Financial Advisors can go by several names, e.g., Personal Financial Advisor, Stockbroker, Tax Preparer, Estate Planner, Certified Financial Planner, and even more.
Broadly speaking, a Financial Advisor is someone who charges money for financial advice. An individual may turn to his or her accountant for this type of advice, or may walk into a fancy office building that houses dozens of professional finance gurus.
Financial Advisor Requirements
To be a Registered Investment Advisor (RIA), you must pass the Series 7 exam and the Series 66 exam. Or, you could just pass the Series 65 exam.
RIAs who manage a portfolio totaling less than $100 million must register at the state level. RIAs managing larger portfolios must register with the US Securities and Exchange Commission.
There are many professional certifications available. Here is a brief overview of the most reputable:
- Certified Financial Planner (CFP) is the most widely recognized credential in the financial planning industry. The CFP board has set up rigorous requirements and this is a tough certification to earn. You have to take five courses and then sit for a board exam — a 2-day, 10-hour, 285-question test that 40 percent of test-takers fail. You must also have three years of professional experience and hold a bachelor’s degree.
- Chartered Life Underwriter (CLU) is the oldest designation and is similar to CFU, except that it has a life insurance focus.
- Chartered Financial Consultant (ChFC) was also created by the life insurance industry, as an alternative to the CFP. It begins in life insurance but also allows for general financial planning issues. (The CLU and the ChFC may require more coursework then the CFP, but there is no comprehensive exam.)
Financial Advisors must have great analytic skills, be able to work well with people, be strong communicators, and be good at math.
Education and Training — How to Become a Financial Advisor?
Nearly all Financial Advisors have a college degree. Some certifications (e.g., CFP) require a four-year degree.
If you don’t have significant experience and coursework in finance, you will probably want to start with a bachelor’s degree. Look for a program that will help you prepare for licensing exams. Then work to pass the exam that will take you in the direction you want to go. Note that large firms often have their own training programs, which helps trainees get the required licensing.
Also, if you choose to sell insurance, you will need to be licensed by your state.
If you’re planning on a career in Financial Planning, start networking like crazy, and start now.
Financial Advisor Salary — How Much Do Financial Advisors Make?
In May of 2012, the median salary for Personal Financial Advisors was $67, 520 (BLS). This figure does not include self-employed advisors. This figure also excludes bonuses that many firms offer.
Career Opportunities
If you’re looking for a Financial Advisor Career, we have good news. Employment for financial advisors is expected to grow 27 percent from 2012 to 2022 (BLS). This is a much faster rate than most occupations.