How to Become a Successful Financial Advisor in 2023 [Masterplan]

Welcome to a new chapter in the world of finance. As we step into 2023, the role of a financial advisor has never been more vital.

Just imagine yourself as a guide, leading clients through the intricate paths of financial choices. This year holds opportunities to not just navigate the financial landscape but to shape it.

Join us on this journey to discover how to become a successful financial advisor in 2023, where your expertise becomes a powerful asset in the pursuit of financial success.

What is a Financial Advisor?

A financial advisor is a certified expert who gets paid for offering tailored financial guidance to clients aiming to enhance their financial health.

Financial advisors look at someone’s current money situation, listen to what they want to achieve, and make a plan to help them reach their goals. They help with making smart decisions about money and creating a plan to have a better financial future.

Important: The term “financial advisor” includes various job titles like Financial Coach, wealth manager, investment advisor, Retirement Planner and so on. Many advisors have special certifications and degrees, such as Certified Financial Planner (CFP), Personal Financial Specialist (CPA), Certified Fund Specialist (CFS), or Chartered Financial Analyst (CFA) which show they’re well-trained and committed to financial standards.

According to the BSL, The demand for personal financial advisors is expected to increase by 15 percent between 2021 and 2031, surpassing the average growth rate for all professions in America.

So, if you want to become a successful financial advisor, take the chance as early as possible. Because it’s a growing but very competitive career choice.

Is a Financial Advisor a Good Career in 2023?

Financial Advisor can be a very good and lucrative career for you if you enjoy the working environment and have the required skills and strong work ethic.

The reality,

The problem is for every successful financial advisor there are probably thousands that fail. A significant number of newcomers, around 70%-80%, either exit the field due to low performance or are let go before completing their third year due to insufficient productivity. It’s a RED FLAG.

But,

"Believe It or Not, It’s a Great Time to Be a Financial Advisor."

The Opportunity,

Starting can be tough, but it’s rewarding when you get loyal customers. If you have your own business, the future could be really bright.

The typical yearly earnings of a Merrill Lynch Financial Advisor in America range from $126,000 to $233,000.

But, what happens if you become a successful financial advisor with a strong client base?

When you establish a strong fee-based business, you can expect to receive a steady income, often every quarter. Imagine if your clients’ assets totaled $20 million, and you charged a 1% fee. That’s $200,000 in fees, though your actual earnings will depend on your payout arrangement, usually around 40-50%.

Now, consider this for $50 million in assets. You can see how this could lead to a rewarding income.

If you like sales, come from a finance background, and have a serious passion for becoming a successful financial advisor, then it might be a good career option for you.

What Does a Financial Advisor Do?

A financial advisor guides his clients in handling their finances from both short- and long-term perspectives. He can evaluate the client’s personal finance status, considering their overall income, assets, expenses, and debts. Finally, the advisor gives advice and makes a plan for his clients.

Here’s how a financial advisor can assist his clients:

• Setting up an emergency fund: Assists in creating a safety net for unexpected expenses, like medical bills or repairs.
• Guiding clients on saving and budgeting: Helps you craft a budget and savings plan to better manage your finances.
• Planning for short- and long-term goals: Aids in setting achievable financial goals and developing strategies to reach them.
• Figuring out how to retire well: Analyze your situation to recommend retirement savings and investment approaches.
• Managing taxes: Offers strategies to minimize your tax burden and maximize your earnings.
• Choosing the right mix of investments: Design a balanced investment portfolio tailored to your needs.
• Getting rid of debt: Helps create a plan to efficiently pay off debts and regain financial freedom.
• Taking care of investments you have: Monitors and adjusts existing investments to align with your evolving financial situation.

In short, financial advisors provide personalized guidance and strategies across a spectrum of financial aspects to enhance their client’s financial well-being and help them navigate through life’s various milestones and challenges.

10 Types of Financial Advisors with Salaries

Based on the latest data from the Bureau of Labor Statistics (BLS), financial advisors earned a median annual salary of $ 95,390 in 2022, surpassing the national average of $74,738. The middle 50% earned around double the amount of the lowest 10%, with the median at $ 95,390. Meanwhile, the highest 10% of financial advisors earned $239,200, which is almost five times the income of the lowest 10% at $ 46,700.

