Hoping to be a financial advisor and not sure if the profession is worth it?
No need to worry.
In this article, you’ll learn about:
By the end of the blog, you’ll have the answer to the fundamental question that every aspiring financial advisor is struggling with.
Without further ado, let’s dive right in.
Is Financial Advisor a Good Career?
Financial advising can be a lucrative career for individuals who love to serve others and have a passion for sales.
It takes time to build a sustainable career in the industry, but once established, the client base feeds on itself.
That is to say.
Advisors keep getting referrals from the clients they serve.
Apart from that, advisors play a major role in people’s financial life.
Every day there’s a potential of an advisor making a difference in someone’s life.
Who doesn’t want that?
But wait, there’s more.
As an advisor gains experience, their potential earning increases and they also gain more control over their time.
More importantly, the pressure to deliver and the unending prospecting process in the first five years helps one develop a tough skin that’s enough to last them a lifetime.
Pros and Cons of Being a Financial Advisor
Just like any other profession, financial advising has its own good side and challenges.
Pros of Being a Financial Advisor
There are several advantages to being a financial advisor.
Here are the top five.
Unlimited Earning Potential
According to the U.S. Bureau of Labor Statistics (BLS), the median salary of a personal financial advisor is $89,330.
Advisors’ earning potential increases as they gain experience in the field.
And even then, there is no limit to how much a financial advisor can earn.
Whether they are fee-only, commission-only, or a hybrid, their earning potential solely depends on their own financial goals.
Of course, other factors, like the firm they work in and its payment structure, may also impact their earning potential.
Besides that, financial advisors earn commission regularly for the financial products, such as mutual funds or annuities they sell.
When they are charging a fee for financial services offered, they are equally set up to earn higher income as advisors fix their fees themselves and schedule the number of clients they see on a given day.
But to hit the top 10 percentile, an advisor will have to put in the work.
Marketing to increase their firm’s brand visibility or promote their own services comes at a cost.
But there’s always a return on investment when done right.
Opportunity to Help Others
The opportunity to help others tops the list on why a financial advisor career is so fulfilling.
Many people are saving money, but they don’t have the slightest idea of how to make this money work for them.
Often they live from pay-check-to-pay-check, hoping that things will look up soon.
Whether working for an advisory firm or independently, financial advisors have one goal in mind: to help people manage their money.
They can help their clients reach their financial goals using proven strategies.
Advisors take pride in helping clients buy their dream home, achieve their retirement plans, or take their children to college.
They provide meaningful financial advice on which financial products to invest in and the investment strategies that will better suit the client.
When their clients meet their goals, advisors can see their hard work bear fruit, positively impacting people’s lives one at a time.
Flexible Work Schedule
A flexible work schedule is yet another reason why a financial advisor career is attractive.
Unlike most 9-5 jobs where one has to report to the office in the morning and only leave in the evening, advisors can work on their own terms.
This is especially true as an advisor advances in their career.
An experienced advisor has the privilege of working less than 40 hours per week as long as they are meeting their goals.
They can plan clients’ meetings around their schedule, giving them the work-life balance we all crave.
Important to mention is that it takes time for a new advisor to enjoy such flexibility.
But once they’ve established a client base, they can adopt schedules that work for them.
Financial advisors can choose self-employment over employment.
Getting started on self-employment will require an advisor to have a few years of experience.
A certified financial planner (CFP), for example, can open a practice in their home to minimize overhead costs.
Self-employment comes with even more flexible working hours, though it’s demanding.
It allows an advisor to structure their work schedule around their personal life.
An advisor can meet their household demands and equally meet their professional goals.
Additionally, setting up is low cost.
An advisor will part with some bucks for the regulatory fees, acquiring the licenses, and setting up a website.
Self-employment may translate to advisors meeting new clients at their homes or offices or at the advisor’s home office.
When the latter is the case, an advisor must go a notch higher to ensure their home office is ideal for client meet-ups.
Still, some advisors set up their offices in the city.
Opportunity to Niche Down
When starting as a new advisor, there is a high chance that one will focus on offering a wide range of services to anyone who needs it.
However, as an investment advisor advances in career, they can streamline their client base and service offerings.
The niche an advisor chooses depends on their experience and certification.
An advisor can choose to provide a wide range of financial services to a particular demography.
