Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

Becoming a financial advisor can be a rewarding career choice; they help people save for their future and make wise investment choices. To become one, you’ll need to find a firm, get licensed and start building a book of business.

If you’re considering becoming a financial advisor, this is what you need to know.

What Does a Financial Advisor Do?

A financial advisor provides advice and guidance to clients regarding investments, insurance and other financial planning matters. They also help clients set financial goals and make plans to achieve those goals.

In addition to providing advice on investments, financial advisors help clients plan for retirement, manage their taxes and navigate life changes such as marriage or the birth of a child.

Responsibilities of Financial Advisors

Financial advisors have a wide range of responsibilities, all of which contribute to helping their clients reach their financial goals. But one of the most important responsibilities is to study investments and strategies. This includes keeping up with current trends, understanding how different investments work, and knowing when to buy and sell.

Another key responsibility is meeting with clients. This gives advisors the chance to get to know their clients, understand their financial situations and assess their needs. Based on this information, advisors can then help clients choose investments and strategies that are right for them.

Related: Free Quiz Matches You With Vetted Financial Advisors

Types of Financial Advisors

Most financial advisors are essentially stock brokers with some baseline knowledge of finance and requisite licenses that let them help clients choose securities and investment strategies.

However, there are also advisors with more specialized skills. These include: financial planners who help clients build comprehensive financial plans, investment advisors who manage clients’ money and analysts who study specific securities.

Some types of financial advisors include:

  • Certified financial planner (CFP). To become a CFP, you must complete a rigorous certification process that requires passing challenging exams. CFPs specialize in building comprehensive financial plans for clients.
  • Chartered financial analyst (CFA). This type of financial professional has been certified by the CFA Institute to help value securities that investors buy and sell.
  • Registered Investment Advisor (RIA). This is a company that employs individual financial advisors and is registered with the U.S. Securities and Exchange Commission (SEC) or individual states. Employees of RIAs have the ability to make investment decisions on clients’ behalf.
  • Chartered financial consultant (ChFC). This type of advisor has been certified by The American College of Financial Services to help clients with a range of financial planning issues.

Financial Advisor Licenses

There are many different financial advisor licenses issued by the Financial Industry Regulatory Authority, or FINRA, that allow advisors to provide different services to clients. Each license has different requirements, but all involve passing an exam and meeting continuing education requirements.

Here are five licenses that can help advisors offer a wide range of services:

  • Series 7: The General Securities Representative Qualification Examination—or the Series 7 exam—is the standard licensing exam for registered representatives. Passing the Series 7 allows an individual to become a stockbroker or security trader. You must work for a FINRA member firm to take the test and gain this license.
  • Series 6: The Investment Company and Variable Contracts Products Representative Qualification Examination is a consolidated exam similar to the Series 7 that qualifies individuals to sell mutual funds and variable annuities.
  • Series 63: The Uniform Securities Agent State Law Examination is an exam required by most U.S. states for individuals who wish to sell securities. This license is required in addition to the Series 7 for advisors to sell securities in most states.
  • Series 65: The Uniform Investment Advisor Law Examination is required for individuals who wish to become investment advisor representatives and make investment recommendations to clients or manage investments on their behalf.
  • Series 66: The Uniform Combined State Law Examination is a combination of the Series 63 and 65 exams. Passing it allows an individual to work as an investment advisor representative and sell securities in most states.

How to Become a Financial Advisor

Becoming a financial advisor typically involves completing certain industry-specific training, passing an exam and obtaining licenses. If you’re ready for a career in finance, consider the requirements to be a financial advisor and follow these steps:

1. Get a Job

The first step toward becoming a financial advisor is to get a job at a firm that will sponsor you for your licenses. Some firms hire people with no experience in the financial industry and train them to become financial advisors. However, these firms are usually looking for people with strong sales skills, so if you have experience selling products or services, include it in your resume and during your interview.

