A Financial Advisor helps you oversee and manage your money. This can include everything from debt management to budgeting and saving to investments. Financial advisors may be independent agents or work for a business or financial institution.
Since anyone can call themselves a financial advisor, it is a good idea to look for one with credentials such as a Certified Financial Planner (CFA). These industry professionals have rigorous educational and ethical requirements. They must act as fiduciaries, which means they must act in their client’s best interests.
When you first meet with a financial advisor, they will ask questions to understand your financial goals and assess where you are now. They use the information you provide to create a plan and suggest strategies to help you achieve your goals. Some financial advisors are specialists in investments, debt relief or retirement planning. Most financial advisors, however, can help you build a plan for any financial goal.
Let’s learn about what does a financial advisor do and their job responsibilities.
Financial Advisor Responsibility #1: Debt Management
Financial advisors can be an invaluable help in getting debt under control. By mapping out your cash flow and identifying problem areas, an advisor will help their client create a balanced budget. They will analyze the debts held and come up with a payback strategy or may help to restructure debt to make it easier to pay off.
Financial Advisor Responsibility #2: Investment Advice
Handling your investments can be complicated. Financial advisors understand the market and can help you pick the investment opportunities best suited to your specific goals and risk tolerance. They will help you develop an investment strategy that works for you and help you make adjustments when needed.
Financial Advisor Responsibility #3: Saving and Budgeting
Maybe you are saving for a child’s education. Or perhaps an annual vacation is your objective. No matter what you are saving for, an advisor can identify strategies with the money you save and the money you spend to help you achieve your goals.
Financial Advisor Responsibility #4: Retirement Planning
Even if you have already saved some money for retirement, a financial advisor can help boost and protect your savings. No matter what age you are starting at, an advisor can help chart a path toward providing for your future.
Financial Advisor Responsibility #5: Estate Planning
A financial advisor can help you carry out your desires for your legacy. They will help you group your assets, identify opportunities to transfer your wealth to family members and prioritize the things most important to you.
Financial Advisor Responsibility #6: Tax Planning
Advisors can identify ways to take advantage of available tax savings and reduce your tax burden. Depending on your situation, this can include strategies like making charitable donations, income splitting, or investing in registered accounts. An advisor can work with your tax professional to ensure that your investment plan helps to minimize your tax liabilities each year.
Who Needs a Financial Advisor
Even though almost everyone can benefit from the services a financial advisor can provide, you may not need one if your financial situation is straightforward. However, the reality is most people have more complex circumstances. For example, a windfall or significant change to your employment income are good reasons to seek a financial advisor. An advisor can help you develop a plan for your money to best reach your financial goals. Changes in your personal life, such as marriage, divorce, or having children, will affect your finances, and the direction a financial advisor provides can be invaluable.
Creating a financial plan involves more than just picking an EFT or mutual fund to be successful. Understanding what your money is doing is where a financial advisor comes in. They can help you set goals and show you what you need to do to achieve them.
How to Become a Financial Advisor
To become a financial advisor, you should complete a bachelor’s degree. A degree in finance, business, or economics is not always necessary, but it will help. After you graduate, you will seek employment with a financial institution. This is usually the recommended course of action, as an institution will often sponsor you for the industry certifications needed to practice as a financial advisor. Financial advisors with a designation such as CFA have additional education and testing requirements. And while there isn’t a specific certification for financial advisors in general, you will need a license if you want to sell products like mutual funds, bonds, or securities.
Money and finances are some of the most stressful things we need to deal with. Because of this, many people seek out professional assistance. Financial advisors are there to help their clients achieve financial independence and security. It’s a good idea to consult with one if you want to manage your finances better and plan for your retirement. A financial expert can help guide you to financial stability by helping you grow your savings, manage risk, and avoid making costly mistakes.