What Financial Advisors do
A financial advisor helps individuals manage their finances. They meet with clients to discuss their financial goals. It’s their duty as advisors to give professional advice on areas such as retirement, investments, mortgages, taxes, insurance, college tuition and estate planning among other areas of finance.
They research and educate clients on investments, and help them choose where to invest. They also monitor accounts of clients to determine if there’s need for adjustments to accommodate changes such as having children.
Types of financial planners and advisors
• Accountant: they help and advise clients on all taxation matters. For example, they could help file tax returns.
• Estate Planner: they help clients with estate planning, taxes and developing a strategy for how their estates will be manage in the event that they meet their deaths.
• Insurance agents: they sell health, life, property, casualty and education insurance products.
• Investment Advisers: they advise clients on securities and must be registered with the Securities Exchange Commission.
• Stockbroker: they buy and sell bonds, stocks and mutual funds on behalf of the client.
• Attorney: they may help with estate and tax plans. They offer clients legal advice when it comes to preparing or adjusting wills, business ownership and trust documents.
Steps to becoming a Financial Advisor
• Certified Financial Planner (CFP): it is granted by the Certified Financial Planner Board of Standards, Inc., to individuals who have at least 3 years working experience, bachelor’s degree and demonstrated their ability to adhere to the code of ethics. Candidates are required to sit and pass several exams.
• Chartered Financial Analyst (CFA): it is conferred by the CFA Institute and meant for investment professionals with at least 4 years working experience. Candidate must show adherence to professional standards.
• Personal Financial Specialist (PFS): this certification is bestowed by the American Institute of CPAs to certified public accountants who’ve trained in the Financial Planning Program.
• ChFC (Chartered Financial Consultant): it is awarded by the American College. Candidates are trained and tested in a variety of financial planning areas. Eligible candidates are those who have a bachelor’s degree and completed 2 years working in the field of business.
• Personal Financial Advisor (PFA): it is awarded by the National Association of Personal Financial Advisors to fee-only financial planners who have worked at least 5 years on the job and passed series of tests.
Important Skills for a Financial Advisor
• Speaking skills: when interacting with clients, a financial advisor should be able to elaborate on financial concepts in a way that the client understands.
• Interpersonal skills: an advisor is required to establish strong relationships with clients such that the client can trust them with their businesses and investments. They must also be able to address questions and concerns by the client.
• Sales skills: they must be able to sell their craft to potential clients in order to increase their clientele.
• Analytical skills: when making investment recommendations to clients, an advisor examines economic trends and regulatory changes as well as takes into consideration the willingness of the client to make risky investment decisions.
• Math Skills: being good in mathematics helps them keep track of the amount of money invested and to what percentage it has grown or reduced.