However, financial advisory salaries are not one-size-fits-all. They fluctuate substantially based on factors such as geographical location and the advisor’s level of expertise.

Check these 10 types of Financial Advisors and their salary:

1. Certified Credit Counselor (CCC): Average salary: $48,127/year, Salary Range: $33,000/year to $69,000/year.
2. Insurance Agent: Average salary: $61,971/year, Salary Range: $29,644/year to $129,551/year.
3. Personal Financial Specialist (PFS): Average salary: $62,853/year, Salary Range: $28,000/year to $116,000/year.
4. Enrolled Agent: Average salary: $66,573/year, Salary Range: $40,495/year to $109,445/year.
5. Broker: Average salary: $77,432/year, Salary Range: $35,375/year to $169,489/year, Commission: $43,500/year.
6. Certified public accountant (CPA): Average salary: $87,421/year, Salary Range: $48,500/year to $122,000/year.
7. Certified Financial Planner (CFP): Average salary: $88,009/year, Salary Range: $48,500/year to $128,500/year.
8. Asset Manager: Average salary: $92,312/year, Salary Range: $56,883/year to $149,805/year.
9. Registered Investment Advisor (RIA): Average salary: $98,399/year, Salary Range: $80,214/year to $143,866/year.
10. Chartered Financial Analyst (CFA): Average salary: $111,863/year, Salary Range: $24,896/year to $196,057/year.

The salary range above will give you a basic idea about what you can expect. You’ll start your career with an entry-level salary and your salary will increase based on your performance.

5 Key Factors that Influence the Salary of a Financial Advisor

The earnings of a financial advisor are influenced by a multitude of factors that shape their career trajectory and income potential.

If you want to become a successful financial advisor, consider these 5 key factors that influence the salary of a financial advisor:

1. Credentials/Certifications

Earnings for financial advisors are influenced by their credentials and certifications, such as CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst), which demonstrate expertise and build trust with clients.

2. Experience Level and Skills

Accumulated experience and a diverse skill set in investment strategies, tax planning, and financial management contribute to a financial advisor’s earning potential, as clients value seasoned professionals for sound guidance.

3. Type of Clients

The range of clients served impacts earnings; working with high-net-worth individuals or institutional clients can lead to higher fees and commissions compared to serving retail clients.

4. Location

Earnings can vary based on geographical location, as cost of living and local economic factors affect fee structures and compensation standards for financial advisors.

5. Success and Performance:

A track record of delivering strong returns and achieving financial goals for clients enhances an advisor’s reputation, leading to referrals and potentially a larger client base, thus impacting overall earnings.

Earning potential in the realm of financial advising is a multifaceted interplay of qualifications, experience, client dynamics, geographic considerations, and a proven track record.

As financial advisors navigate these factors and continue to refine their expertise, they can position themselves for higher earnings while providing invaluable financial guidance to their diverse clientele.

Financial Advisor Career: Pros and Cons

A career as a financial advisor can be both rewarding and challenging, offering individuals the opportunity to shape their financial futures while navigating a complex and dynamic industry.

In this profession, there are several appealing aspects, as well as potential drawbacks, that aspiring financial advisors should carefully consider.

Let’s delve into the pros and cons of pursuing a career as a financial advisor.

Benefits of Pursuing a Career as a Financial Advisor:

• Lucrative Income Potential: Financial advisors have the opportunity to earn a substantial income based on their skills and client base, with the potential for significant growth over time.
• High Growth Industry: The financial advising field is projected to grow at a rate much faster than the average occupation, driven by increasing retirement planning needs and changing pension dynamics.
• Flexible Work Schedule: Financial advisors enjoy the freedom to set their schedules, accommodating their most productive hours and achieving a healthier work-life balance.
• Affordable Startup: Starting as an independent advisor requires a relatively low initial investment, with opportunities for remote work and reduced overhead costs.

Drawbacks of Pursuing a Career as a Financial Advisor:

• Steep Learning Curve: Mastering the complexities of financial advising demands continuous education and skill development, including passing challenging exams like Series 7, Series 66, and CFA.
• High-Stress Industry: Due to market volatility, competition, and client expectations, financial advisors face significant stress, necessitating effective stress management strategies.
• Regulatory Complexities: Complex regulations and licensing requirements can create barriers to entry and demand ongoing compliance efforts.
• Upfront Work and Uncertainty: Building a successful practice requires years of hard work, long hours, and enduring uncertainty before reaping substantial rewards.

