In some ways, being a financial advisor is like being a therapist: You share in your clients’ biggest life events — like having a baby, retiring and handling inheritance — and are often tasked with…
In some ways, being a financial advisor is like being a therapist: You share in your clients’ biggest life events — like having a baby, retiring and handling inheritance — and are often tasked with helping them address their fears — like recessions or running out of money.
This is part of what makes a career as a financial advisor so rewarding — U.S. News & World Report ranked it as the eighth-best job in 2018 — but it’s also why becoming a financial advisor isn’t easy.
“Giving advice to clients is a privilege,” says Rianka R. Dorsainvil, a certified financial planner in the District of Columbia, and founder and president of Your Greatest Contribution. They’re trusting you with the intimate details of their finances. Earning that trust requires passing rigorous exams and holding yourself to the highest standards of professionalism and integrity.
Is a financial advisor the right career for you? Read on to find out and, if it is, how to become a financial advisor.
What Does a Financial Advisor Do?
Financial advisors help their clients make more informed financial decisions. Those decisions can be around anything from how to start investing to retirement or estate planning.
They can work in a variety of settings, most common being large financial institutions like banks or brokerage firms with smaller firms and independent, self-employed advisors increasingly popular.
Some advisors specialize in a certain area (such as retirement planning or investment management), a particular client type (such as those within a given net worth or age bracket) or specific account type (such as workplace plans).
Responsibilities of financial advisors
Regardless of their specialization, all financial advisors have the same objective: to help their clients “figure out their life’s financial puzzle,” says Adam Breazeale, a certified financial planner in Nashville, Tennessee.
“We look at where our clients are relative to where they want to be then provide the tools and solutions necessary to create a roadmap for success,” Breazeale says.
This guidance comes with enormous responsibility. Financial advisors have the ability to transform their clients lives every day.
Day-to-day responsibilities of financial advisors
Financial advisors spend their days “meeting with prospective clients, implementing solutions with new clients and reviewing plans with existing clients,” Breazeale says.
Every day is different because every client has a different need, says Michelle Bender, a certified financial planner at Potomac Financial Consultants in Germantown, Maryland. On a typical day, she’ll meet with five to six clients, spending six to eight hours of her day in client meetings.
“I’d say 85 percent 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.
“My days are always jam-packed with calls, whether it’s sales and client calls or managing my team,” says Brittney Castro, a certified financial planner and founder and chief executive officer of Financially Wise.
When they aren’t in front of clients, financial advisors are often prepping for client meetings and marketing themselves to prospective clients such as through networking or marketing events. They’re also constantly attending continuing education seminars “to keep fresh on the financial services industry and maintain [industry] licenses,” Bender says.
To juggle all of this, Bender limits client meetings to three days of the week. “I find having client-focused days and non-client-focused days helps my schedule flow better both professionally and personally,” she says.
It was being able to create her own business around helping people that attracted Castro to the financial industry. “The certified financial planner profession is great for that reason, especially for women,” she says. But that doesn’t mean it’s necessarily the right career path for you.
“One thing people need to understand is it’s largely a sales profession,” Breazeale says. Even if you choose not to run your own business, you still need to get clients.
“Most successful financial planners are those who are naturally inclined to talk to people and be more out there and run a business,” Castro says.
Becoming a financial advisor also requires patience, Bender says, both in terms of building your client base, called a book of business, and in dealing with clients. Every client has a different need and requires a different approach, she says.
Financial advisors need both strong interpersonal and analytical skills. They must be able to analyze investment and financial data then clearly communicate their findings with their clients.
When deciding if you should become a financial advisor, look at what you’re naturally good at, Castro says. “If you like the idea of running a business, getting clients, marketing and helping people, all while having the ability to make good money, then this is a good field to try.”
The financial advisor skill set
Some of the skills a financial advisor needs include:
— Aptitude for sales and marketing
— Attention to detail
— Adept at 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 about becoming a financial advisor
Ask yourself these questions to decide if the financial advisor career path is right for you:
— Are you passionate about helping people financially?
— Do you want a customer-facing role that requires working and communicating with a variety of people?
— Are you comfortable networking and reaching out to strangers?
— 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 making decisions for yourself and others?
If you answered “yes” to all or most of these questions, a career as a financial advisor may be right for you.
No one walks out of college ready to advise clients financially. Often you’ll begin doing back-end office work or supporting another advisor until you pass the necessary exams to get certified.
Once licensed or certified, you can progress to building and managing your own book of business. And as your expertise grows, so too can the size of your book and net worth of your clients.
Here are the steps to becoming a financial advisor:
1. Earn a bachelor’s degree
You need a bachelor’s degree to become a financial advisor, but it doesn’t need to be in a specific major. You don’t need to get a financially relevant degree — although having one will likely help with the exams, Bender says. As can taking courses in finance, investments, estate planning and risk management.
If you choose to become a certified financial planner (CFP), however, you’ll need to complete a CFP Board of Standards-approved, college-level program in personal financial planning or an accepted equivalent. Many universities, including online ones, now offer qualifying programs. You can find a full list of accepted programs on the CFP board website.
