Personal Financial Advisors and Financial Analysts typically work with individuals or small businesses to develop wealth-building strategies. These professionals are often in charge of finding their own clients, then analyzing their clients’ current investments and goals. Based on this, financial advisors develop a savings and investment plan and guide their clients into selecting the right financial products for their needs.
The majority of personal financial advisors are paid on commission. While some larger firms allow their advisors to draw a base salary when first starting out, most people in these positions work as independent contractors. Since many of these professionals set their own hours, salary ranges are very broad. Part-time advisors typically make between $5000 and $20,000 a year, while full time advisors can make well over $100,000 after several years of experience and a list of established clients. Financial Advisors can also work on a fee-only basis, which is preferred by many customers seeking impartial advice. Advisors in these positions usually make between $40,000 and $80,000 a year, and report enjoying more schedule flexibility than commission-based advisors.*
Financial analysts are usually employed by large firms who work with corporate clients, and can expect their pay to be a combination of salary and bonus. Most positions are full-time with starting pay around $35,000. These professionals often bring home much more than that, however, because of the bonus system at many financial companies. Lower-level analysts typically bring home about $20,000 to $50,000 in bonus money, while analysts who go into management can expect to make much more.*
*According to the BLS, http://www.bls.gov/oco/
Job Description and Outlook
Financial services was one of the fastest growing industries in the United States from 2000 to 2006. With the recent economic downtown, many financial companies have slowed down their hiring, but not to the extent of many other industries. Long term projections state that there is a good potential for the industry to start booming again once the economy comes out of its current recession.*
*According to the BLS, http://www.bls.gov/oco/
Financial Advisors are in high demand by the aging population of baby boomers who are looking for assistance with retirement planning. Additionally, younger generations who are now entering the workforce no longer have the defined pension plans and other benefits that their parents did, forcing them to seek advice in order to plan for major life changes such as marriage and their own retirement. As this generation will not have the job security that their parents had, they will also need help in planning for financial matters that other generations have not had to consider such as long-term unemployment and repaying student loans.
Financial Analysts typically manage corporate accounts which typically have more money than individual accounts. Because of this, they are subject to more regulations than Financial Advisors. Since their work usually spans several different time zones, it is typical to put in long hours at these positions. Nonetheless, it is believed that as the United States economy becomes more dependent on information than manufactured goods, companies will need to hire more people to analyze financial data.
Training and Education Requirements
A Bachelor’s degree in a finance, business, or management related field is required by most companies looking to hire Financial Analysts. Larger companies that handle multi-million dollar corporate accounts will often prefer to hire professionals with Master’s degrees. In order to be promoted into management and MBA is almost universally required.
Financial Advisors are usually required to have Bachelor’s degrees as well, but can have their degree in a variety of fields. Current and former teachers, engineers, librarians, and medical professionals have transferred to a new career as a Financial Advisor without having to take additional coursework beyond a training class designed to help them pass their exam.
Financial advisors and analysts are required to be licensed by the state in which they practice. Each state has their own requirements regarding licensing of financial analysts and advisors. In general, though, advisors are expected to pass an exam and have a record free of any finance-related criminal wrong-doing. Check your state board for the exact requirements. Due to recent high-profile cases of fraud, the SEC is currently considering raising these standards and/or creating a federal licensing process for these professionals. At the present, time, however, no laws have been passed mandating extra qualifications or certifications for these jobs.
There are a number of professional associations that can help Financial Advisors and Analysts with their career development. In addition to a number of locally based groups, these national associations have been a well-established method of finding new career opportunities.
NAPFA, the National Association of Personal Financial Advisors, is the nation’s leading organization dedicated to the advancement of Fee-Only comprehensive financial planning. Visit their website at www.napfa.org
NAIFA, the National Association of Insurance and Financial Advisors includes commission-based advisors. Visit their website at www.naifa.org
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