How Financial Advisors Charge
The way that some financial advisors charge has changed fairly recently which means that how much money they make have changed for some as well. It used to be that financial advisors worked on commission. This meant that if they sold a particular product to a customer, the company that provided that product would pay them commission. This would mean that they might get a lump sum or a certain percentage for the duration of that product. However, there was a problem of bias with this, as a financial advisor may be tempted to hard sell products that earned them the most money. In order to try stop this, there are new rules so financial advisors can no longer take commission. This means that in order to make money they need to directly charge customers and this is normally done using an hourly rate.
The amount that they charge or are paid will very much depend on whether they work for a company or are self-employed. Many are self-employed and this will mean that they will be able to set their own rate of pay, although they may want to keep it as something which is competitive so that they do not lose customers. However, some work for companies, usually financial institutions and so would be paid a salary.
Differences in Salaries
According to Reed.co.uk the average salary for a financial advisor is £65,506 in June 2017 which is a reduction on last year. The salary will change on location with London being the highest paying city in the UK. They tend to work 35-40 hours a week and standard working hours, although independent advisors may visit customers in their homes on evenings and weekends. An independent advisor would normally need to be able to drive and to own a car.
To become a financial advisor there are a couple of routes. You could start with an apprenticeship or working as an supporter to a financial advisor. You will need a qualification approved by the Financial Conduct Authority and it could be possible to do this while working, perhaps after getting a degree and working in a graduate scheme for a bank or company of financial advisors. You will also need to pass a background check and a credit check. You will also need good skills in maths and computers and well as good communication skills. You will need to be able to research and then analyse financial information. You will need to be able to write reports and be good at negotiating sales.
As you build up experience your salary will increase with a start of £25,00 to £30,000 and then a rise to up to £50,00 as you gain experience with the most experienced earning up to £90,000. However an independent financial advisor will tend to charge around £150 an hour and so their earnings will depend on the amount of customers they have. This does sound a lot, but it will only be charged for consultation time with customers and therefore travel time, cost of travel and research time will be unpaid.