Should you encourage a young person with aspirations of becoming a financial advisor to pursue their dream? Some people may be hesitant to choose a financial advisor career due to the various challenges facing you as a startup and the availability of online financial tools and automatic investment options available today.
Think of financial advisors and investment managers like coaches. They serve as the third party who helps individuals stay on track and successfully manage their own money.
Let’s look at an example. On January 1, people flock to gyms with the goal of getting in shape and losing weight. But come March 1, the majority of those folks have given up. The people who haven’t given up are typically the ones who have a coach to keep them on track. Even the most self-motivated individuals perform better with a coach. The coach brings them to another level and gets them where they want to go.
We can take this example a step further and think about successful people, in general.
- Business owners have business coaches;
- Athletes have strength/fitness coaches;
- Weight loss program participants have weight loss coaches; and
- Teams (like the New England Patriots) have many coaches. From the quarterback coach to the linebacker coach all the way up to the head coach!
So when you look at these examples and think about financial managers as coaches, you can conclude that it’s a viable career. No matter what financial tools come out, people are going to need advice from an experienced advisor to help them make the right decisions and keep them on the right track.
Why Online Financial Tools Will Never Replace Financial Advisors
Many of the online tools available today only help with bits and pieces of retirement planning or money management. And the free, all-encompassing financial software provides mixed results. Why? Because there are so many variables and assumptions that go into the software model. For example, there’s interest rate assumptions, expense inflation assumptions, future value forecasts, and many more. It’s important to find someone with expertise to help you make the right assumptions based on your unique situation.
Even the ultimate do-it-yourselfers need to be careful. These people learn everything they can about a topic so they do it themselves. That’s all well and good unless there’s a lot at risk. You only have one shot for planning your retirement. Do you really want to risk doing it yourself and causing harm to your financial situation? Or do you want to hire a financial planner to make sure it’s done right? Hint! There’s no do-over when it comes to retirement planning.
So, unless you’re financially savvy and really understand how all the financial management and retirement planning pieces work together, it’s important to have a coach guide you to help make the right decision for your unique situation.
Benefits of being a Financial Advisor
There are many advantages to having a career as a financial advisor. The first is you are entering an industry that has been growing for many years. Traditionally only the very wealthy had financial advisors, or as they were known, personal bankers. But the industry shifted in the last 25 years to serve a much broader audience.
Many middle class families now have financial advisors to help them plan for life situations, like paying for higher education, helping out their parents and saving for retirement.
Another benefit of being a financial advisor is that you truly help people achieve their financial goals. As we mentioned above, you become a superhero coach through the advice and guidance that help your clients achieve their financial goals.
Cons of becoming a Financial Advisor
With all the advantages, there are a few things you should know before you embark on this career.
- There is a steep learning curve. Becoming a financial advisor takes years of education in order to know how to get results for your clients. And if you want to become a Certified Financial Planner, you need continuing education to maintain your certification.
- It’s a high stress industry. Market volatility can generate high levels of stress for some personality types. Not only will you have to manage your stress level, you may need to help clients through the emotional roller coaster that can occur when markets drop.
- There is a lot of work required when starting out. To open your practice, you will need to understand the regulations required to operate a legal practice. On top of that, you will also need to be good at finding clients. You need to be your own sales and marketing person when starting out, attending networking organizations to become known in the industry. Add to that the hours needed to actually manage your client’s portfolios, and you could be working many long days and weekends.
Nothing good in life is ever easy. Becoming a highly respected financial advisor takes work and discipline that can pay off in the long run.
According to the Bureau of Labor Statistics, there were 271,700 financial advisor jobs in 2018. This number is expected to decrease over the next ten to fifteen years. So, there’s actually going to be a need for new people going into the field. As of right now, the projections are such that there aren’t enough people becoming financial planners to satisfy future demand. Therefore, the salary will be at a premium making it an attractive career path for a young person to pursue.
Listen to our podcast to get more information on starting your career as a financial advisor.