Financial advisors and stockbrokers may seem like similar professions: they both work in finance and require excellent communication skills, as well as a deep understanding of the financial market.
However, financial advisors and stockbrokers actually have different roles in the financial world, and those differences will determine which type of professional you need. Here are the main differences between a financial advisor and a stockbroker.
What does a financial advisor do?
In a nutshell, a financial advisor is exactly that: someone who gives advice about finances. With their knowledge of the market, these professionals act as guides for people who are planning for their future, helping them prepare for goals such as retirement or education.
A financial advisor usually offers advice on investments, tax management, and estate planning. Some also sell insurance, but this is not a requirement of the job.
A financial advisor’s most important job is to study the market extensively and translate complex financial subjects to their clients while always keeping their best interests in mind.
What does a stockbroker do?
Unlike a financial advisor, a stockbroker deals primarily with the stock market, namely trading in securities and commodities. This job entails working directly with clients and involves constantly monitoring the market to assess risk, as well as buying and selling stocks with the goal of turning a profit.
Stockbrokers make most of their decisions based on corporate events, and unlike financial advisors, they are not bound by a code of ethics to work in their clients’ best interests.
Also, while financial advisors generally make money through fixed fees and financial product sales, stockbrokers earn their living through sales commissions.
Do you need a financial advisor or a stockbroker?
If you’re interested in the stock market and already have a good understanding of finance, a stockbroker can help you choose the best short-term investments to grow your wealth.
On the other hand, if you need more help with your finances and want to plan for the future, a financial advisor can guide you toward the best options for your financial goals. It all depends on when and how you need your money to work for you!