Some people compare stock brokers with financial advisors. These are actually more than stock brokers – they are trained professionals whose duty is to put their client’s interests ahead of their own. The ease with which one can trade online and the abundance of free investment information available on the internet have caused some people to think that they don’t need financial advisors, but this is not true. A good advisor for finance can be worth far more than any internet information. A financial planner or advisor is someone who is licensed to sell stocks, bonds, mutual funds, and various insurance products. Some are may even be able to give tax or legal advice.
Financial advisors are categorized into two types – fee based and commission based. For high-net worth investors, fee-based advisors are preferable. This is because you will never have to worry about your advisor’s strategy into an investment as he is paid to give you advice, not based on what you actually buy or sell. This doesn’t mean that commission-based advisors are all bad. Some commission based advisors are much better than fee based advisors. Truly professional financial advisors will always do whatever they can to accommodate the needs of their existing clients, even if their assets are modest.
The working strategy of a financial advisor should be proper. These advisors should take a look at their clients’ financial status, goals, and risk tolerance, in order to develop a truly comprehensive financial plan. But this is just a simplified case. Sometime the clients are little out of the ordinary. Perhaps they haven’t saved enough for retirement. A good planner will recognize this and recommend the right path for their investments, even in older age.
