Financial advisors offer professional advice to people willing to pay for it. They work with individuals, companies, and government agencies on financial planning.
Financial advice can be provided in the following areas:
- Investment advice – Estate planning
- Retirement planning – Tax advice
It’s important to know that financial advisors don’t provide investment or tax advice. They only consult clients on general topics related to money management. Clients do not come with ready-made plans; they want professional help developing them.
A good advisor will talk about relevant issues like how much money is needed for retirement, what assets should be sold at which time, how much risk should be taken etc. A good advisor always asks you questions before advising you.
The significant difference between a financial advisor and an investment manager is that the first one only provides advice while the second manages client portfolios. Numerous financial consulting firms focus on selling products, which could bring additional revenue for the consulting firm, but it’s not always the best option for clients. Advisors should be compensated by their clients, not by third-party companies. An excellent way to find out if an advisor is independent would be to ask how he gets paid and who benefits from his services.