What is a Financial Advisor? – Forbes Advisor

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If you’re looking for a finance professional to help you achieve your financial goals, you may feel overwhelmed by all the terms. One of the most commonly used terms is financial advisor.

What does a financial adviser do?

Financial advisors can be regular financial advisors or certified professionals who hold the Chartered Financial Advisor (ChFC) designation. They work closely with clients to help them understand their assets and financial goals. These goals can range from making appropriate retirement investments to investing a portion of savings for short-term gains.

Although the terms “financial consultant” and “financial adviser” are often used interchangeably, not everyone who calls themselves financial consultants can have official certification. However, that doesn’t make them any less reputable or useful.

Certified ChFCs follow specific courses and pass a certification test. They have the ability to advise clients on a wide variety of financial principles, including business tax strategies, retirement planning, estate planning and more. They are also required to participate in an annual recertification program to maintain their designation.

Financial Consultant vs Financial Advisor

Financial advisors and financial advisors do similar work to help their clients plan their finances. The difference between the two depends on their training and certifications.

For example, a certified financial planner (CFP) is a type of financial advisor. This professional takes an exam at the end of his courses to receive his certification from the CFP board. Alternatively, a ChFC takes an exam after completing each course throughout their studies. Often, CFPs can also be ChFCs, because the subjects of study are so similar.

Don’t forget that there are also financial advisors who are not CFPs but still offer personalized financial advice. Understanding whether a financial advisor is working under fiduciary duty is essential when considering working with a finance professional.

Under fiduciary duty, a financial advisor is required to work in the best interests of their clients and to recommend only a financial plan and products that are best suited to their individual needs. This differs from advisors who can only work to suitability standards, which means they must recommend products that suit a client’s needs, but not always what suits them best.

Financial advisors who earn a commission on products are generally not fiduciaries, unlike those who only pay fees.

What services does a financial advisor offer?

A financial advisor offers a wide range of services tailored to the needs of each client. The types of services offered may vary depending on whether the person is a ChFC or not.

ChFCs offer many services, including:

  • Provide tax strategies to individuals, small businesses and corporations
  • Assistance in creating a retirement and investment plan
  • Create estate planning strategies
  • Advise on appropriate insurance products
  • Financial gift and estate planning

If a financial consultant is not an official ChFC, they still offer similar services. For example, robo-advisors can be considered financial consultants. These automated software platforms manage clients’ investment portfolios in exchange for a small fee. Some robo-advisors also offer the ability to add personalized financial advice to your account for an additional fee.

In-person financial advisors, also called financial advisers, will give you a detailed plan of your overall financial situation. It pays to work with these professionals because you meet with them a few times a year and they get to know your lifestyle, decision-making outlook, and long-term goals. Building a close relationship with an in-person financial advisor can help propel you on your financial journey.

Do you need a financial adviser?

Everyone can benefit from working with a financial advisor. You don’t have to be rich or have a large wallet to work with one; a financial advisor is available to help you create goals no matter where you are in your financial journey.

For example, if you need help planning for your retirement, a financial advisor can help you determine an investment plan based on your risk tolerance and goals. If you need help saving for a down payment on a home or paying off debt, a financial advisor can help you develop a plan to make it happen.

You should find a financial advisor suitable for your particular situation. If you have a complex portfolio, you will likely benefit more from working with a wealth manager who will help you with various aspects of your financial situation. If you’re just starting out, meeting with a financial advisor can be a good first step.

When looking for a financial advisor, you’ll also want to make sure their fees and costs are appropriate for your personal situation. If you’re looking for a more affordable option or don’t necessarily want a personalized financial advisor, consider using a robo-advisor to start with, as these are usually less expensive.

When looking for finance professionals to work with, be sure to check their references to determine if they will be working in your best interest.

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