A financial consultant or financial advisor is someone who offers financial advice to clients according to their financial circumstances. Advisors play an important role in the financial planning of individuals and families. They offer a range of financial advisory services such as advising about investments, pension funds, insurance, investment strategies and savings options. In most countries, financial advisers must complete certain formal training and be formally registered with a regulating body to give professional advice.
As a rule, financial advisors should have an MBA and preferably a CFA. Financial advisors can have different types of licenses ranging from registered brokers to investment consultants to self-employed people. They can work independently or for firms with specialized knowledge of specific sectors. They can also work in private firms that provide advisory services to individual clients. Regardless of their experience and licenses, financial advisors can be divided into three main categories: the ranker, the sales person and the financial planner.
The ranker is the most common type of financial advisor and the most senior in the job structure. He or she is directly involved in the day-to-day investment decisions of his or her clients. The ranker will need to understand investment products like pensions and insurance to help create investment plans that will fit each client’s needs. For instance, a planner may help people save for retirement by helping them identify investment options. The planner is typically responsible for analyzing investment strategies and providing recommendations for retirement savings.
The sales person is the middle-man between planner and client. He or she is responsible for selling the plans and products of financial advisors to investors. Financial advisors that work in the sales field will generally be paid on commission, which means they receive a portion of what their clients pay into investments. Some will receive a lump sum and others will earn a percentage of the total amount invested. Financial advisors that are employed by large firms may also have other duties such as handling the sales process.
A third type of financial advisor that many people think of when they hear the words ‘financial advisor’ are those that work within the retirement planning advisor field. Retirement planning advisors plan for and aid retirement-age people in creating specific financial packages that will benefit them once they retire. Financial advisors who work with retirement planners focus on setting up specific accounts, investments and pensions for their clients. Many retirement planners offer advice about investing, estate planning and retirement income security. Retirement planners do not handle clients’ money; however, many will be required to meet with a client’s representatives at least once a year.
The final type of professional who you might think of when you hear the term ‘financial advisor’ are corporate financial advisors. Corporate financial advisors provide advice and assistance to businesses on investing, business financing, mergers and acquisitions and overall business performance. They usually work as independent contractors. Many corporate advisors are compensated by the company where they work, although the compensation can vary depending on the nature of the client and the advice they give. Most corporate advisors receive extensive training in financial planning and have at least a bachelor’s degree in finance.