Financial Advisors: What Do They Do?

Zoe Team

Jun 25, 2020

5 min read

A financial advisor reviewing a plan with two clients at a table

Key Takeaways

Financial advisors provide guidance on investment strategies, retirement planning, and managing daily financial tasks.
Hiring an advisor can help simplify complex financial decisions and ensure you stay on track with your long-term wealth goals.
Advisors offer personalized plans tailored to your specific life stage, risk tolerance, and individual financial objectives.

Frequently Asked Questions

What does a financial advisor do?

A financial advisor offers professional guidance on managing money, investments, taxes, and retirement planning to help you reach financial goals.

Do I need a financial advisor?

If you feel overwhelmed by investment decisions or want a structured, personalized strategy for your wealth, an advisor provides valuable expertise.

What do advisors do daily?

They monitor market trends, manage client portfolios, review financial plans, and meet with clients to discuss their progress and adjustments.

What Does a Financial Advisor Do?

Most people know that a financial advisor’s job is to advise on finances. But what does a financial advisor do, exactly? What does a financial advisor do on a daily basis? If you are thinking about hiring a financial advisor, but are not sure how they can help you, read on. Published June 22, 2021

Financial advisors assist individuals, and sometimes companies, in creating and managing strategies for their money for the short and long term. The term financial advisor is commonly interchanged with financial planners and wealth managers. After all, they all offer expert advice on how to manage money through a structured approach that involves goal-setting, planning, and focus. Their services are not just for the wealthy, as their goal is to help people set and achieve their financial goals, however big or small.

Is it Worth Hiring a Financial Advisor?

According to a NAPFA consumer survey, Americans’ financial present and future are becoming overwhelmingly stressful. A financial advisor offers plenty of services that can help reduce your financial stress. Financial advisors can provide investment advice, education on how to save, debt management, tax planning, budgeting, long-term care, retirement planning, and estate planning. The best advisor will be one who can help you formulate a holistic plan that is based on your unique situation.

Advisors Advise Clients in their Financial Goals

The most straightforward task advisors have is to help and advise clients on their financial goals, both short and long-term. This includes things like paying for college, building a retirement fund, or buying a home. It might also mean advising on investments, tax, and insurance. The first step is a conversation between advisor and client to determine and review the client’s income, expenses, tax status, risk tolerance, insurance, financial goals, or other necessary information to generate a plan.

Once an advisor has assessed a client’s needs, they recommend, and most times, execute a strategy that ensures a client’s objectives are met. A fiduciary financial advisor is always subject to ensuring their client’s best interests are being considered. This means the advisor makes an informed recommendation on behalf of the client’s best interest rather than what yields him the highest fee. A fiduciary advisor must also follow the US Security and Exchange Commission ‘s regulations.

Advisors Identify Opportunities For Their Clients

To provide a client with the best advice, they are always on the lookout to identify new opportunities to add value. This means they are constantly researching and analyzing different investment or tax opportunities, as well as changes to legislation that may affect their investments or estate. Financial advisors are regularly liaising with other people, such as financial service providers, insurance, or estate agents to have the most accurate client information to make decisions keeping in mind their whole financial picture.

Advisors Do Investment Research Market Analysis

Advisors have to do market analysis and research to stay up to date with the markets and know how to act, particularly if they become volatile, like with the coronavirus pandemic. This does not imply that they will be able to predict what will come next, but by having a pulse on how your portfolio is doing they will be able to implement tax harvesting and rebalancing as a way to save you money in taxes and keep your portfolio’s risk profile aligned.

Financial advisors can determine strategic asset allocations by creating long-term capital market assumptions based on historical asset class returns and correlations. All these decisions should be made considering their client’s specific risk tolerance and capacity.

This means they have to be in constant communication with their clients to reassess their needs and goals. Meeting with new and already existing clients means they can discuss goals, current needs, and strategies going forward, as well as inform and answer ad hoc questions the client might have.

By monitoring accounts, financial advisors can determine if changes are needed, either because investments can be improved or a client’s life situation changes, such as having a baby or buying a new home. They have to ensure clients are aware of their best options so that they can reach their financial goals.

Advisors Stay Informed to Help Their Clients

Being a financial advisor is a profession of a lifetime for people that enjoy helping others. So just like doctors, financial advisors keep up with their education and credentials. Most advisors usually have degrees that demonstrate their training and commitment to the financial profession. Additionally, the best advisors get certified with credentials like the Certified Financial Planner (CFP) from the Certified Financial Planner (CFP) Board. This entails passing an exam after various years of experience.

A Financial Advisor Guides You Toward Your Financial Goals

All in all, a financial advisor not only needs to know about how to manage money but also needs to understand investment biases to help clients stick to their plans through thick and thin. Hiring a financial advisor is like hiring a personal trainer, you are receiving someone’s expertise so you can reach a specific goal. A financial one in this case.

With recent research by the CFP Board showing Americans feel more prepared for a recession when they work with a financial advisor, you might be considering hiring one. If you decide to do so, remember to consider the services they offer against your needs as no matter what your situation looks like, you want the best advice that will make your goals a reality.

What Does a Financial Advisor Do?

Is it Worth Hiring a Financial Advisor?

Advisors Advise Clients in their Financial Goals

Advisors Identify Opportunities For Their Clients

Advisors Do Investment Research Market Analysis

Advisors Stay Informed to Help Their Clients

A Financial Advisor Guides You Toward Your Financial Goals

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