Guide To Careers In Financial Planning

What is the FinancialPlanning Process?7-STEP FINANCIALPLANNING PROCESSA financial planner uses the financialplanning process to guide clients throughcomplicated financial decisions, such ashow much to save for retirement andhow to invest those savings with the goalof reaching their desired retirement ageand level of income.UNDERSTAND the client’s personal and financialcircumstances. The financial planner must obtain theinformation needed to fulfill the engagement, andthen analyze the information to assess the client’scircumstances.Certified Financial Planner Board ofStandards, Inc. (CFP Board), which setsand enforces standards for financialplanners who hold the CFP certification,has established a 7-step financialplanning process that may be used toconsider all aspects of a client’s personaland financial situation when formulatingfinancial planning strategies and makingrecommendations.IDENTIFY and select goals. The financial plannermust help the client identify goals, and then select andprioritize goals.ANALYZE the client’s current course of action andpotential alternative courses of action. The financialplanner analyzes the client’s current course of action,and where appropriate, considers and analyzes one ormore alternative courses of action, whether each actionmaximizes the potential for meeting the client’s goals,and how each goal integrates the client’s personal andfinancial circumstances.DEVELOP financial planning recommendations.The financial planner selects one or morerecommendations designed to maximize theclient’s potential for meeting the client’s goals.PRESENT financial planning recommendationsto the client. The financial planner presents therecommendations to the client, including theinformation that the financial planner consideredwhen developing the recommendation.CLEARLY, FINANCIALPLANNING IS MUCH MORETHAN SPREADSHEETS,BUDGETS, SALES ANDSTOCK TICKERS.At its foundation, financial planning isabout supporting individuals and families,especially to plan for crucial momentsin their lives. It is a process of closecollaboration between a client and afinancial planning professional who theclient has selected and entrusted with theirmost private financial details, ambitionsand anxieties.IMPLEMENT financial planning recommendations.The financial planner establishes with the clientwhether the financial planner has implementationresponsibilities. A financial planner with implementationresponsibilities must identify and analyze actions,products and services designed to implement therecommendations, recommend one or more actions,products, and services to the client, and help the clientselect and implement the actions, products and services.MONITOR the client’s progress, review theclient’s situation and update the financial planningrecommendations. The financial planner establisheswith the client whether the financial planner hasmonitoring and updating responsibilities, and if so,what are those responsibilities. A financial planner withmonitoring responsibilities must analyze, at appropriateintervals, the progress toward achieving the client’sgoals, and obtain from the client current informationconcerning the client’s circumstances. When thefinancial planner has updating responsibilities, andcircumstances warrant changes, the financial plannermust update as appropriate.10

What Makes FinancialPlanning an AttractiveCareer?PERSONAL FULFILLMENTA financial planning career can provide: Personal fulfillment of helping others:You can enjoy the personal satisfaction ofmaking a difference in your clients’ livesas you guide them through buildingwealth, managing financial challenges andsecuring their families’ financial futures.FINANCIAL REWARDS Financial rewards: Experienced financialplanners, also known as Lead Advisors,who have 5 to 10 years of experiencemake 126,945 to 213,126 per year,according to compensation data fromInvestmentNews.1 Mental stimulation: Good financialplanners must be proficient in a widerange of financial areas, from retirementplanning and estate planning to insurance,taxation and investments. It also helps tohave a solid understanding of clientpsychology.MENTAL STIMULATIONWORKLIFEBALANCEFLEXIBILITY Work-life balance: Talk to successfulfinancial planners and you will learn thatwhat they value the most in their work isthe freedom and flexibility to balance theirpersonal and professional lives. Thevariety of career options enables you tobuild the work-life balance you want. Career flexibility: Financial planning is nota one-size-fits-all career. As you will readin this guide, there is a wide variety ofcareer paths—from striking out on yourown to working at firms big and small.Visit CFP.net to learn moreabout the benefits of financialplanning careers and hearCFP professionals talk aboutwhy they love their job.1. 2020 InvestmentNews Adviser Compensation & Staffing Study11

