Preparing Yourself for a Career as a Financial Planner

The path to becoming a financial planner begins with genuine interest in a career providing financial advice to others. But your progress toward that goal is largely influenced by how prepared you are in three key areas: financial acumen, communication skill, and your own financial situation. You may need to spend considerable time, potentially years, on one or more of these items before you can launch a financial planning career, and that’s okay.

For most, this journey begins with an honest, self-assessment of career readiness. What do you lack? Can it be corrected? And how would you do that? From there, you can build a plan to get you ready enough to advise clients. You don’t have to know everything up front because you will continue to develop throughout your career, but you need to get to the point of being functionally ready.

Functional Readiness

Since you’ll develop skills, refine your ideas, and advance your knowledge throughout your entire career, the goal to focus on is achieving the minimum level of functional readiness. That’s the threshold you cross once you have a solid enough of a foundation to build on after you begin to see clients. It’s the point where you know there’s still more to do or learn, but you possess enough to provide valuable advice to others and self-sustain your ability to improve as you go.

Financial Acumen

Trading financial advice for payment requires a certain degree of personal finance acumen. This is your ability to clearly understand financial data, assess needs, and develop solutions. Without that, your advice lacks the value necessary so clients will pay you for it. Your analytic abilities become more efficient with practice, but you must possess enough to be valuable before you are ready to work with clients.

Education is often the gateway to gaining financial acumen. It’s not enough to possess the knowledge; you must be able to correctly apply it. Educational programs that prepare students to sit for the CFP® exam are one of the best ways to develop the minimum acumen necessary to become a financial planner. However, it is highly beneficial to augment course work with study groups and interaction with others who already possess such acumen.

Depending on your existing amount of knowledge and experience, it may take a couple of years learning before you are ready to practice. You’ll need to meet an experience requirement to complete CFP® certification, but many planners actually gain some or all of that experience as private practitioners.

Interpersonal Communications Skills

Some people seem to be naturally good communicators, while others have to work hard at it. But the ability to satisfactorily communicate across the financial planning process is essential for a beginning practitioner. You needn’t be an expert communicator right out of the gate, but you may require a greater degree of interpersonal communication skill than you currently possess or might otherwise need.

Interpersonal communication is not just about your technical language skills. It’s at least as much about your ability to recognize, respond, and adapt to the communication styles and skill levels of your clients, even if they’re not what you know to be technically correct. If you don’t think you have the necessary skills, learn them before you take on your first client. If think you do, find a way to confirm it. A communication failure concerning someone else’s money has the potential to result in a very short financial planning career.

Self-assessing interpersonal communication skills may not be as fruitful as candid feedback from coaches, instructors, and even friends and family. Here again, education is a great place to get you to the minimum that’s reasonably necessary level to engage clients in elements of the financial planning process. Your ability to effectively communicate improves with self-awareness, knowledge, and practice.

Your Own Money

Having your own financial affairs in order not only helps you, it helps your clients too. Getting and keeping your finances in good health provides important perspective, and if you plan to be in private practice, it’s absolutely essential. I’ve seen too many skilled planners, loaded with potential, fail to launch their own practice because they were under capitalized to ignore this topic. They may have been on track, profitable and growing, progressing toward a successful career, but they just ran out of money.

It’s not just about being profitable. You’ll need to carry yourself while your profits close the gap between just making a profit and making enough of one to live comfortably. It’s like failing an exam because you ran out of time, not because you didn’t know the answers. But the hardest part may be estimating the size of such a gap and planning enough of a buffer. Being able to do so with enough confidence to proceed is part of having the financial acumen needed for a successful planning career.

Organizing your own household finances and building up the necessary resources could take several years and may be the final hurdle to clear. If you were your own client and would advise against starting your own financial planning practice, you’re not yet ready.

One Last Thing

You can develop financial acumen, expand your communication skills, and save up enough money to open your own practice. These are all achievable with effort and patience. But you are planning to operate your own practice, you’ll also need to be reasonably sure that you (and possibly others at in your life) possess the will and the nerve to do this. Not everyone is cut out for self-employment, and it’s not an easy road. While there’s plenty of support and resources available through as networks and associations for planners like you, a fair degree of self-reliance is inevitable. Make sure you’re comfortable with that too.

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