What services do financial advisors provide?
If you have wondered what financial advisors actually do or what services they provide, this easy-to-understand guide is for you!
We will break down the different services that financial advisors offer their clients, which will help you feel confident about what particular services you may need.
Here is a list of the most common services financial advisors provide:
Note: feel free to skip ahead - services are defined in this order:
- Investment management
- Tax planning
- Estate planning
- Insurance
- Financial planning
- Retirement planning
- Business banking
- Personal banking
- Advice-only financial planning
- Business retirement solutions
What is investment management?
Investment management, commonly referred to as asset management, is what most people think of when the word financial advisor comes up in conversation. Simply put, investment management is the process of analyzing, buying, and selling assets that fit a client's unique needs.
Investment management is often part of a client's financial plan, which helps the advisor determine how to best construct, allocate, and invest a client's money - risk tolerance, clients' goals, liquidity needs, and more need to be considered.
What is tax planning?
While most financial advisors do not do tax filings, they will work with clients and their accountants to ensure that clients pay the lowest taxes possible. Advisors will consider the timing of income, purchases, and investments to help reduce a client's overall tax burden.
One of the most discussed tax minimization strategies, which falls under tax planning, is tax-loss harvesting. Tax-loss harvesting is a strategy to lower an individual's taxes by purposely selling underperforming assets, which results in a loss. That loss is then used to offset capital gains.
What is estate planning?
While it is uncommon for a financial advisor to do estate planning, they may have someone in their firm that does. Additionally, clients often have their own outside estate attorney to create estate documents. Financial advisors can assist with estate planning strategies and advise on wills and trusts.
Estate planning reduces tax implications during the transfer of wealth and is used to help family members financially. Note: Financial Advisors do not create estate planning documents unless on infrequent occasions when they are legally allowed to do so!
What is insurance?
Financial advisors can advise or assist their clients with specific insurance needs. In this situation, the type of insurance is often life insurance, which is a risk management tool in the unfortunate situation of a death.
The financial advisors who sell life insurance or insurance products will work directly with their clients, while those that advise their clients will review existing insurance policies.
What is financial planning?
Financial planning is a comprehensive evaluation of an individual's current financial status. Gathering client information, establishing goals, analyzing the current financial situation of a client, and developing and implementing a financial plan are what a client can expect. The advisor should continuously monitor and review the plan as life changes, and plans should be dynamic.
Financial planning involves investment management, tax & estate planning, insurance planning, retirement planning, succession planning, philanthropic goals, and the psychology of finance.
What is retirement planning?
Retirement planning is the process where advisors work with their clients to identify their retirement goals and devise a plan to achieve them. Advisors will often uncover how much money a client will need in retirement and specific goals like buying a second house. Retirement planning often falls under financial planning.
The goal of retirement planning is to make sure the client does not run out of money in retirement and helps the client achieve the specific goals they have set for themselves.
What is business banking?
Some advisors offer business banking to help business owners with business loans, credit cards, lines of credit, and checkings or savings accounts. Advisors must be affiliated with a bank to provide business banking services.
Often, a financial advisor will refer a client to a business banker if they cannot provide the service directly to the client.
What is personal banking?
Personal banking includes debit and savings accounts, credit cards, mortgage loans, auto loans, and other personal banking products. Some advisors can offer these options through their affiliation with a bank.
Similarly to business banking, a financial advisor may refer a client to a particular personal banker or help them decide on which bank or credit card to use.
What is advice-only financial planning?
Advice-only financial planning comprehensively evaluates an individual's current financial status. Gathering client information, establishing goals, analyzing the current financial situation of a client, and developing and implementing a financial plan are what a client can expect. The advisor should continuously monitor and review the plan as life changes, and plans should be dynamic.
Financial planning involves investment management, tax & estate planning, insurance planning, retirement planning, succession planning, philanthropic goals, and the psychology of finance.
Advice-only financial planning sounds similar to financial planning because it is, but with one caveat! Advice-only financial planners will develop a plan for a client but will NOT implement the financial plan.
What are business retirement solutions?
Business retirement solutions involve helping clients who own businesses create specific employer-sponsored plans, which help their employees plan for retirement. Some retirement solutions involve ERISA compliance, investment policy statement preparation and maintenance, investment monitoring, and more.
You can now find an advisor based on a particular service you need. The easiest way to do this is by using the AdvisorFinder marketplace and filtering for the types of services provided. Browse our marketplace of financial advisors and planners from any firm here: app.AdvisorFinder.com/Marketplace
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