How to Become a Personal Financial Advisor
Personal financial advisors must establish trust with clients and respond to their questions and concerns.
Personal financial advisors typically need a bachelor’s degree. A master’s degree and certification can improve one’s chances for advancement in the occupation.
Education
Personal financial advisors typically need a bachelor’s degree. Although employers usually do not require personal financial advisors to have completed a specific course of study, a degree in finance, economics, accounting, business, mathematics, or law is good preparation for this occupation. Courses in investments, taxes, estate planning, and risk management are also helpful. Programs in financial planning are becoming more available in colleges and universities.
Training
Once they are hired, personal financial advisors often enter an on-the-job training period. During this time, new advisors work under the supervision of senior advisors and learn how to perform their duties, including building a client network and developing investment portfolios. This training usually lasts for more than a year.
Licenses, Certifications, and Registrations
Personal financial advisors who directly buy or sell stocks, bonds, or insurance policies, or who provide specific investment advice, need a combination of licenses that varies with the products they sell. In addition to being required to have those licenses, advisors in smaller firms that manage clients’ investments must be registered with state regulators and those in larger firms must be registered with the Securities and Exchange Commission. Personal financial advisors who choose to sell insurance need licenses issued by state boards. Information on state licensing board requirements for registered investment advisors is available from the North American Securities Administrators Association.
Certifications can enhance a personal financial advisor’s reputation and can help bring in new clients. The Certified Financial Planner Board of Standards offers the Certified Financial Planner (CFP) certification. For this certification, advisors must have a bachelor’s degree, complete at least 3 years of relevant work experience, pass an exam, and agree to adhere to a code of ethics. The exam covers the financial planning process, insurance and risk management, employee benefits planning, taxes and retirement planning, investment and real estate planning, debt management, planning liability, emergency fund reserves, and statistical modeling.
Advancement
A master’s degree in an area such as finance or business administration can improve a personal financial advisor’s chances of moving into a management position and attracting new clients.
Important Qualities
Analytical skills. In determining an investment portfolio for a client, personal financial advisors must be able to take into account a range of information, including economic trends, regulatory changes, and the client’s comfort with risky decisions.
Interpersonal skills. A major part of a personal financial advisor’s job is making clients feel comfortable. Advisors must establish trust with clients and respond well to their questions and concerns.
Math skills. Personal financial advisors should be good at mathematics because they constantly work with numbers. They determine the amount invested, how that amount has grown or decreased over time, and how a portfolio is distributed among different investments.
Sales skills. To expand their base of clients, personal financial advisors must be convincing and persistent in selling their services.
Speaking skills. Personal financial advisors interact with clients every day. They must explain complex financial concepts in understandable language.
Pay
Personal Financial Advisors
Median annual wages, May 2015
- Personal financial advisors
- Financial specialists
- Total, all occupations
The median annual wage for personal financial advisors was $89,160 in May 2015. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $39,300, and the highest 10 percent earned more than $187,200.
In May 2015, the median annual wages for personal financial advisors in the top industries in which they worked were as follows:
| Securities and commodity contracts intermediation and brokerage | $99,280 |
| Other financial investment activities | 95,500 |
| Management of companies and enterprises | 85,210 |
| Professional, scientific, and technical services | 76,810 |
| Credit intermediation and related activities | 73,250 |
Wages of self-employed advisors are not included in the earnings reported here.
Personal financial advisors who work for financial services firms are often paid a salary plus bonuses. Bonuses are not included in the wage data here.
Advisors who work for financial investment firms or financial planning firms, or who are self-employed, typically earn their money by charging a percentage of the clients’ assets that they manage. They also may earn money by charging an hourly fee or by getting fees on stock and insurance purchases. In addition to their fees, advisors generally get commissions for financial products that they sell.
Most personal financial advisors work full time, and about 3 in 10 worked more than 40 hours per week in 2014. They often go to meetings on evenings and weekends to meet with existing clients or to try to bring in new ones.
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