In the financial world, one of everyone’s greatest concerns is how to manage their wealth. This makes a profession like financial planning integral to society as anything else, allowing financial planners to form meaningful connections and rewarding opportunities. So, is it a good idea to pursue financial planning as your career? The answer is yes, but it may change depending on your skills and qualifications. After all, t’s necessary to pay attention to what financial planning requires and entails. Let’s explore this sector in more detail.
Job description of a financial planner?
A financial planner helps people manage their wealth and creates detailed, long-term plans for their clients. Financial planners guide the monetary endeavors of clients from different backgrounds. Especially in the United States, clients need support in navigating financial planning systems. This means that financial planners have to spend a significant amount of time with their clients: to understand their circumstances and build a relationship of trust. They must work with companies, individuals, families and help their clients achieve financial goals. Financial planners have to create comprehensive financial strategies based on their clients’ unique circumstances, regardless of the size of their organizations.
For their clients, financial planners create:
- Detailed personal budgets
- Expenditure control plans
- Targets for savings
- Financial strategies that will lead their clients to expand their wealth
Many financial planners work hand-in-hand with financial advisers, mutual fund companies, and investment managers.
Educational Requirements to Become a Financial Planner
To become a financial planner, you will need a comprehensive education in fields that relate to financial planning. Experts even recommend building a strong foundation of business subjects from high school.
- A bachelor’s degree in financial planning, finance, accounting, business, or economics
- A master’s degree in Business Administration
- Courses in fields such as finance, economics, and accounting
Employers in financial planning require candidates who have taken courses about investments, estate planning, risk management, and taxes. Many colleges offer financial planning programs for bachelor’s degrees, so make sure you take advantage of that. Of course, the education required in legal terms varies according to your state. But the Certified Financial Planner (CFP) exam is always recommended for a prestigious career in financial planning. Not only does passing the two-day CFP exam increase your credibility, but it also attracts potential employers and clients.
How do you qualify for the CFP exam?
- A college-level degree in personal financial planning or similar, CFP-accepted fields.
- It would be best to have a bachelor’s degree to receive the certificate but not register for the exam.
- You need to have 6,000 hours of standard pathway experience or 4,000 hours of the apprenticeship pathway.
- You will have to meet the ethical standards of the CFP board. You will undergo a background check and also share your background information in an application to CFP.
Aside from the CFP, designations like the Certified Financial Analyst (CFA) and Chartered Financial Consultant (ChFC) are also favored. You will not need a license to work as a personal financial planner, but if you intend to sell mutual funds or insurance, then you’ll need licenses like 6, 7, or 63. Overseen by the Financial Industry Regulatory Authority (FINRA), these exams require sponsors by self-regulatory organizations or even member firms.
Financial Planner Competencies
Aside from your educational background, your set of soft skills and qualities will heavily affect your prospects as a financial planner. In order to perform well in financial planning, you’ll need these skills/qualities:
- Analytical Thinking: Financial planners must analyze market trends and give their clients the best financial advice. They have to interpret their clients’ financial information meaningfully. You will have to consider every aspect of a step and weigh the pros and cons before letting your client make a decision.
- Forecasting Problems and Solutions: As you interact with your client, you need to develop a sense of any potential problems. Because you are their financial planner, you must predict an investment or insurance outcome and lead your client to the most rewarding, safe options.
- Interpersonal Communication: Networking is the core of financial planning. You will need to constantly build close connections with people and organizations to find clients. Unlike 9-to-5 office jobs, financial planning demands someone who can creatively develop interpersonal relationships. Aside from forming new connections, a financial planner also needs to maintain their relationships with clients. You will be working with people from different age groups, racial backgrounds, and genders. A financial planner must empathize with the client’s circumstances and respond in a way that ensures the client’s complete trust in them.
- Presentation: With networking, there comes a need to present yourself and your ideas. You need to display your achievements as a financial planner and attract as many opportunities as possible for your career to flourish. Instead of a product, you’ll be selling your consulting services to clients. And for them to choose you, your presentation must be top-notch.
- Persuasion and Negotiation: Why should an organization pick you as their financial planner? While you may present yourself as an excellent professional in finance, it’s also necessary for you to convince potential clients of the benefits of choosing you. And once you have the clients you want, you will need to persuade them to make decisions that you know will work in their favor.
- Planning and Organizing: The entire purpose of a financial planner is to plan endeavors for their clients. Investing how and in which market will lead to what results, which insurance company will offer your client the most benefits, etc., will all be a part of your job. Financial planners must organize a personalized financial plan for their clients.
- Awareness of the Small Picture: As a financial planner, you must be able to think on a micro-level. Your topmost priority will be your client’s financial goals and how every step will affect its progress. Details are everything when it comes to financial analysis — if a financial planner misses so much as a single factor, the entire plan they’ve set for their client may topple.
Pros and Cons of Financial Planning as a Career
According to the US Bureau of Labor Statistics, these are the pros and cons of financial planning as a career:
- Excellent job prospects: the Bureau predicts a 27% growth in financial advising fields.
- High salaries
- Not many complex educational requirements for a good salary
- Flexible hours
- Licensing is not difficult or expensive to earn
- Earning certification after completing your education and experience prerequisites
- Lengthy work hours (often over 50 hours a week)
- You will be on your own to network and build a client base.
- You’ll need to earn a master’s degree to advance.
- A company or firm must sponsor your license.
Financial Planning Salary
According to Glassdoor, on average, a United States financial planner can earn a base salary of $62,079 per year. But it’s important to note that a financial planner’s annual income primarily comes from fee-based planning services and commissions. For example, the sale of annuities, life insurance, mutual funds, investment securities, and exchange-traded funds. The Bureau of Labor Statistics in 2016 reported that a financial planner’s income ranged between around $41,000 to over $200,000. The commission payout varies per the organization you will work in as a financial planner. If you belong to a large investment firm, for example, then your payout will be much lower than if you run your own firm.
Financial Planning Jobs and Career
Financial planners typically work in banks and investment firms. There are also many self-employed financial planners and also those who work in small practice groups. This work line calls for a great amount of traveling for visiting clients and attending networking events and conferences. Of course, this means that financial planning is a field that requires dedication and time commitment. Because it depends on your client workload, your work schedule can be under 40 hours to over 40 hours. It will vary according to your client workload because you must be available for any meetings and consultations.
Financial Planning As Your Career
After reading this article, you must have developed a clear idea of how suitable financial planning will be for you. Ultimately, it will be up to you to make financial planning a good or bad career because it all boils down to your own qualities and priorities. While the income may be attractive, you can lose weekends and many hours of rest in financial planning. Are you a good communicator? Are you comfortable with working alone with clients? How do you feel about networking? Make sure that you ask yourself these questions before you decide to become a financial planner. Let us know in the comments if you have any questions, and good luck!