2. Consider an internship
Getting your first job as a financial advisor can be a challenge, especially if you don’t have any relevant experience or coursework. Bender says she’d “struggle to bring in” applicants with neither of the above for an interview. If this is you, consider an internship before applying for a full-time job.
3. Acquire the proper certifications and licenses
“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.
Where you work and the level of services you provide clients will determine which licenses and certifications you need to become a financial advisor.
If your role involves selling investment products (common at a broker-dealers and banks), you’ll need to pass certain exams with administered by the Financial Industry Regulatory Authority (FINRA). These may include:
— 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 Adviser Law Examination
— Series 66: Uniform Combined State Law Examination
On Oct. 1, FINRA restructured its representative-level qualification exams to eliminate duplicative testing of general knowledge. New applicants will need to take the SIE in addition to the new, shorter versions of the Series 6 or 7 exams.
The exams are multiple choice and range from 75 minutes to three hours. FINRA provides details for each exam — such as the number of questions, time limits, content outlines and what constitutes a passing score — on their website.
To sell insurance-related products like annuities, you’ll also need a state insurance license in any state in which you plan to sell them.
4. Find your first job
The large broker-dealers are a good place to start your career as a financial advisor, Bender says. “They teach you a lot about cold calling and how to build a book of business,” and can also help if you’re interest lies in managing investments rather than clients.
“But if you think you want to go the financial planning route, then a small- to mid-sized firm that focuses on full-service” is a great place to start, she says.
Wherever you get for your first job as a financial advisor, look for an employer that provides in-depth, on-the-job training, Castro says.
After you get your foot in the door, consider seeking out a mentor. Having a mentor and joining a financial planning organization were the things that helped Bender the most in launching her career.
The CFP board connects financial planner mentors and mentees through its WIN-to-WIN mentorship program. Originally designed for women-only, they’re in the process of expanding it to men as well.
A mentor can also be simply the author of a book, Castro adds. “I’ve had a lot of virtual mentors because I’ve read a lot about how to be a financial planner.”
Once you get your first job in financial services, the focus will likely shift to quickly getting your exams. So be prepared to study before, during and after work.
5. Want to become a certified financial planner instead?
If your role won’t require the actual selling of investment products, but rather focuses solely on the financial planning side (common at smaller, independent firms), you may not need your FINRA licenses. Instead, you could obtain your CFP. That isn’t to say getting your CFP is any easier than being licensed with FINRA.
The CFP exam is a six-hour, one-day marathon where you’re tested on the components of financial planning. Like the FINRA exams, it is computer-based and multiple choice. With an average pass rate around 58 percent, it’s not a test to be taken lightly.
“It’s not an exam where you can just not study and think you’ll pass,” Dorsainvil says. “It requires a different level of mental readiness.”
In addition to the exam, you need 6,000 hours of professional experience or 4,000 hours of apprenticeship experience in financial planning to become a CFP. This amounts to about three years of full-time work experience. The CFP board lays out the requirements this experience must meet on its website.
You don’t need to complete your experience hours before taking the exam; they just need to be completed within five years of passing the exam.
Becoming a CFP is not a requirement to be a financial advisor, but it helps “distinguish you as more credible,” Castro says. For this reason, even advisors who obtain their FINRA licenses may go on to complete their CFP.
Financial advisors typically earn an annual salary plus bonuses or commissions. “Some firms provide a base salary the first six, 12 or 18 months as long as certain [sales] goals are met,” Breazeale says.
That base pay can be minor compared to the bonuses. For instance, you may have a base salary of only $50,000 base but earn six figures in variable pay.
Other advisors work on a fee-only basis, meaning they earn a single fee for all services provided. This is more common among independent advisors.
The average financial advisor salary in the U.S. in 2016 was $123,100. Salaries ranged from less than $41,160 to over $208,000 across the country.
How Long Is the Process of Becoming a Financial Advisor?
Depending on the path you take to become a financial advisor, it could take less than five years to seven or more to become a financial advisor.
The fastest route is likely to obtain 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. But FINRA licenses alone don’t 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.
This is why to become a CFP, you need those three years of work experience. Combined with a four-year degree, it could take seven years or longer to become a CFP.
Robo Advisors and Modern Financial Planning
Robo advisors are disrupting the financial services industry, but experts say they’re not going to replace personal financial advisors. In fact, all of the experts referenced in this story think robo advisors are a good addition to their roles.
Robo advisors are great for young investors just getting started who want professional management at a low cost, Breazeale says. “As their net worth increases and their life becomes more complex, they can transition to a more traditional advisor relationship.”
At Financially Wise, they leverage robo advisors for the investment side of their business so advisors can focus on more important issues, like making sure their clients are happy and fulfilled in their financial lives.
Robo advisors are good for the financial industry because they’re “challenging financial advisors and planners to show their value outside of investments,” Dorsainvil says. Investment management can be commoditized, but comprehensive financial planning cannot.