Because financial advisors play an important role in helping people make decisions with their money, the path to becoming one is not necessarily easy. Becoming a financial advisor requires a hefty amount of education, testing, and experience. However, if you stick to that path then you may open up opportunities for advancement and other career moves in the future.
Education for Financial Advisors
Education is a critical step on the path to becoming a financial advisor. To start, you usually need to get a bachelor’s degree in a finance, economics, statistics, or another finance-related field. Earning a graduate degree can not only give you a competitive advantage when looking for work, but some firms require their advisors to have a master’s in business administration (MBA). In some cases, you can work on your MBA while pursuing work in the field at a lower level.
People who want to become financial advisors can also obtain one or all of these certifications: Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Chartered Financial Consultant (ChFC). Although the certifications aren’t necessarily required to become a financial advisor, having one can help you get more work and higher-paying jobs.
The CFA certification is considered the most prestigious since it’s harder to get. It takes about four years to earn the CFA credential, which involves passing three exams that require more than 300 hours of study each. Other requirements include a bachelor’s degree, four or more years of professional work experience (it doesn’t have to be related to finance), and two or three letters of reference.
To get a CFP certification, you must have a bachelor’s degree, complete courses outlined by the CFP Board, and then pass the CFP Exam. You must also complete 6,000 hours (about two years) of related experience before you can apply for certification, or 4,000 if you meet certain criteria.
Earning a ChFC is a bit different. To get the certification, you can complete eight self-study courses at your own pace and pass a final exam within four months of course completion. You must have three years of full-time business experience as well, or two years if you also have a bachelor’s or master’s degree.
No matter which certification you choose, they all have continuing education and ongoing recertification requirements that you must complete if you want to keep your credentials.
Starting Out as a Financial Advisor
Since the certification programs all require some work experience, many people pursuing a career as a financial advisor with no previous experience start by working in a more junior type of position at a financial firm while they finish their education or obtain their credentials. Many firms offer internships as well, and if you're still in school or a recent graduate, check with your institution to see if it partners with any firms.
There are many places you can work as a financial advisor, and the type of firm you join depends on what’s most important to you. Big-name firms like Charles Schwab or Fidelity Investments generally offer more robust training programs and support, but climbing the ranks in such large companies can be harder. Often, advisors at big firms must meet tough production quotas as well.
Smaller, more boutique firms may not offer the same level of training or brand-name recognition you might get with a larger firm, but compensation can sometimes be better. You may also have the opportunity to do more types of work and gain a wider range of experience in a smaller firm, and a better chance of advancing in your career.
Many financial advisors choose to start their own companies and work for themselves. This route is usually better suited for people who already have some experience in the industry.
Other Career Opportunities for Financial Advisors
Being a financial advisor can open up other possible career paths and options for advancement. For financial advisors who have developed expertise in a specific area of investing or client service, becoming a specialist at either a regional or national level within a firm is possible.
In some firms, some financial advisors technically remain within the function but reduce or eliminate their own interactions with clients, and instead turn to actively managing client accounts on behalf of the firm's other financial advisors.
Those interested in pursuing a management track can move on to become a branch sales manager or branch manager for a financial institution. Depending on the firm's policies and the size of the office, a financial advisor who moves into a branch management position may or may not have the opportunity to retain a book of business.
Financial advisors who move into branch sales manager or branch manager positions may use these posts as stepping-stones to regional or national sales force management positions, or into a variety of management positions in other areas, such as marketing or product management.