Personal Financial Advisor

Reviewed by Sujaini | Updated on Jul 26, 2021


What Is a Personal Financial Advisor?

A personal financial advisor is a person who provides clients with financial advice and services according to their particular needs. A personal financial advisors have the expertise and experience in providing solutions customised to the needs of their customers, preventing costly mistakes, and mitigating risk.

He also offers a range of services and products aligned with the current and future aspirations of their clients. Many financial advisors receive a flat fee for their recommendations while others gain fees from investment sales.

Understanding Personal Financial Advisor

It is rare to find a personal financial advisor, as there are many financial services professionals whose roles are close to those of financial advisors. Professional organizations, such as the Association for Financial Planning (FPA) and the National Association of Personal Financial Advisors (NAPFA), will help locate advisors in your area. It is important to check their background and experience when choosing a financial advisor.

Personal Financial Advisor and Individual Financial Plan

Financial advisors make financial plans for their clients before providing advice and recommending products and services. This includes a detailed assessment of their current and future financial state. It also considers essential, basic details such as age (time horizon), financial goals (saving for education, buying a home, maintaining money, or generating income), and a risk and reward appetite.

This is often focused on employment, net worth, and public-and-private-market experience. Certain elements of the financial plans may include tax liabilities, asset allocation, and plans for future retirement and assets. Such financial plans will consider variables to predict future cash flows, asset values, and arrangements for withdrawal.

A good financial plan will keep an investor informed about the changes in order to experience a smooth transition through life's financial phases, such as to reduce spending or change asset allocation. It is essential to keep the financial plans fluid so there is scope for occasional updates.

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