Financial advisors change peoples’ lives and help them protect their assets. For that reason, they will always be in high demand. Here’s some advice and information to help you get into this lucrative industry.
There aren’t generally high educational standards in the financial planning industry, which is surprising given that you will be managing other peoples’ money or advising them on the best course of action.
However, you can attend colleges like the American College to get a formal education in financial planning. If you attend a college in California online, you can reduce the costs associated with your degree.
Regardless of the route you take to get in, there is always continuing education that is required each year. Depending on the state you live in, and the licenses you hold, you must complete 15 to 40 credit hours every other year, test out on exams, and achieve a passing score to maintain your license.
Where Will You Work?
Most financial planners work for a financial firm or insurance company. But, you can also go out on your own and become an independent registered representative or insurance agent. Some financial professionals open their own financial firm and hire other financial advisors to work for them.
The Sales Component
Do you like sales? Financial planning is a sales-based job. Almost every financial professional needs to be able to sell a client either financial products or sell them on a financial plan. Sales and marketing is perhaps the most under-appreciated aspect of financial planning and many planners struggle with it.
While much of your business will initially come from referrals, you will eventually have to learn how to market.
Charging Fees vs Earning Commission
Financial advisors earn money through fees or commissions. Fees are either based on assets under management or a flat fee for services. Commissions are based on the dollar amount clients use to buy financial products from you.
There is a debate over which compensation method is more fair for consumers, with fee-only financial planners claiming commissions create a conflict of interest between consumers and advisors.
Commissioned advisors, on the other hand, argue that many middle-class families can’t afford the high fees that some advisors charge. The commissions take the place of a $500 or $1,500 planning fee.
Financial advisors make between $40,000 and $100,000 per year. Some make more than that but, according to the BLS, financial advisors earn a median annual income of $90,000. This median income is applies to what many in the industry call “investment advisors.”
Investment advisors manage money for clients who are usually high net worth, raking a 0.5 to 1 percent management fee each year on the total invested assets.
Financial advisors who charge a flat fee may make much less due to the fees being a one-time charge. Commissions salespeople also sometimes refer to themselves as “financial advisors,” and may make more or less than the median income listed by the BLS depending on the products they’re selling.
Sara Curry has enjoyed a successful career in financial services.She likes to be able to share her insights and experiences online. You can find articles written by her on a number of relevant websites.