The Covid pandemic touched off a lot of changes in people’s personal and professional lives. Consider the employment situation in the U.S., where approximately 47 million people called it quits on their employers. Some left because of factors like toxic culture, but a great many quit to escape poor pay or to pursue better pay.
If you’re in a career change mindset, a switch to a financial advisor career may prove a good choice for you. Not sure what that entails? Keep reading for a breakdown of what a financial advisor does, how you become one, and why it’s a smart career choice.
What Is a Financial Advisor?
Broadly speaking, a financial advisor helps clients to develop long-term financial plans to meet their long-term life goals. For example, a financial advisor may help clients develop a plan for their children’s college education, such as a savings plan or opening a 529 account.
Other areas where a financial advisor may assist include:
- Retirement planning
- Investment planning and strategy
In addition, financial advisors often execute financial activities for you, such as buying or selling stocks and bonds or adjusting your investment levels in mutual funds.
The end goal for a good financial planner is a comprehensive financial plan for each client. Financial planners will typically check in with clients periodically to ensure make sure the planner and their clients remain on the same page in terms of client goals.
The term financial advisor can mean a few different things, but often refers to a certified financial planner or CFP. While CFPs do have some requirements, they aren’t as stringent as you might expect.
For example, you only need a bachelor’s degree and not a finance degree specifically for certification. Although, certain types of finance degrees can fast-track you through the process.
You must typically complete CFP-specific coursework related to a range of finance topics that appear on the CFP exam, such as:
- Financial planning principles
- Tax planning
- Insurance planning
- Risk management
- Estate planning
- Professional conduct
- Financial regulations
Beyond these requirements, there are several licenses you may need related to buying and selling securities. The most common ones are the Series 6, Series 7, Series 63, and Series 65 licenses.
Some people join a finance firm to get these licenses, while others pursue them independently. With the essentials covered, let’s look at why a financial advisor career is a smart move.
If you go to work for a financial planning firm, for example, you sign up for the same kind of daily schedule that most white-collar professionals expect. There are some upsides, including experience, mentorship, and help with securing those licenses. Many financial firms will subsidize the exam fees for you.
Once you’ve got your feet under you, though, you can strike out on your own as an independent financial advisor. That approach to financial careers can provide you with substantially more flexibility than you get with a traditional finance firm job.
For one, you can set your own schedule. While most clients will expect you to maintain some availability during business hours, it’s not quite as rigid. Let’s say you despise getting up early in the morning. You can let your availability start at 10 am.
It also lets you offer availability outside of traditional business hours. For example, you can take meetings in the evening or even on the weekend when people have more time.
You also get more flexibility to suggest an alternative investment platform than the ones a financial firm might suggest.
One of the reasons why some people enter into a finance career is the earning potential. Objectively speaking, there is no hard cap on how much you can earn. Practically speaking, there are limits defined by things like:
- How many clients you can manage at any given time
- Your willingness to hire help
- The financial status of your clientele
Your earnings potential is also somewhat limited by location. Some areas provide higher compensation than others.
With all of that out of the way, financial advisors generally earn a fairly good living. The median financial advisor salary hovers around $94,000 annually.
Choose Your Clients
There are those financial advisors who only work with millionaire clients because they can make more money working for affluent clients. It’s a viable business strategy. It’s not the only strategy.
If you work as an independent financial advisor, you can decide what kind of clients you take on. While low-income and middle-class individuals may get less attention from finance professionals, it doesn’t make them any less in need of good financial advice.
In fact, one could argue that they need good financial advice more than anyone. You can take on those clients if you want or go for more of a mixed bag, using more affluent clients to help you offset the lower earnings from low-income or middle-class clients.
It’s a Chance to Help
The chance to help might not seem like a strong motivator for a career in finance, at first. Yet, finances are often one of the most vexing problems a person can face.
For some people, budgets are just something they’ve heard about. They know nothing about how you actually make one. Other people may know the financial basics, but struggle with how best to approach things like making strategic investments.
You get a chance to serve as something of a teacher and mentor to your clients. You can help them put their financial world into order and even help them understand why different financial choices make sense for them or not.
Pursuing Your Financial Advisor Career
One of the nice things about pursuing a financial advisor career is that many people already possess a bachelor’s degree. That’s a huge step toward becoming a certified financial planner, as long as you’re willing to take it the rest of the way with the coursework, exams, and licenses.
If you go independent, make sure you get a handle on marketing and prospecting. You’ll need those to help you build a client base.
Looking for more career or finance advice? Check out the posts in our Finance section.