Are you considering a career as a financial advisor? Gaining insight before diving into a job is invaluable for navigating unfamiliar waters.
While the career path of a financial advisor is often fruitful and rewarding, not every benefit of the job is immediate; many pros, such as salary or scheduling, come with time. However, as with many careers, dedicated time spent nurturing your position will pay off in the long run. Below, we explore both the benefits of becoming a financial advisor and important considerations to keep in mind before diving in!
The Benefits of Becoming a Financial Advisor
1. Projected Industry Growth
According to the Bureau of Labor Statistics, the financial advisor field projected growth rate far surpasses the occupational average – employment is expected to increase 7% from 2018-2028. The demand for financial planning among an ever-aging population is sure to increase over time. Thus, pursuing a career as a financial advisor promises employment opportunity into the future.
2. Virtually Unlimited Income Potential
Before diving into numbers, discussing the four primary pay structures is helpful:
Commission-based pay structure: Financial advisors who adhere to this pay structure earn income via commission received from selling an insurance or investment product. Often, commission-based financial advisors are referred to as Brokers or Registered Representatives.
Fee-only pay structure: Fee-only financial advisors do not make a commission from selling a specific product. These advisors charge fees by the hour or based on a percentage of managed assets only.
Fee-based pay structure: The fee-based advisor usually employs a combination of the aforementioned pay structures, selling products for commission and charging discretionary fees.
Salaried pay structure: Although not the most common pay structure, salaried financial advisors are becoming more common. In addition to a salary, these financial advisors may receive bonuses based on products sold or assets managed.
While a certain pay structure may be preferable to different advisors, all four offer nearly unlimited earning potential, based on the financial advisor’s personal earning potential. However, in 2019, the median annual wage for a personal financial advisor was about $88,000. The lowest-paid 25% made about $57,000, while the best-paid made nearly $158,000.
Finally, your specific title – CFP, CFA, financial planner, financial advisor, etc. – does not dictate a specific fee structure you must follow.
3. Scheduling Flexibility
While first-time financial advisors must maintain a rigid schedule while working towards gaining clients and managing assets, flexibility comes with time. Once you have built a steady client base, it is often possible to schedule around your personal calendar – or occasionally work fewer than 40 hours.
Additionally, though you may start under the umbrella of another company, many financial advisors are able to break free and work independently. “Even though you may start under a companies’ brand and with their training,” JobUnlocker explains, “after establishing your clients you may be able to start your own ‘independent’ business.”
4. Practice Creativity
Because you will likely be the one building your client portfolio, you have creative liberty in practice structure. Who do you prefer to work with? If you enjoy assisting the Baby Boomer generation, you can build your base around this age group. On the other hand, if you prefer to work with Gen X or Millennials, you have the freedom to build the appropriate client base.
Beyond age group, financial advisors often specialize in a certain type of client over time, from lawyers and business owners to entrepreneurs. As you build your client base and grow comfortable choosing a specific type of client or age group, you can creatively shape your financial practice.
Brainstorm where you might decide to specialize now.“Before planning how to become a financial advisor,” U.S. News writes, “think about where you’ll find your niche… looking to your network for inspiration: Is it weighted toward any one professional field? Is there an opportunity to work with a set of people you’re already connected to?”
Important Financial Advisor Considerations
While the role of a financial advisor is often rewarding and flexible, consider a few important challenges associated with the job before diving into the career.
1. As a Financial Advisor, You Will Work with People – Often
If you are uncomfortable with forging trust, managing long-term relationships, and working with people regularly, a financial advisor career will be challenging. The idea that financial advisors spend most of their time crunching numbers is a misconception. In fact, you will likely spend as much time in communication and conversation with individuals as you will with numbers and calculations.
2. Starting a Career as a Financial Advisor Can Be Stressful
Pursuing a career as a financial advisor can certainly be stressful. Regardless of your launching board as a member of a financial services firm or independent advisor, building a portfolio takes time and dedication. Investopedia states, “For new advisors with a small personal network, building a book of business is the most challenging aspect of the career.”
Additionally, financial advisors manage the emotions of clients, emotions that can rise and fall with domestic and global market performance.
3. Becoming a Financial Advisor is an Investment
As with most industries, pursuing a career as a financial advisor involves an initial and ongoing commitment to continued education. Financial advisors are required to obtain and maintain licenses necessary to meet regulatory requirements.
Pursuing a career as a financial advisor is an ultimately rewarding commitment that requires hard work, a desire to learn, and a problem-solver mindset.
Dunham: Trust & Investment Firm
At Dunham, we are dedicated to supporting financial advisors, both asset gatherers and asset managers. We offer a comprehensive selection of mutual funds and Asset Allocation Program model portfolios to help our clients meet objectives and outperform benchmarks.
Our team is ready to take your call and answer your questions! Feel free to reach out at 858.964.0500 or via our online contact form.
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US Bureau of Labor Statistics occupational outlook - Financial Advisors