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Financial Advisor

Financial Advisor




The financial advisor is one of the professions in the field of finance, the list of duties of which is unlimited. Financial advisors include brokers, investment advisors, financial accountants, financial lawyers, financial insurance agents, financial analysts, and anyone who provides advice (for free or for free) regarding financial planning.


Usually, a financial advisor is understood as a person providing consulting services in the field of financial planning, both corporate and individual. Financial advice can include an appraisal, financial, investment and management consulting based on the level of risk tolerance of its client and the size of its investment. The advisor tries to build stable relationships with his clients, which, as a rule, are guided by long-term financial planning. In the private financial services sector in Western countries, financial advisory services are popular with representatives with incomes slightly above or well above the national average, usually in order to accumulate sufficient funds in advance to ensure a decent life in old age and/or after retirement. In many countries of the world, the profession of financial advisor has its own specifics (for example, independent financial advisor or (NSF) in the UK and other countries of the British Commonwealth) and its activities are regulated by law. To achieve greater efficiency, financial advisors rarely operate alone and are usually united in guilds, which are large financial firms (Morgan Stanley, Janney Montgomery), often tied to banks.

Phased aspects of a financial analyst

  1. At the initial stage of building a relationship with a client, a financial analyst must thoroughly study the individual situation, profile, portfolio, current state, initial financial condition, priorities, and goals and wishes of the client, both in the short and in the long term. The wider the financial analyst’s access to the context, the higher the likelihood that his advice will be of the highest quality and useful. It is often during the consultation process that a person is aware of various alternative options. However, clients do not always want to be completely open about their current or desired financial situation with the advisor.
  2. Further, an active search and design of options for a financial solution are carried out to achieve the goals and objectives (they can be narrowly focused, more complex, short-, medium- or long-term). Often, the advice of a financial analyst is a whole chain of actions, unlimited only by financial instruments, and containing, in addition to them, various social and legal aspects (connecting guarantors, changing ownership rights, ensuring the security of transactions, insurance, hedging, etc.);
  3. The advisor often offers his recommendations regarding the purchase or sale of certain financial products in order to optimize the financial future or the present client with a position of credit, investment, and insurance. Understanding the client’s financial context and the balance of products in their portfolio is key in this case. It also assesses the available room for maneuver and the severity of possible yawing. The advisor also has to simultaneously monitor all conditions and information flows on the current securities market, which is very difficult in the conditions of the modern overabundance of information both from the market itself and from various media. Thirdly, he must also familiarize himself with the peculiarities of the credit and insurance policies of different countries, intercepting the client, as well as often specific financial institutions. For instance,
  4. Also, a financial advisor often has to deal with organizational issues in the process of implementing the recommendations given to him and organizing interaction with financial institutions and third parties.


A financial analyst is one of the so-called post-industrial professions. He usually provides his services for a fee or for a commission, structured in one of the following ways:

  • Hourly wages
  • The annual rate for servicing an individual portfolio
  • Commission for each transaction
  • The percentage commission on the amount of the deposit, transaction, or portfolio
  • Various kinds of extra charges

Benefits and Disadvantages from an Investor Perspective

In the world of financial science, there has been a long debate about the advisability of using the services of financial analysts in general and independent financial advisers in particular by individual investors. As a class, portfolios managed by financial advisors do not get statistically significant better results than passively investing in the current stock market. Considering the fact that you have to pay for their services, then portfolios managed by financial advisors bring even slightly less profit to their investors. However, the moral support of financial analysts, as well as the lost profit of investors who get more free time and can spend it on something else (lost profit) is difficult to assess in monetary terms in each individual case. The presence of Internet forums allows modern clients to increase the level of transparency in the activities of financial advisors and take a more objective look at the quality of their services. For example, financial advisors of large financial firms are sometimes accused of wanting to work not to please clients, but to the management of the offices, which require advisors to permanently recruit a certain number of clients, make a certain number of transactions from each portfolio in order to receive a commission or excessive enthusiasm for mutual funds for the same reason.


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