If you want to know how to become a financial planner, I’ll explain it. I get asked how to be a financial advisor all the time. I thought I’d share my response with you in case you were considering jumping into the profession.
If you are interested in becoming a financial planner you have to understand the following:
1. Understand what business you are in.
Being a financial planner is a business. I think it’s one of the best small business ideas you could think of…but it’s a business.
There are two kinds of people in the business – those who love money and numbers and those who love people.
Those who love money, math and investments usually go to work for mutual funds and insurance companies. They don’t deal with clients. Usually those folks obtain a CFA – Chartered Financial Analyst certification.
If you want to work with people, you really don’t need a CFA certification, but you do need to learn how to deal with people. That includes some level of salesmanship. In fact, when you start, that’s all you really are – a salesperson.
Nobody hands you clients – you have to make that happen by yourself. A successful financial planner is a person who knows how to build and manage a business. If you don’t like rejection, don’t start this career.
2. Know who to stay away from.
If you go to work for an insurance company or brokerage firm, they require that you hit all your friends and family up for business. Once you do, your employer will toss you if you don’t produce enough business. Also, who you work for will influence which clients use you as a financial planner.
On the other hand, if you go to work for a bank, they’ll introduce you to clients. It’s a great place to start and it’s how I launched my career.
3. Understand licenses.
Anyone can call themselves a financial planner, but if you want to work with clients, you’ll need to work with a broker/dealer (yuk) or become a Registered Investment Adviser. The broker/dealer route is commission-based. The Registered Investment Adviser route is more consultative-based.
Of course, you’ll need to find your own clients still, so you need to think about how you’re going to do that regardless.
4. Know the Education Requirements.
It helps if you have a bachelor’s degree in Accounting, Economics, Finance, Marketing, Business or Commerce. If you’ve studied Mathematics or Computer Science, that will help too. This is just a small part of good financial advisor training.
5. Understand Certification.
You can become a financial planner without certification, but it sure helps to have it. It demonstrates commitment and responsibility. I became a CFP (R) – Certified Financial Planner – and I highly recommend that program to anyone.
To get the certification you need to take an examination. There are over 285 colleges and universities that can help you prepare for this exam. You also need to have three years’ full-time work experience.
How to Become a Financial Planner…and How to Be a Successful Financial Planner
The first question I’d ask you is, what is your definition of success?
To me, it includes being of service to my clients and supporting my family.
Becoming a successful financial planner requires work – and it never stops. You constantly have to educate yourself and learn. Above all, sharpen your listening skills. Work hard at understanding what your clients really need and want. Sometimes, they don’t even know, and you have to be able to help them discover it.
My 25 years’ experience tells me that these skills are far more important than any other. You’ll learn the most valuable lessons over the years. Don’t wait to master the subject prior to getting to work.
I love being a financial planner and if you like helping others significantly enhance their lives, you will too.
Start off by taking care of the basic requirements. Always think about how to market your services, put your clients above yourself and keep learning. That’s how to become a financial planner, if you ask me.
If you’re a financial planner, was your career path different? What would you add?
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{ 56 comments… read them below or add one }
Hmm I’m glad you wrote this because I had no idea that you could become a financial planner without any real training! It’s kind of funny actually because that would mean that it’s possible for me to hire a financial adviser who knows less than I do. . .fascinating.
So. . .how would you find a ‘good/competent’ financial planner? AND how would you know when you have found one. Thought provoking!
excellent question….stay tuned!
OK Sam…….stay tuned….I”ll follow up man.
Will be great! I really think this would be a fun profession to be in as a 2nd profession.
I guess the issue is, if I want to do this in 5-10-15 years already, better to start now right?
Getting a CFP seems like a no brainer… as well as doing it in a high retireee state like Hawaii or Florida yeah?
Thnx, Sam
My experience tells me to work with people I love. Hence, I work w/retirees, highly-paid employees and small business people. Those are the folks I get excited about. I think you could find the people you want to work with just about anywhere Sam.
If you want to start in 5 + years….try to get some experience in the financial services industry and determine if it’s really for you.
You might do this in retirement….I know you’re swimming in cash now anyway.
I wish I was Mr. Duckworth swimming in cash!
Is it possible for you to use your blog WealthPilgrim to gain further business? How do you see your blog as it ties in with your business.
Cheers, Sam
Hi Neal, I’ve wondered this question so thanks for highlighting.
One needs 3 years of work experience doing anything or does it have to be related to financial planning? Might be good to add a follow on post or tips on studying for the CFP and the process (cost, where to take, how long to study, etc). Heard there are changes a coming.
Can you share with us how much CFP’s can make based on X # of clients and fees? If it’s consultative based, how do you charge? Is it by session, by milestone goals, etc? Very curious!
