Financial Advisor Career Profile
Financial Adviser Roles and Responsibilities
Financial advisers, formerly called stockbrokers, brokers, account executives, or registered representatives, were primarily responsible for buying and selling securities, such as stocks and bonds, on behalf of clients. These responsibilities have changed to include financial advice and guidance on investment strategies, mutual funds, bonds, and stocks.
The change in titles and responsibilities has much to do with meeting client needs in a continually changing economy. In addition to facilitating transactions, financial advisers need to be investment advisers and financial planners who take a holistic view of their clients' financial needs and goals. Other variations in title, such as wealth management adviser, also are used, sometimes to denote a financial adviser who has additional training, certifications, or experience.
Though the term financial adviser has been in general use since the early 1990s, it is not without controversy. Many critics still maintain that it implies adherence to the strict fiduciary standard that requires acting in the best interests of clients, rather than the less stringent suitability standard that traditionally binds brokers. For example, Merrill Lynch was among the last of the major firms to adopt the term, entirely due to this concern on the part of its legal and compliance department, which was very conservative at the time.
Some financial advisers focus on serving individual or retail clients, while others concentrate on business or institutional clients. There are securities firms that prefer their financial advisers to specialize in one type of client, rather than a mix of clients, however there are other firms who allow their financial advisers to serve a mix of clients. Business clients who require specialized advice and services involving, say, working capital management or business loans, may prefer financial advisers with detailed knowledge in these areas.
Duties and Responsibilities
Financial advisers counsel clients on investment opportunities, consistent with the latter's needs, goals, and tolerance for risk. The job requires keeping abreast of the financial markets, constantly monitoring the specific investments in clients' portfolios, and staying current on new investment strategies and vehicles. Financial advisers must be confident about decision-making with uncertainty and under extreme time pressure, have excellent people and communication skills, and know how to deal with failure and with dissatisfied clients.
Success is highly dependent on sales ability, both in the acquisition of new clients and in the pitching of investment ideas to existing clients. Client service, compliance, and practice management are closely intertwined issues for financial advisers.
Financial advisers can greatly enhance their productivity and ability to serve a large book of business if they are supported by one or more sales assistants. However, in many financial service firms, financial advisers must pay their sales assistants, in whole or in part, out of their own compensation.
The Bureau of Labor Statistics (BLS) reports that 24 percent of financial advisers work more than 50 hours per week. However, the actual time commitment can be much higher (60 to 80 hours per week or more), both for those starting out in the field and for established financial advisers committed to delivering excellent service and to growing their business.
Financial advisers have a high degree of professional autonomy, more akin to being an independent entrepreneur than a corporate employee. There is a close link between performance and reward, with virtually unlimited earnings potential. Do your job well, and you make a discernible, positive impact on your clients' lives.
The responsibilities of a financial adviser can be overwhelming, as they are under pressure to provide accurate, timely information to clients. Financial advisers must process a constant flood of information; make quick, accurate decisions; and sell services daily. There is not much room for error, as poor decisions can be costly to clients and ruin your's and your firm's reputation.
Median annual compensation in 2018 was $58,720, with 90 percent earning between $36,239 and $158,167. Financial adviser compensation typically is commission-based. That is, a financial adviser gets a share of the revenue generated for the firm by their clients. Other metrics, such as the total value of client financial assets on deposit with the financial adviser's firm, may also factor into compensation. Top financial advisers can earn well over $1,000,000.
Financial advisers are experts at successfully managing their relationships inside and outside of the firm. They also have the ability to work well under pressure. Many securities firms look for financial advisers with these skills, who have previous experience working in the financial sector with clients and have an honest, hard-working reputation among peers.