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What Does An Independent Financial Advisor Do?

Independent Financial Advisor-

For most people dealing with their finances can at times seem overwhelming. From planning for retirement, to choosing how to invest their money, to selecting an appropriate mortgage for their home navigating through the array of options is daunting. To help guide them through these difficult but highly important decisions they need a professional. And that is where an Independent Financial Advisor comes in.

Independent Financial AdvisorThe role of an Independent Financial Advisor is to help individuals and families to manage their finances so as to meet their goals. One of the most important points is that this is a collaborative process between the client and the financial advisor. The advisor will consult and discuss with the clients how that they can best meet their objectives given their financial situation.

An Independent Financial Advisor will give advice about some or all of the following:

  • Retirement Planning
  • Tax Planning
  • Estate Planning
  • Funding Education
  • Investment Planning
  • Debt Reduction
  • Budgeting
  • Business Succession Planning

When the independent financial advisor is either unqualified or does not have sufficient background on a particular topic, such as tax law, they will typically be able to refer you to someone who can discuss this area.

Average Salary of an Independent Financial Advisor

According to the U.S. Bureau of Labor Statistics the median salary of an Independent Financial Advisor was $64,750 per year in 2010. It requires at least a Bachelor’s degree. Between 2010 and 2020 this field is expected to grow much faster than average with a projected 32% growth rate adding 66,400 new jobs over the ten year period.

 What an Independent Financial Advisor does

One of the most important areas that an Independent Financial Advisor does is investing. Choosing the right mix of stocks, bonds, cash and real estate will depend on the financial circumstances and goals of the client. What is right for one person may not be right for another. For example some one who is closer to retirement might prefer to have more bonds than stocks in their portfolio. In contrast a younger person may prefer a more high growth high risk selection. The Independent Financial Advisor needs to take this into consideration when giving advice.

Having an independent financial advisor can be invaluable when trying to make decisions in relation to our finances. For example if you have recently come into a windfall of $10,000 what is the best use of this money? Should you use it to repay your mortgage or should you invest it for your child’s college education. There can be conflicting information about what is the best use of your money and having someone who is qualified to give advice on this subject can help make the decision easier.

One of the most common problems faced by Financial Advisors and their clients recently is the problem of loan modifications. During the real estate boom many people took out sub prime loans, some of which were made directly and others through loans online. While these loans often had very low payment terms at the beginning of the loan several years later these payments ballooned. Facing new much higher payments borrowers were unable to meet their payments and faced foreclosure. The process of loan modification which refers to altering the payment terms is a complex and lengthy process. Having an Independent Financial Advisor to guide you can make the process much easier.

There are two different types of “Financial Advisor” some work for a company and get commissions and some are called “Fee Only” .

Commission Based Financial Advisors

This can include insurance brokers, bank employees and finance product sales people. These individuals will sometimes have a vested interest in guiding you towards their own company’s financial products and so it is important to be clear with your clients what conflicts of interest may apply. You can learn more about the different professionals involved in giving advice in this post on financial experts.

Remember the role of an Independent Financial Advisor is to offer advice rather than to make decisions for your client. In order for you to gain the most benefit from the relationship there must be a good level of communication between the two of you. So in addition to financial knowledge good communication skills are necessary. You must be able to express yourself properly and clearly communicate explanations and advice that you offer.

There is a great sense of satisfaction involved in being an Independent Financial Advisor as these are some of the most important decisions your client will need to make in regards to preparing for thier retirement and other financial goals.

Book Recommendations:

If you are considering a career as a Financial Advisor you may want to read:

The Journey, The Evolution of a Financial AdvisorAs entertaining as it is insightful… Ken does an amazing job of weaving some great life lessons into a very entertaining story. This is a must read for anyone, in any profession, looking to make substantive changes to their personal and professional lives. Don’t let the sub title “Evolution of a Financial Advisor” mislead you, the concepts and techniques Ken describes can be applied by any professional that interacts with others in the course of their business and personal experience.

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Author Bio:
Ceri Thomas loves writing on popular finance blogs and is the owner of cashpaydayloansonline.co.uk, where you can find more about payday loans

Photo Credits: by Images_of_Money | Money Jigsaw