How to become a Financial Advisor
Today’s constantly changing roller coaster economy has dislodged many people from their long term careers and have left many others considering career changes. Not wanting to get “burned again” they are researching careers that are somewhat immune to fluctuations in the economy but yet provide a reasonably good and steady income. Some have been drawn into considering the Financial Advisor or financial analyst career track. The question then arises “How do I start a career as a Financial Advisor”. This article is going to look at that process from a “birds eye view” for those considering a career change into the rapidly expanding financial services industry.
People engage the services of Financial Advisors when they require assistance and consultation regarding decisions about college funding for children and grandchildren, retirement, estate planning, wealth management, insurance, investments, and tax deferred and tax free investments. Roughly 33% of Financial Advisors are self employed while the other 67% are employed by financial firms such as banks, insurance companies, or broker-dealers. They work regular daily office hours that are filled with research, phone calls and meetings. In addition to working regular office hours they spend a significant amount of hours working evenings and weekends meeting with their clients or perspective clients. Marketing is a huge part of their activities and techniques vary between advisors and firms. It’s not uncommon to see them conducting evening and weekend seminars and/or workshops targeted at generating prospects that will hopefully at some point become clients.
Employers look for candidates who have a bachelor’s degree preferably in finance or accounting. Educational requirements can be somewhat less stringent based on the candidate’s age, work history, and business background. A life and health insurance license is required for advisors who will be recommending or selling any type of indexed or fixed annuity because annuities are an insurance product and their earnings are linked to the stock market. A property and casualty license may also be required if the employer is an insurance company. Working for a broker-dealer entails obtaining a Financial Industry Regulatory Authority (FINRA) Series 7 license and a North American Securities Administration Association (NASAA) Series 63, 65 or 66 license. These strong credentials may get a person hired however; additional certifications help to enhance the advisors career. Designation as a Chartered Financial Analyst (CFA) or Certified Financial Planner credential (CFP) will provide testament to one’s competence in the industry. A Financial Advisor will need to be fingerprinted and undergo an extremely thorough background check of their criminal and financial history. Be forewarned that if a person has a felony in their background or if they have developed any “Ponzi Schemes” lately an alternative career track would be well advised.
A Financial Advisor is first and foremost a sales person. They need to be honest, highly motivated, independent, mature, personable, and detail orientated. The advisor must be able to recognize opportunities when presented with them then tailor recommendations based on the individual clients’ financial aspirations. Reputable firms will run new advisors through their “tried and true” training programs which are designed and orientated to the firm’s successful business models. The career is not unlike starting a new business venture. Individuals that have started and owned their own businesses in the past and who have the entrepreneurial spirit generally do well in this career. The Financial Advisor will develop their own book of business and clientele and be compensated by accumulating more clients and managing more of their assets.
In addition to stock, bonds, ETF’s, mutual funds and other investments, insurance plays a crucial position when designing competent and responsible financial plans for clients. Many new candidates in the career have found success in employment at insurance companies who are also broker-dealers because they can provide an array of financial services and products including insurance from within a single firm.
Having strong credentials is paramount in being hired by a reputable firm. People new to the industry find that there are a number of firms who will bring them on board and compensate them by commission only. That tends to be a dominate business model in the industry. One needs to realize that when working solely on a commission basis there will be the start up phase (like starting a new business) that will likely not provide any income until the clientele and business builds up. This “ramp up phase” will vary by individual. Conversely there are some firms that will provide a minimal salary or draw against future business during the start up phase of their career. Some that come to mind are Edward Jones, AXA Advisors, Morgan Stanley Smith Barney and Country Financial. The salary component generally disappears once income earned by commission bypasses the base salary. Generally an advisor serious about their new career and willing to do the hard work and spend the time to build the business should see earnings near the six figure range in roughly two years time.
The outlook for the industry is encouraging. In fact, opportunities for Financial Advisors are expected to grow faster than employment in other occupations and are reportedly one of the top 10 growth occupations through 2016. Several factors contribute to these projections such as the increased number of baby boomers seeking financial advice and people are living longer which increases the need for alternative retirement strategies. Additionally, there are so many financial and investment venues available a Financial Advisor can play a significant roll in recommending the most suitable investments and strategies.
Making the decision to start a new career as a Financial Advisor requires careful research and consideration. The competition for these positions is continuing to increase. If you enjoy building long term, trusted relationships and the challenges of building a business in the financial industry then this career may be the perfect fit.
