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Financial Advisors: What Do They Do?

Mike Hunt

Financial Advisors: What Do They Do?

Quite a bit. Read this for more information and prepare for your meeting with your financial advisor.

What does a financial advisor do? Generally, these professionals help you make money management decisions, such as investing or taking other actions.


  • The responsibilities of a financial advisor extend beyond executing trades in the markets on behalf of their clients.
  • Clients entrust their advisors with creating personalised financial plans to help them reach their financial goals.
  • In addition to investments, these plans offer strategies for saving, budgeting, insurance, and taxation.
  • In addition, advisors meet with clients regularly to reassess their current situation and future goals and formulate plans accordingly.

A Financial Advisor Aligns Your Life Aims With Your Finances

An advisor helps you plan for the future. Think about retiring in 20 years or sending your child to a private university in 10 years. Financial advisors are qualified professionals with the proper licenses who can help you make your plans a reality.

During your meeting with your advisor, you will discuss a wide range of topics, including how much you should save, what type of account you need, which insurances to purchase (including long-term care, term life, disability, etc. ), and estate planning.

Educating clients is also part of the financial planner's role. Your advisor also helps you understand how to achieve your future goals. You may receive detailed assistance with financial topics during this process. Budgeting and saving may be among the issues discussed at the beginning of your relationship. When you become more knowledgeable, your advisor will assist you in understanding complex investment, insurance, and tax matters. 

Understanding your financial health is the first step in the financial advisory process. If you don't know where you are today, you can't adequately plan for the future. Most often, a written questionnaire will be required. In addition to helping the advisor learn about your situation, your answers will ensure you don't overlook any critical details.

The Financial Profile Questionnaire

Financial advisors will help you gain an understanding of your assets, liabilities, income, and expenses. You should list all investments, pensions, gifts, and sources of income that you have and are expecting to have. Additionally, you will need to describe any long-term financial obligations and future pension plans, as well as future income sources.

As part of the investment questionnaire, you will be asked questions regarding risk tolerance and risk capacity. An advisor can determine your investment asset allocation based on an understanding of your risk. The advisor will also ask you about your investment preferences at this point.

Other financial topics, such as insurance concerns and tax issues, may also be examined in the initial assessment. Advisors should be kept abreast of your estate plan and other professionals on your team, such as accountants and lawyers. You and your advisor can work together to develop a plan to reach your life and financial goals once you both know your financial position and future projections. 

Financial Planning

Your financial advisor will create a comprehensive financial plan that will serve as a road map for your financial future using all of this initial information. It begins by summarising the findings from the questionnaire and summarising your financial status, including liquid assets, liabilities, and net worth. You and the advisor discuss the goals in the financial plan.

The analysis section of this lengthy document explains several topics, including your risk tolerance, your estate-planning details, your family's circumstances, long-term care risks, and many other pertinent present and future financial considerations.

Based on your expected net worth and future income at retirement, the plan will simulate both the best- and the worst-case scenarios for your retirement, including the scary possibility of outliving your money. You can take action to prevent this from happening. It examines the rates at which you should withdraw from your portfolio in retirement. The plan will also consider survivorship issues and financial scenarios for the surviving partner if you are married or in a long-term partnership.

You can implement the plan after reviewing it with the advisor and making adjustments as necessary.

Action Steps & Implementing The Advisor's Plan

Investments are not the only thing a financial advisor does. They help you with all aspects of your finances. Even without them managing your portfolio or recommending any investments, you could work with a financial advisor.

Investment advice is a significant reason why many people work with a financial advisor. Here are some of the things you can expect.

Your advisor will design an asset allocation that meets both your risk tolerance and risk capacity. An asset allocation is simply a means for determining what percentage of your total financial portfolio will be allocated to each asset class. Those who are risk-averse will have a higher concentration of government bonds, certificates of deposit (CDs), and money market investments. At the same time, those who are more comfortable with risk will invest more in stocks, corporate bonds, and possibly even investment real estate. You will have an asset allocation based on how old you are and how long you have before retirement. When purchasing and selling financial assets, financial advisory firms must follow their company's investment policy and the law.

Ensure You Understand Your Financial Advisor's Recommendations

As a consumer, it's essential to understand why your planner makes specific recommendations. Investors should not follow a financial advisor's recommendations blindly; it's your money, and you should know how it's being used. Pay attention to the fees you are paying - both to your advisor and any funds they may be buying for you.

Ask your financial advisor why they recommend specific investments and if they receive a commission for recommending them. Watch out for conflicts of interest.

The selection of financial products is based on the risk profile of the client. A 50-year-old individual may be interested in capital preservation if they are already comfortable with their net worth. The number of stock assets (that are either individual stocks, mutual funds, or exchange-traded funds (ETFs)) may be 45%, and the amount of fixed-income investments (such as bonds) may be 55%. Additionally, a 40-year-old with less net worth and a willingness to take on more risk may choose an asset allocation of 70% stock assets, 25% fixed income assets, and 5% alternative investments.

