A financial advisor or financial consultant is a person who gives financial advice to potential clients according to their financial circumstances. Financial advisers are licensed in most countries and can provide expert financial advice to individuals, companies and pension plans. In most countries, financial advisers must obtain certain minimum training and also be registered with a regulatory body to give financial advice. There are different types of financial advisers including stockbrokers, chartered financial consultants and self-employed advisors.
The main role of financial advisors is to advise people on matters relating to their savings and investment portfolios. They help people make the right investments by matching them with suitable opportunities. They can advise and provide solutions for retirement, investing in new business opportunities, investing in the stock market, estate and different forms of derivatives, such as foreign currency exchange and swaptions. Financial advisors can also provide investment advice relating to insurance policies, general loans, mortgages, consumer credit and personal finance.
Financial advisors can work independently, providing valuable advice and can also be employed by banks and other institutions to carry out investments and ensure that client portfolios are maintained. However, there are instances where financial advisors can represent a client on both a transactional and also an advisory basis. For instance, some banks hire financial advisors to open new accounts for their clients or to process applications for refinancing. Other times, financial advisors might act as consultants to a number of companies who might be expanding their own investments or looking for a business partner. Financial advisers might also be required to manage the portfolio of a company or a government agency on behalf of a client.
Another area of specialization for financial advisors is in the area of estate planning. Financial advice on estate planning generally requires that financial advisors help individuals and families to plan the future of their estate and assets. This includes making sure that tax laws and estate laws are properly understood and that potential probate beneficiaries are properly named and established. In addition, financial advice often requires that advisors help people with making the best decisions for their futures as well as those of their family members. Some of the most common services that an estate planner provides would include planning for the future, protecting wealth, and closing long-term financial transactions.
Financial advisors who work primarily with wealthy individuals tend to charge higher fees for their services than other types of advisors. This is because the wealthy individuals typically hire them to manage their money and assets, and they will not be providing any other services that could result in a lower fee for the service rendered. For example, a fee-based financial advisor may only receive commissions if the client manages five hundred to one thousand dollars worth of assets during a year.
The number of years that financial advisors may work for a specific client is also another factor in determining the fees that they would charge. Most experts recommend working for at least two to three years on investments that are less than ten thousand dollars in value. For clients who plan to keep their money in the market and turn over large portions of their investments periodically, they may want to work with financial advisors who charge fees based upon the number of years that the investments stay active. If an investor fails to maintain his investments over that time period, he may be charged at a substantially higher fee. There are also times when the fees that an advisor would be able to charge vary based upon the assets that the investor has invested in.