Navigating the Path: Education and Requirements to Become a Financial Advisor

The role of a financial advisor is crucial in guiding individuals and businesses toward making informed decisions about their finances. Financial advisors actively work on their clients’ behalf, to research and pursue reliable investment opportunities that will yield a sufficient return. They help clients plan for short- and long-term goals, such as budgeting for education expenses and saving for retirement through investments. Their consultation process usually begins with an assessment of the client’s financial situation before moving into the identification of short- and long-term goals. After meeting with the client, the advisor formulates a financial plan for them to review. They often meet regularly to review the client’s investments and make any necessary changes. But how does one embark on this career path? This article explores the education, licenses, and skills necessary to become a successful financial advisor.

Educational Foundation

Formal Education

Getting started as a financial advisor generally requires formal education, such as a bachelor’s degree. A bachelor's degree is typically the minimum education required to become a financial advisor. Many financial advisors hold a bachelor's degree in finance, economics, business, or a related field. Personal financial advisors typically need a bachelor’s degree to enter the occupation, although employers usually do not require a specific course of study. However, common fields of degree include business, social science, or mathematics. This undergraduate degree usually takes around four years to complete. Undergraduate programs like these typically focus on basic financial management, accounting software, accounting principles, compliance, and budgeting.

For those looking to enhance their qualifications, a Master of Business Administration (MBA) or other relevant master’s degree is suitable for advisors interested in becoming financial managers. Applicants looking to further enhance their qualifications should consider a master’s degree in accounting, attainable online. These programs provide specific instruction in financial law, tax structure, and global markets. After completing a bachelor's degree, many potential advisors often pursue additional education and certifications. This can include obtaining a Master of Business Administration (MBA) with a focus on finance or completing the CERTIFIED FINANCIAL PLANNER® program.

Relevant Coursework

Professionals with specialized degrees related to accounting, business, and finance provide the majority of investment advisory and portfolio management services. Several examples of specialized degrees are listed here:

BA or BS -Accounting
BA-Consumer and Family Financial Services
MBA-Accounting and Finance or simply Finance
MS-Accounting, Personal Financial Planning, or Finance
PhD-Accounting or Finance

Courses that will be highly relevant to your work as an investment adviser:

Accounting
Computer information systems
Finance
Marketing
Behavior of groups, persons, and organizations
Statistics
Management
Ethics in business
Quantitative applications applied to business
Business communications
Business law
Economics
Taxation
Behavior of groups, persons, and organizations

Accelerated Programs

If you’re looking to expedite your path to becoming a financial advisor, accelerated programs are available. These programs are designed to condense the educational requirements into a shorter timeframe, allowing individuals to enter the profession more quickly. Accelerated programs may offer intensive coursework, flexible schedules, or a combination of both.

Ultimately, the time it takes to become a financial advisor will vary depending on individual circumstances and choices. It's important to carefully consider the educational path that aligns with your goals and commitments.

Ongoing Education

Continued education is required by both Edward Jones and regulatory authorities. There is also required training to maintain registrations and licenses. CFPs must complete 30 hours of continuing education every two years, including a minimum of two hours focused on ethics.

Licensing and Registration

Aspiring financial advisors must acquire licenses to legally provide professional financial advice. There are several types of licenses they might need, depending on the services they offer and the products they sell. The licensing process involves fulfilling specific requirements set by regulatory authorities. Financial advisors typically need to pass exams related to the licenses they’re going for. In addition to passing exams, advisors may need to meet education and experience requirements. These requirements may vary depending on the license and the state in which the advisor operates. Obtaining these licenses are not only required, but they’re also beneficial to their business. These licenses demonstrate a level of credibility and professionalism to clients.

Key Licenses and Exams

SIE (Security Industry Essentials): This introductory-level exam assesses a candidate’s knowledge of basic securities industry information.
FINRA Series 7: This license is required for individuals who want to sell a broad array of securities such as stocks, options, variable annuities and bonds. To be eligible to take the Series 7, you must be sponsored by a FINRA member firm.
North America Securities Adminstrators Association (NASAA) Series 66: This license is designed to qualify candidates as both securities agents and investment adviser representatives. It covers topics that have been determined to be necessary to provide investment advice and effect securities transactions for clients. The Series 66 registration is administered and maintained by the North American Securities Administrators Association (NASAA).

