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Learn to Become a Financial Planner
What is a Financial Planner?
A financial planner helps clients achieve financial goals. This type of expert works in the financial industry, assisting individuals or companies with financial planning and asset management. Advising on with investments, taxes, estate planning, college funding, and retirement are all part of a financial planner's job.
Steps to Become A Financial Planner
If you want to become a financial planner, you'll need a mandatory license and optional degrees or certifications before getting a job in the field.
Earn your degree.
There are no educational requirements to become a financial planner—not even a high school diploma. However, a bachelor's degree in a field like business administration or finance can be helpful as you enter the financial planning field.
"I have an accounting degree and a business administration degree, with a concentration in finance," says Tait Lane, a wealth advisor and president of Triad Financial Strategies in Issaquah, Washington, "and I would say the latter is more productive for our industry."
A degree in finance, business, or economics makes sense for someone looking to become a financial planner. These bachelor's degrees generally take four years to complete. Some colleges now offer a bachelor's or master's degree specifically in financial planning that could also be helpful for aspiring financial planners.
Explore the field.
Financial planners work with both individuals and companies. They might work for banks, investment firms, or mutual fund companies.
"I would say overwhelmingly we work with what we call retail clients," Lane says. "They are individual clients, but we do work with corporations as well." He adds that financial planners offer two primary services: financial planning (helping clients manage their money and plan for retirement), and asset management (where planners take a discretionary role in the management of the assets). From a business standpoint, a financial planner might help a small corporation manage their funds or set up a retirement plan for their employees.
Day-to-day duties often include tasks such as:
• Reviewing and analyzing clients' financial information
• Meeting remotely or in person with current clients
• Looking for new clients via networking and marketing
• Meeting with fellow advisors
• Administrative tasks
• Pursuing continuing education classes and certifications
In order to give advice to clients, financial planners must obtain certain securities licenses through an organization called the Financial Industry Regulatory Authority (FINRA). You will need these licenses before you can get a job as a financial planner. However, the specific licenses you'll need may vary depending on what exactly you want to do as a financial planner.
Get to work.
Getting a job as a new financial planner can be difficult. While there's nothing stopping you from opening your own company or firm, it can be difficult to recruit clients if you have no financial planning experience. Aspiring financial planners typically start out by getting a job supporting an existing firm. Eventually, after receiving mentoring and learning the system, you'll have a better chance of moving into a full-time, client-facing role.
While certifications are not required to be a financial planner, they can be helpful if you want to advance in the field. The most popular certification is the CFP, or Certified Financial Planner. Think of this certification as the equivalent to the Certified Public Accountant (CPA) exam for accountants or the bar exam for attorneys. The CFP certification takes 18-24 months to complete. You need a bachelor's degree as part of the CFP requirements, but you can earn this degree up to five years after passing your CFP exam. There are also additional types of certifications you may choose to get. These can demonstrate to clients that you have the knowledge and experience needed to help them.
Up your education.
You may want to consider furthering your education with a master's degree. A Master in Finance is intended for financial professionals and will offer a deeper dive into financial coursework. In addition, many schools now offer a master of science that's specifically designed for financial planning. But you may find out that it isn't worth your time.
"I never once have had anyone ever ask me if I have a degree," says Lane, "but they do ask me if I have certifications." He explains that members of the leadership teams of large financial planning firms may benefit from master's programs, "but you're talking about more executive work, not financial planning per se." If you simply want to help clients save and manage their money, credentials will go light years further.
What Classes Will I Take?
While the classes you take in college will depend on the degree you pursue, common classes that aspiring financial planners might take include:
Licenses For Financial Planners
There are several licenses available for financial planners. All of these licenses are administered by FINRA, the Financial Industry Regulatory Authority.
Each license requires candidates to sit for an exam, and each exam has a fee. After completing each exam, you'll be instructed on next steps to get your license. These often include filing a Form U4, passing a background check, and paying a fee.
Series 6, Series 7, Series 63, Series 65, and Series 66 are a few of the most common licenses for financial planners to get. Financial advisors are required to have both a Series 6 or 7 and a Series 63 license to operate within any given state.
