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4 Myths About Financial Advisors

Financial advisors provide lots of services, such as tax planning, investment management, and estate planning. Financial advisors include investment managers, tax preparers, financial planners, insurance agents, etc. There are a lot of misconceptions surrounding this profession. Here are four common myths about financial advisors:

1. Financial advisors make a lot of money

Indeed, financiers make a lot of money compared to most other professions. However, the fact that the opinion about their salaries in wide circles is formed mainly by movies like "The Wolf of Wall Street".

The level of income and unrestrained consumption that is shown in this movie does exist in real life, but for an extremely limited circle of people. Such income is available either from management positions in investment banks, which are the highest paying place for financial advisors or from lucky, extremely advanced, and aggressive traders who run risky but successful deals to buy and sell securities.

2. To become a financial advisor you have to take hard exams

In finance, there is indeed a complete deck of different exams, each with its own target audience and scope. Let's talk about the most common ones - CFA, CPA, and ACCA.

  • СFA (Chartered Financial Analyst) is considered the most prestigious exam in corporate finance. In practice, its greatest utility is concentrated in such areas as wealth management, portfolio investments, and equity research. In other financial areas, its real effectiveness is questionable, although in some cases the CFA certificate is a competitive advantage. However, investment bankers often consider CFA a useless piece of paper, and for their part, these people are right: in the field of mergers and acquisitions, as well as operations with the capital of companies, the knowledge bank for this exam really cannot boast of up-to-date information.
  • ACCA (Association of Chartered Certified Accountants) is the main international exam in accounting, auditing, and financial management. This exam, having gained its popularity in the field of auditing, gradually spread to the financial management of organizations in general, and now it is the most popular certificate among CFOs and CFOs. Globally, ACCA for many countries is a must-have for an auditor.
  • CPA (Certified Public Accountant) is the gold standard in the accounting world and is good for those who want a career in accounting. The CPA curriculum consists of auditing and attestation, financial accounting and reporting, business environment and concepts, and regulation.

There are really a lot of exams for financiers, but you don't need to rush to everything brilliant in the best magpie traditions: you need to clearly understand in which area of finance you want to develop and what exams you should (or should not) take for this.

3. Financial advisors work only in investment banks

Although the highest paid, only a small part of all financial advisors work in investment banks. Many people work in the industry, in the same enterprises as everyone else.

The majority of financial advisors and accountants are thinly distributed across all organizations: almost any large or even medium-sized company has a planning and economic department, a financial analysis department. The largest market-leading corporations also typically operate in areas such as investment analysis, corporate finance, audited financial statements, management of subsidiaries - and all of these departments also employ financiers. In addition, financial advisors are filled with firms that are actively working with other people's finances: commercial banks, insurance, leasing, factoring companies, stock exchanges, private pension funds.

Therefore, it would be a mistake to think that financial advisors are a handful of people sitting in the tallest tower in the city in the office of an investment bank. There are many more of them than you think - they are among us.

4. A financial advisor is a male profession

This myth, which is in no way true in the 21st century, and it is easily debunked by a huge number of LinkedIn profiles owned by women who have built careers in finance. 

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Tuesday, 07 December 2021

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