Financial Advisor Career Path - dummies

By Dummies Press, Ivan Illan

Many paths lead to a career as a successful financial advisor or financial consultant. These paths can be broken down into three categories based on your starting point: right out of college, within the industry, and outside the industry.

Getting started in the financial advisory industry fresh out of college

If you just graduated from college with a degree in finance or economics, you may have determined already that becoming a financial advisor is the path for you. After all, studying related subjects at a college or university prepares you perfectly for this profession, right? Wrong. Having some education in the financial arena can be helpful to understand financial terminology and concepts and to pursue further professional designations. However, it doesn’t adequately prepare you for the day-to-day work involved in being a financial advisor.

One of the most common ways graduates get their feet wet is to work for one of the big investment banking firms. Years ago, these firms offered months-long training programs that focused on developing the sales skills and product knowledge required to be a functional financial advisor. Today, training is much less robust, and newbies must fend for themselves to acquire clients.

To give yourself a leg up, join an existing team or apprentice with a solo practitioner. Broker/dealers have wide variety of practices within their networks. If you’re working with a recruiter for one of these firms or, better yet, proactively approaching one, tell her you’re looking to apprentice to an existing solo practitioner or advisor group within the branch. Don’t hesitate to make this request. After all, you’re fulfilling a need that most firms are struggling with — namely, replacing an aging workforce with younger tenured advisors. In addition, your targeted self-promotion and assertiveness gives you an edge over shyer candidates who don’t have what it takes to grow the business.

As an apprentice, expect to earn a salary and perhaps a bonus based on revenue growth. (Salaries of financial advisors depend on their individual success and abilities to acquire clients.) The biggest benefit, however, is that you get hands-on experience in the field, just as residents at medical centers and associates at law firms gain practical experience on their way to becoming fully fledged members of the profession. You’ll also avoid the rat race of having to find new clients right out of the gate, something that’s difficult for new college grads whose network consists mostly of fellow twenty-somethings who are also looking for jobs.

Avoid firms that hire new college grads merely to increase their product distribution instead of to develop highly qualified financial advisors. Unfortunately, this exploitation of new college grads is common in the industry. These work opportunities are fine if you’re looking to make a quick buck in commissioned product sales, but if you’re pursuing a lifetime career as a professional, don’t settle for less than a position that offers mentorship and continuing education.

Changing careers from another financial job within the financial industry

If you have a financial job and are beginning to crave a greater purpose — by adding valuable financial advice and guidance to the lives of people in your community — then becoming a financial advisor may be just the right move for you. You probably have all the skills and experience required to succeed. You simply need to redirect them.

Applying your accumulated knowledge and insight on how and why the financial world works the way it does is a great way to deliver value to clients. Not only do you have a specialized background that can be of great benefit, but you’re also in the perfect position to be a true client advocate, looking out for your clients’ interests in a way that only someone with financial services experience (for example, banking, securities trading, or product wholesaling, to name a few) can. It’s a great differentiator too, which can help you attract more clients in your early years.

The evolution of financial technology has driven many traditional Wall Street jobs to extinction. As one major example, a stock exchange floor specialist used to be the best job you could have on Wall Street. The role required a complicated combination of brute force and intellect, which had at its core the responsibility of managing the market around a particular set of stocks. This role is almost a relic of the past, as technology has reinvented how markets facilitate the meeting of buyers and sellers.

Today, institutional bond market traders are slowly getting the message that their roles are disappearing, too, as many more transactions are being organized and executed through peer-to-peer networks and exchanges. Gone are the days where a client would need an well-connected bond broker with a great network of bond traders at various dealers across the country to find a good deal. With the advent of technology, profit margins have been squeezed even more, benefitting investors while slowly eroding the status quo.

These backgrounds and others in the financial field can significantly ease the transition to becoming a financial advisor, providing the knowledge and insights to serve clients more effectively.

Changing careers from outside the financial industry

Few things in life are worse than feeling stuck in a job or on a career path you don’t like. After college, most people who major in general studies set out on a career path by happy (or unhappy) accident as they look for ways to apply their education to a worthy endeavor. Years may pass, and then one day, they wake up to realize that they’re unfulfilled and losing hope for ever being so. They know they need to change careers but aren’t sure which career path would lead to their dream job.

Dissatisfied professionals with a wide variety of educational backgrounds can find the answer as a financial advisor, especially those who understand people and appreciate the role of money, and its limitations, in enabling people to pursue their own happiness and fulfillment. Several backgrounds in particular ease the transition into becoming a financial advisor:

  • Psychology: Anyone who has an intimate knowledge of human psychology and factors that drive thoughts, emotions, and behaviors has a good start. If you like to spend time with people — talking with them, listening, connecting — then you’re already at an advantage.
  • Fundraising/charity: People who work for charities, especially in donor development, already value the importance that strong financials can have on a cause or outcome. If this category includes you, you merely need to shift your focus from nonprofit fundraising to family wealth stewardship. If you’ve received formal education and training related to charitable gift planning strategies, you’re even better positioned to make the transition.
  • Professional networker: If you’re in any industry that requires you to have a broad network of colleagues, communication skills (writing and speaking), and relationship management skills, you’re probably suited for a position as a financial advisor. Communication and relationship management skills are highly transferrable.