An advisor is a financial expert that can help with a variety of financial needs facing their clients. They are compensated for these services in a variety of ways.
Financial Advisor
What is a financial advisor?
- An advisor is a financial expert that can help with a variety of financial needs.
- An advisor can help with financial planning, investment planning, estate planning, and tax planning.
- An effective advisor communicates complex financial topics to their clients in easy-to-understand language.
- An advisor who is fiduciary acts in the best interest of their clients. They often have a Certified Financial Planner, or CFP, designation.
Advisors have a broad set of responsibilities. Many of those are considered financial planning like tax planning and estate planning. Other tasks revolve around investment planning like managing investment accounts and determining asset allocation.
Advisors also serve as a financial education resource. Effective advisors can communicate complex financial topics to their clients in easy-to-understand language. Advisors who are fiduciaries act in the best interest of their clients. They often have a Certified Financial Planner, or CFP, designation.
Financial advisors have different ways of charging clients for their services. Some have an hourly rate while others charge on an assets under management, or AUM, basis. For example, they may charge 0.05% of a client’s total assets on a yearly basis. Other advisors may charge their client sales loads, one-time payments for recommending clients buy certain investments. Advisors’ objectivity may come into question if they recommend clients buy pricier securities that benefit advisors and not clients.