Insurance Broker vs. Financial Advisor: Who Should You Hire?

When it comes to managing finances, it can be hard to do it on your own, which is why many people are hiring professionals. However, as someone who’s not familiar with the financial industry, it can be confusing as to what type of professional you should specifically hire. Usually, the choice is between the insurance broker and the financial adviser, especially if you’re also interested in getting insurance. Besides, protecting your finances means you should get insurance to have financial assistance in case of unexpected instances.

An insurance broker and a financial adviser have their similarities and differences. They can both manage finances, but they also have specific differences.

In this article, we’ll discuss the similarities and differences between insurance brokers and financial advisers, and which one you should hire based on your needs.

Understanding the Differences in Roles

What Does an Insurance Broker Do?

An insurance broker is a licensed professional who knows a lot about different types of insurance, including the policies, terms, and what various insurance companies offer. When it comes to insurance types, some of the most common ones include health, life, auto, and home insurance.

Once you know the specific types of insurance you need, the insurance broker can also help with comparing the insurance coverage from different providers, reviewing the risks, and explaining the exclusions and the whole insurance policy.

Of course, if you want to focus on a specific type of insurance, you can look for a broker who specialises in that insurance.

What Does a Financial Advisor Do?

A financial advisor, on the other hand, specialises in managing, building, and improving your wealth. They handle the biggest aspect of your finances, including the investments, savings, taxes, and retirement.

When it comes to investment management, a financial advisor can help you with deciding how you’ll allocate your finances. In addition, they can help create a strategy for how you’ll allocate the finances successfully.

As for the retirement plans, they involve they can create a strategy on how to manage their finances that they can use once they retire.

Another service that a financial adviser manages is estate and tax planning. Usually, financial advisor who specialises in this kind of service are also Certified Public Accountants (CPA).

Lastly, there’s the service where they assist in budgeting and wealth-building strategies, which involves managing loans, credit cards, and other debts. This is perfect for those who don’t know where to start in managing their existing financial situation.

Key Differences Between the Two

Although both the insurance broker and financial advisor can handle your finances, there are specific things one professional can do better than the other. So, if you’re confused about which one you should hire, here are some of their key differences:

1. Primary Focus

Insurance Broker: Protecting finances through insurance

Financial Advisor: Managing and building wealth

2. Products Offered

Insurance Broker: Insurance policies

Financial Advisor: Investment and financial plans

3. Compensation

Insurance Broker: Commission from insurance companies

Financial Advisor: Commissions, hourly rates, standard fees, or a percentage of managed assets

4. Goal

Insurance Broker: Financial security and managing risks

Financial Advisor: Financial planning and long-term growth

When to Hire an Insurance Broker

As a beginner, it can be confusing to identify the right time to hire an insurance broker. Here are some instances that require you to hire an insurance broker:

• Looking for the best insurance company provider

• Compare insurance policies and coverages without any bias

• Advice on how to update and assess insurance needs

• Starting a business, buying a car, and buying a new property

• Risk management assessment

When to Hire a Financial Advisor

Meanwhile, when it comes to hiring a financial advisor, there is also the right time to do so. Here are some reasons why it’s time to hire a financial advisor:

• Planning long-term financial goals

• Managing investments and other assets

• Stepping into the next chapter of your life, like marriage or having kids

• Optimising savings, taxes, and real estate plans

Can You Work with Both?

Of course, you can work with both a financial advisor and an insurance broker. Since they offer different services, you can improve every aspect of your financial life. When hiring an insurance broker, you can find the right insurance provider and policy, while hiring a financial advisor is about creating a better overall wealth.

So, if you think you need to hire both of them, there’s no reason why you shouldn’t.

Final Thoughts

If you’re confused about which professional you should hire, you should first assess your current financial situation. This allows you to know the specific aspect that needs to be fixed. Once identified, cross-check your assessment with the specific services and abilities the professionals can provide.

Have you already chosen whether you need to hire an insurance broker, a financial advisor, or both? Don’t hesitate to share it with us by commenting below!