Financial Advisor: How to Choose the Right One for You

Who is the financial advisor and what requirements must he meet? But, above all, what are the advantages for a customer who decides to contact him? A practical guide to navigate the world of financial advice and discover all the characteristics of the financial advisor

The financial advisor (in English, financial advisor) is a professional expert in finance and related legal and tax aspects, with particular reference to the subject of investment services and capital management operations of companies, institutions or individuals (asset management) . 

Obviously not all are the same.

In this article we try to shed light on this figure, on the requirements that he must have, on the advantages for the client who turns to him and on everything that, as a client, can be asked of this professional who plays a fundamental role in the management of the own heritage. 

In fact, it is important to choose the right consultant to be sure of having an experienced professional at your disposal, capable of guiding us in understanding the financial markets and the ever-changing dynamics of the economic-financial scenario.

What does a financial advisor do?

The financial advisor helps their clients make investment decisions by offering personalized advice that aims to help them achieve their goals by creating a financial plan. He can work as an independent professional or within a financial consultancy firm.

What does independent financial advisor mean?

The financial consultant can work for a consulting company (by law he must be a sole agent, because the principal is jointly and severally liable for his work) or independently. 

The "independent" financial advisor is in any case duly registered with the Ocf professional register and is authorized to carry out investment advice.

However, it should be noted that the independent financial consultant never comes into direct contact with the savings to be managed: for the execution of the recommended operations, he leaves the clients with the task of giving instructions to the qualified parties (for example, the banks).

What can the independent financial advisor do?

The independent financial consultant has the task of satisfying the investment objectives set by the clients (respecting, for example, the risk profile) and, more concretely, that of knowing how to choose on the basis of those objectives among the numerous financial instruments available on the market, as well as being able to diversify them by type or product case.

What can't the independent financial advisor do?

The independent financial consultant, in addition to not being able to manage savings directly, cannot even receive special assignments or powers of attorney for the direct fulfillment of operations, nor delegations to dispose of the sums or assets of the customers. 

The independent financial consultant is called, in fact, fee-only: this means that he is remunerated in a fee (the fee) only by his client.

Brokers and promoters

If we talk about financial advisors, we must also make a distinction with other professionals in the financial sector: intermediaries and brokers.

Brokers are essentially insurance figures: they work only as insurers.

They operate without being sole agents. Their peculiarity is to be able to offer their customers the solution that best meets the needs of the insured on the market.

Years ago there was the figure of financial promoters, which today has been replaced by
financial advisor. 

The promoters were intermediaries who had the faculty - unlike the bank - to offer “off-site” investment products and services, that is, not at the offices of the company they represented. 

As is also the case today for the consultant, even the promoters could only operate on behalf of a single subject (bank, investment company, asset management company or other) thus resulting either as employees of that subject or its sole agents. 

This has transformed the professional figure of the "promoter" (who proposes the purchase of a product) into a "consultant" (who merely advises on the basis of information and data).

How to choose your financial advisor?

Here are some good tips for points.

1) Possession of the title and actual experience

Those who provide consultancy activities must be authorized and possess the necessary certifications. So, first of all, you need to make sure that the financial advisor is recognized and qualified:

a) by registering with the register, which is enabling;
b) through further certifications issued by organizations (such as Efpa and Anasf - which both have a code of ethics to adhere to) or recognized associations.

2) Empathy and communication

In any successful relationship, the basic characteristics are empathy and right communication. It is important to ensure that the financial advisor has a natural spirit of cooperation and is able to:
a) listen carefully to understand the individual needs
b) knowing how to explain and convey information clearly

Consultants who have obtained a certification in questionology have precisely these characteristics.

3) Trust, availability and reputation

Another fundamental phase for the choice of the financial advisor is based on his availability and reputation, which become the basis on which to build the subsequent trust in him.
You have to try to understand what feedback the financial advisor has had from his previous clients and, above all, it must be easy to get in touch with him. When called, he must respond promptly and / or call back within a short time. Must be quick in giving the answers you are looking for: have monthly phone calls or quarterly meetings? Furthermore, he must use technological tools (for example, custom apps, document cloud, etc) that facilitate the speed and quality of communications with customers.

4) The principal (company)

It is good to evaluate the principal, or the company to which the financial advisor refers. There are four macro models of principal companies:
1) with a marked propensity for insurance,
2) with balanced asset mix,
3) with management orientation,
4) with dominant managed savings.

These four macro models are markedly differentiated from each other by service model and growth driver. A good financial advisor knows how to select the best client for his skills and for his clients.

5) Always think about the return / risk equation

He is mathematician. There is an inverse relationship between return and security: the higher the return, the more volatile the investment. And if volatility is added, the client has to accept a longer time horizon. We must therefore be wary of the financial advisor who promises returns.

6) Personal values

Understand the financial advisor's core values ​​and assess whether they match the client's long-term financial goals. A trustworthy person will be able to tell what his core values ​​are from a personal point of view.

What are the advantages of financial advice?

1) Customize investments, according to the objectives

Through a consultant, each investor will have a customized solution to meet their expectations. The financial advisor will recommend only the tools suitable to achieve the objectives, in full respect of the client's interests.

2) Reduce the investment risk

Since a financial consultant will guide the client towards the most efficient tools for the specific situation, thanks to him, a better cost - earnings ratio can be obtained. In this way it is possible to reduce the risks associated with the investment and, as a corollary, to increase the earning opportunities.

3) Long-term planning

The financial consultant, as the only contact person, will personally know the end customer and will be able, over time, to plan with him the investment of his own capital in the short, medium and long term, creating a real investment plan that will take into account all the dynamics of the customer's life. Since life can change, the consultant will be able to reshape the financial planning according to the new needs.

Five questions to ask your financial advisor

Before finishing this guidance article, here are some questions you can ask your financial advisor when you decide to use his / her collaboration:

1) How am I profiled?

This is one of the first questions that the consultant will answer (even if it will not be asked ...). The consultant will submit a questionnaire to you and will cross-reference the client's answers with the other data available to him. By discovering the client's profile as an investor, the foundations will be laid by both of them to start a personalized consultancy.

2) What happens if you have to divest?

It is important that the advisor be asked what happens if you need to liquidate your investment ahead of time. If the consultant knows this need he can design a better financial planning.

3) What are the advantages and disadvantages of a particular financial instrument?

It is important to have everything explained well: what need does a certain type of proposed investment satisfy? How does it work towards your investment objectives? If you are talking about a single product with the financial advisor, it is important to have an explanation of how and why it fits virtuously into your portfolio. That is: how does it fit into the overall portfolio? What function does it have? Does it reduce the risk? Does it increase the chances of achieving good performance? Does it raise the profitability of the portfolio in terms of coupons / dividends? Does it have a hedging function against some impending risk?

4) What risks does the investment have?

Nothing ventured nothing gained. If you don't risk it, you don't earn. But the risks must be consistent with the client's needs, his profile and his financial profile.

5) What are the costs associated with the investment?

Any entry and exit costs, management and performance fees (if any), consultancy costs, any penalties, etc. The various items must be explained well, how, when and why they come into play. In particular, it is also important to ask how much the consultation costs each year.

How much does a financial advisor cost?

A financial advisor earns a percentage of the invested capital. The Mifid 2 legislation also makes a careful check on costs, which must always be communicated to the customer with transparency. The cost of a good financial advisor pays off in full because it optimizes revenues and minimizes the risks that a client would have by operating alone. In short, his fee is transformed into an investment for the client himself. Good advice and a good overview of the financial market are worth gold. Literally. 

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Financial Advisor Secrets Exposed! Here’s the Juicy Details

How Much Does a Financial Advisor Earn in the USA

What are the average recurring fees charged by financial advisors in the United States for the services provided to their clients? According to the 2017 edition of the annual study edited by AdvisoryHQ, it ranges from a maximum of 1.45% applied to assets not exceeding 50 thousand dollars, up to 0.25% in the case of assets between 4 and 5 million dollars. dollars, as even lower levels are negotiable for assets above this threshold. 

Financial advisors and wealth management firms tend to present their clients with a table that makes transparent the structure of fees that will be applied for their services. 

The commissions applied can be summarized: a percentage commission parameterized to the assets under management (the most commonly applied type), a fixed commission calculated on the basis of the assets under management, commissions on an hourly basis, annual commissions, hybrid commissions. 

To these commissions are added administrative costs and overall management costs related to due diligence, monitoring, scale management, portfolio rebalancing, investment advice and financial planning. 

Depending on the type of financial instrument that an investor inserts in his or her portfolio under advisory, there are then other commissions to be paid equal on average, for actively managed funds, to 0.65% per annum of the value of the fund if of a bond or 0.89% if of an equity nature.

In the case of index funds, commissions drop to 0.12% per annum on average in the case of equity funds and to 0.11% in the case of bond funds; finally, in the case of ETFs (not levied), annual commissions equal to 0.5% of the assets are applied on average, regardless of the nature of the ETF.

Three types of financial consultancy firms operate on the US market: “fee only” companies, which do not accept commissions or rebates for financial products and receive remuneration only from their customers; commission-based companies, which receive commissions on financial products sold to their customers; “fee-based” companies, which apply a “fee only” structure for some services and receive commissions on the products placed.

