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Financial Advisory Services – Definition, Importance, And Purpose

With growing incomes and profits around the world, especially in developing nations, financial advisory services have risen in popularity in recent years. Finance is a thorough study of economics as a whole unit and identifies the clear differentiation between public and private finance and the various concepts that work in each. To handle private money at large, different types of financial advisory services are opted for by people who hold investments, and pension fund commitments and must also worry about the technicalities of loan repayments and the tax structure of a country or organization. Financial advising can come in many shapes…

Financial Advisory Services - Definition, Importance, And Purpose

But before we entangle ourselves in the several types of financial advisory services found around the globe and in India, we must thoroughly understand the value of finance in today’s world and the subject matter that falls under its scope. Furthermore, a cursory look into the realm of public finance and private finance is a requisite for gaining a lucid understanding of the various types of financial advisory services and their use for individuals.

After an insightful journey into understanding the multifaceted utilities provided by different types of financial advisory services, there is a further need to know about the other facilities provided to foster financial advisors, the scope of their roles in the growing economies around the world and the plethora of learning experiences that a novice might encounter. Moreover, there is also a need for an informative discussion on the merits and demerits of these advisors and who is most likely to require their services.

We shall also discuss the governmental regulations on this profession and the standard requirements that need to be met before one can confidently call oneself a financial advisor. Our main focus will be the distinct types of financial advisory services and the painting of a picture of the road that leads to learning the opposite skills for this job. We shall also outline the skills for the job to streamline the list of qualities you might need to adopt in the process if you wish to be a financial advisor. Lastly, the entire enterprise of this article has been initiated in the context of India and will outline the important regulations, skills, scope, etc. in its market, first and foremost. 

Now without further ado, let’s understand…

Finance: Meaning & Purpose

If you are a man or woman who has existed till adulthood and you reside in a developing or developed nation, you are most likely familiar with finance as a term that gets thrown around by economists, the government, and many experts. Finance is a broad field of study and its use in different contexts with different shades of meaning cannot easily be confined to a brief definition. 

Nonetheless, in layman’s terms finance refers to the study of financial systems and the processes carried on within them. It is the study of the various economic units such as money, capital, and the various assets that can be used to determine the values of currencies (measured against gold) and control important economic phenomena like production, inflation, and income distribution. It is a field that is as old as money, but only recently has it risen to distinction as a subject of inquiry separate from others. Depending on the flows of its components to different parties, finance can be differentiated into:

Personal Finance – The use of monetary resources or assets over time to meet personal requirements and the management of a personal budget influenced by the future outlooks of the person and the financial risks that can be adopted. Securities, levels of investment and savings as well as debt and its interest payments are some of the major factors that account for personal finance, its grievances and victories. 

Public Finance – It is the specific study of the economics of government finance, revenue and expenditure of the administration and authorities. It is delimited to the various ways of revenue generation, pivotal sectoral expenditure by the government bodies, and the net benefit addition to desirable economic processes like capital investment while simultaneously reducing the effects of destabilizing processes like inflationary pressures, depreciation of the currency, etc.

Corporate Finance – It refers to the actions that deal with corporate profits and increase them to effectively increase shareholder value. Processes such as capital structuring, asset, and resource allocation as well as the methods used by managers to increase productivity/efficiency in the long and short period. This field works in close association with investment banking to fulfill the financial needs of a corporation.

Investment Management – It refers to the procedure of managing various investment options of private entities; institutes and persons of significance. The formation of this field usually constitutes shares and bonds but may also extend to property and land that can be sold or bought to meet previously agreed-upon terms or objectives. Ultimately, this branch of finance aims to solve the age-old issue of asset allocation i.e. the need to diversify investments to reduce risk and increase overall gain through an increase in the value of resources or equity.

Risk Management – It refers to the valuation of a proposition over the possible risk involved, the ways to reduce the risk, and how to protect the corporate value at any rate. It promotes the diversification of holdings and contains three componential risks:

Market Risk majorly concerns the shifting of market valuations and general prices suitability and unsuitability for the company.

Operational Risk arises out of the failure of the proper working of internal processes, systems, etc.

Credit Risk is relegated to money-lending institutions that may run the risk of defaulting by a loan-taker or a rapid increase in NPAs (Non-Performing Assets)

Quantitative Finance – It refers to the procedural generation of financial dear or valuable figures for financial activities using valuable mathematical models and quantitative analysis. This field underpins or overlaps many of the previous fields of finance but due to its unique character, it is considered a separate field of study. Its mechanical basis and purely objective foundation lend it great merit in the fields of banking and trade. The development of quantitative investment strategies and trade formulations is made possible through quantitative finance alone.

