When you hear the term financial advisor, many things come to mind regarding what they do.
And so to clear the confusion, this article on Financial Advisor Duties will cover:
Stay with us as we walk you through everything you need to know about what financial advisors do.
Financial Advisor Working Hours
The number of hours a financial advisor works depends on their years of experience and their company’s policies.
Full-time advisers work around 45 hours per week on average.
Part-time financial advisers work lesser hours depending on how much time they commit to their advising job.
Entry-level full-time advisors work the most hours per week, ranging from 60 to 80 hours.
On the flip side, experienced personal financial advisors with a huge client base may work only 20 to 30 hours per week.
Sometimes advisors work over the weekend and on holidays.
Financial advisers mostly spend their working hours prospecting for clients and organizing meetings with potential clients.
Personal financial advisors’ work environment can be at home, the office, or the client’s office.
It all depends on the task at hand.
Working as a Financial Advisor
Financial advisors work with individuals on a wide range of financial issues.
Advisors majorly focus on helping clients build wealth through long-term investment strategies.
Their services also include helping clients in debt management and meeting short-term financial goals.
Other times, advisors offer investment advice and sell financial products.
But more often than not, financial advisors offer comprehensive financial planning services and even help clients manage their investment portfolios.
Having said that, here is what a financial advisor’s work involves.
Meeting with Clients
Advisors meet with clients on a daily basis, both existing clients and new prospects.
When meeting with existing clients, the focus is often to find out if there are any changes in the client’s situation.
Additionally, they might meet existing clients if the initial financial plan requires some adjustments.
When it comes to new clients, the goal is to understand their financial situation and financial needs.
For advisors to thoroughly understand their new client’s present financial situation, they give them a questionnaire.
The questionnaire requires clients to fill in information about income, assets, liabilities, and expenses.
Besides that, clients also give information about their investments, income sources, and pension savings.
Additionally, information such as long-term financial obligations, retirement needs, and sources of pension during retirement are also filled.
This information may seem like a lot and personal, but it’s crucial for an advisor to wrap their head around the client’s personal finances.
Meeting with new clients helps financial advisors to find out if the client has insurance issues.
It also reveals any tax situation, estate plans, and any other professionals the client already has that the financial advisor will be working with.
Meeting clients set the tone of the financial planner and client relationship going forward.
Even more importantly, the first meeting with new clients may culminate into a subsequent meeting, or the advisor may lose that client even before they get them.
Hence, advisors put in a lot of effort to ensure it goes smoothly.
Financial Planning
It goes without saying that the core duty of a financial advisor is to plan clients’ finances.
Therefore, from the questionnaire analysis, an advisor learns about the client’s situation and future financial goals.
They then hatch a plan, a financial plan, to bridge the gap between where the client is now and where they want to be in the future.
Advisors analyze the client’s risk tolerance, family situation, long-term care risks, and estate planning.
They also look into the assets, liability, working capital, and a client’s net worth to develop investment solutions that align with the client’s profile.
Depending on the client’s age, they set up asset allocation, bearing in mind the client’s risk tolerance and risk capacity.
Before the final plan is developed, an advisor schedules a meeting with the client to review various sections of the plan.
If the client is not content, the advisor will adjust the financial plan accordingly to meet the client’s financial needs.
A final copy of the financial plan usually has the client’s financial goals, investment vehicles to achieve those goals, and income projections.
Financial planning tops the list of what advisors do because many people seek advisors’ guidance on investment more than other financial services.
Regular Financial Monitoring
With the plan implemented, advisors regularly review the portfolio performance.
They’ll often set up quarterly or yearly meetings with the client to review their goals and inform them of the progress.
These meetings are also crucial because clients ask questions and give feedback on their thoughts about the plan.
Additionally, advisors get to know if there are any changes in the client’s life that might impact their financial future.
Things like losing a job, giving birth, selling a house, getting married, or getting a promotion can all affect the financial plan in one way or another.
Hence, regular monitoring allows an advisor to consider these factors and adjust the plan.
Staying Up-To-Date with Financial Market News
The financial market keeps changing.
