Financial Planning Career

Finance: Financial Planning

Financial planning is an exciting career within the broader field of finance. The 2001 Jobs Rated Almanac chose financial planning as the top career choice in the country (jobweb.com). Financial planners help people plan their finances, with a focus on long-term goals such as providing for children's college tuition or having a comfortable retirement. Financial planners differ from money managers, who directly invest people's money as they see fit. As long as money is important to people, financial planning for the future will also be important. The question of how to keep one's money and even make it grow is extremely interesting to most people. The stock-market craze of the late 1990s and then the real estate boom of the past five years have made people think seriously about financial planning in their own lives. Suffering large losses in the stock market, many people learned one of the key commandments of financial planning: Thou Shall Diversify Your Assets! Fortunes are to be made or lost depending on how one plans financially. This paper will present an overview of the nature of financial planning work, the general requirements of the profession, the specific requirements for certification, the level of demand for financial planners, and useful resources for job hunting and career issues.

The work environment and income of financial planners can vary greatly. Some are self-employed, while others find employment in large financial services institutions such as American Express. Most choose to be independent or work with a few other planners in a relatively small organization such as Yeske & Company in San Francisco. Financial planners may receive an hourly pay or commissions or both. They may also be compensated by a given percentage of the client's portfolio, for example 1% for assets below $1 million but as low as 0.5% for assets above $5 million (Miller 2004). According to a recent survey, the median salary for financial planners is about $55,000, but the top 10% of financial planners make $150,000 or above per year (Careers in Finance 2005).

Financial planners help clients create a plan that enables them to meet their personal and financial goals. To achieve this goal, planners review assets, liabilities, and earnings. They also perform periodic checks of progress toward goals. Financial planners can provide advice on a wide range of topics such as insurance products, investments, estate planning, loans, mortgages, and taxes. A good planner will therefore have a long-term relationship with his or her clients. A common reason that people consult a planner is to ensure that they have enough assets for a secure, comfortable retirement.

Business skills are a must in this line of work, as are interpersonal and communication skills. People want to feel confident that they have a competent, well-informed, and totally reliable planner looking after their financial interest. They expect their planner to listen carefully and express ideas clearly to them, without jargon that they cannot understand. As a result, it is a good idea to obtain a business degree, so that one has solid knowledge of today's fast-paced business world. It is also important to earn the title of Certified Financial Planner (CFP) by completing the necessary coursework and exams, as explained below.

The Certified Financial Planners Board of Standards is the governing body for the profession throughout the United States. It is located in Denver, Colorado, and offers key information about the field and services for current financial planners. The Board's website lists all the necessary steps for becoming a CFP. Table 1 summarizes this information for people exploring a financial planning career. First, a person must complete the education requirement by one of three paths. A candidate for the CFP can complete a board-registered education program, which is offered by over 285 programs in colleges and universities throughout the US (Certified Financial Planner 2005). Another route is to apply for challenge status, which allows a person to use another degree or certification such as a J.D., Ph.D. in business, or CPA, to sit for the CFP certification exam. A third alternative is to request a transcript review by the board to determine if the individual has the necessary academic background to sit for the certification exam. Starting in January 2007, a bachelor's degree in any field will be required for CFP certification.

Table 1: The Required Steps for Becoming a Certified Financial Planner (CFP)

1. Complete the Education Requirement - Three Alternatives

A. Complete a CFP Board-Registered Education Program

B. Apply for Challenge Status

C. Request a Transcript Review

2. Pass the CFP Certification Exam

A. Exam Offered Three Times a Year

B. Review Courses Offered Nationwide for Preparation

3. Meet the Experience Requirement

A. At Least Three Years of Qualifying Full-Time Work Experience Required

4. Adhere to the Code of Ethics

a. A Background Check Must be Passed

2. Pay Certification Fees

Source: www.cfp.net/become/Steps.asp

The next step is to pass the ten-hour CFP certification exam, which is offered three times a year. The test focuses on a candidate's ability to analyze and synthesize data related to a hypothetical client and to offer them the best possible planning advice. A third step is to meet the experience requirement, which consists of three years of full-time work experience in the field. Then it is necessary to adhere to the code of ethics and professional responsibility, as well as pass a background check. A final formality is the payment of the certification fee.

All of these stringent standards have been imposed because the public, especially well-to-do clients who most commonly seek financial planning services,