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How to Become a Financial Advisor | Professional Tips & Guidance

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Are you interested in pursuing a career as a financial advisor but don’t know how to start?

The field of finance is competitive, and it can be overwhelming to try and work in it. 

Luckily, this article will provide you with the information you need on how to become a financial advisor, including the opportunities and challenges of this occupation. 

An Overview of Financial Advising: A Primer

An independent financial advisor helps clients reach their financial goals. They support their clients in financial decisions such as budgeting, investments, retirement planning, debt management, mortgages, insurance, and taxes. They can also help their clients earn a passive income. It can be a great second job next to your main job as well. 

Financial advisors’ clients could range anywhere from young people who want to plan for their future, to wealthy individuals who require wealth management. 

The clients could also be businesses, or recurring revenue businesses, seeking financial guidance or risk management. 

Financial advisors first meet up with them to discuss their needs. After analyzing the situation, the financial advisor provides the client with financial options and strategies. 

Then, the financial advisor creates an individualized plan tailored to the client’s needs. Afterward, the financial advisor is responsible for following up with the client to check their progress and make adjustments as needed. 

A financial advisor in a meeting with a married couple

There are various types of financial advisors. The three most common are:

  • Certified financial planners (CFPs)
  • Registered investment advisors (RIAs)
  • Chartered financial analysts (CFAs)

CFPs are advisors who have completed an exhaustive certification process and passed an exam on financial planning. 

An RIA is an individual or a firm that provides financial advice and portfolio management to their clients for a fee. RIAs are registered with the SEC (Securities and Exchange Commission) or state authorities. 

As for CFAs, they’re the professionals who completed the CFA program held by the CFA Institute. CFAs have a high rank among financial advisors as their position is tough to reach, and they usually charge more money. 

How Much Do Financial Advisors Make?

A financial advisor’s salary will differ based on the years of experience, qualifications, and type of service provided.

Salaries also differ between states. In some states, financial advisors make higher salaries than others. 

According to the U.S. Bureau of Labor Statistics, the average annual salary for a financial advisor is $94,170.

What You’ll Need to Become a Financial Advisor [& Associated Costs]

There are no specific fees for becoming a financial advisor. The amount of money will depend on the type of advisor you want to be and the education, certifications, and licenses you’ll need. 

Here’s a list of what you can expect to pay to start your career path:

  • Education: The average for a Bachelor’s in Finance is $30,00 and the average for a postgraduate (optional) is $25,000 
  • Licenses: You’ll need the series 7 license which is $300. After that, you’ll need additional licenses based on the type of work you want to do. Licenses range from $75 to $177.
  • SEC Registration: This will vary according to where you work but the average initial fee is $150
  • Certifications: Those range from $900 to $3,000.

How Much Does it Cost to Become a Financial Advisor?

A financial advisor insurer banker consulting a client about a contract

First, you’ll need a degree in finance or a relevant study to get hired as a financial advisor in an office. Of course, the cost of the degree will depend on the university or institution you plan to study at. 

After that, you’ll need to get licensed by passing the Series 7 exam, which is the General Securities Representative Examination administered by FINRA (Financial Industry Regulatory Authority). 

You might also need additional licenses after that according to the financial products you plan to sell, such as insurance and securities. 

Finally, some states might require you to register with state regulators or with SEC, if you’ll be working for a large firm. 

If you choose to pursue a certification afterward to advance your career, those will have their own cost according to the type of certification. 

So, how much will you need to get your career started? You’ll at least need the cost of your bachelor’s degree and the Series 7 License. 

This means that you’ll need an average of $25,300. This number can decrease if you get a scholarship for university and work for a firm that will sponsor your license. So, the number may seem big, but it can be decreased. 

Is It Hard to Become a Financial Advisor?

Becoming a financial advisor is challenging, and if you want to pursue this career, you should be prepared to put in hard work.

However, with the right dedication, the results can be rewarding. You should be prepared and know what it takes to get into this field before pursuing it. 

How Long Does it Take to Become a Financial Advisor?

The amount of time it takes to become a financial advisor will vary from one person to another. It depends on several factors, such as the level of education, the amount of work put in, the state they live in, and the professional level they want to reach. 

Earning a Bachelor’s in Finance or a relevant study will take around four years. After that, you can start studying and register immediately for the series license, which doesn’t require work experience. 

Receiving the license takes a few months then you can start looking for a job. This is the fastest and most basic route to becoming a financial advisor and takes around five years. 

However, you’ll still need further studying and advancements in your career, so it would take around seven years to reach a professional level. 

