Because financial planning is a minimally regulated field, you are
wise to ask your employer a number of questions to understand what the
job would consist of and how you would be paid.
The two most critical components you will want to understand are what
credentials, if any, are required and how you get paid. There are
three certifications available: Certified Financial Planner, Chartered
Financial Consultant, and Personal Financial Specialist. The latter
two are used in the insurance and accounting industries, respectively.
Therefore, depending upon the type affirm you are working for, a
different certification may be required.
Financial planners can be compensated in a number of ways. You may be
paid a commission, which would come from selling investments with
loads and/or 12 B-1 fees. Alternatively, you may be paid based on a
percentage of assets under management, or you could be paid a straight
salary. Each arrangement has different potential conflicts of
interest between you and your clients that you would want to be
comfortable with. You would also want to know how the firm itself
makes money. For example, paying you on commission while collecting
fees from the customer on a flat fee basis could create a hidden
conflict of interest between you and your customers that you might not
be comfortable with.
You would want to know the scope of the financial planning you would
be expected to perform and what the characteristics of your customers
would be. Are you dealing with investments only, or would you also be
handling your clients' estate planning and insurance needs? Are you
dealing with high net worth or low net worth customers? Is debt
management likely to be an important part of your services? Each of
these areas requires specialized training and ongoing education. How
will the firm support you in acquiring the necessary skills and
keeping them up-to-date?
Does the firm have its own line of investment products or other
services, such as mortgages or home-equity loans? If it does, to what
extent are you encouraged to sell them versus other products? Are
quotas involved? How they performed relative to competing products?
Serious conflicts of interest can exist between you and your customers
if you are strong incentivized to sell inferior products.
Who is liable for investment decisions you make on behalf of the
customer? What guidelines and oversight does the firm provided to
ensure that you select suitable investments for the customers? Are
you an employee of the firm covered by the firm's malpractice
insurance, or are you an independent contractor who is responsible for
maintaining their own coverage?
How many customers and what amount of assets would you typically
handle? Are you expected to bring them in, or does the firm primarily
handle the marketing chores? Who gets the customers who just happen
to walk in the door? Is business usually conducted in the office or
in the customer's home?
Personally, I think that you will have the most success as a financial
planner if you are providing a service that you believe in and are
knowledgeable about. I have provided two links to articles about
selecting a financial planner to give you perspective on how
prospective customers are being instructed by experts to approach
obtaining financial advice. As you will read, there are many
variations on financial planning, and hopefully one or more of them
will appeal to you. Once you have identified the types of services
you would like to sell and how you would like to get paid, you will be
well on your way to identifying which firm would be the best fit for
you.
Please do not hesitate to request clarification before rating my
answer if you have any questions. Good luck in finding a great job as
a financial planner.
Sincerely,
Wonko
"Why do-it-yourselfers turn to money pros" By Jeffrey R. Kosnett,
CNBC, http://moneycentral.msn.com/content/RetirementandWills/P45791.asp
"8 things your financial planner won't tell you" By Liz Pulliam
Weston, CNBC, http://moneycentral.msn.com/content/Retirementandwills/Createaplan/P34210.asp |
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