Thanks to the rise of financial management groups like Betterment and Wealthfront, we’ve seen so-called “robo-advisors” and the use of increasingly advanced algorithms disrupt the financial services sector.
The vast majority of everyday citizens are still likely to turn to a traditional financial advisor when organising their money, however, as this provides them with a reliable point of contact who can offer reassurances concerning the validity of their investments.
This is just one aspect of a financial advisor’s role, however, which encompasses a number of different tasks on a daily basis. We’ll address this further below, while asking what your financial advisor should actually be responsible for.
What’s the Purpose of a Financial Advisor?
In simple terms, financial advisors and wealth management firms like Downing provide expertise that enables their clients to achieve their monetary and economic goals.
To achieve this, they’ll assess each client’s individual circumstances and provide a tailored investment and wealth management plan to help them make the most of their finances. By understanding the interlocking of these investments with time, taxation and a full-time job, advisors use their knowledge base to realise the full potential of their client’s estates.
Ultimately, an advisor will work closely with you to develop an effective and viable strategy, while communicating this clearly so that you can manage your expectations.
Advisors can also work with clients over any length of time, with the vast majority providing a reliable and trusted service over the course of decades rather than years.
What are Financial Advisors Responsible For?
The role of a financial advisor is variable and far-reaching, while it was only in 2013 that more stringent legislation was introduced to regulate the activity of people who were active in the industry.
Ultimately, the scope of a financial advisor will depend largely on their relationship with individual clients. The reason for this is simple; as it enables clients to use advisors as they see fit while leveraging their own levels of experience and expertise to shape their own investment strategy.
In general terms, however, a financial advisor will be responsible for creating a short or long-term investment strategy, while providing trusted device that inform your decisions as a client. As part of an agreement, you’ll still retain control of your capital and finances, and are under no obligation to accept the advice on offer or act upon this accordingly.
As with any market, there are some financial advisors who may not be fully licensed or reputable, so you need to check each service providers accreditations before choosing to partner with a firm or individual.
When liaising with potential advisors, we’d also recommend listening intently to the way in which they communicate. After all, part of a financial advisor’s role is to act in a way that’s ethical and entirely in the interests of their client, and the failure to do this is illegal and could be extremely damaging to your prospects.
So, allow them to articulate their services and try to get a feel for how they’re likely to represent you and your capital.