Financial Advisor Career Overview: Financial advisor (FA) and financial consultant (FC) are contemporary job titles for what used to be called a stockbroker, broker, account executive or registered representative. A variant spelling, financial adviser, also is used sometimes.
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More Detail on the Job: For those seeking information beyond an introductory level, this guidesite includes a number of other articles that explore financial advisor careers and related issues in more detail. These articles are organized into these categories:
- Career Development for Financial Advisors
- Practice Development for Financial Advisors
- Client Service Issues for Financial Advisors
- Investment Products
- Investment Strategies
- Behavioral Finance
- Ideas for Small Business Clients
Traditionally, the job of a financial advisor has involved buying and selling securities (such as stocks and bonds) on behalf of clients. The change in titles outlined above is supposed to reflect the fact that, rather than being focused primarily on facilitating transactions, financial advisors really should be more like investment advisers and financial planners who take a holistic view of their clients' financial needs and goals. Other variations in title, such as wealth management advisor, also are used, sometimes to denote a financial advisor who has additional training, certifications and/or experience.
Specialization: Some financial advisors focus on serving individual or retail clients and others concentrate on business or institutional clients. Some securities firms prefer that financial advisors specialize in this fashion, others leave it up to the individual advisors to choose whatever mix of clients they prefer. Business clients who require specialized advice and services (such as in working capital management or business loans) may prefer financial advisors with detailed knowledge in these areas.
Education: A bachelor's degree is expected for a financial advisor. Coursework in finance, accounting and/or economics is helpful, though not required. Strong quantitative and analytic skills are vital. An MBA can give you a leg up in the hiring process, depending on the firm and the situation, as might legal studies or a law degree. In any case, compensation (see below) is tied strictly to performance, not to academic credentials.
Entering the Field: Major Wall Street firms used to run extensive financial advisor training programs, mainly for recent college graduates, but many of these have been dismantled over the past decade to save costs. Entering the field thus is becoming more difficult. Instead, firms increasingly rely on recruiting experienced financial advisors from competitors. When they do train new ones, they usually seek experienced financial industry professionals looking for a career change. Moreover, becoming a financial advisor today often requires intensive networking, aimed at finding an established individual practitioner or team willing to take on an apprentice, to help in serving and/or expanding his/her/their book of business.
Certification: Becoming a financial advisor requires passing the Series 7 exam offered by FINRA and meeting continuing education requirements. You must be sponsored by a FINRA member firm (that is, your employer) to sit for the Series 7 exam. In some firms, for certain more senior financial advisor positions, and in some states, one or more additional credentials may be required.
Duties and Responsibilities: Financial advisors counsel clients on investment opportunities, consonant with the latter's needs, goals and tolerance for risk. The job requires keeping abreast of the financial markets, constantly monitoring the specific investments in clients' portfolios, and being on top of new investment strategies and investment vehicles. Financial advisors must be confident about decision-making under uncertainty and under extreme time pressure, have excellent people and communication skills, and know how to deal with failure and with dissatisfied clients. Success is highly dependent on sales ability, both in the acquisition of new clients and in the pitching of investment ideas to existing clients. Serving clients, compliance and practice management are closely-intertwined issues for financial advisors.
Financial advisors can greatly enhance their productivity and their ability to serve a large book of business if they are supported by one or more sales assistants. However, in many financial services firms, financial advisors must fund the pay of their sales assistants, in whole or in part, out of their own compensation (see below).
Typical Schedule: The Bureau of Labor Statistics reports that 24% work more than 50 hours per week. However, the actual time commitment can be much heavier (60-80 hours per week or more), both for those starting out in the field and for established financial advisors committed to delivering excellent service and to growing their business.
What's to Like: Financial advisors have a high degree of professional autonomy, more akin to being an independent entrepreneur than a corporate employee. There is a close correlation between performance and reward, with virtually unlimited earnings potential. Do your job well, and you make a discernible, positive impact on your clients' lives.
What's Not to Like: The pressures on a financial advisor to process a constant avalanche of information, to make quick decisions under uncertainty that, if wrong, can be costly to clients, to sell constantly and to justify yourself daily can be overwhelming for some people.
Compensation Range: Per the Bureau of Labor Statistics, median annual compensation was about $64,750 as of May 2010, with the top 10% earning over $166,400. Financial advisor compensation typically is commission-based. That is, a financial advisor gets a share of the revenue generated for the firm by his/her clients. Other metrics, such as the total value of client financial assets on deposit with the financial advisor's firm, may also factor into compensation. Top financial advisors can earn well over $1,000,000.
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