A financial planner helps clients plan their spending, investments and taxes. They may also provide insurance advice and guidance on estate planning issues.
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In many cases, they are regulated by several government agencies depending on the services that they provide. They may be licensed to sell securities, such as stocks and bonds.
Qualifications
Financial planners help clients plan for their financial futures, including savings, investments, tax planning, insurance coverage and estate planning. They also help clients understand the financial implications of education, marriage, retirement and health care.
Some planners have a general practice, while others specialize in specific areas. For example, some are investment advisors who offer advice about stock and bond portfolios, while others work with a law firm or broker to provide estate planning and tax services.
These individuals may also have other credentials such as the CFP certification of the Certified Financial Planner Board of Standards, or the CFA certification of the CFA Institute. These credentials have strict educational, experience, and ethical requirements. They also require ongoing education.
You can also pursue additional education such as a Master`s in Business Administration or Finance. These degrees provide a solid foundation for a career in financial planning and offer career advancement opportunities and higher salaries.
Licenses
Financial planners work with clients to help them plan for the future. They provide guidance on financial decisions such as investments, insurance and tax planning.
These professionals are required to obtain a number of licenses in order to offer their services. They are also required to meet with their clients and understand their needs.
Depending on their job duties, they may be licensed by the state or by the Securities and Exchange Commission (SEC). They can also obtain certifications that indicate a high level of knowledge in a particular area.
For example, those who want to become certified financial planners must complete a rigorous course of study, pass an exam and agree to a professional code of ethics. A CFP designation is considered one of the most important credentials in the field and can lead to career advancement.
Specializations
The field of financial planning includes a variety of specializations. Some focus on a specific area of finance, such as retirement or estate planning; others offer general financial advice.
Some planners are employed by investment banks, insurance companies or credit unions. They create programs for their clients that help them achieve their long-term financial goals.
They are paid by employers on the basis of their commissions earned from investment and insurance products. These professionals may be self-employed.
The CFP credential is highly regarded in the financial planning field and can serve as a powerful step towards success. It requires years of experience, passing a standardized exam and meeting certain ethics requirements.
Some planners specialize in the areas of life, health, property, and liability insurance, or estate planning. They assess their client`s finances to determine the amount of insurance needed to cover future costs. These professionals also offer advice on the best policies to purchase.
Fees
Costs associated with financial planners can vary greatly depending on the experience and scope of service offered. Some financial planners charge a fee only, while others receive commissions from investments and insurance policies they sell to clients.
According to the FPA study, a majority charge an AUM-based fee for financial planning, but also many use flat or hourly fee structures.
In a flat fee model, a planner creates a detailed plan for you, then lets you implement it on your own. The cost of this type of service usually isn`t tied to your asset balance, but it can be more expensive if your situation is complicated.
According to Kaleb Paddle, certified financial planner with Ten Talents Financial Planning, a percentage can be cheaper than a fixed fee for larger accounts. But he warns that clients with $1 million or more in investable assets may want to avoid percentage fees unless they have an ongoing relationship with the adviser.