Financial advisors are professionals who provide highly specific, often guided investment decisions to meet your specific financial planning needs and goals. Financial advisors help you decide what to do with your money to achieve the goals you set. Their goal can be to provide you with the support you need. This could include paying down debt, building your retirement savings, or choosing the best stocks to invest in for your future.
Working with a Financial Advisor
There is never a bad time to hire a financial planner to help you build and achieve your financial goals. You do not have to be wealthy. You do not have to have specific ideas of how to invest. Rather, you can obtain customized support that meets your specific objectives. Consider some of the duties and opportunities that financial advisors offer, as well as the types of financial advisors available to you.
If you are ready to hire a financial advisor or want to know your options, check out our tools at Invested Better. That includes providing a free advisor match tool to help you find the best type of advisor for your specific situation.
Consider the roles a financial advisor can play for you based on your specific goals and objectives:
- Create a plan. Your advisor can help you create financial goals by providing you with personalized financial advice and strategies. They help you prioritize the strategies necessary to achieve those goals. That includes offering custom solutions for you.
- Review. A financial advisor then works to review your financial strategy over time and helps you make adjustments that are necessary. They can help you establish your financial portfolio and then rebalance it over time as the market changes.
- Manage decision-making. It’s easy for a person without a lot of financial experience to make rash decisions that could influence their ability to build wealth. Your financial advisor helps you navigate tough times without pulling you off track.
- Build your retirement. Your financial advisor will help you create a retirement plan, including wealth management strategies.
- Aid with tax planning. Your financial advisor can also help you minimize tax consequences at every stage of your financial wealth building.
These are all broad statements of what a financial advisor can do. However, there are so many individual tasks and services they offer to help you achieve those goals.
Understanding the Role of a Financial Advisor
You Define the Role of a Financial Advisor
That depends on the specific needs you have and the objectives you wish to achieve. Financial advisors provide advice and management support on the aspects of your financial life you would like help with or to improve. Many times, this includes managing your investment portfolio, but it may also include setting up short-term goals like saving for a down payment to buy a home, paying off debt, or building an emergency fund.
You Choose the Support You Need
The key to understanding the role of a financial advisor is this. This is a professional you turn to for specific advice and guidance based on the personal financial needs you have. You choose the level of support you provide, whether that is just basic investment advice to set up a robo advisor or full wealth management. You control what you get from these professionals, and that helps to ensure you obtain the plan for the financial future you desire.
Types of Financial Advisors
Key certifications aside, there are three main types of financial advisors:
- Human advisors: These people work directly with you to set up, manage, and oversee your investments.
- Brokers: These professionals facilitate the buying and selling of securities with less investment advice provided.
- Robo advisors: These are apps that let you set up objectives, and they work the process for you.
What Does a Financial Advisor Do?
A financial advisor can provide you with a wide range of services. Depending on your goals, you may wish to work with a professional who can provide any of the following services:
- Set up retirement accounts: This includes choosing the most appropriate retirement accounts for your needs.
- Invest in stocks, bonds, and other securities: They use your risk tolerance level to determine how you should invest to achieve your goals.
- Estate planning: Financial advisors work to create an estate plan that may include insurance products, trusts, wills, long-term care planning, and methods to transfer your assets to your heirs to avoid estate taxes and probate.
- Reduce taxation: Financial advisors also can help you make financial decisions based on the tax consequences of those steps.
- Manage your wealth: For those who have a significant amount to invest, working with wealth managers allows you to hire a professional who can provide ongoing management of your financial investment strategies.
Your goal is financial independence and peace of mind. Your financial planner’s objective is to create an investment plan to help you get there using all of the investment options available to you.
Top Financial Advisor Qualifications and Certifications
Financial advisors are critical resources. They provide you with the insight and guidance you need to achieve your goals. However, to get the results you desire for your financial future, you need to consider who to hire. In other words, when you consider “what is a financial advisor able to do for me?” also think about what type of education, training, licensing, and certifications they may have. The following are some examples of the most common types of financial advisors.
- Chartered Financial Analyst: A CFA provides asset management and securities analysis to individuals. Many work with high net worth individuals or companies to make high-level trades and investment decisions. They provide portfolio management, risk management services, and investment guidance.
- Certified Financial Planner: A CFP is a more robust financial advisor who provides a wide range of services to clients. They can help with budgeting, retirement planning, education planning, investment planning, and much more. They also act as fiduciaries, which means they have an obligation to work to meet their client’s best interests above their own.
- Registered Investment Advisor: An RIA is a person, rather than a company, that provides specific services to clients. They are registered with the Securities and Exchange Commission (SEC) or a state regulatory agency. They are also regulated fiduciaries.
- Certified Private Wealth Advisor: CPWAs are financial advisors who have wealth management experience. They tend to work with high net worth clients to manage investment portfolio. They aim to minimize tax, grow investment portfolio, and help with estate planning.
- Chartered Financial Consultant: A CFP is a type of financial advisor that offers personal financial management, tax planning, estate planning, life insurance products, retirement planning, and special needs planning, among other services. They tend to have a bit more depth of knowledge in financial consultation services.
Any of these professionals may be able to help you make decisions about your investments. A traditional advisor may not be specifically certified to provide investment advice, though. Always learn who you are working with before you commit.
Why Partner with a Financial Advisor?