Hence, it’s paramount that advisors are up-to-date with what’s happening, as some of the changes may directly affect their clients.
For this reason, when advisors are not prospecting, meeting up with clients, or developing financial plans, they are reading on the current market news and trends.
They also take time to research investment opportunities that will better meet their clients’ needs.
Furthermore, advisors work with other professionals such as attorneys, accountants, insurance agents, and lawyers to have a holistic overview of a client’s situation.
The consultations with other professions help financial advisors develop comprehensive investment strategies that consider the worst and best-case scenarios.
Since financial advisors help clients in every area of their financial life, staying abreast with the market becomes crucial even when giving financial advice.
Marketing
At the core of the financial advising job are the clients that advisors help with money matters, hence the need to market their financial services.
Marketing can be in the form of educational seminars and events that could include breakfasts or lunches.
Sometimes financial advisors organize evening events.
Since marketing is the only way an advisor can grow their business, it follows that a systematic marketing plan is a must-have to draw in the specific client demography that an advisor works with.
Suppose an advisor works with millennials, men, engineers, or ex-army officials, etcetera. They tailor their marketing plan to that specific group.
Sometimes financial advisors specialize in the services they offer.
In this case, an advisor may solely offer retirement planning, insurance planning, or estate planning.
Whether an advisor is a generalist or a specialist, the goal is to always put their business before those who need their services through marketing.
Financial Advisors Roles and Responsibilities
Financial advisors have a wide range of roles and responsibilities.
Personal financial advisors work with clients to ensure their present and future goals are met.
But beyond finance advice, advisors do the following:
Record Keeping
Financial advisors handle crucial clients’ financial records.
As such, documents such as advisory contracts, portfolio reports, disclosure statements, payment records, and financial services offered must be kept safely.
Record keeping is not only important because it’s an ethical requirement for an advisor, but also regulatory bodies such as the Securities and Exchange Commission (SEC) require financial records annually.
SEC also requires investment advisors to submit details about their client base when registering with the commission.
Organize, Manage, and Keep Finances in Order
People are always caught up with the demands of the workplace and their personal life, that it’s almost impossible to prioritize finances or investment.
And when they take time to invest themselves, they are prone to make mistakes, leading to losses since they lack the expertise.
If not that, then the investment demands consume their time, compromising their jobs and family relations.
Thus, financial advisors play an important role in helping clients organize, manage, and grow their finances.
Since they have the expertise, advisors analyze their clients’ current situation, priorities, and goals to help them devise a watertight plan to reach their dreams.
The wealth management strategies that advisors recommend are always personalized to the client’s specific needs.
Advisors go above and beyond to ensure their clients maximize their return on investment.
Structure Investment Plan to Meet Career and Business
Advisers are experts in financial matters.
Their knowledge in financial planning and investment strategies comes in handy in the different phases of career development and life changes.
Financial advisers review and adjust investment plans in case of job shift, retirement, or stock market fluctuations.
Advisers look into potential shifts in income projections and work out strategies to balance the plan.
In the case of business owners, financial advisers recommend investment opportunities and insurance products to help entrepreneurs plan their future appropriately.
More than that, advisors structure asset allocation to meet their clients’ risk capacity.
When working with elderly clients who are most likely risk-averse, financial advisers go for investment vehicles aimed towards capital preservation.
On the other hand, millennials who might be risk-takers will most likely embrace an investment plan with more stock assets than fixed-income assets.
That is to say, advisors do asset allocation that matches clients’ risk appetite.
Their role revolves around building investment portfolios that match their clients’ needs, whether in business or employed.
Regulatory and Legal Knowledge
To become an investment advisor, one must take licensing exams with Financial Industry Regulatory Authority (FINRA).
The exams cover laws and regulations on securities, investment advice, financial services, and payment structure, among other crucial topics in the financial industry.
Advisors are required to pass the exams before selling, buying, or advising clients on financial matters.
Apart from FINRA requirements, the Securities and Exchange Commission also has standards that advisors must meet to register with the commission.
