Financial advisors are experts on personal finance and wealth management. They can advise you about your decisions related to your wealth.

There are various designations and credentials in the field of financial advisors. These include chartered financial analyst, chartered financial consultant and a certified financial planner. One of the best-known financial advisors is the certified financial planner (CFP). The Certified Financial Planner Board of Standards (private trade association) in the U.S assigns this designation after a person qualifies mandatory exams and gains certification.[i]

Areas of Expertise

Financial advisors can help you with a retirement plan as well as any question about your insurance depending on their area of expertise. Some of the facilities that a financial advisor can provide include:

  • They can help you in assessing your financial goals and current financial situation.
  • They can also provide advice on any unexpected financial problems that may occur in your life.
  • They can give you information about insurance policies and to locate financial vehicles like mortgages.
  • A financial advisor can assist you in setting up an investment account for investing funds.
  • They can provide you a comprehensive plan related to your financial concerns including insurance, taxation, retirement, and college planning, etc.

Need for Financial Planning

There are various occasions where you might need to seek a financial advisor. Here are some of the scenarios that may lead you to hire a financial advice:

  • If you are near retirement and want to set up a plan for savings to get on to a right track.
  • If you have been married recently and want to manage your finances.
  • Manage overall finances of your elders.
  • To invest money inherited from a parent.
  • If you want a professional to manage your finances without you being anxious about it.
  • If you want a second opinion to make sure you don’t mess up.

Everyone needs a financial advisor at some point of their life for developing a long-term financial plan including considerations for children’s education, estate plan and retirement planning.

Types of financial advisers

Certified financial planner:

CFPs get this designation after a lot of training and passing various certification exams. They have high ethical standards and o lot of experience. They offer a wide range of services including a financial plan to save enough money for use after your retirement, plan to create a budget or pay off a debt. You can make sure that the financial adviser is actually a CFP by checking their credentials from the CFP Board.

Investment advisors:

An investment advisor is paid and hired for providing advice related to investment. They are professional who manage client assets. An advisor’s registration can be verified through the Financial Industry Regulatory Authority.

Retirement Planners:

Retirement planners have been trained to figure out how to utilize your money for generating reliable paychecks in retirement. Your retirement money must last the rest of your life so you really need to hire a specialist for this decision. They have in-depth knowledge about health care options, annuities, social security, pensions, taxes on retirement income, and reverse mortgages.

Financial advisor vs. financial planner

A financial advisor may provide the services of a financial planner and that is why he may also be sometimes referred to as a financial planner. Generally, the main focus of a financial planner is to create and analyze financial plans however, he may not be able to provide direct advice on investment or about managing assets. The sensible thing would be to find and hire a professional skilled in your desired financial area.[ii]

Pros and cons of a financial advisor

There are many advantages and some disadvantages of hiring a financial advisor as there may be with any other field. Let’s discuss about the advantages first. Some of the advantages of hiring a financial advisor are stated below:

Save Time:

Making an investment plan particularly if you are not an expert is time consuming as it requires complex skills and knowledge. Time is money and you do not want to waste it. A simple solution for this problem is a financial advisor. You pay him to make your investment plan and save your time. You can simple pursue other activities while an expert is making your plan for you.


A certified financial adviser has rigorous training, adequate knowledge, mandatory qualifications, and a lot of experience all of which is difficult to achieve yourself without necessary education and training. These individuals are more up to date about current trends as well as the development in the market, law, taxation and investment which is as important as anything else when you are making a financial plan.


Full-time finance professional researches about various investment opportunities which are suitable for you. Most often they already know your particular business needs but in some cases they may conduct the necessary research. A financial adviser typically keeps on researching on regular basis to maximize knowledge on taxation, law, industry, and markets.


Making a financial plan is very challenging and difficult to handle. A right financial expert can provide you a vital benefit of peace of mind. You can relax yourself while your financial advisor devises a plan to invest your wealth. He will study the market and discuss with you.  If you have any concerns or queries you can simple contact your financial adviser.


Another advantage of a financial advisor as that he can act as mediator. He takes the emotional subjects out of the issue and give you an objective advice.


A financial expert can help you avoid taxes that may otherwise erode your investment profits. This makes your investment more effective.  A financial adviser considers all possible issues related to taxation.


A financial adviser can help you in long-term planning and achieving your lifetime goals.


Some of the potential risks of hiring a financial advisor include:


Hiring a financial advisor will cost you money and some advisors charge money higher than the others. So you need to choose a financial advisor whose fee is worth the services rendered.

Poor Quality Advisor:

While some advisors are very professional and have a high expertise in their field some are not that competent. It is up to you to choose the right financial advisor after careful observation and questioning.[iii]