Forty-three per cent of all financial planners are over the age of 50, according to the Financial Planning Standards Council (FPSC). As these boomers head towards retirement, jobs in financial services are increasingly opening to new graduates. Financial planning offers a variety of career paths and a desirable income. But walk into a bank and you’ll find yourself scratching your head wondering what all the titles mean; financial advisor, financial services representative, even financial planner — they all sound the same.
So, what is a financial planner?
The FPSC defines financial planning as "a process that determines how you can best meet your life goals through the proper management of your financial affairs." Investment advisors, (yet another title) arguably provide the same service — so what’s the difference?
It’s important to distinguish the roles advisors in the financial services industry play. As a rule of thumb, financial planners tend to develop and execute the plan, and other professionals give advice and sell insurance products, mutual funds, individual stocks, and other financial instruments.
“Some financial planners just sell the plan, others are also licensed to sell products too,” Tamara Smith, VP of Marketing and Consumer Affairs at FPSC, explains. Many professionals in the industry develop the financial plan, and are licensed to sell products, acting like a one-stop-shop of financial services for their clients.
Becoming a financial planner
The Canadian Securities Institute and the Financial Planning Standards Council both offer industry standard financial planning designations, the PFP and the CFP® respectively. To earn either set of letters after your name, completing recommended courses, and passing several exams is required.
Regardless of which designation you seek, both involve three years of work experience in financial services to complete the certification process. It’s possible to work strictly as a financial planner, but most positions require both planning and sales skills.
Where to start
More than half of all Certified Financial Planners work for financial institutions, with many getting their start in entry-level positions. Points of entry vary across the board, but if you choose to work in retail banking, positions include: financial service representative, personal banking officer, investment representative, and sales assistant. With securities firms, junior analyst or investment banking analyst positions are common. To launch a career in financial planning with an insurance company, look for titles like sales associate or advisor services representative.
Benefits and Challenges
With about 50 percent of financial planners with CFP® designations reporting over 100k in annual gross earnings to the FPSC in 2010, the potential for lucrative salaries is a major draw. Compensation structures vary between firms, but according to the FPSC, 41 percent of salaries are purely commission based while 30 percent benefit from a combination of salary, bonus and/or commission. “For those who excel in performance, they can expect to increase their earnings in comparison to their colleagues in other disciplines, but this can also be a challenge if your income is solely commission,” Michael Manirakiza, a personal financial advisor at Desjardins Voyageurs Credit Union Caisse, explains. Earning the big bucks isn’t a piece of cake either, especially during economic downturns. “Explaining macro and micro issues to clients, while their investments are showing negative returns can be stressful for both the planner and the client,” he adds. “But learning to manage your client’s expectations is very important for the relationship to work.”
Clients' needs tend to mirror changes in society, so not surprisingly, more in-depth knowledge from financial planners is emerging. “There is growth in niche markets. More financial planners are beginning to specialize to accommodate specific circumstances in their clients’ lives including: divorce, new immigrants, families with disabled children, and the sandwich generation,” Smith explains.
What do employers look for?
“Completing a degree is an indication of performance. It shows they can get things done,” says Chris Skerik, general manager of Imperial Service and Business Banking, at CIBC. Putting credentials and education aside, when hiring new planners Skerik screens for soft skills and personal traits to round out the ideal candidate. “I look for people who have confidence, understand the sales process, life experience (to better relate to others), an above average financial acumen, and the ability to perform.”