When it comes to saving money, we have a wide array of options ranging from stashing it under our mattress to placing it in a savings account or investing in stocks. With so many different savings choices available, people often need an expert to deliver solid financial advice on where to they should trust their hard-earned money. That’s exactly where personal financial advisors come in. Personal financial advisors help clients plan for meeting their short and long-term financial goals. Many people turn to personal financial advisors to receive helpful guidance on:
- investments
- taxes
- insurance
- retirement planning
- college tuition expenses
Personal financial advisors play a big role in monitoring clients’ savings and investment accounts to ensure they have the funding for whatever life changes lie ahead.
Salary
According to the Bureau of Labor Statistics, the average annual salary for the 183,420 personal financial advisors employed nationwide is $99,920. This could be equivalent to $48.04 per hour. Personal financial advisors who work in depository credit intermediation earn significantly less at $74,730. Those working in securities and commodity brokerages bring home an average of $104,900 each year.
Beginning Salary
Personal financial advisors with little to no experience often start in bottom 10% of the profession with a median salary of around $33,190. While this seems low, personal financial advisors who gain more professional experience can advance to making upwards of $124,680 annually with time.
Key Responsibilities
When first meeting with a new client, personal financial advisors are responsible for:
- discussing their financial goals
- explaining various types of financial services available
- answering their questions about savings options as well as their risks
Personal financial advisors will then recommend or select investments on their client’s behalf to plan for a specific situation, such as retirement. Financial advisors will receive regular investment reports for each client to carefully track progress and suggest ways to improve account performance if necessary. Many personal financial advisors also spend a large chunk of their time marketing their financial services by:
- teaching seminars
- exchanging financial help
- networking with businesses
Necessary Skills
Due to the nature of the work, personal financial advisors must have strong analytical skills. They take into account economic trends, regulatory changes, and risk in managing their clients’ investment portfolios. Mathematical skills are a must to work the numbers and determine how investments are performing. Interpersonal relations are a large part of the job. Financial advisors should have the communication skills to answer their clients’ questions in understandable language and build relationships on trust. Sales skills are also important because personal financial advisors must persuade others to use their financial services in order to expand their client base.
Degree and Education Requirements
Personal financial advisors typically must earn at least a four-year bachelor’s degree from a regionally accredited institution. While a specific major is not required, personal financial advisors often choose to pursue an undergraduate degree in:
- finance
- economics
- accounting
- business administration
- statistics
- or applied mathematics
In some cases, individuals are able to find programs specifically related to financial planning as well. Regardless of the major, it’s advised that aspiring personal financial advisors take courses related to:
- investing
- taxation
- estate planning
- business law
- risk management
Earning a Master of Business Administration (MBA) or Master of Science in Finance (MSF) is also an option for financial advisors seeking to move into managerial positions and attract high-end clients.
Pros and Cons of the Position
While it’s clear that the salary potential is a major win, personal financial advisors often report that their freedom is the biggest pro to the position. Since around one-third of all personal financial advisors are self-employed, many enjoy being their own boss and managing their business independently. This means that the commission-based salary is virtually limitless for those who are:
- disciplined
- diligent
- enthusiastic
As with any other career, there are some downsides though. Financial advisors often need to travel to conferences for drumming up new clients. Competition between advisors is heating up, despite healthy job growth. Plus, personal financial advisors typically face long hours beyond the standard 40-hour work week meeting with clients and complying with complex, tedious regulations.
Getting Started
After earning an appropriate education, you’ll likely need to pursue licensure to begin directly buying or selling:
- stocks
- bonds
- insurance policies
Smaller firms that manage clients’ investments typically require advisors to be registered with state regulators. Larger firms mandate that their personal financial advisors be registered with the Securities and Exchange Commission (SEC). Then, you’ll need to start getting your feet wet by taking an entry-level or internship position related to financial advisement or planning. Start building your resume with experience:
- creating client portfolios
- offering financial advice
- working with a wide range of investment funds
Once acquiring at least three years of relevant work experience, advisors should earn the Certified Financial Planner (CFP) credential by passing the certification exam and adhering to a code of ethics.
Future Outlook
Hordes of people from the large baby boomer population are reaching retirement age. There is expected to be a fast-growing demand for personal financial advisors to share their financial planning expertise for building a successful retirement period. Funds for corporate and state pensions are also decreasing. This means that personal financial advisors will need to work with more working individuals to ensure good retirement planning. According to the Bureau of Labor Statistics, the employment of personal advisors is projected to grow much faster in comparison to other financial sector jobs at the rapid rate of 27%. This could translate into around 60,300 new jobs at:
- financial institutions
- corporations
- credit intermediation chains
- banks
- securities and commodities brokerages
- insurance carriers
- private firms
Overall, personal financial advisors have a rewarding career. They counsel clients on different investment opportunities in accordance with their financial needs to help achieve maximum earning potential. Whether clients are planning to buy a house, have children, or retire, personal financial advisors stand ready to offer sound advice on how best to save, invest, and grow their monetary funds. If you’re pursuing a career as a personal financial advisor, you’ll enter a favorable job market to provide clients with guidance on choosing the right financial products and building a diversified investment portfolio.
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