Q&A: What Does a Financial Advisor Do?

By Indeed Editorial Team

Updated 15 September 2022 | Published 30 June 2021

Updated 15 September 2022

Published 30 June 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Financial advisors help clients understand and plan for all their monetary needs. They guide people through important financial decisions such as picking when to retire or how to allocate money into their accounts. Those who enjoy math, educating others, and creating strategic plans may be interested in this career. In this article, we discover what a financial advisor does and explore other common questions about this job role.

What is a financial advisor?

A financial advisor is a business professional who gives advice and guides clients' decisions about monetary matters for a fee. They may provide a variety of services such as estate planning, investment management, and tax assistance. Financial advisors also sell insurance products and offer portfolio management services. Financial advisors take care to provide recommendations based on the needs of their clients, rather than in the interests of a specific financial institution.

The term financial advisor is broad, so more specialised job titles may fit under the heading if the professionals advise clients in addition to providing services. Some related positions may include:

  • Bankers

  • Estate planners

  • Financial planners

  • Insurance agents

  • Investment managers

  • Tax preparation service providers

Related: Highest Paying Jobs in Singapore

What does a financial advisor do?

Financial advisors primarily focus on helping clients assess their current financial situations and prepare for the future. Some job responsibilities of a financial advisor include:

  • Converting information from financial health assessments into financial plans

  • Discussing the amount of money a client saves or spends regularly

  • Educating clients on why creating a comprehensive financial plan can help them meet their goals

  • Offering estate and tax planning services

  • Providing investment advice

  • Providing portfolio monitoring services

  • Reviewing the types of accounts customers can open to achieve their goals

  • Suggesting relevant insurance products for clients

  • Teaching clients about investment, insurance, and tax options

  • Teaching clients how to create budgets

  • Teaching clients how to save money

Related: What Is a Financial Consultant? Job Scope, Skills and Salary

What's the difference between a financial advisor and a stockbroker?

Stockbrokers and other financial professionals generally just take and complete clients' orders. For stockbrokers, in particular, this means buying and selling stocks as dictated by the client. While financial advisors may also provide those kinds of services, the biggest distinction is that they also provide guidance to clients about how or why making certain decisions affects their portfolios or financial health.

Related: What is a Stockbroker: Role, Needed Skills and Salary

What is a financial health assessment?

A financial health assessment, also sometimes called a financial health questionnaire, is a tool financial advisors use to understand the current state of a client's financial records and background. Knowing the details of someone's present financial state can help advisors plan for their future. Financial advisors administer assessments or questionnaires to ask in-depth questions about all aspects of a client's financial history and status. Reviewing these responses helps them to understand the individual's situation and provide the most fitting advice. They ask clients to list as much accurate information as possible. Some information solicited from these assessments includes:

  • Alternative income sources: These can include any planned non-traditional income sources before or after retirement, such as an inheritance.

  • Assets: These are items you currently own that have a future value, such as the money in your current or savings account.

  • Expenses: This is the total amount of money you typically owe within a certain period for all expected goods and services, such as food bills and leisure activities.

  • Income: This is the amount of money you typically make during a certain period through traditional means, such as earning a salary or providing consulting services.

  • Investment needs: Listing these items can help calculate things like your risk tolerance and your preferences for investing in products like stocks and bonds.

  • Liabilities: These are your debts that you are currently repaying or you expect to be due in the future, such as student loans, car payments or mortgages.

  • Long-term financial payments: These can include any payments you expect to make over an extended period, such as caring for an older relative or maintaining a rental property.

  • Pensions: These are payments you expect to receive after retirement that have accrued over the length of your career.

  • Retirement needs: These factors inform financial advisors of your plans for living expenses after you've discontinued earning your traditional forms of income.

Related: How To Be a Wealth Manager (With Tips To Advance Your Career)

Who can use a financial advisor?

Anyone at any age or stage in their life that has gained, inherited or earned money can work with a financial advisor. They work with clients from all financial brackets and statuses and those who have questions or enquiries about all types of financial activities. The most beneficial financial advisor and client relationships may come from partnerships where the advisors are deeply knowledgeable about their clients' areas of interest and advisors who can relate to or understand the clients' personal financial situations. People who might be most interested in consulting a financial advisor include:

  • Casual investors who hope to increase their holdings

  • First-time investors

  • People interested in making estate plans

  • People who are entering new phases in their lives, such as starting a new job, starting a family or entering retirement

  • People who have questions about basic financial matters

  • People who want guidance to reach their financial goals

  • People who want help to stay accountable for their financial decisions

  • People who want to learn how to save money

What are the skills of a financial advisor?

