It pays to know how to handle money - literally. If you're good enough to help manage the financial situation of others, you just may be able to fetch an impressive salary for yourself. Not everyone needs a financial advisor, but enough people find it worth it to work with one that it continues to be a viable career option - even as robo advisors become more prevalent.
How much do they make?
Financial Advisor Salary
According to the U.S. Bureau of Labor Statistics (BLS), as of May 2017 the median average for a personal financial advisor is $90,460. Those on the higher end of the salary range, who have done this work for a long time or work in the right industry or city, could find themselves making over $200,000 a year.
Top Financial Advisor Salary by State
Many of the states with the highest financial advisor salaries contain or are close to large cities. The BLS reported that as of May 2017, the highest annual mean wage for financial advisors came from the state of Wall Street, New York with a mean wage of $166,100. Not too far behind is California at $141,100, followed by Connecticut at $137,120. At No. 4 is District of Columbia with $135,770, with Maine in 5th with $134,380.
National Average Financial Advisor Salary and Statistics
The range of salaries is extremely wide. The city an advisor works in plays a large role in this. The aforementioned states have high annual mean wages, but the same BLS report shows the mean in non-metropolitan areas of southeast Nebraska is $52,530.
Some statistics on financial advisor salaries as of May 2017:
- Mean annual salary: $124,140
- Wages for the lowest 10th percentile: $40,800
- Advanced range salaries (75th percentile): $162,680
- Wages for the highest 10th percentile: over $208,000
- Number of jobs: 200,920
- Job outlook: 15% increase from 2016-2026
What Does a Financial Advisor Do?
Financial advisors work closely with people and suggest a course of action to enhance their financial assets. This can mean helping with the planning of long-term goals like retirement or short-term goals like vacation.
A financial advisor can also be far more specialized than just a general advisor. Some focus on things like retirement, others on taxes, others on investments. The entire financial field is available when becoming or seeking a financial advisor, and you'll need to know a lot; clients are putting their financial situation and future in your hands.
Whether a client is financially stable or not, an advisor is still often helping him or her through major decisions that impact the present and future, and will also need to help keep them calm and help them make the best choice for them and their family. A couple with a baby on the way may look to a financial advisor for advice on how to save money for future expenses or safe investments that are more likely to bring a return. Perhaps an investor is looking to add to and diversify their portfolio, but isn't quite sure how to start and wants a qualified professional to help. Or maybe someone has come into more money and wants to make sure it's not wasted. No matter the client, financial advisors need to provide quality advice and be a trustworthy presence in their life.
Financial advisor handle a lot of pressure. Risk is unavoidable in finance (and especially in investments), but you need a keen understanding of the difference between bad risk and good risk in any given scenario. Someone looking for money management advice in the midst of a divorce requires different advice than someone looking for good investments as they near retirement.
Financial Advisor Expectations and Tasks
Balancing the finances and investments of multiple clients involves a lot of juggling and a lot of focus.
When meeting with a new client for the first time, financial advisors need to discuss at length why this client has chosen to have the meeting and where they are currently at financially. What is their income? What are their investments and which additional investments are they interested in?
With this information, an advisor can offer advice to their client for a direction to take for their foreseeable future and how their offered services can help with this direction. A financial advisor with a broad-enough range can create a larger overall plan for a client, while a specialized advisor can provide expertly detailed and intricate advice in their field.
Oftentimes, these plans and advice will involve investments - which ones are wise for the short-term or long-term, which ones lend themselves to a situation like retirement, etc. Advisors can give suggestions of investments and answer any questions clients may have about their own concerns. Being able to effectively provide this counsel means that financial advisors must vigilantly research and stay updated on current and up-and-coming investment options.
Financial advisement is of course the crux of what an advisor does, but to become successful requires networking. Developing a professional network of contacts helps financial advisors get jobs, find long-lasting clients, and create a reputation. Attending networking events and seminars is a consistent part of the job.
Is there a difference between financial advisors and financial planners? Yes, in the sense that not all financial advisors are planners. But financial planners do fall under the umbrella of "financial advisor." They're the advisor who offers more of a tangible plan for clients to adhere to than simple advice and suggestion.
Some financial planners are Certified Financial Planners, or CFPs. CFPs take coursework and eventually the CFP exam from the Certified Financial Planner Board of Standards, Inc. The coursework, which requires a bachelor's degree, covers topics like tax, retirement and education planning. Aspiring CFPs will also have to pass an exam and have up to 6,000 hours of professional financial planning experience before officially becoming a CFP.
Financial Advisor Facts
Per BLS, as of May 2017:
- The industry with the highest-paid personal financial advisors is the Securities, Commodity Contracts, and Other Financial Investments/Related Activities industry, with an annual mean wage of $133,910. It's also the industry with the most employed financial advisors and the highest concentration of employment for them.
- Job growth from 2016-2026 is projected to increase 15%, likely due to a large aging population facing retirement.
- 24% of financial advisors in 2016 were self-employed.
- 30% of financial advisors claimed they worked over 40 hours a week in 2016, more than the hours required to count as a full-time job.