start your Financial Advising career
Most people know they should manage their money wisely—but they don’t always know how to do it. That’s when they turn to financial advisors, who have the expertise to help them. Financial advisors undergo rigorous education and training to attain the certifications and skills necessary to succeed in this career. The path to becoming a professional financial advisor can be direct, or may include a number of twists, turns and side trips depending on past education and experience. This guide provides information to assist in weighing all of the pros and cons—including job duties, salary expectations, and step-by-step, in-depth instructions to becoming a financial advisor—to help readers decide if this is the right career choice.
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What Does a Financial Advisor Do?
Financial advisors help individuals make wise decisions regarding money management. They assess a person’s financial position, understand their needs and goals, and then make recommendations on how to best achieve them. Some financial advisors have diverse backgrounds and provide an array of general services, while others focus on a particular area such as retirement or tax law.
Financial advisors work in a variety of settings. Many are employed by large companies focusing on investments, finance or insurance, while others choose to work at a small firm or independently. Self-employed financial advisors are often part-salesmen. They must market their services to attract potential clients, so they spend a portion of their time teaching seminars or networking at various functions after office hours.
The minimum educational requirement for financial advisors—also known as financial consultants or counselors—is a bachelor’s degree, typically in finance, accounting, business, economics, statistics or a similar field. Students should take classes in such topics as risk management, taxes, investments and estate planning. Financial advisors need to understand their clients’ short- and long-term financial goals—which may include retirement, saving for college, or other objectives—and offer ways to help their clients reach these goals. They explain and recommend various types of investments, decide the type and level of insurance that is necessary, and ensure that tax forms and other financial documents comply with regulations.
Most financial advisors obtain at least one of the many certifications available, such as Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC). In addition, a master’s degree in finance or a related subject can offer a competitive edge.
Steps to becoming a financial advisor
EARN THE RIGHT DEGREE
A bachelor’s degree is required for a career as a financial advisor. Majors in finance, economics, business, statistics or similar fields are acceptable. Financial advisors can be generalists, or they may specialize in one of several areas, including retirement, taxes, estate planning, or insurance and risk management.
A finance degree most closely fulfills the education and training required for a career as a financial advisor. While related to
economics, a finance degree has a narrower scope and is sometimes offered as a specialization within a broader degree program, such as Business Administration. Finance students study applied concepts including risk management, business analysis, valuation, portfolio management and investment strategies. Programs are offered at all degree levels.
Economics is a broad discipline that offers students the opportunity to develop quantitative and analytical skills as they relate to finance or other related fields. Students learn how to use mathematical models and economic theories to analyze data and make sound recommendations on financial resources and issues.
A degree in business provides a broad knowledge base for financial advisors. A range of areas are covered, including finance, accounting, statistical analysis, business law, marketing and sales, management, psychology and ethics. Many programs also offer the opportunity to tailor the focus of the degree to an area of specialization.
Accounting programs emphasize the collection and organization of financial information, often for budgeting or tax purposes. Students learn industry skills such as financial reporting and analysis, managerial accounting, cost management, auditing, tax accounting and other generally accepted accounting principles (GAAP)—all of which can be beneficial for a career in financial advising.
A degree in statistics can be relevant to a career as a financial advisor. Students learn data analysis and actuarial science, which are vital when performing risk assessment for insurance policies and investment management.
There’s always more to learn—especially in the fast-moving world of finance. Finance laws and strategies are always changing, and advisors must keep up with current trends. Many certifications in financial advising require continuing education, while senior positions often demand an advanced degree. A graduate degree in finance, typically offered as a master’s in finance (MSF) or an MBA with a concentration in finance, can provide a competitive edge.
Components of a Successful
Career as a Financial Advisor:
Skills, Credentials, Tools and Technology
Financial Advisor Skill Set
Financial advisors possess a wide range of business and marketing skills. The ability to analyze and organize data is a virtual must, while a strong grasp of mathematics helps with accurate and extensive number-crunching. Critical thinking skills are necessary to spot trends, evaluate the pros and cons of a particular course of action, and make changes when necessary.
Communication skills are vital. Financial advisors work with a variety of people who have different financial backgrounds and levels of knowledge. Advisors must be able to present complicated information and explain technical jargon in understandable terms. Finally, they must engender trust with their clients and adhere to the industry’s set of ethical standards, including integrity, objectivity, fairness and confidentiality.
Certifications identify a financial advisor as having met rigorous competency, ethical, and professional standards. Some are general certifications, while others represent specialty areas. Certified Financial Planners, Personal Financial Specialists and Chartered Financial Consultants are all qualified to provide overall financial services. A financial advisor might also choose one of the following specialties: