What is a financial advisor for? what do they do exactly?
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Ignore the previous answer, it is an unbalanced view... Choosing the way to invest your hard-earned cash can be done by yourself, but if you have little or no understanding of the many options available, the probability is that you will make poor choices; that is to say you could lose money, or at best, make modest profits. A Financial Adviser is trained in all aspects of investing and can prepare a plan suited to your particular situation. The web-link below gives detailed information on investment advisers, some of which are independent, and some who are linked to particular companies.
( My CV - 25 years of investing experience.)
They advise folks with money but little knowledge of Financial doings and how to increase their nest egg by investing.
Think of them as a product advisor. lots of different financial products out there (bank accounts, savings, pensions, mortgages, shares, unit trusts, peps isa's etc). They should have a knowledge of all the different products and they are meant to find the product/products that are best suited to your individual needs.
Unfortunately some financial advisors 'push' products which give them the most commission rather than the product that is right for you.
Make sure your financial advisor is regulated by the FSA -financial services authority (if your in the UK) that way you have a comeback should you be mis-sold a financial product.
They give you direction so you can obtain your financial goals.
Say your goals are to buy a house - fund your child's/children's education - retire in style. So you better get started NOW. The adviser will review your income and suggest investments to help you get where you want to go. Suggesting you put 3 months living expenses in a savings to buffer you through a lay-off or illness. Get insurance to pay for the house and support your family should you die prematurely. Get you started in a retirement plan with regular investing - if you have a matching 401K at work, that would be the best place because the "matching" part doubles your investment. Maybe suggest a part time job to get the down payment for a house if your goals are bigger than your income. It is pretty much boiler plate advise tweaked a little for you personally and specific suggestions for stock purchases etc.
They have money, its true, they have the basic knowledge of finance but they pretend they know everything about finance. They will only tell you what they only have been thought. They are not going to tell you something you never heard.
First they will tell you how good their company is. How much money they made in the past. Then it will come to your money. They will never be certain about how much money you will make. They will talk about how safe they are and they will only talk about themselves and how big their company is.
In the world there isnt ANY financial advisor made one person rich. They only make their company rich. its easy as that.
Your self and your common understanding is the biggest financial advisor.
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