Financial Services Practice Management for Beginners: Getting Started

Is Financial Advising Right for Me?

In this series of articles, we will be exploring all the necessary information a professional needs to consider as part of running their own practice. The first leg of this journey is looking at the financial advising profession and helping a person consider whether or not this career is appropriate for them.

To determine whether or not this profession is appropriate, a person should evaluate the following factors:

• What exactly does a financial advisor do?
• What are the barriers to entry in the financial advising profession?
• How can I prove my credibility as a financial advisor?

These are not the only questions one needs to consider when looking at a career in financial services, but they serve as a good starting point that allows someone to consider whether or not this profession is really a good fit for them.

What Does a Financial Advisor Do?

This is a fairly broad question and the honest answer is that it depends on the situation. However, to address the heart of this question, it would generally be correct to say that a financial advisor helps an individual or entity manage their money. There are many nuances to the specifics of the relationship between an advisor and their client that can affect this answer, but overall, managing money and helping clients meet their financial goals is at the heart of financial advising.

There are multiple different types of financial advisors though, and this can change what functions they serve to their clients. For example, some advisors specialize in retirement planning, others assist with charitable giving, some offer investment plans, and others offer clients comprehensive financial plans that include all of the above and more.

As you research the financial advising profession, you may come across an important term that can greatly affect the role a financial advisor plays. This term refers to an advisor and calls them what is known as a “fiduciary.” According to Forbes, “a fiduciary financial advisor is a professional bound by legal and ethical standards who always acts in your best interest.”¹

Financial advisors that also have a fiduciary responsibility are legally required to consider what’s best for their clients’ financial situations when offering them advice. This may seem like a given, but as a formalized legal and ethical obligation, whether or not an advisor is classified as a fiduciary should not be taken lightly.

How Do I Become a Financial Advisor?

One of the benefits of the financial advising profession is that there is no strict criteria for what an individual needs to become a financial advisor. This places financial advising as an option for professionals from a variety of backgrounds. However, one will likely find a greater level of success breaking into the field with either some form of finance experience or a college degree relating to business or finance.

Once these initial criteria have been met, there are a number of other factors to consider. Many financial services professionals pursue additional licenses and education that allow them to serve additional roles and validate them as qualified financial advisors.

For example, the Financial Industry Regulation Authority (FINRA) offers several licenses, including the popular Series 7 and Series 66. According to FINRA’s website, an individual who passes the Series 7 exam is “qualified for the solicitation, purchase and/or sale of all securities products, including corporate securities, municipal fund securities, options, direct participation programs, investment company products and variable contracts.”² The Series 66 exam, “qualifies individuals in two capacities, as a representative of both a broker-dealer and an investment adviser.”³

Unlike other titles, the Series 7 and Series 66 are licenses and are required to perform certain functions. Though these licenses are not required to act as a financial advisor, they are qualifications those looking at the financial services field may want to consider.

How Do I Prove My Credibility as a Financial Advisor?

For many advisors, breaking into the field is not the final step. Some advisors may look to pursue additional education as a way to establish their capabilities. In some other cases, firms may require new hires to pursue one of these designations. However, if someone is new to the field, the number of options and the meaning behind the letters may be confusing or overwhelming.

Like many of the questions above, there is not a single right answer when trying to determine which, if any, credential is the right choice when attempting to prove your credibility as a financial professional. The financial services profession does not have any formalized requirements for financial advisors, but the closest thing to an industry standard is likely the Certified Financial Planner® (CFP®) certification. As one of the most prevalent titles in the industry with over 106,000 certification holders worldwide⁴, the CFP® certification offers a recognizable mark of credibility that tells clients an individual has demonstrated competence in several core areas of financial planning.

However, the CFP® mark has several prerequisites that may prohibit some from pursuing it. Those who wish to earn the title of CFP® professional must hold a bachelor’s degree. For some, this may be a prohibiting factor, as according to the U.S. Census Bureau, 62.3% of Americans, or roughly five out of every eight Americans, do not have one.⁵

Fortunately, a similar designation, the Chartered Financial Consultant® (ChFC®), demonstrates the same core competencies while not requiring a bachelor’s degree. For those who pursue a financial services career through a non-traditional path, this may signify the ChFC® as the appropriate choice for them.

Each of these designations serves as an indicator of a financial professional’s capability in the field, but they are not the only options. Specialized designations are also offered to advisors who wish to perform a specific function, such as the Retirement Income Certified Professional® (RICP®) for those seeking to perform retirement planning.

In any case, those pursuing a career in financial services have many questions to consider before determining whether the career is right for them. As with many major decisions, the choice should not be taken lightly. Research and education are your friend in making this decision. The American College of Financial Services offers both of these things and can help you on your path as you look to a career as a financial professional.
 

More on Practice Management

• Explore the ChFC®
• Read the 2024 Designation Outcomes Study
• Browse Designations