With different types of financial advisors available, you really do have the ability to find an investment professional who can help you no matter where you are right now. That includes helping you to pay down debt, build savings, invest, plan for future needs, and much more. When you partner with a financial advisor, you gain a number of potential benefits:
- Help with your current financial situation. Your financial advisors provide you with specific strategies to help you navigate your current financial situation. That could be debt management or wealth growth.
- Develop personal assets. They can help you determine what type of investments to choose based on your risk tolerance and investment goals. They offer unbiased financial advice.
- Wealth managers do it all for you. When you work with a wealth manager, you will work to handle investment portfolios fully, allowing you to not have to play a specific role in the process if you do not want to.
- Retirement planning support. Financial advisors can provide you with a plan to retire early or with the investments you desire.
Financial advisors help you make important and informed decisions. They have industry knowledge, stay up to date on the financial markets, and have skills to understand what your needs are, what your options are, and what type of plan may be best for you.
How to Choose a Financial Advisor?
Choosing a financial advisor depends on a variety of factors. You certainly want an educated, proven professional. You should not choose someone just because you like them, though. There is much more to consider than their personality here. Instead, ask your financial advisor questions. Get an idea of what they can offer you based on their experience. Some of the most important factors to consider when hiring a financial advisor include:
- Are they a fiduciary? This means they are committed to providing financial products and services to you that are specifically beneficial to you and in your best interests.
- How are they paid? Some will be paid on a commission basis, and that could be less desirable than flat fee or fee-based payment.
- What types of investment strategies do they offer? Some offer different types of financial products to meet your specific needs.
- What type of education do they have? Also, note that it helps when a financial advisor chooses to look for someone who stays up to date on their education, especially with the rapid technology changes occurring.
- Will the financial advisor educate you? Often, a wealth manager will simply direct investments for you, working to maximize your earnings. Others can help you gain a financial education that can be applied to various aspects of your life.
You also want to choose an advisor that is willing and capable of understanding your emotions. Investment is very emotional with numerous ups and downs. Choose a financial advisor that is trustworthy, with a solid reputation and a proven level of experience, but also one that can help you regulate emotional decision making.
Is a Financial Advisor Right for Me?
Knowing when it’s worth it to hire a financial advisor is a big decision. After all, you are paying for this service. At the same time, if you want your money to go as far as it can so you are able to retire early, manage retirement goals, or build wealth, having a professional with ample experience can make a big difference.
There are various times in your life that it may be wise to invest in a financial advisor, including:
- You are brand new. If you have no experience with financial planning, investment strategies, or reducing financial obligations to pay down debt, it’s time to get some help to do so.
- Your life is changing significantly. You may be getting married or divorced, having a child, buying a home, or engaging in other tasks that may require some additional financial planning.
- You want to start or build a business. Having a financial advisor as you work to build your business is a critical step in having financial guidance. It will also allow you to manage those ups and downs within your business in a healthy manner.
- You want to develop a strategy. You may want to start putting money away to pay for your retirement. You may be thinking about a college education for your children, buying real estate, or meeting other objectives. If you have specific financial goals, an advisor can help you make them a reality.
- You want to protect your wealth. In volatile stock market conditions, having a professional advisor can help you protect your wealth and build on it rather than simply letting the market ride it out. Most financial advisors can help you with both wealth preservation and wealth building.
It may be worthwhile to meet with a few different advisors to discuss your needs and goals. Then, choose one.
How Much Does a Financial Advisor Cost?
Financial advisors charge fees based on the types of services they provide to you. The amount they charge is dependent on their fee schedule. Most financial advisors will be very clear with you on the expected costs upfront, so you know exactly what to expect.
There are numerous factors that play a role in their overall cost, including:
- Experience in the industry
- The size of the firm
- The local market
- If they charge Assets Under management (AUM) or if they charge based on services
- Some charge a flat rate, which you can expect to be hundreds to thousands of dollars depending on the services offered to you.
- Some charge on a subscription basis, which means you pay a monthly fee for the services you need.
Find a financial advisor and talk to them about how they are paid. Choose one that fits your budget but also your financial objectives.
Can I Fire My Financial Advisor?
It’s a loaded question, but the answer is that yes, you can terminate your contract with your financial advisor when it simply is not working for you.
- Read through the contract you have with the financial advisor.
- Locate any potential termination clauses as requirements, such as a specific length of time for notice or fees associated with ending the contract early.
- Send a letter to the financial advisor to clarify your goals and, most importantly, follow the terms and conditions in the contract you have set up with the financial advisor.
As you consider the investment options available to you, remember that financial advice takes time to develop and come to fruition. If you do not like your financial plan or want a full-service financial advisor, it certainly makes sense to make a move.
Final Thoughts on Financial Advisors
A financial advisor is a specialized professional capable of providing specific insight and knowledge to you. Compare the various types of advisors based on what service you need. Then, consider fees and services provided. A good financial advisor is someone you can trust to help you with the entire process.
As you consider looking for financial professionals that meet your needs, check out the resources Invested Better can offer to you. With some of the best financial advisors available to you to provide accurate, comprehensive advice, you can start planning and achieving your financial goals in no time.
Find a financial advisor with our advisor match tool to get started. Invested Better positions you to get the type of support you need. Find your ideally matched financial advisor now.
