How to Become a Financial Counselor

A career as a financial counselor can be one of the most lucrative and profitable positions in the financial services industry. A financial counselor is responsible for assisting individuals with analyzing their current economic situations, identifying potential gaps in the protection of their assets and incomes, and implementing strategies to fill those gaps. This professional also helps people find the most efficient and suitable means of increasing their net worth and preparing for future financial obligations like college tuition and retirement. Becoming a successful financial counselor takes a great deal of time, energy, and money, not to mention a thick skin and strong backbone. Financial counselors must have comprehensive knowledge about multiple facets of the financial industry to properly analyze the current situation and advise clients on basic issues such as insurance and investments. Since the financial services industry is heavily regulated by both the states and the federal government, proper licenses are required to ensure that a counselor has an appropriate grasp of industry legislation and planning concepts. A financial counselor who wants to offer clients the most comprehensive service, without the need to refer them to another professional, will need to obtain both an insurance producer license and a variable securities license. The insurance license is issued by the Department of Insurance at the state level , while the securities license is issued at the federal level.

Things You'll Need

• Insurance Training Classes
• Insurance Licenses
• Securities Training Classes
• Sponsoring Broker-Dealer
• Securities Licenses

Instructions

1. Attend an insurance training class. The insurance industry is regulated at the state level, and each state's laws are slightly different. To participate in insurance sales and transactions, a proper state license is required. Some states require attendance at an approved classroom training course, while others permit self-study at home. This course will provide the information and education required to pass the state insurance-producer license exam.

2. Take the insurance license exam. In addition to the successful completion of required classroom courses, the state requires that potential insurance producers pass an exam to ensure their comprehension of insurance industry rules and regulation, sales practice standards, ethics, and general techniques and methodology. It is only after completion of this exam that an insurance producer can make sales and solicit insurance products such as life insurance, health insurance, disability insurance, long-term-care insurance, and fixed annuities.

3. Attend a securities training class. The investment side of the financial industry is regulated at the federal level, and investment counselors, stock brokers, or any other professional who deals with the stock market must obtain the appropriate licenses prior to entering into any transactions or providing services to clients. Although attendance at an in-person classroom course is not mandatory, it is recommended because of the highly technical and complex nature of the issues.

4. Find a securities broker-dealer to sponsor you. Anyone can attend a securities license training class, but only individuals with formal sponsorship are permitted to sit for the actual industry exam. A broker-dealer is a company engaged in the business of trading securities, or providing a platform for advisors to manage their clients' investment accounts. Securities transactions cannot be completed without the involvement of a broker-dealer, therefore anyone wishing to trade securities or manage investment accounts is required to contract with one.

5. Take the securities license exam. Once a broker-dealer has formally sponsored a potential advisor, the federal license exam must be taken before any business may be conducted. Depending upon the goals of the would-be financial counselor and the limitations of the broker-dealer, there are a number of exams that may be taken. These exams, when successfully passed, permit the counselor to engage in investment transactions of varying types. Only those financial counselors with the proper license can solicit and sell investments. For example, the Series 6 securities license permits a financial counselor to sell, solicit, and advise clients regarding mutual fund accounts, variable annuities, and variable life insurance policies. The Series 7 securities license permits a financial counselor to handle the same products, but it also allows the counselor to work with individual stocks and bonds.

Tips & Warnings

• Always attend a classroom training course for insurance and investment license preparation. Regardless of your state's position on this issue, it is always best to attend an in-person class. The benefits of a formal setting, an experienced instructor, and the chance to actively participate in discussions far outweigh the cost of such classes. Make every attempt to contract with an insurance company or broker-dealer prior to enrolling in classroom courses or sitting for license exams. In many instances, companies will provide their own in-house training for no cost, or will offer reimbursement upon successful completion of courses and exams.

• Do not engage in the solicitation or sale of insurance or investment products without first obtaining the proper industry licenses. The penalties for non-licensed persons acting as insurance agents, investment advisors, or financial counselors are steep and will severely negatively impact your ability to find a job in the financial services industry.

References

• Laws That Govern The Securities Industry

Resources

• Insurance License Express
• FINRA Classroom Learning