What is the difference between an investment fund manager and a financial planner? While each job deals with protecting and growing your money, the two roles take a different angle to accomplish that goal. Additionally, each job requires different skills to be effective at that job.
Investment Fund Managers and Market Trends
An investment fund can take many forms. In some cases, a fund manager will attempt to incorporate stocks from fast growing companies in an effort to quickly grow the value of the fund. In other cases, the fund manager will attempt to include a majority of stocks from foreign companies to help diversify your portfolio. A fund manager will determine which stocks to include by looking at a stock’s performance over the past 52 weeks as well as which sector the stock is in.
A fund manager is typically only concerned with the performance of one or two funds. If the fund does well, he or she is hailed as a genius. If the fund doesn’t do well, the majority of the blame goes on the fund manager. This is why the person who manages a fund will spend hours poring over financial documents and other information from hundreds of companies in the United States and other countries looking for a great new company for the fund to invest in.
Financial Planners and Your Financial Needs
While a fund manager may make decisions based on the activity of the stock market, a financial planner will take your entire financial situation into account. He or she will take steps to help you reduce your tax burden both now and in the future, help you with estate planning, and will help you manage the finances of your business if you have one.
The goal of the financial planner is to help you keep more of your money both now and years down the road. If you have children, a financial planner will ensure that as much of your money as possible gets into the hands of future generations. Your financial planner will also create contingency plans to help you pay bills if you are sick or too injured to work.
Financial planners will deal with a diverse group of people who each have different goals. For example, a Monday morning could be spent helping a family with estate planning while Monday afternoon sees that same financial planner going over an audit for a major corporation. A financial planner tends to take pride in their ability to help as many people as possible.
Overall, the main difference between a financial planner and a fund manager is that the financial planner is responsible for a broad array of financial decisions while the fund manager focuses on one area of your finances. Although both are critical to growing your money, your fund manager is more important to your stock portfolio while your financial planner helps you create a complete picture of your current and future financial needs.
