A financial advisor (also known as an investment advisor) manages a client’s money and provides advice on investing strategies. They often hold at least a bachelor’s degree in accounting, finance, economics, business or mathematics; a master’s degree enhances job prospects and increases earnings potential.

Exponent Investment Management on the client’s needs, a financial advisor may also help them purchase life insurance or long-term care policies. They may also prepare tax returns or consult with clients about minimizing taxes through retirement planning or tax-loss harvesting.

They may also create a financial plan that details a client’s goals, risk tolerance and other personal financial information. The plan will identify short- and long-term goals, as well as other aspects of a client’s finances, such as their family situation, estate-planning details, current expenses and the cost of future needs like education or housing.

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In some cases, a financial advisor will determine how much of an individual’s portfolio should be allocated to each asset class. For example, a person who is risk-averse may decide to put more money into government bonds, certificates of deposit and money market accounts while someone who is comfortable with risk might invest in stocks, mutual funds or exchange-traded funds that track the market.

Some financial advisors are paid a commission for the investments they sell, while others work on a fee-only basis. It is important for individuals to understand how their financial advisors are compensated and to choose an advisor that works as a fiduciary, meaning they put their clients’ interests ahead of their own or those of the firm.