What Does a Financial Advisor Do?

A financial advisor can you make financial decisions or actively manage your accounts for you. No matter what services you want, working with a financial advisor typically starts the same way: reviewing your assets, debts, expenses and priorities, and using it all to build a financial plan.

Most financial advisors do the following:

• Help you create an emergency fund.

• Assist with saving and budgeting.

• Plan to meet short- and long-term goals.

• Help create plans to pay off debt.

• Investment management.

• Retirement planning.

• College planning.

• Tax planning.

• Estate planning.

• Succession planning.

» Looking for an advisor? View our picks for the year’s best financial advisors

In some cases, you can choose which services you want or need based on the type of financial advisor you select.

"Financial advisor" is a catch-all term that describes a wide variety of professionals, including investment managers, financial consultants and financial planners.

A financial planner, for instance, may only focus on building and analyzing financial plans. They may not give investment advice or manage your assets. Similarly, an investment manager may only give investment advice but not create comprehensive financial plans for you.

It’s also important to find a professional who is skilled in the area you need help with. You may need help with complex matters such as taxes, estate planning and debt repayment. You might also want guidance on specific investment strategies around emerging investments, such as crypto and crypto taxes.

That’s why it’s important to interview several advisors. You want someone who meets your needs and who you feel comfortable opening up to about your finances. For help with that conversation, we cover 10 questions to ask a financial advisor.

» Not sure where to begin? Learn how to choose a financial advisor

How financial advisors get paid

Financial advisors make money in different ways.

• Assets under management (AUM) fees: Some advisors charge an annual fee that is a percentage of the amount of assets they manage for you (your assets under management).

• Fixed rates: Some charge an hourly or flat fee for certain services, such as writing a one-time financial plan or working on special cases, such as helping you through a divorce.

• Commissions: Some get commissions from the products they sell to you (annuities, life insurance, mutual funds, etc.).

• Trading fees: Some charge commissions on trades they place on your behalf.

Some advisors may combine these fee structures. Don’t be afraid to ask an advisor what they charge, and compare their fees to others before moving forward.

» Dive deeper: How much does a financial advisor cost?

When to get a financial advisor

You may want to work with a financial advisor if you:

• Struggle to prioritize your financial goals

• Need a plan for where and how to save

• Want help with investment management 

The quiz below can help you decide if it's time to get a financial advisor.

» MORE: How to tell it's time to hire a financial advisor