Financial planning for an individual typically involves creating a plan to help meet long-term financial goals, such as saving for retirement, investing for long-term aspirations, paying for a child’s education, contributing to philanthropy or building an emergency fund. It may also involve creating a budget to help manage day-to-day expenses and make the most of one’s income.
The process of financial planning typically involves several steps:
- Establishing the scope of work with the client
- Gathering information and setting financial goals
- Assessing the current financial situation
- Developing a plan
- Implementing the plan
- Monitoring and reviewing the plan
Given the importance of successful execution in financial planning, it makes sense for many individuals to rely on the education and expertise of a well-trained professional — a financial planner — to guide them successfully through these steps. An advanced degree in finance and financial services can equip professionals with the necessary skills to pursue jobs like financial planner, among others. Professionals engaged in comprehensive financial planning may have titles like financial advisor, investment advisor representative, wealth manager and many more.
What Is a Financial Planner?
A financial planner is a professional who works with individuals and organizations to help them plan for their financial futures. Financial planners typically have expertise in various financial areas — including taxes, investment and insurance — and can help clients develop a comprehensive financial plan to meet their specific needs and goals.
Financial planners may work with clients on a one-time basis, helping them to develop a financial plan and then moving on to other clients. Usually, they work with clients on an ongoing basis, providing continued advice and support as the client’s financial situation and goals evolve.
Financial planners may be independent professionals who work alone or in association with a financial planning firm or a financial services company. Some financial planners are also licensed to sell financial products, such as insurance or investments. In most cases, those engaged with comprehensive financial planning will work alongside other financial professionals like CPAs and estate planning attorneys.
A certified financial planner (CFP) is a professional designation awarded by the CFP Board to a financial advisor after 4,000 to 6,000 hours of apprenticeship or professional experience, extensive coursework and the passing of a rigorous exam covering all aspects of the discipline. The designation conveys expertise in financial planning, retirement planning, estate planning, taxes and insurance. CFPs may offer a comprehensive range of planning services or specialize in specific aspects such as retirement, tax or estate planning. CFPs are typically hired by clients with complex financial situations and clients with a long-term horizon who are interested in comprehensive and ongoing financial guidance.
How Does Financial Planning Differ From Financial Service Sales?
A financial planner helps individuals and organizations plan for their financial future through a holistic, collaborative process, including creating a budget, saving for retirement, planning for education expenses or investing for long-term goals.
In a financial service sales or advisor position, like a stockbroker or insurance agent, the focus is on selling financial products. This may include recommending financial products such as investments, insurance or mortgages. Compensation will largely or entirely be based on commissioned sales.
Comprehensive financial planners, however, focus on their advice, usually accompanied by a fee for service. The fee could be billed hourly or flat. The most popular is charging an annual amount based on the assets under management (typically 0.59% to 1.18%, according to an AdvisoryHQ 2021 study). Some comprehensive financial planning firms may also use commissions, but this is less often the case than charging a fee for service. Compensation to the financial planner from the firm can be in the form of salaries, bonuses, share in revenue and occasionally commissions.
Another key distinction clients should be aware of is that financial planners — especially CFPs — operate on a fiduciary standard, which means they must act in their clients’ best interests. For example, investment advisor representatives (IARs) doing comprehensive financial planning at a registered investment advisory (RIA) firm are held to a fiduciary standard. On the other hand, brokers primarily selling financial products must adhere only to a suitability standard, meaning they are just required to recommend suitable strategies that may not necessarily be the best options for their clients.
Financial planners generally take a more holistic view of client finances than financial advisers and typically have more education, certifications and experience. However, because the term “financial planner” is unregulated, some financial planners specialize in specific aspects of financial planning, including saving for retirement or a child’s education. In addition, their relationships with clients usually are ongoing and occur over a longer term than adviser-client relationships, which are typically shorter in duration.
A Curriculum That Prepares You to Become a Certified Financial Planner
The Master of Science (MS) in Finance and Financial Services – Financial Planning Track online program at William Paterson University (WP) is designed for professionals who are interested in obtaining senior-level positions in finance and financial services, aligning with industry standards and preparing for the Certified Financial Planner (CFP) exam. This program includes industry-relevant projects using WP’s Global Business & Finance Institute’s Financial Learning Center.
Core courses within the track include Investment Analysis, Taxation of Individuals, Personal Financial Planning, Insurance Analysis and Planning, Retirement Planning, Estate Planning and a Financial Planning Capstone course designed to integrate this expertise using professional planning software. Students may choose one to three elective courses in the program, which can help those who want to specialize in areas like commercial bank management, risk management and new venture finance.
If you are interested in a career as a certified financial planner (CFP), this program will equip you with the necessary skills to build a rewarding future — for you and your clients. With the appropriate certifications, graduates can also pursue roles like personal financial planner, financial analyst, investment strategist, portfolio manager or financial consultant.
Learn more about William Paterson University’s MS in Finance and Financial Services – Financial Planning Track online program.
