How to Become a Financial Advisor | Financial Advisors

In some ways, being a financial advisor is like being a therapist: You share in your clients’ biggest life events – such as having a baby, retiring and handling inheritance – and are often tasked with helping them address their fears, such as recessions or running out of money.

This is part of what makes a career as a financial advisor so rewarding, but it’s also why becoming a financial advisor isn’t easy.

“Giving advice to clients is a privilege,” says Rianka R. Dorsainvil, a certified financial planner in the District of Columbia and co-founder and co-CEO of 2050 Wealth Partners. They’re trusting you with the intimate details of their finances. Earning that trust requires passing rigorous exams and holding yourself to the highest standards of professionalism and integrity.

Is a financial advisor the right career for you? Here are several factors that go into that decision, and steps to take toward becoming a financial advisor:

  • What does a financial advisor do?
  • Responsibilities of financial advisors.
  • Day-to-day activities of financial advisors.
  • Is this the right career path for you?
  • The financial advisor skill set.
  • Questions to ask yourself before becoming a financial advisor.
  • Financial advisor requirements.
  • How to become a financial advisor: a step-by-step guide.
  • Becoming a registered investment advisor.
  • What does the Investment Advisors Act of 1940 do?
  • Who is subject to the Investment Advisors Act?
  • How to register as an RIA.
  • Salary snapshot.
  • How long is the process of becoming a financial advisor?
  • Robo advisors and modern financial planning.

What Does a Financial Advisor Do?

Financial advisors help their clients make more informed financial decisions. Those decisions can be around anything from how to start investing to retirement or estate planning.

They can work in a variety of settings, the most common being large financial institutions such as banks or brokerage firms, with smaller firms and independent, self-employed advisors becoming increasingly popular.

Some advisors specialize in a certain area, such as retirement planning or investment management; a particular client type, such as those within a given net worth or age bracket; or a specific account type, such as workplace plans.

Responsibilities of Financial Advisors

Regardless of their specialization, all financial advisors have the same objective: to help their clients “figure out their life’s financial puzzle,” says Adam Breazeale, a senior financial planner at Charles Schwab in Panama City Beach, Florida.

“We look at where our clients are relative to where they want to be, then provide the tools and solutions necessary to create a road map for success,” Breazeale says.

This guidance comes with enormous responsibility. Financial advisors have the ability to transform their clients’ lives every day.

Day-to-Day Activities of Financial Advisors

Financial advisors spend their days “meeting with prospective clients, implementing solutions with new clients and reviewing plans with existing clients,” Breazeale says.

Every day is different because every client has a different need, says Michelle Bender, a certified financial planner at Potomac Financial Consultants in Germantown, Maryland. On a typical day, she’ll meet, virtually or in person, with five to six clients, spending six to eight hours of her day in client meetings.

“I’d say 85% of our conversations are around saving for retirement,” Bender says. “The core is always: Do we have enough for retirement? Then the ancillaries are college, saving for a house” and other financial goals.

When they aren’t in front of clients, financial advisors are often prepping for client meetings and marketing themselves to prospective clients through networking or marketing events. They’re also constantly attending continuing education seminars “to keep fresh on the financial services industry and maintain (industry) licenses,” Bender says.

To juggle all of this, Bender limits client meetings to three days per week. “I find having client-focused days and non-client-focused days helps my schedule flow better both professionally and personally,” she says.

Is This the Right Career Path for You?

“One thing people need to understand is it’s largely a sales profession,” Breazeale says. Even if you choose not to run your own business, you still need to get clients.

Becoming a financial advisor also requires patience, Bender says, both in terms of building your client base, called a book of business, and in dealing with clients. Every client has a different need and requires a different approach, she says.

Financial advisors need both strong interpersonal and analytical skills. They must be able to analyze investment and financial data, then clearly communicate their findings with their clients.

The Financial Advisor Skill Set

Some of the skills a financial advisor needs include:

  • Aptitude for sales and marketing.
  • Attention to detail.
  • Adept at building strong client relationships.
  • Comfort with numbers and analyzing data.
  • Ability to communicate with a wide range of people.
  • Knack for simplifying complex ideas.

