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Who Is A Financial Advisor? Skills, Responsibilities, And More

As the years pass by, the value of money grows alongside our age. Rectangular pieces of paper dictate the quality of our life and the security of sustenance of this quality till we meet our end one day. It is not easy to grapple with the restrictions imposed by old age, much less old age accompanied by financial trouble. Nobody in the developing or developed world wants to be in this dire situation. Thus, the prevalence of a financial advisor in the world today that performs multiple duties follows a traceable pattern founded in the demand for standards of living.

Who Is A Financial Advisor - Skills, Roles And Responsibilities

With the aforementioned in mind, learning about advisory services and the characteristic of a financial advisor is pertinent for your financial security as well. There is also the possibility of someone embarking on the journey to becoming an advisor and looking for the specific skill set that is necessary for an advisor. These topics and more information about advisors are the purposes of this article. Before we go on to dissect the properties that define a financial advisor and the scope of a financial advisor in corporate and personal finance, we must learn about personal finance and corporate finance in detail. Finance is a large body of knowledge that constitutes a crucial part of the economic conditions of an area.

A financial advisor can provide you with guidance alone, they will not lead you to the right decisions by dragging you by your hand. Everyone learns to find their way in life and that is true for personal financial stability as well. Without a modicum of financial knowledge, no advisor can be of any help. So, let’s try to understand finance, first, then move to some essential terms, and finally, financial professionals for advisory services will be discussed. So, without wasting an iota of time, let’s understand…

Finance: The Basics for Functional Living

Finance constitutes a big part of the life of most people today. From the rich whining about the issues of the cascading impact of taxes and the progressively egregious amounts of tax that they need to pay, to the poor shopkeepers who face trouble understanding the taxation structure and how to comply with the demands it levies on them, finance related to tax is a phenomenon that affects everyone living in the developed and developing world today. Finance is a commercial study of money, currency, and economic transfers by definition. Only when you ask a financial advisor do you come to grasp more than the superficial aspects. 

Finance is about people, their ambitions, problems, and worries about their future and present monetary state and how that can be manipulated in a meaningful way to take a turn for the better. Finance sees the valuation of money through time, and how credit and interest interact to beneficial or detrimental ends for the borrower and lender, respectively. Finance has a variety of terms that separate it as a field of financial study and scientific discipline.

Tax, revenue, investments, and other economics-related terms fall under the ambit of finance, and subsequently, the complexity of pension fund schemes, financial investments in sales, and debentures that are an accumulation of these varying terms of finance often confound the layman. He/she requires tangible aid in this aspect of life which may be on the account of a lack of financial literacy, difficult tax and banking infrastructure with deviously placed expenses along the financial journey, or miscellaneous impediments. A little understanding of the several types of finances may help you understand what particular field suits your situation the best.

The Types of Finance as Below:

  • Personal Finance 
  • Public Finance 
  • Corporate Finance

Personal Finance deals with comparatively small-scale financial systems and the short-term as well long-term needs of an individual or a family through numerous ways of management. It deals with relatively small units of an economy that don’t possess large funds or a great number of plans, but work based on life values and personally specified life objectives.

Majorly these objectives refer to retirement plans and schemes, budgeting, and beneficial investment in the long term. They may also be the management of different financial products like issuing debentures, credit cards, and securities. This is perhaps one of the most popular finances today since more people flock to financial services for credible advice that can help them manage their portfolios and improve the amount of their personal wealth i.e., disposable income.


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Some Aspects Where Personal Finance is Important Are as follows:

  • To achieve any sense of balance through finance, it is necessary to improve the calibration between the company’s financial status and the market status at large and find how each influences the other. In a state where the personal finance of an individual may be affected by forces beyond their power, personal finance can support the erection of new targets. 
  • Assessment of important financial valuations through cash flow estimation, saving rates, interest payments, etc.
  • Alleviating risk and planning for future contingencies is also a stabilizing part of personal finance. This is done through acquiring appropriate insurance, setting up funds for machinery malfunction or repair for a small business, or be kept aside liquid assets as quick access money for health emergencies in an aging family.
  • Retirement planning purports to be a straightforward venture into the twilight of your years and the minuscule amount of money required for it or some form of pension that can be availed, discarding the requirement for planned investments or rather not. In recent years, pensions have flown downhill while pension funds have seen tremendous hikes. These funds have differing rates, which can be used to gain profits, and investing the right one could net you big benefits for your money. With the age of life expectancy showing no end in recent times while the aspirations of people retiring grow (for travel, for clothes and better quality of living), personal finance is demanded more and more in these times.

