Financial Planning

Do I Need a Financial Advisor or a Stockbroker?

Don't be confused when seeking professional assistance with your finances. Learn the difference between a financial adviser and a stockbroker, and the roles they play in your financial future.

Differences Between a Financial Adviser and a Stockbroker

When people seek out professional assistance for their finances, they are often met with many different professions that may fall under a similar umbrella. One of those challenges is distinguishing the difference between a financial adviser and a stockbroker. While both professions are immersed in the world of finance, they serve the public in two very different roles.

Here's what you need to know:

A Financial Adviser

According to Investopedia, the definition of a financial adviser is a person who provides financial advice or guidance to customers for compensation, providing many different services that can include investment management, income tax preparation, estate and retirement planning.1 By assessing your financial situation, a financial adviser can help provide you with the best available options suited to your unique situation and goals.

There are many different qualifications and/or designations that an individual can have in order to hang out a shingle as a financial adviser. At a minimum, you should look for a financial adviser who has attained a Certified Financial Planner (CFP) designation. Why? Because a CFP designation requires a certification process that covers a wide range of financial disciplines that includes insurance, financial analysis, investment planning, tax management, retirement and estate planning- all in rolled up in one professional package. So if you're looking for a professional who can help you with a multitude of life's financial planning challenges, a CFP is where the rubber meets the road.

A Stockbroker

A stockbroker is an individual who buys and sells stocks as well as other securities through a stock exchange or over the counter for a fee or commission. It's the role of the stockbroker to assess their client's risk tolerance, and to offer investment opportunities that may be beneficial. By continually monitoring the financial market, a stockbroker can be a credible source of knowledge to better gauge the performance of financial securities.

A stock broker may have several different designations based on the type of type of services they provide, the type of securities they sell, as well as the type of licenses they hold. For a stockbroker in the U.S. who is looking to sell a full line of securities as well as mutual funds, generally they must have their Series 7 exam under their belt, as well as the Series 63 or Series 66 exams completed in order to be considered a licensed stockbroker.

Similarities of a Financial Adviser and a Stockbroker

According to the Bureau of Labor Statistics, even though a financial planner doesn't specialize in the stock market, they may still buy stocks and trade them on behalf of their clients (this is dependent upon the individual client agreement).2 And since both professions work closely with their client's finances, you may find financial advisers and stockbrokers with similar higher educational credentials such as a degree in economics, mathematics, or a Master of Business Administration (MBA).

1. http://www.investopedia.com/terms/f/financial-advisor.asp
2. http://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm#tab-2

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

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Financial Adviser

When it comes to selecting a financial professional, there can be many professions that may fall under the similar heading. So if you're looking for a financial adviser, chances are you might be wondering what the difference is between a financial adviser and a stockbroker. At Protective Life, we want you to make informed decisions about selecting a financial professional that meets your individual needs. For more information, visit the Protective learning center.

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