What it enables you to do: Allows financial advisors to sell packaged securities.
Who should have it?: Anyone who wants to purchase or sell securities products such as mutual funds, variable annuities, variable life insurance, unit investment trusts, and municipal fund securities.
Prerequisites: You'll need to take the Securities Industry Essentials (SIE) exam. The SIE is a co-requisite to Series 6, so you'll need to pass both. You also must be associated with and sponsored by a FINRA member firm or other applicable self-regulatory organization (SRO) member firm to be eligible to take FINRA representative-level qualification exams.
What else you should know: To obtain a Series 6, you'll need to take a 50-question exam. A 70% score is passing. If a Series 6 is the only license you have, you can't sell individual stocks or bonds.
What it enables you to do: Enables you to sell different types of investment products, including stocks, bonds, options, and futures. You'll also be able to sell packaged securities even if you don't have a Series 6.
Who should have it?: This license applies to any planners who want to sell investment products or packaged securities. Since Series 7 is so broad, it's the most common license for financial planners to get.
Prerequisites: The SIE exam is a co-requisite to the Series 7 exam, so you'll need to pass both. You also must be associated with and sponsored by a FINRA member firm or other applicable SRO member firm to be eligible to take FINRA representative-level qualification exams.
What else you should know: A Series 7 advisor can only work in a commission-based capacity—you'll sell products and get paid in commission. The Series 7 also does not cover commodities, real estate, or life insurance. The exam includes 125 questions.
What it enables you to do: Purchase or sell securities products
Who should have it?: Since this license is required in almost every state, most financial planners will need a Series 63.
Prerequisites: You'll need a Series 6 or 7 to take the Series 63 exam. However, you can sit for this exam without a member firm sponsoring you.
What else you should know: While the exam is shorter than the Series 7 and Series 6, it's very detailed and specific.
What it enables you to do: Work in a fee-based capacity.
Who should have it?: Anyone who wants to be a fee-based advisor instead of working on commission.
Prerequisites: There are no prerequisites or co-requisites for the Series 65 exam, and you do not need a sponsoring member firm.
What else you should know: Most of the exam material is very similar to what's on the Series 7 exam. Taking the Series 65 after the Series 7 is generally not difficult. What's more, if you hold professional certification, you may be able to get your Series 65 exam waived.
What it enables you to do: Work as an investment advisor. (Series 66 fulfills the requirements of the Series 63 and Series 65 licenses.)
Who should have it?: If you don't have a Series 63 and/or Series 65 license, you will need a Series 66 instead.
Prerequisites: There is no prerequisite to a Series 66, but a Series 7 is a co-requisite, meaning the SIE exam is also a co-requisite by extension. You do not need a sponsoring member firm for Series 66.
What else you should know: You'll have 150 minutes to take the Series 66 exam, which has 100 multiple-choice questions.
Certifications for Financial Planners
Financial planning certifications are optional, but they're the one of the best ways to continue advancing in the industry. Here are a few of your options.
Certified Financial Planner (CFP)
Who it's for: Anyone who wants to be a financial planner.
Prerequisites: You need to have a bachelor's degree as part of the CFP requirements, but you can earn this degree up to five years after taking your CFP exam. You'll also need to complete 6,000 hours of relevant work experience either before or after the exam, and agree to the code of ethics set forth by the CFP Board.
About the exam: The CFP exam is administered by the Certified Financial Planner Board of Standards. This test is rigorous, with special courses leading up to the exam, and can take a year or two to complete.
Certified Fund Specialist (CFS)
Who it's for: Anyone who wants to help clients with mutual funds.
Prerequisites: You must have either a bachelor's degree or 2,000 hours of financial services work experience.
About the exam: The CFS exam is given by the Institute of Business and Finance (IBF). You'll complete a self-study program and then take three exams and complete a case study. You'll need to keep up with continuing education (30 hours every two years) after earning the certification.
Chartered Financial Consultant (ChFC)
Who it's for: Those seeking a broad overview of multiple financial planning topics
Prerequisites: You must have a minimum of three years of full-time business experience within the last five years.
About the exam: For a ChFC certification, you'll work through eight self-study courses from The American College. Then you'll have to pass a final exam within four months of completing the courses. ChFC recipients also must complete 30 continuing education credits every two years.
Important Skills and Traits
If you want to be a financial planner, it's helpful to be able to analyze data, be highly professional, and be honest and trustworthy. But the most important trait for a financial planner to have? Be able to relate with people.
"At the end of the day it's a trust business," says Lane. "Someone can be brilliant and a great money manager, but (they also need to be able to) connect with somebody in person and have a conversation and be empathetic. It's that ability more than anything."
Are Financial Advisors the Same as Financial Planners?
There are many terms used to describe financial planners, including financial advisor, investment representative, wealth manager, wealth advisor, or broker. Financial advisors provide slightly different services than financial planners—they help clients manage their existing finances instead of helping plan for the future.
Financial analyst is another term that sounds similar, but describes a very different job. Most companies have financial analysts on staff who analyze the company's finances. This is different from what financial planners do.
Salary of a Financial Planner
According to the U.S. Bureau of Labor Statistics, (BLS), the median annual wage for a personal financial advisor is $94,170. This breaks down to a median hourly rate of $45. If you work with a larger firm or focus on corporate clients instead of individuals, your yearly salary may top these numbers. Check out salaries by state:
Median Salary: $94,170
Projected job growth: 15.4%
10th Percentile: $47,570
25th Percentile: $61,200
75th Percentile: $158,890
90th Percentile: N/A
Projected job growth: 15.4%
|State||Median Salary||Bottom 10%||Top 10%|
|District of Columbia||$127,930||$49,420||N/A|
Source: U.S. Bureau of Labor Statistics (BLS) 2021 median salary; projected job growth through 2031. Actual salaries vary depending on location, level of education, years of experience, work environment, and other factors. Salaries may differ even more for those who are self-employed or work part time.
How to Advance as a Financial Planner
If you want to advance as a financial planner, one of the best ways to do so is to obtain additional certifications. These credentials will likely take you further than working on more degrees. Depending on which certifications you choose to get, these could also help you niche down and provide a more specialized service, giving your services a higher demand.
If you want to advance as a financial planner, one of the best ways to do so is to obtain additional certifications.
Having a network is another important way to gain more clients. If you're working with a firm, you'll be given a group of clients to begin working with, but you'll also be expected to do your own networking and grow your circle of clients.
Finally, tighten up your people skills as much as you can. "Being concise in the way that you talk, having a strong value proposition, being able to proactively listen" are some valuable skills, says Lane.
According to the BLS, the job outlook for financial planning positions is slower than average. However, Lane explains the reason behind this statistic is "because of the difficulty from an entry standpoint… if somebody is 21 years old, they're probably not going to get a lot of clients to come to them."
For clients, financial health is incredibly important. Choosing a financial planner is a big decision. And that's why the overwhelming majority of clients will lean toward a CFP who has experience. "What we usually see is people re-entering the industry in their late 30s or early 40s when they have already (had) a prior career… and now all of a sudden they have a natural perception of experience, even though they may not be in the industry."
Lane adds that despite the entry-level difficulty, in his opinion this industry is still 100% worth pursuing. "I think we have one of the coolest jobs out there in the world, because we get to work intimately with clients about a very important part of their life," he says. "You can be your own boss, you can have the freedom to pick and choose who you work with."
Get a foot in the door in the financial planning industry by using these resources:
—NAPFA is the country's leading professional association of fee-only financial advisors, providing support and education for practitioners.
Barron's Advisor—This weekly podcast shares insights from top advisors and industry standouts to help you stay up-to-date on what's happening in the industry.
Business Network International—BNI is a referral networking organization that can help you build relationships that will grow your business.
Streamline My Practice: For Financial Advisors—This YouTube channel posts videos that teach financial advisors how to grow their practice.
Financial Advisor Magazine—Financial Advisor delivers essential market information and strategies to 80,000 financial planners, registered investment advisors, and independent broker-dealers each month.