We all have short-term and long-term life goals and financial goals that we want to accomplish. For instance, buying a house, putting children through college, taking a world tour, developing a farmhouse for retirement, etc. To this end, we need to not just a save portion of our current income but also ensure it grows. Hiding money under the mattress or saving it in a safe at home is not safe or advisable options. Money needs to make money and that is possible through proper investment either in banks and financial institutions or an array of financial instruments. There is a multitude of investment options available today. Each investment option has a different set of risks and returns. Making the choice requires detailed research and analysis, grounded in an in-depth understanding of the overall monetary and economic environment and legislation. This process can be tedious, confusing and even intimidating to many. So, how do you make these decisions? This is where financial advisors come in.
Financial advisors are professionals who aid their clients to make the best investment decisions that will get them a higher rate of return and monetary growth. They work with clients in trying to understand their life goals and objectives related to investment and assess their financial needs. They, then, assess the present financial situation and financial health of their clients in terms of their assets, liabilities, income, expenses and expected future income. Financial advisors also take into account the risk tolerance capacity, tax situation, insurance requirements, etc. of their clients before making suggestions on the investments. Based on these and the overall economic conditions, they make a comprehensive financial plan as a roadmap for the future.
Financial advisors work with banks and financial institutions (NBFCs, insurance companies, mutual funds companies, etc.), companies and as independent consultants. Their clients can be individuals or institutions. There has always been a steady demand for financial advisors, but recent years have seen a much steeper rise in demand. This can be attributed to the increasing incomes and increasing awareness of the need to save and invest for our growing needs. Simply put, there is a lot of uncertainty and instability in the politico-economic space and the business cycles are causing severe turbulence and damage. So, the working professionals of today understand that they need to be financially prepared in the face of such instability and insecurity. However, this rise in demand for financial advisors has not been met with the supply of qualified and skilled financial advisors.
How do you become a financial advisor?
To become a financial advisor, the basic minimum requirement is for you to possess a bachelor’s degree in finance, accounting, business, statistics, economics or other related fields. A post-graduate or doctorate degree in the finance field like MBA, commerce, economics, statistics, etc. will improve your chances of getting a high-paying job. Even non-finance graduates and non-finance professionals can get into the field by taking finance or financial management courses. There are plenty of good online finance courses available today. Finance courses equip you with the necessary knowledge and technical skills necessary. Experts say that choosing a specialization improves your job prospect and scope.
There are a number of certifications available for financial advisors such as Certified Financial Planner, Chartered Financial Analyst, Personal Financial Specialist, Chartered Financial Consultant, etc. that give them authority in the field. It is advisable to obtain at least one certification. In some areas such as insurance and portfolio management, certification is a compulsory requirement. The need for certification may also vary from country to country. It is, therefore, necessary to do your research and get the relevant certification.
Skills and Other Requirements
Financial advisors must have excellent communication skills, both oral and written. They must be excellent in cultivating and maintaining interpersonal relationships. They must be proficient with MS Office programs like Word, Excel, PowerPoint and Access, and tech-savvy in general. You should have good networking and negotiation skills.
It is extremely important for financial advisors to be well-versed in local, state and national financial laws, rules, regulations and guidelines. They must keep themselves abreast of changes in these as well as a global economic, fiscal and monetary scenario.
Pay Scale for financial advisors
The national average pay scale for financial advisors is approximately Rs. 3,30,000 per annum. According to experts and the available data, the most important factor that has a bearing on the pay scales of financial advisors is their level of experience. Freshers may receive around Rs. 3,00,000 per annum, mid-level executives with 5 to 9 years of experience earn Rs. 5,00,000 to Rs. 7,00,000 per annum. Financial advisors with over 10 years of experience earn salaries as high as Rs. 7,00,000 to Rs. 12,00,000 per annum.
So, if you are a non-finance professional considering taking up a career as a financial advisor, you must take an online finance course and equip yourself with the skills and knowledge.