Overall, our small stop at finance before discussing the various types of financial advisory services is now coming to an end. Finance is a unique discipline of great prominence that has spawned variegated types of financial advisory services that are increasingly helpful for people across the globe and its importance has only grown in recent years. This has been due to the proliferation of financial advisors and the value of investing/saving money.

With the growth in money literacy, there has been more demand for the services of financial advisors. This is opted by many young earners to gain insight into the financial markets, sort out their portfolio to collect marginal profits in the short term or provide special space for savings. Furthermore, they may also allow options for long-term investments and portfolio management so that you save up for important life goals later down the road of life. We need to only make one last stop before discussing all the types of financial advisory services, which is…

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A Study in Financial Advisors:

Financial advisors are a title and group of finance professionals that serve to help you with personal and professional finances. They may even serve companies and large institutions for long periods. They are financial professionals who relay advice to others based on the compensation they receive. Compensation may be in the form of one-time, consistent pay or a commission cut on advice given. They have turned into jacks of all trades recently but majorly they confine themselves to the areas of investment management for corporations & portfolio development for private investors, tax management, and property dealings.

Stockbrokers, financial planning experts, and tax and insurance professionals all fall under the same category of financial advisors. Investment bankers and finance/account consultants may also fall under this category. Ultimately there are many shapes, sizes, and accreditations that a finance professional may be graded along but wisdom requires that you choose a financial advisor that suits your needs. For instance, a credible investment banker may be fit for you if you wish to invest heavily.

Checking up on their certification and areas of financial expertise is the first step to sound decision-making. As the many types of financial advisory services have grown so have the requirements for a good financial advisor. Some of the skills required for fulfilling the role of a proper and efficient financial advisor are:

  • Registered financial advisor, preferably fee-only fiduciary. These are some necessary qualifications for a viable and credible financial advisor as it ascertains that the professional focuses on fulfilling your interests and works towards your benefit, not fulfill certain metrics to siphon more commission out of your pockets. Furthermore, a registered financial advisor under the rule of law must follow the guidelines that compel him or her to work in the best interests of the client, almost as if the client were working for himself or if he or she possessed the necessary technical know-how or registration. It is the best way to maintain the accountability of a finance professional. 
  • Great interpersonal skills are an unspoken necessity of a financial advisor. Not only is dealing with smart banking officials a tough job if you are not good with your presentation or speech but it also makes it hard to bridge gaps with clients and gain an understanding of their desires and goals. These goals have a major impact on the overall wellness of a client-advisor relationship. Furthermore, understanding the objectives for the financial well-being of the client and conveying these in a sophisticated yet legible manner are the shining qualities of any financial professional. The types of financial advisory services on offer are numerous but the ones that stand out often center around their sublime ability to keep the flow of conversation about the client’s needs in an immaculate balance. 


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  • Financial advisors who are fluent in different types of financial advisory services are often well-versed and experienced in the craft of advising as well as marketing. Financial advising is a lonesome endeavor that leaves little room for waiting on luck to take a turn for your benefit.
  • A good marketing finance advisor who labels himself into a category of his expertise will find success in more quantity as well as with greater speed. 
  • Knowledge of market situations and in-depth study of the companies where their client has invested is a sign of a good financial advisor. In some types of financial advisory services, there might be little to no forecasting prospects however skilled advisors will find means to forecast future trends wherever possible.
  • A good professional insists on adjusting the portfolios of their clients, recommending a shift in saving patterns depending on interest rates and financial objectives. Lastly, financial advisors may even delve into great detail about various government schemes to help out clients if they are in monetary trouble. 

These are the fundamentals followed by good financial advisors and the skills they have learned to perform their duties without a hiccup. With a brief understanding of all aforementioned concepts, let’s finally grapple with…

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Types of Financial Advisory Services:

There is a plethora of financial advisory services that fall under the banner of financial services, we have curated the most significant types of financial advisory services for you. Some of them are as follows: 

1. Financial Strategic Planning:

This financial advisory service aims to formulate a proper corporate financial structure. This exercise is conducted on the foundation of the particular resources required, taxation structure, and compliance regulations as well as other fundraising regulations.

It also constitutes the construction of business models and plans after collecting comprehensive data on the market as a whole and the standing of the company within it. It also maps out the effects of the market on products and services and adjusts the business plan accordingly. Lastly, thorough market analysis and product data are utilized for the development of forecasts and budgets that will benefit investment/ saving.

2. Business & Financial Operations:

Under this financial service, the accounts and ledgers of clientele are maintained without any hassles by outsourcing the process to foreign or secondary financing services. Financial operations would not be appropriately named if it were not for the extreme focus on payroll development processes and activities. Activities of payroll compliance, benefit and pay processing structure, managing payroll-related compliances, and advising clientele on the best payroll practices.

