What is a financial advisor and what do they do?

When you’re ready to discuss your finances with a professional, it’s important to understand your long-term financial goals and take the time to do your research and find someone you can trust, with the experience and qualifications needed to manage your wealth.

We’re here to help you understand what a financial advisor is, what they do, why you may want to work with one, and how to choose a financial advisor.

What does a financial advisor do?

Financial advisors are professionals who can help you manage and maintain your finances, including your wealth, savings, and investments. Many financial advisors have professional designations, licenses, and certifications, such as a Certified Financial Planner (CFP)^®, to help you manage specific aspects of your finances.

Financial advisors offer services including:

• Investment Advice
• Debt Management Solutions
• Retirement Planning
• Estate Planning
• Insurance Strategy and Products

Not every financial advisor specializes in every type of service, but many work with teams or members of a firm to provide you with well-rounded, professional advice. For example, if you’re interested in retirement planning, you might seek out a financial advisor at Huntington who could help you invest in an Individual Retirement Account (IRA), Money Market Account (MMA) IRA, or other services to help you save.

Do I need a financial advisor?

You might not have considered a financial advisor in the past, but you might be surprised at how much they can help you plan for your financial future. Do you want to grow your wealth and then pass it on to your children to inherit? Do you have life-changing financial decisions on the horizon, like selling a business or retiring by the end of the year? Have you come into a large amount of money and have no solid plan for investing it or putting it into savings?

All of these scenarios could necessitate contacting and hiring a financial advisor. If you’re overwhelmed with managing your investments or extra savings, a financial advisor can be just what you need.

How much does a financial advisor cost?

The cost of hiring a financial advisor varies depending on the services you need and your advisor’s compensation structure. Advisors may work on commission, fee-only, per project, or salary plus bonuses. Depending on their fee structure, you may have to pay a retainer or additional fees as compensation. Some financial advisors have flat fees for their services, or an hourly rate.

Rates and payment structures can differ greatly from firm to firm and advisor to advisor. When you’re interviewing a financial advisor, inquire about their compensation and how much you can expect to pay as a potential client.

What are the possible benefits of having a financial advisor?

While you could possibly handle your money on your own with advice from friends or information from the internet, it’s unlikely you’ll be able to match the one-on-one interaction you can get from a financial advisor.

Whether you speak in-person, on the phone, or in a video chat, a financial advisor can offer you individualized attention and guidance tailored to your financial goals, needs, and desires. You also have a chance to form a personal connection with your financial advisor, which goes a long way to building trust in their abilities and guidance. You can ask your advisor specific questions about the state of your savings, which investments could be the most beneficial, and any recent progress on achieving your long-term financial goals.

How to choose a financial advisor

Choosing the financial advisor who’s right for you is a process, similar to a job interview. Consider what qualities, licenses, and specialties you want in an advisor and set up interviews with a few candidates you think may fit the bill. If you only want to work with a financial advisor who is a fiduciary or a CPA, make sure you note this upfront and avoid interviews with advisors or firms who do not meet your requirements.

If you’re unsure what type of advisor you may want, consider whether you’d like to work with a financial advisor, a wealth manager, or even a robo-advisor.

Financial advisor vs wealth manager

Depending on the bank, firm, or institution, the terms financial advisor and wealth manager may be used interchangeably, or could mean two different things. If a distinction is made between the two positions, a wealth manager is typically a subset of a financial advisor that specializes in helping clients with a high net worth. If you’re looking for guidance on growing your wealth, you may consider specifically hiring a wealth manager, or a financial advisor with wealth management expertise.

Financial advisor vs robo-advisor

Unlike a financial advisor, a robo-advisor automates investing. Robo-advisors may be a good choice for you because the service may “charge lower fees than conventional financial advisors because they invest your money in prebaked portfolios made primarily of specially chosen, low-fee exchange-traded funds (ETFs)¹”.

However, robo-advisors are not for everyone. They may not offer investments outside of ETFs and cannot offer a comprehensive financial plan outside of automated services. A financial advisor may be able to offer a broader range of investments and services for more complex finances, as well as the added bonus of working with a person instead of a computer program.