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What Does a Financial Advisor Do?

By: Kaplan Financial Education
June 22, 2020
Financial Advisor at Work

What does a financial advisor do? People who are exploring a career in finance often ask this question. The short answer is that a financial advisor works with clients to assess their current financial status and future plans, economic conditions and forecasts, and regulations so that they can give them financial advice. This article offers more detail on the financial advisor role and shares the steps to follow to become a financial advisor.

What Is a Financial Advisor?

A financial advisor helps clients by giving them financial advice that takes their current financial situation, long-term and short-term goals, and requirements into account. Generally, financial advisors fall into one of these categories:

  • Personal financial advisor: A personal financial advisor helps individuals manage their finances and provide advice on investments, insurance, mortgages, college savings, taxes, estate planning, and retirement.
  • Investment advisor: An investment advisor provides investment-related advice for a fee. Their focus is strictly on investing, so their work is more limited in scope than that of a personal financial advisor.
  • Registered representative: A registered representative can recommend and purchase investment products such as stocks, bonds, and mutual funds for a client based on income, portfolio, risk tolerance, investment objectives, and overall financial situation.
  • Wealth management advisor: A wealth management advisor recommends ways that high-net-worth clients can achieve their goals related to wealth accumulation, protection, and distribution.
  • Financial planner: A financial planner helps clients with long-term investment decisions, taxes, and selecting insurance policies and retirement plans.

Regardless of their specific job title, all financial advisors design investment portfolios based on a range of information, including economic trends, regulatory changes, and risk. They are expected to establish trust with their clients and balance their market and investment knowledge with an understanding of what will work best for each client.

Typical Duties of a Financial Advisor

What does the job of a financial advisor look like? Here is a list of things that are typical of the role:

  • Contacting prospective clients to explain their offerings
  • Responding to prospect queries about financial services
  • Providing financial advice on investments, including securities, insurance, annuities, and retirement
  • Monitoring financial markets and legislation Updating clients on market changes Checking with clients after life event changes
  • Reporting performance of investments to clients
  • Preparing financial plans and checking their accuracy
  • Sharing subject matter expertise with prospects, clients, and other advisors

These are just the highlights. Also, they may differ slightly, depending on the type of financial advisor you are.

How to Become a Financial Advisor

There are five main steps to become a financial advisor:

  1. Earn a bachelor’s degree: Most practicing financial advisors majored in some type of business or finance program.
  2. Complete an internship: An internship can help get a sense of what a financial advisor does every day while offering the opportunity to learn from financial advisors. If your internship was mutually successful and satisfying, consider exploring the possibility of an entry-level position after you graduate.
  3. Find a finance job: As you prepare to enter the workforce as a financial advisor, consider looking on job websites for positions in large firms and make sure you are prepared if you are asked for an interview. You can learn a lot about how to make cold calls and build a book of business at a large company.
  4. Earn the necessary licenses and consider certification: Earning the CFP® mark or the CFA® charter can help you specialize or differentiate yourself from your competition. If you sell securities or insurance, you’ll need a license.
  5. Pursue additional education: Your job relies on your ability to provide valuable financial advice to clients. Returning to school to earn a graduate degree or doctorate can help you progress in your career as a financial advisor.

Ready to Get Started?

If a career as a financial advisor appeals to you, get more information about how to become one in this article. You can also read this article to find out how much financial advisors earn.

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