The Role of a Financial Advisor and How It Can Help You

A financial advisor is a person who provides financial advice or guidance to their clients. In this article, we tell you more about what a financial advisor does and what differentiates him from a financial coach.

To better understand the role of a financial advisor, let’s start with an example.

Since childhood, we are used to visiting a doctor. The first memories may not be so happy since they involve needles at the appointment with the pediatrician. However, as we get older we understand the importance of going to the doctor to cure or prevent diseases.

As we enter adult life, we become more aware of good eating habits and exercise, although we do not always practice them! However, at least once a year we must visit our primary doctor to assess our physical health and thus prevent complications.

If we applied the same principle to our finances, we would avoid many headaches and serious complications when it comes to money.

From our own experience, we know that stress has serious consequences on your physical health. Therefore, good financial health should be a priority for everyone.

What exactly does a financial advisor do?

A financial advisor explores your current situation and, based on the objectives or goals you want to achieve, gives you recommendations in this regard.

As in the case of doctors, there are several kinds of consultants. A financial advisor can be a generalist (such as an internist), a specialist (such as a cardiologist or plastic surgeon), or a combination (such as an internist-cardiologist).

Each country has its regulation on this matter. For example, in the United States, a financial advisor must have a license known as Series 65, particularly if he works as an investment adviser. Similarly, an insurance consultant must be licensed.

It is important that you make sure that your advisor has the credentials required by law, for your safety in case of any inconvenience.

What is the difference between a coach and a financial advisor?

When we go to evaluate our health, in some parts of the process we interact with nurses and then the doctor.

Those who study nursing can attend to health matters to a certain extent. They can take your weight and measure your pulse or temperature. What they cannot do is prescribe treatments.

Both roles are necessary and very favorable for your financial health. Those who do coaches can help you achieve your goals. Today, financial advisors who really care about the well-being of our clients, use elements of coaching for complete support.

How to choose a financial advisor

The first step is to recognize when we have a health problem (physical or financial) or we want to plan and prevent inconveniences. That is when we should seek professional help.

Once you identify a financial advisor professional, you can seek an initial conversation to explore their knowledge and experience.

When choosing a financial advisor, it’s important to work with someone you feel comfortable with. The relationship between a person and her financial advisor is very similar to that between a patient and her doctor. A good advisor educates to guide and listens to understand, not to sell. If an advisor doesn’t hear you and is just looking for ways to sell you something, run!

It is important that this advisor has empathy and knows how to explore and ask questions to understand you more than talk. Only then will he be able to effectively put his knowledge at your disposal to support you in achieving your goals.

How and how much does a financial advisor charge?

There are several ways in which an advisor charges their clients. The salary of a financial advisor can be by the commission, by the percentage of managed assets, or a fixed price ( flat fee ) per hour or per project.

Payment on commission

 Its main role is the purchase and sale of securities to invest in the capital market. Depending on their service model, they may or may not include an in-depth assessment of your financial situation.

Payment of percentage of managed assets

Investment financial advisors may charge a percentage of the money they manage for you. For example, if an advisor manages your investments, which currently total $100,000 and charges 1% per year, then you will be paying $1,000 per year for their services.

As we mentioned before, each country follows its own regulation.

Those who work under this collection model follow what is known as the fiduciary principle or the good father of a family ( fiduciary duty ). They usually perform their duties as a family doctor. In addition to managing an investment portfolio, they assess your overall financial health. This is known as wealth management.

Fixed price payment ( flat fee ) per hour or project

Depending on the client’s need, some consultants charge by the hour ($150-$500) or a lump sum ($1,000-$5,000), depending on the scope of the project.

Hourly appointments are used to explore future problems or needs and plan a course of action. They also serve to monitor a plan in progress or to achieve a specific objective.

Projects can be organizing personal finances or preparing a financial plan. It can also be supported by the development and execution of a comprehensive plan with other professionals such as lawyers, and accountants, among others.

How can a financial advisor help you?

Health is first. Without health there is nothing.

This phrase applies physically and financially. To lead a healthy life sometimes we require professional guidance.

When it comes to money, a financial advisor can support you to improve your financial situation in the event of a problem. Similarly, it can propel you to achieve your goals, whatever they may be.

In any case, investing in professional help can be beneficial for your health.

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