In the finance industry, there are a wide range of professions, some of which sound the same or similar to the average person. A financial planner and financial advisor sound practically identical, but there are some nuances that make both professions distinct. Let’s take a look.
What is a Financial Planner?
A financial planner is a finance professional who helps organizations and individuals reach their long-term financial goals. Financial planners will map out a budgeting, savings, retirement, and investment plan for their clients and will try to help them establish good spending habits.
Some financial planners will specialize in estate planning, investments, retirement, and taxes, but all professionals need to learn about all aspects of financial planning to help their clients.
What is a Financial Advisor?
A financial advisor is a person who helps manage your money. Instead of being coached to manage your funds, the advisor will take your money and help you with money-related tasks. They will help you buy and sell stocks, create an estate plan, and manage your investments.
The term “financial advisor” will often be used as a catch-all term for multiple professions. For example, insurance agents, stockbrokers, and estate planners are all called “advisors.”
How to Become a Financial Planner
Learning how to become a financial planner in your country is an essential step in your potential career in banking. For example, in Australia, students must earn a FASEA approved degree in finance before they can pass the FASEA exam. In the US, there are different requirements.
To become a financial planner, you first need to become a financial advisor, which requires a 4-year bachelor’s degree in accounting, finance, or business. It’s important to sign up for an internship or apply for a part-time bank job before you graduate to improve your skills.
After you earn some experience in your first job, you can apply for your state licenses and register with the Securities and Exchange Commission, even if you don’t plan on specializing.
Earning an additional Certified Financial Planner (CFP) certificate can lead to further career advancement. You must have a bachelor’s degree, 3 years of work experience, and agree to adhere to a specific code of ethics before you can receive your CFP credential.
How to Become a Financial Advisor
To become a financial advisor, you need a 4-year degree in accounting, fiance, or business. You should consider an internship while at university because you’ll receive on-the-job experience before you graduate. After you finish university, you need to pass the following FINRA exams:
- SIE Exam
- Series 6 Exam
- Series 7 Exam
- Series 63 Exam
- Series 65 Exam (for an RIA)
- Series 66 Exam (for an RIA)
Most of these exams are purely multiple choice. If you want to specialize, you’ll need a state license in your specialty (i.e., insurance, tax). After passing, you’ll apply for your first job.
At this point, you can choose to study for your Certified Financial Planner credential, but if you want to stay as an advisor, you could take your Series 65 and 66 to become an RIA. An RIA (registered investment advisor) can open up their own practice and become independent.
Is a Career in Financial Planning Right for You?
A financial planner, even if they never own their own practice, is a salesperson first and a planner second. You need to spend most of your time attracting clients and maintaining your customer base, which can be tricky considering every client has different financial needs.
To be a great financial planner, you need to be patient. You’ll need to speak to several clients on a daily basis and persevere through 5-8 years of schooling and job training. Both financial advisors and financial planners should have strong interpersonal and analytical skills.