What Does a Financial Advisor Do?

A recently published 2023 CFP survey of American consumers shows that 9 in 10 Americans are concerned about the current cost of living in the United States. With 55% of Americans struggling to pay the mortgage or rent each month, a financial advisor may seem like an unnecessary expense.

Most of the consumers polled are concerned about saving for retirement, credit card debt, and medical debt. A financial advisor may be worth the investment if you are concerned about debt, housing costs, or retirement savings.

What Does a Financial Advisor Do?

A financial advisor is a professional who provides guidance and advice to individuals or organizations on various aspects of their financial matters. Their primary role is to help clients make informed decisions regarding their money, investments, and overall economic well-being. While not all financial advisors assume all of these responsibilities, here are some general tasks typically performed by financial advisors.

Financial planning for the day-to-day

What is the difference between a financial planner and a financial advisor? Well, put simply by Ramsey Solutions– all financial planners are financial advisors, but not all financial advisors are financial planners. 

However, in general, your financial advisor can help you establish a comprehensive financial plan that outlines strategies for saving, budgeting in current economic situations, paying off debt, and more. 

Investment management

Advisors help clients determine suitable investment options based on their risk tolerance, time horizon, and financial goals. They provide advice on asset allocation, diversification, and investment selection to maximize returns while minimizing risks.

Retirement planning

Financial advisors can assist clients in planning for their retirement by estimating the amount of money required to live comfortably, recommending retirement savings strategies such as IRAs or 401(k) plans, and projecting future income streams.

Tax planning

Many financial advisors also provide guidance on tax-efficient strategies to minimize tax liabilities. They analyze the tax implications of investment decisions, suggest deductions, and help clients take advantage of available tax incentives. However, most financial advisors will likely advise you to hire a professional accountant to ensure compliance with the IRS.

Estate planning

Financial advisors can help you develop a strategy for an estate plan to ensure your heirs receive your assets. They may collaborate with estate planning attorneys to establish wills, trusts, and strategies for minimizing estate taxes.

Risk management

Advisors assess your insurance needs and recommend appropriate coverage for life, health, disability, and long-term care insurance. They evaluate existing insurance policies and provide guidance on risk mitigation strategies.

Funding education for dependents

Advisors can assist you in planning for your children's education expenses, such as college savings plans (e.g., 529 plans) or education savings accounts (ESAs).

Long-term care planning

A financial advisor can play a crucial role in helping individuals and families with long-term care planning. They can assess your family’s long-term care needs, recommend long-term care insurance, and develop asset protection strategies. 

Financial education

In addition to helping you with your finances, financial advisors can educate you about financial concepts, investment strategies, and market trends. They explain complex financial terms in simple language and empower clients to make well-informed financial decisions. 

Compliance

In the United States, financial advisors are required to adhere to ethical standards and comply with industry regulations, such as licensing requirements and fiduciary obligations, ensuring they act in the best interests of their clients. 

Regular monitoring of portfolios

Financial advisors regularly review and monitor your financial plans and investment portfolios. They make necessary adjustments based on changing circumstances, market conditions, and your evolving financial goals.

How To Find a Financial Advisor

Finding a financial advisor who is the right fit for your needs requires careful consideration and research. At Expertise.com, we do the research for you. We independently research, mystery shop, and review the top financial advisors across the country. Use our financial advisor directory to find a top-rated professional near you.