Are you thinking about a career in finance? If so, you might want to consider becoming a personal financial advisor. According to the Bureau of Labor Statistics, the demand for personal financial advisors is expected to grow by 15% between 2021 and 2031.
But what exactly does a financial advisor do? What does it take to become one? Take a moment to dive into seven things you need to know about this career.
Financial Advisors Offer Many Services
A financial advisor operates as a coach, providing advice and guidance on managing your money. Financial advisors often serve individuals, offering services that can include:
- Budgeting
- Debt management
- Investment strategies
- Tax planning
- Estate management
- Insurance planning
Some financial advisors also provide guidance to small business owners. Small business financial advisors can help entrepreneurs develop budgets, learn to spot sales trends, and manage their cash flow to keep their businesses running at optimal levels.
There Are Different Types of Financial Advisors
As you can see, financial advisors serve varied functions for their clients. This means that many different types of professions fall under the umbrella of financial advising. These can include:
- Stockbrokers
- Broker-dealers
- Investment managers
- Insurance agents
- Tax advisors
- Estate planners
- Business consultants
However, the key thread is that a financial advisor must provide professional advice, not merely execute sales on a client’s behalf. That’s what makes a financial advisor different from a broker-dealer. Any stockbroker can execute stock trades on a client’s behalf. But a financial advisor will also work to inform the client so that they can make the best investment decisions.
There Are Various Educational Requirements
Technically, there are no specific educational requirements to become a financial advisor. However, if you work for an advisory firm, the firm itself will likely expect to see educational credentials listed on your resume.
Most commonly, this includes a bachelor’s degree from an accredited college or university in an area such as business, finance, or marketing.
But to stand out, some financial advisors pursue advanced degrees, such as the Master of Business Administration (MBA). These degrees make you more marketable to advisory firms and add to your qualifications in the eyes of your potential clients.
The Average Salary of a Financial Advisor Is Respectable
According to the employment site Indeed.com, the average salary for a financial advisor is $81,617. However, the BLS reports that in 2021, the median salary for a financial advisor was $94,170. Since advisors work in many different fields, the exact salary can depend on your professional niche. You can also read financial advisor salary paid across the world for your informative purpose.
Financial Advisors May Have Professional Licenses
Financial advisors commonly receive professional licenses, though this can vary depending on the area of expertise. For example, if you plan to sell securities and receive pay for your advisory services, you’ll need to pass three tests:
- The General Securities Representative Exam
- The Series 63 exam (Uniform Securities Agent State Law Examination)
- The Series 65 exam (Uniform Investment Adviser Law Examination)
Insurance providers obtain their state’s life, health, and variable licenses to sell insurance products and annuities.
Financial Advisors May Obtain Professional Certifications
In addition to licensing, financial advisors commonly receive certifications. As with education, these certifications aren’t necessarily required but are commonly encouraged by advisory firms. These certifications can include:
- Certified financial planner (CFP)
- Chartered financial consultant (ChFC)
- Registered investment advisor (RIA)
- Chartered financial analyst (CFA)
- Investment advisor representative (IAR)
Each certification has its own set of standards and must be maintained through continuing education.
Financial Advisors Get Paid in Two Different Ways
Financial advisors can be paid in one of two ways:
- Fee-based advisors: Charge a flat fee for their services
- Commission-based advisors: Receive pay based on their client’s transactions
Fee-based advisors are also considered fiduciaries, meaning they have a special responsibility to the well-being and interests of their clients. Fees can be paid on a one-time basis or on a recurring/annual basis.
The Future of Advising
Over the next decade, the BLS anticipates roughly 30,500 job openings per year for financial advisors. This is partly due to the mass exodus of retiring financial professionals, but it also reflects the evolving roles of financial advisors in the United States. Pursuing this career path can provide a surprisingly rewarding and flexible future.
Originally posted 2023-08-25 11:24:00.