What is financial advisor and what are his capabilities?

Have you at any point considered how to manage your cash? A financial advisor is the person in charge of helping you. Someone with a exhaustive information on finance and ready to track down the item that best suits your necessities. Next, we will explain in detail what the functions of this financial coach are and what their day-to-day tasks are; so you can encourage yourself to hire one, or find out if you have the professional profile required to become one of them.

What is a financial advisor:

A financial advisor is the professional who helps manage the economy of a person or a company according to their income, assets and needs. That is, advisors manage financial operations on behalf of their clients. For this reason, in this trade perhaps more than in any other, it is crucial to know who the financial manager is charging for their services. A little further down we will see it in detail.

Difference between advisor and financial agent

The financial adviser should not be confused with the financial agent, who is defined by having a more global vision of the economy. In other words, the function of an agent will be more similar to that of an expert consultant in finance, external and punctual. An advisor has to do with a periodic monitoring of the client’s objectives, and the ability to recommend among a series of financial products that he manages and knows.

How much does a financial advisor cost?

There is a belief that a financial advisor is a service only for high net worth individuals. But, in reality, it also offers a service to the small saver. In fact, every time we contract a product at the bank we are paying a small percentage for contracting the service. For example, if you have contracted a mortgage, you can ask your entity how much a mortgage advisor charges.

Since 2018, with the implementation of Mifid II, the bank will be forced to inform you of how much money it has earned offering you its services during that year. Even if you hire an online financial advisor or rob advisor, they will keep a percentage.

They should likewise conform to straightforwardness guidelines, illuminating you regarding how much commission their own monetary counsels charge, and where they get it from. As well as the percentage of cost that corresponds to each of its financial business advisory services.

Historically, this has been the form of payment for financial advisers, the so-called retrocessions (also prohibited with Mifid II). Because, as in any other profession, there is no free financial advisor.

In other words, banking entities must specify whether they accept the work of dependent or independent advice.

In order to carry out professional advisory work, it is best to be an independent financial advisor. That is to say, that it has no other source of income than what it collects from the client.

And it is that, in the case of dependent advisers, they are subject to the requirements of the bank (to its offer of products and commercial objectives that are imposed) and their advice may be affected by conflicts of interest . Although this new transparency law tries to mitigate precisely that.

Duties of a financial advisor

What does a financial advisor do? There are several aspects in which a financial business advisor can help you. Depending on whether you are a company or request it to manage your personal finances, these are the functions of a financial advisor:

Functions of a consultant in a company

Increase cash flow. A financial advisor must look for new tools and strategies to increase the capital of the company

It acts as a guide to make investment decisions of the company. Using as a base their knowledge in finance and markets

Advise the profits of the company to, for example, have a supplement to retirement

Functions of a commercial advisor in a bank

Lay out business associations with clients , with items adjusted to their gamble profile Seek new opportunities in the management of funds marketed by the Bank.

Duties of an Independent Financial Advisor

The independent financial advisor, unlike the commercial or dependent, does not charge commissions for the products he sells, but receives a fixed salary from the client he advises.

This is why it is always recommended to hire an independent financial advisor, although it is normally a service offered to high net worth individuals.

However, thanks to the new MiFID regulations , the focus is being placed on avoiding conflicts of interest. There is a greater demand for transparency in the operations carried out by the bank. Constant communication with the client is required, so that he can see where his advisor gets the commissions from, in the event that he is dependent.

The trend, therefore, is to bring the figure of the independent professional closer to any type of public. Although for this to be possible it will be necessary, among other things, a lot of financial education.

The functions of the independent financial professional are:

Accompany the client in their investment decision

Help you achieve your financial goal

Offer you financial products adapted to your risk profile

Advantages of hiring a financial advisor certified by EFPA Spain

A certified financial adviser is guaranteed to have up-to-date knowledge of the different products offered by the market, their situation and the latest developments in the sector.

EFPA certifications oblige those who have them to comply with a number of hours of annual training in order to maintain it here the detail

On the other hand, certified financial advisers sign a code of ethics in which they undertake to look after the client’s interests above those of their company, with the aim of advising by always putting the client at the center.

For this reason, it is essential that, if you hire a financial commercial, you first check that he is a certified professional.

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