• This article details what a financial advisor is and the role they play within investment entities.
• The information provided is useful for financial advisors and other executives who wish to understand the characteristics of this role.
• FlexFunds offers an asset securitization program that enables financial advisors to optimize the distribution of their investment strategies. For more information, please do not hesitate to contact our team of specialists.

The wealth management and private banking industry is changing. The sector has evolved from a universal model to increasingly specialized advisory services.

Given the need to serve clients with substantial capital and seek differentiation from traditional banking, one must ask what the key characteristics and factors of a financial advisor should be.

What is a financial advisor and what are their activities?

The European Financial Planning Association (EFPA) defines a financial advisor as a person with in-depth knowledge of finance, capable of recognizing the most suitable investment product or vehicle for their client’s needs.

It is important to distinguish between independent financial advisors, commercial bank advisors, and company advisors.

In this article, we refer to financial advice in terms of investments and wealth management, not the figure that helps business owners with their financial situation (cash flow management, financing, etc.).

A commercial advisor is solely responsible for establishing business relationships with clients, offering products that match their investor profile.

Meanwhile, an independent investment advisor is a professional who guides clients in financial matters, offering them a personalized plan to help achieve their financial goals.

The fundamental difference between the two is that the commercial advisor receives commissions for the products they manage to sell, while an independent advisor’s income comes entirely from fees paid by their clients.

What characteristics should a financial advisor have?

The required characteristics for a financial advisor can be summarized as follows:

Knowledge

First and foremost, they must have a solid knowledge base in finance and taxation. The stronger this base, the greater their ability to develop effective solutions for clients.

Additionally, it is necessary for the advisor to stay updated, as increasingly innovative financial products, prominent investment vehicles, and changing economic conditions continuously emerge.

Objectivity

As mentioned earlier, a financial advisor can only be considered independent if they have no ties or vested interest in offering any particular entity or financial product to their clients.

This characteristic provides them with true objectivity when creating plans and maintaining professional ethics.

Communication skills

At any point in their relationship with clients, the investment advisor must address any questions and clearly explain their ideas and decisions. The client must be able to understand them with ease.

Quality customer service

While high-net-worth clients often require more attention, all clients have concerns because their assets are at stake, and they expect efficient service.

Professional certifications

An investment advisor with certain certifications ensures that their knowledge is up-to-date and that they are committed to adhering to an ethical code that requires them to safeguard their clients’ interests.

What are key factors for a financial advisor?

Beyond the quantitative aspects, one of the main reasons clients abandon financial advisory services is dissatisfaction and lack of initiative from the advisor.

In this sense, it is crucial to offer personalized, high-quality service and maintain a proactive attitude.

The selection criteria for a firm or personal manager include several aspects:

Personal resume

Factors such as experience, specialization, the evolution of managed assets, the number of clients managed, etc. For example, not all investment advisors are equipped to operate with derivatives.

Proposed services

Does the firm have the necessary infrastructure to understand each client’s needs and offer tailored solutions? This factor is critical, as information technologies and the vast array of financial products available allow for highly customized services.

Compensation

Certainly, this is one of the most sensitive factors, but it should not be the primary one.

Specialization

While generic financial advisors exist, clients increasingly demand specialization. For example, sector-specific investment advice, such as in Real Estate, is available.

Security and trust

This factor is also one of the most critical. Ultimately, the client expects peace of mind. However, if the previous points have been met, much of this will come naturally. The rest depends on the good relationship built, as private banking business is not based on coldness.

The role of a financial advisor in the business of an investment entity

The financial advisor plays a central role within any investment entity, acting as the link between institutional strategy and the operational execution that enables sustainable results.

Their perspective combines technical analysis, market understanding, long-term vision, and a precise reading of the profile and objectives of the clients or beneficiaries of the investment vehicle. 

Key functions of a financial advisor in investment entities

The functions of a financial advisor are extensive and cover everything from strategic design to tactical execution.

Portfolio management and investment optimization

Portfolio management is one of the core functions of the financial advisor. It involves efficiently allocating resources according to the defined strategy, balancing risk and return under both quantitative and qualitative criteria.

Strategic planning and personalized advice

Strategic planning is key to aligning investment objectives with the entity’s capabilities and constraints. The financial advisor develops plans that integrate time horizons, risk tolerance, performance goals, and regulatory needs.

Identifying opportunities and mitigating risks

The financial advisor evaluates structural trends (such as regulatory changes, technological innovations, or sector movements) to integrate assets with appreciation potential or differential returns.

At the same time, they analyze market, credit, liquidity, counterparty, and operational risks and propose hedging or diversification mechanisms.

Strategic collaboration of the financial advisor

The financial advisor does not work in isolation, as their function is integrated into the entity’s strategic framework.

They collaborate with investment committees, legal teams, compliance departments, commercial executives, and external consultants.

This interaction ensures that investment decisions are solid, aligned with institutional strategy, and executed under governance and transparency standards.

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