Financial planners help individuals to reach their long term financial goals. From planning for retirement, to offering the structure and strategy needed to enable clients to make the most of their finances, financial planners advise on a range of issues including tax, investments, budgets and inheritance. Combining expertise with a client-first approach, financial planners provide a roadmap that helps individuals achieve what they want from life with the resources they have available.
Not only is financial planning a versatile and rewarding field, but there are a broad range of career opportunities in the sector. These careers can be quite rewarding, and there are numerous exit opportunities in the event that you wish to further your education or broaden your overall experience. If you’re considering financial planning, here’s everything you need to know about a financial planner career path.
Contents
- What does a financial planner do?
- Why become a financial planner?
- Financial planner hierarchy and progressing within the role
- Financial planner and financial advisor salary
- What qualifications are required to work in financial planning?
- Financial planning career outlook
- Financial planner exit options and opportunities
- Is financial planning a good career choice for you?
What does a financial planner do?
Firstly, let’s clarify the differences between a financial planner and financial advisor:
- A financial advisor is a broader term encompassing finance professionals that help with money management and investments. Examples of this could be share brokers, insurance agents, bankers.
- A financial planner helps their clients achieve their long term financial and life goals through a tailor-made plan for their investments.
- A financial planner is a type of financial advisor, but not all financial advisors are financial planners.
Financial planners offers advice mainly about a client’s finances and formulate a plan for them to reach their financial goals in life. This means understanding the personal circ*mstances of each client, and using the right combination of financial products, strategies, tools and insight to help them move along the path towards their goals.
They will also be responsible for offering targeted advice based around the needs of the client. Estate planning, portfolio management, retirement options, and everyday money management (such as creating a realistic household budget) are additional tasks which may be required.
In terms of day-to-day activities, financial planners will also perform duties including:
- Keeping clients up to date with their investment portfolios.
- Providing assistance with tax management, investment advice and new opportunities.
- Setting targeted goals in accordance with the needs of individual customers.
- There are also times when planners work within team settings; particularly when managing larger and multifaceted portfolios.
The exact roles and responsibilities of a financial planner will also depend upon their employer, their clients, as well as their specific job title.
Why become a financial planner?
Most individuals who are interested in this position already possess a passion for finance. While this is a primary motivating factor, there are some other benefits which come into play.
The ability to provide helpful advice to clients on a personal level is a big draw for many people. Interacting with clients and helping them through various important stages of life can be a rewarding experience, and is certainly a different way of applying your financial knowledge at a more personal level.
The role of a financial planner also offers high income potential, relatively flexible work schedules, and the ability to work for yourself, if preferred. It also perhaps offers a better work/life balance than some financial careers, and is less demanding of time than you may find in the commercial banking sector.
As the need for professional financial planning expertise continues to grow, those who possess the proper skill sets should enjoy a lucrative future. There are numerous additional certifications which can be obtained in order to broaden your horizons when desired.
Financial planner hierarchy and progressing within the role
In the majority of cases, those who wish to become a financial planner will need to possess a bachelor’s degree in business administration or a similar finance-related field.
However, there can also be times when applicants who have obtained other higher education degrees (such as psychology or the humanities) may be considered for the role. Excellent communication skills are frequently valued over static knowledge alone. This will once again depend upon the mission statement of the firm itself.
Let’s take a look at a typical hierarchy for financial planning.
Analyst / Support advisor
This title may also be referred to as “consultant” or “senior analyst”. Financial planning analysts are responsible for common tasks such as data entry, assist with client onboarding, and providing support to lead advisors on client presentations.
Other responsibilities such as providing assistance to senior planners may also be required from time to time. Entry-level planners will normally remain in this position for up to 3 years before progressing. There may likewise be times when internships are available for those who have yet to obtain a bachelor’s degree (depending upon the company and its onboarding programme).
Associate / Paraplanners
Paraplanners represent the next rung within this career path. While many of the duties may still be considered “behind the scenes” in nature, paraplanners will begin to display their services within more public settings.