SEC requires financial advisers to prioritize their clients’ financial well-being when offering financial guidance.
This is what is referred to as a fiduciary duty.
As a fiduciary, all the recommendations an adviser gives must be in the client’s best interest.
Apart from the two bodies, the Certified Financial Planner (CFP) Board of Standards also has a set of codes of conduct that CFPs must abide by.
Plan for Retirement
Often people fail to plan for retirement because it seems far-fetched.
Financial advisors work is to help people plan now for the life they want during retirement.
Advisers work with potential clients to develop a plan to ensure they don’t outlive their savings.
Bring Objectivity in Investment Planning
A job loss, market volatility, or life-threatening disease can lead someone to make emotional, financial choices.
A good financial adviser offers more than just returns.
They guide clients, helping them overcome such challenges with ease.
They counsel in case of misunderstanding on financial matters and manage any raising issues.
Personal Financial Advisor Job Requirement
There are several requirements one must meet to get a job as a personal financial advisor. These requirements span across education, experience, licenses, and certifications.
Some of the requirements are mandatory, while others are recommended, but not a must-have.
Educational Requirements
Many financial advisory firms require their financial advisors to have a bachelor’s degree.
Many financial advisers major in business administration, finance, marketing, law, and statistics.
There are also advisors with master’s degree which is not required but boost an advisor’s resume.
Important to note is that one can get started in the financial industry without a bachelor’s degree.
What is really important are the FINRA licenses exams.
Professional Licenses
Professional licenses allow an advisor to sell securities and offer investment advice.
The General Securities Representative license, also known as the series 7 license, is the introductory exam that covers the basics in the financial industry.
The exam covers the security regulations and topics on investment risk, debt instruments, equity, and taxation.
It allows stockbrokers to sell all securities except for futures and commodities.
There is also series 63 license, also referred to as Uniform Securities Agent State license.
Series 63 license allows advisors to buy and sell securities in different states.
Apart from the above two licenses that are mandatory at the entry level, there are several other licenses.
Series 65 exam is for advisors who want to charge fee-only for financial services.
There is also series 31 for managed futures and series 3 for commodities.
Financial advisers can pursue the wide range of licenses as they gain experience in the industry and expand their expertise.
Work Experience and Skills
It’s on rare occasions that advisors are employed fresh from college.
Fresh graduates usually go for an internship to gain some work experience before being employed.
When work experience is considered, it’s often recommended that it’s in a business or sale-related industry.
Apart from work experience, advisers are required to have interpersonal skills for the simple reason that it’s impossible to build a client base without communicating and building a relationship with clients.
Another important skill set is entrepreneurship.
An entrepreneurial adviser is self-driven, takes the initiative, and always looks for new opportunities.
Advisers should also have analytical skills, attention to detail, communication skills, and research skills.
Certification and Designation
Some job descriptions that require specialization may require certification.
Please note that certification is not mandatory, but it’s recommended to give an advisor a competitive edge and open up new opportunities.
Areas of specialization like financial planning or financial analysis require an advisor to be a CFP and financial analyst, respectively.
CFP is administered by the CFP board of standards, which holds its members to the highest code of conduct.
A certified financial planner is the most common certification in the industry, but there are many more certifications out there.
Financial Advisor Job Description
Many financial advisory firms highlight the following as their job description when advertising for a financial advisor position.
Requirements
- Bachelor’s degree in finance or business-related course.
- Holder of series 7 and 63 licenses.
- 1-2 years experience in sales in the insurance industry.
- Proficiency in Microsoft office.
- Experience in securities, mutual funds, and retirement planning.
- Valid driver’s license
Responsibilities
- Marketing the firm’s financial services to draw in potential clients.
- Scheduling meetings with clients to gather information about their financial objectives, income, source of income, expenses, risk tolerance, and tax situation.
- Giving financial advice to clients.
- Be on call to answer clients’ questions arising from their financial plans.
- Preparing investment progress reports, client’s income projections, and other financial reports when requested.
- Develop, implement, manage and update clients’ investment portfolios.