The idea is to differentiate themselves from the rest and target a specific group of people they enjoy working with.
A financial advisor can resort to targeting gen X, millennials, or baby boomers.
They can further specialize by working with a particular profession within the chosen group.
This can be doctors, professional athletes, lawyers, entrepreneurs, or pilots.
Niching gives advisors a competitive edge in the financial service industry, as they only attract specific customers.
It also allows them to learn more about their client base and tailor financial plans that work best for that particular group.
Cons of Being a Financial Advisor
It’s not all rosy in the financial advisory industry.
There are several challenges along the way that advisors must endure to enjoy the sweet side of the financial advisor career we’ve just discussed.
Prospecting is the most challenging part of being an advisor.
Brokerage firms have monthly quotas that advisors must meet all year round.
This calls for round-the-clock prospecting, with some new advisors working up to 60 hours a week to reach their quota.
This career path requires hard work.
Financial advisors are always looking for clients through calls, emails, networking events, conferences, or LinkedIn.
The process of establishing a solid client base takes time and money.
This can be challenging for financial advisors getting started without a strong network.
It’s particularly difficult in the first five years if an advisor doesn’t have any other income.
Moreover, with lots of information online about managing finances, some people opt not to hire a financial advisor.
However, as an advisor gains experience, it becomes easier to get referrals from previous clients.
An advisor will need strong willpower to consistently market themselves despite the setbacks.
Lots of Stress
It’s easy to manage a single financial plan, guide two clients on retirement planning or offer financial advice to five clients.
But when the numbers skyrocket to 50 or 100 or even 300, it’s a lot more stressful to keep tabs on everything.
And yes, that’s where technology comes in, but still, advisors have a role to play.
Advisors are always thinking on their feet.
They must have strong analytical skills and be able to multitask.
Since the financial market performance is directly affected by the global and domestic market, advisors do more than just investment management.
When the market is crumbling down, they have to reach out to their clients, give them the bad news and offer emotional support if need be.
All this is on top of their daily struggle of prospecting for clients.
So, to perform their tasks effectively, managing one’s schedule to ensure maximum productivity is of utmost importance.
Requirements to Be Met
There are several requirements one must meet to be a financial advisor.
Let’s start with the long lessons when studying for a bachelor’s degree certificate.
After the degree, an advisor starts the journey of working for an advisory firm.
Financial service firms will only sponsor an advisor to take the license exams if the advisor is performing.
So, the dream of self-employment will be tucked away for some years.
Further, Financial Industry Regulatory Authority (FINRA) requires licensed advisors to comply with the set code of conduct.
More than that, advisors must learn about sales and marketing, customer care, psychology, and finance.
And it doesn’t stop there.
Financial advisors are required to take continuing education every year to maintain their licenses.
Moreover, there are several certifications that advisors take to have a competitive advantage.
It’s a never-ending education process.
Even when an advisor thinks it’s done, they’ll be a workshop or seminar to sharpen their skill set in a particular area.
Beyond the education requirement, there are regulations that advisors must comply with.
Advisors are always with errors and omission insurance.
They are also required to register with the Securities and Exchange Commission (SEC) or state regulatory authority, depending on the value of investments they are managing.
Financial planners working with Registered Investment Advisors (RIA) are required to be fiduciaries.
They are required by law to always act in their clients’ best interests at all times.
All these requirements make the financial advisory industry challenging.
But on the bright side, the education qualifications and the regulation’s requirements equip advisors with what it takes to offer legit financial planning services.
Benefits of Being a Financial Advisor
The benefits of being a financial advisor are diverse.
Keep reading to find out what one stands to gain as an advisor.
Satisfaction with Helping People
The satisfaction that comes with helping clients reach their financial goals is what keeps many advisors going.
Financial advising offers advisors a unique opportunity to manage a very crucial part of someone’s life.
At the end of the day, how their financial decisions transform clients’ lives is the most fulfilling part of being a financial advisor.
Financial advisors work with a wide range of clients, from high-net-worth clients to middle-income individuals.
Financial planners get the opportunity to know more about their clients beyond finances.
That is their families, businesses, interests, aspirations, and fears.
Sometimes the connections advisors build with clients are not only professional but also personal.
When need be, advisors can leverage their pool of network.
Since they have clients across different industries, it becomes easier to get help, especially when their services positively impacted the client’s life.
