Aspects of a Financial Advisor

Subject: Business
Type: Informative Essay
Pages: 5
Word count: 1334
Topics: Investment, Accounting, Finance, Macroeconomics, Microeconomics


A financial advisor provides expert financial advices and services for customers. These include advice on investment in assets, financial products and instruments, stock market, property, insurance, loans, advice on retirement planning, and other services. Some professionals such as brokers, investment bankers, lawyers, financial planners, insurance agents, accountants, also provide financial advisor services (Adams, 2010). This paper examines several important aspects of financial advisors such as requirements and education, duties and responsibilities, and salary and benefits. 

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Requirements and Education

The terms ‘adviser’ and ‘advisor’ are important and they do not mean the same. Adviser refers to professionals who provide consultancy of legislative acts, rules and regulations, while advisor refer to a practitioner who provides guidance on investment portfolio. The market is self-regulated and a private body, Financial Industry Regulatory Authority (FINRA) provides the rules and guidance along with certification and qualifications such as Certified Financial Planner and Registered Investment Adviser. All professionals and this includes firms that give financial advise and individuals must be registered with FINRA (FINRA, 2017). 

Individuals have to pass qualification exams where applicants are required are tested in topics such as insurance, markets and securities, regulatory structure, and once they are registered they are required to undergo continuing education in ethics and supervisory training (Exams, 2017). Since financial advisory services are subject to fraud and in some cases advisors make unrealistic projections of returns on investment, professionals are covered under the Investment Advisers Act of 1940 (SEC, 2012).

In addition to the above regulations, financial advisors are expected to be educated, understand the implications of their investment advise, understand customers needs and capability, and work to benefit clients. Insurance agents who sell policies and banks that grant loans, hire college graduates in various capacities, and train them on their products and services, and in effective selling. Employees are expected to dress neatly, have a pleasing attitude that inspires trust, be effective communicators, and win the trust of their customers. Smaller firms and individual advisors often are industry professionals who decide to become financial advisors after gaining experience. Agents are hired on commission basis and these people take up the services to augment their income (Adams, 2010).

Duties and Responsibilities

The financial advisor carries out several roles and responsibilities. These include serving as a trusted advisor, educator, planning facilitator, multiple generation family coordinators, portfolio manager, and other rules. These are briefly explained as follows.

