Personal Financial Advisors


Quick Facts: Personal Financial Advisors
2017 Median Pay $90,640 per year 
$43.58 per hour
Typical Entry-Level Education Bachelor's degree
Work Experience in a Related Occupation None
On-the-job Training Long-term on-the-job training
Number of Jobs, 2016 271,900
Job Outlook, 2016-26 15% (Much faster than average)
Employment Change, 2016-26 40,400

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Personal Financial Advisors Career, Salary and Education Information

What Personal Financial Advisors Do

Personal financial advisors provide advice on investments, insurance, mortgages, college savings, estate planning, taxes, and retirement to help individuals manage their finances.

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Personal financial advisors

Duties of personal financial advisors

Personal financial advisors typically do the following:

  • Meet with clients in person to discuss their financial goals

  • Explain the types of financial services they provide to potential clients

  • Educate clients and answer questions about investment options and potential risks

  • Recommend investments to clients or select investments on their behalf

  • Help clients plan for specific circumstances, such as education expenses or retirement

  • Monitor clients’ accounts and determine if changes are needed to improve financial performance or to accommodate life changes, such as getting married or having children

  • Research investment opportunities

Personal financial advisors assess the financial needs of individuals and help them with decisions on investments (such as stocks and bonds), tax laws, and insurance. Advisors help clients plan for short- and long-term goals, such as meeting education expenses and saving for retirement through investments. They invest clients’ money based on the clients’ decisions. Many advisors also provide tax advice or sell insurance.

Although most planners offer advice on a wide range of topics, some specialize in areas such as retirement or risk management (evaluating how willing the investor is to take chances and adjusting investments accordingly).

Many personal financial advisors spend a lot of time marketing their services, and they meet potential clients by giving seminars or participating in business and social networking. Networking is the process of meeting and exchanging information with people, or groups of people, who have similar interests.

After financial advisors have invested funds for a client, they and the client receive regular investment reports. Advisors monitor the client’s investments and usually meet with each client at least once a year to update the client on potential investments and to adjust the financial plan based on the client’s circumstances or because investment options may have changed.

Many personal financial advisors are licensed to directly buy and sell financial products, such as stocks, bonds, annuities, and insurance. Depending on the agreement they have with their clients, personal financial advisors may have the client’s permission to make decisions about buying and selling stocks and bonds.

Private bankers or wealth managers are personal financial advisors who work for people who have a lot of money to invest. These clients are similar to institutional investors (commonly, companies or organizations), and they approach investing differently than the general public does. Private bankers manage a collection of investments, called a portfolio, for these clients by using the resources of the bank, including teams of financial analystsaccountants, and other professionals.


Work Environment for Personal Financial Advisors

Personal financial advisors held about 271,900 jobs in 2016. The largest employers of personal financial advisors were as follows:

Securities, commodity contracts, and other financial investments and related activities: 51%

Self-employed workers: 24%

Credit intermediation and related activities: 13%

Insurance carriers and related activities: 5%

Management of companies and enterprises: 3%

Work Schedules

Most personal financial advisors work full time, and about 3 in 10 worked more than 40 hours per week in 2016. They often go to meetings on evenings and weekends to meet with prospective or existing clients.


How to Become a Personal Financial Advisor

Personal financial advisors typically need a bachelor’s degree. A master’s degree and certification can improve one’s chances for advancement in the occupation.

Education

Personal financial advisors typically need a bachelor’s degree. Although employers usually do not require personal financial advisors to have completed a specific course of study, a degree in finance, economics, accounting, business, mathematics, or law is good preparation for this occupation. Courses in investments, taxes, estate planning, and risk management are also helpful. Programs in financial planning are becoming more available in colleges and universities.

Training

Once they are hired, personal financial advisors often enter an on-the-job training period. During this time, new advisors work under the supervision of senior advisors and learn how to perform their duties, including building a client network and developing investment portfolios. This training usually lasts for more than a year.

Licenses, Certifications, and Registrations

Personal financial advisors who directly buy or sell stocks, bonds, or insurance policies, or who provide specific investment advice, need a combination of licenses that varies with the products they sell. In addition to being required to have those licenses, advisors in smaller firms that manage clients’ investments must be registered with state regulators and those in larger firms must be registered with the Securities and Exchange Commission. Personal financial advisors who choose to sell insurance need licenses issued by state boards. Information on state licensing board requirements for registered investment advisors is available from the North American Securities Administrators Association.