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What Does the Financial Advisor Do?

Job Description of Financial Advisor

The financial advisor advises clients on how to manage their assets and invest in the best way. 

He is an expert in the markets and financial products offered by banks, credit institutions and brokerage companies: thanks to this knowledge, he can advise and direct his clients towards the solutions most suited to their needs - from credit to pension, from investments to insurance protection.

How does the profession of financial advisor work?

The financial consultant first of all meets the client to identify expectations and needs for investment, savings protection, improvement of the present or future financial situation. 

He then carries out an in-depth analysis of the client's personal, fiscal and economic situation and sets short and long-term goals.

You illustrate the possible options on the market, highlighting the advantages, risks and costs of each: loans, insurance, investments, savings plans, pension products. 

He is in fact a professional with complete expertise, able to recommend the best products for every financial need. He answers all the client's questions and clarifies any doubts also in the field of fiscal and tax legislation.

For a financial consultant, it is very important to build a personal relationship with the customer, based on transparency: the direct relationship allows them to fully understand their financial situation and objectives, and to formulate the most suitable solution in the interest of the customer.

Based on the level of risk that the client is ready to take, the financial consultant proposes a personalized financial planning, to achieve the objectives defined together.

For example, the investment advisor may sell specific financial products, recommend or make capital transfers on behalf of his clients, opening current accounts, buying and selling securities on the stock exchange. 

You then manage all the documentation and related administrative and bureaucratic practices.

The financial advisor then follows the actual performance of the financial plan with respect to forecasts: monitors the stock market prices of shares, securities and funds in the portfolio, constantly updates the client on the current situation, checks whether changes are necessary based on market trends and any changed conditions of the customer. 

For this reason, the financial advisor must keep himself informed on the new financial products available and on the market analyzes published by analysts and specialized media.

In addition to the consultancy activity, the maintenance and expansion of the customer portfolio are fundamental. 

Given that the earnings prospects of a financial advisor are very often linked to the commissions he takes based on the quantity of financial products he sells, the size and the results of the investments, it is very important to carefully manage your client base, constantly increase collaborating with existing customers and finding new ones.

With Quicken, you can manage your finances, create a custom comprehensive budget, track your investments and plan for retirement - all in one place.

Where does a financial advisor work?

Financial consultants work as independent freelancers or for banks and investment companies, financial institutions and insurance companies, financial consultancy companies, securities firms (SIMs) or asset management companies (SGRs).

They can carry out their duties in the office, from home or at the customer's home (so the trips can be numerous). 

Furthermore, the need to consolidate and expand their client portfolio pushes investment advisors to actively participate in meetings, conferences and events even outside traditional working hours.

Duties and Duties of the Financial Advisor

The typical duties of the financial advisor are:

•     Analyze the client's financial situation
•     Establish with the client the objectives, methods and level of risk of the investments
•     Carry out the required financial transactions
•     Manage investment documentation and bureaucracy
•     Monitor the progress of investments and periodically inform customers
•     Evaluate new financial products
•     Manage and expand your customer portfolio
•     Constantly update on the financial market situation

How to Become a Financial Advisor? Training and Requirements

The training required to become a financial consultant is economic and financial: degrees in Economics and Finance, Business Management and Accounting are often required.

In fact, the financial consultant must have knowledge in accounting and budgeting, macroeconomics, microeconomics, statistics, financial mathematics and financial regulations, in order to be able to plan investments, manage financial transactions and monitor market trends.

Furthermore, financial advisors must know how to use specific financial analysis programs, investment management software and other advanced FinTech solutions (fintech, or financial technology), which allow them to create investment strategies based on mathematical-financial algorithms.

It is also essential that the financial advisor always keep his knowledge of the stock market and new investment products up-to-date, in order to propose profitable solutions to his clients.

Depending on the different regulations in each country, a license may be required to work as a financial advisor.

Skills of a Financial Advisor

The skills required of a financial advisor are:

•     Knowledge of the different financial products available on the market
•     IT skills
•     Analytical skills
•     Communication and relational skills
•     Persuasion and negotiation skills
•     Ability to explain complex economic concepts in simple words
•     Ability to establish stable and lasting relationships with customers
•     Reliability and reliability
•     Organizational skills
•     Decision-making skills
•     Discretion on the operations carried out for its customers

Job Opportunities and Career of the Financial Advisor

The career of a financial advisor usually begins with other roles in the banking, financial or insurance sector, such as a bank employee, bank teller, financial analyst, insurance agent, stock trader or broker.

