Know what it’s like to work as a financial advisor.
The financial advisor career is among the best business jobs and best-paying jobs, according to U.S. News’ career rankings. It’s evolved “from a sales and product-driven profession to one centered on providing meaningful financial advice,” says Michael Purpura, president of Wealth Management at D.A. Davidson & Co. “It is incredibly rewarding to help people navigate a series of challenging issues and achieve a variety of substantial end goals.” Those goals range from college planning to funding a comfortable retirement to leaving a legacy for the next generation. But the financial advisor career isn’t right for everyone. Here are 14 things to know before becoming a financial advisor.
It’s an industry entrenched in tradition.
While the financial industry is evolving, it’s still one steeped in tradition and traditionalists. The average age of financial advisors is over 50, and the industry as a whole is dominated by long-standing names. As such, it can be frustrating to be the new person with new ideas in the room. “Younger advisors need to understand that there are many ideas, processes and people in the industry that have been around for a long time,” says Patrick Brewer, founder and CEO of Model FA. “If you are the kind of person who wants to buck tradition, then financial services may not be for you unless you are willing to be patient and save your entrepreneurial drive until you are a few years into your career.”
You must love people.
It’s a myth that the financial services industry is for people who like numbers. Financial advisors spend as much time, if not more, managing people as they do crunching numbers. “This is a career based on relationships and advice tailored to each person’s unique needs, situation and objectives,” Purpura says. “Being genuinely curious about people and their stories is crucial to forging trusted, long-term relationships with clients.” So before you start looking to become a financial advisor, ask yourself if you have a genuine curiosity about and affinity for people. Do you like helping people and giving advice? Are you willing to spend the majority of your days in conversation with others?
You should be success-driven, not dollar-driven.
Before becoming a financial advisor, ask yourself what your motivation is for starting this career path. “If you’re interested in becoming an advisor to make money, you’re doing it for the wrong reason,” says Jeff Cashman, principal partner and lead advisor at Cashman Consulting. “Aspiring advisors should genuinely want to help people and serve as a trusted counselor.” He tells would-be advisors to be “success-driven, not dollar-driven.” Those who are success-driven want to perform their best for clients. “Frequently, young professionals get so attracted to the potential for high commissions that they forget the purpose of their role in the first place,” he says. A lot more goes into your work as an advisor than hunting big-dollar clients, and you’ll need to build client relationships.
You’ll initially make less than your college friends earn.
One reason to have motivation to become a financial advisor beyond making money is that you probably won’t be making much money in the early years. “In the first three to five years of your career as a financial advisor, you will probably be making less money than many of the people you went to college with,” Brewer says. “Even if you do everything right and learn quickly, your revenue in the early years will be slow to build.” He advises aspiring advisors to set reasonable expectations before becoming a financial advisor. “You will make money if you build your relational capital first, but that won’t happen overnight,” he says. “Your work will pay off if you manage to build a practice, (but) not every brand-new advisor makes it that far.”
Problem-solvers are preferred.
“At the end of the day, a great financial advisor is a problem-solver,” Brewer says. Your days will be spent helping people solve conundrums that could be financial or personal. Sometimes “money trouble is merely a symptom,” he says. “And you have to connect your clients with professionals or resources to solve deeper issues.” You may come across clients struggling with addiction, communication problems or past trauma. “Solving those problems will allow clients to view you as credible and reliable,” he says. “If you don’t enjoy solving problems or aren’t good at doing it, you will be missing key ingredients for building long-term trust and a successful financial advisory practice.”
There are different types of financial advisors.
Many people mistakenly think all financial advisors do the same thing, but that’s not the case. There are many different types of financial advisors, from planning advisors to investment advisors. There are rainmaker advisors who focus on business development and servicing advisors who focus on existing client service rather than finding new clients, says Paul West, managing partner of Carson Wealth. For aspiring advisors, this means two things. First, becoming a financial advisor does not mean you’re stuck in the same role forever. And second, your role will likely involve more than picking investments. “The best advisors are ones who focus on comprehensive, strategic planning and providing sage advice,” West says. “Investments are just a portion of the overall plan.”
A willingness to sell is required.
Like it or not, sales is an integral part of the financial advisor career. “This industry can be unforgiving for those who are unwilling to develop their ability to sell,” Brewer says. Even if you steer clear of the transactional side of product sales, you’ll still have to sell your advice. No amount of degrees or certifications will sell it for you. “Many professionals mistakenly believe that by simply being a fiduciary advisor, their expertise will magically sell itself,” Brewer says. “Selling financial advice means building trust, listening, creating a sense of curiosity and inspiring commitment.”
Self-starters thrive best.
