From time to time, people ask me how to become a financial advisor and then, how to find good jobs in the industry. Even if you aren’t interested in becoming an advisor, you might like to know how your advisor became one and got their job.
How To Become An Advisor
The truth is you can become a financial advisor in any number of ways. It actually depends on what kind of advisor you want to be. I suggest you read my series on how different financial advisors work to really understand what I’m talking about here. If you want to become a commissioned stock broker you simply need to get a brokerage firm to sponsor you and take a test.
A bright person could study for 3 weeks and pass the exam without too much trouble. If you want to sell life insurance the process is similar and the study period is about the same. So if your goals are to be a stock broker or life insurance agent you can get into the business without much fuss.
If you want to be a Registered Investment Advisor you’ll also have to take an exam. This test is administered by the SEC and it’s a little more difficult to pass but with enough study you’ll be fine. Keep in mind that becoming a Registered Investment Advisor is separate and apart from becoming a CERTIFIED FINANCIAL PLANNER™ Professional (R). To become a Certified Financial Planner (R) Professional you’ll need to invest a couple of years studying and then sit for a very extensive exam. It’s a toughie but not impossible.
I’ve taken every test mentioned above and I can promise you one thing; these tests allowed me to enter into the business but they did not prepare me to become an effective advisor. That took a lot of time working with clients and learning along the way. There is simply no other way to learn how to really help clients other than by doing it.
How To Find Financial Planner Jobs
Here’s a really important tip – identify the kind of financial planner you want to be, find a job (or at least a firm that is interested in hiring you) and only then start studying for the exams. If you first pass all the tests above you might waste a great deal of time. Also, many employers pay for your studies and exam fees if they hire you so make sure you approach this systematically.
If you want to be a stock broker or life insurance agent, simply reach out to these firms and go through their hiring process. They’ll teach you all you need to know to pass the exam and start building your business. Just be aware that nobody is going to bring you clients. Typically with brokers and life insurance companies, new hires are told to make a list of 100 people they know and then they are told to go out and get their business.
Personally, I’d prefer to do just about anything rather than hit up my friends and family for business but that’s just me. The bottom line is that you are going to have build your own book of business. (There are a few exceptions which we’ll get to soon).
If you really want to be an advisor, reach out to financial planning firms. Look for “fee only” or “fee based” firms nearby. The good firms will have you start out slowly. First you’ll work in the back office learning about administration and client service which is the backbone of what we do. Gradually, you’ll work your way up and over time you can become an advisor if you work hard, show dedication and are patient.
If you go this route you won’t make much money at first but you’ll learn invaluable skills and you’ll have great future potential. Of course, even this avenue requires you to build your own business eventually. This is less of a problem however because by the time you do that, you’ll know what you are doing as opposed to the green horns who are set lose on their friends and family by the brokerage firms and insurance companies.
The Exception That’s Not That Exceptional Anymore
Shortly after I began my career in 1986 I went to work for a bank as an advisor. This was great because they introduced me to clients and helped me jump start my practice. This is an option you have today too but I am not a huge fan if you have no experience. I say that because working at a bank doesn’t give you any opportunity to be around seasoned planners. The only difference between brokers, insurance agents and the “advisors” who work in a bank is the bank advisors sometimes find it easier to find clients. In my opinion, that is the only benefit and not really worth it long-term. There are a few other side gigs that lead to financial planning jobs and they might be worth your time looking into. But if I was going to start all over today, I’d try to work for an established firm, find a mentor and get to work.
Are you interested in becoming a financial advisor? How are you going to break into the business?
I wanted to know what it would take for someone like me who is starting out later in life to be able to get into the business. I am in my mid fifties and have not worked because I stayed home to raise my kids. Any suggestions?
I am doing a Master’s in personal finance, and could very well do the CFP exam. But how can I get into a job with a financial planner to get the three years’ experience that I need?
Neal Frankle, CFP ® says
I believe the article provides a few good alternatives. Have you looked into these?
Felicia Gopaul @ Certified Financial Planner practictioner says
It is easy to get hired into the financial services business. Many of the companies out there still hire the same way. Get as many bodies as possible to start, milk their databases and then keep their clients when they fail out of the industry. I think the honest companies will say that it’s not easy and to be successful either you or they have to have a game plan to get started. Some companies will have a mentoring program where they match you up with a veteran which can be a good way to start. I am biased and will say that if you plan to stay in the industry, take the time to get some of the credentials like the CFP designation.
Nunzio Bruno says
After I finished undergrad and right before grad school I was lured in by the muses of big broker/dealer sales. I didn’t know any better and I thought I was getting a leg up because I knew I wanted to be a financial planner and I was already accepted into my master’s program for it. I’ll tell you it was the worst summer ever, I didn’t make it much farther than the liscensing because, already thinking like a planner, I challenged my supervisors and refused to “push” because I didn’t feel right about it. It wasn’t what financial planning was supposed to be, or what I knew about it at that point anyways. So when the following fall came I was a full time grad student, walked out of their with all my lisc. and started an internship with a fee based planner. I haven’t looked back since. My advice would be to find a planner that you get along with and that has the ability to employ you and start learning the process there if you have the chance def keep going with the education too. My CFP credits and masters degree in financial planning opened so many doors early on. I wouldn’t be the stunning vision of the Financial Coach at Financially Digital you see before you if I didn’t have all that 🙂
Neal@Wealth Pilgrim says
I almost fell for a similar ruse. I ended up working for a bank and that worked out….but it was years ago. At the time, the banks actually wanted to do right by their clients.
Financial Samurai says
Totally boiler room man. Forget about it! They are just trying to attract innocent graduates who know nothing.
Kristin - Certified Financial Planner says
Thanks for the write-up. Always saddened to hear that these schemes continue to exist. Don’t forget that not only does the ’employee’ get burned in this mess, their family and friends often wind up being pressured to purchase low quality or over-priced products too.
Austin @ Foreigner's Finances says
I had some friends who were hired to sell vacuum cleaners and it was the same situation. It took them 2 weeks to burn out and they made nothing.
This is something I’m pretty interested in, but I don’t have a game plan so I’m going to subscribe to the comments and hope your readers provide some good feedback.