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What does a Financial Advisor do?

Personal financial advisor's provide analysis and guidance to businesses and individuals to help them with their investment decisions. Personal financial advisor's generally assess the financial needs of individuals, providing them a wide range of options. Personal financial advisors, also called financial planners or financial consultants, use their knowledge of investments, tax laws, and insurance to recommend financial options to individuals in accordance with their short-term and long-term goals. Some of the issues that planners address are retirement and estate planning, funding for college, and general investment options. While most planners offer advice on a wide range of topics, some specialize in areas such as retirement and estate planning or risk management.

An advisor’s work begins with a consultation with the client, from whom the advisor obtains information on the client’s finances and financial goals. The advisor then develops a comprehensive financial plan that identifies problem areas, makes recommendations for improvement, and selects appropriate investments compatible with the client’s goals, attitude toward risk, and expectation or need for a return on the investment. Sometimes this plan is written, but, more often, it is in the form of verbal advice. Financial advisor's usually meet with established clients at least once a year to update them on potential investments and to determine whether the clients have been through any life changes—such as marriage, disability, or retirement—that might affect their financial goals. Financial advisor's also answer questions from clients regarding changes in benefit plans or the consequences of a change in their job or career.

Finding clients and building a customer base is one of the most important parts of a financial advisor’s job. Referrals from satisfied clients are an important source of new business. Many advisor's also contact potential clients by giving seminars or lectures or meet clients through business and social contacts.

Financial analysts and personal financial advisor's usually work indoors in safe, comfortable offices or their own homes. Many of these workers enjoy the challenge of helping firms or people make financial decisions. However, financial analysts may face long hours, frequent travel to visit companies and talk to potential investors, and the pressure of deadlines. Much of their research must be done after office hours, because their day is filled with telephone calls and meetings. Personal financial advisors usually work standard business hours, but they also schedule meetings with clients in the evenings or on weekends. Many teach evening classes or hold seminars in order to bring in more clients.

Approximately 38 percent of personal financial advisor's are self-employed, operating small investment advisory firms, usually in urban areas. About 31 percent of personal financial advisor's are employed by securities and commodity brokers, exchanges, and investment services firms. Another 14 percent are employed by depository and non-depository institutions, including banks, savings institutions, and credit unions. A small number work for insurance carriers and insurance agents, brokers, and services.

A college education is required for financial analysts and is strongly preferred for personal financial advisor's. Most companies require financial analysts to have at least a bachelor’s degree in business administration, accounting, statistics, or finance. Coursework in statistics, economics, and business is required, and knowledge of accounting policies and procedures, corporate budgeting, and financial analysis methods is recommended.

A master of business administration is desirable. Advanced courses in options pricing or bond valuation and knowledge of risk management also are suggested. Employers usually do not require a specific field of study for personal financial advisor's, but a bachelor’s degree in accounting, finance, economics, business, mathematics, or law provides good preparation for the occupation. Courses in investments, taxes, estate planning, and risk management also are helpful.

Programs in financial planning are becoming more widely available in colleges and universities. However, many financial planners enter the field after working in a related occupation, such as accountant, auditor, insurance sales agent, lawyer, or securities, commodities, and financial services sales agent. Mathematical, computer, analytical, and problem-solving skills are essential qualifications for financial analysts and personal financial advisor's. Good communication skills also are necessary, because these workers must present complex financial concepts and strategies in easy-to-understand language to clients and other professionals. Self-confidence, maturity, and the ability to work independently are important as well.

Financial analysts must be detail oriented, motivated to seek out obscure information, and familiar with the workings of the economy, tax laws, and money markets. Strong interpersonal skills and sales ability are crucial to the success of both financial analysts and personal financial advisor's.

Personal financial advisor's may obtain the Certified Financial Planner credential, often referred to as CFP (R), demonstrating to potential customers that a planner has extensive training and competency in the area of financial planning. The CFP (R) certification, issued by the Certified Financial Planner Board of Standards, Inc., requires relevant experience, the completion of education requirements, the passage of a comprehensive examination, and adherence to an enforceable code of ethics. Personal financial advisors may also obtain the Chartered Financial Consultant (CFC) designation, issued by the American College in Bryn Mawr, Pennsylvania, which requires experience and the completion of an eight-course program of study. Both designations have a continuing education requirement.

A license is not required to work as a personal financial advisor, but advisor's who sell stocks, bonds, mutual funds, insurance, or real estate may need licenses to perform these additional services. Also, if legal advice is provided, a license to practice law may be required. Financial advisor's who do not provide these additional services often refer clients to those qualified to provide them. Personal financial advisors who work in firms also may move into managerial positions, but most advisors advance by accumulating clients and managing more assets.

Personal financial advisor's who work for financial services firms are generally paid a salary plus bonus. Advisor's who work for financial-planning firms or who are self-employed either charge hourly fees for their services or charge one set fee for a comprehensive plan, based on its complexity. Advisor's who manage a client’s assets usually charge a percentage of those assets. A majority of advisor's receive commissions for financial products they sell, in addition to charging a fee.

 

 

 

 

 


 

 

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