Financial planners assess their client’s assets, liabilities, insurance coverage, tax status and cash flow and recommend investment strategies. They also assist clients with insurance decisions and tax laws.
Helping clients plan for short-term and long-term financial goals – from educational expenses to retirement – is the primary role of a personal financial advisor. Some advisors may specialize in a particular area, such as risk management or estate planning.
Because personal financial planners must find their own clients, they may offer seminars as a way to develop relationships with potential customers. Many also search for clients through social or business networks. Advisors meet with new clients to review their goals and finances, then create a financial plan that makes recommendations for problem areas and selects investments that are in line with the client’s goals. They typically meet with existing clients at least once a year to review their financial goals and determine the impact of any life changes, such as marriage, the birth of a child or retirement.
Many personal financial planners are licensed to buy and sell stocks, bonds, annuities, insurance products and derivatives on behalf of their clients. Advisors who work with extremely wealthy clients that have a lot of money to invest are often referred to as wealth managers or private bankers. Their work is more akin to institutional investing, and they generally work with a few select clients and directly manage their finances and investments.
Financial Planners Job Summary
- Most personal financial planners hold a bachelor’s degree; some employers give preference to those with a graduate degree.
- It is important for financial adviserrs to have strong interpersonal, analytical and math skills.
- Job growth should be much faster than average, but there will be strong competition.
- Around 29% of these financial planners are self-employed.
Work Environment for Financial Planners
Personal financial advisors usually work in offices, and some may work out of their homes. They typically work regular business hours, but some offer evening and weekend hours as a convenience to their clients. Some advisors spend time hosting seminars or teaching classes on investment and finance as a way to bring in more clients. Travel may be required to present training sessions, attend conferences or visit clients.
Some financial planners work in banks and financial institutions, where they normally work regular business hours. However, some are on call for special clients outside regular hours.
Financial Planners Degree Requirements and Licensing
A bachelor’s or graduate degree is the norm for most personal financial planners. Employers typically look for candidates with a bachelor's degree in accounting, finance, business, mathematics, law, or economics. Students interested in this career path should take courses in risk management, taxes, estate planning and investments. A growing number of colleges and universities are offering programs in financial planning.
Financial advisors who buy or sell insurance policies, stocks, bonds or investment advice are required to have the appropriate licenses. For example, those who sell insurance must be licensed by their state board. Large firms that manage client investments must be registered with the Securities and Exchange Commission, while small firms are typically registered with state regulators.
A financial planners needs to have strong interpersonal, analytical and math skills, as well as sales ability. They need to be able to make customers feel confident and comfortable. Training for financial planners focuses on the various types of investor personalities and how to deal personally with each client.
Although certification is not necessary for financial planners, many employers recommend it. The Certified Financial Planner (CFP) designation is offered by the Certified Financial Planner Board of Standards. Candidates must have bachelor’s degree and three years of experience, pass a standard examination and adhere to a code of ethics.
Financial Planner Salary and Jobs Outlook
Financial planners held about 149,460 jobs in May 2009, according to research published by the U.S. Bureau of Labor Statistics (BLS). About 63% of advisors worked in the finance and insurance industries. Nearly 30% were self-employed and ran their own investment advisory firm.
Employment in this field is projected by the BLS to grow 30% between 2008 and 2018, which is much faster than the average for all occupations. The millions of workers expected to retire over this time period will spur the need for more personal financial advisors.
How much do financial planners make a year? Based on findings from May 2009, the BLS reported that the median annual wage for personal financial advisors was $68,200. The middle 50% of professionals earned between $44,760 and $116,580, while the lowest 10% had an annual income of around $33,790. The top 10% earned in excess of $165,000 per year.