A career as a financial advisor can be rewarding, but like any job it also has drawbacks.
Financial Advisor Career: An Overview
Taking on the role of a financial advisor provides a range of opportunities not widely available in many career fields. In addition to offering valuable advice to clients, successful financial advisors have virtually unlimited earning potential, flexibility in work schedule, and control over their practice.
Number of financial advisors in the U.S., according to the Bureau of Labor Statistics.
The career also has a slew of drawbacks that range in severity and duration. Among the most prominent cons are the high-stress environment of the industry, the length of time it takes to build a client base, and the continuous need to meet regulatory requirements.
- The growth rate for financial advisors through 2024 is much higher than the outlook for the average job.
- Benefits of becoming an advisor include unlimited earning potential, a flexible work schedule, and the ability to tailor one's practice.
- Among the drawbacks are high stress, the effort and time needed to build a client base, and the ongoing need to meet regulatory requirements.
Pros of a Financial Advisor Career
The benefits of a career as a financial advisor go well beyond compensation.
Offering Meaningful Advice
While offering meaningful advice is not often the reason financial advisors begin a career in the industry, it is common that this aspect of the job is the most rewarding. Consumers are all too often overwhelmed and confused regarding which investments or insurance vehicles are appropriate for them. The greatest role a financial advisor plays is providing education to clients so suitable decisions can be made. A success in the financial life of a client often equates to success for the client's financial advisor.
Unlimited Income Potential
For most financial advisors, there is no limit on earning potential. Financial advisors are either fee-based, commission-based, or a combination of both. This means income is based on the amount of new business or recurring revenue created each year. While pay structures differ, advisors have the ability to earn as much, or as little, as they are able.
Work Schedule Flexibility
Finding a balance between work and personal life can be a challenge when starting a new career and financial advisors are no different. However, once an advisor establishes a client base, the career lends itself to flexibility in work hours. Seasoned advisors have the advantage of scheduling client meetings around their personal calendars and, over time, have the opportunity to work less than a full 40-hour week.
Creativity in Practice Structure
Financial advisors have the opportunity to be creative in building their client bases. While some focus on serving the Baby Boomer generation, others cater exclusively to Millennials. Gen X is another group to serve. Advisors can also decide to specialize in a particular type of type of client, such as doctors, lawyers, or entrepreneurs.
The financial advisor field has a projected growth rate of 15% from 2016-2024, which is significantly higher than the average job outlook (7%), according to the Bureau of Labor Statistics.
They can also provide a wide range of products and services to clients, including financial planning, investment management, life or disability insurance, or retirement plans, giving them full control over their practices.
Cons of a Financial Advisor Career
While the list of pros related to working as a financial advisor is lengthy, there are a number of cons to consider.
High Stress Industry
Financial advisors can experience a great deal of stress when starting this career. The financial services industry is cyclical and deeply intertwined with the performance of domestic and global markets. When economies perform poorly, clients reach out to their advisors first. Financial advisors are constantly managing the emotions of their clients based on downturns in the market, and this can lead to a high level of stress over time.
Starting a career as a financial advisor is not an easy task. Many financial services firms have sales quotas to be met each month, which means that—until a robust client base is established—advisors are constantly in need of new prospects. A high number of advisors who leave the financial services industry speak to the stress caused by the amount of time and money spent creating and maintaining profitable prospecting systems. For new advisors with a small personal network, building a book of business is the most challenging aspect of the career.
Regulatory and Compliance Requirements
Financial advisors must be licensed to provide advice or sell products to clients. The process to obtain those licenses can be lengthy. Additionally, advisors are required to complete a certain number of continuing education courses each year to keep their licenses in good standing, and they must carry errors and omissions insurance coverage throughout their careers. Keeping up with these regulatory requirements helps protect clients from malpractice but can be a costly and time-consuming endeavor for a financial advisor.