Financial Advisor, Insurance Brokers, Investing, Personal Finance

What Does a Financial Advisor Do?

Financial AdvisorIt’s hard to get your ducks in a row and set financial priorities when you are just getting started on a career, especially if you have huge student loans, which take a big bite out of your paycheck.  Plus there are other expenses that make it difficult to save for the future.  If you’re lucky, your employer sets you up with a 401(k) and continues to make contributions on your behalf – hopefully you are matching those contributions, and, if not, you’re setting a little money for the future, right?  Perhaps you’ve been savvy enough to plan for the future, and, have a nest egg above and beyond that small “rainy day account” for financial emergencies.  Or, maybe you live paycheck to paycheck and need someone to implement an investment plan for your future.  Finally, if you won that big Power Ball jackpot the last go around, it might be time to seek a consult with a financial advisor.  Whether your monetary status is too little or too much, a financial planner can assist you in planning for the future.

So, what can a financial advisor do for me?

Not everyone has the skill or expertise to fully understand the benefits of planning for the future, especially when they are young, so a financial advisor can get you started in the right direction and will keep you track by meeting with you periodically to ensure you stay on track and continually plan for the long haul.  First, you need to understand that a financial advisor can wear many hats, and some have more areas of expertise than others.  This expertise isn’t just gleaned from years of financial planning experience, (although that certainly helps), there are a variety of requirements, examinations and studies that must be undertaken, and will distinguish the strata of financial planner-type occupations.

According to Bankrate.com, the various types of financial planners or analysts are listed below:

  • CFP: Certified financial planners have passed a national test covering insurance, investments, taxation, employee benefits, retirement and estate planning administered by the CFP Board of Standards. They must meet experience requirements and abide by a code of ethics.
  • ChFC: Chartered financial consultants are the insurance industry’s financial planning designates. They pass exams in finance and investing.
  • CLU: Chartered life underwriters pass national exams in insurance and related subjects and have business experience in the insurance industry.
  • CFA: Chartered financial analysts are experienced financial analysts who have passed exams in economics, financial accounting, portfolio management, security analysis and standards of conduct.
  • AICPA PFP: Personal financial planning specialists are certified public accountants who have earned the financial planner designation from the American Institute of Certified Public Accountants.

Which type of financial planner is best?

The person best suited for your needs would be a certified financial planner who has passed a national test covering insurance and investments.  Whether you’ve got money to invest, and are looking for guidance, or you just wish to get on the fast track to saving for the future, seek a consult with an advisor and lay it on the table exactly what you are looking to do and state that are hoping he or she will be a perfect financial fit for your needs.  You should state your financial level since some advisors have a minimum amount requirement before taking your investment.  You should set up a series of meetings to see if you and the financial advisor mesh

Next, call the financial advisor’s office and find out if they work with clients at your financial level.  This is important because some advisors do have minimums and may require that you have $100,000 or more to invest before taking you on as a client.  In your initial meeting, be ready to fire away with questions to your prospective financial advisor to see how well you will be able to work together, as hopefully this will be a long-standing relationship.

Questions to ask

What can you do for me?  The suggested response would be to first assess your current financial situation (by reviewing your last two tax returns, all income sources, liquid and non-liquid assets, wills, insurance policies, and estate and retirement planning documents).  Second, after analyzing the proffered documents, a financial advisor will be able identify your financial needs and goals and implement a financial plan based on that analysis, explain the pros and cons of various options and financial instruments (stocks, bonds, mutual funds, IRAs, etc.).  If there are other professionals who must participate in your long-term financial planning (investment brokers, lawyers or accountants), these will be suggested.

If the response to your query “what can you do for me?” is double your money, you should take your business elsewhere according to Bankrate.com.

A financial advisor brings a lot to the table

A good financial advisor has your best interests at hand.  You can bend his or her ear and expect to hear the advice based on expertise gleaned from education, both from school and continuing education to hone the broad training necessary to achieve the needed credentials.  This is a better pedigree than relying on the advices of your banker or accountant have, though their fee for a consultation will most likely be free.

A financial advisor might have the initial meeting for free, but in the long run, the best financial advisor, is well worth the investment.  Look at it this way – the price for a financial advisor’s skills and expertise, eventually will amortize over the long-term benefits through thorough financial planning.

Are you looking for a qualified financial advisor to begin a long-term relationship with?  Well, look no further than John Savadjian,  a local financial advisor in New Jersey.

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