Hey everyone, welcome to the most beneficial write-up on the pros and cons of a Financial Advisor.
At the end of this, you will understand that although the career journey of a Financial Advisor is rewarding, it also has its drawbacks and challenges. But then, there is a lot of success and rewards therein too. You’ll get to know them all before the end of the article.
Well, this article covers:
Without further delay, let’s get started!
Financial Advisor Pros and Cons
Are you considering pursuing a career as a Financial Advisor?
Without a doubt, there are many benefits that come from offering financial advice to individuals and entities.
However, the career is not without its drawbacks and is not for those with half-hearted ambition or goals.
To help people far and wide make an informed decision, Career Employer has compiled a list of the pros and cons of being a Financial Advisor.
For those who are looking to go all the way, our team has added extra information that may prove crucial in the future.
The Pros of Being a Financial Advisor
If you have made the decision to pursue a career as a Financial Advisor, there are many benefits accruable to you.
The team at Career Employer has put together a few benefits of choosing to be a Financial Advisor.
Demand for the job
It is also recommended to pursue a career in a field that is on the rise.
According to Investopedia, the demand for financial services is bound to increase in the nearby future.
The website projects a growth rate of approximately 15% in the next 5 years.
This is substantially higher than the 7% growth rate that was estimated by the Bureau of Labor Statistics.
Offering consequential and important advice
Many may argue that the most important part of any career is the compensation attached to it.
But life is more than that.
It is about doing something worthwhile and being able to help others through service.
This leaves an impact on the lives of those you interact with.
The most rewarding part of any Financial Advisor’s career is educating your clients.
You will be tasked with educating baby boomers, millennials, and zoomers.
Each type of client has different financial goals and needs as your financial advice will be crucial to how well they achieve those goals in the near future.
Great income potential
For full-time Financial Advisors, there are several ways to earn an income.
You can make a living through a commission-based, fee-based, or a combination of both systems.
Provided that you are able to lock in new job opportunities in the industry, the sky’s the limit.
If you are able to chart your own career path and be self-employed, the better; a world of unlimited earning potential awaits you.
Another challenge that is plaguing the career industry is achieving a work-life balance.
It is important to be able to enjoy the fruits of your hard labor by taking care of your body, your mental health, and your family.
This kind of work-life balance is also possible if you pursue a career in the financial services industry.
Given this, you will have to put in the hard work, prospecting in possible niches, and establishing a client base.
But once the foundation is set, you can enjoy the flexibility that the career offers.
Experienced Financial Planners can set up meetings around their personal calendars, working less than 40 hours a week.
This setup gives them time to perfect their craft by attending seminars, taking up online classes, or doing that MBA.
Creativity and diversity
Financial Advisors have the choice of building a diverse client base.
Professionals in the field can find themselves advising on retirement plans, wealth management, or estate planning.
Professionals in the field are also looking to work as personal Financial Advisors.
This allows them to provide a wide scope of products and services.
The Cons of Being a Financial Adviser
While the benefits make a future in financial planning and advising lucrative, the profession, like every other, comes with its own set of disadvantages.
Let’s have a look at a few downsides.
The work of a Financial Advisor can be considered similar to that of a psychologist.
When a person is troubled by the performance of their investments or the domestic/ global market, they will turn to their advisors first.
Financial Advisors are therefore expected to manage the stress of several individuals and entities at the same time.
Such an environment can take a toll on you.
New Advisors looking to start off their career find it to be an arduous task.
To set up a strong and diverse base, Advisors will need to put in a considerable amount of time and effort on a daily basis.
This is often considered one of the most challenging parts of the career.
Compliance to regulatory requirements
To be a Certified Financial Planner, there are certain requirements that an individual must meet.
They must have graduated from a reputable and recognized school, been trained by a senior professional in the same field, and passed a series of exams.
In addition, Advisors are mandated to meet a certain number of continuous professional development hours or courses each year.
There is also the matter of insurance, to be more specific professional indemnity and omissions coverage.
The purpose of this insurance is to protect the public from errors and negligence committed by professionals in their day-to-day activities.
These insurance coverages are costly as they must be maintained on a yearly basis.
The professional cannot offer services of any kind without insurance.
The Grass is Greener On This Side
All things considered, choosing to pursue a career in the financial services industry is a prudent move that comes highly recommended.
But since it is a competitive and highly regulated profession, you might need a few tips to market yourself differently from your colleagues.
To help you, the team at Career Employer has compiled a few tips that may prove you crucial.
Registered Investment Advisor
This is a goal that every young professional in the field should yearn for.
Getting licensed or registered is not too difficult.
It is necessary that you receive formal training for several years.
Consider working for an orthodox brokerage firm e.g. Charles Schwab, Merrill Lynch, or A.G. Edwards.
Depending on the firm you apprentice under, they might even be willing to pay for your Series 7 Securities Exam.
It should be noted that companies/professionals who consider themselves fee-based Advisors might not require the Series 7 Securities license.
They seek accreditation by becoming Registered Investment Advisors (RIA).
The market for financial services is a bit skewed.
People in need of your services will not come to you because of your market acumen or friendly persona.
They will gravitate more towards already established companies.
This doesn’t paint a good picture especially with the thousands of dollars that you spent as start-up costs.
First and foremost, you must be willing to give it your all to establish yourself in the market.
Getting the first 100 clients will require that you put in the hard work needed.
Referrals will come in once you have a firm foot in the industry.
Our second piece of advice revolves around a marketing plan.
There is no one-size-fits-all solution when it comes to marketing.
Prepare a marketing plan that meets your needs as a company.
It is best you use a combined solution that balances digital solutions (social media and blog sites) and more traditional options.
The experienced team at Career Employer recommends making use of the following marketing solutions:
- Cold calling is a tried and tested maneuver that has worked in the past.
- Email marketing
- Setting up workshops and seminars
- Creating a network with centers or persons of influence, for example Accountants, Mutual funds Managers, Estate agents and Fiduciary lawyers etc.
Make your special
Ask yourself this question: why should a client approach me and no other existing Financial Advisor in the area?
What can draw them in and keep them in a seat for 15 minutes for you to pitch your idea?
From our experience in the industry, it is either you have novel ideas or have the credentials.
If you have a unique solution on annuities, asset protection, or estate planning, you are halfway there.
What remains is how you present your fresh idea to an audience and set up that meeting.
What is the percentage of the population that knows the difference between a CFP, CFA, CLU, and CAS?
We can confirm to you that it is a very small population, save for the educational providers.
However, your clients will be impressed by the letters on your business card or brochure.
Certification differentiates you from other service providers in the market.
It also gives your potential clients reason to seek you out and ask for your professional advice on a matter or two.
Don’t underestimate the power of the CPAs or any other abbreviation in luring potential clients.
The bottom line
A career as a Financial Advisor is not meant for everyone.
It requires that individuals put in the time, effort, and work through the hard times.
The profession offers great returns either in terms of annual fee payments or commission.
You should check out our expertly-crafted resources on the different financial services professionals, their career paths, educational requirements, and job outlook.