Certifications can enhance a personal financial advisor’s reputation and can help bring in new clients. The Certified Financial Planner Board of Standards offers the Certified Financial Planner (CFP) certification. For this certification, advisors must have a bachelor’s degree, complete at least 3 years of relevant work experience, pass an exam, and agree to adhere to a code of ethics. The CFP exam covers the general principles of financial planning, insurance planning, risk management, employee benefits planning, income taxes and retirement planning, investment and real estate planning, debt management, planning liability, emergency fund reserves, and statistical modeling.

Advancement

A master’s degree in an area such as finance or business administration can improve a personal financial advisor’s chances of moving into a management position and attracting new clients.

Important Qualities

Analytical skills. In determining an investment portfolio for a client, personal financial advisors must be able to take into account a range of information, including economic trends, regulatory changes, and the client’s comfort with risky decisions.

Interpersonal skills. A major part of a personal financial advisor’s job is making clients feel comfortable. Advisors must establish trust with clients and respond well to their questions and concerns.

Math skills. Personal financial advisors should be good at mathematics because they constantly work with numbers. They determine the amount invested, how that amount has grown or decreased over time, and how a portfolio is distributed among different investments.

Sales skills. To expand their base of clients, personal financial advisors must be convincing and persistent in selling their services.

Speaking skills. Personal financial advisors interact with clients every day. They must explain complex financial concepts in understandable language.


salaries for Personal Financial Advisors

The median annual wage for personal financial advisors was $90,640 in May 2017. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $40,800, and the highest 10 percent earned more than $208,000.

In May 2017, the median annual wages for personal financial advisors in the top industries in which they worked were as follows:

Securities, commodity contracts, and other financial investments and related activities: $98,560

Management of companies and enterprises: $82,330

Credit intermediation and related activities: $78,550

Insurance carriers and related activities: $70,290


Job Outlook for financial advisors

Employment of personal financial advisors is projected to grow 15 percent from 2016 to 2026, much faster than the average for all occupations.The primary driver of employment growth will be the aging population. As large numbers of baby boomers approach retirement, more are likely to seek planning advice from personal financial advisors. Also, longer lifespans will lead to longer retirement periods, further increasing demand for financial planning services.

In addition, the replacement of traditional pension plans with individual retirement accounts is expected to continue. Many people used to receive defined pension payments in retirement, but most companies no longer offer these plans. Therefore, individuals must save and invest for their own retirement, increasing the demand for personal financial advisors.

Job Prospects 

Job prospects for personal financial advisors should be relatively favorable, compared with prospects in other financial sector occupations. Those who obtain certification will likely have the best prospects.

Employment projections data for Personal Financial Advisors, 2016-2026:

Employment, 2016: 271,900

Projected Employment, 2026: 312,300

Change, 2016-2026: +15%, +40,400


Careers Related to personal financial advisors

Budget Analysts

Budget analysts help public and private institutions organize their finances. They prepare budget reports and monitor institutional spending.

Financial Analysts

Financial analysts provide guidance to businesses and individuals making investment decisions. They assess the performance of stocks, bonds, and other types of investments.

Financial Managers

Financial managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organization.

Insurance Sales Agent

Insurance sales agents contact potential customers and sell one or more types of insurance. Insurance sales agents explain various insurance policies and help clients choose plans that suit them.

Insurance Underwriters

Insurance underwriters decide whether to provide insurance, and under what terms. They evaluate insurance applications and determine coverage amounts and premiums.

Real Estate Brokers and Sales Agent

Real estate brokers and sales agents help clients buy, sell, and rent properties. Although brokers and agents do similar work, brokers are licensed to manage their own real estate businesses. Sales agents must work with a real estate broker.

Securities, Commodities, and Financial Service Sales Agent

Securities, commodities, and financial services sales agents connect buyers and sellers in financial markets. They sell securities to individuals, advise companies in search of investors, and conduct trades.

OccupationENTRY-LEVEL EDUCATION2017 MEDIAN PAY
Budget AnalystsBachelor's degree$75,240
Financial AnalystsBachelor's degree$84,300
Financial ManagersBachelor's degree$125,080
Insurance Sales AgentsHigh school diploma or equivalent$49,710
Insurance UnderwritersBachelor's degree$69,760
Real Estate Brokers and Sales AgentsHigh school diploma or equivalent$47,880
Securities, Commodities, and Financial Services Sales AgentBachelor's degree$63,780

Citation:

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Personal Financial Advisors,
on the Internet at https://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm