what is a financial advisor 
a financial advisor provides financial advice or guidance to customers for compensation financial advisors sometimes spelled as advisers can provide many different services such as investment management tax planning and estate planning increasingly financial advisors are acting as a one stop shop by providing everything from portfolio management to insurance products registered advisors must carry the series 65 license to conduct business with the public a wide variety of other licenses and certifications may be required depending on the services provided by a given financial advisor 12understanding financial advisors financial advisor is a generic term with no precise industry definition as a result this title can describe many different types of financial professionals stockbrokers insurance agents tax preparers investment managers and financial planners can all be considered financial advisors estate planners and bankers may also fall under this umbrella still an important distinction can be made that is a financial advisor must provide guidance and advice a financial advisor can be distinguished from an execution stockbroker that simply places trades for clients or a tax accountant who simply prepares tax returns without providing advice on how to maximize tax advantages furthermore what may pass as a financial advisor in some instances may simply be a product salesperson such as a stockbroker or a life insurance agent a true financial advisor should be a well educated credentialed experienced financial professional who works on behalf of their clients as opposed to serving the interests of a financial institution by maximizing the sales of certain products or capitalizing on commissions from sales 34there were 330 300 professional financial advisors in the u s as of 2021 according to the bureau of labor statistics 5generally a financial advisor is an independent practitioner who operates in a fiduciary capacity in which a client s interests come before their own however only registered investment advisors rias who are governed by the investment advisers act of 1940 are held to a true fiduciary standard this fiduciary standard mandates that an ria must always unconditionally put the client s best interests ahead of their own regardless of all other circumstances 6there are some agents and brokers who elect to practice in this capacity as a fiduciary as a way of attracting clients however their compensation structure is such that they are bound by the contracts of the companies where they work financial advisors should work for the client and not the company that employs them if you feel uncomfortable with your advisor s responsiveness and accuracy or wonder if they have your best interest at heart you should look for a new advisor since the enactment of the investment adviser act of 1940 two types of relationships have existed between financial intermediaries and their clients these are the reasonableness standard and the stricter fiduciary standard these relationships characterize the nature of the transactions between registered representatives and clients in the broker dealer space there is a fiduciary relationship that requires advisors registered with the securities and exchange commission sec as registered investment advisors to exercise duties of loyalty care and full disclosure in their interactions with clients while the former is based on the principle of caveat emptor guided by self governed rules of suitability and reasonableness in recommending an investment product or strategy the latter is grounded in federal laws that impose the highest ethical standards at its core the fiduciary relationship relies on the necessity that a financial advisor must act on behalf of a client in a way the client would act for themself if they had the requisite knowledge and skills to do so 6financial advisors vs financial plannersthe financial planner is one particular type of financial advisor who specializes in helping companies and individuals create a program to meet long term financial goals a financial planner might have a specialty in investments taxes retirement and or estate planning further the financial planner may hold various licenses or designations such as the certified financial planner cfp designation financial planners may specialize in tax planning asset allocation risk management retirement planning and or estate planning 7