Despite the popularity of do-it-yourself investment choices such as robo advisors, many people still want help managing their money and planning for big life events, especially retirement.
That’s good news for aspiring financial advisors. Nearly 51,000 new advisors will be added to the employment rolls by 2031, at a median salary of $94,170 per year, according to the Bureau of Labor Statistics.
Many would-be advisors have misconceptions about what the career entails, says Barry Mulholland, a certified financial planner and financial planning director at the University of Akron’s College of Business. Mulholland recounts a story about a mentor early in his career who convinced him the industry wasn’t simply about selling products, as he’d assumed.
“As a financial advisor, you get to help people realize their goals and dreams, and that is what I love doing the most. That is what drove me to pursue the industry because I really love helping people,” Mulholland says.
Here are some important things to know before embarking on a career as a financial advisor:
It’s About People, Not Numbers
One common misunderstanding is that a career as a financial advisor, or even within financial services in general, requires advanced skills in math. In fact, plenty of liberal arts graduates thrive as client-facing advisors.
“Although it might help, you don’t need a finance degree to work in financial services,” says Mulholland. He says an internship or entry-level position can kickstart a successful career, even without a math-oriented degree.
“Many people think this job requires a finance degree, but that is off the mark,” says Dyan Goodwin, managing director and private client advisor at Bank of America Private Bank in Boston.
She adds that the job includes knowing about investments and planning, but she identifies two things an advisor needs to do exceptionally well: listening and communicating.
“If you can truly listen to a client or prospect with an open mind and give them your full attention, you’re halfway there,” she says. “And if you can also communicate clearly and articulately, express yourself with empathy, and offer solutions that benefit the clients first, you very likely have what it takes to do this job and do it well.”
Have a Passion for Helping Your Clients
While there are certainly number-crunching jobs within finance, and some firms have employees dedicated to trading and portfolio allocation, client-facing roles require a high degree of empathy and emotional intelligence. Advisors should be prepared for emotional discussions, such as after a client loses a spouse and needs to make financial decisions quickly.
“Even after years as an advisor, I continue to be surprised by the profound impact that financial decisions can have on people’s lives and the weight of responsibility that comes with guiding them through those choices,” says Derek DiManno, founder of Flagship Asset Services in Towson, Maryland.
DiManno says a core part of the job involves helping clients find financial clarity, navigate complex emotions, and make informed decisions that align with their values and goals.
Naoko McKelvey, senior advisor at Blue Chip Partners in Farmington Hills, Michigan, says aspiring advisors should be sure they’re entering the field for the right reasons.
“If you are passionate about helping others, enjoy problem-solving and getting to know people, this might be the right choice for you,” she says. “It’s a lifelong learning process so make sure you’re vested in keeping up your skills and knowledge base.”
Understand the Industry
From the outside, the advisory business may seem monolithic, but that’s far from true. There are numerous business models. For example, some advisors are employed by big financial corporations. Others are completely independent and own registered investment advisory firms. Others function essentially as hybrids, owning their own businesses while being affiliated with a broker-dealer. Some remain investment advisor representatives within an RIA owned by someone else. Yet others are insurance agents, licensed to sell mutual funds and other financial products.
Once they’ve been in the business for a while and understand the nuances, most advisors tend to have strong opinions about the various models. It’s not uncommon for a new advisor to start their career with some kind of broker-dealer affiliation and later gravitate toward the fee-only model. However, many others prefer working with a broker-dealer or a large corporation.
“I was really surprised, and it took me quite a while, to learn how many different business structures exist for financial advisors,” says Stephanie McCullough, founder and financial planner at Sofia Financial in Berwyn, Pennsylvania.
Each different structure, she points out, has its own way of being compensated and incentivized. She says new advisors shouldn’t get discouraged if the structure at their current firm isn’t a good fit. She recommends researching the industry to understand the various business models before taking a job.
“When we come into the profession, we usually see just one model of doing the work and we assume that’s the only one there is,” she says. “If that format doesn’t feel right, too many good people exit the profession, when they likely could have flourished if they had known about the other structures out there.”
Think Like a Business Owner
A new advisor shouldn’t expect to be handed a book of business on day one. Instead, advisors are typically responsible for generating their own clientele. Although among fiduciary advisors, “sales” has become a dirty word, marketing and business development are crucial if an advisor wants to generate enough income to make a comfortable living.
“To the person, I’m always met with surprise when they learn that we own, manage and operate our businesses with a (profit and loss statement) and that we’re as focused on growth as any other business owner,” says Chris Jay, senior vice president and wealth management advisor at Bank of America Merrill Lynch in Seattle.
Misty Lynch, owner and CEO of Sound View Financial Advisors in Walpole, Massachusetts, says that simply passing exams and getting licensed isn’t the only preparation a new advisor needs.
“Running a small firm has meant being operations, marketing, tech support, research, sales, compliance and trading, to name a few,” she says.
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