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How to Become a Financial Advisor | Investing

Advisor’s Corner

Having been in the finance industry for more than two decades, I’ve witnessed the transformative power of financial advice firsthand. I have many stories, but one memorable encounter was with a Gen-X couple. They were overwhelmed, caught between the financial responsibilities of caring for their aging parents, preparing for their children’s college education, and managing their own retirement planning. It was a classic case of the “sandwich generation” dilemma.

It’s just one example of the complex financial situations people can find themselves in, and I was honored to advise them on a tailored strategy. Like Rianka R. Dorsainvil, a certified financial planner in Washington, D.C., and co-founder and co-CEO of 2050 Wealth Partners, says: “Giving advice to clients is a privilege.”

Truly, clients entrust us with their financial secrets. Gaining that trust demands passing stringent exams and maintaining the highest standards of professionalism and integrity. As a financial advisor myself, I can help you decide if it’s the right career choice for you and, if so, how to get started:

  • What does a financial advisor do?
  • Responsibilities of financial advisors.
  • Financial advisor requirements.
  • How to become a financial advisor: A step-by-step guide.
  • A day in the life of a financial advisor.
  • Is being a financial advisor right for you?
  • The financial advisor skill set.
  • Questions to ask yourself before becoming a financial advisor.
  • How much do financial advisors make? A salary snapshot.
  • How long does it take to become a financial advisor?

What Does a Financial Advisor Do?

As financial advisors, we help our clients sort through their complete financial picture and make informed financial decisions, ranging from initial investment strategies to retirement or estate planning. We may work in large financial institutions like banks or brokerage firms or find our niche in smaller firms or as independent consultants.

What a financial advisor does depends a lot on who they serve. For instance, some specialize in a particular niche, such as retirement planning or investment management, while others might cater to a clientele type, such as those within a specific net worth or age bracket.

Responsibilities of Financial Advisors

Regardless of our area of expertise, our primary objective remains the same: to help our clients make sense of their financial lives. As Adam Breazeale, a senior financial planner at Schwab Wealth Advisory, puts it, “We look at where our clients are relative to where they want to be, then provide the tools and solutions necessary to create a road map for success.”

This guidance comes with enormous responsibility. We must thoroughly understand the financial markets, the best strategies and the potential risks to provide the most effective advice and guidance. Additionally, we must consider our client’s circumstances, such as their goals and risk tolerance, and tailor the advice to their needs.

Financial Advisor Requirements

Financial advisor careers are open to almost anyone, which is one of my favorite aspects of the profession. You’ll need a bachelor’s degree, but it doesn’t have to be in a specific field.

Even if you’re already established in your career, it’s possible to transition into the role of a financial advisor. I speak from personal experience – I made that transition myself. My academic background focused on corporate finance and East Asian language and literature. I started my professional journey at a Japanese investment bank post-graduation. But I soon realized that I wanted a deeper connection with clients and their personal financial well-being. That’s when I discovered my passion for personal finance and made the switch into a career as a certified financial planner, or CFP professional.

How to Become a Financial Advisor: A Step-By-Step Guide

Becoming a financial advisor is an exciting and fulfilling journey, but it requires careful planning and preparation. You don’t just walk out of college ready to advise clients. Many financial advisors start by doing operations or assisting with client service to support another advisor. It gives you hands-on experience as you work toward passing the necessary exams to earn certification.

Here’s a road map to becoming a financial advisor:

1. Earn a bachelor’s degree.

Your first step toward financial advising is getting a bachelor’s degree. It can be in any subject, but I’d suggest taking finance, investments, estate planning and risk management courses to support your new career. I wanted to become a certified financial planner, or CFP professional, so completing a CFP Board of Standards-approved program in personal financial planning was essential. You may be eligible to skip much of the coursework if you already have an advanced degree or other professional certifications.

Finding qualifying programs is easy through the CFP Board’s website, which lists programs available in traditional classroom settings and online formats.

2. Consider an internship.

An internship can be key to career growth. Michelle Bender, a certified financial planner at Potomac Financial Consultants, says she’d “struggle to bring in” for an interview an applicant who lacked experience and had not taken the appropriate courses. Consider an internship before applying for a full-time job if this is you.

An internship can provide practical experience and insights into the day-to-day responsibilities of a financial advisor. You’ll learn from seasoned professionals, observe client interactions, and learn about investment strategies and financial planning techniques. Plus, it offers the opportunity to build a valuable network of industry contacts, which can contribute to your career advancement as a financial advisor.

3. Acquire the proper certifications and licenses.

The world of financial advising is filled with a constellation of acronyms that designate various levels of expertise, education and specialization. “There are three different channels you can work in in the financial services industry,” Dorsainvil says. You can work for a broker-dealer like Morgan Stanley or Fidelity; for a bank with a financial advisor arm; or for a smaller, independent firm.

The licenses and certifications you need will depend on where you work and the level of services you provide to clients. Here are some of the most well-known financial advisor designations you might want to consider:

  • Certified financial planner (CFP). One of the most recognized and respected certifications, the CFP certification is awarded by the Certified Financial Planner Board of Standards. It requires you to complete a rigorous course of study, pass an exam and have at least three years of professional experience.
  • Chartered financial analyst (CFA). Issued by the CFA Institute, the CFA designation signifies expertise in investment management. Requirements include a bachelor’s degree, passing three exam levels and work experience in investment decision-making.
  • Certified fund specialist (CFS). By becoming a CFS, you will be able to demonstrate your knowledge of mutual funds. The Institute of Business & Finance issues it and requires you to complete a self-study program and pass a final exam.
  • Chartered financial consultant (ChFC). With a focus on advanced financial planning strategies, the ChFC includes retirement, estate, insurance and income tax planning. You must complete a series of courses, pass a comprehensive exam and have three years of work experience, according to the American College of Financial Services.
  • Certified investment management analyst (CIMA). The CIMA is geared toward investment consulting and portfolio management expertise. To earn it, you’ll need to complete a program from the Investments & Wealth Institute, pass an exam and meet experience requirements.
  • Certified public accountant (CPA). Although it isn’t exclusively a financial advisor certificate, CPAs provide valuable financial advice on tax-related issues. It requires you to pass the CPA exam to get licensed by the Board of Accountancy in your state.

