Many of the professions in the financial services industry are fee based, including the job of a financial advisor in many cases. Becoming a financial advisor requires the proper education, training, and licensing often before a firm will even consider making a hire. Experience is a valuable asset, even if it's in the form of an unpaid internship. Demonstrating strong relationship-building skills will also help you to become a fee-based financial advisor. Being a fee-based financial advisor is in contrast to being a commission-based financial advisor, and there are benefits and disadvantages to both.
The path to become a fee-based financial advisor leads to compensation that can be quite secure. Clients, who can be wealthy individuals or institutions such as pension funds, essentially pay fees no matter how much work is done on their behalf. A client may call one time per week or 10 times in that same period of time, requesting changes or asking for advice, and the fee-based financial advisor is paid the same fee. In a commission-based structure, the professional financial advisor is able to charge for time devoted to individual clients and for each activity executed on the client's behalf, including providing advice and securities trading. Usually, a financial firm will dictate whether compensation is based on fees or commission, but in certain environments, such as venturing out to launch your own business, that decision may be up to you.
Recognize early that client relationships are the bread and butter of this business, and often, you will be involved in some of the most monumental events that transpire in a client's life. In order to become a fee-based financial advisor, develop strong relationship-building skills early. At first, you may need to build on the client relationships already established at a firm, but networking leads to new contacts and potentially new clients.
To become a fee-based financial advisor, you should excel in mathematics or accounting. Many financial institutions hire employees who have had an Ivy League education, although that is not vital. Obtaining postgraduate education, such as a Masters of Business Administration (MBA), can also help. Upon successfully completing an education, further certification and training are necessary.
There are several exams that qualify money managers to trade in the financial markets, certifications that may be vital on the road to become a fee-based financial advisor. Even if you are not buying and selling securities but instead advising clients on how they should invest, earning licenses qualifies an advisor as someone with authority on the financial markets. Licensing, such as a Series Seven or Series 66 certification in the U.S., may be a prerequisite before getting hired.
