Becoming a Certified Financial Planner (CFP®) is a long and challenging process. To become certified, you must pass a series of tests and be able to demonstrate that you have at least three years of experience in financial planning.
The first step is to pass the CFP® exam. This test is given by the Certified Financial Planner Board of Standards Inc., which sets the standards for certification and oversees the exam.
The exam consists of two parts: the Core Exam and the Advanced Exam. The Core Exam covers basic financial concepts like taxation, retirement planning, debt management and estate planning; these concepts are critical to your clients’ financial health. You must pass both parts of this exam to receive your CFP® designation.
Once you have passed both parts of this exam, you will need to demonstrate three years of experience in financial planning before being accepted into the CFP® program. You can do so by providing proof from employers or clients that they have worked with you as their individual financial planner for at least three years before applying for certification.
To become fully certified as a CFP®, individuals must complete 12 hours of continuing education every year they hold their credential in order to keep it current.
How To Become Certified Financial Planner
Financial planners advise individuals and organizations to help meet long-term financial goals. Personal financial advisor jobs can provide high earnings and flexible work schedules.
The Bureau of Labor Statistics (BLS) reports that personal financial advisors, including financial planners, earned a median annual salary of $89,330 in 2020. Employers typically require candidates to possess bachelor’s degrees in business or finance. To advance in the field, many financial planners earn certifications in financial planning.
Read on to explore the necessary steps to become a financial advisor, including education, credentials, and experience.
Steps to Becoming a Financial Advisor
- Earn a Bachelor’s Degree: Financial planner education requirements usually include a bachelor’s degree. Some employers seek applicants with degrees in finance, accounting, or business, but many do not stipulate a specific course of study. Classes in taxes, risk management, and investments prepare students to pursue work as financial advisors. A bachelor’s degree typically takes four years to complete.
- Complete On-the-Job Training: After graduating with a bachelor’s degree, a student can pursue entry-level financial planner jobs. Most employers require recent graduates to work closely with more experienced financial advisors for a year or longer.
- Attain Licenses: Some financial planners must obtain state licenses or register with the Securities and Exchange Commission (SEC). For example, professionals who provide specific investment advice and directly buy or sell insurance policies, stocks, or bonds may need additional credentials.
- Obtain Certifications in Financial Planning: Earning a certified financial planner (CFP) credential can lead to career advancement. To receive the CFP designation, each applicant must hold a bachelor’s degree, complete a minimum of three years of relevant work experience, pass the CFP test, and agree to a professional code of ethics.
- Pursue Additional Higher Education: A financial advisor can open the door to advanced career opportunities, management positions, and higher salaries by completing a master’s degree in business administration or finance.
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Required Financial Planner Education
Becoming a financial advisor requires at least a bachelor’s degree. Some employers seek a bachelor’s in accounting, business, law, or economics. Financial planner education includes coursework in taxes, investments, and risk management.
To pursue the certified financial planner credential, each candidate needs a bachelor’s degree. Formal finance and accounting coursework prepares students for the optional CFP exam. Although not required, a master’s degree in finance, accounting, or business administration can help financial planners qualify for advanced job opportunities and higher salaries.
- Read about bachelor’s degree programs in accounting
- Read about master’s degree programs in accounting
- Read about master’s degree programs in business administration
Required Licensing and Certifications in Financial Planning
Depending on the career level and job duties, becoming a financial advisor may require a license. Certifications are optional but can lead to better job opportunities. Licensing requirements for financial planners vary by state and career.
Financial advisors who give specific types of investment advice, along with professionals who buy or sell stocks, bonds, or insurance policies, may need one or more licenses. Financial advisors who do not participate in these activities may not need to earn licensure.
Financial planners who work at large companies may need to register with the SEC. The North American Securities Administrators Association’s website provides additional details about state licensing board requirements for registered investment advisors.
Optional Degrees and Credentials
Financial planners can pursue optional degrees and certifications to demonstrate their mastery of the field and advance professionally. A master’s degree in business administration, accounting, or finance can help financial planners qualify for advanced personal financial advisor jobs with higher pay.
Optional certifications in financial planning, like the certified financial planner credential, can also improve a financial advisor’s reputation. Many employers prefer to hire financial planners with the CFP certification. Maintaining credentials typically requires professionals to complete continuing education credits.
The CFP Board delivers the certified financial planner credential. Applicants must meet education and experience requirements, pass an exam, and agree to a code of professional ethics.
Learn how to become a Certified Financial Planner
Required Experience for a Financial Planner
The financial planning field does not generally require a specific amount of experience for entry-level positions. However, recent graduates with related work experience can stand out from their competition in the job market. Some bachelor’s programs feature internships and practicums for students to develop experience before graduation.
Entry-level personal financial advisor jobs typically include on-the-job training under the supervision of more experienced advisors. Qualifying for certifications in financial planning typically requires professional experience. Becoming a CFP requires 6,000 hours of relevant professional experience or 4,000 hours of apprenticeship experience.
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Should I Become a Financial Planner?
Becoming a financial advisor can offer a lucrative, rewarding career choice for many people in the industry. Consider the following potential pros and cons to help make your decision.
| PROS OF BECOMING A FINANCIAL PLANNER | CONS OF BECOMING A FINANCIAL PLANNER |
|---|---|
| High earning potential | Can be a high-stress job |
| Flexible hours | Finding clients can be difficult and requires self-marketing |
| Work independently or find employment with a public or private firm | May need to meet specific education, experience, and licensing requirements |
| Interact with a diverse clientele and provide meaningful advice | May need to work long hours in the early years of your career |
| Certifications are relatively easy and inexpensive to obtain | Requires hard work, discipline, and motivation to succeed |
The Search for Personal Financial Advisor Jobs
Students and new graduates can find financial planner and personal financial advisor jobs in many places. Most universities offer career development centers that offer job boards, interview preparation, resume reviews, and mentorship programs. Consider looking for career resources from professional organizations or attending job fairs and networking events.
Use your current connections to discover new professional opportunities. Ask previous employers, professors, and mentors for recommendations. You can start your job search with one of the following job boards.
The American Accounting Association Job Board : The AAA’s career center connects job-seekers with accounting and finance opportunities throughout the U.S.
Accounting Jobs Today : This site offers career resources for finance and accounting professionals. It also features an employer recruitment center and a professional career center.
AccountingCrossing : As a private, members-only job site, AccountingCrossing posts finance jobs from government, corporate, and public interest job websites.
iHireAccounting : This industry-focused job board allows prospective employees to search for accounting opportunities across the U.S. Users can post their resumes and receive advice from career experts.
Read more tips on job searching:
- How do you professionally network in accounting?
- Is it worth working with a recruiter?
- How do you write a resume?
Upward Mobility
Becoming a financial advisor offers the opportunity for upward mobility without changing careers. Financial advisors can continue to take on more and better-paying clients to increase their earnings over time. They can move from working for firms to setting up their own businesses, as well.
Financial planners can also pursue other positions, like financial manager, to advance professionally. Financial managers oversee organizations’ long-term financial goals. They supervise employees, advise management on financial decisions, and find ways to maximize profits and minimize costs.
Financial managers earned a median annual salary of $134,180 as of May 2020. The BLS projects a faster-than-average 17% employment growth rate for financial managers from 2020-2030. These managers usually need at least five years of experience in financial or business positions. Some obtain optional certifications, but they do not need higher education beyond a bachelor’s degree.