In addition to a willingness to market your services to others, financial advisors need to be self-starters. “This is a profession in which you need to rely heavily upon your own motivation and ability to reach out to your clients,” Purpura says. “You are the driver of your clients’ successes and your own.” Regardless of the type of firm you work for — be it a large broker or on your own as a registered investment advisor — you will need a healthy dose of the entrepreneurial spirit to succeed. “While some individuals thrive on this entrepreneurial aspect of serving as an advisor, this style of working is not for everyone,” Purpura says. Do a little soul-searching as you’re researching how to become a financial advisor to determine if sales and being an entrepreneur appeal to you.
You’ll need a niche.
The Bureau of Labor Statistics estimates there are more than 200,000 personal financial advisors in the United States. Cerulli Associates puts that number at more than 300,000. Either way, this means that as a financial advisor, you will be competing with hundreds of thousands of others for clients. You’ll also compete with robo advisors. “In a competitive environment, getting very good at helping people with a specific set of needs and gearing your financial advisory practice toward them could help you establish a unique value proposition,” says Bill McManus, managing director of Applied Insights at Hartford Funds. Before planning how to become a financial advisor, think about where you’ll find your niche. McManus suggests looking to your network for inspiration. Is it weighted toward one professional field? Is there an opportunity to work with a set of people with whom you’re already connected?
You’ll probably want a CFP credential and to work for a fiduciary.
There are a couple of frequented routes to the financial advisor career path. You could get your Financial Industry Regulatory Authority, or FINRA, securities licenses, which will allow you to advise on and sell investments. You could go the purely planning route by getting your certified financial planner, or CFP, credentials. While you don’t need your CFP to take the first path, many advisors recommend obtaining it anyway. “Investing in yourself and achieving the CFP designation will not only make you credible but also allow you to be thorough in your planning capabilities with your client,” West says. He also advises working for a fiduciary. “Don’t put yourself in a situation where you have to choose (between) selling someone something versus advising what is right and optimal for your clients.”
Industry experience is key.
It can be tempting to wait for that perfect job to come, but don’t put off getting started in a career as a financial advisor for the sake of perfectionism. Experience is essential to advancing your career as a financial advisor. All the certifications and training can’t help you until you have spent some time applying your knowledge. So don’t be afraid to take a role that will help you get the experience you need while you wait for your perfect job to become available.
Seek out a mentor.
One of the best strategies for success as a new financial advisor is to seek out a mentor early in your career. “Every financial advisor — new or experienced — benefits from mentorship,” says Patty Carter, principal and branch team talent acquisition lead for Edward Jones in St. Louis. “Coaching and collaborating helps ensure financial advisors get the support and feedback they need from fellow financial advisors to successfully build their practices.” The right mentor can help you “grow your practice by learning how to deepen relationships with existing clients and attract the ideal client.” When looking for a mentor, she suggests seeking someone whose practice and leadership you admire. A good mentor will provide candid feedback and help financial advisors uncover their own blind spots, she says.
Plan to join a professional association.
Joining a professional association can be a good step once you’ve begun working in the financial services industry. “Professional association and community organization memberships are an opportunity to develop vital leadership skills, build relationships and serve others,” Carter says. There is no single professional association that is best for every advisor. A few top contenders include the National Association of Personal Financial Advisors, or NAPFA, for fee-only financial advisors, and the Financial Planning Association, or FPA, for financial planners. “Financial advisors can be most successful when they build relationships with clients and invest directly in their communities,” Carter says.
The financial advisor career is open to many people.
The beauty of the financial advisor career is that it allows professionals from different backgrounds to draw from their unique experiences and expertise. “Becoming a financial advisor is an opportunity for a wide variety of professionals, allowing them to make a meaningful difference in the lives of their clients, colleagues and communities,” Carter says. “Talented people with diverse experiences and perspectives bring both the knowledge and empathy needed to help clients financially achieve what is most important to them.” Financial advisors from many backgrounds can build practices tailored to the unique needs of their clients, markets and personal priorities, she says. “Now, more than ever, this knowledge is sought out,” Carter says.
Things to know before becoming a financial advisor:
— It’s an industry entrenched in tradition.
— You must love people.
— You should be success-driven, not dollar-driven.
— You’ll initially make less than your college friends earn.
— Problem-solvers are preferred.
— There are different types of financial advisors.
— A willingness to sell is required.
— Self-starters thrive best.
— You’ll need a niche.
— You’ll probably want a CFP credential and to work for a fiduciary.
— Industry experience is key.
— Seek out a mentor.
— Plan to join a professional association.
— The financial advisor career is open to many people.
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Update 12/15/20: This slideshow was published at an earlier date and has been updated with new information.