How to become a financial advisor
Financial advisors can enjoy rewarding careers where they work with clients to develop plans around their financial goals. Some advisors work for large firms, while others operate their own independent firms.
Financial advisors need to be comfortable with a broad array of financial topics, so there is a lot of training they’ll need before getting started. They may also want to pursue a professional certification to boost their credentials, and there may be licenses they’ll need to obtain before they can start working with clients.
Here’s what else you should know about what it takes to become a financial advisor.
Key takeaways
- Financial advisors work with clients to develop a plan that will allow them to achieve their financial goals.
- Financial advisors may specialize in certain areas such as retirement planning, investments, tax strategy or estate planning.
- You’ll need significant education and training in order to become a financial advisor including obtaining the requisite licenses and professional certifications.
Financial advisor statistics
- Median pay for personal financial advisors was $95,390 in 2022, according to data from the U.S. Bureau of Labor Statistics.
- Financial advisor fees can vary, but costs typically run around 1 percent of client assets each year.
- It is estimated that about 35 percent of Americans work with a financial advisor, according to the financial education organization Finance Strategists.
- About 72 percent of financial advisors are men, according to career platform Zippia.
- Financial advisors are mostly White (72.1 percent), followed by Hispanic or Latino (9.5 percent), Asian (8.3 percent) and Black or African American (5.6 percent), according to Zippia.
How to become a financial advisor
Becoming a financial advisor requires a combination of education, licenses, certifications and work experience. Some licenses are required in order to sell certain products or to buy and sell securities on behalf of clients. Other education and training will help you in working with clients and earning their trust.
When you’re just starting out as a financial advisor, you may work closely with more experienced advisors to gain valuable experience and see how the job is done. Over time, you’ll attract your own clients who you’ll work with to meet their financial goals.
Education
You’ll likely need a bachelor’s degree to be a financial advisor. Typically, a degree in a business-related field is preferred, though not required. Financial advisors often hold degrees in finance, accounting or another business specialization.
Financial advisors who don’t have bachelor’s degrees in business-related fields may need to pursue a master’s degree or an MBA to get the education they need. Some certifications may also provide the necessary education.
Licenses
In order to offer certain services, financial advisors may need to hold licenses issued by the Financial Industry Regulatory Authority (FINRA). These licenses allow advisors to sell certain securities or to provide investment advice to clients. The state you operate in may also require you to hold certain licenses.
- Series 6: Allows an advisor to act as an investment company representative and sell certain mutual funds, variable annuities, variable life insurance, municipal fund securities and unit investment trusts.
- Series 7: Allows an advisor to buy and sell all securities products including stocks, bonds, exchange-traded funds (ETFs) and options.
- Series 63: Qualifies advisors as securities agents and covers state securities regulations in the Uniform Securities Act.
- Series 65: Allows individuals to act as investment advisors
- Series 66: Qualifies individuals as both investment advisors and securities agents. The Series 7 exam is a co-requisite with the Series 66.
The Series 63, 65 and 66 exams are developed by the North American Securities Administrators Association (NASAA) and administered by FINRA.
Certifications
In addition to the required licenses, financial advisors may also want to pursue professional certifications to enhance their credentials. Obtaining these certifications typically involves passing an exam or series of exams and meeting certain work requirements.
- Certified financial planner (CFP)
- The CFP designation is run by the CFP Board and requires its advisors to act as fiduciaries, meaning they must put their clients’ interests first.
- Chartered financial analyst (CFA)
- The CFA Institute oversees the CFA program, and is considered one the most difficult professional designations to obtain. Successful candidates must pass three in-depth exams and complete the required work experience. The CFA program is especially relevant for those looking to work in investment management.
- Chartered Financial Consultant (ChFC)
- The ChFC designation is overseen by the American College of Financial Services. To earn the designation, applicants must complete the coursework and pass a final exam. There are also continuing education requirements.
- Certified Private Wealth Advisor (CPWA)
- The CPWA designation is designed for professionals who work with high net worth clients. Applicants complete a six-month study program and pass an exam to earn the certification.
How long does it take to become a financial advisor?
You may be able to become a financial advisor in a short period of time after obtaining the necessary licenses, but you may need to complete additional training or certifications in order to attract clients.
Several professional designations come with work requirements and may require passing more than one exam. For instance, the CFA program requires you to pass three exams. Successful candidates report studying for more than 300 hours for each exam, on average. Some designations may only require a few months, while others can take years to obtain.
What is a financial advisor?
A financial advisor works with clients to develop a financial plan around each client’s goals. They may provide advice on a variety of different financial topics including investments, retirement planning, taxes or even estate planning.
Financial advisors may be part of a large financial organization such as a bank, or they may be a small, independent firm that works with a smaller number of clients.
What does a financial advisor do?
Financial advisors can wear several hats, but ultimately their role is about helping clients achieve their financial goals. This may require them to spend time managing investment strategies as well as keeping up with financial and economic trends.
Financial advisors also spend a lot of time meeting with clients, both in person and virtually. Advisors typically meet with clients a few times each year to make sure they understand their goals and to determine if anything needs to change in their financial plan.
Bringing new clients into their firm is also a part of most financial advisors’ jobs. A financial advising business is more profitable the more assets you have, so attracting new clients is key for the firm’s success.
Bottom line
Becoming a financial advisor will require formal education and training, but it can lead to a very rewarding career. If you’re looking at a career in financing advising, you’ll want to understand which licenses you’ll need and which professional certifications you may want to pursue.
Ultimately, being a good financial advisor is about helping people achieve their financial goals. If you’re interested in finance and are looking for a way to help people, a career as a financial advisor might be the right fit for you.
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