Guide: How to Become a Financial Advisor

Referred to by many names and specialties, including financial planner, stockbroker, financial analyst, and more, a financial advisor essentially assists people and businesses with buying financial products that help them create secure futures. Professionals in different specialties work with different areas of finance, from investments to estate planning and more.

This lucrative and often fulfilling industry is ideal for business-, economics-, and sales-minded people. Some specialties demand extensive education and certifications, although the reward is often worth the work, while others have minimal basic requirements.

Thinking of pursuing a career in this fast-paced, rapidly growing field? Here is how to become a financial advisor.

What is a financial advisor?

A financial advisor is a broad term describing a professional who helps people achieve their financial goals, which can involve responsibilities such as creating a retirement strategy, estate planning, paying for a child’s college tuition, and more. She also informs and educates clients on how to best meet these goals, explaining complex financial topics.

Different types of financial advisors include:

• Stockbroker

After passing certain testing requirements and registering with the U.S. Securities and Exchange Commission, a stockbroker buys and sells stocks on behalf of clients. 

• Chartered Financial Analyst

A designation given by the CFA Institute, this role involves assisting clients with building investment portfolios.

• Certified Financial Planner

CFPs must complete certain education and work experience requirements and pass a test administered by the Certified Financial Planner Board of Standards to receive this designation and offer financial planning advice.

• Enrolled Agent

An EA represents taxpayers before the IRS and may advise, assistant, represent, and prepare tax returns for anyone who pays taxes. EAs are authorized to work in this capacity by the U.S. Department of Treasury.

There are several other types of financial advisors that require different levels of education, experience, and certifications and perform additional or separate responsibilities. 

How long does it take to become a financial advisor?

The length of time it takes to become a financial advisor depends on the specialty. For example, it takes at least three years to become a certified financial planner after earning a bachelor’s degree. Financial advisors who do not obtain certification can begin their careers more quickly, but they will likely have fewer and less lucrative job prospects.

What qualifications do I need to be a financial advisor?

Education

You will likely need at least a bachelor’s degree as a basic requirement of becoming a financial advisor. It can be in any area, although you will need to have passed courses in subjects such as finance, math, and economics in order to obtain some certifications. While not all financial advisors have earned a bachelor’s degree, most have, and it is a requirement of many different financial advisory specialties. 

Many financial advisors also earn their MBA. This can give you preparation for the work you will be performing, as well as increase job prospects and earning potential. 

Certifications 

Many types of financial advisors have certifications. For some specialties, obtaining certifications is a requirement of practicing in the field. Some of the typical certifications for financial advisor positions are:

• CFP

This certification is one of the most common among financial advisors. It involves passing a 10-hour exam administered by the Certified Financial Planner Board of Standards and covers a range of topics, such as investments, income, estates, and more. The certification enables you to receive the designation of Certified Financial Planner.

• CPA

To become a certified public accountant, you’ll take a lengthy exam that enables you to provide accounting services to clients. 

• CFA

Prospective CFAs must pass three levels of exams that cover topics including accounting, economics, ethics, and more.

How do you become a certified financial advisor?

When referring to a certified financial advisor, most people mean a Certified Financial Planner professional, a designation granted by the Certified Financial Planner Board of Standards. To become a Certified Financial Planner (CFP) professional, you must:

1. Complete the education requirement.

You may complete a CFP Board-Registered Program, hold certain certifications, or complete approved coursework.

2. Pass the CFP exam.

The CFP Certification Examination is “designed to assess your ability to integrate and apply a broad base of financial planning knowledge in the context of real-life financial planning situations,” according to the CFP Board. There are three testing windows throughout the year.

3. Obtain or hold a bachelor’s degree within five years of passing your exam.

4. Gain three years of work experience or two years of apprenticeship experience.

This requirement should be fulfilled after completing your exam. 

5. Demonstrate that you meet the CFP Board ’s fitness standards.

You must satisfy the CFP Board’s ethical standards by passing a code of conduct and submitting to a background check. 

6. Complete the Certification Application.

Once your application is processed, you may begin using CFP Marks.

Salary expectations

The median pay for personal financial advisors was $90,640 annually in 2017, according to the Bureau of Labor Statistics. Of course, you can expect salaries to vary widely according to specialty, certifications, experience, and other factors. Many financial advisors also receive significant bonuses in addition to their base pay.

A day in the life of a financial advisor

A financial advisor’s day can vary significantly according to her specialty and level of experience in the field. It may include responsibilities such as:

• Meeting with existing clients to discuss their financial situation, review goals and objectives, and more

• Looking for and meeting with new clients (prospecting) and building a strong network

• Updating client records and preparing detailed reports

• Mapping out client objectives and strategies to meet their goals

• Meeting with other colleagues, attorneys, accountants, and investment bankers to discuss individual clients and overall strategies

• Entering data

• Reviewing market performance data and headlines, which often affect individuals and their financial futures

Where to work or find work as a financial advisor

Financial advisors work in a variety of settings, such as:

• insurance companies

• banks

• financial investment firms

• securities and commodities brokers

Many are self-employed and obtain clients independently. According to Investopedia, four out of ten financial advisors are self-employed with independent firms.