Financial Planner or Money Manager: What’s the Difference?

AMA4-27-13The world of finance and investment planning is complex and fast becoming more so. And that’s why the field is full of experts offering advice, financial products and legal representation to manage your money. It can be difficult for independent investors to go it alone – but it’s not always easy to choose the right advisers from the long list of financial planners, investment counselors, financial advisers and money managers waiting to offer their expertise, often for a fee.

In his 10 Commandments for Investors, Jason Hartman advises readers to educate themselves and seek advice from qualified professionals who understand and support an investor’s long-term goals. Picking the right advisers, then, begins with understanding what functions these different titles represent.

There’s no real formal definition of any of those titles, and they’re often either conferred by the investment company an individual represents, or self-described. But in general, according to numerous financial management sources, the question of picking the right kind of “manager” or “adviser” hinges on understanding the fiduciary function – whether this individual is legally required to represent an investor’s interests rather than simply offering advice on financial products and services.

In general, financial advisers and counselors work in a variety of financial industries. They might also be called wealth managers, investment brokers or planners as well, or a variety of similar titles. They may represent investment firms or financial institutions, or work independently Their role should be to provide comprehensive and focused advice in response to an investor’s stated goals and needs –not to take control of investing decisions or dictate the agenda.

Money managers typically serve a more limited function related primarily to managing mutual funds and other types of investment instruments such as trusts and endowments. They’re most likely found in institutions such as banks and investment companies, tasked

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with representing a client’s interests within a specific financial framework.

Financial experts echo Jason Hartman’s advice. Scams and frauds abound in the realm of financial advising, so it’s essential to educate yourself and clarify your goals and needs. Do you simply need advice on financial products, or someone to legally represent your interest? If the latter, it’s essential, say professionals, to get the designation “fiduciary” in writing.

Whatever the title, it’s important to remember that a financial adviser is an investor’s employee, not the other way around. A trustworthy counselor or manager can help a new investor successfully negotiate the money maze – but only if goals are clear and expectations put in writing. (Top image:Flickr/rieh)

The American Monetary Association Team

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