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What Are the Different Types of Financial Advisor Qualifications?

K. Kinsella
K. Kinsella

Financial advisors help individuals raise funds for major life events such as retirement or the birth of a child. Some advisors charge consultancy fees while others earn commissions by selling a variety of financial products such as mutual funds, certificates of deposit (CD)s or insurance policies. Rules about financial advisor qualifications vary between nations but most advisors have a college degree or have obtained some type of professional license or certification.

In some countries, there are specific types of financial advisor qualifications that financial professionals must obtain if they intend to refer to themselves as "advisors" as opposed to sales people or brokers. The Certified Financial Planner (CFP) Board of Standards in the United States, for example, issues certificates to advisors who pass an exam that tests both their financial knowledge and their professional ethics. Similar certification processes are used in other nations. Advisors who commit ethics violations can be stripped of these qualifications by ethics board's.

A financial advisor should fully understand her client's financial situation.
A financial advisor should fully understand her client's financial situation.

Over long periods of time, stocks, mutual funds and other types of marketable securities tend to grow in value at a faster rate than bank products such as CDs. Many advisors recommend that clients invest a high percentage of their money in these securities so that they can attempt to outpace inflation as they raise money for major expenses such as college tuition or retirement. Most nations have laws in place requiring securities traders and agents to obtain securities licenses. Consequently, securities licenses and investment experience are among the normal financial advisor qualifications that financial firm's require employees to have.

In many countries, insurance firms sell life insurance policies that have living benefits that take the form of monthly income payments or cash accounts. While insurance contracts are not always marketable, the insurance industries are heavily regulated and only licensed insurance agents can sell these products. Consequently, job postings detailing financial advisor qualifications typically include life insurance licenses as prerequisites for advisor roles.

Most advisors have a degree in finance, business, economics, accounting or a related field. Some firms prefer to hire advisors who are certified tax professionals or accountants. While advisory services are generally focused on investments rather than taxes or accounting issues, an advisor with knowledge of such issues can provide more rounded advice to clients than someone who lacks such knowledge. In some nations, only certified tax professionals can even provide tax advice. Since many investment decisions have tax ramifications many successful advisors are also certified tax professionals.

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    • A financial advisor should fully understand her client's financial situation.
      By: Duey
      A financial advisor should fully understand her client's financial situation.