Careers in financial planning are more in demand than ever, with baby boomers retiring and millennials entering their peak earning years. As you consider a career in this field, you’ve undoubtedly been told the timing couldn’t be better.
But is a career in financial planning a good fit for you?
At Consolidated Planning, we help financial advisors launch their practices. Over the past four decades, we’ve seen the good, the bad, and the ugly in this career. We’ve distilled our experience into a practice building playbook for new advisors. Our playbook focuses on the fundamentals we know will drive results long term as an advisor builds a comprehensive, planning-oriented practice. And it works well. The average advisor using this playbook helps 125 families while earning over $250,000 annually by their fifth year.
In this article, we’ll share the top 3 advantages and disadvantages of a career in financial planning. By the end, you’ll be well equipped to decide whether a career in financial planning is right for you.
Top 3 Advantages To A Career In Financial Planning
There are dozens of advantages to this career path, but three rise to the top for their presence in all successful advisory practices.
Pro #1: Opportunity To Make A Meaningful Difference In People’s Lives
Finances are consistently ranked as the number one source of stress in people’s lives, with 73% of people reporting financial stress. High levels of financial stress can even impact physical health and well-being. As a financial advisor, you can positively impact their clients’ lives and reduce stress by providing quality financial advice and guidance.
At Consolidated Planning, our advisors work with clients to organize, protect, and focus their dollars toward their highest and best use based on the client’s needs, wants, and goals. We have found clients have clear priorities:
1. “Being happy” is far and away the top priority.
2. Having enough money to enjoy life.
3. Staying fit and healthy.
4. Retiring with a secure and adequate income.
These priorities are not age or income specific but rooted in the sense of emotional security. Our planning process creates a framework for clients to accomplish these priorities. As an advisor, you have a front row seat to watching their client’s dreams unfold throughout their relationship.
The sense of personal satisfaction provided by this career is something money can’t buy.
Pro #2: Unlimited Income Potential
You may not be able to buy personal satisfaction with cold hard cash, but for everything else, this career offers unlimited income potential. At the end of the day, we all work to earn a living. As a financial advisor, your hard work and success directly translate into more money in your pocket.
Financial advisors earn a percentage of the revenue they create through fees and commissions. In many cases, this revenue is recurring and continues to grow yearly. The longer an advisor is in business, the more substantial this recurring revenue becomes.
At Consolidated Planning, the average inexperienced financial advisor earns $250,000 annually by their fifth year with our firm. Experienced advisors joining our firm typically earn between $250,000 and $500,000 annually by their fifth year (or triple their income over five years). In this business, activity drives revenue and Consolidated Planning’s advisor resources create efficiency and scale to grow rapidly.
Pro #3: Freedom and Flexibility
Freedom and flexibility of time and schedule are often touted as the top advantages of this career. As a financial advisor, you control your schedule, client base, service model, and practice specialty. However, it may not always feel that way when you first start.
On day one, you have all of this control, but also have clients to help, goals to hit, and revenue to produce. Sometimes that pressure can cause advisors to feel out of control. At Consolidated Planning, we hold monthly meetings to help advisors work on their personal business, not just in it. This intentionality restores the balance of control to the advisor and increases confidence.
As your practice matures and your client base grows, you will experience an increase in freedom and flexibility. You may establish a “lifestyle practice” built around your wants and needs, or you may choose to build a team to support your practice growth. In either case, like so many things in this business, the choice is entirely up to you.
Top 3 Disadvantages To A Career In Financial Planning
We think this career is an awesome choice, but it isn’t all rainbows and unicorns. Let’s dive into the negative side of this career so you can weigh the pros and cons for yourself.
Con #1: High Stress
Financial advisors “eat what they kill,” meaning they are responsible for finding their own clients and closing business to generate revenue. This means the advisor is rewarded for their success, but it can also create significant stress when times are tough. This pressure is especially prevalent in the early stages of building your practice when you don’t have a large client base to support you.
As an advisor, you’ll have hard conversations with clients about their spending and savings. You’ll guide them through personal tragedies and down markets. You’ll make recommendations directly impacting your client’s current and future goals. The importance of your work is a heavy load to carry.
Some advisors thrive under this pressure, and others crumble. At Consolidated Planning, we provide support services to our advisors to reduce the burden of this stress, but we are not able to completely eliminate it.
Con #2: Hard Work To Build Client Base
Everyone (and I mean EVERYONE) can benefit from working with a financial advisor. Heck, even Warren Buffett has a financial advisor. Since literally everyone can benefit from working with an advisor, building a client base should be easy, right?
Building a book of business from scratch is hard work. Period. End of story.
Launching a practice and onboarding clients requires you to get outside of your comfort zone. You will face rejection. Prospects will ghost you. Things won’t go according to plan no matter how perfect the plan was. It happens to everyone.
Persistence and determination are the keys to building your practice. Consolidated Planning has a playbook for building a practice that works well, but this playbook recognizes the challenges to gaining clients. You’ll start more than 160 conversations with prospects in your first year to close the 30 planning clients you need to be on track for success.
It’s not easy, but it’s entirely possible. We’ve seen it happen again and again. If you put in the work, you will see the results.
Con #3: Regulatory and Compliance Requirements
The financial services industry is heavily regulated. As a financial advisor, you’ll be responsible for keeping up with these regulations. One of the primary ways you’ll accomplish this is with ongoing continuing education requirements – around 24 hours per year.
In addition to continuing education, you’ll also need to stay on top of your firm’s compliance procedures to ensure you are operating your practice appropriately. Any checks received from clients need to be recorded and promptly deposited. Marketing materials must be reviewed by a compliance officer for approval before they are distributed. Correspondence with clients must be archived.
The regulatory burdens and compliance requirements aren’t unmanageable, but they can be a hassle if you fall behind.
Is a Career In Financial Planning Right For Me?
When you started reading this article, you were interested in this career and wanted to learn more to see if it was a good fit for you. Being a financial advisor sounded cool, but you wondered if the reality would live up to your expectations.
You learned how financial advisors do meaningful work with unlimited income potential and high levels of freedom and flexibility. You also learned about the high stress, challenges of building a client base, and the heavy regulatory burden of this career.
Now the ball is in your court. If the stress and challenges of this career don’t outweigh the potential benefits, then this isn’t the career for you. And that’s okay.
If you are excited by the opportunity to impact lives and take control of your career despite the challenges, reach out to our recruiting team today to discuss how Consolidated Planning can help you launch your career as a financial advisor.
2022-145205 Expires 10/2024
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