Managing Client Expectations
This is an area where advisors need to understand client psychology to succeed. While managing a client's portfolio might be pretty straightforward, handling their expectations can be more complex. Many clients are unrealistic about investment returns and interest rates.
Yes, being a financial advisor can be stressful. Financial advisors are often under pressure to meet the needs of their clients, and they may be dealing with sensitive financial information. However, financial advisors who can manage their stress effectively can find the job to be very rewarding.
Math skills: Constantly working with numbers means that financial advisors need to have excellent math skills. They must determine the amount to be invested, how much that amount will decrease or increase over time and how to create a balanced portfolio that includes a variety of investments.
According to the U.S. Bureau of Labor Statistics, the median annual wage for personal financial advisors was $94,170 in May 2021. It means half of the financial advisors earned more than that, and half earned less. One in ten earned less than $47,570, while one in ten made more than $208,000. A fun fact!
The Bureau of Labor Statistics projects 12.8% employment growth for financial advisors between 2022 and 2032.
In an ideal world, advisors can fully utilize the skills they have while developing new ones. All with the goal of better serving their clients. Advisors may quit if they feel that they've been wedged into a role that doesn't fit their skills, or that their firm doesn't encourage them to acquire new skills.
Up to 90% of financial advisors fail within the first three years of being in business — that's a scary statistic, but it doesn't have to be that way. Ask yourself this: Is being a financial advisor worth it? If you say yes, then you have to accept failure as a stepping stone to success.
Most personal financial advisors work full time, and some work more than 40 hours per week. They also may go to meetings on evenings and weekends to meet with existing clients or to try to bring in new ones.
The certified financial planner exam is one of the hardest tests in the financial planning industry.
Financial advisors are most concerned about business development. Nearly 80% cite the challenge of finding “ideal” clients (Exhibit 1). While an “ideal” client will vary among financial advisors, sourcing them instead of less preferred clients is a big deal.
Financial advisors are enterprising and conventional
They also tend to be conventional, meaning that they are usually detail-oriented and organized, and like working in a structured environment.
The average age of a financial adviser in the U.S. is 56. As they start to retire, younger practitioners will need to step up.
What Are the Ways Financial Advisors Get Money? The three main ways advisors get money are via commission, hourly-based fees, and advisory fees. Rates and average fees within these frameworks can vary widely, and some advisors may combine two or more structures.
Do financial advisors find their jobs meaningful? On average, financial advisors rate the meaningfulness of their work a 2.6/5. While most financial advisors aren't very fulfilled by their work, some people may still manage to find meaning in it.
Clients can part ways with their advisors due to poor communication, mismatched expectations, underperformance, lack of personalized advice, trust issues, high fees, and inadequate financial education.
Financial Advisors Can Make Six Figures a Year: Here's How to Become One. Being a financial advisor is a career with many advantages, including the ability to make a high salary. CERTIFIED FINANCIAL PLANNER™ professionals can earn even more than non-certified financial planners.
And contrary to what some people think, financial planning is for everyone no matter how much money you have. What's important is there are knowledgeable, experienced financial planners who care and are making their expertise available to those consumers who need the help.
How stressful is being a financial advisor? Being a financial advisor can be highly stressful due to the responsibility of managing clients' financial futures, market volatility, and the need to make crucial decisions under pressure. Stress levels can vary based on individual clients and market conditions.
There is no comfort in the numbers:
The retention rate is low: By the fifth year, only 15-16% of advisors will still be in business. Over 90% of financial advisors in the industry do not last three years. Putting it simply: 9 advisors out of 10 would fail!
According to a recent study from Deloitte, 77% of professionals shared that they've experienced burnout. The financial advisory profession isn't any different from these general trends. In one study from the Financial Planning Association, 71% of advisors reported being stressed out.
Key Takeaways
Once based out of traditional offices, several new platforms allow financial planners to work remotely from home. Financial planners who decide to work remotely as freelancers often experience a new level of personal autonomy and flexibility.
At a minimum, you'll typically need at least a four-year degree to pursue a career as an advisor. Ideally, your degree should be in finance or a related field, like business or accounting.