What is a Financial Advisor?

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You've heard the term, Financial Advisor, you've probably even watched some movies that portray Financial Advisors, but have you ever wondered what a financial advisor actual is? What do they do and is it necessary to have one? If you've ever wondered any of these things or maybe even considered a career as a Financial Advisor, this post is for you. 

What is a Financial Advisor?

A financial advisor is one who works with clients to provide guidance and financial advice on topics such as estate planning, insurance, investment management and tax planning. 

What Does a Financial Advisor Do?

Financial advisor job duties can include but not limited to:

Reviewing client’s existing situation for understanding; identifying problem areas that need to be addressed

Taking notes and asking questions to understand comprehensive picture of client’s financial objectives, concern, and goals (information gathering, review, follow-up)

Preparing client presentation of wealth management recommendations and delivering a presentation in an easy to understand manner.

Displaying professional competence and keeping current on industry news, and technology.

Demonstrating the ability to identifying cross-selling opportunities with current clients; identifying and communicating these opportunities to the client's advisor

Ability to analyze basic financial data and draw reasonable recommendations and conclusions

Processing client business, trades, and other client service issues.

Ability to identify changes in circumstance (economic, legislative, social, personal) that may require a change in investment approach or methodology clients.

Updating client files with changes in circumstance and complying to all fiduciary standards.

Build a network of new potential clients for business development and growth.

Maintaining continuing education's (CE) requirements.

Who are Financial Advisors?

The term “Financial Advisor” is a generic term and many different types of financial professionals may perform similar job duties

Private Client Advisor Wealth Management Advisor
Insurance agent (must be Series 7 Licence)


Financial Representative

Independent Financial Advisor

Private Client Advisor

Certified Financial Planners (CFP)

Investment Advisors Financial Planners

Where do Financial Advisors Work?

Financial Advisors can work for a “Wirehouse” such as Morgan Stanley, and UBS a regional bank such as Chase or Fifth Third or they can work as “independent” for a boutique firm.

How to find a Financial Advisor

Finding a financial advisor can be challenging, especially given the amount of trust that is required. In my experience, the best way to find a financial advisor is to first identify what is most important to you.

Once you identify the most important criteria then it is best to interview 2 or 3 advisers until you find one that you are very comfortable with. For instance, if educational credentials are most important then you can find advisors who completed the rigorous requirements of the Certified Financial Planner™  or CFP™ HERE.

If fees are most important, and you are relatively savvy then a discount brokerage firms like Fidelity, Charles Schwab, WealthFront or Betterment may suit you best. If you have a substantial amount of assets (over $10 million) I would recommend you look at Private Wealth Groups who are suited to handle your assets.

Wirehouse firms likeMorgan Stanley, and Merrill Lynch typically have Private Wealth Management Groups. The National Association of Financial Planning (NAPFA) and technology sites like GuideVine and Credio have made finding a financial advisor easier than ever.

What are a Financial Advisors job qualifications?

Bachelor's degree in business, finance, sales, marketing or a related field or equivalent to five years professional experience in business development, management, sales, legal, accounting, education, military, finance or other business

Excellent communication, presentation, organization skills

Strong community presence with an established network of contacts

Ability to listen to client needs and provide financial solutions

Authorization to work in the U.S. without restriction as to duration

Successful completion of background check and pre-employment assessments

 Successful completion of Series 7 and Series 66 exams within the time frame provided by applicable company policy

What is a Financial Advisor's salary?

According to the Department the Labor and Statistics, the median annual wage for personal financial advisors was $90,530 in May 2016. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $41,160, and the highest 10 percent earned more than $208,000.

For entry-level advisors, the firm typically provides a base salary for the first three years. That salary typically is reduced on an incremental schedule over those three years. The idea is that once you get through training and you acquire new clients, the business you bring in should supplement your reducing salary completely replacing it after your first three years.

The starting salary can range anywhere from $45,000 - $80,000. Also, once a new advisor passes their series 7 and insurance exams, they typically have a minimum threshold (of generated revenue) the firm has set in order for that advisor to receive their commission in addition to their salary. 

How do Financial Advisor's get paid?

There are three ways financial advisors are paid.

Fee-only (at a fixed rate, as a percent of assets, at an hourly fee, or as performance-based)

Fee-based (a base fee and a commission)

 Commission-only (only on transactions)

The benefit of a Fee-only and a fee-based account is that both interests the advisor and the client are in line with one another. This is because as the client's assets grow so does the advisor’s compensation on that client.

Say for instance you are paying 1% of the total assets under management and you have a portfolio of $1 million. That means that the advisor is compensated $10,000 a year.

However, if the advisor is able to grow the client's assets to $1.5 million then the advisor's compensation increases to $15,000 a year for that client. In my experience, I have found the more assets a client has with a firm the smaller the fee typically ranging between 1% to 2% of total assets under management.

How to become a Financial Advisor

There is a HUGE need for new advisors. With the largest generation (baby boomers) retiring and the transfer of generational wealth the Department of Labor Statistics estimates a job growth of over 30% from 2014-2024 adding nearly 75,000 jobs. The career can be very rewarding and lucrative but I would strongly encourage you to do your research first. You can check out How To Become a Financial Advisor for more information. 

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