Questions to Ask Yourself Before Becoming a Financial Advisor

Ask yourself these questions to decide whether the financial advisor career path is right for you:

  • Are you passionate about helping people financially?
  • Do you want a customer-facing role that requires working and communicating with a variety of people?
  • Are you comfortable networking and reaching out to strangers?
  • Does the idea of actively promoting your services to others excite you?
  • Do you enjoy working with numbers or have an interest in investments and financial planning?
  • Are you comfortable making decisions for yourself and others?

If you answered “yes” to all or most of these questions, a career as a financial advisor may be right for you.

Financial Advisor Requirements

One of the best aspects of the financial advisor career path is that it’s open to nearly anyone. You just need to meet a few financial advisor requirements:

  • A bachelor’s degree in any subject.
  • The necessary industry licenses or certifications, which are usually determined by your employer or chosen career path.

How to Become a Financial Advisor: A Step-by-Step Guide

No one walks out of college ready to advise clients financially. Often you’ll begin by doing back-end office work or supporting another advisor until you pass the necessary exams to get certified.

Once licensed or certified, you can progress to building and managing your own book of business. And as your expertise grows, so too can the size of your book and the net worth of your clients.

Here are the steps to becoming a financial advisor:

1. Earn a bachelor’s degree.

You need a bachelor’s degree to become a financial advisor, but it doesn’t need to be in a specific major. You don’t need to get a financially relevant degree – although having one will likely help with the exams, Bender says. Taking courses in finance, investments, estate planning and risk management is a good idea.

If you choose to become a certified financial planner, or CFP, you’ll need to complete a CFP Board of Standards-approved, college-level program in personal financial planning or an accepted equivalent. Many universities, including online ones, now offer qualifying programs. You can find a full list of accepted programs on the CFP Board website.

The CFP Board also offers scholarships to help aspiring CFPs complete their education requirement. The deadline to apply this year is April 3, 2022.

2. Consider an internship.

Getting your first job as a financial advisor can be a challenge, especially if you don’t have any relevant experience or coursework. Bender says she’d “struggle to bring in” for an interview an applicant who lacked experience and had not taken the appropriate courses. If this is you, consider an internship before applying for a full-time job.

3. Acquire the proper certifications and licenses.

“There are three different channels you can work in in the financial services industry,” Dorsainvil says. You can work for a broker-dealer like Morgan Stanley or Fidelity; for a bank with a financial advisor arm; or for a smaller, independent firm.

Where you work and the level of services you provide to clients will determine which licenses and certifications you need to become a financial advisor.

If your role involves selling investment products, which is common at broker-dealers and banks, you’ll need to pass certain exams administered by the Financial Industry Regulatory Authority, or FINRA. These may include:

  • Securities Industry Essentials (SIE) exam
  • Series 6: Investment Company and Variable Contracts Products Representative Qualification Examination (IR)
  • Series 7: General Securities Representative Qualification Examination (GS)
  • Series 63: Uniform Securities State Law Examination
  • Series 65: Uniform Investment Advisor Law Examination
  • Series 66: Uniform Combined State Law Examination

The exams are multiple-choice and range from 75 minutes to three hours. FINRA provides details for each exam – such as the number of questions, time limits, content outlines and what constitutes a passing score – on its website.
There are other licensing exams that may be required for different roles within the financial advisor industry, such as if you take on a management or compliance role at your firm, which requires passing certain principal-level exams.

To sell insurance-related products, such as annuities, you’ll also need a state insurance license in the state you plan to sell them.

4. Find your first job.

The large broker-dealers are a good place to start your career as a financial advisor, Bender says. “They teach you a lot about cold-calling and how to build a book of business,” and can also help if your interest lies in managing investments rather than clients.

“But if you think you want to go the financial planning route, then a small to midsize firm that focuses on full service” is a great place to start, she says.

Wherever you get your first job as a financial advisor, look for an employer that provides in-depth, on-the-job training. After you get your foot in the door, consider seeking out a mentor. Having a mentor and joining a financial planning organization were the things that helped Bender the most in launching her career.

The CFP Board connects financial planner mentors and mentees through its mentorship program, although a mentor could also just be the author of a book.

Once you get your first job in financial services, the focus will likely shift to quickly taking your exams. So be prepared to study before, during and after work.