Furthermore, Personal Finance Has 5 Components as Well, Which It Draws. These Are:

  • Income Management 
  • Protection of Individuals through Insurance 
  • Spending Habits and Understanding Their Causes through Behavioural Finance 
  • Saving & Limitations
  • Investment and Portfolios 

In the history of economics, this field of finance was particularly looked down upon. Home economics, so-called, was not a proper scientific process that was worth studying as it only stuck to the whims of housewives of that time. This idea has been rebuked by many economists today who believe that macroeconomic factors are manipulated by changes in personal variables exercised over a long time. Thus, widespread education today gives some priority to finances for the general benefit of society. 

Public Finance is the financing used by the government for its revenue and expenditure. It is a stabilizing method of finance through the means by which the government oversees the economy or some aspects of it. During recessions, increased public expenditure in public works gives more remuneration and greater employment opportunities to laborers as well, which is also a part of public finance. Public finance deals with tax collection from the citizenry, and collection of revenue from other sources as well as the expenditure on infrastructure and other production processes. These combine to form the budget of a nation at the beginning of the year usually which usually strikes the unfavorable side of the spectrum. 

Some of the Components of Public Finance Are as Follows:

  • Tax Structure and Collection
  • National Debt
  • Budgetary Deficits/Surpluses
  • Different Expenditures
  • Budgetary National/International Debt

Public finance is the means through which a government tackles many economic and social problems of its time. It is a type of finance that works by the government’s policies and objectives for accelerated growth in some aspects of the country while only providing a marginal boost or stability in others. It is a cornerstone for financial analysis and effective control over one’s economy in the modern world. As for a financial advisor, there are chairs in the ministry that handle financial services for the betterment of economic policy as it progresses through the year.

Corporate Finance refers to the obtaining of a variety of financial assets through the market of sale. Corporate finance deals with complicated business-related finances that are massive in size due to the sheer enormity of transactions that take place regularly. For instance, it deals with investor funds and their categorical separation into different channels. This leads to a greater understanding of what a firm lacks and the channels that are yet to be tapped. Managing credit and banking communication as well as transaction of interest payments is also a part of the parcel of the functions of corporate finance. 

These are the three distinct types of finances that are most popularly defined when discussing finance. Behavioral finance is frequently given a separate place among the several categories due to its broader scope. It works to disseminate information about the psychological and behavioral impacts of financial changes and how financial exchanges take place in our minds. Despite it being an interesting body of work, it is hardly something that can be given concrete shape for a financial advisor to use in his work life. Thus, it is limited to general advice.

Before moving on to defining the role of a financial advisor and the skills required for the job, the job opportunities, and the viability of the profession as a whole, let us give a cursory glance at the importance of finance as a discipline.

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Importance of Finance:

As per experts, your financial decisions affect your natural well-being, and understanding how they do so will only help manage them with more finesse and in turn, help you live better. Finance, even personal finance is not solely limited to you. Finance appears much more complicated than it is but utilizing it to understand customer mindsets during different economic times can eliminate possibilities about predicting customer behavior. Furthermore, a clear understanding of the proper financial jargon can help you act more responsibly and effectively with other departments to tackle issues and problems. 

In your personal life, a financial farrago suits nobody and wastes everyone’s precious time. Not knowing the legal procedures of tax payments and other interest-related clauses can lead you directly into trouble with authorities. Furthermore, decision-making and future planning for yourself can be done only when you are cognizant of the value of your income in real terms i.e., real income. This can only be done after the application of discounting methods of finance. Such is the overarching significance.

Financial Advisor – The Profession:

A financial advisor is a certified/registered/licensed professional that provides financial consultation and assistance to individuals and entities. By giving their customers advice on how to increase wealth, save costs, or pay off debt, a financial advisor can assist people and businesses in achieving their financial objectives more quickly. Investment managers, financial consultants, and financial planners are just a few of the many individuals and businesses that fall under the umbrella term “financial adviser,” which is used to refer to them all. Financial professionals can call themselves so if they not only minutely dissect your financial inflows and outflows to formulate an assessment of the situation at present.

They turn you into financially literate and aware individuals so that you can comprehend the changes they suggest in your assets, stock portfolio, and liability management/repayments. The crux of the situation is that they can improve the quality of your financial account in the bank with their knowledge and expertise. There are certain roles, however, that they may fulfill for individuals alone and others for big firms specifically. These are as follows:

  • In individual cases the variables are low, and the cost of mistakes is low as well. There is more social and educational nuance required of the individual because the main objective of a registered advisor is to build rapport and develop a clear picture of the temperament and financial aims of the person. He/she is alert to whether their clients are risk-averse or risk-loving and advise accordingly. A lot of information exchanges hands between them because a financial professional is trying to ascertain the financial situation of the client while the client also wants to verify the abilities of the professional upfront. This role requires the advisor to adopt an attitude based on the characteristics of the client at hand. 
  • In firm-level cases, usually entire advisory agencies are devoted to a single project’s financial evaluation and so are hired en masse. Therefore, singular financial professionals advise based on their fundamental verification of an already financially analyzed project and the different ways they can apply the funds to bring greater benefit to the business. This lends business stakeholders more options to choose or merge new and old financial overviews. 

