Editor’s note: I earn commissions from partner links on Forbes Advisor. Commissions do not affect editors’ opinions or ratings.
Financial planning offers relatively high wages, strong job growth, and the opportunity to make a positive difference in the lives of others. This article discusses how to become a financial planner, including education, experience, and certifications.
Becoming a financial planner can be a great career option for individuals who want to focus on the human side of finance. Like other financial specialists, financial planners require keen analytical and mathematical skills But this customer-facing role also requires a strong interpersonal skill set.
If you’re social, numbers-oriented, and detail-oriented, financial planning might be for you.
What Do Financial Planners Do?
Before we get into the details of how to become a financial planner, let’s take a look at what that role entails. But what exactly is a financial planner?
Broadly speaking, financial planners help people and organizations manage their money. Some financial professionals, such as risk analysts and investment bankers, focus on corporate, government, and non-profit clients. However, financial planners typically serve individuals and families.
Financial Planners, also known as Personal Financial Advisors, help clients of all life stages work toward a variety of short- and long-term financial goals. You may advise young professionals how to start investing. Work with parents to set up your kids’ college funds. Or help individuals and couples plan for retirement, pay off debts, and decide how to handle an inheritance. Some planners specialize in areas such as risk management and retirement.
Through these processes, financial planners consider each client’s needs, values and risk tolerance.
After devising an initial plan, the planner invests the client’s funds, monitors the performance of the investment, and meets with the client to provide updates and suggest adjustments. Planners also need to stay abreast of market trends and industry developments. This enables our clients to make informed decisions based on the latest data and forecasts.
Another important part of a financial planner’s job is building a customer base. This is often called the business book. Whether self-employed or working for a bank or investment firm, financial planners spend a lot of time growing and maintaining business relationships. They often hold seminars and attend networking events to connect with new clients.
Financial Planner Salary and Career Advancement
Careers in finance are known to be lucrative, and financial planning is no exception. According to the U.S. Bureau of Labor Statistics (BLS), the personal financial advisor’s median annual salary is $94,170, which is more than double his national average salary of $45,760 for all occupations.
The BLS also projects growth for these professionals, with job growth of 15% from 2021 to 2031 (three times the national average). Additionally, the cost of higher education is rising and more people are having to plan how they will pay for college. All of these factors could boost the demand for financial his planners.
Increasing automation in the financial sector means that software programs are beginning to take over some investment servicing tasks. However, financial planning is often complex and subjective, so human experts are still essential in this area.
What is the difference between a financial analyst and a financial planner?
When comparing financial advisors and financial planners, the distinction can be blurry, especially since the titles are often used interchangeably. Both professionals advise individuals and organizations on money matters. However, “financial advisors” (also known in law as “advisors”) is a broader category that includes financial planners and professionals such as stockbrokers and real estate planners.
A financial planner typically provides a more comprehensive scope of work than a financial advisor. Planners are more likely to work with long-term clients to develop and maintain a comprehensive financial plan, while advisors often focus on specific trades or narrower specialties such as investment management.
How to become a financial planner
get a bachelor’s degree
You can become a financial planner with a bachelor’s degree in any subject, but many choose a degree in finance, a bachelor’s degree in business administration, or a bachelor’s degree in accounting. Look for undergraduate programs with courses in areas such as investment, property planning, and risk management.
Some schools offer financial planning with a focus on broader business majors. Social sciences and mathematics are also popular majors among aspiring financial planners.
If you plan to become a Certified Financial Planner (CFP)®, you must have a bachelor’s degree before taking the certification exam or within five years after passing it.
If you don’t have a degree yet, look for a program that meets the CFP requirements for post-secondary financial planning education. If you already have a bachelor’s degree, don’t worry. You can meet these requirements through a certificate or graduate program. Many CFP eligible programs are available online.
Most bachelor’s level programs include about 120 credits and can usually be completed in four years for full-time students. General admission requirements include transcripts, personal essays, letters of recommendation, and SAT or ACT scores.
Certification is not required to become a financial planner, but it can help strengthen your financial planning resume.
The CFP certification is one of the most popular and prestigious certifications in the financial industry, and earning this credential can make a significant contribution to career advancement. CFPs must undergo rigorous training and act as fiduciaries. In other words, CFPs have an obligation to put their clients’ needs ahead of their own. For this reason, a CFP certification increases your credibility and helps potential clients feel confident that you are acting in their best interests.
So how do you get certified as a financial planner? First, you must complete approved college-level financial planning coursework. The educational component typically takes 12-18 months, but candidates with certain degrees or certifications may qualify for accelerated paths. Next, her aspiring CFP must pass a six-hour multiple-choice exam. Finally, 4,000 to 6,000 hours of professional experience is required.
gain practical experience
If you are pursuing the CFP designation, work experience is part of the certification process. The CFP Board Career Center helps candidates find entry-level financial planning jobs and begin building expertise in the field. Whether you’re a CFP candidate or not, this resource is free and includes articles and webinars to help you find it. Job seekers can also use financial career sites such as eFinancialCareers and FinancialJobBank.
Aspiring financial planners can gain experience through internships and financial planning associate or assistant positions in organizations such as banks, credit agencies, brokerage firms, and accounting firms. These junior her-level roles typically include a year or more of on-the-job training.
You can also teach financial planning or gain experience through self-employment. Note, however, that her CFP candidates who are self-employed require supervision from a qualified professional.
reach out to the network
Strong networking skills are very important for financial planners, both in their job search and throughout their careers. The same skills that help you create a business book can help you get started as a financial planning professional.
Professional networking sites like LinkedIn are a good starting point for users to browse job listings, connect with industry professionals, and leverage existing connections to generate client leads. increase.
Students can network within the university through professors, cohorts, internships, and university career centers. You can also consider joining a business or finance related student club.
Industry associations such as the National Association of Personal Financial Advisors offer a wealth of professional development and networking resources for all career stages, and many offer student memberships.
Frequently Asked Questions (FAQ) to Become a Financial Planner
How do I start a career in financial planning?
Becoming a financial planner often requires a bachelor’s degree in a field such as business, finance, or accounting. After gaining a background in this field, individuals can seek entry-level jobs in organizations such as banks, insurance companies, and investment firms. You can also pursue self-employment while preparing for certifications such as CFP.
Do financial planners make money?
Yes, financial planners are typically highly paid. BLS reports that the median annual salary for personal financial advisors is above his $94,000. Experience, location, and industry can affect your earning potential in that area.
How long does it take to become a financial advisor?
There are many ways to become a financial planner or personal financial advisor, so there is no universal timeline. In addition to a four-year bachelor’s degree, additional study in specific areas is usually required, especially if you have a bachelor’s degree not related to finance or business. For individuals seeking CFP certification, it may take an additional 12-18 months to complete the educational requirements. New financial planners entering entry-level jobs often undergo at least a year of her on-the-job training.