Table of Contents Hide
- What Is A Financial Planner?
- How Much Does A Financial Planner Make?
- When And Why Do People Need A Financial Planner?
- How To Get A Financial Planner?
All kinds of questions pop in our heads all day, whether they are about our lifestyle, needs, future, or money. And we are always looking for some instant answers for those questions, without worrying about them being true or false. The same is the case with someone facing financial dilemmas, be it increasing their money, or managing it. People are constantly looking for someone to guide them through ways that fulfill their financial needs. Some consult their friends for guidance, while others think they are capable enough to organize and plan their finances themselves. Whereas the right way for that is to hire a professional financial planner. And you would be surprised to know how common they are when you learn about how much does a financial planner makes annually.
But before we let you in on how much does a financial planner makes in a year, let’s go over what is a financial planner and their roles and responsibilities.
What Is A Financial Planner?
A financial planner is someone who provides a full plan and a set of financial guidelines for your money by taking into account, your needs and future goals. Financial planners help companies, and organizations, as well as individuals, go through their financial uncertainties. Financial planners shape future financial goals for their clients and carry out a pathway to help them reach those goals.
For example, they advise people about how to utilize the money in a way that can pay off their debts, and expand their resources by investments. Just like doctors and psychologists help people with their biological and psychological issues and solve their problems by advising the right strategies and planning. How much does a financial planner make annually depends on the same practice and principle of listening to people’s financial problems and help them out with the right planning and guidance?
Understanding The Link Between Financial Advisors And Financial Planners
A financial advisor is a broader term that encompasses someone who not only plans and guides other individuals and organizations but also educates them about each aspect of their financial dealings on longer terms. A financial advisor has much more to do than just look into your finances and make a plan for your future. They are responsible for every financial matter of their clients such as taxes, rents, buying and selling estate and property, debts, insurances, and bank accounts.
Financial advisors use multiple tools to understand the full financial profile of a person or a company. Financial planners are one of the many types of financial advisors. How much does a financial planner makes depends on planning the monetary resources of their clients, while the financial advisor’s job is to assist people in every aspect of their finances. Before we head to how much does a financial planner makes, let’s first look at the differences between a financial consultant and a financial advisor.
Financial Consultant Vs Financial Advisor
Strictly speaking, there is not much difference between these two terms, both offer their services to assist people regarding their financial milestones and goals. But some experts believe that the way financial advisors and financial consultants handle financial matters varies to some extent.
One of the prominent differences has been seen in the timeline of both professionals. Consultants, just like the financial planners, work for a short period with any client and offer their services during that time only. Financial advisors, on the other hand, are hired for the long term, they stay with the same clients for months and even years and continue to guide clients. Keep in mind that the financial consultants might vary in time but they have the same responsibilities as a financial advisor rather than a financial planner.
Let’s quickly go over the roles and responsibilities of a financial planner before we come to answering what you are eager to know, “how much does a financial planner make?”.
What Does A Planner Do?
How much does a financial planner makes is directly proportional to how good and credible his/her services are. Certain steps and milestones need to be completed successfully for the financial planning of their clients. A financial planner:
- Learns about the financial background of the client and assess its present status.
- Carry out meetings with the clients to understand the future goals and financial requirements.
- Break down goals into smaller chunks to help carry out plans to manage the client’s financials.
- Approach the clients with the possibilities and financial opportunities such as investments and other strategies to pay off their debts.
- Inform their clients about the merits and demerits of each financial solution so that they can make an informed decision about their finances.
- Carrying out the selected plan and then reviewing that plan to enhance the results.
How Much Does A Financial Planner Make?
As we all know by now what financial planners do but a lot of people still wonder how much does a financial planner makes? In the US, the scope of this field is pretty vast and the employment rate for financial planners has increased more than 10% in the last few years. Financial planners and financial advisors are considered one of the top five highest-rated jobs in the US. How much does a financial planner make is mostly based on their qualification, skills, and experiences.
Financial Planner Skills And Education
If you are wondering how much does a financial planner makes, it is also based on the skills and the education of the financial planner. There are specific skills and abilities that one person needs to have to become a financial planner.
- Education: A financial planner must have a bachelor’s degree in business, finance, economics, mathematics, or any other finance-related field of study. Some universities in the US even offer degrees specialized for becoming a financial planner and a financial advisor.
- Training: after getting the degree, the candidates have to gain some experience in the field by getting some business or finance training. Typically most students aspiring to be financial advisors and planners enroll themselves in year-long internships with different firms. Those firms and internship programs give them enough experience to start working in their career.
