What Do Personal Financial Advisors Do?
Personal financial advisors provide investment, insurance, mortgage, college savings, estate planning, tax, and retirement advice to help people manage their finances.
Personal financial advisors typically do the following:
- Meet with clients in person to discuss their financial goals.
- Explain the types of financial services they provide to potential clients.
- Educate clients and answer questions about investment options and potential risks.
- Recommending investments to clients or selecting investments on their behalf.
- Help clients plan for specific circumstances, such as education or retirement expenses.
- Monitor client accounts and determine if changes are needed to improve financial performance or to adjust to life changes, such as getting married or having children
- Research investment opportunities
Advisors help clients plan for short- and long-term goals, such as covering education expenses and saving for retirement through investments.
They invest customer money based on customer decisions. Many advisors also provide tax advice or sell insurance.
While most planners offer advice on a wide range of topics, some planners specialize in areas such as retirement or risk management (assessing an investor’s willingness to take risks and adjusting investments accordingly).
Many personal financial advisors spend a lot of time marketing their services, meeting potential clients by giving seminars or participating in business and social media.
Networking is the process of meeting and exchanging information with people or groups of people who have similar interests.
After financial advisors have invested funds for a client, they and the client receive regular investment reports. Advisors monitor client investments and typically meet with each client at least once a year to update the client on possible investments and to adjust the financial plan based on the client’s circumstances or because investment options may have changed.
Many personal financial advisors are licensed to directly buy and sell financial products, such as stocks, bonds, annuities, and insurance. Depending on the agreement they have with their clients, personal financial advisors may have the client’s permission to make decisions about buying and selling stocks and bonds.
Private bankers or wealth managers are personal financial advisors who work for people who have a lot of money to invest. These clients are similar to institutional investors (commonly companies or organizations), and they approach investing differently than the general public. Private bankers manage a collection of investments, called a portfolio, for these clients using the bank’s resources, including teams of financial analysts, accountants, and other professionals.
In the United States, personal financial advisors have approximately 271,700 jobs. The main employers of personal financial advisors are the following:
Securities, commodity contracts and other financial investments and related activities. 54%
Credit intermediation and related activities. eleven%
Insurance companies and related activities. 4%
Management of companies and enterprises. two%
Personal financial advisors often work in offices. Some also travel to attend conferences, give evening financial seminars, and attend networking events to attract more clients.
Most Personal Financial Advisors work full time, with some working more than 40 hours per week. They often go to meetings in the evenings and weekends to meet with potential or existing clients.
Personal financial advisors generally need a bachelor’s degree. A master’s degree and certification can improve the chances of advancing in the occupation.
Requirements To Work
Personal financial advisors generally need a bachelor ‘s degree . Although employers generally do not require personal financial advisors to have completed a specific course of study, a degree in finance, economics, accounting, business, mathematics, or law is good preparation for this occupation. Courses on investments, taxes, estate planning, and risk management are also helpful. Financial planning programs are becoming more widely available at colleges and universities.
Important Qualities to Possess
Analysis capacity. When determining an investment portfolio for a client, personal financial advisors must be able to take into account a variety of information, including economic trends, regulatory changes, and the client’s comfort with risky decisions.
Interpersonal skills. An important part of a personal financial advisor’s job is to make clients feel comfortable. Advisors must establish trust with clients and respond well to their questions and concerns.
Mathematical skills. Personal financial advisors should be good at math because they are constantly working with numbers. They determine the amount invested, how that amount has grown or decreased over time, and how a portfolio is distributed among different investments.
Sales skills. To expand their client base, personal financial advisors must be convincing and persistent in selling their services.
Speaking skills. Personal financial advisors interact with clients every day. They must explain complex financial concepts in understandable language.
Personal Financial Advisor Salaries
In the United States, the median annual salary for personal financial advisors is $88,890. The median wage is the wage at which half the workers in an occupation earned more than that amount and the other half earned less. The lowest 10% earned less than $41,590, and the highest 10% earned more than $208,000.
The average annual salaries for personal financial advisors in the main industries in which they work are as follows:
Securities, commodity contracts and other financial investments and related activities. $97,090
Management of companies and enterprises. $86,510
Credit intermediation and related activities. $77,140
Insurance companies and related activities. $66,600
Personal financial advisors who work for financial services companies often receive a salary plus bonuses. Bonuses are not included in the salary data here.
Advisors who work for financial investment or financial planning firms, or who are self-employed, generally make their money by charging a percentage of the assets of the clients they manage. They can also make money by charging an hourly rate or by charging fees for the purchase of shares and insurance. In addition to their fees, advisers generally earn commissions on the financial products they sell.
Most Personal Financial Advisors work full time, with some working more than 40 hours per week. They often go to meetings in the evenings and weekends to meet with existing clients or to try to attract new ones.
Forbes magazine has published an article outlining the salaries of every financial advisor in the United States.
Employment of personal financial advisors is projected to grow 7% over the next ten years, faster than the average for all occupations.
The main driver of job growth will be the aging of the population. As large numbers of baby boomers near retirement, more people are likely to seek planning advice from personal financial advisors. Additionally, longer lifespans will lead to longer retirement periods, further increasing the demand for financial planning services.
In addition, the replacement of traditional pension plans with individual retirement accounts is expected to continue. Many people used to receive defined pension payments in retirement, but most companies no longer offer these plans. Therefore, individuals must save and invest for their own retirement, increasing the demand for personal financial advisors.
The emergence of “robo-advisors”, computer programs that provide automated investment advice based on user input, will partially dampen the demand for personal financial advisors. However, the impact of this technology should be limited as consumers continue to turn to human advisors for more complex and specialized investment advice over the next 10 years.