Registration as an Investment Advisor

To become a financial advisor in New York, you’ll need to register an independent investment adviser (IA) firm or secure employment as an investment adviser representative (IAR) with an established New York-registered IA. As a proprietor of a state level IA, you’ll operate under the regulatory authority of the New York Office of the Attorney General, Investor Protection Bureau. If you qualify for federal registration, you’ll register with the Securities & Exchange Commission (SEC). As the principal of a New York-registered IA, you, your firm, and all it’s representatives will be required to operate in strict accordance with New York Securities Law, known as the Martin Act, and the New York Investment Advisory Act.

As a new advisor, you will be required to complete your registration process through the Financial Industry Regulatory Authority (FINRA)-administered Investment Adviser Registration Depository (IARD). Both state registration with the New York Investor Protection Bureau and federal registration with the Securities and Exchange Commission (SEC) are processed through this system.

If you elect to manage more than $100 million client assets then your firm will be registered at the federal level with the SEC. If you’ll manage client assets that total less than $100 million, you will register your IA at the state level only.

Steps for Firm Registration in New York

Submit hard copy Entitlement Forms: This gives a representative of your firm, designated as Super Accountant Administrator (SAA), access to all FINRA Web-based systems, including the IARD system. The SAA will access the firm Gateway to complete all other state and federal registration requirements.
Fund the IARD User Account: This account will be used to pay all required registration fees, IAR registration and testing fees, as well as state filing fees:
- FINRA administrative $40 initial filing fee for state-registered firms managing less than $40 million in client assets
- FINRA administrative $150 initial filing fee for mid-level state-registered firms managing between $25 million and $100 million in client assets
- FINRA administrative $225 initial filing fee for SEC-registered advisors, which include firms with over $100 million in assets under management
- $200 initial state firm filing fee charged by New York
- Exam fees for each IAR that will be in the firm. There is no initial state IAR filing fee charged by New York for an IAR that will be employed by the firm.
Submit an electronic version of Form ADV: This form outlines your new IA firm’s investment philosophy, background of investment advisors in your employ, and fee structure.
Submit Form U-4: Each investment advisor representative (IAR) in the firm is required to complete a U-4 Uniform Application for Securities Registration or Transfer form. As a firm principal, you will be required to submit the Form U-4 for yourself as well. Form U-4 is submitted through the Central Registration Depository (CRD).
Submit a balance sheet: A balance sheet must be sent to New York State Department of Law, Investor Protection Bureau, Investment Advisory Unit, 120 Broadway 23rd Floor, New York, NY 10271. The state requires that you add this statement: “I do hereby certify that this is a true and complete financial statement” with an authorized signature. Alternatively, you can attach a CPA Audit report.

Exam Requirements and Waivers

New York requires that all investment adviser representative candidates register for and complete one of the following exams:

The Series 65, Uniform Investment Adviser Law Examination
OR
The Series 66, Uniform Combined State Law Examination and the Series 7, General Securities Representative Examination.

Individual registration and exam applications are submitted through the Central Registration Depository: Form U-4 Uniform Application for Securities Industry Registration or Transfer is used to register individuals with the New York Securities Bureau, and the SEC, as applicable, as well as serving as an application for the required exams. Upon approval of application, the exam(s) will be scheduled through one of the Prometric or Pearson Professional Center testing locations in New York. You must schedule the exam(s) within 120 days of registration. Check in with the testing center one hour before your exam time on the proper day. Exam scores are distributed immediately after the exam is complete.

The state of New York and the SEC have the ability to waive exam requirements for firm principals and representatives that have completed one of the five professional designation programs listed here:

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Chartered Financial Consultant (ChFC)
Chartered Investment Counselor (CIC)
Chartered Financial Analyst (CFA)
Certified Financial Planner (CFP)
Personal Financial Specialist (PFS)

To request a waiver in the state of New York submit an Investment Advisor Qualification form.