A Rapidly Growing FieldA perfect storm of demographic trends andindustry developments has made this a greattime for newcomers to enter the financialplanning profession. The combination of theaging baby boomer generation, increasinglife spans and the shift away from pensionstoward individual retirement plans meansmore Americans are looking for competent,ethical financial planning advice. What’smore, part of this aging wave includesadvisors themselves, many of whom—about37%—are expected to retire over the nextdecade.2 As a result, there is an abundance ofcareer opportunities for the next generationof financial planners.THE NEED FOR A DIVERSEFINANCIAL PLANNER WORKFORCE4%CFP PROFESSIONALS IN THE U.S.WHO ARE BLACK OR LATINO23%CFP PROFESSIONALS IN THE U.S.WHO ARE WOMENAdditionally, the changing demographics ofwealth in the U.S. mean that more womenand people of color are accumulating wealthand need financial planning advice. As aresult, the financial planning profession needsmore financial planners from populationsthat are currently underrepresented in theprofession. For example, only about 4% ofCFP professionals in the U.S. are Black orLatino, even though these communitiescomprise more than 31% of the U.S.population,3 and women comprise only23% of CFP professionals.Recognizing this opportunity, financialservices companies are prioritizing theirdiversity, equity and inclusion initiatives inorder to recruit a more diverse financialplanner workforce that can meet the financialplanning needs of increasingly diverseconsumers. This means that there are ampleopportunities for individuals from diversebackgrounds to become financial planners.The CFP Board Center for Financial Planningis focused on creating a more diverse andsustainable financial planning professionthrough innovative solutions and initiatives.Collectively, these efforts are making animpact: In 2020, the number of Black andLatino CFP professionals rose by more than12% over 2019, nearly 5 times the growth rateof all CFP professionals for the year, whilethe number of women CFP professionalsalso increased to an all-time high of 20,633.2. 37% Of Financial Advisors Expected To Retire Over Next Decade, Financial Advisor, November 20193. U.S. Census Bureau, Quick Facts T04521912

LEMARWILLIAMS, CFP ,CPWA , CTFA, CLU Wealth Management AdvisorMerrill Lynch Wealth ManagementHeathrow, FloridaYOU HAVE THEFLEXIBILITYTO STRUCTUREYOUR DAY INA WAY THATWORKS FOR YOU.Q. Why did you choose to work in thisparticular financial planning business model?I chose to work for a large investment firmbecause of the brand name recognition,which can be extremely helpful with acquiringnew clients. A large firm can also invest anenormous amount of money in resourcesto assist my clients. The resources providedby the firm allow me to focus 100% of myattention on my clients’ future, and notconcern myself with the day-to-day tasks ofoperating a business. This model works forme because it takes some of the stress awayof being an entrepreneur, but you still get thefreedom to build your own business within alarger business.Q. What is a typical day like for you at your firm?Every day is different. Some days I spendmost of my time responding to client emailsor phone calls. Another day I could beprepping for a review for an existing client,or I might be out to lunch with an existing orprospective client. You have the flexibility tostructure your day in a way that works foryou. The best part of my job is the financialplanning I get to do for my clients. I really doget excited when I walk through a financialplan with a client. It’s a good feeling to tella client we are ahead of schedule, so thatthey can retire early, or that they can pay fortheir child’s college tuition without negativelyimpacting their own future.Q: What do you think is the biggestmisconception about financial planningcareers?The industry is changing, and I don’t knowanyone anymore that considers themselvesa “stock broker.” Yes, financial plannersdo help their clients get invested, but theinvestment portfolio is structured in a way tocontrol the level of risk in order to achieve adesired objective outlined in a well-structuredfinancial plan. I think the other misconceptionabout financial planners is that we are onlyinvestment professionals. Most financialplanners can provide guidance on insuranceplanning, estate planning, retirementincome planning, Social Security, retirementbenefits, healthcare, education planning, taxminimization strategies, as well as investmentstrategies. I personally believe everyoneshould have a professional with that type ofknowledge in their corner.13

