Being a financial advisor can be very rewarding job—and not just financially. You’ll have the opportunity to helppeople achieve their financial goals, such as buy a house, send their children to school, or simply to be financially stable for the rest of their lives. If this is a career path that you want to pursue, the following are the requirements for someone to become a professional financial advisor:
EducationIf you know early on that financial planning is your calling, you might want to pursue a degree in related fields. It helps if you have a background in accounting, finance, business, economics, mathematics, or law.
Knowledge in the said fields is not strictly essential, though; any four-year degree is acceptable. A 2009 survey by the Financial Planning Association reported that 88% of financial advisors started out with a different job. In exceptional cases, a degree is not even needed, but do take note that the operative word here is exceptional.
There are many other benefits to completing a Bachelor’s Degree. It gives you credibility, and shows that you’re willing to adhere to schedules and submit requirements to achieve an end goal. A four-year degree is also necessary in case you want to get professional certification.
Other, broader subjects might also serve you well, like economy in general. No matter where you work as a financial advisor, it helps to see how the bigger picture affects personal finance and vice-versa. For example, you can see how developing countries emerge and how this affects certain stocks your client might want to buy.
Experience
Just as important as getting an education is accumulating experience. Some large firms offer comprehensive training programs to give you experience and prepare you for licensing exams. These are typically hard to get into, but worth it.
You may also want to start with a smaller company. The training won’t be as structured, but you’ll be forced to learn to do more things because you’ll be called on to perform a wide variety of tasks for different clients. You’ll have to be able to hit the ground running, learn things on the fly, and be able to quickly adjust to different situations.
Remember, though, that you might have to accept unpaid internships and start at entry-level jobs. This might be especially difficult if you’re a career-changer and already have several years of experience under your belt. The experience will be invaluable, though.
Certifications
There are several certifications you can earn to boost your credibility, but getting a Certificate in Financial Planning (CFP) is the most significant. This requires three years of experience with a financial planning business, coursework, and a two-day exam. You will also be required to commit to continuing education on finance and ethics in order to maintain your certification.
Larger firms like Merrill Lynch Global Wealth Management and Wells Fargo Advisors don’t require CFP designations from their financial advisors. It’s helpful in building your client base, though, because clients will usually be looking for it. Although in no way does it guarantee it, a CFP designation will signal sound financial advice to prospective clients.
Personal Skills
Finance is a very personal matter to anyone: hopes, dreams, egos, and your clients’ futures are tied to it. Financial attitudes are also very personal.
Richard Salmen, Financial Planning Association chair, said it best: being a financial advisor is as much counseling as it is advising. There are more dysfunctions associated with money than with any other issue. Expect to advise on everything from the stock market to how to best handle credits cards.
Personal skills are also important, in that you are essentially in a sales position. You’ll be convincing people to use their money to invest in things, and that’s hard without some soft skills.
Fees Vs. Commissions
Decide how you want to earn in this business, because it also affects how your clients perceive you. If you choose to charge the standard 1% flat rate for all the assets you manage, clients might be wary of you not wanting to drop some stocks because it could lower your rate.
If you go for commission, on the other hand, the danger is that your client might be cautious against you advising in favor of or against certain stocks.
Whatever and whenever you decide to become a financial advisor, remember that besides skill, it takes a lot of commitment, long hours, and the prospect of starting from the ground up. You’ll basically be acting on your own, and carrying in your hands the huge responsibility of your clients’ financial future.
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