Ongoing Requirements

Investment Advisor Firm updates through the Investment Adviser Registration Depository: Annual updates to the ADV will always be required in order to reflect any changes to your firm’s fees, or employment status changes for advisers in your firm’s employ. License renewal actions must be completed by December 31st every year, and are processed through the Investment Advisor Registration Depository.
Expect the following fees to apply: IARD administrative fees of $100. New York’s renewal fees are $200 for the firm. There are no registration fees charged for IARs in the firm’s employ. Renewal fees are paid for all states where the firm is registered
Investment Adviser Representative updates through the Central Registration Depository: IARs are required to maintain their own Form U-4 by alerting the firm’s compliance department. As a firm principal, you will update your own Form U-4.

Experience

Building experience in the finance industry is crucial to becoming a successful financial advisor. After they are hired, personal financial advisors typically need on-the-job training to attain competency. During this time, new advisors work under the supervision of senior advisors and learn how to build a client network, develop investment portfolios, and perform other duties. A strong educational background is essential, but experience demonstrates the ability to apply theory in real-world settings.

Entry-level roles at banks, insurance companies, and investment firms provide great exposure to financial products and client communication. Many aspiring planners spend one to three years building these practical skills. Before becoming a financial planner, you will likely need to gain some on-the-job experience in an entry-level role such as a financial analyst, insurance associate, or client services representative. Most financial planners have 1-3 years of experience and familiarity with financial products, compliance standards, and direct client interaction.

Essential Skills and Qualities

To excel as a financial advisor, you need a combination of technical skills and personal attributes.

Analytical skills. Strong analytical skills, attention to detail, and good communication skills are essential.
Interpersonal skills. A major part of a personal financial advisor’s job is making clients feel comfortable.
Math skills.
Sales skills.
Speaking skills. Personal financial advisors interact with clients every day.
Self-motivation and commitment: Financial advisors should be self-motivated and committed to their work.
Empathy: The ability to listen to people and be empathetic is also important.
Critical thinking and decision-making skills: These are good to have.

Certification

It’s always important to highlight your education and experience and there are elective professional certifications that can help you in doing this. Although state and federal registration do not require independent advisors and IARs to have one of these certifications, state and federal regulatory authorities will waive exam requirements if you hold one. Eligibility requirements for one of these designations often include a bachelor’s degree or a number of years of industry experience:

Personal Financial Specialist (PFS)
Chartered Investment Counselor (CIC)
Certified Financial Planner (CFP)
Chartered Financial Analyst (CFA)
Chartered Financial Consultant (ChFC)

Optional certifications can enhance job prospects and salary potential. The Certified Financial Planner (CFP) credential from the CFP Board of Standards requires a mix of education and experience (4,000 to 6,000 hours of practical financial planning work). Many financial planners earn the certified financial planner (CFP) credential to increase their earning potential and advance their careers.

Unlike professions such as law or medicine, financial planners are not required to hold a specific national license to use the job title. That said, if you want to sell securities or insurance products, you must obtain appropriate licenses, which vary by state and product type. While credentials may not be legally required for all planning roles, employers and clients often view them as a benchmark of professionalism.

Financial planners may pursue certifications and advanced degrees to enhance credibility, improve job security, and often command higher salaries - especially with employers in investment firms, wealth management, and estate planning.

Job Outlook and Salary

Expected to expand 4% from 2019 to 2029, the growth curve for financial advisors is experiencing an increase roughly the same as the market average. Primarily, aging populations are behind the increasing demand for financial advisory services. Elsewhere, computer programs that provide automatic financial advice are expected to temper the growth of the industry somewhat. The BLS projects a significantly faster-than-average job outlook for personal finance advisors due to the increase in retirees who need financial planning advice and changes in how companies offer retirement plans.

The median annual wage for personal financial advisors was $102,140 in May 2024. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. Personal financial advisors who work for financial services firms are often paid a salary plus bonuses. Advisors who work for financial investment firms or financial planning firms or who are self-employed earn money for their services in one of two ways.

A financial advisor’s salary can average $94,170. A financial advisor’s exact compensation can also vary based on their industry. Salaries often vary by region, experience, education, and industry. Advisors who work for financial firms may increase their income with bonuses, commissions, and other incentives.

Is This Career Right for You?

Before you set out to become a financial advisor, it’s important to consider if this is the right career for you. You can make a good living, but it does require a unique set of skills and qualities. Don’t be afraid to interview professionals in the field and get their take on the job. Becoming a financial planner can be highly rewarding, but it’s not without challenges. Compensation also tends to increase with experience, certifications, and specialization.

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