But it’s not only about getting assistance.
Advisors can leverage their network for referrals.
Unlimited Employment Opportunities
The opportunities in the industry are diverse, just like there is a wide range of professionals referred to as financial advisors.
Advisors can work in banks, brokerages, insurance firms, investment houses, RIA, or open their own practice.
Sometimes, one can work as a part-time financial planner, as they do another full-time job.
Besides, with the many sectors in the industry, an advisor can easily switch jobs with the right training.
Most advisors start out selling and buying financial products.
With time, they take certifications and quickly shift to CFP.
They can also jump from one position to another, such as a financial analyst to a portfolio manager.
Not many jobs give people the flexibility to make a consistent stream of income on the side.
Excellent Work-Life Balance
More than anything else, the work-life balance that comes with establishing oneself in the industry is to die for.
Successful advisors working in large financial firms have flexible working hours than many professionals.
Advisors who have their RIAs also have an excellent work-life balance.
Since they have a huge client base, these advisors don’t have to worry about prospecting all the time.
They have a steady income, and most of their work revolves around upselling to the clients they already have.
They equally enjoy leads from their network of clients.
Lessons About Personal Finances
Helping clients have a secured financial life is honorable.
But more than helping others, personal financial advisors learn about managing their own finances.
As advisors guide clients in financial planning, they become experts themselves at every stage of the financial journey.
Moreover, the same investment strategies an advisor finds helpful in their own lives. They tailor the same for the clients.
Good financial advisors preach water and drink water.
Lastly, taking the licenses exams and certification programs while working is a huge lesson on finance management.
Hard Work Pays
With 90% of financial advisors failing in the first three years of their financial planning career, it’s public knowledge that not everyone is cut to be an advisor.
It takes years of education, specialized training, and sheer commitment.
Advisors are required to be on call all the time for when the clients need their help.
But all the hard work pays off once an advisor starts helping clients make the most of their personal finance.
A financial advisor is assured of success if their client’s wealth grows.
How? you ask.
A satisfied client stays.
They stay for a long time because they can always bank on the advisor’s expertise on all matters related to finance.
Watertight financial advice delivers results.
Therefore, when an advisor’s recommendations on mutual funds, life insurance, or annuities do well, so does the advisor’s earning.
The more an advisor helps clients with wealth management, investment strategies, and retirement planning, the more trustworthy and successful they become.
They get more referrals and basically attract more new clients.
With hard work, advisors stand to earn more and enjoy a thoroughly fulfilling career.
Reasons Why Most Financial Advisors Fail
Up to this point, we can all agree that being a financial advisor is a great career choice.
But there’s one question, though, if the advisory career is so great, why do most financial advisors fail?
The huge failure rate, especially in the first years, can be linked to:
Failure to Prospect
Success in the advisory industry is closely tied to the number of clients an advisor has.
The only way to find clients is through marketing oneself and the services offered.
That’s why prospecting ranks at the top of the roles of an advisor.
Thus, any advisor that’s not into sales is most likely to fail.
In fact, they can’t help anyone if there are no clients to be helped.
So, what’s the way out?
Advisors can leverage several strategies, including cold calling, social media marketing, emails, and referrals, to grow their careers.
Giving up Easily
The times an advisor gets a “no” in the industry are way too many.
Negative reports like a client leaving, a prospect losing interest, and people being rude are part and parcel of the job.
Many financial advisors get discouraged at the first “no” they get.
One moment defines their whole career trajectory.
However, if an advisor has a goal in mind, they’ll keep going even during the bad days.
Thinking the Market Is Too Competitive
Thinking the market is too competitive that there’s no room for other advisors could be the reason many new advisors don’t give prospecting their all.
But what an advisor should consider is that there is a wide range of professionals in the industry.
A client won’t really know the difference between a RIA and a registered representative.
It’s only when an advisor articulates who they are and what they offer that they can differentiate themselves.
In addition, being that many advisors are generalists, one can differentiate themselves by targeting a particular group.
A Short-Sighted Outlook
The only advisors that make it in the industry are the ones with long-term goals.
A short-sighted outlook leads to cutting corners in the name of meeting today’s needs at the expense of tomorrow’s.
At the end of the day, an advisor ends up making financial decisions that are not in the client’s best interest.
Before they know it, they are knocked out of the market.