According to the Bureau of Labor Statistics (BLS), the median annual salary for a financial advisor was $99,580 as of May 2023, significantly above the national average of $65,470. However, salaries can vary greatly depending on location, experience and the advisor’s client base. An advisor’s earnings can also be influenced by the specific needs and profiles of their clients. If you’re looking for help managing your finances or preparing for retirement, consider consulting a financial advisor.
What Is a Financial Advisor?
A financial advisor meets with clients and makes recommendations on how they can improve various aspects of their financial life. This can include guiding clients through everything from creating budgets to retirement planning. Financial advisors may also manage investment portfolios; however, most choose to specialize in one area, such as taxes or estate planning.
The term financial advisor doesn’t apply to just one profession. It’s more of a blanket term that includes financial planners, insurance agents, stock brokers, tax professionals and even some bankers.
How Much Do Financial Advisors Make?
BLS data shows that the median annual wage for financial advisors in 2023 was $99,580. But there’s a big difference between the highest- and lowest-earning financial advisors. Here’s a breakdown of the hourly and annual wages of the highest- and lowest-earning financial advisors:
National Financial Advisor Salaries in 2023
| Percentile | 10th | 25th | 50th (Median) | 75th | 90th |
| Hourly Wage | $23.43 | $31.41 | $47.88 | $81.69 | ≥$115.00 |
| Annual Wage | $48,730 | $65,320 | $99,580 | $169,910 | ≥$239,000 |
As you can see above, the lowest 10th percentile of financial advisors earned just $48,730. Meanwhile, the top 10th percentile made over $239,000, or about five times as much.
One factor that drives this gap is industry concentration, as financial advisors often wear many different hats, real estate brokers and sales agents, to financial analysts and managers.
How Do Financial Advisors Make Money?
When it comes to pay, there are a few main ways that financial advisors can earn money. Fee-only advisors charge typical management and planning fees to clients. Fee-based advisors do the same. These charges can come in the form of hourly fees, fixed fees or fees based on overall assets under management (AUM).
As an example, let’s say a financial advisor charges a 2% annual fee on a client’s AUM. If the advisor handles $10,000 of their assets, then they will pay a fee of $200 each year.
Fee-only and fee-based financial advisors differ in their approach to compensation outside of client fees. Fee-only advisors strictly avoid any non-client-based compensation, focusing solely on the services they provide to clients. In contrast, fee-based advisors may receive commissions from selling specific financial products, like securities or insurance.
From a consumer perspective, fee-only advisors are often seen as a more objective choice, as their income depends exclusively on the services they offer, reducing potential conflicts of interest. By contrast, fee-based advisors may face incentives to promote particular products due to commission opportunities, potentially influencing their recommendations. However, it’s relatively uncommon for advisors to rely solely on commission-based earnings.
Some advisors are salaried, particularly those working within banks or other financial institutions. These advisors might also receive bonuses or commissions for selling specific products, though their primary income comes from a fixed salary.
Industry Outlook for Financial Advisors
The BLS projects the employment of financial advisors will jump by 15% between 2016 and 2026. The climb paces much higher than the average for all occupations in the country. The government ties this growth to an aging population that will soon demand advice around retirement planning. In particular, the BLS sites the shift to individual retirement accounts (IRAs) and 401(k) plans from traditional pensions as a main driver behind the demand for financial advice.
It also notes that the rise of robo-advisors may temporarily lessen demand for financial advisors. But it also notes that “the impact of this technology should be limited as consumers continue turning to human advisors for more complex and specialized investment advice over the next 10 years.”
But if you’re interested in becoming a financial advisor, note that some states offer more opportunities than others. The latest BLS data shows that California ranks among the highest in terms of financial advisor employment. More than 28,000 people serve in the profession as “personal financial advisors” in the Golden State. We detail some of the the main points below:
States With the Most Financial Advisors in 2020
| State | Employment | Hourly Mean Wage | Annual Mean Wage |
| California | 32,100 | $68.86 | $143,240 |
| New York | 27,440 | $98.98 | $205,870 |
| Florida | 20,920 | $72.38 | $150,550 |
| Texas | 18,740 | $56.92 | $118,390 |
| Illinois | 14,500 | $65.98 | $137,240 |
How to Become a Financial Advisor
At the most basic level, a financial advisor needs to have financial expertise. Most have at least a bachelor’s degree but the exact degree could be in finance, business or economics. Some universities offer a specific degree for something like financial planning.
Because a financial advisor needs to work closely with and understand clients, individuals from non-finance backgrounds, like psychology, might also find success. Having a sales background can help because many advisors work off commission.
Financial advisors will also need to earn certain certifications or licenses depending on the fields they want to work in. Each certification program will have its own requirements. These requirement could include a specific degree, coursework, a certain amount of experience or passing exams.
To get a better idea of what attaining a certification is like, consider a few common examples:
- Certified Financial Planner™ (CFP®): In order to become a CFP, you need to first meet certain educational requirements and have a few years of experience in the industry. Only then will you be able to take the CFP exam, which you’d obviously have to pass to earn this designation.
- Chartered financial analyst (CFA): This is one of the most popular and respected certifications an advisor can have. For starters, you need to have a bachelor’s degree and four years of advising experience. You then must pass three six-hour exams in order to receive certification.
- Certified public accountant (CPA): If you want to specialize in taxes and tax planning, becoming a CPA is the universal starting point. This distinct certification requires specific coursework, two years of experience and the passing of an exam.
Bottom Line
Financial advisors are typically experts in certain areas of finance, and they use that expertise to help clients make wise financial decisions. The term financial advisor actually covers a number of different professions, with each focusing on a slightly different area of financial management and/or planning. If you want to build a career as a financial advisor, you’ll likely need a bachelor’s degree plus at least one certification that relates specifically to what you want to do.
Tips for Choosing a Financial Advisor
- There are many ways a financial advisor can help you, as they often have substantial experience in dealing with various types of financial issues. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- As you search for an advisor, look for someone who has the proper certifications. Take a look over these top 10 financial certifications to get prepared beforehand. If you’re looking for help with your taxes, you might want to find a CPA. For anyone getting a divorce, a certified divorce financial analyst (CDFA) could be helpful.
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