A financial advisor or financial planner is someone who offers financial advisory services to clients according to their financial status. They also help in planning and forecasting future sales based on investment returns. In most countries, financial advisors have to complete certain training and be duly registered with a regulatory body to give professional advice. There are many types of advisors and one can choose the one who meets all their needs.
According to the Securities and Exchange Commission, registered financial advisors are required to disclose all relevant information regarding the conflicts of interest and costs involved. All financial advisors should be registered under the National Association of Securities Dealers and should have their license number from the Commodity Futures Trading Commission. Advisors may also be required to meet certain minimum standards such as having a three-year college degree or be a graduate of an accredited business administration program. Some states also require financial advisors to be licensed by the state before they can take the licensing exam.
The different types of advisers include investment bankers, insurance agents, real estate professionals, venture capitalists, individual wealth investors and pension fund management teams. Investment bankers can advise and provide investment advice for a client according to the bank’s investment policies. Insurance agents have the duty to represent their insured customers and collect premiums, pay claims, and manage the portfolio of the insured. Real estate professionals deal with the purchase of property and financing it as well as the maintenance and repair of the property. Venture capitalists are people who invest in the ownership of businesses and enterprises and deliver a return to their investors.
To become a qualified financial advisor, a person has to have sound knowledge of investment strategies and tools. He or she should know how to analyze investment proposals and evaluate the performance of the investments. Advisors should have a thorough understanding of tax laws, so that he or she can advise and provide support for the clients’ tax-related needs. It is important that the advisors understand the goals of their clients and the time-specific goals. In addition, financial advisors should have realistic expectations about the returns on the investments of his or her clients.
Before hiring a financial advisor, it is important that the client understands his / her financial goals and objectives. Advisors should be willing to explain their fee structure to the clients. They should also be willing to talk about risk factors and what they can do to mitigate the risks inherent in the investments of his or her clients. Clients should also be able to discuss plans with the financial advisors regarding their retirement accounts, pensions, IRAs and other plans.
Some states have rules that limit the amount of commission that financial advisors may receive based on the number of services provided. The number of commissions may range from one to five percent. Financial advisors can earn additional money through the sale of discount fees, waiving debt, making referrals to other financial products and accepting payments for the placement of their clients’ annuities. Some states have no provision for fees and rely on the discretionary income earned through the self-employment rule, while others have limited or no provision for fees at all.