The role of a financial advisor is very broad. In general, their job is to guide their clients through the confusing and sometimes overwhelming landscape of investing, tax, estate, and financial management.
Ultimately, a financial advisor's goal is to help each of their clients secure enough money to spend during their lifetime, and, in some cases, to protect and preserve a portion for future generations.
A person may also hire a financial advisor for a specific goal, such as funding their children’s college education or buying a vacation home. Consequently, a financial advisor may be asked to be an all-purpose money advisor, in addition to a personal counselor and confidante.
Key Takeaways
- In general, a financial advisor's job is to help each of their clients secure enough money to spend during their lifetime, but a person may also hire a financial advisor for a specific goal, such as funding their children’s college education or buying a vacation home.
- When deciding on a college major, the advisor's intended area of expertise—stocks, retirement, education, taxes, insurance, real estate, or financial planning—may be relevant.
- For a student who is entering college intending to become a financial advisor, a strong prospect is to pursue a business degree with a concentration in finance.
- One of the benefits of a financial advisory career is that there is no required college major in order to enter the profession.
Financial Advisor Backgrounds
Financial advisors come from a variety of different academic backgrounds. When deciding on a college major, the advisor's intended area of expertise may be relevant. Some of the specialized topics financial advisors can focus on include stocks, retirement, education, taxes, insurance, real estate, and financial planning.
For example, a financial advisor working for an investment brokerage company may need a different skill set than a fee-only financial planner with their own small business.
In addition, many financial advisors are required to undergo specialized training on top of their chosen college degree to pass the requisite licensing exams. For an aspiring financial advisor, here are some college degrees that can prepare you for the career.
Business Degree With a Focus in Finance
For a student who is entering college with the goal of becoming a financial advisor, a strong prospect is to pursue a business degree with a concentration in finance.
While studying business, students gain a broad understanding of banking and economics, which are important topics in understanding financial planning. Plus, a concentration in finance can provide insight into how to value a business, stock, or other financial product.
There are also financial planning majors and certificate programsavailable at some universities. For example, San Diego State University offers aB.S. degree in Financial Services with a certificate in personal financial planning.
Overall, a business major's strong quantitative and analytical background is a strong asset in the financial advisory profession. With a business degree and a concentration in financial planning, the postgraduate coursework that is sometimes necessary to obtain financial advisor licensure can be minimized.
Economics Degree
An economics degree, with finance courses, can also offer a foundation for an aspiring financial advisor. Economics covers both global and broad macroeconomic concepts, as well as important microeconomic topics, such as monetary and fiscal policy.
A financial advisor with a thorough understanding of economics is better equipped to help their clients traverse the business and financial market cycles.
In general, you can't go wrong with a major in business or economics; both will serve as a sound foundation for a financial planning or advisory career. The basic coursework that you must fulfill to earn a degree—accounting, economics, marketing, finance, and management—will help you transition into the financial planning field.
While a business or economics degree is preferable for a prospective financial advisor, an individual who decides to enter the financial planning field after college or late in their college studies may successfully proceed without one. That is one of the benefits of a financial advisory career; there is no required college major in order to enter the profession.
Liberal Arts, Communications, or Psychology Degree
A liberal arts degree—or even a communications or psychology degree—can offer important communication and analytical skills.
Although understanding investing and business concepts is important, much of a financial advisor's task is dealing with people and their emotions surrounding money. The ability to communicate with and relate to the client are both equally important skills.
Clearly, money and financial issues can be highly emotional issues. A student of psychology learns about emotions, fears, anxieties, and how the mind works, and this training aids financial advisors in their client relationships.
Some financial advisors want to be able to advise their clients on buying and trading stocks. Even just giving advice pertaining to investments requires a license. Similarly, financial advisors at insurance companies need additional licensure to sell and advise on specialty insurance products. These licenses require both timely courses and exams.
Communications majors also benefit from analytical skills and the ability to make complex topics simple. When supplemented by the finance and investing concepts, the planner with a communications degree can be a successful financial advisor.
In general, the liberal arts teach sound reasoning and analytical skills. When integrating and proposing a financial plan, the advisor with excellent critical thinking skills will be well-prepared to educate and explain the various options to their client.
What Does a Financial Advisor Do?
A financial advisor helps their clients pursue their financial goals. They primarily help you make decisions on how to manage your money; how much to save, where to save, what to invest in, how much to invest, how to manage taxes, how to make use of tax benefits, retirement planning, and more.
Is It Worth Paying for a Financial Advisor?
Whether it is worth paying for a financial advisor will depend on the specific individual. If you have complex finances, don't have good financial acumen, or don't have the time to manage your finances, then a financial advisor could be a good investment.
How Do Financial Advisors Make Money?
Financial advisors make money in a variety of different ways. They can be paid hourly, paid an annual fee, paid a percentage of the assets you invest, or paid on commission. It is usually one or the other depending on how you are using a financial advisor.
The Bottom Line
There is no required college major for a career as a financial advisor. That said,there are advantages that certain degrees can provide for an aspiring financial advisor.
Getting licensed is not necessarily a requirement to be a financial advisor; depending on your specialty, you may be required to pursue additional studies and certifications before you begin practicing as a financial advisor.
At the end of the day, the dedicated applicant can have a successful career as a financial advisor with a variety of different college majors.
