Personal financial advisor: skills, duties, and career requirements

Dream Job

My dream job is to be a personal financial advisor. This position is appealing because it is well-compensated, provides a useful service to the public, and because it is an in-demand job. The fact that the job is also independent is another significant attribute of the personal financial advisor position. Becoming a personal financial advisor requires a lot of different educational and training experiences, including getting a college degree, preferably is something like finance or economics that is related to the field, and then there is further training in order to gain an investment advice license (OOH, 2013).

Job Description

The personal financial advisor position works within the investment advice office of the bank, and involves meeting with clients in order to help develop investment strategies that will meet their investment needs. The role combines strong interpersonal skills, sales skills and financial knowledge. The duties for this role include:

Meeting with clients to discuss their risk preferences, investment knowledge and financial objectives.

Explaining the different types of financial instruments that are available

Helping to educate the clients about these instruments, including the pros and cons of each and their respective risk levels

Helping clients with special circumstances such as retirement planning, tax planning estate planning and insurance services

Monitor client portfolios to ensure that the portfolio is always meeting client objectives

Researching different investment opportunities

Executing trades in a wide range of financial products including stocks, bonds, derivate instruments and mutual funds

Seeking new clients

Behave within both the law and the ethical guidelines of the host institution

This role is largely office-based, but there will be times when you are required to meet clients off-site, including home visits. Some client visits may need to be conducted outside of normal business hours. As a personal financial advisor, you are expected to be in the office and on duty when the stock markets are open, or designate an assistant with a trading license to handle client trade requests.

A job description should also feature the skills, knowledge and competencies that are required for the position (SBA.gov, 2013). The following apply to the personal financial advisor position:

Be capable of working independently to build your own book

Strong interpersonal communication and sales skills are mandatory

Expert knowledge of financial instruments is required

Personal Financial Advisors must be fully licensed to give financial advice and to execute trades

Strong organizational skills

Excellent computer skills including Customer Relationship Management (CRM) software, Word and Excel. In-house training on proprietary account management software will be provided

Compensation Package

There are two distinct compensation models for this role. With some banks in particular the personal financial advisor is largely a salaried position, servicing the bank's clients with bonuses for productivity. The other model is primarily a commission model, where the advisor pays a rights fee to the financial institution that covers the cost of the office space, the use of the institution's name and its equipment and staff as well. This latter model is more common, because it has more upside and personal financial advisors tend to have a lot of intrinsic motivation. Thus the model that will be used will be for me to essentially retain a percentage of every trade and then pay a flat fee for the various financial institution resources that I will be using.

The flat fee per trade covers the cost to the bank of executing the trade.

The payout scale will be 40% for basic instruments, 37% for derivative instruments and 48% for mutual funds. These are in line industry norms, for example that used at Raymond James (2013). This payout scale will allow me to earn from my work, giving me the upside that I need to really grow my business. There are no bonuses built into the structure.

There are, however, some benefits that come with being an employee of the financial institution. The benefits package will consist of a benefits menu plan. There will be a number of health care options, dental care, life insurance and other small benefits. The total benefits plan value will be $20,000, and it is highly likely that most of it will go into health care. The option to join with the bank's insurance programs in particular will allow me to receive better prices on my insurance than I was compelled to purchase my own insurance without the bank's bargaining power.

However, as the job requires that the clients be served whenever the market is open, the job does not have specific benefits for vacation time, family leave or anything like that. Time away from the office is entirely voluntary. There are no limits on time away from the office, but a licensed assistant or another personal financial planner will need to cover the book while the advisor is out of the office during market hours. This is standard in the industry because servicing the client comes first, and because the advisor's status with the company is essentially that of an independent contractor.

Design of the Compensation Package

The design of the compensation package was derived from speaking with people in the industry to find out what is standard for this type of work. Furthermore, there is information from the Occupational Outlook Handbook and the U.S. Department of Labor. These sources informed about what a personal financial advisor can expect. A high level of money available for the menu is desirable. Given how much the average financial advisor brings into the bank, I felt that $20,000 was a minimal amount of benefits compensation. Given that the benefits menu consists largely of options that are optional, the value could be held low. The bank does not, for example, make a contribution to a 401K or any other retirement or pension plan. The personal financial advisor is expected to be able to handle that sort of thing himself or herself. Likewise the bank does not provide anything more than options as far as insurance because the personal financial advisor should have an insurance license and be able to find the best plan, often better than the standard bank plan. Thus, the insurance component is optional in case the bank's bargaining power makes its life insurance package superior.

The objective of the benefits package is simply to provide a baseline level of comfort for the personal financial advisor so that he or she can pursue the business of bringing in clients and managing their books. The use of incentive-based compensation is to provide motivation for the advisor to engage actively in sales. This is critical because the advisor will gain around 40% on average of sales so there is a strong and direct correlation between the work that the personal financial advisor puts into sales and building the book and the pay that he or she shall receive.

Performance Appraisal Design

A good performance appraisal system should orient the employee to the tasks that the employer values the most. In this case, sales, ethics and service are the three most important things that the bank wants. It wants sales and assets because those are directly valuable to the bank -- that is why the bank has personal financial advisors.. Service is important because lousy service hurts the host institution's brand. Most clients will likely have other services at the host institution, and that business could be jeopardized if there are issues with service at the personal financial advisor level.

Ethics are also an important criteria also because unethical behavior risks the host institution's brand. Furthermore, unethical behavior can result in legal action against the host institution. Thus, there is a zero tolerance policy with respect to ethical breaches, because the costs are so high of violations, up to and including the loss of licenses for the institution if it is found to have no provided adequate protections for the wealth of the clients.

Overall, this job is my dream job because I would be my own boss, managing money and working independently. Most often you need to work with a host institution and this institution takes a cut of your earnings in order to pay for the resources that you use. The key to the compensation plan is that it is open-ended and you are paid out as much as you are willing to earn. There are a few benefits that accrue from association with the financial institutions, but due to the nature of the employment these are not as comprehensive as might otherwise be offered to a person with the same high level of qualifications. The financial institution is responsible for performance appraisal, however, and this is because of the association with the brand, so the host institutions does play a strong role in managing the position, even if the sales and portfolio management aspects are more independent of host institution control.