselor (CPFC) program which is usually offered by most states in the US. The Association for Financial Counseling and Planning Education (AFCPE) also offers various certification programs like the Accredited Financial Counselor (AFC) program.

When should you see a financial counselor?

Mostly, financial counselors advocate individuals on their rights and options regarding debts and the laws that surround them. They help people create strategies for tackling financial hardships and also provide advice on increasing one’s disposable income by managing money more efficiently.

More often than not, financial counselors tend to possess in-depth knowledge about the financial hardships faced by families belonging to the lower-income group. For instance, they can help families negotiate repayment plans for various kinds of debts and help maximize a family’s tax refunds by helping them claim as many refundable tax credits as they are legible for.

An unexpected financial difficulty, like losing a job or getting evicted, can result in a financial breakdown before you even get time to realize what is happening. Therefore, when faced with such hardships, it is advisable to hire the services of a financial counselor. If you are struggling to pay bills, defaulting on your mortgage payments, risk being evicted or are sliding towards bankruptcy, you should get in touch with a financial counselor as soon as possible.

Who is a financial planner?

A financial planner is a qualified investment professional who helps individuals and corporations achieve their long-term financial goals. Such a professional can work with people of all ages, in any stage of their lives. Essentially, financial planners distribute an individual’s available savings into diverse investments that are designed to grow and provide income as and when desired.

Financial planners also help people develop strategies to build their wealth and meet their major financial objectives in life. When working with clients, they analyze financial goals, gauge potential risks and identify suitable investments to achieve the best financial outcomes in the long run. Some of the areas financial planners specialize in include investments, tax management, asset allocation, risk management, retirement planning and estate planning.

When it comes to certification, a financial planner can hold various licenses and designations such as Certified Financial Planner (CFP), Certified Investment Management Analyst (CIMA), Chartered Financial Analyst (CFA) or Chartered Financial Consultant (ChFC), amongst others. To obtain each of these certifications and licenses, financial planners must possess different sets of educational qualifications and work experience requirements.

When should you see a financial planner?

Many citizens are under the wrong impression that financial planning costs a lot of money and is meant only for the super-rich. The prevailing notion is that financial planners only help manage massively wealthy families. People believe that lower to moderate-income households need not avail of their services as they don’t have too much money to protect in the first place.

However, a financial planner can help individuals of all ages and from all sorts of economic backgrounds. The simple fact is that if you are looking to build and protect your wealth, no matter how big or small, a financial planner can help you. Oftentimes, people seek out the services of financial planners for only a short period of time instead of hiring them on a full-time basis.

Many individuals tend to hire financial planners around major life events. For instance, if you are thinking of buying your first home, starting a new business or having children, it would be a good time to enlist the professional assistance of financial planners.

To sum it up

The roles of a financial counselor and a financial planner are quite distinct even though lines might appear blurry at first. The one you should opt for solely depends on your particular preferences and circumstances.

Financial counselors can help you pay your outstanding bills, get out of crippling debts and build up emergency funds for unforeseen life events in the future. On the other hand, financial planners can help you grow your money and plan for major financial milestones such as buying a home or sending your kids to college. Financial planners can also help you lead a comfortable retired life.

So, if you are experiencing any particular difficulty which has strangled your finances and left you reeling with debt, a financial counselor could help you get back on your feet. Once your finances have stabilized, though, you should consider hiring the services of a financial planner who will help you grow your assets and reach long-term financial goals.

Are you looking for someone to discuss your financial problems with and better your finances? You can get in touch with the top financial professionals in your area.