What is a financial adviser?

Financial advisers work with their clients to clarify their financial goals, assess their risk tolerance and time horizon, and evaluate their overall financial situation. Working together, the adviser and client develop a financial plan, an investment strategy, and an asset allocation model. The next step is identifying and making appropriate investments — some of which the adviser may sell if he or she is licensed. In other cases, the client opens a brokerage account to make investments.

Financial advisers may continue to monitor their clients’ portfolios and advise adjusting the holdings as needed. An adviser may hold the Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or other designation. However, there is no official certification or licensing requirement.

Advisers who manage assets of more than $25 million must register with the SEC as a Registered Investment Adviser (RIA). Advisers who manage less than $25 million must register with state securities regulators in the states where they operate.