Can You Become a Financial Advisor with a Psychology Degree?

The people skills acquired in psychology are invaluable to financial planning. A psychology degree is a good start for a career in financial services. A financial advisor can have any degree, or no degree at all.

In this article, we will explore the skills that transfer from psychology to financial advising, the differences between the two fields, and the job opportunities available in financial advising.

Can a Psychology Major be a Financial Advisor?

Financial planners who majored in psychology can offer specialized services in the fast-growing field of Financial Psychology. There is no specific degree requirement for financial planners. You don’t need a degree, just experience, knowledge and empathy.

“It has long been the case, and with advancements in technology (especially AI), we can see it easier now: Financial planning is more about relationships and less about the dollars. This makes people trained in psychological and therapeutic techniques especially well-suited for careers in financial planning.”

Dr. Sonya Lutter, Ph.D., CFP, LMFT

There is no legal degree requirement to become a financial advisor. You can take the licensing exams, get registered and sell your services.

Getting a degree is still a great move for your career. Some “optional” certifications require a degree. (I say optional but honestly, it’s much harder to do well without certifications.) The CFP (CERTIFIED FINANCIAL PLANNER) is a popular, credibility-boosting designation. It makes it easier to get hired and get clients. The CFP requires a bachelor’s degree.

Here’s some details and interview clips about how you can Become a Financial Advisor.

Financial advisors work closely with clients to understand their needs, preferences, and risk tolerance, and to develop comprehensive financial plans tailored to their specific goals. Financial advisors also monitor and adjust their clients’ plans over time, as their circumstances change.

Psychology Becoming More Relevant in Financial Planning

Psychology in financial planning has been a big talking point/development over the past 10 years. It’s predicted to grow a lot over the next several decades. So having a background in psychology might future-proof your career.

A psychology degree can equip you with some of the skills needed for a career in financial planning (financial planning is another name for financial advising). You will learn how to use quantitative and qualitative methods to conduct research and interpret data.

Transitioning from psychology to financial advising will require obtaining the necessary certifications and licenses, as well as building a network of industry professionals and potential clients. LinkedIn is a great tool for networking with financial advisors.

It’s important to supplement your psych education with training in areas specific to financial advising. The biggest topics in financial planning are investments, retirement, tax, estate, insurance, and the psychology of financial planning. Hopefully the psychology of financial planning part comes easy to you.

The Psychology of Financial Planning is a popular, straightforward book that can help you understand your future clients’ feelings about money.

What Skills Transfer from Psychology to Financial Advising?

Communication, empathy, and research are common skills in psychology and financial advising.

According to Dr. Sonya Lutter, Ph.D., CFP®, LMFT, “Those coming from a helping profession do not necessarily need to be proficient with calculations (the software does that for you), but they need to understand why the software is making that calculation. It’s about thinking systemically, which those trained in counseling and therapy are usually pretty good at doing.”

Dr. Lutter is a renowned proponent of the financial therapy field. She is also the Director of Financial Health and Wellness at Texas Tech.

Communication skills

Strong communication skills are essential in both psychology and financial advising. In psychology, you learn how to effectively communicate complex data. In financial advising, you will be explaining investment options, presenting financial plans, and building relationships with clients. There’s usually less writing in advising but don’t worry there’s still plenty of writing to do: writing emails, writing notes for compliance, writing recommendations.

91% of financial professionals believe that mastering interpersonal communication is a top priority, according to this 2021 Redtail Financial Planning Careers survey. So, if you have a psychology degree, you probably understand communication better those with a more traditional major such as financial planning, finance, or accounting.

Empathy

Empathy is a famous skill of psychology majors. Students often pick psychology because they want to help people. Almost every financial advisor I’ve met has said they chose this field because they like helping people. It’s hard work feeling concern for people all day. So, if you’re empathetic enough to be in the psychology field, financial advising might be a great fit for you.

Becoming a financial therapist is a relatively new and exciting career path. A financial therapist is someone who helps patients/clients deal with their psychological issues around money. Check out this page from the Financial Therapy Association on how to become a Financial Therapist.  

The skills and data experience in research are highly transferable to financial advising. This can help you understand and explain investments, taxes, insurance, etc. to your clients and coworkers.

Do financial advisors have to learn a lot of math? Don’t worry. I wrote an article for that too. Spoiler alert: It’s probably easier than the math from your psychology classes.

What’re the Differences Between Psychology and Financial Advising?

Psychology and financial advising share similar soft skills, however there is a learning curve for beginners. The soft skills are usually more difficult to master than the technical knowledge.

This image explains some of the topics you’ll need to learn to help others with their money.  

Financial advisors often focus on areas such as retirement planning, investment management, estate planning, tax planning, and insurance.

If you’re considering a career in financial advising, you don’t have to get another degree for it. Yes, there’s a lot to learn, however most people can learn the essentials of financial planning within a year or two. Or at least better than some of these salesmen wearing a financial advisor hat.

You may want to take some virtual or self-study courses to fill the gaps. Dalton Education and College for Financial Planning are popular, flexible options. I’ve heard great reviews of their CFP classes and I’ve benefited from some of their other study materials.

Don’t have any financial planning experience? Here’s the article I wrote about how to get a financial planning job with no experience.

Unlike becoming a clinical psychologist, you do not have to get a PhD or master’s degree to become a financial planner. Some financial advisors choose to get a master’s to learn how to serve their clients better. A bachelor’s degree is heavily recommended but isn’t technically required.

Sales skills are very important for acquiring clients and building a book of business. Even if you aren’t selling a product, many advisors say that selling yourself is a hard thing to learn. Psychology experts normally don’t have to sell but after years of studying human behavior, you’re well-positioned to be a good salesperson.

If you are introverted, don’t worry. There are plenty of jobs in financial advising where you don’t have to be facing the clients all the time. Like paraplanners or portfolio analysts. A paraplanner is someone who supports the financial advisor. Check out my article about how a paraplanner can work from home.