Financial advisors use a variety of both hard and soft skills to carry out their job responsibilities. Hard skills are those that you can learn on the job or through training and practice. Soft skills are more innate, like personality traits. Some common skills for financial advisors include:

  • Ability to remain calm in challenging situations

  • Analytical ability

  • Attention to detail

  • Honesty

  • Knowledge of financial products, such as investment or insurance services

  • Knowledge of market structures

  • Organisation

  • Persistence

  • Research

  • Trend recognition

  • Written and verbal communication

Related: Top 10 Accounting Skills To Include in Your Resume

What is the work environment of a financial advisor?

Financial advisors may work for organisations or as independent contractors. When employed by financial firms, they often work in corporate offices. When working independently, financial advisors may work from a home office space or rent an office location. Independent financial advisors can also travel to meet clients in public places, or in their own homes and workplaces. Financial advisors typically work full time and may word overtime hours to meet a client's needs or to accommodate their schedules. Some evening and weekend hours may be necessary in certain cases.

Financial advisors may have the opportunity to travel to different cities or countries for work, depending on the types of clients they serve and their business models. They can also attend conferences and networking events to secure more clients or teach courses and workshops about financial advisory during or after traditional hours.

Related: Q&A: What Is Remote Work?

Do I need to be licensed to be a financial advisor?

Financial advisors must have a licence to perform their job. The Monetary Authority of Singapore (MAS) regulates the licensure process for the country under the Financial Advisers Act (FAA). They set the minimum requirements a potential financial advisor must meet to offer their services to clients.

What are the basic requirements to become a financial advisor?

According to the FAA regulations, there are age, education, and exam requirements candidates must fulfil to become a licensed financial advisor. Qualified candidates must:

  • Be at least 21 years old

  • Have one of the following educational backgrounds:

    • GCE "A" Level Certificate with three H2 passes and two H1 passes

    • An International Baccalaureate (IB) diploma

    • A polytechnic diploma

    • Equivalent academic qualifications

  • Pass modules 5 to 9A of the Capital Markets and Financial Advisory Services Examination (CMFAS)

Related: How To Become an Independent Financial Advisor

Do I need to be certified to be a financial advisor?

Unlike licensure, MAS does not require certification to work as a financial advisor. However, receiving a globally recognised certification can increase your chances of securing a position. Some available credentials include:

  • Associate Financial Consultant (AFC): This certification from the Insurance and Financial Practitioners Association of Singapore (IFPAS) is a distinction for knowledgeable, ethics-driven financial professionals. Candidates must meet the prerequisites and pay a fee to apply.

  • Certified Financial Planner (CFP): This distinction from the Financial Planning Association of Singapore (FPAS) is for those who want to show their commitment to ethical financial planning. Candidates must meet the education, experience, and professional development requirements and pass an exam.

  • Chartered Financial Consultant (ChFC): This certification from the IFPAS offers a nine-course programme for financial advisory professionals who choose to provide in-depth client services. This primarily self-study programme has two guided tutorial sessions and an exam.

  • Chartered Life Underwriter (CLU): This distinction from the IFPAS is an eight-course self-study programme focused on all aspects of the economic values of human life.

Do I need professional development as a financial advisor?

Individual financial institutions or firms may require their advisors to take part in professional development activities. These could include events like seminars, workshops or educational classes on industry-related topics. Those who work independently may also benefit from professional development courses to stay current with industry trends.

Related: Key Financial Consultant Skills and How to Highlight Them

How much does a financial advisor make?

According to Indeed salaries, financial advisors make, on average, $69,995 per year. Actual salary figures may vary depending on your education level, employer, client base, and years of experience. The decision to work as an independent contractor may also influence your pay rate.

Related: 40 Financial Adviser Interview Questions With Sample Answers

Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate’s experience, academic background and location.

Please note that none of the companies mentioned are affiliated with Indeed.

Explore more articles