| Educational Attainment Breakdown for Personal Financial Advisors |
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College or Higher |
81.7% |
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Some College |
12.8% |
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High School or Less |
5.4% |
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Most Significant Source of Postsecondary Education or Training
Bachelor's degree
Source: U.S. Department of Labor
Financial analysts and most personal financial advisors must have a bachelor's degree. Many also earn a master's degree in finance or business administration or get professional designations. Because the field is so specialized, workers frequently attend training and seminars to learn the latest developments.
Education and training. A bachelor's or graduate degree is required for financial analysts and is strongly preferred for personal financial advisors. Most companies require financial analysts to have at least a bachelor's degree in finance, business administration, accounting, statistics, or economics. Coursework in statistics, economics, and business is required, and knowledge of accounting policies and procedures, corporate budgeting, and financial analysis methods is recommended. A master's degree in finance or business administration also is desirable. Also useful are advanced courses in options pricing or bond valuation and knowledge of risk management.
Employers usually do not require a specific field of study for personal financial advisors, but a bachelor's degree in accounting, finance, economics, business, mathematics, or law provides good preparation for the occupation. Courses in investments, taxes, estate planning, and risk management are also helpful. Programs in financial planning are becoming more widely available in colleges and universities.
Licensure. The Financial Industry Regulatory Authority (FINRA) is the main licensing organization for the securities industry. Depending on an individual's work, many different licenses may be required, although buy side analysts are less likely to need licenses. The majority of these licenses require sponsorship by an employer, so companies do not expect individuals to have these licenses before starting a job. Experienced workers who change jobs will need to have their licenses renewed with the new company.
Almost all personal financial advisors need the Series 7 and Series 63 or 66 licenses. These licenses give their holders the right to act as a registered representative of a securities firm and to give financial advice. Because the Series 7 license requires sponsorship, self-employed personal financial advisors must maintain a relationship with a large securities firm. This relationship allows them to act as representatives of that firm in the buying and selling of securities.
If personal financial advisors choose to sell insurance, they need additional licenses issued by State licensing boards.
Other qualifications. Strong math, analytical, and problem-solving skills are essential qualifications for financial analysts. Good communication skills also are necessary, because these workers must present complex financial concepts and strategies. Self-confidence, maturity, and the ability to work independently are important as well. Financial analysts must be detail-oriented, motivated to seek out obscure information, and familiar with the workings of the economy, tax laws, and money markets. Financial analysts should also be very comfortable with computers, as they are frequently used in doing work. Although much of the software they use is proprietary, they must be comfortable working with spreadsheets and statistical packages.
Personal financial advisors need many of the same skills, but they must emphasize customer service. They need strong sales ability, including the ability to make customers feel comfortable. It is important for them to be able to present financial concepts to clients in easy-to-understand language. Personal financial advisors must also be able to interact casually with people from many different backgrounds. Some advisors have experience in a related occupation, such as accountant, auditor, insurance sales agent, or broker.
Private bankers work directly with wealthy individuals, so they must be polished and refined. They should be able to interact comfortably with people who may be well-known in the community.
Certification and advancement. Although not required, certifications can enhance professional standing and is recommended by many employers.
Financial analysts can earn the Chartered Financial Analyst (CFA) designation, sponsored by the CFA Institute. To qualify for this designation, applicants need a bachelor's degree and four years of work experience in a related field and must pass three examinations. The first exam is administered twice per year, while the second and third are administered annually. These exams cover subjects such as accounting, economics, securities analysis, financial markets and instruments, corporate finance, asset valuation, and portfolio management. Increasingly, personal financial advisors, sometimes called wealth managers, working with wealthy individuals have the CFA designation.
Personal financial advisors may obtain the Certified Financial Planner credential, often referred to as CFP. This certification, issued by the Certified Financial Planner Board of Standards, requires 3 years of relevant experience; the completion of education requirements, including a bachelor's degree; passing a comprehensive examination, and adherence to a code of ethics. The exams test the candidate's knowledge of the financial planning process, insurance and risk management, employee benefits planning, taxes and retirement planning, and investment and estate planning. Candidates are also required to have a working knowledge of debt management, planning liability, emergency fund reserves, and statistical modeling.
Financial analysts advance by moving into positions where they are responsible for larger or more important products. They may also supervise teams of financial analysts. Eventually, they may become portfolio managers or fund managers, directing the investment portfolios of their companies or funds.
Personal financial advisors have several different paths to advancement. Many accumulate clients and manage more assets. Those who work in firms may move into managerial positions. Others may choose to open their own branch offices for large securities firms and serve as independent registered representatives for those firms. In most cases, employees of established firms are barred from keeping their clients after they leave a firm, so an advisor who leaves a firm to establish a new business must find new customers. Many newly independent personal financial advisors sell their services to family and friends, hoping to win business through referrals.
Source: U.S. Department of Labor's Occupational Outlook Handbook
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