Financial Advisors and the Fiduciary Standard
Financial Advisors are professionals who offer financial advisory services to customers according to their financial situation. They also analyze and evaluate the customer’s financial profile, objectives, needs and preferences. In most countries, financial advisers have to complete certain educational courses and obtain formal registration with a regulatory board in order to give professional advice on various investment issues. Today, it is very important to hire an experienced advisor who can help you manage your finances effectively. With advancement of technology, several firms offer online financial advice services. Therefore, you can consult your advisor via the internet without traveling away from your place.
The primary role of financial advisors is to assist the investors to make sound investment decisions. There are many different fields of specialization which are related to investment management, retirement planning, estate planning and many more. Many financial advisors also provide investment advice to their customers. They help the investor plan various options like short-term investments, long-term investment options and so on. With the advent of the internet technology, advice can be given from anywhere at any time.
Most people prefer to hire a fee-based financial advisor because the fees charged are generally lower than the costs of obtaining the services of a non-revenue earning advisor. Nevertheless, the services of non-revenue earning advisors are also very useful and can play a vital role in assisting the investor to come out with a sound financial plan. Many financial advisors today are working with various pension fund boards to help them devise an appropriate financial plan for their employee beneficiaries. Although the financial advisors have to follow the rules and regulations of the government, their objective is always the same – that the best interests of the investor should be protected.
There are many regulatory bodies and associations which set the suitability standard for financial advisors. These associations include the AM Best (publisher of the prestigious “Best Insurance Companies” rating), Standard & Poor’s ( Moody’s Investor’s Service) and others. The suitability standard involves a thorough evaluation of an advisor’s skills, experience, education and suitability towards particular clients.
All good and reliable financial advisors should share the same guiding philosophy: First, their goal is to help their clients achieve their long-term goals. Second, they strive to continuously evaluate their clients’ needs and circumstances to determine what type of plan will help them achieve those goals over a period of time. And third, the type of plan chosen should be in accordance with the income of their client(s). In other words, all good advisors should want their clients to succeed in the investment marketplace.
All good and dependable financial advisors work under the strict supervision of their state regulatory agencies. Also, all good advisors, no matter how experienced or how well-versed in the area of finance, must still adhere to the minimum standards of conduct required by law. All such professionals need to be registered with the appropriate regulatory agency, and all of them have to complete a Fannie Mae or Securities and Exchange Commission (SEC) examination. Finally, all good advisors need to participate in Continuing Education (CE) events. Finally, all good financial advisors work diligently to make themselves available to their clients, to answer any questions that they may have, as well as to discuss their firm’s products and services on a regular basis.