They may be tasked with drafting investment plans for subsequent presentation, performing asset allocation analyses, consulting with senior advisors before speaking with clients, and attending in-house meetings.
Similar to an entry-level position, paraplanners will normally be required to possess a bachelor’s degree. Typical professionals remain in this role between 2-5 years before they are presented with additional responsibilities.
Service advisor / Financial planner
These professionals are primarily concerned with client relations, as they can often represent the “face” of the company. At this stage, financial planners will serve as a bridge between their subordinates and lead advisors. They may also provide ancillary support when managing the finances of a particularly large client. Some additional roles which serve to define this position include:
- Presenting targeted financial analyses and advice
- Managing analysts and associates’ workstream and training
- Independently managing smaller client accounts
- Work with investment group on financial plan implementations
- Providing support to senior planners
- Offering some of the services associated with paraplanning
Note that many individuals who have achieved the position of front-stage advisor will also be pursuing a CFP (Certified Financial Planner) certification. Between 3-7 years of experience may be required before moving on.
Senior planner
Senior planners (also known as lead planners or lead advisors) will normally be tasked with managing larger clients while providing guidance to their subordinates. They are also heavily involved with obtaining new business via any leads that were previously qualified by junior planners.
These individuals will also host in-house workshops and seminars, offering inspiration to those who may be new to the industry. Senior advisors will normally possess a valid CFP certification, oversee implementation of financial plans whilst are also active in recruitment for the firm. While some may remain in this role for their entire professional career, others could potentially move on to a Partner level (up to ten years of experience may be necessary).
Partner
This is generally considered to represent the top position as a financial planner, as practising partners have a financial stake in the firm itself. These leaders will help to shape company strategy, while serving as a source of inspiration for their junior staff. Due to their recognition as industry experts, these partners will be involved with other responsibilities such as:
- Attracting new talent
- Developing business plans and mission statements
- Overseeing top-end clients
- Promoting organizational growth
- Serving as a member of the executive leadership team (such as a board of directors)
Financial planner and financial advisor salary
While financial planning isn’t necessarily as structured as some careers in finance, in terms of progression and corresponding pay, what type of salary can you expect if you’re thinking about entering the field?
This all depends upon the position itself, as wages can vary quite significantly between areas, firms and job functions. However, the median annual salary of a Chartered financial planner (including commissions) in the UK is approximately £65,000.
Those who are entry-level planners can expect to earn approximately £31,200. Average salaries for those who become paraplanners can equate to roughly £46,700 while professionals who obtain the role of front-end or senior planner may earn between £61,600 and £80,000. Note that these salaries are on average 32% higher than those associated with junior-level positions.
It should also be mentioned that practising partners may earn substantially more due to profit sharing schemes, as well as partial ownership of the firm itself.
Another important observation involves where the individual is employed. For instance, those who are headquartered out of London will enjoy an average salary of about £65,000, and top-level wages may rise well over £100,000 pounds per annum. Of course, this will also depend upon what types of commissions and rewards are available.
In the USA the average base pay for a Certified Financial Planner is about $74,000, however bonuses and commissions can put the total compensation comfortably into six figures on average.
According to CFP board, here’s a quick summary of an average financial planner’s salary in the US, by seniority:
| Position | Years of experience | Total compensation |
|---|---|---|
| Analyst | 0-3 years | $47k-62k, median of $55k |
| Associate | 2-5 years | $59k-75k, median of $68k |
| Service advisor | 3-7 years | $75k-122k, median of $97k |
| Senior planner / lead advisor | 5-10 years | $125k-262k, median of $163k |
| Partner | At least 7 years | $185k-316k, median of $247k |
What qualifications are required to work in financial planning?
The majority of candidates who wish to become financial planners will need to possess at least a bachelor’s degree. However, this is only the beginning of a much more profound learning curve. What other types of professional qualifications are available and what benefits can professionals leverage?