As with any career choice, prospective financial advisors should weigh these factors carefully against their own strengths, aspirations, and appetite for the intricacies of the financial world.

Up to this point, we’ve covered all the essential aspects to consider before starting your journey as a financial advisor. If you’re still committed to becoming a financial advisor in 2023, here’s your blueprint for success:

4 Steps to Become a Successful Financial Advisor in 2023 [The Masterplan]

These four essential steps illuminate the path to success, providing crucial insights into navigating challenges and harnessing opportunities in the ever-evolving realm of financial advisory services.

Step 1: Get the Right Degree

A bachelor’s degree in finance, economics, business, statistics, or related fields is essential for aspiring financial advisors. Additionally, you need specializations in retirement, taxes, estate planning, insurance, or risk management.

If you have a Bachelor’s degree in Finance or Business Administration (BBA), you can start your career as an intern financial analyst and personal financial advisor. After starting your career, you can prepare yourself for Chartered Financial Analyst (CFA) or Certified Financial Planner (CFP) exams.

Prior to getting the CFP mark, you can complete the MBA. Some firms or high-end clients may require advanced degrees like an MBA degree while continuing your full-time employment in the firms.

Step 2: Get Certifications and Licenses to Become a Highest-Paying Financial Advisor

You have to take some certification or licensing exams to become a successful financial advisor. Depending on your specific role within your company, you might be required to take either securities licenses or specialized certifications, sometimes both.

Securities Licenses for Financial Advisors

In order to engage in the marketing and sale of securities, securities licenses are essential for financial advisors. These licenses are regulated by the SEC and require passing exams while being sponsored by a FINRA-member entity. The licensing process involves several exams:

• SIE (Securities Industry Essentials): A foundational exam covering securities basics, serving as a prerequisite for other licensing exams. No sponsorship is required.

• Series 6 License: Also known as Investment Company and Variable Contracts Products Representative license, mainly for advisors incorporating grouped securities. Sponsorship by a FINRA-member entity is necessary.

• Series 7 License: Required for most financial advisors as a General Securities Representative license, enabling broad securities-based product marketing. Sponsorship by a FINRA-member entity is mandatory.

• Series 63 License: A state exam by NASAA covering state regulations for broker-dealer representatives. Typically taken alongside the Series 6 license. No sponsorship is needed.

• Series 65 License: A state exam by NASAA for investment advisor representatives. No sponsorship is required.

• Series 66 License: Also known as the Uniform Combined State Law Examination, combining Series 63 and 65 content. Requires an active Series 7 license for investment advisor representation.

Specialized Certifications for Financial Advisors

If you are considering becoming a financial advisor, do some research to choose the specialized certifications that are fit for your career goal.

Financial advisors can pursue these specialized certifications to enhance their expertise:

• Certified Financial Professional (CFP): This certification from the CFP Board requires a bachelor’s degree, completion of CFP coursework, passing a 170-question exam, and showing 6,000 hours of financial planning experience or 4,000 hours of apprenticeship.

• Personal Financial Specialist (PFS): The AICPA offers this designation for CPAs interested in financial planning, requiring CPA licensure, AICPA membership, 75 hours of training, 2 years of experience, and passing the PFS exam (waived with CFP exam clearance).

• Chartered Financial Analyst (CFA): The CFA certification is suited for individuals interested in investment analysis and portfolio management. To become a CFA charter holder, aspirants need to clear three levels of exams. Additionally, they are required to submit academic and professional records, provide reference letters, and complete an application process.

• Certified Fund Specialist (CFS): The Institute of Business Finance awards this recognition, which focuses on mutual funds and similar assets. It’s obtained after completing a CFS course tailored to advisers handling such investments for clients.

• Chartered Financial Consultant (ChFC): The American College of Financial Services awards the ChFC title, designed for professionals enhancing their financial planning expertise. ChFC status requires coursework completion, successful exams on topics like investments and insurance, and meeting experience and ethics criteria.

