A financial advisor or financial planner is a professional who helps small and medium enterprises (SMEs) and individuals reach their goals. Financial advisors can also act as investment guides from transferring business ownership to saving for emergencies.
Financial advisors concoct misaligned financial ideas into a well-thought financial plan with their relevant skill sets and expertise. Consequently, these financial plans can help save for retirement, buy a new house, or get married, just to name a few.
What are the Common Types of Financial Advisors?
Depending on the nature of the financial plans and advisories, there are multiple types of financial advisors. Here are three common types:
Registered Fiduciary Advisors
The foremost concern of a fiduciary advisor is to protect the interests of his clients. Meaning, they will listen to the financial ideas of the clients and plan a realistic plan. Something that will be fruitful in the longer run.
These are registered professionals who “guide” their clients with investment plans. In collaboration with the state administration or exchange commission, investment advisors can legally help clients in reaching their investment goals.
Advisors on Personal Finance
As the term suggests, personal finance advisors are specifically concerned with individuals and their money. They help individuals in managing, investing, and spending their money. Similarly, personal advisors are also legally registered professionals who work in collaboration with either the federal or state governments.
However, there are some professional financial advisers who work solely on commission or fee – which is generally 2%.
How Does A Financial Advisor Make Money?
Have you ever wondered how these professionals, who help out others in managing their money, make money themselves? Well, these money experts have multifarious sources of income. And who knows the tricks of making and utilizing money better than them? Here are 3 common sources of income for financial advisors:
Most of the financial advisors get paid by the organization they work with. Either quarterly or monthly, financial advisors make a sheer amount of money as their salary. However, it is pertinent to mention here that the exact amount of the salary varies depending on the type of advisory.
Generally speaking, an average financial advisor gets $75,000 as a gross salary. Nonetheless, this does not include bonuses, commissions, or client fees, which are roughly $35,000.
2. Fee & Commission
Some financial advisors do not get a monthly salary. Rather, they work based on commissions and fees. For example, an investment advisor plans a realistic investment plan for his clients and charges a specific percentage of the share from the investment.
Likewise, a financial advisor may make a commission from mutual funds, stocks, and bonds. Nonetheless, commissions for referrals are yet another source of income for these certified professionals.
Apart from gross salary and commissions, and fees, financial advisors also sell certain products and buy stocks. In fact, they make a sheer amount of money from potential short-term investments.
These certified professionals are legally allowed to buy and sell mutual funds and annuities. In turn, it adds up to the income of these advisors.