What Are the Four Skills Needed of a Fee-Based Financial Advisor?
A financial consultant or financial adviser is someone who gives financial advice to clients according to their financial position. In most countries, financial advisers must still complete certain training and obtain certification from a regulatory body if they wish to give professional advice. These days, however, financial advisers are not restricted to advising on investment matters but can also help companies and individuals make strategic decisions, manage money and identify opportunities. Some advisers work independently while some work for firms that hire them as part of an overall strategy. Whatever the function, there are several key skills required to become a good financial adviser.
The first skill a good planner has is the ability to understand financial situations and people very well. This allows them to help guide their clients by providing sound investment advice and selecting the right kind of financial products for their needs. Good planners know when to advise their clients against taking risky investments and when to suggest high yield investments. They are excellent at finding the best risk-adjusted returns from a variety of investments and can do this quickly. Because financial advisors often have access to a wide variety of different investments, they are valuable in helping clients choose the right ones.
The second skill required for a financial advisor is knowledge of how various financial products work. This includes understanding how different products like bonds, mutual funds, insurance and stocks work, how they earn returns and when they need to be sold. Because different products have different characteristics, it takes a knowledgeable financial advisor to understand these characteristics and how they apply to a client’s individual circumstances. In addition, good financial advisors will often have a background in business; therefore, they will be able to discuss various investments in greater detail than a regular consumer would. When financial advisors provide clients with specific advice, they should discuss the investment in greater detail, provide research on the product and why it is a good choice for them.
The third skill a good financial advisor has been good communication skills. Good financial advisors should know how to communicate their advice and recommendations to clients in an easy-to-understand manner. Clients may not always be receptive to financial advisors if they are unable to communicate well. Therefore, it is important that good advisors know how to communicate with people from all walks of life.
The fourth skill required of financial advisors is having an understanding of the applicable law. While most advisors are required to follow the law and their states’ laws, only a few are required to actually take and pass an exam created by the US Department of Justice. If an individual is being considered for certification, they must pass this test, which explains, amongst other things, the suitability standard.
Finally, good fee-based financial advisors are service-oriented. They should be committed to providing the best service possible to their clients. This means that they should take time to fully understand a client’s financial plan and help them develop the best strategy to reach their goals. They should also provide honest and clear advice to their clients in the areas of good investment decisions and how to get those decisions off the ground. A good advisor will help clients develop sound financial plans and develop long-term financial goals that are achievable.