People have a misconception about Financial Advisors regarding their work and often get confused on whether to consult them or not. As the title reveals, financial advisors help you to make financial decisions. And, you can get expert financial advice from them in times of need.
Who Is a Financial Advisor?
A financial advisor is a person who influences your financial decisions. They help their clients by giving them the best financial advice and obviously you have to pay them a certain amount of money in return. In short, these advisors provide you strategies regarding insurance coverage, investment plannings, cash management, etc. so that their clients can reach their financial goals.
For this, they must be well versed with the economic trend, regulatory changes and whether the client is comfortable in taking risky decisions or not, etc.
It is not necessary that you contact a financial advisor only when you have got a huge debt load.
What Does a Financial Advisor Do? Responsibilities and Duties
Financial advisors are experts in financial decision making. They apply their knowledge and create a personalized financial plan for each of their clients in order to reach the desired financial goals. In short, Financial Advisors are your planning partners in managing your finances. They are responsible for performing many duties.
- Financial advisors are responsible for making a great strategy to manage your finances. These strategies include investment plannings (stocks and bonds), savings, tax laws, budgeting, insurance coverage and a lot more.
- These professionals manage their client’s business on their behalf. Advisors must research the market condition and analyze it.
- They often set meetings with their clients so that they can keep their eye on how their clients’ current financial situation is and act according to that. In short, financial advisors monitor their client’s accounts regularly so that they don’t miss out on something important.
- Responsible for identifying new golden opportunities for their clients.
- Must build up a strong connection with their clients so that their clients can rely on them. As clients allow advisors to take the most valuable decisions on their behalf, it is very important to have that comfort zone and trust between the two of them.
- Bound to clear all the doubts and questions that their clients have regarding the strategies and make them understand the whole thing.
- If the client is dealing with any kind of financial crisis, the Financial Advisors are there to help them out. They will suggest the best remedies in order to get rid of that bad phase.
- Some advisors even give advice on retirement planning.
So when you look for a financial advisor near me, who can guide you well in making financial decisions, make sure he performs all these duties.
Independent Financial Advisors (IFAS) – Difference Between Financial Advisors and Independent Financial Advisors
The term Independent Financial Advisers was first introduced in the United Kingdom by the government for representing the financial advice providers. Later on, the other countries have adopted the same term.
An independent financial advisor is someone who provides their clients with financial advice. They don’t represent any insurance company or commercial bank or any other financial service providing organizations, they work independently.
Like the financial advisors, the IFAS will examine the client’s financial condition, market position and suggest the best remedies to attain the client’s financial objectives.
The major difference between the Financial Advisors and Independent Financial Advisors is that Financial Advisors are of three types. Tied Financial Advisor, Multi -tied Financial Advisor and Whole of Market Advisors. All of them work as representatives of any particular insurance company or bank or any other financial service providers.
They suggest their client’s specific products and services of a specific financial service providing company and for that and the service providing companies will pay them a commission.
Though the last one, the Whole of Market Advisors is a bit different. They research and recommend all the financial products and services available in the market to their clients.
But Independent Financial Advisors work independently and are not the representatives of any insurance company or other financial service providing company. Like the Whole of Market Advisors, they also research the market and analyze it. Then they recommend all the best financial products and services that are available in the market to their clients.
Note: In case you are wondering what financial products are, Financial Products are investments and securities. These investments and securities were made to give long term and short term financial gain to the buyers and the sellers. Financial products are risky and circulate the liquidity in the market.
Who Needs a Financial Advisor?
Before consulting a financial advisor, you must realize what kind of financial help you are expecting. Also, think twice if you can afford it or not, as financial advisors will charge you for taking financial guidance from them. Not everyone needs a financial advisor. So you have to know when to contact a financial advisor.
The people who earn a good amount of money at the end of each month and also have a good amount of money saved in the savings account are ideal to take financial services from the advisors.
You don’t need a financial advisor to help you in small matters like how to manage liquid cash on a daily basis or how to stop spending money on everything you like. Rather you need the best advice when you are trying to do something big where a lot of money is involved. Surely you never want to take a risk with a large amount of money. So, here if you get professional help to deal with the situation, it would turn out to be your best decision.
How to Become a Financial Advisor?
As financial advisors are professionals who deal with the current market affairs, not everyone can become financial advisors. Providing Financial guidance is not a matter of a joke. It’s a very serious matter and for that, you have to have adequate knowledge regarding finance management and current market conditions. Below are the suggestions on how you can become a great financial advisor-
Get Required Qualifications
To become a financial advisor in the UK, you must have a qualification certificate from the Financial Conduct Authority or FCA. Also, you need to have GCSEs in maths and English and some relevant work experiences in finance and sales.
When you have all of these qualifications and experiences, you can apply for the role of a trainee in –
Financial Advisor training scheme with a building society or a bank.
Graduate training scheme with a building society or a bank or a large firm of IFAS.
Besides that, you need to show up your credit report, to ensure that you are not bankrupt or have a huge amount of debt load. You will also have to undergo a DBS check.
Required Skills and Qualities
– You have to be strong enough in written and verbal communications.
– You must have the quality to research and analyze the market condition and explain it to your clients in simple words. So that they can understand it clearly.
– Good skills in sales marketing, computer, and maths.
– You need to be motivated and determined towards your job so that you can be the best version of yourself and deliver the best options to your clients.
Besides these, if you are planning to become a financial advisor, confidentiality and trustworthiness are the keys to your success.
Correct Training and Development
All the financial advisors in the UK must have the qualification certificate that is recognized by the FCA at a minimum of level 4.
- Chartered Insurance Institute -Diploma Regulated Financial Planning Level 4
- Chartered Institute for Securities and Investment – Investment Advice Diploma Level 4
- IFS Diploma for Financial Advisors and Professional Certificate in Banking Level 4
In order to become a financial advisor, you also need to hold the SPS certificate (Statement of Professional Standing). It is the proof that you have valid qualifications to be recognized by FCA.
Lastly, as you know, the financial world is moving very fast and there are a lot of new changes every day, you must be able to adapt to the new changes. In short, you have to be updated with time. If you want, you can get training regarding this. Short courses and professional schemes are available there to teach you how to deal with new changes in your career.
You may visit the Personal Finance Society. It is the professional body for the Financial Advice and Planning Industry. If you are a member, you can be a part of their professional development schemes. You can apply for the post of a Chartered Finance Planner after having the CII Advanced Diploma in Financial Planning and have a minimum of 5 years of industry experience.