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Transitioning to a Financial Planning Career

Every once I a while I will be asked to give my opinion on some logical steps to take when pursuing a financial planning career. This post may be beneficial for individuals who are entering the financial planning profession right out of college or are looking to change careers. Some are steps to take and others are questions to ask yourself and others along the way.

  1. What is it about financial planning do/would you enjoy? It could be client-facing meetings, technology, back-office work, or a combination. And you may not know until you try your hand at several things. Ask some current planners or even your own. The point is to find an area that you enjoy and work to get better at it.
  2. Find the right firm. Will you work for an RIA or broker-dealer? What type of firm do you want to align with? This could mean starting your own firm, or joining an already successful firm. Both have advantages and disadvantages. Starting your own firm means being your own boss, autonomy, and building a company. However, you’re stuck with a big learning curve and expenses. Joining a firm has the advantages of not reinventing the wheel, built-in support and compliance, and a solid client base. A good firm should also want you to succeed and advance in the company – if that’s your goal. But, you are subject to management’s edicts, philosophy, quotas, and hours.
  3. Choose your compensation method. Generally, there are three ways financial planners get paid. Fee-only is where clients pay you or the firms directly for any advice given. Fee and commission is where clients may pay fees to you or the firm, but you or the firm also receive commission on any sales of products such as funds, insurance, etc. Commission only is where you or the firm are only compensated if the client buys a product (more aptly, you sell a product). Being paid only commissions can make it difficult to have a long-term focus (as it’s likely you’ll be more focused on survival, not clients). Finally, if you will get paid a salary, ask how that salary is derived (from the above three methods).
  4. Ask yourself how you would want to be treated as a client. This is like the “Golden Rule” of doing to others what you’d want for yourself. How would you want to pay for advice and services? What type of firm would you employ? What qualities would you look for in a competent, professional planner? Knowing how you’d want to be treated as a client will go a long way in your happiness and satisfaction as a planner.
  5. Always be learning. To be a successful planner, you must keep learning. One of the first steps to take is to earn the CFP® designation. The CFP® designation is considered the gold standard in financial planning. It signals to clients that they will be working with a professional, fiduciary planner who has met the rigorous education, ethics, experience, and exam requirements. But don’t stop there. There are other quality, specialty designations as well. Obtaining additional designations may depend on what area of financial planning you want to specialize. Many designations require continuing education. Take the hard, beneficial CE. Don’t be that planner who takes CE at the 11th hour just to get it done.
  6. It takes time. Back in the 90s, when I was living in Boston, there was quite a bit of road construction going on. Hanging from an overpass was a sign that read, “Rome wasn’t built in a day; if it was, we would have hired their contractors.” Becoming better, and even an expert at anything takes time. Expect road blocks, hurdles, and to make some mistakes. Grit will help overcome many of these; as will finding the right company, compensation method, and philosophy.

Good luck!

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