Responsibilities of a Professional: 

The following are some responsibilities

  • A financial expert should take the time to fully understand your specific financial situation and goals before offering any recommendations. Based on this information, the advisor should offer ways to help you, such as:
  • The optimum strategy comprises staying in touch with your advisor frequently (at least once a year) to go over how your portfolio has evolved and determine whether any course corrections are necessary.
  • Remember to go to multiple counselors to find one with whom you feel comfortable discussing your unique financial situation because comfortability and transparency of thought and money are key among clients and advisors. Oftentimes financial experts tend to say words in a vacuum and don’t offer meaningful advice which is the single biggest responsibility they have.

Other responsibilities of a finance professional like an investment banker, stocks advisor, etc. are as follows:

  • Savings & Expenditure Plan 
  • Creating Personal Financial Reports
  • Investment Plan & Future Portfolio Strategy
  • Diversifying Portfolio Investments and Assets
  • Reduction of Liabilities
  • Provision of Governmental Help

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Moving on, let’s understand the making of a financial advisor and the skill set that is required to become a good financial professional in this reputed field of work.

Skills of a Financial Advisor:

A financial professional is a compilation of strong hard financial learnings and incredible soft skills. They weigh them before use and a financial advisor knows when to raise the hammer or use the glove with immediate effect. For one to be an incredibly good advisor, you need not look much further than finding the following skills in your advisor:

  • Avid Critical Thinking — A good advisor always analyzes the forces at play and with his/her immense knowledge, constructs a new vision with unique ideas suited to his/her benefactor in monarchies. Today, the climate is more intricate and palpably more devious to the eye, so financial professionals need to have a critical mind, the ability to entertain financial problems and find solutions with the client through hell or high water and ultimately, decide on good and meaningful decisions that can be taken to prevent financial troubles and secure a sound financial future through investments and good use of money.
  • Market Research and Profound Financial Know-How — Finance and Economics are interlinked in meaningful ways and the dynamic nature of economics often translates to finance as well. Therefore, new and interesting concepts are always on the rise and with them come new problems in finance. Public finance is necessarily applied only after its implications are understood. It is usually in line with the government’s public policy. Therefore, a financial professional need to keep the future adjustments, current adjustments, international variables, and forces of demand and supply in his mind and research how high or low is the value of the domestic investment, which companies show future gains or benefits, and predict as well as know enormous amounts of information before even addressing their client.
  • Interpersonal and Communication Skills — A good advisor not only knows what to advise but how to render his advice so it’s taken. A financial professional like an investment consultant provides good advice but before they wish to know you as a person. Without proper knowledge of your details, history and financial situation, and personal predilections, they cannot give you good advice that will elevate the level of your wealth. They need to know they have all the pins in place to find the mysterious problem that you can’t find. Clients come in all shapes and sizes so they can’t depend on their compliance. Thus, a good financial professional comes fitted with charm and a brilliantly clear take on financial proceedings. They make sure that they are understood, doubly so that they understand their clientele because without proper listening there can never be a good relationship, regardless of its nature. 

These are just some skills that a professional at work should possess and in the esteem of most financial colleges, a good financial professional has all three. Other skills may include leadership skills, management skills, business development projections, and more. 

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FAQs – 

Q1. How much do financial advising jobs pay?

A financial advising job may pay millions if you serve the right client, or it may average around a few lakhs INR if you settle with a bank. It varies from advisor to advisor.

Q2. How do I become an advisor for financial purposes?

Finance is a big field. To enter as an advisor in India, you need:

  • Study Commerce in High School
  • Opt for B.Com at College Level
  • Follow-Up MBA in Finance or a master’s Course with specialization in finance or accounting
  • If you wish for a senior-level post, you can also apply for P.hD

Ultimately your experience and certification work to become extremely useful aspects to further a career in this field.

Q3. Is Finance easy to understand? If so, why hire an advisor?

The fundamentals of any subject are easy to grasp. Physics is easy as a subject when it is introduced but it doesn’t remain so. A basic understanding is advised for finance because we deal with this field every day tangibly, but an advisor knows the complete working of every aspect of it and thus, knows much more than any half-hearted dilettante could. Therefore, hiring them is not questioned.


We hope you learned something of value through this article that will assist you in your journey as a financial professional if you choose to become one. If you merely wish to gain an understanding of the field and employ a suitable advisor, you may consult the appropriate characteristics that are necessary for any good financial professional from this list. Thank you.

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