About financial Advisors: What should you know?

In order to be a financial advisor it is a must for you to pass an exam to practice. This exam is known as the Financial Planning Certificate. In UK this is an exam that is authorized by the Financial Services Authority. In simple terms this is an UK government, which one needs to fulfill before the authorities determine that the advisor is worthy and able for him/her before he/she can practice. There can be three major kinds of financial advisors; namely tied, multi-tied, or independent.
One of the most important kind of financial advisor is the tied advisor who can only recommend financial products marketed by the company he or she represents and that person is basically represented by the company; there are however variations and nonetheless in some cases that individual can work for that organization but be on a self employed contract. A multi-tied agent on the other hand has a role, which is similar except that he or she represents a number of different companies, which often is known as the panel system. There is a third category or the Independent Financial Adviser who must offer whole of market advice and, in addition, must offer prospective clients the choice of paying a fee for advice, rather than being remunerated via commission from the financial product provider.
Tied and multi-tied advisors are nearly always rewarded via commission although in some cases (and if the advisor is employed rather than self employed) commission may be expressed in notional terms to justify a salary. There has been an ongoing debate about the need for financial advisors. This debate is especially pertinent in situations where there is perceived bias toward certain products. These are the products, which basically offer high commission.
A significant fact that should be taken into account is that to an extent there are certain issues of client accountability. Whatever be the advisor tied or independent he for sure has a moral duty to achieve this for clients and therefore this it should be kept into account if the advisor is not independent. Thus however against the company benefits it might be it must be a norm that a tied or multi-tied advisor must recommend the most appropriate financial product available to him or her to suit their clients needs. In most cases however they do recommend company products even if a more appropriate product is available in the market place. Thus the clients in most cases go for independents, as they believe that impartial advice can be obtained only by consulting an independent financial advisor.
There are some investment banks, which help the public and private corporations to raise funds in the capital markets as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions. These are different from the commercial banks, which directly involve themselves in retail loan and cash deposits. Lately the distinction is quite blurred as commercial banks started offering more investment banking services. Initially created in the wake of 1929 market crash, the U.S. Glass-Steagall Act stopped the banks from accepting both deposits and underwriting securities. It was actually repealed by the Gramm-Leach-Bliley Act in 1999. Investment banks and brokerages, though sometimes integrated into single firms, they in actuality differ from one another as brokerages assist in the purchase and sale of stocks, bonds, mutual funds etc.