Common Types of Financial Advisors
Financial Advisors are professionals who provide financial advisory services to customers according to their financial circumstance. In most countries, financial advisors are required to complete certain training and obtain registered with a regulatory board in order to give financial advice. They are also expected to undertake certain examinations annually. Financial advisers can be brokers, stockbrokers or Dealers. They work under firms that do the brokerage for the customer.
Most common financial advisors are brokers who provide investment advice, stockbrokers offer investment advice and bondbrokers provide specialized financial products like bonds, options and funds. Some other advisers work as self-employed or work for a corporation as an employee. There are also consultants who give speeches and present reports at various engagements as public speakers. There are consultants who have earned a license to promote certain products or services.
A financial advisor can be of various types. Clients may choose to have an adviser who gives investment advice and manages their funds or an advisor who gives investing advice and helps them invest in certain securities. The advice on investing should help the client make wise investments according to his capacity and capital. Advice on saving for retirement and investing for kids’ education are other services which are commonly provided by financial advisors.
Many financial advisors use computer software to assist the client in setting up a portfolio. Some of these software are known as robo-advisors. These robo-advisors are able to analyze the portfolio of the client in real time and recommend changes in the portfolio depending on the performance of the portfolio. If the portfolio is performing poorly, the advisor may suggest a portfolio change that may help recover the losses in a short period of time. However, if the portfolio is performing well, the advisor may not need to make any changes.
Other types of financial advisors are those who work on a contract basis or a fee-based financial advisor. A contract-based financial advisor may work with clients on a one-to-one basis, while a fee-based financial advisor may work on a collaborative basis, wherein the client and the advisor meet regularly to discuss his/her goals, objectives, investments and financial plan. The client may also be required to pay some fees as part of the relationship between the advisor and the client. This includes a transaction fee, service charge and investment management fee. Most often, a bank or a brokerage firm charges a transaction fee when dealing with customers, while a discount broker charge a commission on the investments made by the customer.
One type of financial advisors are those who provide services such as planning for estate plans, retirement plans and liquidation of retirement assets. While these advisors provide services, they do not make investments and advise their clients on how to achieve their goals. The services provided by this type of advisor can be provided over the phone, in person or online. A fee-only financial advisor may work online through the Internet, whereas a discount broker provides this service through email or phone.