Becoming a financial advisor is a career path you might consider if you enjoy helping others and have a passion for finance. Like any other profession, there are both advantages and disadvantages to working in the financial services industry. Weighing the main pros and cons of becoming a financial advisor can help you decide if it’s the right field for you.
If you’re ready to kick off your financial advisory business but want to do it in a streamlined way, take a look at SmartAsset’s SmartAdvisor platform.
What Do Financial Advisors Do?
Financial advisors offer financial advice to clients. That’s a simplified explanation but it gets to the heart of what being an advisor is all about. A financial advisor works with clients to help them define their financial goals, develop strategies for reaching those goals and implement them. Financial advisors can offer advice in a broad range of areas, including:
- Investment planning
- Retirement planning
- College planning
Advisors may serve lots of different types of clients or focus on a specific niche or market segment. For example, some financial advisors work exclusively with high-net-worth clients while others cater their services to women.
Financial advisors are paid for their services, typically on a fee-based or fee-only basis. Fee-based advisors can charge a fee for services and receive commissions from recommending specific products to their clients. Fee-only advisors only get paid based on the services they offer.
A financial advisor can hold one or more professional certifications. For example, a Chartered Financial Analyst (CFA) designation means that an advisor has specialized expertise and knowledge in the areas of investment planning and portfolio management. A Certified Financial Planner (CFP), meanwhile, may offer a broader scope of financial advice that covers retirement, investing and taxes, among other topics.
Pros and Cons of Becoming a Financial Advisor
Being a financial advisor comes with certain benefits, but it’s important to keep the potential downsides in mind. If you’re weighing the merits of a career in financial services, here are some of the key things to know.
Pros of Being a Financial Advisor
- Being an advisor is an opportunity to share your knowledge and expertise with others.
- You can make a positive impact on your client’s lives and helping them to achieve their goals can be extremely gratifying.
- Advisor careers can offer flexibility, especially if you’re operating your own practice.
- There’s unlimited earning potential, as demand for financial advice remains steady.
- You can use your creativity and there are always opportunities to learn, adapt and grow.
Cons of Being a Financial Advisor
- Building an advisor practice and growing a client base may be challenging.
- Completing the necessary requirements to get certified and licensed can be time-consuming and costly.
- Working hours are often long, particularly in the early stages of growing an advisor business.
- Constant interaction with others can make this career less attractive for individuals who are introverted.
- Starting an advisor practice can require a sizable amount of capital.
Assessing your personality type, work ethic and overall interest in finance can help you clarify whether a financial advisor career may be a good fit.
If you’re someone who thrives on meeting new people and you can work 40 to 50 hours a week without batting an eye, for instance, then you might see a career in financial advice as a challenge you can’t wait to dive into. On the other hand, if you’re more introverted you might need to consider how you can structure your business so that you’re able to serve your clients’ needs to minimize social fatigue.
Is It Worth It to Become a Financial Advisor?
Pursuing a career path as a financial advisor could absolutely be worth it if you’re passionate about finance and helping others to realize their goals. Income potential aside, being a financial advisor may appeal to you if you enjoy work that’s challenging and you’re interested in a career that allows you to build relationships with others.
Of course, it’s important to consider the investment of time and money that may be required to become an advisor and grow your business. You may feel that you’ve wasted both if you put in the work to become an advisor, only to realize later that it’s not really what you want to do.
It’s also helpful to remember that working with people can be a stressful job, especially if you and your clients’ personalities don’t always gel. Keeping the duties and responsibilities of a financial advisor in perspective and setting realistic expectations can help you to mentally prepare for the demands of the job.
How Do You Become a Financial Advisor?
Becoming a financial advisor typically begins with earning a bachelor’s degree in a finance-related field. For example, you might get a degree in accounting, economics or finance. At a minimum, it’s helpful to complete coursework in areas that are relevant to finance, even if your degree program is focused elsewhere.
Note that if you plan to get a CFP designation, you’ll need to complete an approved degree program. The Certified Financial Planner Board of Standards maintains a list of accepted programs on its website.
If you plan to sell investment products or offer investment-related advice, you’ll need to know which additional designations or licenses you need. For example, if you’re interested in the wealth management niche, you’ll likely need to complete the Series 65 exam to obtain a license. That exam, along with other required exams for financial advisor licensing, is administered by FINRA.
While completing the coursework and exam requirements to become a financial advisor can be daunting, the bigger challenge may be getting hired if you’re not yet ready to launch your own practice. Completing an internship and focusing on building out your network are two strategies that could help you to get hired.
The Bottom Line
A career as a financial advisor can be rewarding but it may not be right for everyone. Talking to other advisors about what they do can help you gain more insight into what you can expect and what this type of job requires. If you decide that becoming a financial advisor is right for you, finding a mentor to follow can help with navigating the waters.
Tips for Jump-Starting Your Financial Advisory Business
- Make it easier for clients to find you. If you’re ready to kick off your financial advisory business but want to do it in a streamlined way, take a look at SmartAsset’s SmartAdvisor platform. We match certified financial advisors with right-fit clients across the U.S., helping you to grow your client base conveniently online.
- Expand your radius. SmartAsset’s recent survey shows that many advisors expect to continue meeting with clients remotely following COVID-19. Consider broadening your search. And work with investors who are more comfortable with holding virtual meetings or spacing out in-person meetings.
Photo credit: ©iStock.com/SDI Productions, ©iStock.com/Riska, ©iStock.com/Milos Dimic