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What Does a Financial Advisor Do? Roles & Responsibilities

By Tim Stobierski
June 4, 2019

The world of finance is a complicated one.

The FINRA Foundation’s National Capability Study, for example, recently found that nearly two-thirds of Americans were unable to pass a basic, five-question financial literacy test that quizzed participants on topics such as interest, debt, and other relatively basic concepts.

It’s little wonder, then, that we often see headlines lamenting the poor state of most Americans’ finances. In just a quick round-up of articles, we can see that:

As these and many other headlines suggest, people don’t spend much time thinking about or learning about finance. Instead, they rely on experts, generally referred to as financial advisors, to help bridge the gap.

What is a Financial Advisor?

Put simply, a financial advisor is a person who offers financial planning and guidance to their clients, which can range from individual people to organizations or businesses. Financial advisors may be generalists capable of addressing all aspects of a client’s financial plan, or they may specialize in one or more areas, such as tax law, investment, or debt repayment.

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What Does a Financial Advisor Do?

A financial advisor’s primary responsibility is to understand their clients’ financial goals and use that understanding to help them develop a plan to reach those goals.

The exact duties that financial advisors perform will naturally vary from client to client and will depend on what, if any, area of finance the advisor specializes in. However, most financial advisors will perform some combination of the tasks below.

Common Financial Advisor Responsibilities

  • Understand clients’ specific financial goals
  • Educate clients on the steps they should take to reach those goals
  • Inform clients of the potential risks and opportunities related to these goals
  • Help clients plan for specific goals and circumstances
  • Monitor clients’ finances and accounts in an ongoing manner, and make recommendations and changes as necessary
  • Answer any questions clients may have

Some of the areas that financial advisors often educate their clients on include:

  • Debt Management: For clients with a substantial amount of debt, financial advisors will typically create a roadmap their clients can use to manage liabilities and risks. This guidance may include identifying what a client should prioritize paying off (such as high-interest credit card bills), managing payments, and other considerations (such as whether or not certain debts or bills should be consolidated or refinanced for easier or cheaper repayment.)
  • Budgeting: Financial advisors help clients develop budgets and create a realistic spending plans to work toward achieving their personal and financial goals.
  • Retirement: Retirement is one of the most significant “purchases” that most people will ever make; it’s also one of the most important, and one of the easiest for people to get wrong. By understanding their clients’ retirement goals, financial advisors are able to advise them on the best way to turn those goals into a reality.
  • Investment Advice: For clients that require it, financial advisors may offer investment guidance and advice. This typically includes ensuring investment portfolios are adequately diversified, that they are aligned with a client’s risk tolerance, and that they offer maximum growth potential.
  • Emergency Savings: Financial advisors help clients prepare for unexpected emergencies by understanding unique risks and using that understanding to advise on how much cash their clients should have on hand at any given time.
  • Insurance: As with emergency savings, insurance is all about managing risk. Financial advisors will often guide their clients in choosing the right kinds of insurance (and the right amounts of each) to protect themselves and their families against financial risk. Depending on the individual, this might include health insurance, life insurance, disability and long-term care insurance, and property insurance.
  • Tax Law: Tax law can be notoriously difficult to navigate. Financial experts can often help their clients take steps to lessen their tax burden and hold onto more of their money by creating an efficient estate plan to minimize estate taxes, advising on charitable donations, or taking other situation-specific actions.  

In addition to managing their existing clients, financial advisors will often spend a fair amount of time each week meeting with prospective clients and marketing their services to retain and grow their business.

Career Outlook: Salary and Job Growth

For those considering becoming a financial advisor, it is important to consider the average salary and job stability for those working in the field.

According to the Bureau of Labor Statistics (BLS), the median pay for personal financial advisors is $88,890 per year or roughly $42.73 per hour. By point of comparison, the median annual pay for all U.S. workers in 2018 was $38,640.

The BLS also estimates that between 2016 and 2026, the industry will add more than 40,000 jobs and grow at a rate of 15 percent annually. That growth rate is more than twice as fast as the seven percent expected growth rate for all occupations. This growth is likely due to several factors, including an aging population seeking increased financial guidance and services.

How to Become a Financial Advisor

The path to becoming a financial advisor is not always a direct one. Many financial advisors find themselves stumbling into the position as a second or even third career after having spent time in other financial roles.

If you think you would like to become a financial advisor, there are steps that you can take to increase your chances of success. Earning the right degree, gaining the appropriate experience, and developing certain key skills can help position you properly for a role in this field.

The minimum level of education typically required for financial advisors is a bachelor’s degree, though the degree doesn’t need to be in a particular major or field of study. Finance, accounting, business, economics, statistics, and other related fields all correlate well with the role of a financial advisor. Courses in taxes, estate planning, investments, and risk management can be helpful for students on this path as well.

Depending on your unique career goals, you may also need to earn specific licenses to fulfill certain clients’ needs, such as buying and selling stocks, bonds, and insurance policies. It can also be helpful to earn a certification such as a Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Personal Financial Specialist (PFS). Each of these additional licenses and certifications has its own requirements to be aware of.

After earning your undergraduate degree and working in an entry-level position, you may find it necessary to earn a graduate degree to advance further in your career. Depending on your specific career goals, this might include pursuing a Master of Business Administration (MBA) or a Master of Science in Business Analytics, Finance, Taxation, or other related fields.

Choosing the Best Path Forward

If you are considering pursuing a career as a financial advisor, the first step is finding a degree that aligns with your personal career goals. If you have yet to earn your undergraduate degree, a Bachelor of Science in Finance and Accounting Management might be a good fit in helping to align your skills with the evolving needs of the profession.

Learn more about this unique degree on the Bachelor of Science in Finance and Accounting Management program page, and explore all the benefits of a bachelor’s degree as outlined in the infographic below.

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About Tim Stobierski

Tim Stobierski is a marketing specialist and contributing writer for Northeastern University.