Those who want to become a financial advisor will need the right education and the right credential. Financial advisors are certified professionals who help individuals make good decisions regarding personal or commercial money management.
Earn a Degree
Financial advisors must achieve and maintain a professional credential, so they will need a bachelor’s degree to qualify. The good news is that there is no specific bachelor’s degree required to take a professional exam. Instead, accounting, finance, economics, statistics and business majors are all accepted. Some financial advisors are generalists who deal with a little bit of everything, but others specialize in one area, such as taxes, insurance, retirement, estate planning or management.
Some of the more common degrees for financial advisors are degrees in financial analysis, financial management and financial services administration. These programs provide students with academic opportunities to study topics like economics, so they learn about income accounting, interest rates, price levels and business fluctuations. In order to understand these topics, students must first study calculus and statistics. Classes on financial management provide surveys of investment theories, corporate finance, financial markets and institutions.
Have the Right Skills
Financial advisors will need to have the right professional skills to succeed in their careers. They must have a comprehensive understanding of the best practices of money portfolio management. They must be able to demonstrate to a corporate client how to establish the valuation of a firm, how to perform capital structure analysis and how to manage capital budgeting. When it comes to investment clients, they must know how to explain basic portfolio theories and how to price bonds and stocks based on asset pricing models.
One of the most basic skills a financial advisor must have is the ability to perform accurate analysis of financial statements. They must know the techniques for evaluating a firm’s current and forecasted financial statements for everything from credit to security to managerial analysis. Financial advisors will need to have knowledge of financial distress indicators, short- and long-term loan request evaluations and how to measure the impact of accounting information on security returns.
Pass an Exam and Work
There are multiple certifications available for financial advisors who are eligible after they have at least three years’ work experience. These certification programs usually require specialized training and specific coursework. The four most common exams favored by financial advisors are Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Personal Financial Specialist (PFS) and Chartered Financial Consultant (ChFC), according to the CFA Institute.
Those who pass the exam will be ready to work as a certified financial advisor. Their work will require them to help clients plan for and meet financial goals. For example, a financial advisor who works at university financial aid office will interpret state, federal, accrediting agency and institutional regulations to help students qualify for financial aid. They will interview prospective students to develop a financial aid award plan and explain what students and parents must do to qualify for aid. They review student applications for completeness and then submit the file to financial aid services or organizations.
Related Resource: Investment Banker
Those who want to become a financial advisor in a specialty area will need a license. For instance, financial advisors who sell insurance or provide investment advice must be licensed by their state.
