Financial Advisor
Vs.
Portfolio
Manager
I’ve been in the financial investment industry for over 45 years, and when looking for professional help with investments, people often come across two terminologies: a financial advisor and portfolio manager. While there’s some similarities in each of these roles, they focus on different aspects of managing your financial wealth and overall investments.
When you do understand the difference between a financial advisor and portfolio manager, it helps you ask the right questions and determines which one of these two may be a better option for you in your financial needs.
A financial advisor assists clients in making decisions on their general financial picture. Of course, depending on the financial advisor, they may assist in:
Some financial advisors are more comprehensive with their approach when comparing financial decisions and seeing what may work best.
One example is a person retiring who wants to consider how much they have invested, when they’re going to retire, how much income they would need to survive, and how their personal investment strategy works in favor of their financial goals.
Services like this vary between different financial advisors, so it’s important to understand what different advisors offer.
Now, a portfolio manager is a bit different as they focus more on the management of someone’s investment portfolio.
Portfolio management mainly deals with:
Portfolio managers don’t typically focus on a client’s whole financial plan, their work is mainly around the client’s investments and how they’re structured/managed.
Essentially, a portfolio manager looks over how their portfolios allocations are aligning with the client’s overall financial goals and risk tolerance.
In short, the easiest way to tell the difference between the two is to realize financial advisors typically look at the big, financial picture, while a portfolio manager focuses more so on the portfolio investments themselves.
However, that doesn’t mean that these two are completely divided.
“Can you give more insight on how you’re compensated?”
There are some financial advisors who advise their clients while providing investment management services, and there’s some portfolio managers who deal with portfolio management AND communicate with their clients directly. In general, some financial professions can perform both functions depending on their certification, firm, and overall service offers.
That’s why the job title isn’t as black and white as it appears on paper.
|
Financial Advisor |
Portfolio Manager |
|---|---|
|
Could address a client’s overall financial situation |
Primarily works on investment portfolios |
|
May help with retirement and financial planning |
Adds/removes investment selections and where to allocate it to |
|
Could potentially provide investment recommendations |
Manages investments according to the strategy’s premise |
|
Is more verse in coordinating multiple areas of financial planning |
Concentrates mainly portfolio construction and management |
|
Services vary by advisor |
Services vary by portfolio manager and firm |
It’s important to know the difference because it leans into what you might need for yourself and what you’re searching for.
If you need assistance looking at an overall financial plan, consider looking towards a financial advisor who offers the overall services you need.
However, if your main issue is seeing how your investments are constructed/managed, then consider going into a portfolio manager.
If you need a mix of both, then there are some investors who may overlap (including myself).
An example of someone who needs assistance on both aspects is an investor who may need help figuring out how much to save for retirement WHILE finding a specific investment strategy from a portfolio manager to reach these saving goals. That’s where knowing a financial professional who does both financial advising and portfolio management role could benefit someone.
When working with either a manager or advisor, you should ask these important questions:
1. What services do you offer?
Ask exactly what this person does for their clients. Don’t assume that their job title means they provide exactly what you’re needing.
2. Do you manage investment portfolios, and if so, how?
If investing into a portfolio is important to you, you should ask what different portfolios they offer, how they’re set up, monitored and adjusted accordingly.
3. How do you finalize an investment strategy that’s right for me?
Professionals may use different approaches on their portfolios based on investment objectives, time horizon, risk tolerance, and current market conditions.
4. How are you paid?
Ask how the financial advisor/portfolio manager and their firm is paid. What fees and expenses could you be responsible for?
5. Who manages my investments?
Is it you or is there somebody else at your facility making these financial decisions for me? This is important to know as the person you initially speak to may not necessarily be the person making those types of decisions for you. It’s reasonable to ask who’s in charge of what and how responsibilities are divided at anybody’s firm.
6. How often will you look over my portfolio?
Understanding the frequency of your investments being looked over and when you can communicate with your advisor can help develop your expectations.
7. How does this specific investment strategy fit my goals?
Investment management shouldn’t ignore what the potential investor’s goals are. You should ask how the specific strategy the professional is showing you is intended to deal with your financial circumstances and goals.
Not all financial professionals are going to offer what you are looking for as an investor.
The important question to ask yourself is what type of guidance do you need?
Someone whose searching for in-depth financial planning may prefer a professional who looks over their overall financial objectives. Someone who is simply looking for someone to manage their investments may just focus on a firm’s portfolio management skills and offerings.
Then you have those investors who need assistance on both aspects.
In short, the most important things to understand is what services are being offered, how decisions on your investments are made, how the financial advisor/portfolio manager is compensated, and whether their services and offers match your financial goals.
For any investors looking for financial services, knowing the difference between a portfolio manager and a financial advisor is important in your decision.
At Stratos Investments of OneSeven, our approach falls in between both investment strategy and portfolio management. It is catered to both individual client circumstances and overall objectives.
If you’re thinking about looking for professional investment management, learning how a firm approaches portfolio construction, risk, and investment decisions, maybe we could help you determine whether the services we have are appropriate for your needs. To learn more, schedule a call to understand more of our available services and see if they we align with your objectives.
Contact Info:
Address: 210 N Stanton St Ste 3 El Paso, TX
Phone: (915) 312-6117
E-Mail: Bernard@stratosoneseven.com
Stratos Investments is a DBA of OneSeven, an investment adviser in Ohio. OneSeven is registered with the Securities and Exchange Commission (“SEC”). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. OneSeven only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of OneSeven’s current written disclosure brochure filed with the SEC, which discusses OneSeven’s business practices, services, and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. All titles listed for Individuals associated with Stratos Investments represent the individual’s role with Stratos Investments.
Please note, the information provided in this presentation is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services. Investments in securities entail risk and are not suitable for all investors. Past performance is not a guarantee of future returns. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.
