A career in financial advising is ideal for anyone interested in helping others manage their money and investments. The article below serves as a comprehensive guide to entering the profession.
How To Become A Financial Advisor
Entering the profession of certified financial advising requires knowledge of the education necessary for entering the field, as well as understanding how to obtain any necessary licensing or certification required to perform the job. In order to become a financial advisor, one must follow the steps below.
Obtain a bachelor’s degree
Common majors include economics, mathematics, etc. The minimum of a bachelor’s degree in an accepted field is required to obtain certification.
Consider enrolling in a master’s program
Having a master’s degree increases opportunities for professional advancement.
Apply to take the CFP exam
For online enrollment, go to www.cfp.net. All applications must be received seven
weeks before the exam date.
Prepare to take the CFP exam
The CFP Exam Candidate handbook can be downloaded online at www.cfp.net.
There are various prep courses available both online and in person.
Take the test
Financial advisors who are distinguished as Certified Financial Planners must pass a challenging, multiple choice exam over a period of two days.
Apply for a job with a firm
Smaller financial advising firms require their employees to be registered with the state, while those who work for larger firms must register on a federal level with the Securities and Exchange Commission.
Receive on the job training
After being hired by a firm, most new financial advisors must work for an approximate one year time learning the basics of the trade from an experienced advisor.
Keep up with renewals
A fee must be paid each year to maintain certification. Additionally, CFP’s are required to complete up to thirty hours of continuing education credits every two years.
Initially, the cost of a four- year college education to obtain a bachelor’s degree is required. For state schools, this averages around twenty-two thousand, while private universities cost around thirty thousand. In the event that higher education is pursued, receiving a master’s degree costs an additional thirty to one hundred and twenty thousand dollars. The CFP exam costs $595 for registration, and the same fee must be paid again if the initial exam is not passed. Additionally, a fee of $325 is paid annually for renewing certification. Once a position within a firm has been obtained, the majority of cost involves time and energy, as long hours are common as well as environments of high stress.
Job Description / Responsibilities
Certified financial advisors play a vital role in the lives of many individuals, as they are responsible for providing financial guidance for their clients. While their duties are varied, a comprehensive sampling of the typical responsibilities are as follows:
- Develop a network of clients, and consult with them to establish a sense of their financial goals.
- Help clients gain an understanding of their viable assets as well as their liabilities.
- Assist clients in formulating a plan for achieving their personal financial goals.
- Provide education to clients regarding the necessary budgeting and savings plan they will need to follow to fulfill their financial goals.
- Ensure that clients are aware of all relevant tax deductions available to them to provide for a maximum return when federal and state taxes are filed.
- Explain different investment options to clients, such as the difference between stocks, bonds, mutual funds, IRA’s, etc. Help clients weigh the various benefits and risks of each option to determine what best suits their needs.
- Educate clients about any potential investment options which are available to them.
- Work with clients to plan financially for major life events, such as planning for a child’s wedding or college education. On a larger scale, this entails planning for the purchase of a house or the start of a business.
- Formulate a realistic retirement plan for clients who are nearing the end of their active working years.
- Assist clients who have a sizable amount of debt to develop a plan to improve their credit as well as to pay off debts. In cases of major debt, a financial advisor may provide knowledge of various forms of bankruptcy as well.
- Keep clients informed about the financial market, and communicate openly with them about any viable opportunities for investment.
- Maintain a detailed financial portfolio for each client, and provide them with updated copies on a regular basis.
- Meet with clients to discuss finances and the goals the client has set forth. These meetings act as an opportunity to build trust between the advisor and their client, and also provide for open communication to ensure that the client’s needs and wants are clearly understood.
Financial advising is an occupation currently growing at a rapid rate. As the professional population expands, it is necessary for workers to find a qualified individual to help them plan for their financial future.
Available jobs in the financial advising field are expected to grow at a rate of thirty percent over the next two years. This makes it one of the fastest growing industries in the modern world. Personal financial advisors are the most rapidly expanding of the associated professions, while those who work in specialty fields fall slightly behind.
The high rate of growth for financial advisors can be attributed to two primary factors. First, as the baby boomer population begins to reach retirement age, more people are seeking out advice for their later years. Secondly, the fact that people are living longer makes financial planning for the elderly years an everyday reality.
While some financial advisors are self-employed, the majority work out of an office. Within this setting, they meet with clients to discuss financial goals and progress, and are typically expected to work a normal nine to five, forty-hour work week.
Particularly in the beginning stages of their career, financial advisors must be constantly on the lookout for new clients, and this may lead to working outside of the office’s regular hours. A financial advisor may meet with a prospective client on the weekend or in the evening hours. During times of increased business, such as tax season, work hours may extend far beyond the normal schedule.
Financial advisors may be required to put in extra hours to attend conferences or other classes which enable them to keep up with any continuing education credits required to maintain CFP certification.
While the profession is not considered high risk in a traditional sense, it is worth noting that financial advisors can find themselves in periods of extreme stress and fatigue, particularly during busy parts of the year. It is therefore important that individuals involved in this profession are able to develop some sort of constructive method of dealing with stress, such as physical exercise or a creative outlet.
There is a wide variety of valuable resources available on the web for financial advisors. A sampling of some of the most reputable, user friendly sites are:
CFB Board: One of the best resources for anyone who is active in or curious about the profession of financial advising. This website gives a comprehensive breakdown of the basics of obtaining CFP certification, along with providing an online link for exam registration. Professionals can also post their credentials and other achievements, making it a valuable resource for networking.
NAPFA: The National Association of Personal Financial Advisors is a web-based network of financial advisors who work on a fee-based salary. This means that they collect a salary in addition to the traditional commission-based method, leaving less room for conflicts of interest. This website features a location based search engine, providing potential clients with a list of nearby professionals. Links are also provided to various educational videos and articles regarding financial planning tips.
Let’s Make a Plan: This is an ideal website for anyone looking to hire a certified financial advisor. Designed with consumer ease in mind, this website allows a potential client to simply input their location via city and state or zip code in order to receive information regarding reputable financial advisors who are currently taking on new clients.
Think Advisor: A website dedicated entirely to the financial advising community, Think Advisor is an ideal resource for those who want to keep up to date on all of the latest information available within the profession. News articles relating current media events to potential financial impacts are frequently published, and there is also a variety of other valuable content, such as excerpts from professional blogs and schedules for upcoming trade shows and business conferences.
The Wall Street Journal: Founded by Charles H. Dow, the Wall Street Journal was first published in 1889, and has since become the most widely circulated newspaper in the United States. Available online since 1996, this publication is widely considered to be one of the utmost authoritative resources for financial advisors. Published six days a week, each issue contains articles which provide insight into the stock market and other current financial trends.
Retirement Researcher: This website is a great resource for financial advisors and their clients to view together, as it provides a wealth of information on how to best plan for the future based upon a multitude of individualized factors.
NAIFA: The National Association of Insurance and Financial Advising website focuses upon representing all types of financial advisors who are looking to expand their clientele, regardless of whether or not they are self-employed. There is a wealth of information available here, including information for upcoming conferences, meetings and workshops.
BlackRock: The information presented within this website is concise and easy to understand. There is a specific section dedicated to providing advice and educational articles for financial advisors, as well as a focus upon obtaining new clients.
American Funds: Known throughout the profession for its concentration on financial advising, professionals are able to keep updated on current market information while gaining access to a plethora of articles providing reputable information on relevant current events.
Financial Planning: A highly respected publication for all those involved in the financial industry, this is a particularly valuable resource for working with clients who have a great amount of money or other viable assets. While information regarding traditional methods of financial planning are certainly included here, there is also an exposure to more modern, experimental methods as well.
Financial advisors provide thorough and ethical assistance to each client represented. These people are entrusted to give informed advice regarding a client’s finances and future, and it is vital that they are in possession of a specific set of skills necessary for the job.
- Mathematical competency: Financial advisors work with an immense amount of numbers, and they must therefore be able to calculate numbers and balance budgets quickly and accurately.
- The ability to analyze: Each client will present with a different set of assets, liabilities and financial goals. A financial advisor must be able to consider all relevant factors and use the client’s information to provide them with the best possible guidance.
- Professional demeanor: Financial advisors must abide by a code of ethical conduct while conducting business.
- A strong moral code: Clients must be able to completely entrust their financial advisor to provide them with information that is accurate and free from any personal motivation for profit or other gain.
- The ability to take initiative: Particularly in the beginning stages of a professional career, it is necessary to build a caseload of clients. This can involve a great deal of active recruitment, i.e. reaching out to potential clients to set up meetings.
- Persistency: Financial advisors must be willing to keep in continuous contact with potential and present clients.
- Organizational skills: There is a great deal of paperwork associated with this profession. This requires a dedication to keeping client portfolios accurately updated and available.
- The ability to multi-task: A typical day in the life of a financial advisor can include preforming a number of roles. They may consult one client on how to obtain early retirement and then quickly have to shift to advising a business owner about tax information.
- Strong communication skills: Financial advisors need to be able to explain complicated information to their client’s in simple terms, as many individuals do not understand the mathematical language which is so common to the profession.
- A tolerance for stress: Fatigue from long hours coupled with the everyday pressure of the job can result in a stressful work environment. The pressure of having responsibility for other people’s finances can be quite intimidating, making it necessary for these professionals to develop some sort of constructive method of releasing any work-related tension they may carry.