Financial Advisors and Analysts Law & Legal Definition

Financial advisors and analysts provide analysis and guidance to businesses and individuals to help them with their investment decisions. Both types of specialist gather financial information, analyze it, and make recommendations to their clients. However, their job duties differ because of the different type of clients they work for. Financial analysts assess the economic performance of companies and industries for firms and institutions with money to invest. Personal financial advisors generally assess the financial needs of individuals, providing them a wide range of options.

They are employed with securities and commodity brokers, exchanges, investment services firms, depository and nondepository institutions, including banks, savings institutions, and mortgage bankers and brokers. The remainder work primarily for insurance carriers; accounting, tax preparation, bookkeeping, and payroll services; management, scientific, and technical consulting services; and state and local government agencies.

A license is not required to work as a personal financial advisor, but advisors who sell stocks, bonds, mutual funds, insurance, or real estate may need licenses to perform these additional services. Also, if legal advice is provided, a license to practice law may be required. Financial advisors who do not provide these additional services often refer clients to those qualified to provide them.

Financial analysts may receive the title Chartered Financial Analyst (CFA), sponsored by the Association of Investment Management and Research. To qualify for CFA designation, applicants must hold a bachelor’s degree, must have 3 years of work experience in a related field, and must pass a series of three examinations. The essay exams, administered once a year for 3 years, cover subjects such as accounting, economics, securities analysis, asset valuation, and portfolio management.

Personal financial advisors may obtain the Certified Financial Planner credential, often referred to as CFP (R), demonstrating to potential customers that a planner has extensive training and competency in the area of financial planning. The CFP (R) certification, issued by the Certified Financial Planner Board of Standards, Inc., requires relevant experience, the completion of education requirements, the passage of a comprehensive examination, and adherence to an enforceable code of ethics.