Financial Planner
Financial Planner Career Overview
Financial planners help individuals and businesses in making investment decisions. There are generally two fundamental types of financial planners: analysts and advisors. Financial analysts usually work with large companies and personal financial advisors assist individuals. Both types gather financial information, analyze it, and make recommendations to their clients. The actual job duties of analysts and advisors differ because of the investment information they give and their relationships with investors.
Financial analysts – also called security analysts or investment analysts – look at the economic performance of companies and industries for firms or institutions that invest money. Financial analysts determine an industry's value and project future earnings. There are two basic types of analysts: those who work on the buy side and those who work on the sell side. Buy-side analysts work for companies looking to invest while sell-side analysts represent security dealers selling their products.
Personal financial advisors assess individuals' financial needs. These advisors work with clients to identify and plan for short- and long-term goals. They can also provide tax advice and sell insurance. Personal financial advisors usually have numerous clients and are charged with finding them on their own. As a result, they spend a considerable amount of time making sales' calls and marketing their services through seminars, lectures, and networking. Building a client base is key to success. A large number of personal financial advisors are self-employed.
Financial Planner Training and Education
Financial analysts must hold a bachelor's degree in a financial-related discipline such as finance, business administration, statistics, or economics. Many go on to obtain a master's degree and/or professional designations. Although not required, it is strongly recommended that personal financial advisors hold at least a bachelor's degree in a financial-related discipline as well.
Course work for this specialty includes economics, business, accounting, corporate budgeting, and financial analysis.
In addition to holding a degree, many analysts and advisors also hold certifications. Financial analysts can earn the Chartered Financial Analyst (CFA) designation if they hold a bachelor's degree, have at least four years of work experience, and pass three examinations. Personal financial advisors may obtain the Certified Financial Planner (CFP) credential. Issued by the Certified Financial Planner Board of Standards, the certification requires having a bachelor's degree, three years of work experience, passing a comprehensive examination, and following a code of ethics.
Financial Planner Career and Salary Outlook
The future looks promising for financial planners. Employment of financial analysts and personal financial advisors is expected to increase by 37 percent between 2006 and 2016, according to the U.S. Bureau of Labor Statistics. The numbers are especially strong for the personal financial advisor occupation, which is projected to be one of the 10 fastest growing over the next several years.
By 2016, there is expected to be 544,000 financial planners working in the United States – 295,000 financial analysts and 248,000 personal financial advisors.
The expected increase in financial analysts is due to the increasing complexity of investments. The demand for personal financial advisors is being driven by the needs of the millions of U.S. workers who will be retiring over the next several years along with companies eliminating traditional pension plans in exchange for retirement savings programs. As a result of the shift away from pensions, more people must manage their own retirement accounts, thus creating jobs for personal financial advisors. Although there will be employment growth for personal financial advisors, competition for these relatively high-paying jobs will be great.
The median annual earnings, including bonuses, of financial analysts is $66,590, with 10 percent making more than $130,130. Bonuses – usually based on how well an analyst's predictions compare to the actual investment performance -- can be a significant part of the total earnings.
The median annual wage and salary for personal financial advisors is $66,590, with 10 percent making more than $145,600.
- Advisors who work for financial services firms generally receive a salary plus bonus.
- Those who work for financial investment firms or those who are self-employed usually either charge by the hour or receive compensation from fees on stock and insurance purchases.
- In addition to charging fees, many advisors receive commissions on financial products they sell.
- Advisors who manage a client's portfolio of assets may charge a percentage of the assets.
Career Fields/Specializations
Accountants and Auditors
Accountants and auditors analyze and communicate financial information for companies, individuals, or the government so that business runs efficiently, records are kept accurately, and taxes are paid properly and on time. Many also provide budget analysis, and financial and investment planning.
Financial Managers
Financial managers are responsible for preparing financial reports, directing investment activities, and developing and overseeing cash management strategies. Managers may also create long-term goals for their organization.
Insurance Sales Agents
Insurance sales agents help individuals, families, and businesses to select the most appropriate life, health, and property insurance policies to fit their needs and their budgets. Agents sell one or more types of insurance – property and casualty, life, health, disability, and long-term care. If and when a policyholder experiences a loss, the agents help to settle the insurance claim.
Budget Analysts
Budget analysts develop, analyze and execute budgets for organizations. Budget analysts many work for private industry, nonprofit organizations, or the public sector.
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