Financial Advisor: Definition, Strengths, Weaknesses and Tips for Choosing Them

Are you one of those people who find it difficult to manage finances or finances? If so, then maybe you need the services of a financial advisor.

In fact, some people do need a special advisor to help plan their finances, be it personal finances or company finances. Because financial matters are not a matter that can be taken lightly. So, who exactly is a financial advisor? Here we will explain it to you.

1 Definition Financial Advisor
So, What Exactly Do Financial Advisors Do?
So, Is Using Financial Advisor Services Necessary?
Advantages and Disadvantages of Using a Financial Advisor
Tips for Choosing the Right Financial Advisor

5.1 See the Experience
5.2 Certification
5.3 Search As Needed
Questions for Financial Advisors Before Choosing Them

6.1 What Financial Expertise Do They Have?
6.2 What are the Financial Services Standards?
6.3 Does His Client Get Comprehensive Financial Planning Advice?
6.4 How Do They Get Compensated For Providing Financial Advice?
6.5 What is the Philosophy of Financial Planning?

Understanding Financial Advisor

As already reported from the official Investopedia website,  a financial advisor is someone who will provide advice or advice to his clients so that they are able to plan company finances or personal finances carefully.

Usually, they will provide various forms of services, such as investment management, financial matters, tax planning, etc. They will carry out their duties independently and some will work under the auspices of a financial company.

Some of them also work in offices or go to many places to meet their clients. A financial advisor also does not rule out giving seminars about financial planning in several places and teaching an online class.

But despite all that, they must have a professional license to run their business on clients. Because not just anyone can become a financial advisor.

In our own country, there are actually many professional financial advisors that you can contact if you need their services. If you’ve heard some terms such as insurance agents, tax preparers, investment managers, or stockbrokers, then they all belong to financial advisors.

So, What Exactly Do Financial Advisors Do?

After we understand the meaning of financial advisor, then maybe you will ask about what they do. Reporting from the official Career Explorer page, their job, in general, is to review a person’s financial needs and assist clients in overcoming various financial problems.

They will provide assistance to their clients to be able to plan their finances in the short or long term. They will also usually provide several recommendations in the form of an investment instrument that is in accordance with the main objectives of the client.

For example, if you want to invest in order to be able to finance retirement life and family education, then they will certainly provide investment instruments that suit your goals.

In addition, they also often provide other advice, such as in terms of insurance or taxation, depending on the problems experienced by their clients.

But in general, some of the things they do are as follows:

  • Meet clients personally to help with financial problems
  • Provide an explanation regarding the types of financial services
  • Provide education to clients and provide advice regarding investment options and risks
  • Provide recommendations on investment instruments that suit clients
  • Conduct research on investment opportunities
  • Provide assistance to clients with certain plans so that they can achieve their goals
  • Monitoring the development of the client’s investment instrument account

So, Is Using Financial Advisor Services Necessary?

The answer to this question goes back to each individual. Reporting from the official Nerd Wallet website, if you experience any doubts about resolving financial problems, it is advisable to consider hiring the services of a financial advisor.

You can make them a good adviser in helping to solve the solution of any financial problems you are experiencing. Because they have an unexpected assessment, so it will make you confident in taking a step or policy.

Apart from that, they will also help you in solving quite complex financial problems, such as debt, building a house, taxes, etc.

So, will the money used to hire their services be worth the results you will get? Of course comparable, why? Because they will provide a mature financial planning for you.

So, with a financial advisor, it is possible that your financial problems can be resolved properly, and even their advice can apply in the long term.

Advantages and Disadvantages of Using a Financial Advisor

Of course there will be a lot of benefits that you can get by hiring a financial advisor. You can directly learn how to invest well with the experts. In addition, you can also save time, because managing investments and planning finances actually takes a long time.

By using their help, you don’t have to think about personal time in arranging financial planning. On the other hand, they also have an important role in giving you the best advice when making financial policies.

Meanwhile, the drawback of using their services is of course the services which are quite expensive. However, this problem is not meaningful enough for those of you who tend to be financially well-established.

Tips for Choosing the Right Financial Advisor

If you are really interested in using the services of a financial advisor, there are several things you should consider when choosing one, here are tips for choosing the right financial advisor :

  • See the Experience

Make sure you see the whole experience before choosing one. Try to determine whether he is someone who has sufficient competence in overcoming your financial problems or not.

You can use social media or information about him on the Internet to see his experience, so you will get background information.

  • Certification

Make sure the financial advisor you choose has a special certification that is trusted. Avoid choosing a financial advisor who has not been certified, so that the financial advice he provides is not guaranteed for you.

  • Look for As Needed

Out there, there are lots of financial advisors who provide many services. Therefore, look for the one that only suits your needs. Besides that, also review the prices they offer. If the price does not match your budget, it is advisable to choose another financial advisor that fits your budget.

Questions for Financial Advisors Before Choosing One

  • What Financial Expertise Do They Have?

Before you actually choose a financial advisor, then make sure of their expertise through the certificates they have. The higher the certificate level, the better because it is not easy to get the certificate.

You need to know that one of the prestigious certificates that you can consider are Certified Financial Planner  (CFP) and  Chartered Financial Analyst  (CFA). Those with CFP certificates have expertise in financial planning. Meanwhile, those who hold the CFA certificate have the ability in investment management to asset allocation.

  • What are the Financial Services Standards?

Try to find out how they provide service to their clients. Ask for a written document or email with the word fiduciary on it, meaning they are bound to fiduciary duty. Those who are bound by fiduciary duties will automatically be regulated by law to perform their functions on the client. Thus, this will protect individual investors from a financial advisor with bad intentions.

  • Do Clients Get Comprehensive Financial Planning Advice?

Surveys show that clients will be satisfied with their financial advisors if they get a comprehensive financial plan. For that, ask them if they are able to provide comprehensive financial planning or not.

  • How Do They Get Compensated for Providing Financial Advice?

Basically, there is no right or wrong compensation model, but understanding compensation will help you in assessing whether they have a conflict of interest or not. If they are paid in terms of buying and selling, then they will set certain targets regarding the number of shares that their clients can buy or sell.

  • What is his Financial Planning Philosophy?

You should also make sure that they share the same financial philosophy to align with your needs and wants.

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