How to Become a Financial Planner

Financial planners help their clients manage both immediate and long-term money needs and goals, such as budgeting, investing, saving for retirement, tax planning, and insurance coverage. Choose the best Financial Planner.

Some individuals seek the advice of financial planners for one specific interest or event – like purchasing real estate or investing an inheritance – while others enlist their services on an ongoing basis.

Education and Training

Becoming a financial planner begins with earning either an associate’s or bachelor’s degree in finance, accounting, or a related field. Such studies give students an understanding of financial decision-making processes as well as economic environments where financial planning takes place; additionally, they prepare them for taking the Chartered Financial Analyst or Certified Financial Planner exams; Southern New Hampshire University provides such programs.

Once you graduate, CFP certification can help expand your qualifications and marketability. Aside from passing the exam and fulfilling experience requirements, a CFP professional must also advocate for their client’s best interests—something that takes extensive training to do effectively.

Financial planners (CFPs) can assist clients at various life stages in meeting both short—and long-term monetary goals, such as investing, saving for retirement, or paying off debt. Some CFPs specialize in areas like estate planning or risk management.

Many Certified Financial Planner professionals take great pleasure in their jobs, with 93% of members reporting satisfaction with their careers, according to a 2021 survey conducted by the CFP Board of Standards.

The CFP Board advises its candidates to participate in internships or work as junior financial planners to gain hands-on work experience in their chosen field. In addition, its Career Center helps candidates locate entry-level financial planning jobs at banks, credit counseling firms, brokerage firms, and accountancy practices; experience gained in these roles can help develop expertise while creating relationships with potential clients.

As a financial planner, in order to operate legally within any given state, licenses issued by FINRA – Financial Industry Regulatory Authority – will be necessary. These licenses include Series 6, 7, and 63, each entailing specific activities that a financial planner can carry out. A Series 6 license enables sales of investment products while Series 7 authorizes packaged securities sales; depending on where you reside, a Series 63 may also be necessary in order to sell mutual funds.

Specializations

Financial planners can work in many industries; however, some professionals prefer to specialize in specific niches like investment management, personal finance, or retirement planning. Each of these specialized jobs offers various career paths, including becoming a certified financial planner (CFP). Many specializations require specific courses, passing certain exams, or years of experience before becoming CFP certified.

CFP certification is one of the most coveted credentials in financial planning, but the requirements to attain it can be stringent. Financial planning graduates must complete six or seven classes and pass an in-depth exam as well as amass years of professional financial planning experience before being allowed to add the initials “CFP” after their names. While working within their chosen industry, they learn its intricacies and develop client relationships.

Risk and estate planning are also popular specializations of financial planning. Risk management specialists examine how an event might affect a particular asset class, while an estate planner handles the creation and administration of trusts for individuals. Many schools provide programs designed to prepare students for these specialty fields; coursework requirements will vary according to program and university.

Aspiring financial planners can earn a bachelor’s degree in the field of finance or business administration – both are popular choices among aspiring planners – with finance degrees or business administration being among the more popular choices. Undergraduate programs usually take four years to finish and may provide students with specific areas of concentration, such as investments, risk management, and estate planning. Some colleges even offer master’s degrees in financial planning that qualify them for more advanced roles and higher salaries.

Some financial planners also opt to obtain licenses through the Financial Industry Regulatory Authority (FINRA), such as Series 6, 7, or 63 licenses, to sell packaged securities such as mutual funds and insurance policies to clients. Such licenses may require fees, background checks, and membership in self-regulatory organizations.

Aspiring financial planners must also possess strong communication and networking abilities to establish themselves successfully as financial advisers. Most firms provide prospective clients, yet it’s essential for this type of worker to expand their network by finding new customers as quickly as possible.

Fees

Financial planners may charge their fees in various ways: hourly, retainer, or AUM percentage. Understanding these fee structures in detail is essential for finding a financial advisor who best fits your needs.

Advisors that charge an AUM fee typically provide both financial planning and investment management services. They consider your age, goals, and risk tolerance when determining an optimal asset allocation and buying mutual funds that fit it. They may also help with other aspects of financial planning, like creating a household budget and estate planning considerations.

Some financial planners charge a flat fee to create a comprehensive financial plan and then leave you to implement it yourself without ongoing investment management or oversight. These firms typically offer lower fees compared to AUM planners since they’re not covering additional services on your behalf.

Others charge an hourly rate ranging from $200 to $400 or more, making this option suitable for people who require advice on specific projects like estate planning. A financial planner offering such services might work with only a select few clients at any one time and schedule meetings as necessary to discuss finances.

Some financial planners earn part of their income through commissions on financial products they sell, such as insurance policies and annuities. This may present a conflict of interest by incentivizing these professionals to recommend more expensive options than you need.

Financial planners who earn part of their revenue through commissions may still be held to legal fiduciary obligations, meaning they’re legally obliged to put your best interests ahead of their own. For your protection, it is wise to only work with planners, registered investment advisers, or Certified Financial PlannerTM professionals; to do this safely, check for disciplinary actions with the U.S. Securities and Exchange Commission, state securities regulators, and FINRA as the industry self-regulatory organization; additionally, there is also an online list available on CFP Board website which shows credentials as well as services offered.

Fiduciary Duty

Financial planners typically owe it to their clients to put their best interests first when providing advice or recommendations, forgoing commission-based sales of investments sold to clients and charging a flat fee for services provided rather than taking a percentage of sales or trading proceeds as income.

Financial planners conduct questionnaires and interviews with potential clients to gain an in-depth knowledge of their overall or specific financial agenda. This information includes current investments, risk tolerance, assets, expenses, taxes, insurance coverage, and retirement plans, helping the planner create an actionable plan designed to assist their clients in meeting their goals.

Financial planners owe their clients a fiduciary duty, which requires them to disclose any information that might impede them in carrying out their professional duties and responsibilities effectively. This could include potential conflicts of interest that might impact them or any financial history/disciplinary history with regulators that could compromise them as fiduciaries. Furthermore, fiduciaries must ensure the confidentiality of any information shared and cannot use it for personal gain or any purpose other than the benefit of beneficiaries.

Fiduciary relationships impose various duties upon their parties. Lawyers owe fiduciary duties to their clients, trustees owe duties to beneficiaries, and corporate boards owe duties to shareholders. Fiduciary duties involve acting with great care when making decisions based on available evidence and conducting thorough investigations before making decisions with an eye toward risk management while avoiding self-dealing and self-dealing behaviors.

Example: A single parent with young children might set up a trust to administer their estate should they pass before reaching adulthood. As fiduciaries, trustees are legally accountable for managing estate and must always act in the best interests of beneficiaries.

As with any charity board membership, members of a charity board have a fiduciary duty to the organization they represent to remain objective, responsible, honest, and trustworthy, ensuring programs serve the organization’s needs without placing it under unnecessary risk.