When individuals, companies and the government need help with their finances, they are able to seek the services rendered by financial advisors. They are able to seek advice on investments, pension planning, life insurance and other insurances such as income protection, critical illness and advice on mortgages. By using proper asset allocation, financial advisors are able to help their clients sustain the desired stability of investment income, capital gains and an adequate level of risk. When meeting the needs of their clients, financial advisors use stock, bonds, mutual funds, real estate investment trusts, options, futures, notes and insurance products. A commission payment is received by financial advisors for the products that they broker. In the financial services industry “fee-based” planning is becoming ever more accepted. There are also “fee-based” and “fee-only” advisors in the financial world. Asset based fees and commissions are collected by fee based advisors and fee only advisors are not likely to collect commissions.
The planning and arrangement of financial affairs such as savings, retirement provisions, tax treatments and wills is the main purpose of a financial advisor and what they can do for their clients. It is important for financial advisors to truly understand their client’s financial situation and to figure out a way to reach financial stability for their client. When financial advisors are working with other people’s money it is there duty to make decisions based on ethics and keep the risk at a minimum. The goal is to maximize the money within the established risk boundaries.
Retirement planning is one of the major services offered by financial advisors. Budgeting, forecasting, taxation, asset allocation and financial tools are all items that a financial advisor should have knowledge of. They should also be knowledgeable in different strategies when devising plans to reach budgeting, forecasting, taxation and asset allocation goals. Financial advisors use several investments tools which include 401ks, Roth accounts, mutual funds, stocks, bonds, CDs and individual retirement accounts. When determining a minimum balance for an individual to save for when it comes to retirement planning, the financial planner will take into consideration tax liabilities, expected inflation and project return on investment. There are many automated tools that are able to calculate the minimum balance an individual should have in their retirement plan once they retire.
Long and short term goals are able to be figured out by financial advisors. Financial advisors must determine how much risk a client is willing to take and then suggest the proper investments. If the financial advisor is given a substantial amount of time, the reward in the end will be more money if the proper risks are taken and well thought out. Fewer risks should be taken if a financial advisor’s client has short term goals.
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