Understanding the financial planner career path

| 24 Jan 2023

Here are the basic stages of a financial planner's career path, from learning the ABCs of budgeting to running a firm from a post by SmartAsset.


Learning the basics

Most financial planners start their careers with a bachelor's degree in a business or finance-related area, but many hold bachelor's degrees in other areas, such as social sciences or humanities. In an entry-level financial planner role, you'll likely be serving as a junior associate at a big advisory firm, a smaller boutique advisory firm, or elsewhere in the financial services industry. In this role, you're likely to spend most of your time supporting and learning from higher-ranking coworkers and mentors. 

According to the Certified Financial Planner Board of Standards (CFPBS), this is the time to soak up all the knowledge you can on financial planning, investing, budgeting, taxes, risk management and estate planning, as well as master the firm's software and other technological tools. 


Gaining technical skills

Once you have a sound basic understanding of what it means to be a financial planner, you'll move to more of an intermediate role. At this point, you'll begin to put your knowledge to use by working directly with clients while continuing to assist senior coworkers with their clients.  The CFPBS says at this phase, you'll be busy mastering the financial planning process and honing your client communication skills. After all, financial planning is full of complexity and nuance, and being able to explain your strategies in layman's terms will be essential. 


Getting certified

Once you reach the third phase of your career, you should be finishing up your official Certified Financial Planner (CFP) designation. If you're wondering why you would wait so long to get your CFP rather than starting your career with it, the answer is that the CFP certification requires not only an educational program that takes an average of 12-18 months; it also requires either 4,000 hours of apprenticeship experience or 6,000 hours of relevant professional experience. 

Besides the coursework and required hours, the CFP certification also requires you to pass a 170-question test and a background check and sign an agreement to adhere to a strict code of ethics. So, you'll probably be a few years into your career before you finally get to add those letters to your email signature. At this point in your career, you'll likely have your own roster of clients while still supporting senior team members with their clients. You'll be honing your skills in client relationships, learning how to manage a team and building your reputation as a subject matter expert. 


Thinking strategically

Once you've gotten your CFP and have several years of experience under your belt and thorough expertise in your field, it's time to learn how to see the big picture. You will need to learn important managerial skills, how to bring in your own clients and contribute to your firm's strategy. It's at this phase of your career that "soft" skills become essential. Not only will you need to be able to attract and cultivate desirable new business, you'll also have increased responsibilities in managing junior team members. 

Around this point, you may think of striking out on your own and opening your own practice. Whether you take the entrepreneurial path or continue to climb the ladder at a firm, the basic skills you'll develop will be the same: a thorough understanding of strategic planning, revenue responsibility and business development. You may also consider getting your master's degree in finance or business administration. While this isn't necessary for a long and successful career, it may help you ascend the ladder faster and appear more knowledgeable to prospective clients. 


Being a leader

At this point, you'll be at the top of the ladder, flexing your deep, specialised knowledge with clients, training up-and-coming financial planners and setting firm strategy. These years will be spent making sure your firm continues to grow and prosper by strengthening your relationships with existing clients and team members and developing new ones. 

You'll be careful to show unimpeachable judgment in your work and personal life. Your goals during this phase of your career should be to continue to build your reputation as a leading expert in your field while giving back to the next generation of financial planners by mentoring and coaching them to success.


Bottom line

A financial planner's career path has five distinct phases that lead from learning the basics of the industry from mentors to becoming a subject matter expert and a mentor yourself. You'll likely need a bachelor's degree to get started and will likely work to earn your CFP designation over the first few years of your career.

Once you've mastered both the technical and interpersonal skills necessary for success, you might consider striking out on your own – or staying at a larger firm and continuing to climb the ladder.