2. Pass Necessary Licensing Exams

For anyone looking to enter the financial advising industry, passing the required licensing exams is an essential first step. This usually requires passing the FINRA Series 7 Exam as well as additional exams based on the types of products and services you want to sell. For example, if you want to sell securities in most states and recommend securities to clients, you’ll need to pass the FINRA Series 66 Exam.

3. Undergo a Background Check

As part of the registration process as a new financial advisor, you’ll need to undergo a background check. Your firm will coordinate this process—though it may take a few weeks and you may be restricted in your activities until it’s completed. For example, you may have to work under the supervision of a fully licensed broker (or be restricted from building a book of business) until your background check is processed.

4. Build a Book of Business

Any financial advisor will tell you that building a strong book of business is a key element to becoming successful. Essentially, a book of business is your clientele—the people or businesses that you provide advice and financial services to. And just like any good relationship, it takes effort to build and maintain a strong book of business.

Here are a few tips for how to do just that:

  • Always provide top-notch service. Your clients should feel like they are your top priority, and that you always have their best interests at heart.
  • Be responsive to your clients’ needs. They should feel like they can reach out to you anytime, and that you will get back to them promptly.
  • Foster relationships with other professionals in your field. These connections can help you refer clients to others and vice versa, growing your businesses together.

5. Stay Current with Continuing Education

Once they’re licensed, financial advisors are required to adhere to strict firm and regulatory requirements to maintain their licenses. Some of these requirements include completing continuing education courses and passing routine exams. While meeting these requirements can be time-consuming, it’s generally not challenging and is essential for financial advisors to stay up-to-date on the latest regulations and best practices.

How Long Does It Take to Become a Financial Advisor?

It’s possible to join a firm and get licensed within 30 days. However, those who are serious about becoming a financial advisor should expect to dedicate months of study and preparation to obtain licenses, plus additional months or years to obtain additional licenses or special certifications.

What to Consider Before Becoming a Financial Advisor

Before becoming a financial advisor, there are several important factors to consider. One is whether you have the temperament for the job. Financial advising can be stressful, and it requires the ability to handle clients who may be angry or upset. Advisors must also be able to deal with rejection, as many clients will not take the advice they’re given.

Another important factor is whether you have the required skills and knowledge. Advisors need to be well-versed in financial concepts and able to explain them in layman’s terms. They must also be comfortable using industry tools, as many aspects of the job are now performed online.

Here are a few other things to consider before deciding whether you want to be a financial advisor, including that you will:

  • Be somewhat restricted. As a licensed financial advisor, all of your written communications with the public must be reviewed and approved by your firm’s compliance department. This restricts what information you can share with clients or potential clients.
  • Be sales-driven. Most financial advisors’ fees are based on their sales or assets under management, or AUM. You’ll need to be okay with being paid based on your sales if you want to be an advisor.
  • Owe clients a standard of care. When you work as a financial advisor, clients expect you to put their interests ahead of your own. If you aren’t willing or able to make decisions or suggestions to clients without regard for your own interests, you may want to find another career.

Is Becoming a Financial Advisor Right for You?

A career as a financial advisor can be rewarding and offers the opportunity to help people make sound investment choices and plan for their financial future. However, it isn’t right for everyone.

Financial advisors must be able to deal with clients who may be anxious or upset about their financial situation. They must also be comfortable working with numbers and have a strong understanding of financial concepts. In addition, financial advisors must be disciplined and organized in order to keep track of their clients’ accounts.

But if you are interested in helping others with their finances and are willing to work hard, a career as a financial advisor may be right for you.

Looking For A Financial Advisor?

Get In Touch With A Pre-screened Financial Advisor In 3 Minutes

Looking For A Financial Advisor?

Get In Touch With A Pre-screened Financial Advisor In 3 Minutes

Categorized in:

Financial Advisor,

Last Update: June 18, 2024

Tagged in: