Guest Blog Post by Erik Klumpp
There are so many titles and designations out there meant to identify professionals who work to help clients with their financial health. Just like in the practice of medicine there are areas of specialty, so the same is true in the business of personal finance.
Think of it this way. You visit your regular family doctor for a physical once a year, and you discuss your overall health. At your latest visit, you express a desire to learn more about better nutrition so you can create a healthier lifestyle for you and your family. Of course your doctor can give you an outline of proper nutrition, but a specialized nutritionist will better accommodate you in implementing a strategy to help you meet your health and wellness goals.
A financial planner and investment manager have overlapping roles like a doctor and a nutritionist. Despite the overlap, the differences between a financial planner and an investment manager can still be clearly identified.
A financial planner is the designer. By working with you, they create a blueprint for your financial life. This blueprint may contain investments, but it is not an investment exclusive plan.
The financial plan includes more, such as a timeline for debt satisfaction, an expense budget, emergency fund recommendations, college savings and retirement goals. A financial planner will coordinate your investment strategy to help you achieve success in your overall financial plan.
Once you have built the initial relationship with your financial planner, your correspondence with them will be much like that of you and your family doctor. You commit to meeting once a year (or more if necessary) to evaluate your financial health.
An investment manager specializes on the investment side of your financial life, focusing specifically on how to implement an investment strategy that aligns with your overall financial plan.
The investment manager monitors your investments and reallocates assets as necessary to keep you on track financially. They will actively and passively be handling your investment portfolio to maximize your earning potential over the long-term.
What perhaps you may not have realized is that most financial planners are investment advisors, but not all investment advisors are financial planners.
Meaning that if you work with a financial planner you are already working with an investment advisor. The two professional described above are actually one in the same when you hire a financial planner and you get the best of both worlds.
Having a financial planner who considers and manages your entire wealth picture makes them even more uniquely qualified to create an investment strategy best suited to meet your financial needs.
Erik O. Klumpp, CFP® is Founder and President of Chessie Advisors, LLC, a fee only financial planning and investment management firm. Based in the Metro Detroit city of Rochester Hills, Michigan, Chessie Advisors specializes in providing financial planning and investmentmanagement guidance to teachers, engineers, and young professionals both within Michigan and virtually throughout the United States. He is also Founder and President of Chessie Tax, LLC, a firm that specializes in providing income tax preparation, planning, and bookkeeping services to individuals and small businesses. Chessie Tax, LLC is also based in Rochester Hills, Michigan.
Erik and I met at a financial planning conference geared toward Gen X & Gen Y advisors and I asked him to write some thoughts as an educational topic for this site.