Do You Need Financial Advisors?
What are financial advisors? A financial advisor or financial planner is a person that offers financial advisory services to clients according to their financial capacity. In most countries, financial advisors have to complete certain educational training and be formally registered with a regulating body to offer professional advice. These advisors can also work independently as private consultants providing financial advisory services. They use different forms of communication including the telephone, the internet, letters and emails.
In order to become a financial adviser, you have to master the knowledge of finance and investment management. The basic requirements of a financial advisors include bachelor’s degree with an accounting background. There are many post graduate programs and courses that can help professionals obtain this qualification. Most financial advisors attend investment management schools to acquire an MBA, CFA or both in finance and accountancy.
The primary objective of a financial adviser is to advise their clients on financial products and investments. A planner helps the client make investment decisions according to his preferences. Financial planners have to devise strategies that can make a return desirable for the client. Some of these strategies can be long-term ones like savings and retirement, purchasing bonds, real estate and insurance and short term ones like making money by trading in options, commodities and stocks. They can also help their clients control their personal finances and set up a budget plan to suit their lifestyle and investment goals.
The duties of financial advisors are to protect the interests of their clients. This is achieved by ensuring that their clients take the right investment decisions. The duty of a financial planner is further ensured by making sure that the interests of the client are protected from inappropriate financial transactions. A fiduciary is an individual who has a legal and professional responsibility to their clients to act in their best interest at all times. They are required to avoid conflicts of interest and ensure that the advice they give is based solely on facts and not on feelings or emotions.
The main focus of financial advisors is to promote wealth creation. However, they need to be aware of the different approaches to wealth creation like asset protection, strategic investing, and holistic investment management. Asset protection is one of the most important strategies of sound financial advisors. Financial planners can help their clients safeguard their wealth by providing policies that will secure it until such time as the investor decides to withdraw from the policy or pass on ownership of the asset to family or friends. These policies can be tailor made and designed according to the specific needs of the client and can also include provisions for tax minimization.
Another important aspect of being a good financial advisor includes the ability to evaluate risk management schemes and strategies. The financial advisors must be able to analyze their clients’ needs and expectations to determine how their investment plans will fit into their long-term goals and objectives. For example, a young professional with significant savings may wish to invest in market-cap stocks to earn a higher income. In this case, he would be better off hiring an experienced professional with the requisite skill set to evaluate short-term and long-term market trends and their effect on his investing choices. This type of analysis will prove invaluable as he pursues his investing plans.