Career Profile: Financial Planner

Job Title: Financial Planner

Also Known As: Financial Analyst, Financial Adviser (Advisor), Financial Consultant, Financial Planner, Investment Consultant or Wealth Manager
What is a Financial Planner?

A Financial Planner is an adviser that helps clients figure out how to best invest their money in order to achieve their financial goals.

What does a Financial Planner do?

Financial Planners help their clients determine the right mix of investments that will yield enough of a return to allow the client to achieve whatever goals s/he has set.  For example, some clients want to retire early, or just comfortably.  Others want to go to graduate school or pay for their children’s college educations.  Still others just want to protect their savings while letting their money work for them, not just the bank.

Financial Planners gather their clients’ financial information, help them clarify their life goals, examines the clients’ financial status and tells the clients’ what they will need to do in order to achieve their goals.

Financial Planners may look at all of their clients’ needs–from budgeting and saving, taxes, investments and insurance and retirement planning.  Or, they may specialize on a particular area of planning, say estate planning for the super-rich or retirement planning.

In addition to advice, some financial planners can provide financial statement preparation and analysis, investment planning, tax planning, estate planning, retirement planning, education planning, and risk management services. Others may only be able to recommend a limited number of investment products, i.e. stock brokers and insurance representatives.

For whom might a Financial Planner work?

Financial Planners may work for investment firms, financial services firms, banks, insurance companies, or stock brokerages such as Prudential Financial, Citibank, Ameriprise and Edward Jones.  They may also work independently or with partners in a private practice.

How much does a Financial Planner earn?

Ultimately, Financial Planners are salespersons.  Their product just happens to be financial advice.

New Financial Planners earn an median salary of $47,000 per year, while better than average salespeople may earn up to $65,000 in their first year.  If you add bonuses, which most financial advisory firms offer, your pay could inch up a as much as $8,000 per year.  Of course, this assumes that you hold basic certifications (series 6, 7, 63, at least).

More experienced (3 years), certified (ChFP) Financial Planners earn an average of $58,000 per year, or up to $80,000.  Edward Jones, a leading financial advisory firm, estimates that I might earn $108,000 in my first year, if I meet my sales goals.

Financial Planners are typically paid in one or more of the following ways:

    • An hourly fee ($150 to $300 per hour for basic financial planning)
    • A flat fee ($1500-$5000 per year)
    • A commission on the investment products they sell you (average is 39% of sales)
    • A percentage of the value of the assets they manage for you (This is called the Assets Under Management model and usually amounts to 1-1.5% of the total value of the assets being managed)
    • A combination of fees and commissions.

They may receive additional compensation or financial incentives based on the products they sell.

Ultimately, the financial planner career is a sales career.  And, like other sales careers, your income depends on your effectiveness as a salesperson.  The bad side of this is that if you aren’t a great sales person, or you simply have a slow month, your pay will plummet.  But, the good side is that if you sell enough and land enough good clients, you don’t have to sell every day for the rest of your days; you will receive residual income from invested assets or your flat fee, and your clients will refer you to friends and family.

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To break in, you’ll need…

There are many practitioners who may call themselves financial planners–from debt counselors to accountants to benefits administrators.  A college degree is not required, though most financial planners earn one, and most larger financial services firms require one.

To get around the degree requirement, you can pass the NASD exams on your own.  This will impress potential employers because usually the first year or more of a new financial planner’s career is dedicated to studying for and passing the series 6, 7, 63 and other exams while shadowing a more experienced financial planner.  Employers usually pay for the on-the-job training, the test fees and the study time.
Another way around the college degree requirement is to take an entry-level job as a stock broker or an insurance agent.  In both these positions the firms for whom you work will provide you with training and help you study for the appropriate exams.

The final work-around is to establish yourself as a top salesperson in another field then switch to financial planning.  If you have a great rapport with people, top selling skills, a rolodex of potential clients and a good reputation, you are the perfect catch for a financial advisory firm looking to recruit career changers.

While a college degree is not required, it is advisable to earn one, if for no other reason than to create credibility.  Clients want to know that they are entrusting their hard-earned money to someone who is learned enough to do the research and formulate an investment plan that won’t squander their life savings.

Having a college degree can also help you to better understand all of the legalese and economic and financial terms and instruments with which you will have to deal.  And, if you plan to specialize in wealth management, it may pay to have a deep understanding of foreign economies, government regulation and taxation.

Many financial planners begin their careers as accountants and analysts, jobs that require a degree in economics or accounting.

Most clients want to know that you are registered with NASD, the U.S. Securities and Exchange Commission or a state insurance or securities regulator.  Most financial planners need to register as investment advisers, investment adviser representatives or brokers (registered representatives). Others may only be licensed to sell insurance.

There are actually 25 certifications, each with different education and experience requirements, for financial planners.  At a minimum, you will need to complete a few distance learning courses, agree to abide by a code of ethics, take at a least one exam and gain work experience.

What about this career do(es)n’t suck?

Financial Planning scores well on the WorkYourWay Index based on its high earnings potential, paid training, flexible work arrangements and the growing demand for financial planners, especially those who can help Boomers and new tech millionaires to make the most of their fortunes.  This career also scores well for its potential to help people achieve their personal financial goals, a very satisfying bit.  Finally, the financial planning career suffers a few deductions for its low earnings potential (sales jobs can be feast or famine), and the stress that may create.  Ultimately, the financial planner career earns a score of 76%!
Who might love this career?

  • Anyone with a knack for sales
  • Anyone who wants the opportunity for uncapped earnings (you can earn as much as you can sell)
  • Anyone who wants to work for him/herself but be connected to a big company
  • Anyone who wants to help people realize their personal goals

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