What is a Financial Advisor?

A financial adviser is a type of financial adviser. A financial consultant will perform an audit of your current financial situation and develop a plan to help you achieve your future goals.

Definition of financial consultant

Financial consultants work with their clients to better understand their assets and what they want those assets to do for them in the future. For example, if a client wants to save for retirement but doesn’t know how, a financial advisor can recommend the type of retirement account to use, suggest specific investments, and answer questions about how much to save.

Depending on their education, background, and level of certification, financial advisors may be able to help clients with more specialized needs like tax preparation and insurance.

To be clear, not all professionals who claim to be financial advisors hold a ChFC.

The terms “financial adviser” and “financial adviser” are often used interchangeably, but some financial advisers hold a designation called a Chartered Financial Consultant, or ChFC. ChFCs may offer more specialized financial planning than other financial advisers, such as business or divorce planning. To be clear, not all professionals who claim to be financial advisors hold a ChFC. Always ask any potential financial advisor what specific certificates they hold.

What does a financial adviser do?

Financial advisors look at a client’s entire financial life, including debts, assets, expenses, and income, to help clients determine what those goals should be. Financial advisors who have the appropriate licenses can also manage their clients’ investments.

The types of services you receive from a financial consultant will also depend on the type of consultant you are working with. There are three main options for people looking for a financial consultant or financial adviser:

1. Robo-advisors provide inexpensively Portfolio Management. If you are interested in investing but do not want to manage your investment portfolio yourself, a robo-advisor can do it for you. Some robo-advisors also offer financial planning services and tools.

2. Online financial planning services offer both investment management and other forms of financial advice. If you need more comprehensive financial planning than just investment management, online financial advisors may be cheaper than in-person counselors.

3. Consultants or financial advisors in person tend to be the most expensive, but developing a relationship with the same advisor for many years can be beneficial. An in-person counselor can get to know your personality, family, and community, which can be a source of comfort when buying a home, saving for retirement, or figuring out how to pay for your child’s college tuition. Here is 10 questions to ask a financial advisor.

What is the difference between a financial consultant and a financial adviser?

There is often no difference between a financial adviser and a financial adviser. Many investment firms use the terms interchangeably.

Financial consultants and financial advisers can hold a variety of licenses or designations. Many hold FINRA licenses, such as Series 7 and 66 licenses, which allow them to sell investments. (FINRA is an organization that regulates brokers.) Others may be ChFCs or hold another specialized certification, such as a Certified Financial Planner or CFP.

Because there is little regulation governing what financial professionals call themselves, the onus falls on the consumer to be very diligent when working with one. One of the best ways to ensure that you can trust your financial advisor is to find a fee-only fiduciary. Consultants or financial advisers who are fiduciaries do not accept commissions for the investments they sell and are expected to work in the best interests of their clients.

Do I need a financial adviser?

Whether you need a financial advisor depends on your situation. If you have a fairly simple investment portfolio, you can use a robo-advisor as an inexpensive way to manage these investments if you don’t feel comfortable doing it yourself.

If your investments are somewhat complex or if you need help with topics other than investment management – ​​such as estate planning, tax assistance, or debt repayment – ​​it may be helpful to work with an advisor. finance or research financial planning services online.

It may be wise to seek advice from a financial advisor when you are going through major changes or events in your life. Getting married, having a child or changing jobs can have a serious impact on your finances. Talking with a professional can help you navigate these changes and make adjustments to your financial plan.