A financial advisor is a person who assists individuals, businesses, and governments in organizing and planning their investments and other aspects of their financial plans. A financial advisor has to undergo specific training in order to be qualified to offer his services. In the United Kingdom, the term used is financial adviser.
There are many areas in which a financial advisor can work with his clients. Some of these areas are:
- Pension planning
- Life insurance
- Income protection insurance
- Mutual funds
Financial advisors can be grouped into two general categories based on how they charge for their services. On the one hand, a financial advisor can charge a flat fee for every transaction he conducts with the client. On the other hand, a financial advisor can charge on a commission basis. Which type of advisor you choose depends on your needs and preferences.
When making the decision to take on the services of a financial advisor, it is important that you take a look at his credentials. In the United States, financial advisors need to be licensed. There are different types of certification depending on the financial area that they can provide advice in. For example, there is a license for individuals to give advice on securities investments. In order to give advice on a broader scale - a client’s financial status, estate planning, and insurance planning - a financial advisor has to be a certified financial planner (CFP). When scouting for a financial advisor, it is good to have an idea of what you expect in terms of his services. You should also not hesitate to ask questions regarding fees, his background, and even check for referrals as well.