Pros and Cons of Being a Financial Advisor
Becoming a financial advisor can be a very lucrative career, but a lot of work is involved. Understand the pros and cons of a career as a financial advisor to make an informed career decision.
| Pros of Being a Financial Advisor |
|---|
| High income potential (about $81,060 median income)* |
| Strong employment growth (27% anticipated between 2012-2022)* |
| Opportunity to be your own boss (self-employed)* |
| Can get job with degree in any major* |
| Cons of Being a Financial Advisor |
|---|
| Usually requires working long hours, including late evenings and weekends (30% work more than 40 hours per week)* |
| Cold-calling to find new clients may be necessary* |
| May travel frequently to find new business* |
| High turnover of financial advisors in their first year** |
Sources: *U.S. Bureau of Labor Statistics, **U.S. Department of Labor.
Essential Career Info
Common Job Duties
A financial advisor is a sales agent who advises clients on financial matters involving stocks, paying taxes and finding deductions, planning for retirement, saving for a child's college tuition and selecting insurance coverage. Since this is essentially a sales position, you will be required to solicit clients using various marketing techniques to develop a book of business. Typically, employers require that you meet sales goals to measure your success as a financial advisor.
Upon gaining prospective clients, you would meet with them in person to determine their short and long term financial needs, research investment options that best suit their needs and educate them on the benefits and potential financial risks. Once a client selects you as their financial planner, you would monitor their accounts to identify any areas of change or improvement, periodically issue reports to update clients on investment performance and meet with them annually to discuss any changes to their financial goals.
Types of Financial Advisors
Financial advisors work with high net-worth clients are also called private bankers or wealth managers. In this role, you would be responsible for managing a client's portfolio, which is a collection of various investment products. Since managing large sums of money requires more expertise, you would work with other financial professionals like accountants and financial analysts to develop investment strategies.
Job Outlook and Salary
You can expect to have good job security as a financial advisor, as employment is expected to increase by 27% from 2012-2022, according to the BLS. This percentage represents a much faster than average growth compared to other occupations. A major reason for this growth is that many individuals are approaching retirement age and are in need of financial planning services.
Although positions are likely to be abundant, you will most likely experience stiff competition for jobs, according to the BLS. This profession draws many candidates because not all employers require a bachelor's degree and income from sales commissions can be high. As of May 2014, the lowest-compensated ten percent of financial advisors earned $35,500 or less, while the highest-paid ten percent earned $187,199 or more, according to the BLS. Pay may be partly of completely based on commissions.
What Are the Requirements?
The BLS reports a bachelor's degree is usually required to work in this field. You do not need a degree in a finance-related major for this position. However, majoring in a discipline, such as accounting, economics or finance may better prepare you for this occupation. If your job involves direct buying or selling of securities, you will be required to obtain the appropriate license.
Typically, you would need a Series 6 - Variable Contracts Limited Representative or a Series 7 - General Securities Representative, plus a Series 63 - Uniform Securities Agent license to sell securities in your state. Getting your Series 6 license requires a sponsoring agency, so employers will hire you without a Series 6 license and work with you to get the proper credentials. Some employers may also require that you have a Series 65 - Uniform Investment Adviser Representative or a Series 66 - Uniform Securities Agent and Investment Adviser Representative license. All licensure exams are administered by the Financial Industry Regulatory Authority (FINRA).
To become successful in this position, you should have good communication and interpersonal skills to develop a rapport with clients. You should also be comfortable reaching out to people you've never met before to establish a client base. Your customers will rely on you for sound financial advice, so you must understand financial markets, make good decisions and communicate financial matters with clients.
Job Postings from Real Employers
Actual job postings show that most employers are looking for candidates with a bachelor's degree, at least three years of sales experience and a Series 6 or 7, plus a Series 63 license. Some employers also hire on advisors into management trainee positions. Below is a list of postings for financial advisor positions that can give you an idea of what real employers were looking for during April 2012:
- A major wealth management company with a branch in Tucson, AZ, seeks a financial advisor for a management trainee program. The candidate must have at least three years of sales experience and a bachelor's degree or higher. Job duties include prospecting new clients, developing a book of business and recommending investment products. This employer prefers candidates who have a Series 6 or Series 7 license. All non-licensed applicants must obtain licensure with 13 weeks of employment.
