Pros and Cons of Becoming a Financial Advisor

If you’ve been planning to step into the finance industry, the most lucrative role you might have come across would be that of a financial advisor. However, just like every career avenue, it comes with its fair share of pros and cons.

In this blog, we’ll discuss the benefits and disadvantages of becoming a financial advisor, and we might also debunk some popular myths around this profession. Moreover, towards the end, we have also carved a pathway for people willing to become Certified Financial Advisors in India and abroad.

Who is a Financial Advisor?

Financial advisors help individuals, families, and businesses make the best use of their money to secure their financial goals. Financial advisors can come in handy in multiple arenas, such as tax, retirement, and estate planning, investment management, or even something as simple as sending your child to a good college.

But what makes them different from the finance gurus offering wealth management advice on the internet?

Well, there are a bunch of things that set them apart.

For instance, they understand your fiscal position and thus curate customized strategies. Moreover, they are well-qualified and experienced. All financial advisors hold prestigious certifications such as Certified Financial Planner (CFP) and Certified Financial Analyst (CFA).

Also Read- How to Become a Financial Advisor

Roles and Responsibilities of Financial Advisors

For your convenience, we’ve broken down their roles and responsibilities of financial advisor into primary and fiduciary duties.

Primary Duty:

The primary/core duty of a financial advisor is to help their clients accomplish their financial goals. To achieve this, they may assess their client’s financial background, current standing, and future goals. How? Well, they may have discussions with them and ask for documents and other proof to assess their income, expenses, debts, and risk tolerance. Some clients may be a little hesitant to share all this information. Fair enough—it’s their hard-earned money. However, a good financial advisor builds trust and rapport and ensures ethical work. All this homework can come in handy while setting realistic financial goals for their clients, such as buying a home, planning for children’s education, or securing a comfortable retirement.

Fiduciary Duty:

To maintain the sanctity of the position, the CFP board has established a strict code of conduct that every financial advisor must follow. Moreover, one of the key responsibilities of a financial advisor is to put their client’s interests above their own—this is known as fiduciary duty. How does it work? Let’s take an example. As a financial advisor, it is your duty to inform your clients about the short-term and long-term benefits as well as the potential drawbacks of their investments. Thus, instead of selling your services, financial advisors are expected to look after the financial well-being of their clients.

Here’s a gist of some other roles and responsibilities of a financial advisor:

• Budgeting
• Cash flow management
• Retirement and estate planning
• Portfolio management
• Risk management, etc.

Job Roles Financial Advisors Can Take On

• Portfolio Manager
• Wealth Manager
• Mutual Fund Manager
• Financial Planner
• Insurance Advisor
• Retirement Planner
• Finance Coach, etc.

 

Also Read- What Does a Certified Financial Advisor Do?

5 Benefits of Working as a Financial Advisor

• Professional and Personal Growth

The role of a financial advisor allows you to get your hands tainted with the real-world know-how of the latest financial laws, market trends and investment strategies. As you evolve and gain expertise, you can also provide a cushion of other services like tax planning, estate planning that foster your professional growth. Moreover, with prestigious certifications like CFP and CFA and an impeccable working record, you can move swiftly to top-level positions in a firm and enjoy better salaries, perks, and other benefits.

• Access to Investment Opportunities

Working as an investment advisor, you get a golden chance to be updated about the market trends and identify investment opportunities. While helping your clients create wealth, you can also create wealth for your family and the upcoming generations with ease.

• Long Career

There’s no fixed age of retirement for financial advisors. Unless and until you have a sound mind and body, you can always make a mark in this industry. Moreover, due to the dynamic nature of the finance industry, the opportunities for growth and development are abundant. All you need is a zeal for learning, passion, and dedication to your work.

• Ability to Help Others and Make a Positive Impact in Their Life

If you’re someone good at mentorship and making a positive difference, this is a perfect role. This role allows you to guide clients through critical life decisions like retirement planning, tax savings, and estate planning. The personal satisfaction that comes from seeing your clients reach their financial milestone is deeply fulfilling.

• Flexibility

Would you believe us if we told you that the role of a financial advisor is highly flexible? Well, you should. Financial advisors can work anytime, anywhere. Moreover, they have the full liberty to decide whether they want to be associated with a firm or start their independent practice. Since the startup cost is low, most of them can manage to carve a place for themselves in the industry even through bootstrapping.

Also Read- Financial Advisor vs Financial Planner

4 Disadvantages of Working as a Financial Advisor

• Regulatory Auditing

As a financial advisor, you have to adhere to various rules and regulatory standards which can be complex and ever-changing. Adhering to all these regulatory standards can be stressful and too time consuming. However, if you fail to adhere to these rules and regulations, it can lead to penalties or even loss of license.

• No Immediate Rewards

If you’re planning to work with a firm, you need to be on a constant lookout for good opportunities. That means you need to stay updated, have a few successful projects under your belt, and maintain cordial relationships with ex-clients that can vouch for your competence. Moreover, even if you’re planning to start your own practice, it takes a lot of perseverance to build a clientele.

Thus, the idea that this field offers easy money is far from reality.

• Vulnerable to Market Risks

The success of a financial advisor is contingent upon the state of equity markets. When the market is promising, they can expect to earn through commissions and other channels. However, they are also susceptible to losses when their investment decisions do not prove to be profit-yielding. As a result, their and their client’s income would suffer.

Also, they often have a hard time convincing their clients to stay put and keep investing from a long-term point of view, as the clients may expect instant rewards.

• High Pressure and Stress

The role of a financial advisor can be psychologically exhausting. Take, for example, when we take our financial decisions, such as managing expenses, repaying the mortgage, saving, investing, etc., it can be tiring.

Now, here’s a person who is entrusted by people to manage their money, minimize risk, and maximize profit for them. Anyone could be stressed out by the gravity of the role they’re expected to carry out. Moreover, given the volatile nature of the financial market, they don’t have a set schedule in place. As a result, working late hours into the night, lack of proper sleep, and poor diet can take a toll on their physical and mental health.

How to Become a Financial Advisor?

Financial Advisors are mostly Certified Financial Planners (CFPs). Their proficiency is tested and vouched by the Financial Planning Standard Boards (FPSB) India, the official partner of CFB Boards of Standards, USA.

The best part is that you don’t need fancy qualifications or finance industry experience before taking the CFP course in India. All you need is a minimum of 55% marks in your 12th standard examinations, an ardent interest in the field and a curiosity to learn! The average course duration of CFP course is 6-18 months. Check out our step-by-step guide to CFP certification in India.

Check out the CFP course at IMS Proschool NOW to unlock your career as a financial advisor in India and abroad!

Moreover, financial advisors are also CFAs.

CFA is one of the globally renowned financial certifications. Being administered by the CFA Institute, U.S., the course focuses on investment management, financial analysis, and ethical practices. Moreover, the CFA charter is considered the gold standard in the finance and investment industry. Financial advisors with CFA are more likely to get better employment and promotion prospects.

If you’re planning to become a financial advisor with CFA, IMS Proschool is offering CFA classes for aspirants with expert faculty, interactive classroom experience, customised study plans, and full employment support.

Check out our CFA Prep course TODAY to know more!

Bottom Line

The role of a Financial Advisor is nothing short of a roller coater ride. It offers substantial rewards to those who are passionate about finance and enjoy helping others achieve their goals. However, the profession also demands dedication, resilience, and a willingness to navigate challenges. By understanding the pros and cons, you are now equipped to make an informed decision of your career.