Financial Advice
Financial Advice is advice given in
relation to financial matters such as investing, insurance,
borrowing, saving and retirement planning. Professionally, the
advice is given only after the financial situation of the client is
unveiled through a thorough fact-finding and analysis exercise. Many
financial advisers also double-up as financial planners because
their function is crossed in many areas. This principle of
understanding the client's situation before advice are given is
known as the 'know your client' rule. Once the client's actual
financial situation is known, a set of prescriptions are provided by
the financial adviser to solve those client's problems that are
uncovered.
Financial advisers may or may not hold distribution contracts with
financial institutions as part of their business. Those who do not
are often referred to as Independent Financial Advisers (IFA) as
they are not influenced by the commissions they get for recommending
financial products, and hence, are considered less bias when
advising their clients.
In some countries like Singapore and Malaysia, financial advisers
are not individuals but companies who are licensed by the respective
Authorities, such as the Monetary Authority of Singapore (MAS) or
Bank Negara Malaysia (BNM). Those individuals who represent these
financial advisers (companies) are called financial adviser
representatives. Those who give financial advice related to
securities in Malaysia need a separate licence from the Securities
Commission (SC). Other institutions including insurance companies,
investment companies, banks and lawyers may offer financial advice
in addition to other services.
Many financial advisers see their profession as complementary to
other professions who give legal advice, tax advice or medical
advice. Financial advice in this context is a professional service
with its own criteria and professional boundaries. The giving of
financial advice is a regulated activity in many jurisdictions.