Additionally, if you plan to sell investment products, a common occurrence at broker-dealers and banks, you’ll need to pass exams administered by the Financial Industry Regulation Authority (FINRA), such as:

  • Securities Industry Essentials (SIE) exam
  • Series 6: Investment Company and Variable Contracts Products Representative Qualification Examination (IR)
  • Series 7: General Securities Representative Qualification Examination (GS)
  • Series 63: Uniform Securities State Law Examination
  • Series 65: Uniform Investment Advisor Law Examination
  • Series 66: Uniform Combined State Law Examination

Different roles within the financial advisor industry may require additional licensing exams. For instance, setting up your own practice as an independent financial advisor requires passing the Series 65 or Series 66 exam and completing the registration process outlined by the Investment Advisors Act of 1940. You may also need to register your firm as a registered investment advisor with the Securities and Exchange Commission while also registering yourself as an investment advisor representative.

Starting your career as a financial advisor at a large broker-dealer can teach you essential skills like cold-calling and building a book of business. It’s also a good choice if you’d rather manage investments than clients.

“But if you think you want to go the financial planning route, then a small to midsize firm that focuses on full service” is a great place to start, Bender says.

Finding an employer that provides on-the-job training is crucial no matter where you start. I also encourage you to look for a mentor and get involved with a professional association. The CFP Board’s mentorship program is an excellent resource for connecting with a mentor.

A Day in the Life of a Financial Advisor

An average day for a financial advisor is never really average. Every day is different because every client has a different need, Bender says.

It’s an ever-changing landscape, with each client presenting a unique need. But many of the same topics resurface again and again. “I’d say 85% of our conversations are around saving for retirement,” Bender says.

“The core is always: Do we have enough for retirement? Then the ancillaries are college, saving for a house” and other financial goals, Bender says.

On a typical day, I might meet prospective clients, implement solutions for new clients, and review plans with existing ones. I also spend time preparing for client meetings and marketing myself to new clients through networking or events.

Continuous education is also vital in this field. We’re constantly attending continuing education seminars “to keep fresh on the financial services industry and maintain [industry] licenses,” Bender says.

Is Being a Financial Advisor Right for You?

A career as a financial advisor may be right for you if you are passionate about finance and enjoy helping others. However, before pursuing this career, it’s essential to consider whether it’s the right fit for you.

“One thing people need to understand is it’s largely a sales profession,” Breazeale says. It requires patience, especially when building a client base, referred to as a ‘book of business.’ Even if you decide not to own a business, attracting clients is your responsibility.

The Financial Advisor Skill Set

Being a financial advisor also requires analytical skills, but it’s more than interpreting investment and financial data. As you work with clients, you’ll come across unique financial circumstances, risk tolerances and goals. A healthy dose of interpersonal skills is crucial to communicate financial strategies with your clients in a way they’ll understand.

In my experience, financial advisors need the following skills:

  • Aptitude for sales and marketing.
  • Attention to detail.
  • Expertise in building strong client relationships.
  • Comfort with numbers and analyzing data.
  • Ability to communicate with a wide range of people.
  • Knack for simplifying complex ideas.

Questions to Ask Yourself Before Becoming a Financial Advisor

Before committing to a career in financial advice, I recommend asking yourself a few questions:

  • Are you passionate about helping people with their finances?
  • Do you want a client-facing role that requires working and communicating with a variety of people?
  • Are you willing to invest time and effort in networking, marketing and self-promotion?
  • Does the idea of actively promoting your services to others excite you?
  • Do you enjoy working with numbers or have an interest in investments and financial planning?
  • Are you comfortable managing financial risks and making decisions for yourself and others?

If you found yourself nodding in agreement to most or all of these questions, this career path might be the right fit.

How Much Do Financial Advisors Make? A Salary Snapshot

Your income potential as a financial advisor depends on experience, location and the type of firm you work for. The median pay for personal financial advisors is $94,170. Generally, you’ll see salaries ranging from around $61,000 to $159,000. It’s usually broken down into an annual salary plus bonuses.

“Some firms provide a base salary the first six, 12 or 18 months as long as certain [sales] goals are met,” Breazeale says.

Keep in mind that your base salary could be minor compared with the bonus you earn. For instance, you may have a base salary of $50,000 but earn six figures in variable pay.

The other option is to work on a fee-only basis. This means you’ll earn a single fee for all services provided, and it’s more common among independent advisors.

How Long Does It Take to Become a Financial Advisor?

The time it takes you to become a financial advisor depends on the path you take. It can range from less than five years to more than seven to complete the coursework, certification and licensing requirements.

One of the quickest routes is to get your series licenses with FINRA, which require no prior job experience.

After completing your bachelor’s degree, you could study and pass your exams in a matter of months. If you’re interested in becoming a CFP, it usually takes a year and a half. It is considered the highest standard in financial planning because of the lengthy educational and exam requirements.

But remember that you need more than coursework and exams to equip you with all the necessary knowledge and expertise to handle every real-life situation. Some things can only be learned through time spent on the job.

U.S. News makes no representations or warranties in connection with the information provided herein, nor to the accuracy or applicability thereof. U.S. News does not give, offer, or render tax, credit, or legal advice. Before making financial or investment decisions, U.S. News recommends that you contact an investment advisor, or tax or legal professional.