- Certifications And License: Getting the financial planner license takes a lot of time for some of the individuals, whereas it may take a short time. The certifications and the license have their respective exams that may take up to three years for the planners to pass. They can not start working officially unless they have a state-granted license which they get after passing a series of exams. And the certifications also require years of experience with the exams and an agreement of the code of ethics.
- Higher Degree: Some companies do not hire financial planners that have only a bachelor’s degree no matter how experienced that might be. This is why many financial advisors and planners aim to get a master’s degree in finance as well. The master’s degree boosts their reputation and the average figure of how much does a financial planner makes increases multifold for them.
- Skills: The financial planners must have a strong grip on analytical as well as communicative skills. They need to analyze the situation and the desires of their clients to carry out a workable plan in the future. Strong communication with the client is the foremost ability that makes a financial planner more credible and reputable. Along with these two abilities, a financial planner must be robust in decision-making. Because the clients act on the decisions made by the planners and they are risking their resources. A high level of perceptual and intellectual reasoning is required for planners to design a profitable plan for their clients. How much does a financial planner make can be reflected in his/her organizational abilities? The way the financial advisors comprehend and process financial information are also crucial.
Financial Planner Salary
The average salary of a financial planner in the US is around $85,000, depending on the abilities of the financial planner. With companies in the 21st century hiring more and more financial advisors every year, the figure of how much does a financial planner makes has been increasing as well. The lowest starting salary for an NYC financial planner is around $27,000, whereas the highest can go up to $150,000.
The salary for a financial planner also varies across locations. The higher the demand for a financial planner, the more salary a company is offering to pay. For example, financial planner Denver’s salary would be lower than a financial planner Chicago’s salary or a financial planner San Deigo’s compensation.
Some financial planners are fee-based financial planners. They work independently of any organization and charge a fee for the services they provide.
When And Why Do People Need A Financial Planner?
The simple answer as to why you need financial planning services depends on the complexity and the knowledge of your financial resources. The more complicated your monetary matters get, the likely it is for you to need a financial advisor or a planner.
Here are a few scenarios that will help you understand when and why you should hire a financial planner.
You Have No Idea About Your Financial Status
For people who have no idea how much they own because the money is scattered in different bank accounts and they own a lot of property in different areas. Such people are unable to comprehend the actual amount of their assets and what to do with them. For those, it is the right time and the right reason to get a financial planner as soon as possible. A financial planner will help them figure out their resources and plan an investment program that can be profitable for them.
Your Money Is Disorganized
The young investors who are earning a lot but might not have the slightest idea about what to do with that money need a financial planner. Such individuals often fall into scams as their resources are disorganized and scattered. They can get help from a financial planner for saving and paying off loans, using a discrete plan of action.
You Have Tax Conflicts And Financial Issues
If you are earning a handsome amount of money but are facing some tax issues due to your lack of financial knowledge, getting a financial planner is the best answer for you. They have a huge knowledge about subjects related to economics, tax, and business. So they can plan out investment programs and financial milestones for you that comply with the state tax regulations.
You Are Going To Make A Life-Altering Decision
For those of you who are thinking about totally quitting a job or a business that you own for decades, you should consult a financial planner. They show you the pros and cons of each decision you are about to make and offer some better options instead. They also give you advice on each step of your life regarding your resources and financial matters. So instead of just making a big decision about your financial resources without weighing any risks, you should hire a financial planner or an advisor. They help make your dreams come true with the right guidance.
How To Get A Financial Planner?
You can either hire a financial planner directly or you can get one through one of these sources:
- Insurance Companies: insurance companies offer much more than just giving out insurance to their clients. You can contact your insurance company to avail the services of a financial planner, be it a divorce financial planner or a real estate one. Typically they have financial planners for people with real estate and retirement issues. Those planners can be hired on the behalf of the insurance firm.
- Banks: Banks are the hub for financial dealings, so you may get a financial planner from there. They have highly trained and experienced finance professionals which include advisors, consultants, and planners. With the bank financial planners, there is a huge guarantee that you’re your financial assets will be well taken care of. With their affiliations to the banks, they also have the advantage of getting your tasks done quicker than self-employed financial planners. However, how much does a financial planner makes has not much to do with where you hire them from.
- Self-Employed: In the US a large number of financial planners work independently of any organization or company. They have their businesses and firms where they provide their services. Their rates may even vary from the rates of the planners that have different associations. They have different specializations and most of them are capable of handling matters of versatile niches. The financial planners in big cities like Denver, Chicago, NYC, and Texas work independently and make the most of their money by working as full-time financial planners and advisors for big companies. Some of the most reputable financial planners in the US have their own independent firms and are self-employed.