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How to Become a Financial Planner

Think you want to help people manage their money and meet their ultimate financial goals? If so, you may be wondering how to become a financial planner. The process for becoming a financial planner varies depending on what kind of advising or planning you want to do. As with most jobs, a successful financial planning career begins and ends with quality education. Many financial planners will even earn a certified financial planner (CFP) designation. This certification requires quite a bit of extra schooling and experience to achieve.

What Is a Financial Planner?

The term “financial planner” is often confused with other similar careers. These include jobs like investment advisors and financial analysts. However, there are a number of nuances between these professions that make all the difference.

For starters, financial planners typically work on long-term financial plans for their clients. This usually entails figuring out what kinds of financial goals your client is looking to achieve and building a comprehensive plan to help them reach that summit. It’s not uncommon for a financial planner to have a specific area of expertise in:

Education Requirements for Financial Planners

Like many jobs in today’s world, bachelor’s degree holders typically maintain a distinct career advantage over individuals who don’t have a degree. Financial planning careers are no different, and a quick scan of job listings across the industry confirms this standard. While starting your own financial planning business without a degree is technically an option, the vast majority of financial advisors avoid this route.

As far as specific degrees go, there are a number of different majors that can help propel you into financial planning. The most obvious choices are finance and economics degrees. In many cases, though, mathematics, accounting, real estate and general business degrees will more than suffice.

Finance is one of the most variable businesses in the world. Therefore, it’s important for financial planners to continue their education even after they get a job. However, not all financial planner and advisory professions require educational credentials. For example, if you pass your Series 65 Exam, you can become a registered investment advisor (RIA) without having to take coursework in financial planning.

Financial Planning Licenses and Certifications

How to Become a Financial Planner

There’s more than one kind of financial planner. You could become a financial counselor specializing in helping people get out of debt or avoid foreclosure. Alternatively, you could become a chartered financial analyst (CFA) if you love crunching numbers. But perhaps the most influential and popular certification for financial planners is the certified financial planner (CFP) designation.

For a wider comparison, the table below breaks down eight additional certifications commonly held by different types of financial advisors:

Chartered life underwriters are experts in life insurance, risk management and estate planning.These professionals manage alternate investments like hedge funds and real assets.

Chartered Alternative Investment Analyst (CAIA)

Most Common Certifications for Financial Advisors
Certified Public Accountant (CPA) This license is commonly held by accountants, tax preparers and financial analysts. CPAs can be helpful in reducing taxes and organizing investments.
Chartered Financial Consultant (ChFC) A ChFC handles financial planning for divorce and small business planning.
Chartered Investment Counselor (CIC) CICs work with clients who have large portfolios and need experienced, high-level experts to manage investments.
Financial Risk Manager (FRM) Risk analysts working in banks typically hold this certification. They also work with individual clients seeking risk management and investment advice.
Chartered Life Underwriter (CLU) CLUs are experts in life insurance, risk management and estate planning.
Charter Mutual Fund Counselor (CMFC) CMFCs are experts in mutual funds and other packaged investment products.
Certified Management Accountant (CMA) A CMA is an expert at management accounting and typically help corporate clients make strategic financial business decisions.

Studying for a financial planning exam while working full time takes quite a lot of work and perseverance. But you will need to pass some form of exam to be a financial planner. The Financial Industry Regulatory Authority (FINRA) offers a series of exams that allow those who pass to perform different financial services, like selling securities. These include some licenses you may have heard of, such as the Series 6, Series 7, Series 65 and Series 66 licenses.

Passing an exam isn’t enough to meet licensing requirements, though. You’ll also need to register with either the U.S. Securities and Exchange Commission (SEC) or the state where you’re looking to operate as a financial planner.

How Much Do Financial Advisors Usually Make?

According to the U.S. Bureau of Labor Statistics, the median salary for a financial advisor in 2020 was $89,330, $42.95 per hour. For a comparison, the median annual wage for all workers in the same period was $41,950. And as a range, financial advisors typically made anywhere from around $44,100 to $208,000, depending on where they fell within the hierarchy of the business. Salaries also differ on a state-by-state basis, with the traditionally wealthier states garnering higher average pay grades. Here’s a more detailed breakdown of what financial advisors earn on an hourly and yearly basis:

National Financial Advisor Salaries
Percentile 10th 25th 50th (Median) 75th 90th
Hourly Wage $19.79 $27.63 $43.53 $77.16 ≥$100.00
Annual Wage $41,160 $57,460 $90,530 $160,490 ≥$208,000

Bottom Line

How to Become a Financial Planner

There are many forms that a career in financial planning can take. It’s a relatively flexible field, so long as you have what it takes to meet the prerequisites for licensing and certification.

The Bureau of Labor Statistics expects the field of personal financial advisors to grow 5% from 2020 to 2030. While this is slower than the national average for all occupations, the agency projects 21,500 openings for personal financial advisors on average each year over the decade.

Financial Planning Tips

  • If you feel overwhelmed by the complexity of long-term financial planning, speaking with a financial advisor could help. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • The first step in building any viable financial plan is to create a well thought-out budget. This is, of course, much easier said than done, so SmartAsset made a budget calculator to help get you started.

Photo credit: ©iStock.com/Szepy, ©iStock.com/asiseeit, ©iStock.com/monkeybusinessimages

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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