According to a recent Prosper Marketplace Financial Wellness Study, more than a third of Americans have less than $1,000 in the bank and 60% have significant credit card debt, which may lead one to wonder what does a financial advisor, like elitefm.net, do?
What Does a Financial Advisor Do?
A financial advisor is a professional in the field of finance that assesses his or her client’s financial health and offers individualized financial services, plans and strategies for a fee. The plans and strategies are developed in order to increase financial wealth and stability. Financial advisors offer a myriad of services, such as estate planning, using current tax laws to the advantage of the client and income tax preparation and investment management.
Additionally, to conduct business, a financial advisor must possess the Series 65 license. They may work for a bank, a small or large financial firm or work independently for themselves.
A financial advisor will also help create short and long-term financial goals for their client. A short-term goal may include educating the client on financial options, expenses and how to make assets work for them, how to start saving money immediately and how to better manage your current finances. Long-term goals may include getting out of debt, creating a retirement plan, saving money for your child’s college fund, paying off your mortgage on time or early, finding out how much money the client needs to enjoy financial freedom and looking for ways to increase wealth. Once goals are established, the financial advisor offers financial advice that has the best chance of obtaining those goals.
When you sit down for the first time with a financial advisor, you may feel overwhelmed and intimidated by some of the terms you hear and the plans and strategies mentioned. However, a good financial advisor will take the time to answer any questions you have and help boost your confidence in the process.
The majority of the time that a financial advisor is with you will be them learning everything they can about your financial situation, learning what your financial goals are and then suggesting ways you can achieve those goals.
Financial advisement meetings are not a quick one and done situation. Generally, they are long-term professional relationships that will continue on throughout your retirement years. Your financial advisor will continue meeting with you, checking in on your goals and reassessing your financial wellness when major life changes occur, such as if you get married, lose your job or get a new job, have a baby or reach retirement age.
A financial advisor can help increase your financial wellness no matter what stage of life you are at, whether you are just starting out, settling down, entering midlife, near retirement or already retired. They are trained in developing strategies that will work best for you.
While, technically, anybody can call themselves a “financial planner”, you should seek out financial advisors that have obtained at least one of the certificates recommended by the National Association of Personal Financial Advisors:
Certified Financial Planner (CFP) – A professional designation certificate granted based on meeting rigorous standards set by the Certified Financial Planner Board of Standards.
Personal Financial Specialist (PFS) – A specialty credential awarded to Certified Public Accountants who specialize in helping clients plan out all aspects of their financial wealth and is conferred by the American Institute of Certified Public Accountants (AICPA).
Chartered Financial Consultant (ChFC) – A certificate received after completing an extensive course consisting of practical experience, exams and financial education. The designated certificate is bestowed by The American College upon completion of two elective courses and seven required courses.
Chartered Financial Analyst (CFA)- A professional designation that measures the integrity and competency of a financial analyst. It is granted by the CFA Institute only after their exhaustive standards have been met, such as an individual must be a financial planner or analyst for no less than four years before enrolling, they must have a bachelor’s degree and pass all three levels set forth by the CFA Institute.
While credentials and professional designations are important, choosing the right financial advisor will go beyond just the paperwork they have framed on their wall. You need a financial advisor you can trust, feel comfortable enough with to ask questions and feel satisfied that your questions are being answered in a way that you can understand them. Find a good financial advisor who values you as your client and you will soon see first-hand what a financial advisor does.