Furthermore, this financial advisory generates client and vendor transaction receivables and invoices and ensures timely money transfers as per agreed processes. Often clients aim to set up funds for investment or savings. Sometimes capital funds are involved that need expeditious management to thrive and pay returns on capital assets & funds as well as manage the entire liquidity ratio kept in reserve for contingency business operations.

3. Financial Advising:

Formulation and implementation of financial plans/ objectives that are in coordination with the stipulations of the clientele. These plans undergird important financial controls and the extent to which they can be exercised. Financial advising deals with all aspects of finance so it recommends the best practices at the moment for foreign direct investment and investment in general.

Not only is it limited to investment but also to taxation and compliance processes as well as custom and excise levies and how to manage them. Furthermore, for businesses cash flow is a very important metric. In-flow metrics and out-flow metrics that aid in the evaluation of key business health is verified by advisors. Moreover, suggesting changes in working capital requirements as well as forecasting future cash flows to augment pre-existing knowledge is extremely beneficial to clients. Lastly, financial advising would be incomplete without a comprehensive look into the regular financial performance reporting and deeply insightful analysis of various product lines and personal portfolio investments. This allows for swift and effective decision-making services by clients.

4. Compliance Payments & Structures for Taxation:

Compliance with taxation is a lengthy process in every economy because of the time that needs to be expended to learn the intricacies of the tax structure. More than this there is the sheer quantity of taxes that are levied on consumers — Luxury tax, Sales Tax, Goods and Sales Tax, Custom Duties, and more that are considered significant and require assistance for timely payment. Tax-related policies, how taxation may shift in the future, or the general upheaval of the entire tax structure. Handling of registration and other tax regulation services are also dealt with by financial advisors. Provision of financial statements as per established standards and governmental policy coupled with a long list of compliances that are directly transported to the directors or heads of the corporation for their perusal. 

5. Financial Transaction Advisory:

This type of financial service furnishes clients through the IPO process with no stone left unturned to fulfill key aspects. It ensures the development of reports that depict the commercial potency and financial viability of the institution. This category also includes mergers and important acquisitions by using risk analysis and the value of benefits gained to predict the effects of mergers. It also helps in the initiation of smooth merging between institutions that prevent unnecessary conflict and confusion over the superiority as well as specificity of procedures and policy. It also helps with conducting due diligence, by a client as a prospective stakeholder or by an establishment on a client. Finally, if a client needs to reduce its commitment to the stake of a company a financial advisor works to identify the correct exit strategy as per the law and bylaws of the firm. 

6. Investing Relationships:

Establishing proper MIS systems with banks and equity investors to ensure smooth transactions and processing requirements. This specific category solicits honed soft skills such as good communication skills and visualization skills to offer great presentation skills for effective communication between different parties. 

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FAQs: (Types of Financial Advisory Services)

Q1. What are the different types of finance professionals that fall under the category of financial advisors?

The finance professionals that may fall under the heading of a financial advisor may be one or several. Some of them are as follows:

  • Investment Advisors – Person compensated to render investment-related services to clients
  • Stockbrokers/ Deal-Brokers – Usually a company or an individual that works to commit a variety of transactions of shares, securities, and bonds.
  • Certified Financial Planners – These are fiduciary financial professionals of a company that needs to uphold ethical standards of excellence. They work to plan long-term budgets and fix up plans for retirement or individual-specific goals.
  • Financial Coach – These are professionals who offer financial services for pure beginners to the system. They teach the basics of financial literacy such as saving plans and small investment opportunities
  • Wealth Advisors – Financial professionals that serve the extremely well-off. These may practice general investment guidance with clients who are adept at finance, however, may extend their services to tax compliance services and advice on different charities to invest in as well. 

Q2. What is the basic difference between financial advisors and financial planners?

The basic differentiating factor between the two is that planners help companies in forming programs to meet long-term financial goals and usually have a specialty in retirement planning, investment, and other aspects of finance. They may also possess multiple financial certifications and usually help corporations and people with life-after-retirement plans. Financial advisors on the other hand tend to stick to the present terms and dynamic market tendencies of today and usually work in the short term. 

Q3. How does one become a financial advisor? 

A financial advisor requires registration and may require proper certification as well in many instances. Chartered financial analysts, chartered financial planners, and registered investment advisors are some of the different types of financial advisors that can possess a variety of certifications. Series 6, Series 66, and Series 63 are some licenses that are prevalent today. Furthermore, the appropriate skills discussed before the job of a financial advisor can be gained with relative ease. 


We hope you learned something of value through this article that will assist you in your journey as a financial advisor 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 advisor. Thank you.

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