Personal financial advisors provide fiscal guidance and services to individuals, helping them plan for retirement, purchase insurance, pay taxes, finance education or homes, and make sound investments. Some advisors specialize in a particular field, while others are generalists. Advisors who handle more complex investments for particularly wealthy individuals are also known as wealth managers or private bankers.
Personal financial advisors work for banks or brokerages, or they are self-employed, handling several clients at once. Advisors solicit clients via marketing, self-promotion, and networking, or they may obtain them through referrals from existing clients.
Advisors work with clients in a series of steps. During the initial consultation, they gather and review the client’s records of finances, discuss their investment or savings goals, and develop a financial strategy tailored to the client’s desired outcome and tolerance for risk. Many personal financial advisors are also licensed to sell insurance, stocks, bonds, derivatives, and annuities, and they may recommend these to clients.
Once a financial plan has been put in place, advisors meet regularly with clients to update or adjust their investment portfolios, depending upon changes in the client’s personal status, such as marriage, divorce, change in employment, disability, or retirement. Advisors also keep a close eye on a client’s investment returns, and they may have an agreement to shift investments on the client’s behalf if market conditions change abruptly.
Private bankers and wealth managers also work as personal financial advisors, but because their clients’ resources are much larger, their approach is somewhat different. Bankers and wealth managers typically treat their clients’ funds more like institutional investments, working closely with other financial professionals to directly manage their clients’ portfolios.
Most personal financial advisors work standard hours in a business or home-office setting, with occasional travel to attend meetings and conferences or give seminars. Additional or odd hours may be necessary for meeting with clients at their convenience.
Education, Training, and Essential Skills
Employers and clients prefer financial advisors who have a bachelor’s or master’s degree in business, statistics, finance, economics, accounting, law, or a related discipline. Regardless of the specific degree, advisors who have completed coursework in risk management, estate planning, investing, and tax law will have a competitive edge for these positions.
Some positions require licensure or registration with state regulators or the Federal Securities and Exchange Commission. Advisors who sell financial products or insurance are required to hold appropriate licenses. The North American Securities Administrator Association lists the appropriate requirements, registration, and licenses for investment advisors.
All personal financial advisors require a set of skills to be successful, including strong analytical and mathematical ability; interpersonal, communication, and sales skills; ethics and sound judgment. Personal financial advisors must make a case for their recommendations with clients and must explain complex financial variables to others in both a clear and influential manner. Personal financial advisors must also be familiar with extensive financial laws and regulations, and they must keep abreast of constantly fluctuating trends in both domestic and global markets.
Advancement and Professional Development Opportunities
Brokers, accountants, financial analysts, and other financial professionals often become personal financial advisors or private bankers after they have gained sufficient experience in the field. Financial advisors who work for a firm can advance by taking higher-level positions, acquiring independent registered representative status, or starting their own firms.
Additional certification and professional development, available through the Certified Financial Planner Board of Standards, can increase a financial advisor’s competitive edge and industry standing. Certification is a rigorous process and involves a combination of formal education requirements; work experience; a comprehensive exam; and knowledge of various debt, financial planning, and statistical subjects.
Outlook and Income
Overall, the employment rate for personal financial advisors is expected to grow by 30% over the next decade. This significant growth is driven by population demographics; as people live longer, and baby boomers reach retirement age, demand for financial planning advisors will rise. Demand will be highest for personal financial advisors with strong sales skills, college degrees, and additional certifications.
About two-thirds of personal financial advisors are employed by banks, brokerage firms, insurance companies, and financial investment firms, while about one-third are self-employed. Annual median salaries for personal financial advisors are about $69,000, which does not include commissions or bonuses. For self-employed advisors, income varies considerably, as most charge hourly fees and earn commissions based on financial product sales.