financial advisor

How much money does a financial advisor make?

In today’s world of finance, where millions of dollars are being traded every day, it’s easy to get lost. Stock exchange, mortgages, taxes, all that complicated ‘money stuff’ is oftentimes hard to comprehend by an average Joe. That’s where Financial Advisors come into play.

Who are Financial Advisors?

Financial advisors are professionals trained to help their clients make money-related decisions. Bachelor of finance, masters of their trade. People who use their knowledge to create an investment plan for their client, for instance. They get involved with tasks like tax and investment management, estate planning, or just simply – Financial advice. 

When guiding their clients to financial success, they charge a small fee (usually around 1%), or just a flat rate for, say, advice. 

How much do they make?

Well, the short answer is – around $90.000/year and that’s the average.

Financial advisors’ wages may range between $40.000/year and $200.000/year. There will also be individuals who struggle to make a living and those who cash in the big bucks (hundreds of thousands of dollars).

They are the type of people who make money by helping others make money. Their knowledge and qualification help their clients get rich, or get out of debt, while also making them money. How convenient!

How much money does a financial advisor make in 2020 ?

But, How do they make all this money?

Obviously, by satisfying their client.

If you go to a financial advisor with a mortgage plan in mind, they help you refine it to the best of their ability, considering all the factors, even those you’d never think may matter.

You supply the idea, they make a million dollar plan out of it.

If a financial advisor takes care of all the technical stuff and educates you on what you should care about, and what to watch out for, do you think you wouldn’t want to pay them? Of course, you would. These people might save you a whole lot of money, many more times than the amount you pay them to do so.

Of course, you wouldn’t mind the one percent. You’re spending money on the investment anyway, so just pay 101% of the price and make sure you’re doing what’s right.

Alright, but should I trust them?

Of course, you should. They are professionals. People studying their whole life about money management, investments, stocks, all the money stuff. If there’s anyone who knows how to deal with money, it’s them. That’s why they charge for it.

money pile

Why would I pay an advisor if I can just make an investment on my own?

Well, because they ensure that you do it well. 

If you make a million dollar investment, and it returns 1.5% profit, assuming you know your craft, you’re good right? 

But what if you pay them the 1%, and they crank the 1.5% to 5%? That’s a lot more money. That’s why they’re useful.

What can a financial advisor help me with?

  1. Getting out of debt

People tend to be good with money when it’s there. But what if you’re in debt? Financial advisors can help you get out of debt by carefully preparing a saving plan.

  1. Tax Planning

Taxes can get quite complicated, especially when your fortune grows. That’s why by hiring a tax professional, you save yourself a lot of headaches when dealing with taxes. They help you handle everything, advise on what steps you should consider when investing, or generally dealing with large amounts of money.

  1. Retirement & long term money planning

If you like to live your life on the fly, that’s okay. But if you tend to be cautious about the future and possible mishaps, an advisor can really come in handy. They can prepare a long term money management plan so that you’re not unprepared when trouble comes. 

Same thing with retirement. By carefully managing your money you can save a fund that can make your retirement a whole lot easier when it comes to financing. Advisor’s money plan can make you secure in case of a need for medical care. Not to mention unhappy accidents.

  1. Investments 

When dealing with big bucks, when you make an error, it costs you a lot. It could be safe to hire a professional to help you handle all that stuff. Financial advisors are there to advise, and I suppose when investing, you’d want a word from someone who sits in the financial world all the time.

They’ve been in business for quite a few years and they know what to expect, they know how to predict some outcomes. Things you might not even consider. It’s good to have an extra pair of eyes when Investing, especially if those eyes are made for looking into money.

  1. Saving

A lot of people have trouble saving money. That’s nothing new. It’s so tempting to spend money on things you don’t need, just because you have a little bit extra. This might be nothing wrong, but when someone’s not saving, when bad things happen lives can be ruined.

Financial advisors use their knowledge to prepare a saving plan, best suited for an individual. They take into account all the factors and prepare a personalized saving plan to help you manage your money.

Do you need a financial advisor?

Most of the time, you probably don’t. That’s because most of the time you aren’t dealing with life-changing financial decisions. But when you do, It might be wise to consult with someone of value.

I don’t think you should scrooge when it comes to hiring a financial advisor. Sure, there will be times when you don’t hire one, and come out on top. That’s good.

But it’s a game of risks. If you’re not using professional help (assuming you’re not hardened in the field of finance) you’re raising the risk of losing the money or making a bad decision which leads to even worse consequences.

If you’re willing to take the risk, you may come out victorious, but you might also lose a lot. 

I’m not saying it’s impossible to fail with a financial advisor. Of course, it is. It’s just much less likely. It all comes down to waging the odds. Do I go by myself and try to hit the right spot, or do I use some help but share a bit of the prize?

It’s a question everyone has to consider on their own.

various coins

How do you become a financial advisor?

If you were to become one, there’s a bit of work ahead of you I’m afraid.

To become a financial advisor, you need at least a Bachelor’s degree. Only around a quarter of advisors are self-employed, so for a company to hire you, you’ll need to be certified.

There’s no degree in financial advisory itself, but a degree in economics, business, accounting, finance, or even mathematics would be a good place to start. While in college you should take a lot of extra courses that can best supplement your advisor’s career. Courses such as financial planning, or investment management.

After graduation, it’s good not to quit education, as you’d have to keep up with trends and changes in business.

Is that it?

Well, it might be, although it depends on your career path.

If you happen to want to become a specialist in a certain field, it would be good to get licensed.

Although licensing is not required for general advisors, It adds this extra bit of prestige to your resume. 

Licenses depend on the country you’re in, so I suggest you just google them.

Can I do anything more?

Yes, you can. A professional financial advisor’s certificate. As a certified advisor you’re much more likely to get hired by big companies, and thus – get paid more. However, In order to become a certified advisor, you’ll need at least 6000 hours of professional advising experience (4000 if you work as an apprentice) before you apply for the certification exam.

Conclusion

Making between $40.000/year and $200.000/year, the financial advisors are people you’d want to see in your life when dealing with money. Whether it’s taxes, investments, estate planning, anything that has to do with money (especially a lot of it) could use a touch of professional advice. 

After all, that’s what they’re for. To advise, educate and guide you through the complex world of Finance.