Financial Advisor—What do They Do?

William Bender November 16, 2016 Comments Off on Financial Advisor—What do They Do?
Financial Advisor—What do They Do?

This is a professional who provides financial services to their clients.   Previously they only handled investments but today their roles have evolved.  Today they may deal with undertakes retirement planning and insurance products.  They may also advise their clients on how to invest in real estate, prepare comprehensive plans for their retirement, and how to budget their finances.  As a financial advisor you may also have a client call you for help in preparing a detailed plan for funding the educational requirements of the client’s children.  Basically, a financial advisor has the responsibility of assessing their client’s circumstances and then offering helpful financial advice and then doing as they request.

A financial advisor may also need to determine their client’s risk and return objectives.  The risk that their client is willing to assume should be in accordance with their desired level of return.  A financial advisor may also need to determine the time horizon and need for liquidity of their client.  If their client has a need for liquidity they will obviously not be willing to invest a lot of moment in any investments that do not provide a quick return in the short term.  The reason that the time horizon of their client is important is that if their client has a short-term horizon they will not want to lock up cash in any investments not expected to mature in the long run.3

Their clients, also known as investors, may have more than one time horizon.  One example is that the investor may require cash for sponsoring their children’s education and for buying a home.  The investor may not have any other significant financial commitments until they retire other than those expenses.  The investor should plan on keeping in mind the three time horizons when the need for liquidity will take priority over the desire for investment.  A financial advisor should make sure that their client’s ability and willingness to assume risks complement each other.  If there is an imbalance, the financial advisor should clearly state the benefits and risks assuming the given level of risks.

A financial advisor occupies a position of confidence and trust and the Investment Advisors Act of 1940 requires that a financial advisor act in the best interest of their clients because they will be working with them for a long time.  Being Chicago financial advisors there are certain traits they should have, such as the power of communication, feeling confident that they can help their client have a good return on their investments, being trustworthy, and have a good reputation.  Being a financial advisor you will need to be registered in the state where they live or with the Securities and Exchange Commission (SEC).

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