What Does a Financial Advisor Do?

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 15, 2024

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Financial Advisor Overview

A financial advisor is a professional who helps individuals and businesses make a sound investment, savings, and spending decisions. They can also provide strategic advice on financial planning concerns such as retirement, taxes, and estate planning.

Financial advisors can not only help clients set goals, but they can also help monitor progress and adjust strategies as needed. Thus, having a financial advisor can be invaluable for anyone looking to meet their financial goals.

There are different areas of specialization and types of services that a financial advisor can offer. Thus, clients need to determine their primary needs, so they can select a financial advisor who can adequately meet them.

What Does a Financial Advisor Do?

There are many tasks that financial advisors perform as part of their job description. These include the following:

Meets With Clients

A financial advisor meets with clients to discuss their goals and objectives. They will also analyze the client's current situation and develop a plan tailored to their needs.

Financial advisors can conduct meetings in person or online. They may also occur at a frequency that suits both the financial advisor and the client. For instance, they may meet in person once a year for goal setting and have online meetings every quarter after that to monitor progress.

Offers Strategic Advice on Products & Services

Financial advisors provide advice on various products and services that may be suitable for each client. For example, they can suggest which stocks, bonds, mutual funds, or exchange-traded funds (ETFs) clients can invest in.

They can also discuss which options or alternatives are best suited for each client. For instance, they can help clients decide which life insurance to get and which retirement plan to prioritize.

Performs Market Research

Financial advisors will often monitor the stock market, economic trends, and global events to provide clients with timely advice based on current conditions. They use this information to make informed suggestions helping their clients stay ahead of the market.

For example, they can help clients rebalance and diversify their portfolios, protecting them from expected market volatility due to an impending financial crisis.

Reviews Client Accounts

A financial advisor reviews client accounts periodically. Based on this review, financial advisors can report to their clients, request meetings, and suggest necessary strategy adjustments.

This process can include tasks such as analyzing the performance of a client's portfolio, determining risk factors, and even aligning plans due to a significant event in the client's life, such as marriage or the birth of a child.

Prepares Financial Documents

Certain types of financial advisors can also prepare documents such as investment reports, tax returns, wills, and estate plans. To check which of these documents a financial advisor is equipped to handle, clients can ask about their advisor's certifications and other relevant questions.

For instance, a financial advisor with an Enrolled Agent (EA) Certification can help clients prepare tax returns and represent them before the Internal Revenue Service (IRS) during audits.

Maintains Compliance With Regulatory Bodies

Financial advisors are expected to comply with applicable federal and state regulations. For example, some financial advisors are fiduciaries legally bound to act in their client's best interests. If they wish to keep their certifications, they must uphold ethical standards.

This task also includes staying informed of any changes in the law that could affect their clients. For instance, financial advisors who prepare their client's tax returns can ensure that they are aware of the latest allowed deductions or credits that can help clients minimize taxes.

Follows Market Trends & Best Practices

A financial advisor must also stay abreast of current market trends and best practices. This means they may need to attend conferences, read relevant publications and take continuing education courses to maintain their licenses.

Financial advisors can ensure that they offer their clients the most updated information by engaging in these activities. These activities also demonstrate to clients and the appropriate regulatory bodies that these advisors still deserve to keep their respective certifications.

Builds & Maintains Client Base

Lastly, financial advisors, especially those who work independently, must actively develop and maintain a client base by marketing their services, locating potential new clients, and cultivating deeper relationships.

They can use social media, join networking events, and attend seminars to spread awareness of their services and build credibility within the financial community.

Financial Advisor Services

A financial advisor provides different types of services depending on the needs of their clients. This can include:

Portfolio Management

Portfolio management involves selecting and managing investments to meet a client's goals. Under this service, financial advisors may assist with asset allocation, investment diversification, portfolio rebalancing, and other strategies to help maximize returns while minimizing risk.

Tax Planning

Financial advisors can offer various tax services such as advising clients on minimizing taxes by taking advantage of tax credits and deductions. In some cases, this service can involve proper preparation of tax returns to avoid penalties and even representing clients should there be a need for an IRS audit.

Estate Planning

Estate planning involves preparations for how clients want their assets distributed after death. Under this service, a financial advisor can help clients create wills to properly distribute assets or trusts to protect these assets from creditors.

Retirement Planning

A financial advisor can help clients develop an appropriate retirement savings and investment strategy. This can include recommendations on which retirement vehicle bests suits a client's situation and providing advice on maximizing these retirement accounts.

Wealth Management

Certain financial advisors offer wealth management services to help high-net-worth individuals protect and grow their substantial assets. Financial advisors who offer these services have more experience than their peers in managing high-value portfolios.

Debt Management

Financial advisors may also guide clients through eliminating or minimizing debt. This service involves analyzing a client's financial situation, developing payment plans, negotiating with creditors, or restructuring debt.

Insurance Planning

Financial advisors can help clients manage risk by assessing their needs for various types of insurance, such as life and health insurance. They may also review existing policies to ensure they are sufficient for the client's current and future needs.

Do You Need a Financial Advisor?

For those looking to get their finances in order, reach major financial goals, or make sound long-term investments, working with an experienced financial advisor may be the best choice.

Financial advisors can help take the guesswork out of personal finance by providing comprehensive advice on investments, taxes, estate planning, retirement planning, wealth management, debt management, and insurance planning.

However investing in the services of a financial advisor is an important decision that should not be taken lightly. Before entrusting your money to someone, it is essential to research and ensure that they are properly qualified and experienced with similar clients.

The Bottom Line

Financial advisors are professionals who offer various services to help individuals manage their finances, from portfolio management and taxation advice to retirement planning and wealth management.

Hiring a reputable financial advisor can benefit anyone looking to reach their financial goals. A good financial advisor can provide invaluable guidance in making sound investments, minimizing taxes, and creating a secure future for you and your family. However, different financial advisors offer various services and may specialize in certain areas. Thus, you must ensure that any advisor you work with has experience and credentials appropriate for your particular needs.

Many financial advisors must also pass specific licensing requirements and adhere to the rules and regulations of their jurisdiction. So careful research and checking of these factors can help you select a trustworthy financial advisor who will help you manage your money wisely.

What Does a Financial Advisor Do? FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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