The Comprehensive Guide to How to Become a Financial Advisor

by Sammi Caramela

Many – if not most – people struggle with their finances at some point in their lives. Often, it has less to do with how much they earn and more to do with with how they manage their money.

That’s where financial advisors come into play.

But being the right person to give financial advice comes down to more than a stock-picking know-how. Because they handle other people’s money, accredited financial advisors must be experts in their craft, obtaining high levels of education and hands-on experience to earn their credibility. Additionally, they must learn to empathize with their clients to help them transition through financial milestones, like paying off college, purchasing a home, or planning for retirement.

If you’re considering becoming a financial advisor, you have a long, yet rewarding journey ahead of you – and a lot of options. If you’re willing to put in the time and energy, you’ll be rewarded with a fulfilling career and the knowledge that your work has the potential to change the lives of your clients.

Here’s a comprehensive guide to becoming a financial advisor.

What do financial advisors do?

Financial advisors help clients manage their money and prepare for major life changes like getting married, having a child, house hunting and planning for retirement.

Some of their core responsibilities include:

  • Investment management
  • Holistic financial planning
  • Estate planning
  • Insurance
  • Retirement planning
  • Debt reduction
  • Tax planning

When earning your degree or certification, you can specialize in any of these areas. However, many advisors try to be versatile and help their clients with multiple points.

Necessary degrees/certifications

The preferred degree for financial advisors is a bachelor’s in business, accounting, finance, or economics. Depending on the school or program you’re involved in, you might choose a concentration in a specific area, like financial planning, retirement, taxes, or risk management. It’s possible to become a financial advisor with a degree in a different discipline, but you may have to complete additional coursework.

Perhaps the most important step of all, however, is attaining appropriate certification. While there are many options to choose from, there are really only three credentials that separate you from the pack:

Certified Financial Planner® (CFP)

Receiving your CFP certification requires you to complete CFP coursework and pass the CFP exam. You’ll also need relevant job experience, and you must satisfy the CFP board’s fitness standards, which includes ethics standards and a background check.

Chartered Financial Analyst (CFA)

Earning your CFA certification requires you to enroll in the CFA Program (must have formal education or four years of work experience) and pass three exams. These exams are spread over several years and cover accounting, economics, ethics, finance, and mathematics. You also must have four years of professional work experience in investment decision-making and become a regular member of the CFA Institute.

Personal Financial Specialist (PFS)

If you’re looking to be the cream of the crop, consider the road to becoming a PFS. In order to gain a PFS certification, you must already have your CPA (certified public accountant) license. Additionally, you will need at least two years of full-time business or teaching experience in personal financial planning and 75 hours of continuing professional development within five years of applying for CPA/PFS. You then must pass the PFS exam.

CFP and PFS holders must also complete continuing education requirements throughout their career in order to maintain their certification.

Marketing your financial services

To gain clients, financial advisors, especially those who run their own businesses, need to market their services. Just because you’ve put in the work and earned the acronym after your name doesn’t mean clients will automatically come running to you.

You’re going to need to put yourself out there.

However, in doing so, it’s crucial to follow the ethics and standards of conduct for the regulatory body that governs your credentials. Many of these regulations affect how you advertise your business/offerings. To err on the side of caution, here are some tips for marketing your financial services:

Keep track of emails/social media posts.

While social media marketing is an efficient way to gain clients, you must follow the Financial Industry Regulatory Authority rules for communicating with the public.

First, keep your business’ social media posts preserved for at least three years. You also must understand the difference between static content (less immediate and posted for longer periods of time; must be approved by a registered principal) and interactive communications (real-time and involving third-parties; does not need to be approved if supervised).

Don’t advise.

Your financial advice depends entirely on the individual you’re working with (i.e. their career, risk tolerance, personal situation, etc.), so it’s impossible to offer blanket financial advice.. Plus, advising while marketing your services can breach compliance.

Be wary of third-party websites.

Linking to another company’s website or article essentially tells your audience that you “adopt” their opinions. If that site contains any false or misleading content, you’re at risk for compliance issues.

Follow CAN-SPAM Act

The CAN-SPAM Act requires businesses of all sorts, including sole financial advisors, to follow these rules when sending emails:

  • Don’t use false or misleading headers;
  • Don’t use deceptive subject lines;
  • Identify messages as ads;
  • Tell recipients your location;
  • Tell recipients how to opt out of future emails;
  • Honor opt-out requests promptly;
  • Monitor what others are doing on your behalf.

Don’t lie/mislead.

Generally, the SEC prohibits you from providing misleading statements/testimonials to gain a client. Simply be ethical and honest, don’t solicit, and provide necessary disclaimers.

Outsource compliance reviewers.

When in doubt, ask an expert to review your content for compliance.

Bottom line

Becoming a financial advisor is no easy feat — and it shouldn’t be. Your clients will essentially place their financial health and future in your hands.

However, if you’re willing to work for this title to help others achieve stability, you’re the right person for the job. What are you waiting for?

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