A financial consultant advises clients on investments, loans and insurance. This advice is provided either as circumstances require, or as part of a systematic financial planning. The financial advisor helps assess financial needs, circumstances by analyzing past, present and future of his client.
Taking into account age, assets available, tax rate, employment status, family, and other investments available. After analyzing their risk profile and needs, the consultant will carry out advisory role, covering each aspect based on its merits and adapting historical elements to the current time.
The client-counselor relationship is the foundation of good financial advice, which is based on a high degree of confidence (with rights and obligations for each party) and the consultant has to uphold the client’s interests as if they were his own.
Therefore, the advisor must always offer independence and objectivity in all recommendations. Always looking at the long term and most importantly, create, cultivate and maintain a close relationship with the client.
Part of the main services offered by financial consultants involves retirement planning. A financial adviser must possess a good understanding of taxation, budgeting, forecasting, asset allocation, and financial tools to institute realistic targets and the means to attain them.
There are three main distinguishing criteria in the selection of financial advisors. And the concept of financial adviser is contrary to that of a policy adviser. Financial compensation models involve payment of a fee by the client to the consultant (consultation fee), and payment of the consultant as a commission by the providers of financial products sold.
The relevant legal framework distinguishes between the promotional, marketing activities and investment advice. Generic recommendations or advice are considered general and not personalized financial advisory communications or service.
The marketing of advisory services and customer retention is typically carried out by consultants themselves or by their agents. The marketing of advisory services and customer retention are not in themselves investment services. In a number of jurisdictions, the financial advisory business registration and a permit is required. An examination of knowledge and skills is ensured, which contain a certification after thorough examination by the Chamber of Commerce.
Financial advisers often advertise with independence and objectivity – even though consumer advocates dispute this fact due to alleged dependency on particular channels.
Types of cooperation with financial product providers involve a consultant working for a product provider and sells only products of this company, consultant working for a product provider, but selling products of different companies. Consultants are formally independent of product providers, however, bound to a particular financial sales contract, consultant is truly independent of product suppliers, etc.