What Exactly Does A Financial Advisor Do?

Managing your finances is a critical skill that everybody should master in life, but it can be tricky. To get you on the right track, or if you don’t have the time, it’s good to turn to someone you can trust to handle your investments. A financial advisor is a person with the skills and knowledge to help you get the hang of finances. But what exactly do financial advisors do, and how will they help you sort out your finances? 

Financial Advisors offer clients financial guidance and advice as a service. They often have several different services that they offer that fall under their role as a financial advisor, including:

• Tax planning

• Investment management

• Basic financial planning

• Estate planning

• Portfolio management

• Sale of insurance products

So far, we have a pretty basic understanding of what financial advisors do, but keep reading to find out more about their services and what they actually do. 

What do financial advisors actually do?

A financial advisor’s role involves a broad range of money-related activities, from budgeting and saving to investing and retirement planning. Some financial planners specialise in certain roles, while others offer a broader range of services. 

These are a few services that financial advisors offer:

Financial Health Assessments

Generally, financial advisors will start by assessing your current financial status. This in essence, is what shows them where you are financially and how healthy your financial status is. Knowing this allows them to accurately plan and guide you to greater financial health. This means that they’ll need to view everything related to your finances, including debts, investments, savings, income, expenses, and assets. 

Financial Plans and set goals

Next, they’ll need to get an idea of what your goals are. What do you want to do with your finances? This is a vital part because they’ll need to know this to create a plan for you. Financial advisors are well-versed in methods and ways in which they can improve your financial health. Once they understand your goals, they’ll design a plan tailored to help you achieve them. This plan could include budgeting, saving, investing, and managing debt. It’s tailored to your unique circumstances and objectives.

Advise on Investments

Financial advisors may also advise you on where and how to invest your money to maximise returns while considering your risk tolerance and time horizon. This can involve suggesting specific stocks, bonds, mutual funds, or other investment vehicles.

Risk Management

A common practice for financial advisors is risk management. Financial advisors can help you identify and plan for potential risks that could harm you financially and physically. They’d recommend methods and strategies on how to avoid these risks. These methods often come in the form of insurance products like life insurance, income protection, and medical insurance. 

Retirement Planning

Retirement planning is also a big part of the services financial advisors offer. Financial advisors help you plan for retirement by calculating what you want or need to retire on financially and creating a savings or investment plan that helps you achieve that result by a certain age. This includes things like a Retirement Annuity or Pension Fund. 

Tax Planning

Financial advisors are also pretty clued up with your country’s tax regulations, making them well-equipped to help you plan for tax by minimising the amount you have to pay through tax-efficient investments, charitable giving, and other legal tax avoidance strategies. 

When do you need a financial advisor?

Recognising the right time to get guidance from a financial advisor can have a huge impact on your financial well-being. In most cases, experts say the earlier, the better. But this also depends on your financial experience and expertise. 

For younger people and those who are starting fresh careers, getting a financial planner to help you set wise financial goals and open up retirement investments is essential. The earlier you start moving towards your goals, the faster you’ll get to them. Other reasons to get guidance from a financial advisor are:

• You’ve received a significant salary increase and need to re-assess investments for tax planning purposes
• You’ve had a significant life change, like getting married or divorced
• For family planning, especially if you’re planning on having children
• Saving and planning on buying a home
• To set up wills
• To help you get out of financial trouble or debt

How to find a financial advisor?

Finding a financial advisor is pretty easy; there are so many readily available, you simply need to type  “financial advisor” or with location like “financial advisor Sydney“on Google, and hundreds will come up. But there is a difference between finding someone with the title and someone who you can trust with your money. 

The best way to find a trusted financial advisor is by word of mouth. Ask your friends who they use or even other trusted businessmen. When you ask someone with experience using a financial advisor, they can give you details on whether or not that financial advisor is good or not. Checking reviews might also help. 

You also want to check if the financial advisor you’re considering is fully qualified and accredited to practice. This will indicate their authenticity and help you avoid running into scammers. 

Final Thoughts

Whether you’re in your twenties and tackling your first job or coming up on retirement, there’ll always be a time in your life when you need financial guidance. Getting advice from a financial adviser can help you strategically and successfully achieve your financial goals. Have you approached a financial advisor yet? If not, why not get in touch with one now and start your journey to better financial health?