Thanks,
Sam
I know of another PF blogger who does get business from his blog. I have generated a little consulting work. We’ll see how things go. My intention here was never to focus on that. I wanted to create a place where everyone could get objective advice and info without feeling like I was trying to sell them something. That’s most important to me right now.
Maybe down the road things will change.
OK. Perhaps that person is Jeff at Good Financial Cents.
Here are a couple of points for clarification.
In order to obtain a CFP one must possess a Bachelor’s degree in addition to sitting for the examination.
One must be registered and affiliated with an SEC or a state Registered Investment Advisor in order to practice as a fee based financial planner. One can affiliate with an established firm, or if he/she possesses the credentials, he/she can start up one’s own firm via creating a Form ADV, following the registration process, etc.
My opinion is that unless one has one’s own firm, this is not a hobby or a nice to have credential, and like you mentioned, the low producer will be canned no matter what type of firm he/she is affiliated with. It takes a great deal of money/compliance/supervisory efforts and a payback to cover costs and generate a bit of profit is a minimum requirement.
I’ll agree w/Al.
The credential (CFP(R)) takes a lot of work to obtain. My point is however, I don’t think it provides ALL the training planners need. It is a great basis but a good planner needs more. Such as years and years of experience…and it sounds like AL has been at it for awhile.
Interesting write-up!! It made me think for quite sometime. Do you really mean it when you say professional training is not essential for expertise in this field? What do you think about a long tenured experience? I have been in this field for quite some time and I sincerely think real life dealing with financial ordeals of various clients help to increase your skill.
Belmont,
I think the education is critical…but it’s not enough. Your years and years of experience are much more important IMO…
This is good to know. I didn’t know the requirements for this . I will be sure to look for that when I am seeking a financial planner.
I think you pretty much hit all the nails on the how’s of becoming a planner. One thing I might add is the way I went. I have my Master’s of Science in Financial Planning and I got it from The McCallum School at Bentley University. Just another direction to accumulate the credentials and experience needed to be able to give good advice. To the point @Simple in France made in the first comment; yes anyone can be an “advisor” including kids looking for jobs right out of high school that get talked into the gig which is more of a sales job than anything else. So be very very careful when picking out people to help you craft real financial plans..not everyone out there is like Neal Frankle or myself
Kudos on the article!
Hey Nunzio,
That’s a very nice compliment…
I agree 100% ….it’s super important to take care when it comes to picking advisers.
I have learned a lot about PF in the past few years. Although my degree is not in personal finance or any other business degree, I feel that I would make a real difference in people’s lives.
This is a good (and timely) post. I might consider this as a secondary job. I know it would be a very satisfying experience.
Very informative article. What is the difference between a Financial Counselor, a Financial Advisor and a Finanacial Planner?
Being a Financial planner should NOT be taken lightly and should NOT be a second job. Please do not minimize our profession. We help people every day achieve their goals. Yes, there are individuals that call themselves “advisors” and “planners” but a CFP should not be confused with any of these.
Unfortunately, I’ve met CFP’s who are not very professional at all.
Forbes.com reported last week that the #1 industry to start a new business is in financial services and included financial planning and income tax preparation.
Useful post. What really gives one credibility is first being your own financial planner, and walking your talk. When your focus is not on the fees or commission, then your work takes on a whole new meaning
Neal, Thanks for this article. I know this is an old thread, but I’m still confused.
Do I have to go through one of the wirehouses and put in my 3 years to get the experience or is there another way? I’ve heard of para-planners, but they seem to also require licenses; which require sponsorship from a company…it seems like an endless circle to break in without working for a shady company. Neal, can you clarify?
Try these:
wealthpilgrim.com/financial-advisor-training-real-world-advice-from-a- successful-cfpr/
wealthpilgrim.com/the-fastest-path-to-great-financial-planner-jobs/
Neal, Thanks for responding…I got double 404 on the links..I’ll try to find them in your archives. I hope we get to meet as I’m in “the valley” also.
Sorry …lets try that again.
http://wealthpilgrim.com/the-fastest-path-to-great-financial-planner-jobs/
http://wealthpilgrim.com/the-fastest-path-to-great-financial-planner-jobs/
I discovered that the application process is very detailed and time consuming (at least for the state of Hawaii)?? Someone told me that there are “consultants”? who assist with the application process. If true, how would I find a reputable consultant to help me through the process?
Eddie, if you are talking about the RIA process, yes, it’s a pain. Look at magazines like “Investment Advisor” or “Investment News”. There are ads for people who you can hire to help.
