A financial planning career can be a rewarding professional journey. It offers the possibility of substantial income and may also provide some fulfillment from helping clients achieve their financial goals.
If you're considering a career as a financial planner, you'll need to prepare for a path of education, training, and meeting several specific requirements as you advance your knowledge. Financial planners and managers typically need a combination of a relevant bachelor's degree in economics, business, or finance. Additionally, they must complete several training programs and certifications to practice in their field.
As today's financial markets grow more complex and interconnected, the demand for skilled financial planners is increasing, making it a lucrative field for those with the right skills and dedication. The career is also becoming increasingly fast-paced and interdisciplinary, suiting those with a knack for continuous learning.
In this article, we explore financial planning—its requirements, purposes, and rewards—and discuss how the field is evolving in the face of financial and technological innovation.
Understanding Financial Planning
Financial planning involves evaluating a client's financial status and setting short- and long-term goals. The "planning" side is about creating a plan to achieve those goals.
This strategic process encompasses personal finance elements, including saving, budgeting, investing, tax planning, retirement planning, risk management, and estate planning.
Thus, a financial planner is a trusted advisor who guides clients through the intricacies of managing their finances and wealth. Their primary job is to analyze a client's financial situation and steer them toward realistic goals. In addition, it involves developing personalized financial plans and offering consistent support to ensure such plans are implemented.
To excel in their field, financial planners must stay abreast of new developments in the fast-changing financial landscape. They must understand economic conditions, market trends, and tax laws to ensure their advice remains accurate and relevant.
The Pros of Pursuing a Financial Planning Career Path
Choosing financial planning as your job or career offers several distinct advantages versus other careers, such as:
Better earning potential
Financial planning is one of the few careers that offer high earning potential right from the start.
According to the American platform Glassdoor, the salary range for financial planners is $127,000 to $238,000. They also found that the average salary for the financial planning profession is $80,944 annually.
The US Bureau of Labor Statistics (BLS) states that financial planners’ median pay was $99,580 as of May 2023—about $48 hourly. This hourly rate is over twice the average of all other occupations, which is $23.11. Moreover, the highest 10 percent of earners earn more than $208,000 annually.
Not everyone starts with high earnings
Remember that new advisors usually start with lesser sums. Those belonging to the 10 percent lowest-paid bracket of financial advisors made less than $48,730 annually—an equivalent of a $23.43 hourly wage, nearly equal to the all-occupation average for the US. The BLS data estimates the starting base salary for financial advisors is around $45,000 to $60,000 annually.
The income potential in this field is primarily performance-based. Hence, the more successfully you meet your client's objectives and grow your credibility, the higher your earnings will be.
Better job outlook due to high demand
Financial planning services are growing in demand due to several factors. These factors include the increasing complexity of financial markets, an aging population requiring financial advice for retirement, and the shift towards defined contribution retirement plans.
The BLS forecasts the demand for personal financial advisors to grow 13 percent from 2022 to 2032. This rate is faster than the average for all occupations. On average, the BLS forecasts about 25,000 new openings for personal financial advisors over this decade. Many of these job openings could result from many workers transitioning to retirement or moving occupations.
Flexibility
If you prefer to work from home, set your schedule, have a better work-life balance, or be in charge of your own business, a career in financial planning may work for you.
Within the profession, you can choose among several arrangements. You can work and train under a financial firm, offer virtual services, or start an independent practice. This higher degree of lifestyle flexibility allows you to build your career around your personal and professional goals.
Diverse opportunities
As a financial planner, you can carve your path and specialize in your preferred niche. The field offers flexibility, enabling you to pursue various specializations. Such niches include tax planning, investment management, retirement planning, estate planning, and insurance.
This wide range allows financial planners to pursue specific lines of study and interests. Consequently, developing expertise in particular areas is more straightforward, improving the chances of building a solid client base.
Opportunities for professional growth
Due to the industry being highly dynamic and competitive, financial planners have many opportunities to grow and learn continuously. If you want to stay relevant in the profession, you must
stay updated on the latest investment strategies, tax laws, financial products, and economic trends.
To move up the ladder, you will need more certifications. Continuous learning ensures you remain competent in your field and well-informed about business and financial trends in general.
High job satisfaction
Financial planners make a difference in their clients' lives, helping them manage their assets, plan for the future, and achieve their life goals. This contribution can lead to high career fulfillment or job satisfaction.
Seasoned financial planners often develop long-term relationships with their clients. They become trusted advisors integral to their client's financial success as they grow sought-after skills and produce better results.
Steps to a Successful Financial Planning Career
If you’ve decided to embark on a career in financial planning, you need to complete the following requirements:
Pursue relevant education
To have an excellent foundation and understand the concepts behind financial planning, you will need to obtain a related bachelor’s degree. A degree in economics, finance, or accounting is seen as beneficial. However, fields like marketing, psychology, or business administration can also provide the insight and skills needed to succeed in financial planning.
A master's degree, Ph.D., or further education is not an absolute requirement. However, a master's degree in finance, financial planning, or business administration (MBA) will go a long way in helping you excel in this competitive field. An MBA could also open up advanced career opportunities.
Get the necessary certifications to practice financial planning
To practice and move up in your chosen career as a financial planner, you must comply with specific certifications, including:
Certified Financial Planner (CFP)
To be highly successful in the financial planning industry, you will require a CFP designation. It is a recognized and respected certification that helps boost your career significantly. To achieve this high-level certification, you must complete specific educational requirements, pass a rigorous exam, and acquire relevant industry experience.
Chartered Financial Analyst (CFA)
Becoming a chartered financial analyst or CFA can be challenging, but it's worth the effort. A CFA is understood to have passed three rigorous six-hour exams. These exams encompass money management, economics, ethics, and other financial topics.
You also need an average of 1,000 hours of study and four years of experience in the field.
The CFA Institute is the international organization that administers the program. It provides investment professionals with the necessary education, a code of ethics, and several sought-after certification programs. The institute's primary mandate is to maintain a high standard for the investment industry.
Less than 20 percent of candidates receive the CFA designation. Financial professionals with a CFA must also follow a code of ethics and standards.
Certified Public Accountant (CPA)
The CPA certification helps you pursue a niche in tax planning. It requires passing a rigorous exam on tax laws and general accounting topics.
CPAs are considered to be at the top of the accounting field. As a CPA, you have a wide range—you can keep the books at a small office or review files for the IRS. It is also valuable in the financial planning business. CPAs are the cream of the crop if you need someone to review your financial statements.
Other relevant certifications
To enhance your financial planning career, you can aim for certifications such as Certified Investment Management Analyst (CIMA), Chartered Financial Consultant (ChFC), and Personal Financial Specialist (PFS).
Sorting through the alphabet soup of financial certifications can be complicated, but knowing the differences among the requirements is vital in pursuing a financial planning specialization.
Chartered Financial Consultant (ChFC)
Those with a ChFC designation are understood to have demonstrated their vast knowledge of financial planning. The American College of Financial Services administers the ChFC certification program.
To complete the program, candidates must take a financial planning exam covering investment, income tax, insurance, and estate planning. They must also have at least three years of experience in a relevant position in the financial industry.
Professionals who hold the ChFC charter help clients analyze their financial situations and achieve their goals.
Certified Investment Analyst (CIMA)
The CIMA designation focuses on due diligence, asset allocation, risk measurement, investment policy, performance measurement, and ethics. The certification signifies a high level of expertise suited for a consulting position.
Only those with at least three years of professional experience in investment consulting are eligible to take the CIMA. If you hold a CIMA designation, you must continually prove your expertise through education and recertification every two years.
Personal Finance Specialist (PFS)
The PFS designation continues the path of a CPA holder. CPA holders interested in gaining more expertise and pursuing financial planning to supplement their careers must be certified as personal finance specialists (PFS).
To be a PFS, you need to take additional courses and pass the requirements set by the American Institute of CPAs.
Obtain the necessary financial planning licenses
You must obtain some essential licenses to enhance your reputation as a financial advisor. These licenses allow you to practice your profession and conduct business in your state.
The most qualified financial advisors in the industry are licensed to sell a comprehensive list of investment products. The comprehensive licenses also signal that they have the experience to work with a wide range of clients.
More licenses can lead to higher income and opportunities in the future. The licenses also grant freedom to manage future business operations more independently. These financial advisor licenses include:
The Series 6 license
The Series 6 license, also known as the securities license, enables financial advisors to sell packaged securities or investment products such as mutual funds and variable annuities.
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In order to obtain this particular license, one must go through a registration process with the Financial Industry Regulatory Authority (FINRA) and successfully pass a comprehensive 100-question exam. It covers topics including business development, US laws and regulations, account management, essential job functions, and the development of client recommendations.
The Series 7 license
The General Securities or Series 7 license is powerful. It allows financial advisors to sell nearly every type of investment product.
The license includes selling stocks, bonds, futures, options, and packaged securities. To obtain a General Securities or Series 7 license, a financial advisor must pass FINRA's 250-item exam, which is given in three-hour segments and requires rigorous preparation.
The Series 63 license
Financial advisors need a Series 63 license to conduct business within a state's borders. To obtain this in the United States, advisors have to take a specific test known as the Series 63 or Uniform Securities Agent State Law Examination. This important test is required for financial advisers who buy and sell stocks, bonds, annuities, or mutual funds—basically, those who buy and sell securities on an investor's behalf.
The FINRA-administered exam requires the financial advisor to answer 60 precise questions about state laws and regulations. It also tests your knowledge of investments and securities markets.
Financial advisors need a Series 6 or 7 license plus a Series 63 license to practice fully and operate within any given state in the US.
The Series 65 license
The Uniform Investment Advisor Law Examination or Series 65 license is an essential test for financial advisors providing investment advice, specifically on ERISA-regulated retirement accounts. It covers investment vehicle characteristics, financial markets, economics, financial analysis, ethics in the field, and client investment recommendations and strategies.
Passing the US Series 65 exam qualifies you as an IAR or Investment Advisor Representative.
The Series 66 license
If you want to register as a securities agent and an investment advisor representative, you’ll need a Series 66 license. The exam spans similar topics as the Series 63 and 65 exams.
You often need a Series 7 and Series 66 license to work as an investment advisor representative. A Series 7 license will enable you to sell securities. However, it does not give you the authority to provide investment advice as a service. The Series 66 will allow you to provide investment advisory services legally, which is why it is necessary for a comprehensive financial planning role.
Insurance licenses
You must obtain an insurance license to sell life insurance while providing other services. A life insurance license is a certification that grants someone legal authority to sell life insurance policies.
State insurance departments issue the license and indicate that the holder has completed certain requirements. These include completing a pre-licensing education course and passing a licensing exam.
Once a financial advisor obtains the license, they can legally sell different types of life insurance. These products provide additional financial protection to holders and their beneficiaries in addition to the other financial investments you offer.
The license requires ongoing education for renewal. You must stay informed about product changes, insurance laws, and industry practices. As a license holder, you may work independently, integrate it into your practice, or represent an insurance company.
Practice What You Preach: Improve Your Financial Standing
As a financial advisor, your knowledge must be comprehensive, covering essential financial advice, like budgeting and saving, and understanding fundamental products and more sophisticated investments.
You must also have a good rapport with your clients, guiding them through the essentials of financial health, like setting up a high-yield online savings account and briefing them about the benefits of novel technology.
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These days, going digital is imperative. You can play a transformative role in educating clients and helping them learn about the latest investment platforms and products, such as Bitcoin and crypto, which can help diversify their portfolios further.
More importantly, you must embody the investment philosophies you teach your clients. Be sure you are in good financial standing with a high credit score and well-diversified investments with the necessary protection for adverse or unexpected events.
Financial planners must be able to speak from their own financial success, applying all the principles they use in their lives and achieving excellent results. Your confidence plays a significant role in convincing your clients to use the financial services and products you sell.
Embark on an Impactful Financial Planning Career Today
Financial planners provide a comprehensive range of advisory and investment services that help clients in every stage of life. They guide them to stability and security and help them align their financial goals with the appropriate strategies for optimally achieving them.
As an aspiring financial planner, you must prepare to assist clients in budgeting and saving, tax planning, investing, retirement planning, estate planning, risk management, etc. If you are successful, you also open yourself up to significant financial success and earnings. Start your journey by looking at the available job opportunities!
Choosing this profession offers a unique blend of financial reward, personal satisfaction, and professional growth. Today's economic environment drives the increasing demand for financial planning services, which provide diverse career opportunities and high earning potential. Financial planning, therefore, can be an attractive and viable career path that can lead to financial success for you and your clients.