Certified Financial Planner (CFP)
While financial planners have much in common with financial advisors, achieving the distinction of Certified Financial Planner is perhaps the clearest way to demonstrate proficiency in the sector, with 90% of consumers considering their advisor’s qualifications as important.
Most professionals feel that this qualification provides them with a highly competitive edge, and one interesting benefit of this title involves its emphasis upon transparency and ethical practices. As these traits are often demanded by clients, CFP holders are sought after by some of the most respected firms in the industry.
Chartered Financial AnalyWhat Is CFA Exam? A Useful Beginner’s Guidest (CFA)
Chartered Financial Analyst (CFA) Charterholders are associated with an in-depth knowledge of portfolio management and technical investment analysis, and is generally considered as one of the best financial certifications available.
One advantage of becoming a CFA Charterholder is that it means individuals possess a real-world knowledge of the latest techniques as opposed to static understanding alone.
Diploma in Regulated Financial Planning
Professionals may also choose to obtain a Diploma in Regulated Financial Planning. Associated with retail-oriented investment advice, this certification may be useful for paraplanners as well as those who wish to focus upon the business side of the industry.
Some of the core competencies which are addressed within this curriculum include regulatory issues and compliance, personal taxation, risk mitigation, pensions, and financial protection.
Master of Business Administration (MBA)
Holding a Master of Business Administration (MBA) is yet another common title which many professionals eventually obtain. Many argue that the practical nature of this certification is its most attractive quality, however it can be expensive to obtain and so the question of whether an MBA is worth it really depends on the direction you want to take with your career.
As it is also focused upon developing leadership skills, an MBA can provide advantages to those who are seeking to obtain higher positions such as a senior planner. It is often possible to study for an MBA while employed on a full-time basis; an added benefit for those who do not wish to put their professional careers on hold.
Financial planning career outlook
What can you expect if you choose to pursue a career in financial planning? Similar to other financial industries, there are plenty of opportunities for advancement.
In the US, the number of personal financial advisors is forecast to grow about 5% by 2030, according to the Bureau of Labour Statistics. While this is slightly below the average for all occupations, there are a number of trends that will likely see demand for financial planning increase over the coming years.
Public demand for financial planners is expected to increase in accordance with an ageing population, as more people want to plan for their hopefully longer retirements. The number of individuals who seek continuous professional development in order to remain well ahead of the competitive curve is also expected to increase demand for planning services.
Other trends that professionals in the sector expect to see include the importance of professional development, an uptick in the use of technology, and a shift to more collaborative relationships between financial planners and their clients.
Financial planner exit options and opportunities
Professional flexibility is one of the most attractive reasons to become a financial planner. As we have already examined in the hierarchy of roles, many individuals choose to remain with a specific firm in order to progress to higher levels such as senior lead advisors or partners.
However, there are also a host of exit opportunities for those who seek a financial career change.
Some of the most common options involve similar roles and responsibilities such as wealth management, portfolio management, risk management or consulting. Those who have obtained a more senior position may likewise be interested in establishing their own firm, particularly if they have developed a broad network of contacts over the years.
Is financial planning a good career choice for you?
So, is financial planning the right career choice? The best way to develop an objective opinion involves answering a handful of questions including:
- Do I enjoy working in a dynamic professional environment?
- Do I prefer a better work life balance in my finance career, with the potential option to start my own practice in the future?
- Do I possess robust analytical and communication skills?
- Am I keen to develop working relationships with clients in the long term?
If you have answered “yes” to each of these queries, financial planning could very well represent an excellent career choice.
However, keep in mind that there are also some downsides to consider. The time required to build a solid client base, the responsibility involved in adhering to strict regulatory requirements, and the levels of perceived stress to deliver the best service possible to clients are often present.
We hope the guide above shed some light on a financial planning career. Do you thinkthis career path suits you? Let us know in the comments below!
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