Financial Adviser – Definition

Cite this article as:"Financial Adviser – Definition," in The Business Professor, updated September 30, 2019, last accessed July 9, 2020,


Financial Adviser Definition

A financial adviser refers to a professional who renders financial services to individuals based on their financial situation. The advisers usually specialize in different finance areas such as investment, mortgages, real estate, retirement, insurance, taxes, college fees, etc.

Since they are entitled to determine an investment portfolio on behalf of a client, it is mandatory for them to consider a wide range of information. Such information may include regulatory changes, economic trends, and the client’s comfort, including risky decisions.

A Little More on What is a Financial Adviser

In most countries, financial advisers must undergo specific training and must also hold a license to be able to provide advice. A financial adviser in the United States carries a series 65 and Series 7 or Series 66 license. The U.S. Financial Industry Regulatory (FINRA) requires that compliance and designation license-related issues must be reported for public view.

FINRA also clearly specifies groups of individuals who are allowed to use a financial adviser title. They include; Accountants, financial adviser, investment advisers, brokers, private bankers, financial planners, insurance agents, and lawyers.

How Important is a Financial Adviser

In general, a financial adviser adds value to an investment. Some of the benefits of having a financial adviser are as follows:

  • Guidance on overall investment strategy development
  • Assets allocation
  • Tax maximization
  • Rebalancing
  • Structuring and time withdrawals from retirement accounts.

All of the above services from the adviser will significantly boost the returns in a client’s portfolio. The boost may be steady and sometimes occasionally. Note that there are various organizations that help clients to connect with qualified financial advisers. They include:

  • National Association of Financial Advisors
  • Financial Planning Association
  • Certified Financial Planner Board of Standards

Duties and Responsibilities of a Financial Adviser

 Typical duties of financial management include the following:

  • Meeting with clients to chat forward their financial goals
  • Educating clients on possible risks and investment options. They also answer any financial questions a client may have
  • Explaining the financial services they provide to clients
  • Helping clients to plan for specific situations such as retirement and investment
  • Explain to clients research investment opportunities
  • Monitoring the clients’ accounts and determining any changes to the account

 Education Qualifications and Work Experience

Financial advisers should possess several credentials. They should have the following:

  •  Certified Financial Planner designation
  • Pass the Certified Financial Planner test
  • Have an appropriate level of education
  • Be conversant with code of ethics and have a signed copy
  • Have worked for several years in the same capacity
  • Obtain a number of hours of continuing education every year to maintain the designation

 Qualities of a Financial Adviser

A financial adviser possesses several qualities that make him or her stand out. Some of the duties include and not limited to; optimistic, extroverted, confident, persuasive, and enterprising individual, dominant, and assertive.

Cost and Expenses for Financial Adviser

When it comes to financial advisers’ cost, there is no standard fee. The cost varies depending on several factors. The means of compensating financial advisers and whether they will provide the services on an ongoing basis makes it difficult to generalize costs.

However, there are three ways of compensating a financial adviser. They include fee-based, fee-only, or through commission.

Fee-only: Fee-only advisor gets paid by clients for the services they provide.

By commission: Those advisers paid by commission get paid for each financial product or services they sell.

Fee-based: Under this method, advisers request for an upfront fee before they provide their services. Also, for any financial products the advisers sell, they earn a commission.

Generally, to ensure that you avoid the possibility for conflicts of interest, fee-only can be a good choice for a financial adviser. For those advisers providing ongoing services, they charge a certain percentage for the assets they manage. However, there is variance when it comes to the actual amount that a financial adviser is given.

References for “Financial Adviser › Financial Advisor › FA Relevant…/financial-advisor-5049 › Career Paths › Career Path Basics

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