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A financial adviser is a professional who renders investment advice and financial planning services to individuals and businesses. Ideally, the financial adviser helps the client maximize their Net Worth by proper Asset Allocation . Financial advisers use stocks, bonds, mutual funds and insurance products to meet the needs of their clients. Many financial advisers receive a commission payment for the various financial products that they broker, although "fee-based" planning is becoming increasingly popular in the industry. A further distinction should be made between "fee-based", i.e., they charge fees and collect commissions, and "fee-only" advisors. Fee-only advisors receive 100% of their compensation directly from their clients and have no outside conflicts of interest created by commissions or referral fees paid by other product or service providers. FINANCIAL PLANNING Retirement One of the major services that financial advisers offer is retirement planning. The financial adviser will typically have great knowledge in the areas of budgeting, forecasting, taxation, asset allocation and financial tools and products in order to establish realistic goals and the strategy by which to reach them. In the United States, this will include the use of several investment tools such as 401(k) /401(k) Roth account(s), Individual Retirement Account s/Roth IRAs, Mutual Funds , Stock s, Bonds and CDs . The financial adviser will determine what percentage of the available income is necessary--when taking into account the tax liabilities, expected inflation and projected return on investment--in order to meet a minimum balance by the client's target age of retirement. This is a fairly straightforward calculation, and there exist many automated tools that do this. The financial adviser's greatest contribution will be that of asset allocation: determining how to maximize the return on investment while satisfying the client's risk tolerance. Investing Financial advisors may help their clients invest for both long and short term goals. It is the financial advisor's duty to determine the clients' goals and risk tolerance and then to recommend appropriate investments. The longer time horizon to achieve the goal, the more the adviser would be able recommend more volatile investments with potentially greater risks and rewards. Such investments include direct investment in stocks/shares or through collective investment schemes such as mutual funds, unit trusts or investment trusts. If the client has shorter term goals, the adviser should recommend less volatile investments such as cash, Certificates of Deposit, and bonds. These types of investment generally have lower returns, but less volatile and there is less likelihood of losing the amount invested. This makes them more appropriate to guard against capital loss, but their value will be eroded by inflation over long periods of time. INDEPENDENT ADVISERS IN THE UK Under UK polarisation rules the concept of the Independent Financial Advisor or IFA was born. To be independent of any insurer or other third party interest allows for recommendation of products from any source. Non–independent advisers are therefore company representatives who can only recommend products approved by their company. Conflicts of interest may arise where renumeration is linked to the product recommended. Since 1st December 2004 the Financial Services Authority has introduced a new classification of multi-tied adviser who may represent more than one company. Examples of multi-tie advisory networks include Intrinsic Financial Services and Openwork (formerly Zurich Advice Network) [http://www.openwork.uk.com . UK Financial Services Authority Polarisation Rules {Link without Title} REGULATION In the United States of America, the but they would still need FINRA licenses to provide advice for a fee or be registered as an Investment Advisor with the Securities And Exchange Commission in the USA . Many brokerage firms still claim an exemption for their employees who sell fee based products and services. COMPANIES
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