A financial advisor (or adviser) is a trained specialist who helps people with their investments and financial planning. This can mean anything from retirement planning to brokerage advice to tax arrangement. He or she can either work on commission or charge a per-transaction fee every time he or she works with a client. The name of this position is sometimes used interchangeably with the word "broker," but while both professionals offer financial advice, a broker often deals only with investments, while an advisor can also offer guidance on savings, creating a budget, and dealing with debt.
The main reason people hire a financial advisor is to help with retirement planning. In this case, he or she can help with forecasting future economic trends, deciding how and where to invest, calculating tax liabilities, and budgeting. This professional can also suggest the best way to use a 401(k)/401(k) Roth account and how stocks and mutual funds are best distributed.
In the United States of America, a financial advisor needs to be licensed to provide advice on securities investments, but need no specific education for anything else. A certified financial planner (CFP®), on the other hand, must meet certain education requirements, plus pay a yearly recertification fee. The certification allows professionals to deal with the client's financial status, and estate and insurance planning.
Choosing a financial advisor can be difficult, and it is important that investors take their time when doing so. Potential clients should choose somebody they can trust and form a lasting relationship with. On the first meeting, they should ask questions about fees and services, and make sure they know what they will be getting for their money. Clients should ask how long the advisor has been in business and what kind of people he or she usually works with. Someone who works mostly with small business may not have enough practical experience to give advice on personal investment.
A good professional financial advisor will work based on the client's financial goals and will take into consideration your comfort level when it comes to investment risks. He or she will also suggest appropriate steps to get his or her client working on the right direction.
