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What is a Financial Advisor?

A financial advisor guides their clients in choosing the best insurance, mortgages, investments, retirement plans, and estate planning. Financial advisors also give guidance on financial management and taxes.

Fully qualified financial advisors have taken the Certified Financial Planner exam. If they plan to sell stocks, mutual funds, or bonds, they will have to pass the FINRA examination.

To carry out your daily responsibilities, you will need to use specific skills, such as analytical, people, and sales skills. Your overall goal is to help your clients improve their financial and investment picture. You’ll examine and manage the cash flow for either private organizations, government organizations, or individuals. You’ll use specific accounting tools and concepts to help your clients make the best decisions possible.

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Steps to Becoming a Financial Advisor

To enter into this business field, financial advisors need at least a bachelor’s degree in economics, finance, or even business. You’ll also take part in an internship before graduation, then undergo on-the-job training under an experienced financial advisor.

Once you are hired as a financial advisor, you will have to obtain either a certification or license that allows you to work with clients. Such certification helps your clients to trust your financial advice.

  • Step 1: Earn a Bachelor's

  • Step 2: Gain Experience

  • Step 3: Obtain Licensure and/or Certification

  • Step 4: Gain Experience

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Step 1: Earn a Bachelor's

Earning a bachelor’s degree in either finance, economics, or accounting is the first step to becoming a financial advisor. While some employers may accept candidates with degrees in various fields, pursuing a degree in finance, accounting, economics, or business provides a strong foundation for the career. These programs typically cover essential topics such as financial analysis, investment strategies, accounting principles, and economics, which are directly applicable to the work of a financial advisor. A bachelor’s degree also helps to develop the analytical, problem-solving, and communication skills necessary to advise clients on financial decisions. Though a degree is not always mandatory, it significantly enhances your qualifications and increases your chances of securing a position in the competitive field of financial advising.

Step 2: Gain Experience

Gaining hands-on experience is an essential step in becoming a successful financial advisor. Many aspiring financial advisors start by working in entry-level positions such as a financial analyst, client services associate, or personal banker, where they can develop a strong understanding of financial products, services, and client management. This experience helps build a practical foundation in managing finances, understanding market trends, and interacting with clients. Additionally, many financial firms offer internships that provide invaluable exposure to the day-to-day operations of financial advising. These positions allow future advisors to learn from experienced professionals, observe client meetings, and hone their financial planning skills. Gaining experience in a real-world setting is crucial for building credibility and confidence, making it a key part of the path to becoming a financial advisor.

Step 3: Obtain Licensure and/or Certification

You will also need to obtain the necessary licenses and certifications is essential to legally provide financial advice and services. The most common requirement is the Series 7 license, which is administered by the Financial Industry Regulatory Authority (FINRA). This license allows advisors to sell a wide range of securities, such as stocks, bonds, and mutual funds. To obtain the Series 7, candidates must pass the FINRA-administered exam, which tests knowledge of various investment products, regulations, and ethical practices.

In addition to the Series 7, financial advisors who sell insurance products, such as life or health insurance, will need to obtain state-specific licenses for each type of insurance they intend to sell. 

Another important certification is the Certified Financial Planner (CFP) designation, which requires candidates to have a bachelor's degree, complete specific coursework in financial planning, pass a comprehensive exam, and gain several years of professional experience. The CFP designation is highly regarded in the industry and demonstrates expertise in areas like retirement planning, tax strategies, and estate planning. 

Other certifications, such as Chartered Financial Analyst (CFA) or Chartered Retirement Planning Counselor (CRPC), may also be valuable depending on an advisor's specialization. These credentials help build trust with clients and enhance an advisor's qualifications, ensuring they are well-equipped to offer sound financial advice.

Step 4: Specializations

Financial advisors can specialize in various areas to cater to specific client needs. Some may focus on retirement planning, helping clients save and invest for their future, while others specialize in wealth management, offering comprehensive financial strategies for high-net-worth individuals. Tax planning is another area, where advisors assist clients with tax-efficient investing and minimizing liabilities. Estate planning experts help clients prepare for the transfer of assets to heirs, ensuring tax efficiency and aligning with their wishes. Additionally, some financial advisors focus on specific life stages or groups, such as young professionals or small business owners, tailoring their services to meet those clients’ unique financial goals. Specializing allows advisors to deepen their expertise and offer more personalized guidance.

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What Does a Financial Advisor Do?

Before you become a financial advisor, you need to know what they do every day at their jobs. Financial advisors help clients to make investments, handle their mortgages, manage their savings, decide on insurance and providers, deal with estate planning, and set up retirement accounts. In short, a financial advisor will take care of all the frustrating, confusing, and intimidating details that their clients may not know how to handle. You may also provide tax and financial advice to your clients.

Going into more detail, you will:

  • Research investment opportunities for clients
  • Meet with your clients and go over their financial goals
  • Monitor the financial accounts for your clients and mark any that may need changes
  • Educate your clients on investments they should make, then answer questions about risks they face
  • Assist in planning for upcoming circumstances (retirement, college planning, or the death of a spouse)
  • Make recommendations on investments; you may be asked to select investments for some clients

Skills to Acquire

As a financial advisor, you will be working with the public every day. A financial advisor will work in an out-facing job where contact with people outside the office will be one of the biggest things to do. As a financial advisor you need to be able to connect with your clients on a personal and professional level.

Your time in college math and accounting classes will help you to develop your math skills to a high degree. Knowing this, financial advisors should learn as many accounting and math materials as you can. Learn the theories and equations until you are confident that you know everything you can.