Your personal portfolio is built according to your needs as well as the firm's investment philosophy. Your decision should be based on your investment horizon, present and future goals, and when you need the money.

Regular Monitoring

Your advisor will send you regular updates on your portfolio once your investment plan is in place. Your advisor will also schedule regular meetings to discuss your goals and progress and answer any additional questions you may have. Clients can make contact more often by meeting remotely over the phone or via video chat.

Apart from regular, ongoing meetings with your advisor, you should consult with him or her when you anticipate significant changes in your personal and financial life, such as getting married, divorcing, adding children to your family, purchasing a home, or changing jobs.

Signs You May Need an Advisor

Financial advisors work with people of any age and at any stage of their lives. High net worth is not required; find an advisor who fits your situation.

Professional help with money is a highly personal decision, but any time you feel confused, overwhelmed, stressed out, or scared about your finances might be an excellent time to consider hiring a financial advisor. Unless you can afford such assistance, you may be able to get free aid from a financial planning charity.

It's also okay to seek out a financial advisor when you feel financially secure, but you want someone to make sure you are on the right track. Having an advisor help can improve your plan to achieve your goals more effectively.

A financial advisor can also help you if you lack the time or interest to manage your finances.

Those are a few general reasons why you might need the help of a professional advisor. Now for the specific reasons.

If you don't invest or don't know how to invest your savings

Any cash or low-interest account you keep declines in value each year because we live in an inflation-driven world. The only way to make your money grow is to invest, and unless you have an unusually high income, you will never have enough money to retire unless you invest.

Your investments are consistently losing money

Market downturns or decisions that don't work out as planned cost investors money even when they're the best investors. However, investing in general increases your net worth. You can hire a financial advisor if it's not doing that, so you can figure out what you're doing wrong and correct your course.

Currently, you lack a will.

Having your assets handled according to your wishes after your death can also be achieved with the help of a financial advisor. You can also work with a financial advisor if you aren't adequately insured (or unsure which insurance you need). Fee-only financial advisors may offer a more unbiased opinion than insurance agents.

Getting you where you want to be

Investing and reaching long-term goals are ways that financial advisors can help.

Access To Expertise

A financial advisor has more experience with investment and money management than most people. A financial advisor will guide you to making better choices than you might make on your own.

Removing Short-Term Emotion

By keeping you away from emotional decisions regarding your money, financial advisors help you stay on track. Such as buying a stock that's skyrocketed or selling your entire stock portfolio when the market crashes.


It's in the name. A financial advisor can suggest the best strategies to improve your finances; this includes everything from making investments to buying insurance.


A financial advisor can help you adjust your financial plan as your life circumstances change.

Steps to take

Those who are too busy or uncertain about what to do don't manage their finances well. When you work with a financial advisor, someone else handles things you don't have time for, so you can focus on what matters most.

How much does a financial advisor cost?

On a commission basis

According to the commission model, financial advisors typically earn a commission for the products they recommend to clients. As a result, clients may never need to pay the financial advisor. As a result, they might end up with financial products that charge higher fees than similar products on the market. Advisors may earn high commissions on these products.

The fee-based business model

Advisors who follow the fee-based model charge clients either by the hour or as a percentage of their assets under management (AUM). For financial advice, the typical percentage fee is 1%, and the regular hourly fee is between £60 and £300. It depends on where you are located and how experienced the advisor is. Often, advisors offer lower rates for clients who are just getting started with financial planning and cannot afford a high fee. Financial advisors usually provide a free initial consultation. Both the advisor and the client can decide if they are a good match in this consultation. 


Some companies provide their customers with a digital financial advisor, also known as a Robo-advisor. Robo-advisors use computer algorithms to manage your money according to your goals and risk tolerance. Robo-advisors cost less than human, financial advisors and don't require much money to get started. eToro and MoneyFarm are two examples. The services can potentially save you time and money.

Robotic advisors typically invest clients' money in an exchange-traded fund (ETF) or mutual fund portfolio that provides stock and bond exposure and tracks an index. However, a Robo-advisor cannot advise you on how to pay off debt or fund your child's education. Additionally, it can't convince you not to sell your investments out of fear or assist you in building and managing a portfolio of individual stocks. Also, if you have a complex estate or tax issue, you should know that only a human can provide the highly personalised advice you need.

Some firms, however, offer the option of human interaction alongside digital portfolio management at an additional cost. The services are called digital advisors because they are provided over the phone or via video chat rather than in person; others interchangeably use "Robo-advisors" and "digital advisors".

In Conclusion

Financial advisors don't all have the same level of training or offer the same level of expertise. When contracting with an advisor, ensure that the advisor c

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