Starting and Operating a Financial Planning Business

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Financial planners have the NAICS (North American Industry Classification System) code of 523930, which is the Investment Advice Industry. Financial planners help people manage their money and, hopefully, even make more. They use their expertise in investment strategies, securities, insurance, pension plans, real estate and taxes to develop financial plans for individuals and businesses. A planner interviews clients to determine their assets, liabilities, cash flow, insurance coverage, tax status and financial objectives. From this information they develop a financial plan tailored to each client's needs.

Financial planners, also called personal financial advisors or financial consultants, use their knowledge of investments, tax laws, and insurance to recommend financial options to individuals or businesses in accordance with their short-term and long-term goals. Some of the issues that planners address are retirement and estate planning, funding for college, and general investment options. While most planners offer advice on a wide range of topics, some specialize in areas such as retirement and estate planning or risk management. For businesses, they may set up employee benefit plans.

A planner's work begins with a consultation with the client, from whom the advisor obtains information on the client's finances and financial goals. Usually planners develop worksheets that help them cover all the information needed in an organized fashion. The planner then develops a comprehensive financial plan that identifies problem areas, makes recommendations for improvement, and selects appropriate investments compatible with the client's goals, attitude toward risk, and expectation or need for a return on the investment. Financial advisors usually meet with their clients at least once a year to update them on potential investments and to determine whether the clients have been through any life changes - such as marriage, disability, or retirement - that might affect their financial goals.

Some advisors buy and sell financial products, such as mutual funds or insurance, or refer clients to other companies for products and services - for example, the preparation of taxes or wills. A number of advisors take on the responsibility of managing the clients' investments for them.

Finding clients and building a customer base is one of the most important parts of a financial advisor's job. Referrals from satisfied clients are an important source of new business. Many advisors also contact potential clients by giving seminars or lectures or meet clients through business and social contacts.

Skills and Education Needed

Because one of the hardest parts of being a financial planner, especially at the outset, is attracting clients, it is important to realize that the job requires sales and marketing skills. Financial planners must also be very good listeners, thoughtfully absorbing information about clients' financial matters and goals. Financial planners must be organized, good with numbers and knowledgeable about a wide variety of investing and money management techniques.

There is no required education for financial planners. Obviously, a degree in economics or business is great for a field like this, but that doesn't mean a poli-sci major can't break in. Although not required for personal financial advisors to practice, certification by one of the Professional Resources can enhance one's professional standing and is strongly recommended by many financial companies.

Most professional designations, degrees or memberships indicate that the financial advisor has met educational, experience and ethical qualifications. Many organizations are continuing to expand and enhance their qualification standards for the two-fold purpose of elevating their profession and assuring the public of more qualified professional advisors.

Possession of a financial designation is not an assurance that the client will receive excellent service, but the leaders of the financial services industry all possess one or more designations. Membership in a Professional Resources likewise does not guarantee performance, but the most highly respected practitioners tend to be members of professional associations, and are frequently local or national officers.

A college education is strongly preferred for personal financial advisors. A specific field of study is not necessary for personal financial advisors, but a bachelor's degree in accounting, finance, economics, business, mathematics, or law provides good preparation for the occupation. Courses in investments, taxes, estate planning, and risk management also are helpful. Programs in financial planning are becoming more widely available in colleges and universities. However, many financial planners enter the field after working in a related occupation, such as accountant, auditor, insurance sales agent, lawyer, or securities, commodities, and financial services sales agent.

Mathematical, computer, analytical, and problem-solving skills are essential qualifications for personal financial advisors. Good communication skills also are necessary, because these workers must present complex financial concepts and strategies in easy-to-understand language to clients and other professionals. Self-confidence, maturity, and the ability to work independently are important as well.

A license is not required to work as a personal financial advisor, but advisors who sell stocks, bonds, mutual funds, insurance, or real estate may need licenses to perform these additional services. Also, if legal advice is provided, a license to practice law may be required. Financial advisors who do not provide these additional services often refer clients to those qualified to provide them.


Employment of personal financial advisors is expected to grow faster than the average for all occupations through the year 2012. The rapid expansion of self-directed retirement plans, such as 401(k) plans, is expected to continue. As the number and complexity of investments rises, more individuals will look to financial advisors to help manage their money. Financial advisors who have either the CFP (R) certification or ChFC designation are expected to have the best opportunities.

Median annual earnings of personal financial advisors were $56,680 in 2002. The middle 50 percent earned between $36,180 and $100,540. Personal financial advisors who work for financial services firms are generally paid a salary plus bonus. Advisors who work for financial-planning firms or who are self-employed either charge hourly fees for their services or charge one set fee for a comprehensive plan, based on its complexity. Advisors who manage a client's assets usually charge a percentage of those assets. A majority of advisors receive commissions for financial products they sell, in addition to charging a fee.

Introduction | Certification | Education | Books | Magazines | Professional Resources | Related Articles | Sample Business Plans | Start-up Issues


Attract and Retain the Affluent Investor
Winning tactics for financial advisors.

Best Practices for Financial Advisors
A compact handbook on excellence.

CFP (Certified Financial Planning) Exam Fast Track
Study guide covers the essential information needed to pass the CFP Certification Exam.

Deena Katz's Tools and Templates for Your Practice
For financial advisors, planners, and wealth managers.

Effort-Less Marketing for Financial Advisors
A 5-Step Process to transform your business.

Ernst & Young's Financial Planning Essentials
Practical tips and strategies, including worksheets.

Getting Started as a Financial Planner
The basics of what financial planners do.

Getting Started in Financial Consulting
A detailed road map for getting started as an independent financial consultant.

How to Become A Successful Financial Consultant
The education and experience needed.

Never Be Boring Again
Make your business presentations capture attention, inspire action, and produce results.

Practicing Financial Planning For Professionals
Comprehensive educational and reference book.

Rattiner's Financial Planner's Bible
The advisor's advisor.

So You Want to Be a Financial Planner
A step-by-step process for launching a career as a financial planner.

Virtual Office Tools for a High Margin Practice
How client-centered financial advisors can cut paperwork, overhead, and wasted hours.

The Winner's Circle
How 30 financial advisors became the best in the business.

Introduction | Certification | Education | Books | Magazines | Professional Resources | Related Articles | Sample Business Plans | Start-up Issues


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Financial Planning
Serves the field of the financial services industry.

Information on successful companies and individuals, industries, marketing, law, taxes, technology, computers, communications, investments, management performance and global business trends.

Journal of Financial Planning
A forum for the free exchange of ideas, facts and information relevant to the financial planning profession.

Kiplinger's Personal Finance
Reporting on investments, taxes, insurance, paying for college, planning for retirement, home ownership, major purchases such as cars and computers and other personal finance topics.

Smart, no-nonsense tips and strategies to make the most of your money.

A personal business magazine for investors.

The Wall Street Journal
The latest news from the business and finance world.

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