- A Bellevue, WA, financial services company is looking for entry-level and experienced financial advisors to assist clients with college, estate and retirement planning. This job also involves finding tax deductions for clients. Other requirements include having a bachelor's degree or higher, passing a stringent background check and being willing to work long hours. This employer is offering a $24,000 base salary, with commission up to $100,000.
- A financial institution in southern Pennsylvania is seeking a senior financial advisor who has 5-7 years of experience in investment sales, a 4-year degree, Series 7 and 63 licenses and a PA insurance license. This employer prefers a candidate who is a Certified Financial Planner. This candidate will be assigned to a broad region in the state and provide services to high net-worth clients.
- A major commercial bank wants to hire a financial advisor with at least three years of experience and Series 7 and 63 licenses for its branch office in Richardson, TX. This position also requires a Series 65 or 66 license. Job duties for this position include assisting clients with asset allocation and developing a portfolio, educating clients on market trends and educating personal bankers on investment products.
How to Stand Out in the Field
Become Certified
You can enhance your credibility in this area of finance by becoming certified. The Certified Financial Planner Board of Standards, Inc. (CFP Board) offers the Certified Financial Planner (CFP) credential, which is the standard for this occupation. You would need to complete a CFP Board registered certificate or degree program at a college or university prior to registering for the CFP exam. You may be exempt from completing a CFP program if you have a doctoral degree in business or economics or if you already have a professional designation, such as a Chartered Financial Analyst (CFA) or Certified Public Account (CPA).
You do not need a degree to sit for the initial exam. However, if you pass the exam, you must submit proof that you have a bachelor's degree or higher to become certified. Additionally, you must prove that you have at least three years of relevant experience, meet the CFP Board's requirements for professional standards and pay the certification fee to be authorized as a CFP.
Earn an Advanced Degree
You can also stand out and prepare for career advancement by completing a master's degree program. According to the BLS, a master's degree in business administration or finance can help you land a position supervising other advisors or managing a branch office. Additionally, a master's degree can make you more marketable to clients. Many institutions offer a Master of Science in Financial Planning that meets the CFP Board's program requirements.
Alternative Career Paths
Financial Analyst
If you would like a career in finance that primarily gives investment advice to businesses instead of individual consumers, you may consider becoming a financial analyst. Some of the main functions of your job would involve analyzing a company's financial statements, studying market trends for a specific industry and utilizing researched data to make recommendations on investments.
In this profession, you would typically work as a buy side or sell side analyst. As a buy side analyst, you would devise investment plans for lucrative companies, such as a mutual or hedge fund firm. If you choose the sell side route, you would provide investment advice to finance salespersons, such as a financial advisors or brokers. You would most likely need a bachelor's degree and licensure from FINRA. The BLS reported that as of May 2011, the median salary in this profession is around $76,000.
Insurance Sales Agent
As an insurance sales agent, individual consumers and businesses will rely on you to recommend and explain coverage that best suit their needs. Some of the most common types of insurance products you would sell include property and casualty, health and life insurance. In the event of an accident, damage to a property, routine medical screenings or sudden illness, insurance can help protect your clients from paying large sums of money out-of-pocket. To gain clients, you may use leads, cold-call potential customers or do door-to-door marketing.
In addition to selling insurance, you may also sell investment products and offer financial planning services, according to the BLS. Typically, those who sell life insurance often sell fixed annuities, and with additional licenses, may also sell variable annuities, mutual funds and other investment products. For older clients who are approaching retirement or have left the workforce, you may help them with retirement or estate planning. According to the BLS, you would need a high school diploma and a license to sell insurance and financial products in your state. As of May 2011, the median salary in this position is about $47,000.
