Should You Become a Financial Planner?

A financial planner is a well-trained individual who is paid to help regular people, companies, or other entities reach their overall financial goals. Depending on their clients’ needs, financial planners can do anything from set up a college fund, plan retirement, invest in the market, or finance a new business venture. Financial planners can work for themselves, with a partner, in a small firm, or for a large company.

Consumers are always in need of financial assistance and planning. The job requirements may change, but financial planners will always be in demand. The big question is: Should you join the ranks of financial planners?

While financial planning can be taught at the college undergraduate level, the craft is most commonly learned by completing specialized courses found in either accredited training programs or graduate-level university studies. Generally, it will take students between a year and a half and two years to complete the necessary curriculum, which covers a diverse range of topics from planning estates and retirement programs to investments and income taxes. Even though the necessary courses can be completed on a part-time basis, the individual must adopt a “going back to school” mentality in order to finish the program.

This educational path is a big reason why many people become financial planners after starting out in an unrelated career. In fact, 88% of all financial planners have some work experience in a different profession. In addition to skills and knowledge gained from previous employment, these individuals have likely gone through financial planning experiences in their personal lives, such as saving up to buy a first home, determining how to send a child to college, or assisting an elderly relative with paying for medical care.

Once instruction is complete, the person can follow one of several different career paths. Two of the most commonly-sought options are becoming a certified financial planner (CFP) or a chartered financial analyst (CFA). Other choices include being a personal financial specialist (PFS), chartered financial consultant (ChFC), or chartered investment counselor (ChIC). Within these categories, financial planners can either provide broad-based services and advice or specialize in a specific area of expertise.

Many of those certifications involve taking and passing an examination. For instance, the Series 65 exam must be completed successfully in order to charge a fee for services. And a coveted CFP designation can only be earned after passing the rigorous Series 66 exam, which is administered for ten hours over two days (and has a 40% failure rate).

So once you’ve taken all of your courses and passed your exams, how do you start a business as a financial planner?

Some financial planners choose to seek out employment from a bank, investment house, or other company. Depending on their area of specialization, they can make their living by either consulting with clients solicited by the institution or by helping their employers with their corporate financial planning needs.

But one of the frequently-cited attractions of becoming a financial planner is the ability to be self-sufficient while helping others with their financial issues. That usually means positioning themselves as independent service providers, much like an accountant or a therapist does. While this route can be extremely gratifying, it is usually difficult to launch this type of practice because individuals have to attract and foster their own client base. So it’s not uncommon to struggle during the first few years of being an independent financial planner.

The monetary rewards of financial planning can be substantial as well. All financial planners have to determine whether they provide their services for a flat fee, an hourly rate, a percentage of the assets they are handling, or a commission earned from the products that they sell. But established financial planners can earn anywhere from $100,000 to $1,000,000 per year depending on their client base and array of services. If they choose to work at a large company, they may receive paid training of several thousands dollars per month until they gain the necessary skills and certifications to become a full-fledged financial planner. Some of the highest-paid individuals who work for banks or brokers can earn upwards of $350,000 annually.

Of course, there are drawbacks to being a financial planner. In addition to the challenges involved with setting up an independent business, there is the idea of not knowing where you revenue will come from or how much it will be, since it is solely based on what your clients earn and pay for. And financial planners who go to work for a large company may be asked to approach friends, relatives, and acquaintances in the hopes of securing their business – which may make some people feel uncomfortable. Also, market volatility is a constant issue with investment portfolios, meaning that a financial planner’s recommendation can result in financial losses for their clients. These losses are a big reason why lawsuits against financial planners are not uncommon, and these suits can hurt a financial planner’s bottom line and reputation. Finally, there is the stress that can accompany dealing with clients whose expectations are not closely aligned with reality.

But many people appreciate the prestige, flexibility, and earning power that comes with being a financial planner. And the discipline has become a viable second career for countless people around the country. So it really comes down to your own needs and desires as to whether becoming a financial planner is right for you.

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Chris Martin is a freelance writer who has written about topics ranging from investing to consumer and business finance to how to start a business.