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A financial planner is an investment professional that offers financial advice to clients. Financial planners guide and counsel clients on major financial processes, such as keeping track of accounts, understanding credit, making smart investments, and budgeting.
Working as part of wealth management firms or in an independent capacity, financial planners advise a range of clients, including small business owners, couples and families, and entrepreneurs.
Most financial planners work full time, but they may also need to work after hours and on weekends. Financial planning is a major part of the insurance, wealth management, investment banking, and personal finance sectors.
The time is ripe for the financial planning market, which is worth $59.3 billion in 2022 with an average yearly growth of 3.4%, according to IBISWorld. Learn more about a financial planner's role and how you can get started in this career.
Financial Planner Duties
Financial planners have a deep understanding of personal finance, financial markets, and how to interpret financial data. A financial planner helps and guides clients with investments, asset building, retirement planning, savings, and major decisions.
Other responsibilities of a financial planner include:
- Portfolio Management: Financial planners manage investment portfolios for their clients. This involves creating and overseeing investment accounts such as a retirement fund, education fund, or stocks and bonds.
- Private Wealth Management: A financial planner may need to perform wealth management for affluent clients. This high-level financial planning service includes investment management, tax advice and guidance, and estate planning.
- Investment Research: The duties of a financial planner include tracking financial markets, making forecasts, and offering clients the right investment advice. Based on this research, financial planners also produce financial reports.
- Risk Management: Financial planners not only need to identify potential investment risks but also devise strategies to mitigate and eliminate them. Risk management is often a significant part of financial planning.
- Financial Assessment: Reviewing clients' finances determines whether they are on track to achieve their financial goals. Based on this, financial planners offer them advice and guidance to reach their goals faster and more efficiently.
Key Hard Skills for Financial Planners
Financial planners need strong analytical skills to evaluate investments, budgets, and transactional performance and profitability.
A key skill in financial planning is developing businesses — a group of strategies, ideas, and activities to start, grow, or elevate an enterprise.
Since investments are a crucial part of financial planning, deep knowledge in this area is essential for every financial planner. Several forms of investments include retirement or education funds, brokerage, stocks and bonds, and insurance.
Financial planners need to spend significant time researching the market. They must observe trends, keep track of market changes, and be up to date on regulations.
Key Soft Skills for Financial Planners
Financial planners need to actively network to get new clients. Networking opportunities may include conferences, seminars, business association meetings, and advertisements.
Excellent communication skills are special for every financial planner. Since clients rely on their advisors for financial decisions, a financial planner must explain complex information in clear and simple terms.
Since financial planners gather information from various sources, they must possess strong analytical skills to process this data.
Financial planners must focus on detail when researching and making notes on their client's finances. Ensuring the accuracy of data and documents and eliminating errors are necessary skills for any financial advisor.
Financial Planner Areas of Expertise
Any industry involving money and investments needs financial planners. Many financial planners begin their careers as generalists, but with experience, they can specialize in an area that interests them.
A bank is often the first place where people look for financial advisors. A financial planner associated with a bank will offer investment services, budget assistance, debt repayment, life insurance, and even business planning. Financial planners usually specialize in certain areas of expertise and can provide tailored solutions to specific needs.
Common Job Titles
- Financial advisor
- Retirement planner
Financial planners specializing in insurance typically sell and offer advice on insurance policies. Insurance advisors evaluate their client's financial status to determine how much insurance they need and can afford. These professionals also help customers decide the amount of coverage they should purchase depending on their budget, requirements, and goals for the future.
Common Job Titles
- Insurance advisor
- Personal risk manager
Financial planners who work for brokerage firms handle portfolio management or select mutual funds, exchange-traded funds (ETFs), and other securities for clients. Brokerage financial advisors usually charge a percentage of the assets they manage annually. Financial planners at a brokerage firm may also advise clients on which stocks to buy, how long to own them, and the right time to sell.
Common Job Titles
- Fiduciary advisory
- Investment advisor
Consulting is a popular niche for financial planners. As part of a consultancy, a financial planner assists clients with budgeting, retirement savings, education funds, estate planning, and other aspects of their financial health. Financial consultants also offer wealth management services and specific investment advice based on market analysis and economic trends.
Common Job Titles
- Financial consultant
- Personal finance consultant
How to Become a Personal Financial Planner
The typical education for a financial planner is a four-year bachelor's degree in accounting, economics, business, or a related field. But, you will need a bachelor's degree to take the certified financial planner exam.
Financial planners need a thorough knowledge of banking, taxes, investments, and financial products. Although work experience is not always required for entry-level roles, it can certainly help new graduates stand apart from the rest.
Professionals who wish to become certified financial planners must have work experience, meet education requirements, and sit for an exam. This certification is optional but can help advance a financial planner's career and reputation.
Financial Planner Salary and Career Outlook
The Bureau of Labor Statistics projects a 15% growth in financial advisor jobs between 2021 and 2031, which is much faster than average. Financial planning is an upwardly mobile career that offers high earning potential, a wide and diverse clientele, and the opportunity to transition to other positions, such as a financial manager.
A financial advisor's median annual salary was $94,170 in 2021. With more experience and clients, financial planners can boost their income. Some financial planners may also start businesses and employ accountants and advisors.
FAQ on Financial Planners and Certified Financial Planners
What are a financial planner's duties?
A financial planner’s responsibilities include helping clients set and reach financial goals; offering tax, insurance, and investment advice; creating financial reports; budgeting and forecasting; and presenting and selling financial products and services.
What specializations can financial planners have?
A financial planner can work in a variety of industries, including banking, brokerage, and insurance. Some common job titles of a financial planner are client services advisor, wealth manager, and financial consultant.
Where does a financial planner work?
A financial planner may work as part of a bank, an investment company, or an accounting or brokerage firm. Some financial planners choose to work independently.
What is the difference between a financial advisor and a financial planner?
The term financial advisor is a broad category that includes various finance professionals such as insurance agents, bankers, and brokers. A financial planner is a type of financial advisor engaged in creating strategies for money-related goals.
Is financial planning a good career?
Financial planning is a lucrative and rewarding career with opportunities for upward mobility and high salary potential. Professionals interested in this career should be prepared to work hard and have excellent communication and analytical skills.
R.J. Weiss is a certified financial planner and current CEO of the financial education company The Ways To Wealth. Weiss has worked with clients across a variety of fields, including insurance planning, investment planning, income tax planning, and retirement planning. The Ways To Wealth teaches the fundamentals of financial planning to hundreds of thousands of monthly readers.
R.J. Weiss is a paid member of the Red Ventures Education Integrity Network.
Page last reviewed October 19, 2022
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