A financial advisor or financial planner is someone who offers financial advisory services to customers according to his/her financial capacity. In United States, financial advisors are required to take up specific courses and obtain certifications in order to give advice to people about investments, savings and insurance. Advisors help people plan for the future by advising them about retirement plans, investments, estate planning and insurance policies. They also analyze the client’s financial records and determine the appropriate retirement options.
To become a financial advisor, one needs to have an MBA, CFA or equivalent professional credentials. An MBA is a two year degree program that focuses on business management. Students learn how to manage, analyze and communicate about finances, including budgeting and financial goals. For the CFA, a four-year degree is required, which covers all the financial markets, taxation, and investing. Candidates who want to become financial advisors can get admission to a post-secondary school that offers degrees in finance and accounting or choose electives such as business, law, economics, risk management and real estate.
To deal with the ever-changing financial environment, most financial advisors now also offer insurance and investment advice. The role of the financial advisor may vary according to each client’s needs. A general rule is that the advisor should have an in depth understanding of different types of investments, which could mean purchasing stocks, bonds, mutual funds and/or life insurance.
The duties of the term financial advisor include advising investors on investments, identifying opportunities in stocks and/or bonds, setting and achieving financial goals, evaluating risk and recommending strategies for achieving those goals. Some advisors specialize in particular areas of investments such as technology, real estate, banking and personal investments. Others work with clients on educational planning and asset protection planning.
Financial advisors who are working towards retirement can be called upon to advise their clients on investing, saving for retirement, and managing their wealth after retirement. An example is a certified public accountant who is expected to do the same tasks as a financial advisor, except he or she would have to do it for a living as opposed to just working for a living. Other examples of this would be estate planners and asset management consultants. Retirement planning typically involves investing in the stock market, bonds, mutual funds and other common investment vehicles.
Financial advisors can also work as registered investment adviser (RIA). These advisors are required to follow the guidelines set forth by the US Department of Labor’s Office of Investor Protection and Service. Registered investment advisors are regulated by state agencies and are not subject to the regulations of the Securities and Exchange Commission.