Financial advisors can enjoy a rewarding career working with clients to develop plans around their financial goals. Some advisors work for large companies, while others run their own independent offices.
Financial advisors must be familiar with a wide range of financial topics, so a lot of training is needed before they start working. They may also want to pursue a professional certification to increase their qualifications, and they may need to obtain licenses before they can start working with clients.
Here’s what else you need to know about what it takes to become a financial advisor.
Key Takeaways
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Financial advisors work with clients to develop a plan that will help them achieve their financial goals.
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Financial advisors may specialize in certain areas, such as retirement planning, investments, tax strategy or estate planning.
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You will need significant education and training to become a financial advisor, including obtaining the required licenses and professional certifications.
Financial advisor statistics
- According to data from the U.S. Bureau of Labor Statistics, the average wage for personal financial advisors in 2023 was $95,390.
- Fees for financial advisors can vary, but the fee is typically about 1 percent of the client’s assets annually.
- According to the financial education organization Finance Strategists, it is estimated that about 35 percent of Americans work with a financial advisor.
- According to career platform Zippia, approximately 72 percent of financial advisors are male.
- According to Zippia, financial advisors are predominantly white (72.1 percent), followed by Hispanic or Latino (9.5 percent), Asian (8.3 percent) and black or African American (5.6 percent).
How to become a financial advisor
Becoming a financial advisor requires a combination of education, licensing, certifications and work experience. Some licenses are required to sell certain products or to buy and sell securities on behalf of customers. Other education and training will help you work with clients and earn their trust.
If you’re just starting out as a financial advisor, you can work closely with more experienced advisors to gain valuable experience and see how the job gets done. Over time, you will attract your own clients who you will work with to achieve their financial goals.
Education
To become a financial advisor, you will likely need a bachelor’s degree. Normally a degree in a business-related field is preferred, but not required. Financial advisors often have degrees in finance, accounting or another business specialization.
Financial advisors who do not have a bachelor’s degree in business-related fields may need to pursue a master’s degree or an MBA to get the training they need. Some certifications can also provide necessary training.
Licenses
To offer certain services, financial advisors may be required to hold licenses issued by the Financial Industry Regulatory Authority (FINRA). These licenses allow advisors to sell certain securities or provide investment advice to clients. The state in which you operate may also require you to have certain licenses.
- Series 6: Allows an advisor to act as a representative of an investment company and sell certain mutual funds, variable annuities, variable life insurance, municipal fund securities and unit investment trusts.
- Series 7: Allows an advisor to buy and sell all securities products, including stocks, bonds, exchange-traded funds (ETFs), and options.
- Series 63: Qualifies advisors as securities agents and covers state securities regulations in the Uniform Securities Act.
- Series 65: Offers individuals the opportunity to act as an investment advisor
- Series 66: Qualifies individuals as both investment advisors and securities agents. The Series 7 exam is a prerequisite for the Series 66.
The Series 63, 65 and 66 exams were developed by the North American Securities Administrators Association (NASAA) and administered by FINRA.
Certifications
In addition to the required licenses, financial advisors may also want to pursue professional certifications to enhance their credentials. Obtaining these certifications typically involves passing an exam or series of exams and meeting certain work requirements.
- Certified Financial Planner (CFP)
- The CFP designation is administered by the CFP Board and requires its advisors to act as fiduciaries, which means they must put their clients’ best interests first.
- Chartered Financial Analyst (CFA)
- The CFA Institute oversees the CFA program and is considered one of the most difficult professional designations to obtain. Successful candidates must pass three in-depth exams and gain the required work experience. The CFA program is especially relevant for people who want to work in asset management.
- Chartered Financial Advisor (ChFC)
- The ChFC designation is regulated by the American College of Financial Services. To earn the designation, applicants must complete coursework and pass a final exam. There are also continuing education requirements.
- Certified Private Wealth Advisor (CPWA)
- The CPWA designation is intended for professionals who work with high-net-worth clients. Applicants complete a six-month study program and pass an exam to earn the certification.
How long does it take to become a financial advisor?
You may be able to become a financial advisor in a short time after obtaining the necessary licenses, but you may need to complete additional training or certifications to attract clients.
Different professional designations carry work requirements and may require more than one exam. For example, the CFA program requires you to pass three exams. Successful candidates report studying an average of more than 300 hours for each exam. Some designations may take only a few months, while others may take years to obtain.
What is a financial advisor?
A financial advisor works with clients to develop a financial plan around each client’s goals. They can provide advice on a variety of financial topics, including investments, retirement planning, taxes or even estate planning.
Financial advisors can be part of a large financial organization, such as a bank, or be a small, independent firm that works with a smaller number of clients.
What does a financial advisor do?
Financial advisors can wear many hats, but ultimately their role is to help clients achieve their financial goals. This can require them to spend time managing investment strategies and keeping up with financial and economic trends.
Financial advisors also spend a lot of time meeting with clients, both in person and virtually. Advisors typically meet with clients a few times a year to make sure they understand their goals and determine if anything needs to change in their financial plan.
Bringing new clients into their business is also part of the duties of most financial advisors. A financial advisory business is more profitable the more assets you have, so attracting new clients is key to the business’s success.
In short
Becoming a financial advisor requires formal education and training, but it can lead to a very rewarding career. If you’re considering a career in financing consulting, you’ll want to know what licenses you need and what professional certifications you may want to obtain.
Ultimately, a good financial advisor is about helping people achieve their financial goals. If you are interested in finance and looking for a way to help people, a career as a financial advisor may be for you.
