Investment Advice is not Financial Planning

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Investment advice is not financial planning. This is an important distinction to understand when someone goes shopping for financial advice. Do they only need help with investment decisions, or do they need guidance on all aspects of their financial life?

Investment advisors focus only on helping you with the investment decisions that are important for your financial wellbeing. These can include assessing your tolerance for risk, helping you select an appropriate asset allocation, selecting good fund managers, paying attention to lowering costs, and minimizing taxes. They do not provide guidance or direction on any other aspect of your financial life.

If you need help with selecting the appropriate retirement plan, analyzing retirement income needs, drafting wills and trusts, reviewing insurance needs and coverages, implementing tax strategies, dealing with longevity risks, protecting assets, increasing wellbeing, and a myriad of other financial questions, then you need financial planning.

In many cases, a person needs both investment advice and financial planning. Unfortunately, it isn't always easy to tell whether financial professionals offer both.

The titles "investment advisor" or "financial planner" are not regulated. Anyone can claim them. The burden is totally on you to figure out if someone holding themselves out to be an investment advisor or financial planner provides the services they advertise. Many do not do comprehensive financial planning, but simply sell financial products like insurance and annuities, or do only investment advising.