What Does a Financial Advisor Do? A Comprehensive Overview
Written by
Laura Bogart
Edited by
Amber Barkley
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A lot of excellent personal finance advice, including the kind you’ll find at GOBankingRates, boils down to one core nugget of wisdom: Consult a financial advisor you trust.
You think it will be simple enough, just going online and finding someone local and well-reviewed. Then you hop on the information superhighway and see that the lanes are crowded with people who are calling themselves finance professionals. How do you identify a proper financial advisor — and find the right one for you?
Fortunately, GOBankingRates is here to give you an easy breakdown of what a financial advisor is and how they can help you.
A Financial Advisor Is a Trusted Partner in Your Financial Future
Simply put, a financial advisor is a professional with the training and experience to offer you advice around topics related to your personal finances. Ideally, a financial advisor has at least a bachelor’s degree and a strong background in finance. Advisors who have studied business also gain a comprehensive understanding of topics critical to personal finance, like banking and economics.
A financial advisor can take a “cradle-to-grave” approach to your finances, guiding you through everything from creating a budget, learning how to pay your debt, starting to invest, determining the best insurance coverage, planning for retirement and developing an estate plan.
Since this professional will take such an active role in helping you shape your financial goals throughout your life, it’s important that you select someone who understands your desires and is committed to helping you achieve them.
Financial Advisors Help Everyone — Not Just the Rich
While it would be understandable to imagine that financial advisors are there to help wealthy people get wealthier, the truth is that, no matter where you are in your financial journey, you could benefit from the expertise of a trusted advisor.
According to Forbes Advisor, “There’s no one-size-fits-all model, so it helps to understand the common services many professionals offer. All in all, the best financial advisors have a vested interest in the whole of your financial life and will help build a road map for your ongoing financial health.”
The publication shared that, in addition to services like offering investment advice, retirement and estate planning, as well as tax planning and help with picking long-term insurance, financial advisors are also adept at helping everyday people build a budget or even figure out how to get out of debt.
As the publication put it: “If you feel like your debts are standing in the way of a sound financial life, a financial advisor can create strategies to pay down your existing debt and help keep you out of debt for the long term. Less debt means more money you can save.”
How To Find the Right Financial Planner
Of course, looking to friends and family who have had success with their own financial planners is a great way to get some names and make some introductions. Whether you’re fortunate enough to have this “in” or you need to do some scouting online, there are a few steps you can take to know you’re getting a planner who will work well with your interests.
Verify Their Certifications
In addition to asking about their educational background, you’ll also want to see if they have additional certifications, specifically a CFP, or certified financial planner, designation.
CFPs have proven their mastery of a wide range of financial topics while passing a rigorous exam and meeting ethics requirements created by the Certified Financial Planner Board of Standards.
Read Reviews
Reading reviews of the advisor’s services can also give you a sense of how well you could work together. Reputable advisors also shouldn’t mind it if you ask for references.
You should also avail yourself of resources like BrokerCheck, which is maintained by the Financial Industry Regulatory Authority and provides licensing, regulatory, disciplinary and employment histories for registered advisors.
Meet With Them
But remember, there’s no better judge of character — or at least compatibility — than you are. Come to your first meeting with a prospective advisor with your own list of questions about how they’ll help you meet your goals.
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