  • A financial advisor needs to work and serve to maximize customer’s benefits. Products and investment advice must be designed to reduce risk, uncertainty, and the portfolio must be designed keeping in mind the customer’s financial status, needs, and capability. Some customers may be ready to accept higher risks and they will be willing to invest in risky but high return stocks, while others may need stability, smaller assured returns, and safety. These factors must be made clear to customers. Some advisors may offer portfolios with high risks but that yield them higher commission. Coercing customers to invest in such instruments without clarifying on the market uncertainties or promising much higher returns than possible is a fraud. FINRA collected millions as fines and penalties from brokers who gave bad advise (Prospects, 2017).
  • A financial advisor is expected to educate clients, inform them about various investment opportunities, estimate future market conditions, so that they can make informed decisions. Financial products and investment is a highly complex and specialized field. An advisor who sells insurance or mortgage products may not be capable of giving help on the stock market or in health insurance products. A property and real estate consultant would not be helpful in matters relating to loan instruments. Therefore, area of specialization and boundary of operations must be defined to avoid giving ill informed advise (Prospects, 2017).
  • Independent advisors give help on all available instruments and avenues to suit the customer requirements. They are not obliged to focus on products of any firm. Restricted advisors work on behalf of a specific firm and give advise only on products sold by the firm. Such advisors may in some cases, give misleading advise to increase their business and commission. In such cases, customers need to research all products from the Internet and take a decision. In any case, financial advisors need to consider the implications of their advise (Janney, 2017).
  • Financial advisors must be able to design financial strategies that combine the best products and services. Risk analysis is an integral part of the service and a detailed risk analysis, based on market research, risk appetite of the customer, market conditions, and other factors. Financial strategy needs to consider immediate and future requirements of customers, expected expenses, college education of children, appreciation of current assets, and several other factors. Advise must be given for a dynamic portfolio where assets that show lower returns can be divested and new investments made (Janney, 2017).
  • Portfolio management is an important duty of a financial advisor. When customers repose their trust, advisors must reciprocate by helping out with investment portfolios. As mentioned earlier, investment profile and pattern must suit customers risk appetite. Accordingly, the corpus must follow new IPOs, mutual funds, stock market, debt instruments, and shares in holding firms (RIA, 2017).
  • Cross generational financial advisors provide advise to a couple of generations of a family. Such advisors have a very high level of trust and competency. Since the engagement is long term, high level of ethics is expected (RIA, 2017).
  • Financial advisors must be well versed with latest market developments. Investment portfolio keeps changing and the market is dynamic. New risks can emerge while old ones fade away. In addition, new opportunities and new investment avenues can emerge. These include IPOs, bonus on stocks, share redemption, etc. A financial advisor needs to consider all these opportunities and risks and advise customers (Janney, 2017).
  • Financial advisors also owe responsibility to the firm whose products they sell. Firms spend considerable resources in training and communicating with advisors and in giving them support. Firms expect advisors to sell their products efficiently while promoting and building their reputation. If the advisors perform restricted services, meaning that they do not sell products of other firms, then they should refrain from doing so. Trust and ethical behavior is important (Adams, 2010). 
  • Advisors are expected to follow rules and regulations concerning investment advise, given by regulatory authorities. They have to follow federal rules and guidance issues by the Securities and Exchange Commission. These rules must be followed in letter and spirit and required licenses must be obtained and validated as per regulations. Fraud, giving wrong advise, participating in Ponzi schemes, money laundering, etc., are not allowed and defaulters can be tried and jailed (SEC, 2012).

Salary and Benefits

Depending on the terms of their contracts, financial advisors are paid a fixed amount plus commissions or only commissions. The percentage of commissions may vary from 1-2% per year. The fixed payment is a small component. Generally, trainee advisors earn up to £30,000 per year, qualified financial advisors make up to £45,000, while senior wealth managers in private banks earn up to £100,000 (Prospects, 2017). Top advisors who consult with large firms can earn up to $350,000. Earnings depend on market conditions and sentiments of customers. When the economy is down, then advisors make very less money and when the economy is rising, more money can be earned. Earning potential depends on the capability, business acumen, and contacts (Adams, 2010). Benefits are financial since financial advisors can earn in their spare time. Other benefits include a feeling that they helped to improve lives of their community, and respect they earn. Financial advisors are well respected members of their community and develop large networks with contacts that help to increase their customer wealth (Light, 2012).

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The paper examined the role, duties, qualifications, and wages of financial advisors. The profession is highly dynamic and people with strong communication skills, an analytical and financial thinking can succeed. A high level of ethics is expected.

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  1. Adams, S. (2010). How To Become A Financial Advisor. Forbes. Retrieved from
  2. Exams, (2017). Qualification and Exams. Financial Industry Regulatory Authority. Retrieved from
  3. FINRA, 2017. Registration and Qualification. Financial Industry Regulatory Authority. Retrieved from
  4. Janney, (2017). The Role of a Financial Advisor. Janney Montgomery Scott LLC. Retrieved from–families/select-a-financial-advisor/the-role-of-a-financial-consultant
  5. Light , L. (2012). How Much Do Advisors Cost? Forbes. Retrieved from
  6. Prospects, (2017). Financial Adviser. Prospects. Retrieved from
  7. RIA, (2017). From Stock Broker To Fee Only Planner. Registered Investment Advisor. Retrieved from
  8. SEC, (2012). Investment Advisers Act of 1940. Securities and Exchange Commission. Retrieved from
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