If you’re wondering what to do for a living, you might want to become a financial advisor. Being smart with money is more important than ever nowadays. Many people lost their jobs and businesses, and they’re still having a hard time with the effects of COVID on their lives. That’s where you can fill that demand as a financial advisor!
You might think this job just means telling people how to handle their money. However, it provides more services outside of personal finance advice. For example, some financial advisors provide investment advice, while others allow you to purchase assets. Of course, you can make a lot of money from this job.
To better understand what it’s like, we’ll discuss how financial advisors help people. Then, we’ll go through their typical day and talk about how they earn money. We will then turn the focus on you by checking if you should become a financial advisor or not. Finally, we will show you what you need to do to become a financial advisor.
Why is a financial advisor important?
We emphasized how important financial advice is during the COVID times. Yet, people have always needed financial advisors due to the following reasons:
- Buying a home – Purchasing a home is complicated and expensive, making it one of the biggest decisions you will make in your life. An advisor can help you make sense of the jargon and prepare the needed payments.
- Investment goals – You may talk with an advisor on how to invest for your future. They will match your goals with the right assets. What’s more, they will discuss risk management since you can always lose money when investing.
- Choosing assets – Picking assets for your portfolio can be surprisingly personal. Some folks are willing to risk it all, while others fear losing any amount. A financial advisor considers your attitude while being objective in selecting your assets.
- Staying on track – Advisors are also there to make sure you can keep following your financial goals. That’s not always easy when you feel left out of a booming asset or disappointed after yours tanked. Your advisor could talk you through these things, so you can let the emotions pass and continue your goals.
- Financial safety – People easily fall for scams nowadays, such as the Chinese person who lost $28,000 after pouring it into a Squid Game-themed cryptocurrency! If you’re not careful, you could end up broke from just one bad bet. Your advisor can guide you away from scams and into real investments.
- Tax planning – It’s hard to keep track of taxes on your assets, especially the new ones like bitcoin IRAs. A financial advisor can point out the ones you need to pay and compute how much you need.
What are the types of financial advisors?
These pros do more than just give money advice. If you don’t want to be a personal financial advisor, you might want to become these other types:
- Financial planners – These folks help people and businesses develop a plan to reach their financial goals.
- Investment advisors – Like financial planners, they help manage assets, except they only deal with investments. They weigh the pros and cons so that the client can choose the best ones. They must all get a license from the North American Securities Administrators Association.
- Investment representatives – You need to reach out to them to buy stocks, bonds, mutual funds, ETFs, and other assets. The Bureau of Labor Statistics refers to them as Securities, Commodities, and Financial Services Sales Agents.
- Credit counselors – If you need to get rid of debt, they’re the people you need. This type of financial advisor helps in planning debt payoff for clients. That way, they could improve their finances and earn good credit.
How do they make money?
Financial advisors may play different roles, but their workdays are often similar. Here’s how a typical day goes for these professionals:
- Meeting with clients face-to-face.
- Talking about the types of financial services they offer.
- Advising clients about investments and their potential risks.
- Helping them choose investments or doing it on their behalf.
- Track client accounts to see if they should be adjusted in any way.
- Looking for new investment opportunities.
What’s more, advisors earn based on their payment models:
- Commission-only – You pay the advisor upfront as a percentage of the money you’ll invest. If you’re investing $1,000 on a mutual fund with a 5{797b2db22838fb4c5c6528cb4bf0d5060811ff68c73c9b00453f5f3f4ad9306b} commission, $950 goes to the fund while $50 goes to the advisor.
- Fee-only – Some advisors charge you by the hour, and what’s more, you’ll have to pay a flat fee based on the services you’re getting from them. Others charge a retainer fee of around 0.5{797b2db22838fb4c5c6528cb4bf0d5060811ff68c73c9b00453f5f3f4ad9306b} to 2{797b2db22838fb4c5c6528cb4bf0d5060811ff68c73c9b00453f5f3f4ad9306b} based on the investments they’re managing for you.
- Fee-based – Think of these as the previous types combined. You’ll pay them an hourly rate and a certain amount based on the assets they recommend.
According to Indeed, the average salary for a financial advisor as of November 2, 2021, is $73,970. That could get bigger because more people are looking for these pros nowadays!
Read More: How To Make Money Online For Beginners
How do I become a financial advisor?
Now we’re ready to talk about how to become an advisor too! First, you will need to get a bachelor’s degree in finance, accounting, business, or similar fields.
After graduating, you will most likely need to work as an intern. You’re fresh out of school, so you don’t have any experience yet. This will help you find a full-time job afterward.
You will have to get licenses depending on the type of financial advisor you want to be. Here are the ones you need to get for each role:
- Certified Financial Planner (CFP) – Becoming a financial planner requires passing the CFP exam. Besides passing CFP board testing, you’ll need to have worked with the planning process for at least three years.
- Chartered Financial Analyst (CFA) – Get this if you want career options like consulting, research, and portfolio management.
- FINRA exams – If you want a job that involves selling stocks and other investments, you’ll need to pass the Financial Industry Regulatory Authority exams.
These aren’t the only licenses you may need to start financial advising. After that’s done, it’s time to find your first job. This could also help with other licensing requirements.
As you learn more about the job, you might need to go back to school. Today’s job market involves constant learning. The world is changing every day, so you need to adapt by continuing education.
You could check the FINRA website or similar sources for the latest updates. Also, you may want to get an MBA. Fortunately, they’re available on the internet!
Is it worth it to become a financial advisor?
As we said, you can make a lot of money if you become a financial advisor. What’s more, it can open a lot of doors to so many other jobs.
These aren’t the only important things to think about when looking for a job. You have to see if it will fit your skills right now. Here are the ones you should have for this specific role:
- A knack for marketing and sales
- Looking closely at details
- Connecting with clients
- Making sense of numbers and data
- Able to speak with all sorts of people
- Good at making complicated ideas simple for others
Next, you should see if it matches your lifestyle and interests. Check that by asking the following questions. If you answered “yes” to most or all of these, the job might be right for you:
- Do you want to help people in handling their money?
- Are you willing to do a job where you talk to all sorts of people?
- Are you okay with reaching out to strangers?
- Do you like the idea of promoting to others what you can do?
- Do you love working with numbers?
- Are you interested in planning assets and budgets?
- Will you be able to decide for other people?
What if it’s not for me?
It’s okay if you don’t want to become a financial advisor. Everyone is different, so not every option is right for us. Besides, you can take so many other jobs!
Remote work is trending nowadays, so you may want to start there. Find a job you can do at home. Aside from making money, they could expand your career options.
You learn skills and build up experience from your work. With the help of work-from-home jobs, you could qualify for new roles. Even better, you can do them from your comfy house!
What’s more, trades jobs are in-demand nowadays. You can take them even if you haven’t finished college, but they’re just like any other job. You might even make more money from them!
We know it’s tough to find a job, especially because of COVID. If you can’t follow your dream career right now, these could help you make ends meet for a while.
Some people even end up liking their new trade jobs! While you’re at it, you could try investing. Nowadays, it’s easier because of smartphone apps like Robinhood.
It’s a good idea even if you don’t want to become a financial advisor. Buying stocks, bonds, and other assets can help you improve your money situation and secure life in your later years.
Final thoughts
We just talked about the basics of how to become a financial advisor. You can look at so many free online resources if you want to learn more.
The world is changing quickly every day, so you should do your best to keep up with it. This means honing your mind by learning more skills and info.
Look no further than the other articles from Inquirer USA. These can help you make sense of the latest trends and find the most promising investments.
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