5. Want to become a certified financial planner instead?

If your role won’t require the actual selling of investment products but rather focuses solely on the financial planning side, which is common at smaller, independent firms, you may not need your FINRA licenses. Instead, you could obtain your CFP marks. That isn’t to say getting your CFP designation is any easier than being licensed with FINRA.

The CFP exam is a six-hour, one-day marathon where you’re tested on the components of financial planning. Like the FINRA exams, it is computer-based and multiple-choice. With an average pass rate around 62% in 2019, it’s not a test to be taken lightly.

“It’s not an exam where you can just not study and think you’ll pass,” Dorsainvil says. “It requires a different level of mental readiness.”

In addition to the exam, you need 6,000 hours of professional experience or 4,000 hours of apprenticeship experience in financial planning to become a CFP. This amounts to about three years of full-time work experience. The CFP Board lays out the requirements for this experience on its website.

You don’t need to complete your experience hours before taking the exam. They just need to be completed within five years of passing the exam.

Becoming a CFP is not a requirement to be a financial advisor, but it can help distinguish you as more credible to clients looking for comprehensive financial planning.

Becoming a Registered Investment Advisor (RIA)

If you’re of the entrepreneurial mindset, you can take the financial advisor career path one step further by setting up your own practice. If you want to become an independent financial advisor, you’ll likely need to register your firm with the SEC as a registered investment advisor, or RIA, and yourself as an investment advisor representative, or IAR.

Note the distinction here: Your firm is an RIA, while you and any individuals who provide investment advice at that firm are IARs of that business.

To become an IAR, you must pass the Series 65 or Series 66 exam and complete the registration process outlined by the Investment Advisors Act of 1940.

What Does the Investment Advisors Act of 1940 Do?

RIAs and IARs are subject to the regulation of the Investment Advisors Act of 1940. The act is a federal law written by the SEC that sets the legal definition and framework for regulating “investment advisors.”

Who Is Subject to the Investment Advisors Act?

According to the act, an investment advisor is a person or firm that is engaged in the business of advising, recommending or writing reports or analyses on securities for compensation. Certain forms of financial advice are exempt from the law, but the majority of financial advisors are subject to the Investment Advisors Act of 1940 and thus need to register with the SEC or their state securities authority.

How to Register as an RIA

How you register as an RIA and with whom depends on the size of your firm. Generally, smaller advisors with less than $100 million in assets under management must register with the state authority in which you do business. Advisors with more than $100 million in assets under management or who do business in 15 or more states register with the SEC.

Likewise, if your principal state does not have regulations governing investment advisors, you fall under the SEC’s jurisdiction.

Salary Snapshot

Financial advisors typically earn an annual salary plus bonuses or commissions. “Some firms provide a base salary the first six, 12 or 18 months as long as certain (sales) goals are met,” Breazeale says.

That base pay can be minor compared with the bonuses. For instance, you may have a base salary of $50,000 but earn six figures in variable pay.

Other advisors work on a fee-only basis, meaning they earn a single fee for all services provided. This is more common among independent advisors.

How Long Is the Process of Becoming a Financial Advisor?

Depending on the path you take to become a financial advisor, it could take less than five years to seven or more years to become a financial advisor.

The fastest route is likely to obtain your series licenses with FINRA, which require no prior job experience. After completing your bachelor’s degree, you could study and pass your exams in a matter of months. But FINRA licenses alone don’t equip you with all the necessary knowledge and expertise to handle every real-life situation. Some things can only be learned through time spent on the job.

This is why to become a CFP, you need those three years of work experience. Combined with a four-year degree, it could take seven years or longer to become a CFP.

Robo Advisors and Modern Financial Planning

Robo advisors are disrupting the financial services industry, but experts say they’re not going to replace personal financial advisors. In fact, the experts referenced in this story think robo advisors are a good addition to their roles.

Robo advisors are great for young investors just getting started who want professional management at a low cost, Breazeale says. “As their net worth increases, and their life becomes more complex, they can transition to a more traditional advisor relationship.”

At Financially Wise, they leverage robo advisors for the investment side of their business so that advisors can focus on more important issues, such as making sure their clients are happy and fulfilled in their financial lives.

Robo advisors are good for the financial industry because they’re “challenging financial advisors and planners to show their value outside of investments,” Dorsainvil says. Investment management can be commoditized, but comprehensive financial planning cannot.






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