In this chapter, you will learn about:The careers of financial plannersand how they evolve in differenttypes of companiesCHAPTER TWOCAREERS INFINANCIALPLANNINGThe milestones and steps in thecareer of a financial plannerStarting a financial planningcareer in different functions withinfinancial services companiesSpecialized careers available withinthe financial planning professionIf you are interested in financial planning as acareer, we encourage you to consider a companythat provides financial planning and pursue afinancial planning career track. However, there arealso other types of companies and career tracksthat enable you to become a financial planner.You will find that the financial planning professionoffers fulfilling careers and a plethora of positionsacross many different business models andcompany sizes. Much like a large art gallery, thereare many doors to enter through and many hallsto explore. This chapter will walk you throughsome of the most common career tracks andhow you can get started in each one.Financial planners help their clients make criticalfinancial decisions; therefore, careers in planningare ultimately defined by the specific role thata professional (you) plays in this process. Manyfinancial planners work directly with clients eitherin an in-person or virtual relationship and guidethem through the creating and execution of afinancial plan. Other financial planners contributeto the process by completing the analysisnecessary to create a plan. Yet others may behelping with the operational aspects of executingthe plan. There are planners who also specialize indeveloping new client relationships and attractingclients to the company. All these functions arepart of the financial planning profession andrepresent a progression of responsibilities that wecall a “career track.”14

Financial PlanningPractice Career TrackWhile companies formulate a distinctfinancial planning career path to fit theirunique strategy and culture, research showsthat there are defined career stages thatmost companies share. You can learn aboutthese career stages and their associated jobdescriptions in more detail in the Center’sFinancial Planning Career Paths guide. Thestages of a traditional financial planningcareer path vary based on responsibilitiesand expertise and are summarized in thefollowing table.This is the type of career likely to beimplemented in team-based, financialplanning-focused companies. We will touchon some of the variations in the career tracklater in this chapter.15

TYPICAL FINANCIAL PLANNING PRACTICE CAREER TRACKANALYSTTitles Analyst Support Advisor Senior AnalystClientResponsibilities Gather andmaintain clientdata Enter clientinformation intovarious systems Assist theoperationsand investmentteams with clientonboarding Answer routineclient questionsand servicerequestsASSOCIATEADVISORSERVICEADVISORLEAD ADVISOR/MANAGINGDIRECTOR Associate Advisor Paraplanner Senior Associate Service Advisor Financial Planner Planner Financial Advisor Advisor Investment Advisor Director Lead Advisor Managing Director Senior Advisor Principal Partner Draft financialplans Draft and deliverfinancial plansfor review Manage clientrelationships,identifying andmeeting clientneeds Managepremier clientrelationships(i.e., the mostcomplex andlargest in size)as Lead Advisor/ManagingDirector Perform assetallocation analysis Create customanalyses offinancial decisions Prepare materialsfor client meetings Perform researchon investments Answer routineclient questionsand servicerequests Implementfinancial plansunder supervisionof Lead Advisor/Managing Director Work withinvestment teamon financial planimplementation Develop andpresent financialplans to clientsPRINCIPAL/PARTNER Oversee theimplementationof financial plans Consult withLead Advisors/ManagingDirectors oncomplex casesLead a teamand manage theresponsibilitiesand performancewithin the teamManage a teamor potentiallymultiple teams Participate inclient meetings Take the lead onanswering routineclient questionsTeamResponsibilitiesLearn firm process,master the job,and be responsiveand supportiveto advisors andclientsTrain Analysts onthe process, toolsand methodologyused by the teamAssign projectsto Supportand AssociateAdvisors andsupervise qualityand timelinessDegrees e Bachelor’sdegree Bachelor’sdegree Bachelor’sdegree CFP certification CFP certification CFP certificationTypicalExperience0 to 3 years2 to 5 years(median of 5years)3 to 7 years(median of 9years)5 to 10 years(median of 17years)7 years or more(median of 20years)TypicalRange ofCompensationas of 20204 60,000 to 70,500 70,500 to 79,613 80,000 to 122,500 126,945 to 213,126 170,000 to 346,5004. 2020 InvestmentNews Adviser Compensation & Staffing Study16