I am going to be graduating college in a few months and I am really interested in becoming a CFP. Every job opening that has to relate to financial planning seems to require experience and I know that you need 3 years as well to be a CFP. The only things that I have found are the financial advisor training programs from Wells Fargo, Edward Jones, etc. where they will license you with your series 7 and 66. If I was to pursue something along those lines, does that count towards experience for you CFP? I understand it is also a lot of door-to-door and cold calling as well. Any information or suggestions will help. Thanks
Try these posts:
http://wealthpilgrim.com/financial-advisor-training-real-world-advice-from-a-successful-cfpr/
and
http://wealthpilgrim.com/the-fastest-path-to-great-financial-planner-jobs/
I find this site very informative. I’ve been managing my own stock portfolio for over 15 years and now I want to just give “advice”, and “stock recommendations” to relatives and close friends. I would only recommend stocks that are in my own portfolio, but an attorney told me that I need to be careful giving out “recommendations”. I don’t want to charge any fees. I just want to write short articles and post it on my (future) website … brief articles about what I’m buying, and why. I do it just for fun, but an attorney told me I need to find out the rules of what I can and cannot do — to prevent from being sued. Do I need to be registered? I live in the state of Hawaii. Thanks in advance to whoever can answer my questions.
I’m in school taking accounting looking for a career, love working with people and numbers. Could you tell me a little more about what a CFP job desription and is there continuing education requirements?
Read this Shelbie for CFP job description and yes there are CE requirements. Job growth is touted as being very high by the industry. We’ll see! Good luck!!!
Ok so I am a vet and I have my GI Bill to use up. I already got the job I want and I don’t need any more college for it. So I was thinking of using what I have left for some college classes to better myself and that would be how to better handle my own finances. What degree would be best, I am not looking for a masters and not really interested in learning how a big business handles fiances. I would like to learn how to invest my money, maybe play around with the stock market a bit, and there is the option of going into business myself (I am a jeweler btw). Any information would be great, thanks David.
Hi! Neal;
I was reading your website, I think is super interesting.Neal I have a question.I just graduated from a major University in Business Administration with option in Finance and Accounting. I have a job offer as a Financial Advisor. The potential employer offer me to sponsor my license Series 6 an Series 7 which I need in order to sell financial products. However; I was told that I am not aloud by the Federal rules to have another job which I would need it before seem this business profitable. My question is, it is worth it to quit my present job to pursue this career. I have to invest in my license, in addition I have to sign a contract with this Financial Group. I need help, because I am really confuse.
Warm Regard
Ernesto
I have never heard of any Federal law precluding a financial advisor from having another job. This could be your employer who wants to enforce this. I would ask more questions and if it’s just your employer, I would look for a different one.
Neal,
I am currently in the interview proccess with two of the major financial firms in the country. I am looking up reviews of these companies and basically see that there is an astonishingly high turnover rate, and that you are expected to hit goals that are impossible for new financial advisors. Now, I know that a lot of people who post about these companies are disgruntled and this is how they vent, but it still concerns me.
Would you reccomend going to work for one of the big firms early on? I have a very high motor and have top notch people skills in my opinion. I want to do this because I love helping people. I know I am in it for the right reasons, I am just worried about becoming unsure of myself as the pressure mounts when they put me on my own.
Great article as well an thanks for any thoughts!
Bryce
Try this on getting financial planning jobs.
And then read this on financial planning training and the other links in the post.
Hello Neal,
I stubbled over your article while fishing through google and found it interesting. I am a tax consultant with a Bachelor Degree in Business Administration and my own business. I prepare income tax returns as well as analyze and consult with my clients. I’ve built up a pretty decent client base since registering my business in 2010. However, I’ve been doing this type of businesses here and there for 29 years. I decided I would make it a full-time thing and I’m doing pretty well in two years. I liked your ad because financial planning/advising is something I’ve been considering for over one year now. My clients are always asking me for advise in investing and how to create a better financial portfolio. I assume my tax knowledge allows me to give them good financial advise because they are always referring others to me, for both tax preparation and advise. My client base is now 300+. Do you have any recommendations on what type of literature I can read and study to build onto my planner and advisory knowledge? Your recommendations would be highly appreciated.
Thanks,
Deadre-
Your clients are very fortunate to have you and the industry is as well. Welcome aboard! Not sure what kind of info you are lacking but I would suggest you read this and put “financial planner” in my search on my site for other posts. But tell me please what exactly it is that you are looking for? Thanks, Neal
Neal,
I also want to say my clients are easily opened to me while discussing their financial situation. They find it easy to talk with me because I allow them to feel comfortable at all time. My clients have lots of trust in me because I believe strongly in ethics and also to treat them with the utmost respect. They can call me at anytime and know I will be there for them. I personally believe this is the reason my clientelle grew quickly. My clients are the main reason I want to learn more.
