Many consultants chose to become licensed investment advisors (RIAs) as a way to legitimize their work. However, this credential does not come free of charge; RIAs need schooling, experience and demonstrated skills before they can start training. If you are in school or are considering making a career change, use the steps below to join the rewarding area of financial advice.
1. Decide if financial advice is appropriate for you
Working as a financial advisor can be rewarding, but it is also difficult because of the amount of expertise needed and the long hours you have to work for. Think about your interest in finance and investment. The more interest you have in financial matters, the more effective you are likely to be as a financial investment advisor.
Being a good financial advisor also relies heavily on your ability to work with people. The best consultants will be a part salesman and part expert in capital markets.
2. Know your choices
Financial advisors usually follow one of two routes: either become a stockbroker accredited by the Financial Industry Regulatory Authority (FINRA) or registered with the Securities and Exchange Commission (SEC) as an investment advisor. Investment consultants are able to bypass much of the tight oversight that comes with being a stockbroker.
The rest of this article will be discussed as an investment advisor. See how to be a stock broker for more on being a stock broker.
3. Get your college degree
Although not legally mandatory, most banks and investment firms would not employ financial consultants without a bachelor’s degree. However, the discipline in which you get your degree is much less important than the fact that you have one. You can enter the profession with any sort of major, but most financial advisors have a degree in economics, business, finance, or accounting. If you do not choose either of these majors, make sure to take at least a few related courses in accounting or finance so that you have a basic understanding of the industry.
Consider taking a couple of classes in psychology, too. You need to be a bridge between what kind of investment is going to succeed and how to persuade an investor to stick to that plan.
4. Consider the graduation school
In a competitive job market, some graduates may find it easier to get a good job as an investment consultant with a graduate degree. However, after a few years of service, many banks or investment companies would eventually send their employees back to their Master’s degree to further their skills. Consider that before going straight from college to graduate school.
Working for a few years after college will also give you a better understanding of what you may want to specialize in when you’re going to graduate school.
5. Seek internships with financial advisors
Practice is a valuable way to gain expertise, and it’s how many financial consultants get started. Even if many of these internships are not being paid, the experience they offer will make the cost well worth it. If you are already employed elsewhere, you may be able to secure an internship at night.
It could be easier for you to get an internship if your college or university has ties to established banks or firms. Please talk to your career development office to find these internships.
Working as an intern is a perfect way to gain experience in the industry. However, if you’re looking for another way to break into the industry, you might consider an entry level job as a parent planner or analyst.
6. Look for the chances of working with customers
When looking for an internship or a first job, stop working for a brokerage or insurance company. In certain cases, these companies would ask you to apply to your family and friends for sales leads. After that, if you can’t make a steady stream of business fast, you’ll be fired. Some beginners may thrive in this environment, but if that doesn’t sound like you, consider working for a bank or investment consulting firm. You have a mentor at these companies to teach you the ropes and introduce you to the clients.
Having experience dealing with people is a vital part of becoming a financial advisor, so you need to be able to interpret investor behaviour.
7. Search for a curriculum of study
There are a variety of major investment companies offering detailed training programs for financial investment advisors. Such firms will help you gain the necessary work experience and train you for the licensing exams. While the services are competitive, they are worth the challenge of providing advice on financial investment if you get into them. They also offer you the opportunity to prove that you have a passion for financial investment work.
Alternatively, you should partner with smaller agencies that guarantee one-on-one mentoring and provide an opportunity for you to expand your skills by doing different projects for clients with different needs.
The bulk of trainees participate in training programs from other fields of employment.
8. Add it to your expertise
Deep knowledge is also needed for financial planning, in particular with regard to investment in education, mortgages, retirement plans and so on. If possible, take classes or work in related fields, such as real estate or tax preparation, to gain unique experience that may enable you to specialize. Having more skills would also differentiate you from your colleagues and make you a more productive employee.
Getting licensed and certified
9. Please pass the series 65 test
You will need to take the Series 65 test, which is conducted by FINRA, to become a licensed RIA. You don’t have to be sponsored by the employer for this test, so you can technically take this exam while still in school or before you get a job (provided you are knowledgable enough to pass it, that is). Compared to other technical certification exams, the Series 65 is relatively light, with three hours and 140 questions.
Issues are relevant to federal financial law and investment advice.
You must score at least 72 percent to get through. Ten of the 140 questions are test questions and do not count for or against your ranking.
10. Registration with the government
You must be enrolled with your state or the SEC to operate as an RIA. Those consultants with more than $100 million under control must register with the SEC and those below that amount must register with the SEC only. In addition, business advisors must still register with the SEC, irrespective of the size of the company.
Registration is made by the Investment Advisor Registration Depositary (IARD). RIAs must open an account with this framework and then file the ADV and U4 forms with the appropriate body (SEC or state).
Usually, the approval would take 30-45 days. Once you have been licensed, you are now a registered RIA.
11. Have another higher credential
These usually include specialized or different aspects of investment advisory services.   Specifically, it is:
Certified Financial Planner (CFP) focuses on financial preparation for savings, taxation, insurance and estates.
Chartered Financial Analyst (CFA), which entails deeper and more complex financial analysis of markets and securities.
Personal Financial Specialist (PFS), which is similar to the CFP but also includes the qualification of a certified public accountant (CPA).
Chartered Financial Consultant (ChFC), which needs three years of business experience and enables individuals to provide investment advice.
Chartered Investment Counselor (CIC), which builds on CFA credentials and qualifies consultants to manage broader accounts such as mutual funds.
12. Get your certifications
You will need to apply first to obtain these specializations. Any of them need you to have additional certifications. For example, the CIC needs you to have a CFA certificate. Others need you to have a number of years of industry experience, typically three to five years. For both certifications, you will need to pass an associated exam that will be even more involved than the Series 65.
For example, the CFP test is a huge undertaking. It is a two-day, 10-hour study, covering all facets of financial planning. Because of this, more than 40% of the test-takers failed the first time and had to take it again.