MARIEPADIONGAdvisorBrighton JonesSeattle, WashingtonI FIND ITREWARDING TOAID FAMILIESIN REACHINGTHEIR GOALS.Q. Why did you decide to become afinancial planner?Finances can be a great stress for growingfamilies, which is something I’ve experiencedfirsthand. I knew that in any career my mainmission was to help people reach a goal.As a financial planner, I find it rewarding toaid families in reaching their goals so theycan focus on what matters most to them.Also, I feel that educating people aboutthe importance of financial planning isrewarding.a Senior Analyst, an Associate Advisor, anAdvisor, and lastly, a Lead Advisor. It’s alsoimportant to me to offer services for ouradvice, rather than sell a product.Q. Why are you pursuingCFP certification?CFP certification is a high standard.Furthermore, fulfilling the commitment Imake to CFP Board, and giving my clientsfiduciary advice that is in their best interest,allows me to feel like a partner to thefamilies I work with.Q. What do you love the most about yourcareer in this particular business model?My current firm, Brighton Jones, allows aclear path for growth within the businessmodel. As a team, we help build each otherup to help expand the business. Each clienthas a team of 3: the Lead Advisor, AssociateAdvisor and Analyst. The roles are clearlydefined, but we continue to learn from eachother as duties flex depending on the needsof the client. An Analyst can develop into17

Since many readers will likely elect to join acompany at the entry level, we will elaborateon these positions. Entry-level positions in afinancial planning company have titles suchas Associate Planner or Advisor, SupportPlanner or Advisor, Paraplanner, Analyst orSenior Analyst. These roles typically includethe following responsibilities: Drafting financial plans Performing asset allocation analysisnecessary for client onboardingand portfolio reviews Creating custom analyses offinancial decisions Preparing presentations andother materials necessary forclient meetings Performing research on investmentsthat clients currently hold ormay hold Answering routine client questionsand service requestsThe Financial PlanningPracticeThe practical application of financialplanning as a profession and a career isclosely related to the notion of a “practice.”A financial planning practice describes thecollection of people, resources, processesand economic activities that allow a financialplanner to work with and help a groupof clients. A practice is a service unit inthe sense that it contains the resourcesnecessary to productively engage withclients in their best interests. A practiceis also a business unit in the sense thatit allows a financial planner to have theresources needed to take care of clients.Entry-level financial planning positionsare usually trained and supervised by anexperienced financial planner and presentprofessionals with many opportunitiesfor mentoring relationships. While thesepositions do not typically require CERTIFIEDFINANCIAL PLANNER certification,many companies partially or fully supportprofessionals who wish to pursue CFP certification by financing the requirededucation coursework and providingadditional time off to study for the CFP exam.A practice can be somewhat differentdepending on the company where financialplanners work. In some companies, apractice is a team of professionals, eachof whom has a different specializedposition and different level of experience.In other companies, a practice is simplyone professional who works with clientsin person or virtually and leveragesthe technology and capabilities of asupporting company that employs themor partners with them. A practice can bevirtual such that the planner interacts withclients primarily over the phone or webconferencing, or it can take the traditionalform where the planner meets with clientsin person.Entry-level positions on the financial planningcareer track are actively recruited by manyfinancial planning companies. Job postings canfrequently be found on popular job sites suchas the CFP Board Career Center and LinkedInJobs, as well as on job boards for regionalchapters of the Financial Planning Association .The notion of a practice and the typesof practice that a company createsand supports tend to shape careers offinancial planners who work there. In mostenvironments, planners begin by playing asupport role in a practice and then later theymay lead a practice or even own a practice.18

that you take on more regulatory risk and thatyou need to be involved at least on some levelin practice management. The responsibilitiesinherent to owning or operating a financialplanning practice include the following:RETAINING CLIENTSThe financial planning professional mustmaintain strong relation

Find financial planning careers that match your strengths and interests 6 How to Use This Guide Financial planning is a fulfilling career, and demand for financial planners is quickly outpacing supply. Now is the perfect time to begin your journey into the financial planning profession. The Guide to Careers in Financial Planning is designed