Hi Neal,
I’m currently a stay-at-mom. My husband has developed some health issues that will likely impact his career and it is time for me to think about becoming an income source again. I have a Masters degree. Coursework and experience has mostly revolved around service/event marketing/fundraising, but I have a passion for personal finance and helping people. I’ve managed to structure our finances such that our house will be paid off (our only debt) by the time our kids start college, I have 529s in place, and we still save about 15% a month after retirement contributions. I would love to help other young families formulate that for themselves. Is there a career path in this industry that would make sense for me? I’m not interested in another degree, but I don’t mind working on a certification. I would need to be available for my family given our circumstances. My only sales experience is in event sponsorship sales. Just feeling it out and I appreciate any thoughts you can offer.
Thanks!
Shannon,
I am sorry that your husband (and you) are facing these challenges. Given your passion, I would say that this is a great option for you (financial planning). I suggest that you read this on finding a job as a planner. Let me know how things go please.
Hi Neal,
I’m not even quite sure how I landed on your site, but I’m really glad I did. I’ve been exploring the world of personal finance for a few years and am about to turn in a grad application for a family financial planning masters soon. I am finding your advice to be very useful! Just wanted to say thanks.
Hey Alice, Congratulations on your masters and thanks so much for taking the time to share those kind words. Always appreciated!
I am considering a career in financial advising. If I do not have a background in finance, how can I go about obtaining the 2-3yrs experience in this field? I would like to know so that I can get a head start on that part now!!
Thanks
Melanie
This post might help you. If not, search on my site for “financial planner jobs”. Best of luck!
This is really great info, Neal. You’ve done a great job at outlining the benefits and the successes that being a financial planner can bring. As a result of my training to become a Certified Financial Planner I have been able to successfully differentiate myself from the rest of my peers. Being a financial planner isn’t a difficult task, it is just a matter of your motivation and your dedication!
Continue with the great work!
Hello Neal,
I came across your article via google. I thought it was an interesting read and I have considered financial planning as a career path. I don’t have a degree, but I have a vast amount of experience dealing with life insurance and even earned my series 6. With that said, how helpful is having this and how crucial is it that I get a bachelors degree?
I am considering taking your advice and maybe dabbling in tax preparation.
Thanks in advance!
Luis
The only thing is that if you plan on getting your CFP, it might require the BA degree now. Not sure on that but I’m sure the site tells you. The tax prep experience would be fantastic. I would consider what your career path might look like and what you really want to do and then decide.
I agree with you completly about not working for an insurance or brokerage firm, I made that mistake after I completed my MBA, they churn, they burn, and they move on, both employees and customers.
I felt like I was in an insurance sales factory, whatever they want – guide them to this, how quickly can we process that, okay, who is next? The company has the letters NW and the word mutual in it. However I assume they are all pretty much like that.
I too am in it to help people, I know how ridiculously corrupt wall street is, and I see it as my obligation to protect people not only from many of their tactics, but also their own flights of fancy that they may wish to take. Another thing is people usually don’t know how vulnerable they are to catastrophy.
A good financial plan encomapsses the totality of the case, not just one aspect (we’re not pitching the latest hyped up momentum stock). The plan functions well without the owner having to worry about it. There job is to do what they are best at, business owners, doctors, whatever it is. My job is to make their financial lives safer and more secure, and that inevitably spills over into other aspects of their lives.
Great artical Neal, keep up the good work.
Good luck Ed. Thanks for the kind words…….
Hi Neal,
I’m a recent grad and have an interview with a large bank coming up for an entry level financial advisor position. I don’t necessarily have the professional background for this position, but I do have a BS in business administration with a concentration in finance. What concepts would you recommend I study or brush up on beforehand? (I’d like to review as much as possible!)
Thanks in advance.
Here are two posts that should help:
http://wealthpilgrim.com/financial-advisor-training-real-world-advice-from-a-successful-cfpr/
http://wealthpilgrim.com/financial-planning-jobs/
Good luck LH and let us all know how it goes!
Hi Neal,
I am 28 yrs old and have a four year degree with a finance major and an accounting minor. I graduated from college in 2007 and have since been helping my brother grow a small residential construction company. For years now I have been considering a career change for numerous reasons. I have always been intrigued by personal finance and feel that I have been moderately successful managing my own finances. Also, having seen firsthand the damage that can be caused by the lack of knowledge/guidance, I have a genuine desire to help others. I know that financial advising is the career I want to pursue. However, I have recently been on several job interviews with big firms and have received a couple of offers but I am realizing their emphasis on sales and quotas versus service. Becoming a CFP has always been a dream of mine but these interviews and offers have been quite discouraging/discomforting. Is there still hope or do you have to be a used car salesman willing to solicit friend and family to get started? My sister is a CPA and has her own firm in which there is a tremendous need for advice and I have worked part time for years assisting with tax prep. Advice or ideas on how to get started obtaining necessary certifications without losing focus on rhe task at hand (helping people achieve there goals)
Justin, don’t give up. Continue your search. Join FPA and attend meetings. Use the skills I talk about I am sure that if you are patient and work hard, you’ll find a good job. This industry needs quality people like you.