The Importance of A Financial Advisor
When it comes to managing your finances, you can certainly do it yourself. However, there are benefits to using the services of a financial analyst or a financial advisor. Choosing a financial analyst or a financial planner is easy once you know what they can do for you.
A financial analyst and a personal financial advisor help to provide both an analysis and also guidance to businesses and individuals who seek help with their financial decisions. Each type of financial specialist gathers financial information, analyzes it, and makes a recommendation to his/her client. However, they do differ when it comes to the type of investment information that they can provide, and the clients that they work for.
A financial analyst assesses the economic performance of companies and industries, as well and for firms and institutions that have money to invest. A personal financial advisor assesses the financial needs of people, able to offer them a wide range of options.
Also called securities analysts and investment analysts, a financial analyst works for banks, insurance companies, mutual and pension funds, securities firms, and other businesses. He or she helps these companies and/or their clients make important investment decisions. A financial analyst reads a company’s financial statements and also analyzes commodity prices, sales, costs, expenses, and also tax rates in order to determine the company’s value, as well as to project its future earnings.
The financial analyst meets with company officials in order to gain a better insight into the firm’s prospects and also to determine its managerial effectiveness. They usually study an entire industry, assessing its current trends in business practices, products, and industry competition in order to keep abreast of new regulations and policies that may affect the industry. Monitoring the economy to determine its effect on earnings is also a duty.
A personal financial advisor, also known as a financial planner or a financial consultant, uses his/her knowledge of investments, tax laws, and insurance in order to recommend financial options to individuals that fit with the client’s short-term and long-term goals. Financial planners deal with such issues as retirement and estate planning, funding for college, and general investment options. Some financial advisors are able to offer advice on a wide array of topics, while others are specialized in certain areas.
Working with a financial advisor begins with a consultation, where he/she is able to obtain information on your finances and financial goals. A comprehensive financial plan is then developed that identifies problem areas, offers recommendations for improvement, and selects appropriate investments that are compatible with your goals.
Clients usually meet with their financial advisor at least once a year, or when a major life change occurs, to update them. Changes such as a new job, job loss, marriage, or birth of a child all impact finances and financial decisions.
Studies have shown people who work with a financial planner end up with up to five times the amount of money in retirement than those that do not. You will benefit when working with a professional to put a plan in place for you and guide you through your financial decisions.