Know the Difference: Portfolio Manager or Financial Adviser or Financial Planner
Who do you need to talk to when you want to invest your savings: A portfolio manager, a financial adviser, or a financial planner?
Basically, a Portfolio Manager plays more on the technical side of finance, whereas a financial adviser is more social.
A portfolio manager is responsible for the construction of a long term portfolio for the client. The manager could either be managing separate accounts, or pooled accounts (like mutual funds).
This career is more technical in such a way that the portfolio manager is responsible for the health and viability of the client’s various investments. In some firms, the manager is focused on the portfolio itself and has limited personal contact with clients. However, a portfolio manager can increase his/her contact with clients depending on their strategy of how to best fulfill their financial needs. For some managers, client contact can sometimes be helpful as it could guide them in their decision making.
The career of a Portfolio Manager undergoes the traditional route. A four-year-college graduate with a financial degree never starts as Portfolio Manager. The position needs extensive experience, usually working as an investment analyst first and analyze securities.
Success as an analyst could lead to a role of portfolio management—depending if the person is interested to go that route. Nonetheless, portfolio management is frequently designated as a destination job and to some, a ceiling. But position does not matter with this job for analysts because progress is determined by the number of clients and money they handle.
What is satisfying with this job is the sense that you are playing the part of building the client’s dreams. With a well constructed portfolio, you help secure the client’s financial goals. Indeed, portfolio managers often get the most thank you’s and rewards from a satisfied client.
Financial advisers is more about bringing finance education to the layman, reducing technicalities and numbers to its simplified forms so that clients get introduced into the financial industry.
Financial advisers could teach a thing or two about investments in short- and long-term healthcare, insurance, mutual funds, stocks and real estate. For this reason, financial advisers are people persons. To interact and create rapport with different kinds of folks are a must. The objective is to make people aware of the benefits of the financial industry and the advantage in directly participating in it by way of investments.
However, it has become common that financial advisers represent an insurance company. Beforeyou buy an insurance, the adviser would have to make sure you understand the goals you are targeting, the benefits, the risks, and limitations of the insurance policy. In general, insurance agents now call themselves as financial advisers and they represent–or bridge the gap–between company and the buying public.
Individuals can pursue a career as a financial adviser need have at least a college degree, but more often than not, this isn’t a requirement, unlike a portfolio manager does. What’s essential for a financial adviser is for the person to have marketing and public relations skills. Although some may not technically regard this as a financial career, but financial advisers serve as the backbone of the industry.
Without them, only the elite knows the secret of how money can work for them. The rest of us who haven’t studied finance in school, or received the opportunity to invest our hard-earned money in profit-wielding-financial-instruments, would remain spent in our jobs working actively until our retirement.
Financial advisers teach the rest of us how to save and how to see your savings grow exponentially over the long term. Indeed, what is fulfilling with this job is that you are essentially acting as a money doctors. For example, to most people, interest rates on savings back run 1%-2%, it is actually fun to look at their faces when you explain a 12% interest rate.
Now, a financial planner is a mixture of a portfolio manager and financial adviser. A growing profession, financial planners focus on building clients their personal investment portfolio like a Portfolio Manager does, at the same time, consider individual financial goals like a financial adviser does. The difference is that financial advisers cannot charge a fee for their advice, while financial planners can.
Financial Planners earn their stripes by passing through more rigorous examinations and trials than financial advisers, but less educational experience than Portfolio Managers. Still, Financial Planners are generally independent professionals, but working in a financial company is encouraged.