Extended definition of financial terminology

Extended Definition: Financial Advisor has many different functions. Basically, such a professional provides financial advice to customers for a fee. This advice can take many different forms, depending on the type of advice and customer. An individual or mutual fund can for example employ either an individual or organization to provide financial advice. The kind of advice provided also takes different forms. The customer may for example be in need of asset management or investment advice. Furthermore, financial advisors may be tied to a single company, in which case the professional would offer advice relating to the sales of the particular company's products. An independent financial advisor, on the other hand, is not limited to a single company, and offers advice regarding a wider range of products.

The customer receiving advice has a very specific role to play in making use of this service. Especially in the case of new investors, the advice of the correct professional is vital. In order to obtain the correct advice and professional, the customer needs to be very clear about his or her financial goals. Only with clear goals can an advisor provide the correct advice for the specific needs of the customer. The goal of both the customer and financial advisor is to help the former make informed decisions regarding his or her financial choices. The specific advice would depend on the customer's specific level of investment expertise and needs. Financial advisers are helpful not only to novice customers, but also to the more experienced, with a variety of different financial management needs. The initial investment for example can later be supplemented by additional investments, the wisdom and utility of which can all be assessed by the financial adviser. The more complicated the financial decision to be made, the greater the need for an expert to help with advice.

Because of the diverse needs and experience levels of customers, financial advisors should take into account the exact purpose and needs of the customer, as mentioned above. It is therefore possible that these professionals will need to investigate all levels of the customer's needs. Issues such as hopes, dreams and desires are for example taken into account together with more concrete issues such as taxes, insurance and retirement. These are all considered together in terms of the customer's stated needs. Because this is such a complicated and involved process, many financial advisors limit their expertise to provide optimal advice on only one aspect of financial planning or investing, while others attempt to be as global as possible. The customer with singular or simplified financial needs may make use of the former, while those with several different assets and investments may make use of the latter.

What type of financial advisor is chosen therefore depends greatly upon the specific needs and perceived financial competence of the customer. A customer who is not very informed regarding the financial world for example may wish to make use of a professional with a wider range of expertise. An experienced customer on the other hand may benefit more optimally from the specified expertise of a more focused advisor. Less experienced persons could also make use of a combination of financial planners and advisors. A financial planner could for example help a customer to specify his or her specific financial needs, and help to find the correct advisor for the identified purpose.