Pros and Cons of Becoming a Certified Financial Planner
Financial planners, otherwise known as financial advisors, help people achieve their personal economic goals. Find out the pros and cons of being a CFP to decide if it's right for you.
|Pros of Becoming a Certified Financial Planner|
|Job prospects are excellent (27% growth from 2012-2022 for personal financial advisors)*|
|Financial advisors can earn very high salaries (averaging $108,000 a year)*|
|A good career if you like working with people*|
|Relatively few educational requirements (usually all that is needed is a bachelor's degree) for a high salary potential*|
|Cons of Becoming a Certified Financial Planner|
|You must earn certification after completing education and experience requirements*|
|Nearly a quarter of financial advisors work over 50 hours a week*|
|You're usually required to build your own client base*|
|A master's degree is often needed for advancement*|
Source: *U.S. Bureau of Labor Statistics
Job Description and Duties
Financial planners assist clients with making financial plans and decisions. In this occupation, you might discuss short-term and long-term goals with clients, advise customers on various financial investments and educate them about tax matters and insurance. Some financial planners specialize in risk management, retirement or private banking.
Financial planners assess the risk tolerance of each client before making recommendations and meet with clients regularly to review investments and fine-tune planning. As part of your job, you might do other activities such as networking, marketing your business and performing seminars for clients.
Salary and Job Outlook
The outlook for financial planners is exceptional. According to the U.S. Bureau of Labor Statistics (BLS), growth for personal financial planners was expected to be far greater than average, at a rate of 27% from 2012-2022. Growth is fueled in part by a population focused on retirement and needing professional help to maximize their finances. Also, as pension funding disappears from many employee benefit plans, individuals may pursue assistance from advisors to obtain help in goal-setting.
In May 2014, the BLS reported that the average annual salary for personal financial advisors was $108,000. PayScale.com indicated in July 2015 that most planners with the CFP designation earned salaries between $41,000 and $120,000 per year. Many financial planners are self-employed and can set their own fees and hours, which could contribute to the varied salary range.
Education and Credentialing Requirements
To become a financial planner, you'll need to earn a bachelor's degree in any field; however, many employers want you to have a degree in accounting, finance, business, economics or a related area. Master's degree, doctoral degree and certificate programs in financial planning are also available at many colleges and universities. The BLS notes that a master's degree in finance or business administration can be helpful in advancing your career. Personal financial planning programs might have classes in finance and investments, as well as estate, retirement, insurance and tax planning.
Some financial advisors need to earn licensure. If you're involved in buying or selling stocks, giving investment advice or selling insurance, you could need licenses based on those products.
Requirements for Certification
To become a CFP, you need to pass the CFP exam offered by the Certified Financial Planner Board of Standards. In order to qualify to take the exam, you must have a bachelor's degree in any field and three years of full-time professional experience, as well as be in agreement with the CFP code of ethics. The exam tests you on various aspects of financial planning, debt management, emergency funding, statistical modeling, risk management and planning liability. After becoming certified, you'll need to pay an annual renewal fee and earn 30 continuing education hours every two years to maintain your certification.
Jobs Posted by Real Employers
According to April 2012 job postings on CareerBuilder.com, you should have outstanding moral character and good interpersonal skills. Most employers want you to have some experience, unless you're entering a training position (training positions can often help you earn your CFP credential). Corporations sometimes hire financial planners to assist in company planning and may not require that you be certified. Below are some examples of CFP job postings from April 2012:
- An entry-level financial planner is needed for a financial service firm near Portland, Oregon. The position prepares you to earn your CFP credential as you work on financial goal-setting with upscale clients. You must have a bachelor's degree or higher, preferably in finance, law, economics, accounting or business administration. The role requires that you work long hours and have strong personal character.
- A California firm is looking for a CFP-certified investment advisory associate that is open to a long-term commitment and has local ties to the Bay Area. You should have a bachelor's degree and at least five years of experience in marketing to upscale clients, writing financial plans and managing client portfolios. Interpersonal, teamwork, time management and public speaking skills are key.
- An Indiana publishing company is seeking a financial planner to prepare, analyze and report the organization's financials. You must have a bachelor's degree in accounting or finance and some experience with financial modeling, business planning and cost analysis. Good communication and project management skills are important.
Standing Out from the Crowd
While having good communication skills is generally a requirement, being able to speak in public and make presentations could give you the edge for some jobs. Noting that you're licensed and eligible to sell insurance can make your resume more attractive to employers. The Certified Investment Management Analyst credential could also be helpful in attaining certain financial planning positions.
Since you're advising others on how to invest their money, it's important that you're good at making others feel comfortable so you can gain clients. Knowledge of investments - such as various stocks, bonds and mutual funds - is necessary. Some other skills you could use in this job are:
- A knack for explaining finances in layman's terms
- Expertise in selling financial services
- Good interpersonal and customer service skills
- Math and analytical skills
Other Careers to Consider
If you like the idea of helping others set financial goals, but budgeting is your specific interest, you may consider becoming a budget analyst. As a budget analyst, you still need a bachelor's or master's degree as you would if you were a financial planner, but you generally aren't required to earn additional credentials unless you work for the government. On the other hand, the pay might be less and job prospects not as good. In May 2011, the BLS reported that budget analysts earned a mean salary of $71,000 per year, and job opportunities were expected to increase ten percent from 2010-2020.
If you want more financial responsibility in your work and a higher income potential, becoming a financial manager may be right for you. The BLS indicated that financial managers earned a mean salary of $120,000 annually in May 2011. If you become a financial manager, you could be responsible for preparing financial statements, analyzing market trends and reviewing company financial reports; specific job titles can include comptroller, treasurer and risk manager. You usually need a bachelor's degree with at least five years of experience, but high-level positions often require a master's degree. Again, your job prospects may not be as good as they would be if you were a financial planner; during the 2010-2020 decade, financial management job opportunities were predicted to increase only nine percent, which was slower than average.