These designations provide specialized expertise in financial planning, investment analysis, and related fields.

But you know, you can’t take all the certifications at a time.

Simple Hacks: When you start your career as an intern, try to find seniors in your office whose current position matches your career goal and ask them “How can I become a successful financial advisor such as you?”. Get the advice and apply it to your life.

Step 3: Become the master of

Step 3: Find an Entry Level Job

Finding an entry-level job as a financial advisor requires a strategic approach and a commitment to building the necessary skills and connections.

Here are some key steps you consider to get a financial advisor job:

Build a Strong Foundation

Initially, you can get experience in a similar field like customer service or banking. This will help you learn about money matters and set a strong base for your future as a financial advisor.

Use Your Existing Network

Then, you can use your personal and work connections to meet people who work in the finance sector to get a job as a financial advisor. Your friends, family, and coworkers might give you useful advice, recommend you to others, or tell you about job opportunities.

Build New connections

Feel free to attend events, workshops, and conferences about finance. You can meet experts, understand current trends, and make more connections in the industry.

Look for entry-level positions

You have to search for job openings that are made for recent graduates or people changing careers. These jobs could include customer service, helping with investment research, or doing simple financial planning tasks.

Be patient

Be ready to discuss your passion for finance and your commitment to helping clients achieve their financial goals.

Remember that breaking into the financial advising field might take time, but with dedication, networking, and continuous learning, you can increase your chances of securing an entry-level job as a financial advisor.

Step 4: Find a Mentor

Try to find someone trusted as your career mentor from your office during your intern period. If you want more curated career advice you can attend industry events and conferences. It’s a great way to meet other financial professionals and learn about the industry.

But, be careful. Only take career advice from someone who is trusted.

Additionally, you need to be prepared to put in the work to learn from your mentor. It means being open to feedback, being willing to ask questions, and being proactive in your learning.

Make sure you have enough experience and a strong client base before launching your second career as a flat-fee, advice-only financial planner.

Step 4: Start your Own RIA firm or become an advice-only financial planner

If you’re transitioning from a job, consider how you’ll transition your current clients to your new advisory firm. You should maintain open communication to ensure a smooth shift.

You have to leverage your certifications and experience in your marketing materials. Emphasize your deep understanding of complex financial matters and your commitment to providing high-quality advice.

Finally, as an experienced advisor, ensure that your firm’s practices remain compliant with industry regulations and ethical standards.

Congratulations! You become a successful financial advisor.

Whether you are considering launching your own financial advising firm or transitioning from a successful career as a financial advisor to an advice-only financial planner, this journey is one that holds the promise of empowerment, independence, and the ability to positively impact lives.

One more thing, With experience and the right tools at your disposal, you can create a lasting impact on the financial well-being of your clients.

So, be the master of the powerful tools.

Best Tools for Financial Advisors

From analysis to communication, tools are essential for modern financial advisors looking to excel in their roles. So, check this list of industry-dominating tools for financial advisors:

• Client relationship management (CRM) software: Salesforce, Microsoft Dynamics CRM, Insightly
• Financial planning software: eMoney Advisor, MoneyGuidePro, SimplyFI
• Investment research tools: Morningstar, Bloomberg, FactSet
• Portfolio management tools: Envestnet, Portfolio123, Charles Schwab
• Compliance software: Orion Advisor Services, ComplianceBridge, ComplianceSpace
• Data analytics tools: Tableau, QlikView, Power BI

In the world of financial advising, the right tools can make your work smoother and your advice stronger. The tools we’ve mentioned above offer ways to plan better, communicate clearly, and keep data secure.

Remember, using these tools isn’t just about technology—it’s about helping you serve your clients better and make smarter financial decisions.

The Bottom Line

Becoming a successful financial advisor in 2023 is a promising path. The field is competitive but growing.

I would suggest you,

Take a CFP course and pass the exam. Then get a job with a small firm where you can do financial planning and join client meetings. After that take either the Series 65 exam and join a fee-only RIA or take the Series 7 exam and Series 66 exam and join a broker-dealer. You can take ChFC and CIMA certifications if you are interested in investment consulting.

Grow your career and start creating relationships with high-end clients or target HENRYs (high earners, not rich yet) clients, so that you can offer them your services as an advice-only financial planner.