Financial Advisor Careers
Learn to make a living providing financial advice to others. Understand the job and certification requirements for each type of advisor, including CFP, CFA, and others.
Financial Advisor Careers
How do I become a financial advisor?
In order to become a financial advisor, a bachelor’s degree is usually required; however, employers typically do not require a specific course of study (though it’d be wise to consider degrees and courses related to finance). Once you’ve secured employment with an advisory firm, expect more than a year of on-the-job training under the supervision of a senior advisor. Additionally, depending on the services being offered, an advisor may need a combination of different licenses, which requires registering with state regulators, the U.S. Securities and Exchange Commission (SEC), and/or state boards.
What is the career path for a financial advisor?
While career paths will vary based on what kind of service is being provided, there are essentially five stages in the typical financial advisor career path. Most people starting at advisor firms (without any prior experience) will be hired as analysts responsible for gathering, maintaining, and inputting client data, followed by a promotion to associate advisor, which means being in charge of drafting financial plans, performing asset allocation analysis for clients/portfolio, supervising analysts, etc. The remaining stages are service advisor (i.e., those who implement financial plans and supervise both analysts and associate advisors), lead advisor or managing director (i.e., working directly with clients and supervising service advisors during implementation of financial plans), and principal or partner (i.e., managing the largest/most complex client relationships and supervising one or more team(s) of advisors).
How does a financial advisor get paid?
There are essentially two ways a financial advisor can be paid: through a commission-based model and/or through a fee-based model. With the former model, advisors receive compensation for selling specific financial products to a client, which can result in a conflict of interest. When an advisor charges a fee, the client pays them directly (either hourly, as a retainer, as a percentage of assets (AUM), or as a flat fee) for advice, plan implementation, and for the ongoing management of assets.Learn More: Do Financial Advisors Have a Base Salary?
Are financial advisors in high demand?
Despite the availability of automated robo-advisors, human financial advisors are still very much in high demand given their capability to offer more complex and specialized investment advice. However, personal financial advising isn’t the most popular career in the world of finance, with the U.S. Bureau of Labor Statistics (BLS) projecting the field to grow only 5% from 2020 to 2030. Although 21,500 openings for personal financial advisors are projected each year, on average, during this same period, the bulk of these openings are expected to result from the need to replace workers who change occupations or leave the labor force (e.g., retire, etc.).Learn More: 5 Traits of Successful Financial Advisors
A tax advisor is a type of financial expert that specializes in advising clients on matters related to tax accounting and tax law. There are several different kinds of tax advisors, including Certified Public Accounts (CPAs), tax attorneys, enrolled agents, and certain financial advisors.
An investment advisor is a type of financial professional that specializes in offering clients investment recommendations or securities analysis. In the U.S., investment advisors are required to register at the state level and potentially with the SEC, depending on the amount of assets they are managing.
Chartered Retirement Planning Counselor (CRPC)
Chartered Retirement Planning Counselor (CRPC) is a professional financial planning designation that the College for Financial Planning awards to individuals who complete a study program and pass a multiple-choice exam. CRPC holders must complete 16 hours of additional education and pay a fee every two years to continue using the designation.
Chartered Wealth Manager (CWM)
Chartered wealth manager (CWM) is a professional designation that the GAFM Global Academy of Finance and Management issues to certify a wealth management professional’s knowledge and skills. Receiving a CWM designation requires three or more years of professional experience in wealth management and a GAFM-approved degree.
Investment Policy Statement (IPS)
An investment policy statement (IPS) is a document that outlines the relationship between a portfolio manager and their client, in addition to the general rules the former must follow. Ideally, an IPS ensures both the financial professional and the investor stay focused on their long-term goals.
SEC Form ADV
ADV is a form that professional investment advisors are required to submit to the Securities and Exchange Commission (SEC) and state securities authorities, which must be updated annually. The form specifies an advisor’s investment style, assets under management (AUM), and the key officers of their advisory firm (if applicable), among other information.
Series 65 is an exam and securities license required for U.S. investment advisers, which is administered by the Financial Industry Regulatory Authority (FINRA). The Series 65 examination consists of 130 multiple-choice questions, and candidates must get 94 correct (i.e., a score of 72.3%) in order to pass.
Series 24 is an exam and license that entitles an individual to supervise and manage branch activities at a broker-dealer firm, which is administered by the Financial Industry Regulatory Authority (FINRA). The Series 24 examination consists of 160 total questions (10 of which aren’t scored), and candidates must get 105 of the 150 scored questions correct (i.e., a score of 70%) in order to pass.
Explore Financial Advisor Careers
U.S. Bureau of Labor Statistics. "How to Become a Personal Financial Advisor." https://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm#tab-4
CFP Board. "Financial Planning Career Paths," Pages 23–27. https://www.cfp.net/-/media/files/cfp-board/center-for-financial-planning/financial-planning-career-paths-guide.pdf?la=en&hash=926D57C42C624F53AFA2118DF1096145
The National Association of Personal Financial Advisors. "What Is Fee-Only Financial Planning?" https://www.napfa.org/financial-planning/what-is-fee-only-advising
StudentScholarships.org. "The Most in Demand Professions That Aren’t Actually Popular Today." https://studentscholarships.org/articles/43/the-most-in-demand-professions-that-arent-actually-popular-today
U.S. Bureau of Labor Statistics. "Personal Finance Advisors: Job Outlook." https://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm#tab-6