Millions of Americans have already made the decision to hire a personal financial advisor. What is a personal financial advisor, though, and what kind of value does a personal financial advisor bring?
What is Personal Financial Advising?
A personal financial advisor is a business professional who gives economic counsel on short and long-term investments, retirement planning, yearly taxes, and personal mortgages.
Financial advisors can also help people navigate inheritances, estate planning decisions, and creating a fund towards college education.
Many people need economic counsel when it comes to estate planning, establishing a probate and lessening taxes, for instance, which is why a personal financial advisor could be called in to help tie up loose ends in the estate-planning process.
Salary and Job Details
Personal financial advisors are paid either by commission or with a one-time fee. The latter is often seen as a better option for clients while the former – pay by commission – is seen as fair for both the advisor and client when the personal financial advisor takes a commission of successful investments.
The median salary for personal financial advisors is approximately $70,000 per year, according to recent data from the Bureau of Labor Statistics.
There are around 250,000 personal financial advisors now working in the United States, and many of whom are self-employed. The job outlook for personal financial advisors is excellent and slated to remain at 30% over the next decade.
It’s no surprise that personal financial advisors come predominately from the finance sector and insurance industry since personal financial advisors dispense personal financial advice in these areas
Fee-Only Vs. Commission Advisors
Other business professionals needing economic advice can go through the National Association of Personal Financial Advisors for more assistance in finding the ideal financial advisor for a given financial situation.
The National Association of Personal Financial Advisors is a fee-only enterprise that only hires personal financial advisors with a proven track record of financial planning, tax advice and investment counsel that’s a win-win for the advisor and client.
When personal financial advisors are fee-only this means that they only get paid when they give financial advice. In this fee-only system, personal financial advisors don’t take commissions or kickbacks from hedge fund firms or insurance companies.
Financial Advisors and Certified Financial Planners ™
Financial advisors are sometimes called Certified Financial Planners ™. Although a financial advisor and Certified Financial Planner ™ are to some degree interchangeable terms, a Certified Financial Planner ™ has been credentialed by the Certified Financial Planner Board of Standards and shown to be competent in the area of personal finance.
Another distinction between a personal financial advisor and a Certified Financial Planner ™ is that the former typically only needs to have a bachelor’s degree to get hired whereas a Certified Financial Planner ™ commits to continuing education and courses on ethics to keep his job title.