How to Become a Financial Advisor in 5 Simple Steps

Becoming a financial advisor may seem overwhelming at first. It requires hard work, studying, and seeking opportunities. However, it becomes simpler once you know the process and steps to follow.

A financial advisor showing payment plan for a couple

Step 1: Get a Formal Education

The first step to becoming a financial advisor is to get your undergraduate degree in a field that will give you the needed knowledge and skills. You can choose to major in Finance, Business, Accounting, or Economics. 

You might also pursue post-graduate studies after graduation. While that’s not necessary, it can enhance your opportunities of working for a reputable firm and give you additional knowledge in the field. 

Step 2: Get a Job

Getting a job will not only put you on the map among financial advisors but will help you receive sponsoring for your license, which will be the next step. 

Start looking for an entry-level, internship, or even a mentorship program to get your career started. Once you’re in a stable position, your firm can sponsor you to receive your license. 

Step 3: Get a License

To get into the financial advising industry, you’ll need to be licensed by passing certain exams. First, you’ll have to pass the FINRA Series 7 exam. 

Then, you need to consider the type of financial advisor you want to become. Based on the services you want to provide and the products you wish to sell, you’ll need to receive additional licenses. 

Here’s a breakdown of the available licenses and what you can do with them:

  • Series 6: Sell mutual funds 
  • Series 63: A requirement to conduct business within state borders
  • Series 65: Financial advisors who get compensated with fees instead of a commission 
  • Series 66: To qualify as an investment advisor
  • Series 79: For investment bankers

Step 4: Get a Certification

Receiving a certification may be required by your state. It’s also a great way to advance your career. There are several professional certifications that you can pursue to upgrade your professional level and earnings. 

Gaining a certification not only enhances your credibility with hiring firms but with clients as well. It shows that you have the expertise to provide them with a high-quality service. 

The most common financial advising certifications are: 

  • CFA: Chartered Financial Analyst
  • CPA: Certified Public Accountant
  • CFP: Certified Financial Planner
  • RIA: Registered Investment Advisor 
  • ChFC: Chartered Financial Consultant

Step 5: Stay Up to Date With the Financial Market

The financial market is continuously changing, so you must stay informed about all important updates. Keeping track of the changes in the market will allow you to provide clients with accurate and relevant advice.

It will also give you knowledge about investment opportunities, and adjust your clients’ financial plans. 

Reasons to Consider Becoming a Financial Advisor

Financial advising is a good career choice for anyone who enjoys finance and wants to help others manage their finances. 

The industry has a lot of benefits to offer. Here are some reasons to consider a financial advisor career: 

  • High earning potential: Financial advisors make good money. The average salary range is $60,000 to $100,000.
  • Flexible working hours: Financial advisors have the flexibility of scheduling client meetings. They generally respect work/life balance by creating a work calendar that suits them. 
  • Making a difference: As a financial advisor, you have the opportunity to make a difference in your clients’ lives by helping them make smarter choices and invest their money wisely.
  • Various work opportunities: When you take the route of financial advising, there are several jobs that you get to choose from. You might work for a firm or be self-employed. You might also explore specific job options, such as an investment banker. 

Frequently Asked Questions

What degree is best for financial advisors?

Several fields of study could qualify you to become a financial advisor such as business, Finance, or Economics. 

The best course of action would be to study business administration with a focus or major in Finance. This way, you’ll combine several studies such as economics, banking, and finance in one study. 

How do financial advisors get paid?

Financial advisors get paid in two ways; by fees and by commission. Advisors who get paid a fee set a rate according to the service. To offer fee-based services, advisors need to receive a CFP certification. 

With commission-based payments, the advisor earns a percentage from the client’s purchase. 

Similar Gigs to Check Out

If you feel that financial advising is not the right career for you, but you’re still passionate about finance and economics, there are similar careers you could consider. They might even be an uncommon side hustle for you. 

Here are some similar gigs you can check out. 

  • How to Become a Notary: A person who has the authority to certify documents such as contracts and deeds.
  • How to Become an Accredited Investor: An accredited investor helps individuals or companies that are raising capital determine their potential investors. To qualify as an accredited investor, the individual must either have a net worth of $1 million or an income over $200,000. 
  • How to Become a Bookkeeper: A financial professional who keeps the records of a business’s financial affairs. 

Wrapping Up

Becoming a financial advisor has its challenges, but pays off in the end. If you have the right mindset and dedication, and follow the steps, you can reach your goal and become a successful financial advisor. 

You need to stay updated with the financial market to give your clients the best service. 

Let us know what you think of this article in the comments section, and hit the share button if you like it.

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