What Are the Responsibilities of a Financial Advisor?

A financial consultant or financial adviser is an individual who offers financial advice to customers based on his/her financial circumstance. In most countries, financial advisers must meet certain requirements to offer financial advice. In the United States, advisors are required to obtain a license from the FINRA or Financial Industry Regulatory Authority and registered with the SEC or Securities and Exchange Commission. Financial advisers must meet certain minimum educational requirements as well. The rules regarding financial advice are complex and not easily accessible.

Financial Advisors

There are two main types of financial advisors: fee-only and full-service. A fee-only financial advisor provides advice based on his/her own fees, whereas a full-service financial advisor provides advice to clients in consultation with financial institutions, insurance companies, and insurance agents. There are many types of financial advisors such as investment bankers, stockbrokers, estate planners, insurance sales representatives, and mortgage brokers. Most people hire a full-service advisor because they are experts in their field; additionally, they are usually licensed with government agencies such as the SEC or FINRA. On the other hand, fee-only financial advisors can sometimes offer sound advice if the client knows how to ask questions and determine how the advice will affect his/her long-term financial goals.

An advisor may work with money market accounts, stocks, bonds, commodities, real estate, and insurance. There are different classes of financial advisors including commodity and bond traders, investment bankers, insurance sales representatives, land speculation property investors, and mortgage brokers. Most commodity and bond traders deal in the buying and selling of shares of companies like oil, gold, copper, agricultural products, and livestock; while insurance sales representatives handle insurance products such as annuities, life insurance, and worker’s compensation. Land speculation property investors to acquire properties that are below the market value and then turn around and sell these properties for a profit.

Real estate planners are professional planners who help individuals and families prepare and complete multifaceted real estate planning portfolios. These planners help individuals buy, build, and maintain residential, commercial, and industrial real estate properties. The main tasks of a financial advisor and real estate planner are to find potential buyers, find property suitable for purchase, organize property into manageable investments, and make repairs, upgrades, and improvements in properties after purchase. These professionals may also serve as consultants when working with clients on financing, setting up family structures, and implementing long-term financial strategies.

Other financial advisors, such as mortgage brokers, stockbrokers, and insurance sales representatives, work solely with individuals and families on making feasible and convenient financial plans. These professionals assist clients in creating a financial plan that will ensure their future success. These professionals help individuals and families manage their debt, invest in stocks, bonds, commodities, and financial products, obtain lines of credit, and set up insurance policies. All financial advisors provide a comprehensive range of financial services to their clients.

All financial advisors require extensive training to become certified. Candidates must undergo an intensive two-year program at a university that specializes in financial advising. Upon completion of the program, candidates must pass the necessary examinations and pass the state board exam. Many financial advisors also take additional courses, such as those on estate planning, asset allocation, and risk management, to enhance their knowledge of the laws and regulations that govern these practices. Some states require licensing and certification, but some do not.