What is a Financial Advisor?
A financial advisor helps clients with financial planning, including investments, insurance, retirement, taxes, and estate planning. Advisors guide individuals in making informed financial decisions to meet their goals.
To become a qualified financial advisor, you must pass the Certified Financial Planner (CFP) exam. If you plan to sell stocks, bonds, or mutual funds, you’ll also need to pass the FINRA (Financial Industry Regulatory Authority) examination, such as the Series 6 or Series 7, to earn the necessary licensure for these services.
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.
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.
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Step 1: Earn a Bachelor's
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Step 2: Gain Experience
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Step 3: Obtain Licensure and/or Certification
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Step 4: Specializations
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.
Career and Salary
Where Might You Work?
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.