A financial adviser is a professional who provides advice, guidance, and tools on managing personal finances, including investments, retirement, insurance, and financial planning. They help individuals and families make informed decisions to achieve their financial goals. The job of a financial adviser is to deliver comprehensive and measurable improvements to the client's financial outcomes and quality of life.

What Do Financial Advisers Do?

Below is a breakdown of what financial advisers typically do:

Financial Planning

Financial advisers create comprehensive financial plans tailored to individual and family needs and goals, considering factors like age, income, assets, health condition, family situation, lifestyle, risk tolerance, and financial goals.

Investment Management

They advise on investment strategies, asset allocation, and portfolio management to help clients grow their wealth with appropriate risk mitigations.

Retirement Planning

They plan for retirement, including estimating retirement expenses, choosing appropriate retirement accounts, developing retirement income strategies, and mitigating retirement risks. They may recommend the optimal Social Security claiming strategy for the individual and family as a whole. Ultimately, they help ensure financial security and peace of mind in retirement.

Tax Planning

They provide advice on tax-advantaged investment strategies and how to maximize total tax savings. This includes how to best utilize traditional and Roth retirement accounts, Health Savings Accounts (HSA), Roth conversion strategies, asset location, tax bracket management, and investment-focused life insurance and long-term care insurance policies.

Insurance Planning

They help clients assess their insurance needs and recommend appropriate coverage for life insurance, health insurance (including Medicare and Medicaid), disability insurance, long-term care insurance, and other risk mitigation products.

Estate Planning

They may assist with creating wills, trusts, and other estate planning documents to ensure assets are distributed according to the client's wishes with minimal tax impacts.

What Licenses are Needed to be a Financial Adviser?

As stated from investor.gov, "Always check the background of any financial professional to make sure the person is licensed." "Unlicensed, unregistered persons commit much of the investment fraud in the United States."

Below are the licenses that a financial adviser typically has at the state and federal levels:

State Life and Health Insurance License

A life and health insurance license is a state-issued credential that authorizes an individual to sell life and health insurance policies within that specific state. Licensed agents can offer a range of fixed insurance products, including term life, whole life, indexed universal life, fixed rate annuities, fixed index annuities, health insurance, long-term care insurance, and disability insurance. These professionals are typically referred to as insurance agents or insurance producers.

To verify an insurance producer’s credentials, you can visit your state’s Department of Insurance website. Each producer is assigned a unique National Producer Number (NPN), maintained by the National Insurance Producer Registry (NIPR). Producers can be searched by name or NPN to confirm their license status and details.

Securities License

A person holding a securities license is often referred to as a broker or registered representative. Brokers are in the business of buying and selling securities—including stocks, bonds, mutual funds, and certain other investment products—on behalf of clients. Because variable life insurance and variable annuity products are classified as securities, brokers who also hold a state life insurance license are authorized to sell products such as Variable Universal Life (VUL) and Variable Annuity (VA) policies (including variable index annuities, also known as registered index-linked annuities or buffer annuities). To effectively manage the investment accounts within VUL or VA policies, financial advisers should also hold an investment adviser license (see the section below).

Securities-licensed professionals can be verified through FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure (IAPD) system. Each individual is assigned a unique Central Registration Depository (CRD) number—for example, 6909493. You can search for a registered broker by name or CRD number and the search result lists the individual as “Broker”.

Investment Adviser License

An individual holding an investment adviser license is commonly referred to as a Registered Investment Adviser (RIA) or Investment Adviser Representative (IAR). This license authorizes the adviser to offer investment advice, manage investment portfolios (such as taxable brokerage accounts, IRAs, and 401k accounts), and provide comprehensive financial planning services. Investemnt advisers can also design retirement plans for self-employed individuals and businesses, such as 401k and pension plans. In addition, they are licensed to sell advisory annuities and advisory variable life insurance (fee-based products without commissions). For more complex solutions like Private Placement Life Insurance (PPLI), hedge funds, and private market funds, the investment adviser license is required as well. Importantly, investment advisers are fiduciaries, legally obligated to act in their clients’ best interests at all times.

Investment advisers can be verified through two public databases: the Investment Adviser Public Disclosure (IAPD), maintained by the U.S. Securities and Exchange Commission (SEC), and BrokerCheck, managed by the Financial Industry Regulatory Authority (FINRA). Each adviser is assigned a unique CRD (Central Registration Depository) number (such as 6909493), which remains consistent across both licenses if the individual is also a registered broker. Users may search for an investment adviser by name or CRD number to confirm licensure, which lists the individual as "Investment Adviser".

Many financial advisers hold these three core licenses that enable them to deliver truly comprehensive services. Without all three, their ability to provide holistic and comprehensive strategies is limited, often leading to fragmented advice and partial solutions for clients (If a financial adviser lacks the license to provide a service or product that is most suitable for a client, the adviser may offer a less suitable alternative—sometimes without even realizing it). Additionally, some financial advisers hold specialized credentials such as Enrolled Agent (EA) or Certified Public Accountant (CPA), which qualify them to assist clients with tax preparation and filing. Earning industry designations like Certified Financial Planner (CFP) or Retirement Management Advisor (RMA®) further enhances their expertise by broadening their knowledge base and formalizing their approach to comprehensive financial planning.

While obtaining the required licenses is the baseline qualification, being a good financial adviser demands much more. It requires deep and comprehensive professional expertise, strong analytical and data analysis skills, exceptional communication and interpersonal abilities, extensive industry experience, and above all, unwavering ethical standards - always acting in the client’s best interests.

Working with a Financial Adviser

Studies have shown that qualified financial advisers can add a lot of value to most people's financial security and quality of life. While you may feel that you have the time, knowledge and access to critical financial information to make informed decisions on your own, financial advisers have experience in many complex situations and tools that you may not be able to access. They are supported by extensive research teams and have in-depth training that most individual investors lack and can provide an objective, unemotional view and long-term perspective to help you manage your investments and finances through tough times and improve your quality of life in many ways.