Stock Broker vs. Investment Advisor vs. Financial Planner

Do you know what is the difference between financial planner, stock broker and investment advisor. In laymen’s language there are not much difference, for them they are all alike who are doing activities like investing, managing their funds and charging some fee for doing so.

Here I will explain you what is the difference between the three.

Stock Broker

The dictionary definition of stock broker is “a person or company that buys and sells securities for other people on a commission basis and often also acts as a security dealer for them”

Stockbrokers must pass a uniform examination administered by the NCFM and must register with the SEBI.
A floor broker handles buy and sell orders on the floor of a securities or commodities exchange.

Investment Advisor

The dictionary definitions of investment advisor are “A person or an organization that makes the day-to-day decisions regarding a portfolio's investments in other words a person or organization employed by an individual or mutual fund to manage assets or provide investment advices also called financial advisor or investment advisor sometimes known as portfolio manager.

Financial Planner

The dictionary definition of financial planner is “a professional who consults with clients on financial matters. A financial planner may help a client prepare income taxes, insurance, investments, and estate planning, among others”. Generally speaking, a financial planner must have a certification.

In other words we can say that a financial planner is a person who evaluates your personal finances and helps you develop a financial plan to meet both your immediate needs and your long-term goals. Some, but not all, planners have credentials from professional organizations.
Fee-only financial planners charge by the hour or collect a flat fee for a specific service, but don't sell products or earn sales commissions. Other planners don't charge a fee but earn commissions on the products they sell to you. Still others both charge fees and earn commissions but may offset their fees by the amount of commission they earn

Lets Sum Up

By going through the definition of all the three terms we can say that a stock broker is a person who deals in securities where as the investment advisor is a person who manages fund or assets of a person or of a company but a financial planner is a person who advise their client how to accomplish their short term / long term financial goals with in the prescribed time frame.