How to Become a Financial Advisor & Certified Planner in 2024

Pritam Nagrale

Updated on:

How to Become a Financial Advisor

Do you know what financial advisors do, how much their salary is, and how to become a financial advisor or financial planner?

Working as a financial advisor in America is a very prestigious job. And it involves tremendous responsibilities too. That’s because people will trust your advice for investing and using their hard-earned money.

Hence, you’re directly responsible for the financial well-being of the individual or their family. There’re several roles that a financial advisor plays.

Become a Financial Advisor

What does a financial advisor do?

As I mentioned earlier, a financial advisor shoulders tremendous responsibilities. That’s because they play different roles that suit the needs of any client.

  • Financial Advisors assess income, spending patterns, ongoing investments if any, and advice on how to maximize savings.
  • A successful financial advisor also guides people on achieving short, mid, and long-term financial goals such as a home mortgage, higher education plans for children and retirement plans, health plans, and different kinds of investments.
  • To do so, financial advisors serve as a bridge between people and banks, investment companies, and individuals.
  • A superb financial advisor also provides details on how political, economic, and other external scenarios can affect a person’s money in the future.
  • Successful and certified financial advisors help draw a tailored savings and investment roadmap for their clients and help them achieve its objectives.
  • And finally, financial advisors manage their client’s savings and investment portfolios, manage taxes and provide advice whenever it’s necessary to take any action.

Given these roles and responsibilities, you can clearly understand why working as a financial advisor is respectable and lucrative. And it’s not very difficult to become a financial advisor too.

How to Become a Financial Advisor

Though it’s not difficult to become a financial advisor in America, there’re certain educational qualifications, personal skills and experience that matter. Here’re the things you’ll need to take to become a certified financial planner.

University Degree is Main Requirement

A graduation degree in any stream is the first and foremost requirement if you wish to become a successful financial advisor. However, it’s not necessary to hold a Master of Business Administration (MBA) or financial degree to become a financial advisor, though the skills these qualifications impart are very useful. You could be a graduate of any stream from any recognized university.

Internship or Traineeship at Financial Institution

Actually, doing an internship or traineeship isn’t compulsory to become a financial advisor. However, if you wish to become a financial advisor, I strongly recommend one.

That’s because working with a large financial institution as an intern or trainee will provide valuable insights into the nature of the work.

You’ll work alongside experienced financial advisors and meet real-life clients. An internship or traineeship also helps develop a social network and you learn a lot about various savings and investment plans in the market.

Excellent Interpersonal Skills

You can liken a financial advisor’s job to that of a customer care agent. Both have to deal with people. Hence, interpersonal skills are another very important requirement to become a financial planner.

Along with excellent interpersonal skills, you’ll also need good convincing powers and high-level skills in math and calculations.

Remember, a financial advisory is all about money; hence, you’ll need those superb skills with numbers to show your clients how much they need to invest and what returns they can anticipate, among others.

Superb General Knowledge

Every financial advisor needs to have superb general knowledge if they wish to be successful. That’s because investments and their returns can swing wildly due to political and economic situations in America and worldwide.

For example, a conflict anywhere in the world can also affect the American domestic economy. As a financial advisor, you’re directly responsible for ensuring that a client’s portfolio isn’t affected by such factors. Hence, general knowledge is of supreme importance.

Financial Advisor Certifications & Licenses

This is the supreme requirement to become a certified financial advisor in America. You’ll need certifications that qualify you as financial advisor. And you’ll need a license to operate as a financial advisor.

Remember, working as a freelance financial advisor without proper certification and licenses can land you serious legal trouble. Furthermore, almost no client will ask for your services unless you have these qualifications and licenses.

To become a successful financial advisor, you’ll require a minimum of two basic certifications.

One of these is from Financial Industry Regulatory Authority, a non-government organization with the US government's approval. FINRA has various exams which you’ll have to pass before getting certification as a financial advisor.

The other is the US government's Securities & Exchange Commission (SEC). The SEC regulates and licenses financial advisors in America. Therefore, getting their clearances and license is a pre-requisite to becoming a financial advisor.

Authorization from Financial Institutions

Once you have the above certifications and licenses, the next requirement is getting authorization and registration certificates from financial institutions.

As a financial advisor, you can represent a bank, insurer or investment firm only if they allow you.

Usually, most financial institutions will allow you to work as their financial advisor or Registered Investment Advisor (RIA), if you meet their requirements. A distinct advantage of becoming an RIA is that you get commissions for every client you get for the financial institution.

You’re ready to start your career as a financial advisor upon meeting the above six requirements. Here’s what you need to do to launch your business.

Working as Financial Advisor

There’re two distinct ways to work as a financial advisor. The first one is as a freelancer. The second by opening own financial advisory company. Both options are equally good because freelancers are also considered as contractors and not employees. To become a successful financial planner, here’re some things you’ll require.

Extensive Social Network: Financial advisors usually get clients from their social network. Therefore, start promoting your financial advisory services within your circle, though on a smaller scale, to begin with.

Leads from Financial Institutions: Once you’re an RIA with financial institutions, they’ll provide leads of people that require financial advisors. You’ll have to follow these leads independently. Financial institutions provide these leads since they want you to promote their investment and savings solutions.

Online Lead Generation: You can also launch own website as financial advisor and advertise it through social media networks such as Facebook, Twitter, Instagram and Pinterest. LinkedIn is also an excellent resource to promote your services to individual clients and companies.

Online Webinars: Following the Covid-19 pandemic and social distancing norms, a lot of financial advisors now conduct webinars on savings and investments. They generate leads by using this webinar software and try to convert them as clients.

Offline Seminars: Holding an offline seminar can cost some money because you’ll pay for the venue and event advertising. However, a lot of financial planners conduct seminars with some sponsorship from the financial institutions they represent. Usually, the financial institution will also provide some assistance, such as manpower, for these seminars.

Investment Advisor Median Salary

Now you might wonder whether all the effort is really worthwhile. Would working as a financial advisor help me make money?

Therefore, here’re some facts and figures.

The US Bureau of Labor Statistics pegs the median income of financial advisors at $121,770 a year or $42.24 per hour, based on 2018 figures.

By any standards, this is a very lucrative amount of money that independent financial advisors can make. You can earn much more if you’re an independent financial advisor because financial institutions provide incentives for every client you bag for them.

Scope of Financial Advisors in the USA

In recent years, most financial institutions have provided free financial advisory services to clients. However, these are limited to only savings and investment plans available from that financial institution.

Furthermore, there’s a trend of Do-It-Yourself (DIY) investment among younger investors, especially millennials. The availability of free apps such as Acorns and Robinhood, which allows DIY investors to start with as low as $5 is a major reason people don’t take financial advisors.

Only one percent of Americans actually use a financial advisor, a November 2019 survey titled: “Invest in You,” conducted by the news channel CNBC, reveals.

However, there’s ample scope for working as a financial advisor and becoming successful if we look at Bureau of Labor Statistics projections. According to BLS, there’re only 271,700 financial advisors in America. However, the profession will grow at a rate of seven percent every year till 2028.

The main competitor to financial advisors comes from Robo-Advisors or computer programs provided by banks, financial institutions, and other organizations. Available at a fraction of the cost of a human financial advisor, these Robo-Advisors are very popular investment app among lower to a middle-income groups of investors.

Closing Thoughts

Though the road to becoming a financial advisor may sound long and involves lots of effort, the income and prestige make it worth the while. Financial advisors can earn much higher than the median pay if they exert extra effort. You, too, can become a financial advisor.

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