A financial advisor offers financial advice or counsel to clients for compensation primarily on investments. Financial advisers (sometimes spelled as financial strategists) can offer a variety of financial services, including investment advice, tax planning, and real estate planning. A financial advisor can help individuals create financial instruments like investment promissory notes, preferred stocks, debt securities, derivatives, exchange traded funds, and foreign exchange traded funds. Advisors can also help individuals develop a long-term financial strategy. A variety of financial advisory firms offer these services, while others provide these services only for specific types of clients.
The cost of hiring a financial advisor depends on the type of plan and the advice sought. In order to hire a full-service, fee-based financial advisor, individuals are required to supply the requisite information, which may include their tax returns, paystubs, social security numbers, bank statements, copies of birth and death records, copies of divorce decrees, and other documentation of financial need. Fee-only financial advisors require no paperwork from clients, except for information necessary to calculate fees due. Clients who wish to engage in self-directed investments may also contact these types of advisors to help them establish a financial plan. Clients may choose to work with a fee-only financial advisor without the involvement of other professionals or institutions.
Financial Advisors must meet a certain level of education, either undergraduate or law school, before they can practice law or manage a firm. Clients should also be aware that financial advisors must adhere to a variety of rules and regulations to ensure that their advice is well-informed and not self-serving. Financial Advisors must maintain an independent status at all times and must not be affiliated with any particular firm, organization, or governmental agency.