How to Become an Investment Advisor
By Matthew Corica
ave you ever been interested in becoming an Investment Advisor, but you did not know where to start, orfully understand exactly how advisors make their income in a world of discount brokerage firms and marketcorrections. If you wish to become an Investment Advisor, then you must complete what is known as PS 146training before becoming employed as an Authorised Representative of an Australian Financial ServicesLicence (AFSL) holder.During my time as an Investment Advisor, the competition from discount brokerage firms has been veryminimal. My financial services company has operated a discount on-line brokerage division for several yearsnow and the bulk of our revenues are still derived from full service advisory. The vast majority of investorsstill take investment advice, with the remainder being sophisticated amateurs, professionals or undisciplinedpunters. The main reason that discount brokerage firms do not capture market share is because trading andinvesting is about strategy, which takes years of experience and training. It is not about simply executing tradeson a computer screen via the Internet.The PS 146 is an Australian Securities & Investment Commission (ASIC) regulatory requirement, and must becompleted before gaining employment within the industry. If you wish to be employed as an InvestmentAdvisor dealing in stocks, futures, contracts for difference (CFDs) or initial public offerings then you mustcomplete the courses for dealing and advising in securities and derivatives for both retail and wholesale clients.There is no experience required to become an Investment Advisor, because it is a career that is mostly learntfrom actual on the job training. A financial market or economic educational qualification will definitely help,but is not crucial. If you do not have a specific qualification, then you are usually expected to have experiencein another industry and higher education as a minimum. Do not believe the ridiculous myth that InvestmentAdvisors do not require a higher education or specific course completion to land their first job.Prior to the regulators introducing the PS 146 minimum education requirement, the industry self regulated andexpected higher education as a minimum from the majority of their applicants, unless the applicant could provesuperior market knowledge. PS 146 educational providers can be easily found by searching the Internet, and itis now only a short course to “get a foot in the door”. I would suggest that you talk to an AFSL holder andarrange employment before you undertake the PS 146 training to make sure you are studying the correctmodules. I have had people apply for employment positions that did not ask the question and thought they hadstudied the correct courses, but were still unqualified in what they specifically wanted to pursue within theindustry.You may be wondering how an Investment Advisor makes a regular income when the share market moves incycles, and occasionally corrects like we have seen over the last twelve months. For example, the average retailstock market client is less active at the moment, but futures & CFD clients are currently booming due to thelong and short-selling activity in the commodity markets. There is always trading opportunities available, forsmart dealers and their clients. I have found that the average person believes an Investment Advisor orStockbroker only executes trades on physical shares, but that is definitely not the case. We trade everythingfrom physical shares to commodity futures with a considerable income coming from capital raisings for newinitial public offerings (IPO deals) and unlisted managed investments. It only makes sense that the best stock and commodity traders in the world worked in the industry to gain their experience and market knowledge.There are several different directions you can pursue as an Investment Advisor, and my favorite has alwaysbeen research into mechanical trading techniques, which is the development of trading strategies based onalgorithms. Mechanical trading can be defined as methods of generating trading signals and quantifying risk that is independent of the trader’s discretion. It becomes a highly interesting and rewarding career when you canspend your time developing techniques to consistently beat financial markets. If you are the type of person thatenjoys strategic games such as chess or other similar activities, then financial market advisory is a career moveworth considering.