It wasn't so long ago that the average person had no need for a financial planner. Most simply didn't have the luxury of planning for the future when what they earned barely covered present expenses. Should an individual earn enough to cover their daily expenses and a bit more besides, they were quite happy to tuck the extra into a savings account. They may even have bought life insurance or set up an annuity plan.
Until about 40 years ago, regular savings accounts offer fairly decent yields. Back then, savings coupled with a pension would have been enough to retire comfortably. These days, interest rates on savings accounts are in the fractions of a percentage point and pensions are all but done away with. Meanwhile, people still have to plan for the future, especially now that retirement funds are no longer guaranteed. What's an individual to do with their cash other than spend it?
A financial planner can help them decide. These advisors have their finger on the pulse of money markets and exchanges. They can predict trends in finance that could optimally position their clients for a secure financial future. Such professionals become intimately knowledgeable about their clients' circumstances and resources, help them formulate financial goals and recommend investments to help them achieve them. Does that sound like a career tailor-made for you?
To become a financial planner, you must:
- know what's expected of you as a financial planner
- earn the educational credentials to qualify you as a financial planner
- decide where you will work - in a large corporation that offers a range of financial services, in partnership with other financial planners or set up your own financial planning office
- know how much you can expect to earn as a financial planner
That last bullet might be the most relevant. Not planning your own financial future is rather like the cobbler's children going barefoot. You have to look out for yourself before you can advise others, especially in this Information Age when all manner of personal information can be had for a small fee. Imagine the hit to your credibility if clients find out you're deeply in debt and not managing your finances well! For more tips to prepare you for success as a financial planner, we offer you this guide.
The Financial Planner's Duties
This job description can be summed up in seven words: give clients the best financial advice possible. It sounds simple but before you can deliver that advice, you have to do a lot of other work. For one, you must stay up to date on market trends and evaluate financial forecast predictions. You don't have to look for investment pitfalls - that's the risk specialist's job, but you do have to advise your clients on the potential risks to their investments.
The biggest part of financial planners' work is connecting with their clients. Nobody will take advice from you if they don't feel you have their best interests at heart so developing those relationships is crucial to your success. The pension plans you recommend, how you manage their portfolios and the financial instruments you suggest they invest in to grow their wealth all play into that necessary relationship-building.
Other aspects of the job - debt avoidance, debt consolidation and promoting financial solvency are trademarks of the personal financial planner. Their corporate counterparts focus more on formulating the company's long-term financial plans, developing investment portfolios and finding areas of growth to explore. Finding ways to increase profitable dealings with other businesses or companies is also among their duties.
Where Financial Planners Work
In the previous segment, we talked about personal and corporate/business financial planners; we also need to touch on those who work in financial services offices. These professionals may have a long lists of private clients whose portfolios they manage. They must be available to those clients outside of business hours and be quick to contact them if some urgent action is needed to protect their portfolio.
Financial services staff may also contract their services to a business or corporation to work on a single project. Let's say an existing business is bought out. The new owners may hire you to sort through their financial records and make recommendations on how to make their new venture more profitable. They may also want you to make sure their business complies with all of the laws and financial regulations that govern it. You may work closely with their budget analyst to find where they can trim expenses and calculate how much they can afford to invest.
Financial Planners' Educational Background
That level of responsibility demands extensive knowledge. You must have at least a four-year degree to be considered for hire, preferably in some maths-related field. These include Business Studies, Accounting and Statistics, Economics and Finance. Any other type of study you could undertake, from workshops and seminars discussing finance to interning with a financial services firm, would help your CV stand out come time to fill out applications.
Note that many jobs in finance require the same background and level of education. Thus, your credentials will transfer well to other areas of the finance industry. Should you apply yourself to a financial planner internship but, a few months in, discover it's not the job you thought it would be, you could investigate another branch of the industry. With more than 6000 positions currently seeking applicants, you might say that the UK has a shortage of wealth managers. That's just one of the many opportunities open to you with such an educational background.
Conversely, if you'd rather work behind the scenes, you might be interested in a credit analyst's position.
What Financial Planners Earn
Financial planning is generally the purview of those who have finances to plan. Logically, it should then follow that financial planners are better paid than the average wage earner. But that's not entirely accurate.
How much you earn as a financial planner depends on your work situation, your educational background, including continuing education, and your level of experience. Even your geographical location plays a role in determining your salary. For instance, financial advisors in London or Manchester far out-earn those who service clients in less cosmopolitan areas, even if they have a large territory to cover.
It also matters whether you work at a bank or investment firm, or in a financial services office. Obviously, larger, more renowned employers have the means and incentive to compensate their talent well. Local offices might not have the resources to match those handsome pay cheques.
Keeping all of that in mind, according to Indeed, the average base salary for financial planners is £52,729 per year. That does not include bonuses or compensation for night and weekend work if such is offered. Even without those extras, you can rest easy knowing you out-earn brokers and wealth managers by several thousand pounds.
Traits and Qualities of Financial Planners
In this article's introduction, we mentioned the irony of the cobbler's children having no shoes in relation to financial planners failing to plan their own finances. That's just one part of the story; another part is a worrying trend in the field of financial planning. In this profession, the average age is 55, with a substantial portion of advisers 10 years older than that. Does that show a distinct lack of planning on planners' parts - have they failed to mentor the next generation of financial advisers?
In all the hottest jobs in finance, an ageing workforce would signal potential danger ahead. Particularly if we consider that youth is a hiring factor for the titans of finance who aver that anyone over 30 has already lost their 'edge'. However, the exact opposite is true for financial advisers. The longer they're at it, the more experienced they become, both in interpreting market signals and reading their clients. What does that mean for those entering the financial planning field who are newly graduated?
Age is not a quality that financial planners must cultivate but intuition and analysis are. Financial planners have to keep abreast of financial market doings so they can advise their clients on the moves they need to make to keep their investments safe and growing. That intuition comes in handy when trying to tease out what clients' goals actually are.
Along with intuition, financial planners need good communication skills. It might sound unduly harsh to say that few people say what they actually mean. When it comes to financing, an area where people are typically under-informed, clients might express their financial goals in the vaguest of terms. It will be your job to understand their motives and objectives, and then work to help them achieve those aims.
This requires a degree of mentoring ability and all the skills that come with it. A part of your job is to educate your clients about financial instruments, markets and other related concepts. How about putting your mentoring skills to work teaching the next generation of planners and advisers what you know, while you're at it?
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