Financial Planner: Career Path & Qualifications

Financial planning is consistently ranked as a profession with good earnings potential, low stress and excellent future job growth. The Department of Labor believes that job growth for financial planners will be a whopping 27% throughout 2022. The niche itself is fairly new; up until a few decades ago, you only had stockbrokers, bankers or insurance sales representatives. Now, financial planners help their clients get a handle on all the pieces of the finance puzzle, and the demand for such services continues to rise.

A bachelor's degree in a finance-related field is a good starting point, but some firms also hire psychology and other humanities majors. The role of the financial planner is all about human contact. The ability to build trust, explain complex financial products in layman's terms and getting buy-in for a plan of action are often regarded as more important than knowing every mutual fund quirk and trading clause by heart.

A master's in business administration (MBA) will help the climb up the corporate ladder for those seeking management positions. There are occasional doctorates in finance-related fields in management, but MBAs are by far the most common.

One of the most critical factors in becoming a financial planner is to obtain certification. The gold standards are Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA) accreditations. This is similar in significance to an accountant having Certified Public Accountant (CPA) status.

The prerequisites for the CFP exam includes three years of experience (two years if you fulfill certain criteria), college-level courses in finance determined by the CFP board, and a mandatory bachelor's degree or better. The exam itself is a brutal, two-day, 10-hour barrage of questions on every field of personal finance. All applicants have to submit to a thorough background check before the CFP is awarded.

The CFA is often considered the tougher accreditation of the two, requiring four years of experience and a series of three grueling exams. Either certification virtually guarantees good employment prospects.

There is also the Chartered Financial Consultant (ChFC) certification. This program does not require a bachelor's degree, but it is recommended. The certification is awarded upon completion of seven required courses and two elective courses.

While the job itself doesn't technically require licensing, some financial planners elect to get Financial Industry Regulatory Authority (FINRA) licenses such as the Series 6, 7 or 63. This enables them to sell stocks, bonds, mutual funds, insurance and whatever else the client may need. These licenses may require membership in self-regulatory organizations.

Since all of the major certification bodies require a few years of industry experience, most budding financial planners start out in junior positions working part- or full-time while completing their studies.

After obtaining certification, the financial planner can take clients without supervision. The median salary for CFP-accredited financial planners is $63,969, although this can vary considerably between cities. Most financial planners also receive annual bonuses and/or profit sharing that can easily be in the five-figure range.

Many financial planners are quite content to remain in their roles, merely moving to higher net worth clients and higher compensation levels. A senior financial planner at a large firm can have a six-figure base salary with a matching annual bonus with a relatively low-stress work situation.

Some financial planners prefer to become self-employed after completing their certifications. Since the cost of doing business is basically just a small office space, many find the earnings potential higher than regular employment at a finance firm. The key for this path is to have a good network of contacts to build a stable base of clients.