A financial advisor is a professional who guides the client regarding his financial matters.

Role of financial advisor (1)

A financial advisor plays an important role in the financial matter and planning of a person. For that purpose, proper training and registration with a regulatory body are necessary. The activity sectors of a financial advisor are private banking, financial services, banking, and business. In the US, he must qualify for series 7 and series 65 or 66 examinations. Financial services and products provided by the financial advisor depend upon the training level and qualification examination.

He may sell as well as generate financial plans and give insight on leftovers. He might or might not be licensed but is registered with a certain regulatory authority. For instance, a licensed insurance agent is qualified to provide both variable annuities and life insurance because he carries both series 7 qualifications and insurance licenses. A broker can also play the role of a financial planner. An advisor does not have to carry Certified Financial Planner (CFP) designation to call himself a financial planner.

A financial advisor is a planning partner of a client in his financial matters. Let’s say a client is going to retire in twenty years and wants his child to study in a higher university for 10 years. Here a financial advisor with good professional skills comes in and plans to turn this wish into a reality. He along with the client covers many areas such as money a client needs to save, the type of account he needs, types of insurance he must have (including disability, term life, long-term care), and tax and estate planning.


Commissionbased compensation

The financial advisor adheres to the suitability standard takes a commission from the product he provides to a client. It means the financial advisor does not give a billing invoice to the client. He earns a high commission by selling the product higher at price among similar products in the market.

Fee-based model

Some financial advisors work according to the fiduciary standard. They earn either by charging hourly fees from clients or get some percentage from the client’s AUM (assets under management). This percentage is typically 1%. The hourly fee of a financial advisor ranges from $120 to $300. Some advisors offer less fees to clients who cannot afford high charges every month.

Combination of commissions and fees

A fee-based financial advisor is not a fee-only advisor but can also earn through commissions. A fee-based financial advisor charges for creating a financial plan but he can also get commission on selling an investment or insurance product.

Retirement planner (2)

He is a professional who helps a client in creating a retirement plan. He identifies estimated expenses, sources of income, advice the saving plans and helps in managing assets. The vital part in the working of a retirement planner is to estimate futureassets and cash flow. He may use a software program or web-based calculator that can predict future assets and cash flow according to the data entered. Some planners consider financial as well as non-financial aspects of retirement planning, which include the way of life after retirement, location to live and time to quit the job, etc.

In current times, planners depend heavily on retirement planning software and other online tools. The plan a retirement planner creates, never predict accurately the income needs or retirement spending. It is just a healthy initiative.

When a client retires, he switches from an accumulation stage to a distribution stage. He starts to withdraw cash saved in his early life to spend in his old age. A skilful and experienced retirement advisor educates the client in spending his assets.

Certified financial planner

CFP (certified financial planner) is a professional having expertise in retirement, estate planning, insurance, taxes, and financial planning. This designation is awarded by the Certified Financial Planner Board of standards to those candidates who pass the CFP board’s initial test. These candidates are then required to pursue an annual education program to upkeep their certification and skills. The important aspect of CFP is that he adheres to the fiduciary standard while creating a plan for a client.

The first working step of CFP is the evaluation of the client’s current finances, which include properties, investments, assets, or cash. This evaluation helps the CFP to analyze the net worth of the client. He also observes liabilities of the client such as student debt or mortgages. He works on this point and creates a plan best fit for the client.


  • Provides meaningful advice

Most candidates opt for this field due to its most rewarding nature. If a client gets confused regarding appropriate investments and insurance and a skillful advisor gives him a hand, then the financial success of a client equates the advisor’s success as well.

  • Limitless income potential

A financial advisor can earn through commissions or fees or both. Recurring revenue and new business created each year increase the income potential of an advisor.

  • Flexible schedule

It is hard to manage career life and personal life in the initial stages of a career. But once the financial advisor gets established he may find enough flexibility to manage his client’s meeting around his calendar.


  • Stressful field

An advisor cannot earn full money from a single client. He has to look forward to other clients. He must be knowledgeable about the financial statuses of every client very well to avoid any ambiguity.

  • Demands a lot of Willpower

In establishing a healthy career as a financial advisor, willpower is the most important aspect. In the initial stages and home-based working, an advisor may face different hurdles. T.V and media are the most common source of distraction for an advisor.

  • Difficulty in finding clients

There are several financial tools available on the internet. People educate themselves using these tools and manage their finances on their own. In that context, it is hard for an advisor to find a client and ensure the safety of his finances.


  1. https://www.investopedia.com/articles/personal-finance/050815/what-do-financial-advisers-do.asp
  2. https://www.investopedia.com/terms/r/retirement-planner.asp