After gaining experience in the field of investments, you can go to work as a consultant for banks, insurance companies, wealth management companies, or make a career as an independent financial consultant for families, companies and institutions.

We also specialize as a mortgage and loan consultant, insurance policy consultant or other specific products, for example as an expert for pension and social security advice.

A qualification as a financial advisor then opens up interesting opportunities in the field of private banking, dedicated to providing personalized financial services to high-net-worth-individuals or HNWIs.

Good Reasons To Work As A Financial Advisor

Working as a financial consultant is suitable for those who have excellent skills in the financial field and want a profession in contact with customers, who must be followed on an ongoing basis.

In fact, the task of an investment consultant is to recommend solutions to better manage customers' savings, enhance and protect their assets over time, establishing lasting personal relationships: and this also means managing emotions, and not simply assets.

The salary of a financial consultant is usually linked to the commissions on the operations he carries out and on the products he sells: there is therefore concrete potential for growth and earnings for those who manage to create and maintain a solid customer portfolio over time.

With Quicken, You can manage your finances, create a custom comprehensive budget, track your investments and plan for retirement - all in one place.

What Clients Want from Their Financial Advisor

In the financial consultant profession, the relationship with customers is fundamental. 

This figure, in fact, bases its activity on relationships with those who are the users of the service they offer, and who use their services.

But what do clients want from financial advisors? 

An interesting study carried out by the multinational Accenture, in its report, highlighted which are the most important aspects on which users focus, and on which consultants themselves should also focus in order to direct their work in the best way.

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What are the focal points of improving the financial advisor profession? 

From what emerges in the study, 55% of respondents consider the advice currently received by their consultant to be "too general".

A fact that makes us understand how customization and the ability to choose make a wide range of products are some of the most important aspects that professionals can offer their customers today. 

It is also for this reason that 34% of the sample said that a hyper-personalized experience could increase the level of trust in their advisor.

The analysis also shows that younger people consider it important to align the consultant with their values ​​or political ideas, an aspect considered relevant by 71% of the interviewees. 

To this is linked, almost automatically, the theme of sustainability, undoubtedly one of the most important to know in order to connect with the youngest. 

In this regard, it seems that those belonging to generations X, Y and Z have asked for information on ESG issues with double the incidence of baby boomers. 

You can manage your finances, create a custom comprehensive budget, track your investments and plan for retirement - all in one place.

How to Choose a Reliable Financial Advisor: 4 tips

The importance of choosing the right financial advisor

How to invest money without risk? This is the question most people ask themselves when they want to increase the profitability of their savings. 

Relying on a financial consultant is the most immediate answer for those who are not familiar with the ups and downs of the financial world. 

Once this awareness has been acquired, another unknown factor opens up: how to find a financial advisor? And, above all, how to choose the best consultant, that is: a financial consultant who is able to understand your situation, your goals and support you for the best? 

See your financial life all in one place! With Quicken, you can manage your finances, create a custom comprehensive budget, track your investments and plan for retirement - all in one place.

4 Tips for Choosing a Reliable Financial Advisor

Financial advisors help people decide how to manage their money and achieve their financial goals. 

But financial planning isn't for everyone, and there are different types of consultants. 

Choosing the right financial advisor is vital to your financial well-being. 

This is someone you will entrust your investments to, which makes it a high-risk decision.

Ask questions and do your research to find someone to help you conduct a financial assessment, set realistic goals, and work with you to maximize your investment potential. 

Here are four things to look into when choosing a financial advisor.

Core values

Understand your financial advisor's core values ​​and whether they match your long-term financial goals.

 A person with integrity will be able to tell you their core values ​​from a personal point of view. 

Ask your friends and family about their financial advisors and choose a financial advisor with a good reputation, someone who has built up trust over time throughout the community.

Communication

Be honest and upfront about how you would like to communicate with your financial advisor and check his availability. 

Will you have monthly phone calls? Quarterly meetings? 

Not being kept track of your wallet can be annoying and, at worst, dangerous. 

Open communication is the best way to improve your portfolio but you will need to choose a financial advisor who regularly communicates the performance of your investments.

Experience

When choosing a financial advisor, it is good to look at his / her training, experience, credentials, and grades of advancement. 

Do your research and confirm that your financial advisor has no history of misconduct or ongoing investigations. 

It is also important to use due diligence to find a qualified advisor to help you with your specific financial needs.

Confidence

With these points cleared up, you need to decide whether or not to trust your financial advisor to manage your business. 

Ask the right questions and start a relationship of trust that helps you establish a relationship to achieve realistic goals for your future. 

YOU can manage your finances, create a custom comprehensive budget, track your investments and plan for retirement - all in one place.