You’ll be analyzing large amounts of information as you study the different financial products that you plan to recommend to each client you work with.

In working as a financial advisor, you need to have a specific skillset. These include:

  • Analytical thinking
  • People skills
  • Sales skills
  • Accounting and math skills
  • Ability to explain financial terms to layman

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Career and Salary

Where Might You Work?

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When you graduate or complete your training, you will have several fields in which you may find employment. This list includes personal financial planning, corporate finance, real estate, investment banking, asset management, and commercial banking. This is only a partial list, but it can give you a good idea of where a financial advisor can find gainful employment. You may also work for the government (local, state, or federal). It just depends on your knowledge, specialization, and skillset. If you want to have the widest range of opportunities, then you should take as many additional classes as you can in statistics, math, liberal arts, accounting, and economics.

If you complete a degree in business administration with a concentration in finance, you’ll be able to become skilled in financial accounting, investments, risk assessment, and capital and money markets. Financial advisors may find a position as a securities, commodities, and financial service sales agent. In this role, you are responsible for introducing buyers and sellers to each other within the financial markets. You’ll sell securities to individuals, give financial advice to companies looking for investors, and conduct financial trades.

As a personal financial advisor, it’s your job to give financial advice to your clients. You may also look at their taxes and investments, and delve into their insurance decisions, then help them to make better choices with their money.

Potential Roles

Do you know where you want to work as a financial advisor once you graduate? Or is this still something you’re figuring out? If you haven’t pinned down a career, it’s worth reviewing them so you’ll be able to make a decision prior to graduation. No matter which financial field you choose, your days will be fast-paced and hectic.

If you study and achieve high grades, then you’ll be able choose where you want to work. Focus on a few career areas, such as commercial banking, corporate finance, insurance, investment banking, hedge funds, private equity and venture capital, or financial planning. While these jobs have you working in an office environment, they are never boring.

Financial Advisor
This type of financial advisor will work with clients, who can be individuals or companies, to help them reach their financial goals. They can do this by helping them plan for long and short-term goals, like a child going to college or a business making a large purchase and also by explaining relevant tax laws.

Financial Planner
Financial planning has an intense certification process. They take the clients through an in-depth process assessing their current and future income before making any plans.

Investment Advisor
These professionals are concerned with all things dealing with investments, whether large or small, low or high risk.

Personal Financial Advisor
Personal financial advisors usually only advise individuals. That doesn’t mean they aren’t prepared to deal with a high-wealth client, but they focus in on investments that are the right size for your individual needs.

Financial Controller
These professionals work with businesses and keep an eye on their books from day-to-day, including conducting internal account audits and closing out each month of bookkeeping.

Financial Director
Financial directors work much like personal financial advisors that work only for companies, specifically the company that has employed them. They know everything about company finance and make unique decisions for where the company is in relation to their goals.

Salaries

Occupation Entry-Level Mid-Career Late-Career
Financial Managers $59,000 $97,000 $89,000
Securities & Commodities Stock Brokers $46,000 $70,000 $100,000
Financial Analyst $55,000 $69,000 $75,000
Financial Examiners $47,000 $79,000 $80,000
Actuaries $62,000 $109,000 $151,000
Accountants/Auditors $53,000 $64,000 $77,000
Business Analyst Consultants $64,000 $82,000 $96,000
Economists $59,000 $94,000 $124,000

**Salary info provided by PayScale

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Job Outlook

Whether you work as a registered investment advisor, financial advisor, in financial planning, as a registered representative, or as a money manager, you want to ensure that the career outlook for your specialty is good. You want a stable job that lasts through your entire working life, or at least as long as you’re willing to stay. One source says that this career field will grow by about 17% between 2023 and 2033, which is a much faster growth rate than other professions. In fact, this growth rate is more than twice the national average.

Our baby boomers are retiring in large numbers these days. As the people in this group and others retire, they'll need financial advisors to help them figure out how they are going to manage their funds and ensure that they have sufficient retirement funds, apart from Social Security, to support themselves. Fewer than half of Americans over the age of 30 are able to tell you what a retirement account is. They may have a vague idea, but they may not know how to obtain one, much less maintain it. This is where you come in. With your specialized financial knowledge, you will be able to show them how to manage their money, post-retirement.

The Bureau of Labor Statistics (BLS) points out that replacing traditional pension plans with IRAs will only continue rather than going away. These days, retirees won’t receive pension payments, which are going away at increasing rates every year. This means it’s now on the worker/retiree-to-be to save and invest for their future retirements.

Advancing From Here

Once you have reached the top of your field, you may want to transition into another area of finance. This may mean a career move upward for you.

Options include:

  • Financial Examiner
  • Securities, Commodities, and Financial Services Sales Agent
  • Financial Manager

Keep your eyes open for those advancement opportunities.

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Frequently Asked Questions

What do these professionals do?

A financial advisor is someone who advises clients on facial planning when it comes to savings, budget, insurance, and tax strategies.

How much do they usually make?

According to the Bureau of Labor Statistics, on average financial advisors make around $90,000 annually. 

What is the job outlook for the financial services industry?

Jobs in the financial services industry will increase by 4% by 2030.

Do these advisers need a college degree?

You do not have to have a college degree to become a financial advisor. You may want to look into earning a certificate or alternative education because most states will require that you pass a licensure to work as a financial advisor. 

What skills do you need to work in financial planning?

Financial advisors must have a deep understanding of investing and accounting, as well as good communication and listening skills.

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