Home Finance what is the definition of a financial planner?

what is the definition of a financial planner?

what is the definition of a financial planner?
A Financial Planner Is A Certified And Licensed Practitioner Who Assists Companies, Businesses.

A financial planner is a certified job. The person has a license for a lot of works. He helps firms, businesses, and persons to meet their business goals. These goals consists of short and long-term financial goals of the firms. A financial planner analyzes his clients’ needs, targets, goals, sources of wealth, risk areas, personal life, and official actions. Thus, they make a custom plan for their client to help them succeed.

Financial planners have a basic job to check all the wealth sources and finance goals of their clients. They give a lot of plans to their clients, through which they will increase gains. He will cover areas linked to how, where, when, and how much to invest. They spread the risk over a few jobs. So, the firm will profit as much as they can. Thus, they have the basic role in firms.

There are a lot of fields where these planners work. They plan about retirement plans, investing plans, cash flow areas, risks, insurance, real estate, and tax. They also help the firms to decide about succession plans. If you hire a financial advisor, he can do as much work for you as you need. If you need them for a special job, they will help you out in this job. In some cases, firms need them for full planning and ask them to submit proposals about whole firm. Thus, the  services of a financial planner are not for any specific act.

Where do they work?

Financial planners mostly work in the shape of organizations and insurance companies (working as a combined unit) but some work independently as well. However, the nature of services remains the same whether they work as a combined unit or independently.

What does a financial planner do?

A financial planner must have an “authority” before they start working with clients. Even in our personal matters, we don’t trust people that have no authority. Firms needs people that have basic education, skills, expertise, and recent training. So, a financial planner must possess a license from relevant authority to second his claim. He must possess all the needed skills before starting work with private clients.

These planners work with a lot of clients and help them know the basic finance of their firm. They will guide clients about how to increase their profits and get both long and short-term profits. They act as a trustee on behalf of their clients and have legal support on their back. A financial planners must work in the best interest of their client. They must not take any gain from the assets data of the firm. Their duty is to use the data to give profits to their clients and not take any personal profit.

The clients give related financial data during an opening interview, explaining to some questions that they ask. These are related to their total yearly earnings, total debts, monthly expenditures that are not linked to their debts. Investments they are holding currently, savings accounts, taxation obligations, and their adopted insurance options. Financial planners then evaluate this provided data and formulate feasible and meaningful suggestions according to the financial circumstances and motives of their clients.

Other tasks

A financial planner usually talks on a lot of topics that are related to financial planning and control. Such as managing their debts, their savings goals, and private or family budgeting. They may also discuss their clients’ investing plans, their goals or plans related to real estate, safety measures through insurance planning, and plans related to their retirement and distribution schemes.

Financial planning importance is also in tax related areas of the business. However, they can’t file taxes for their clients. The basic aim is to aid the firm, so they had to file least tax within the legal limits. They will work on topics linked to cash flows, forecast income, employee benefits and manage debts. All of these aspects play a critical role for the success of a company. As a result, we can say that the role of financial planning is very important for a firm.

How does a financial planner work?
As Mentioned Earlier That A Financial Planner Works Closely With A Client As A Fiduciary.

How does a financial planner work?:

As mentioned earlier that a financial planner works closely with a client as a fiduciary. He must work for the benefit of a client. He can not obtain any benefit from managing a client’s investment or portfolio. An example of such a description is a registered investment adviser (RIA). They work as fiduciaries under the “investment advisers act 1940”. State securities regulators or securities exchange commission regulates these RIAs.

Most RIAs work as fee-only advisers which means they can not sell any kind of investment products that are not in favor of a client’s personal interest. They cannot work off commission either. Financial planners are not necessarily obligated to work under this model either. They work on the hourly method basis, annual fixed retainer or they make money through a percentage or ratio of investment assets that they are managing for their clients. Financial planners who are working on a commission basis mostly earn money through a commission from those corporations whose investment products are recommended by them to their clients. They also make money by opening accounts for their clients.

There is a process known as prospecting. It involves looking for potential clients and this is a vital part of a career of any financial planner. It usually includes linking with other professionals, such as Public Accountants (CPAs) or estate planning attorneys. Financial planners usually also attend and build new links at social or other charitable functions. This process of prospecting helps them exploring new markets and finding new clients as well as building relations as they need to collaborate with other related professionals.

Training and Education:

Any formal higher education is not mandatory for anyone who wishes to make a living as a financial planner. However, it is highly recommended that they hold a degree of bachelor’s level. While being a graduate in business administration (MBA) can be very helpful for someone who wishes to make a living with this profession but just to be clear, you do not need any formal degree to be a financial planner.

However, there are certain obligations related to this career. Financial planners must have licenses from the regulatory bodies in any country or state to carry out exercise related to this profession. Securities licenses usually consist of the Financial Industry Regulatory Authority (FINRA) Series 7, which examines expertise in the stocks or securities dealings as well as certain transactions related to investments such as selling, options, government securities, variable annuities, municipal bonds, and corporate securities.

A FINRA Series 66 license is also mandatory, which can be obtained after passing the North American Securities Administrators Association (NASAA) exam. Securities licenses mostly include certain requirements such as continuous education related to the field in order to keep good standing with the respective regulatory body.

Other certifications

In addition to that, some other advance level certifications may help to strengthen skills for a career in financial planning such as “certified financial planner” (CFP). The financial industry and other individual clients consider such certification as trustworthy and rank it in higher regard. A certified financial planner board gives this certificate that works as an NPO (Non-profit organization). It administers the exams for CFP and issue certificates or licenses. A certified financial planner has professional skills to offer consultancies in different areas such as financial planning, taxation, insurance, estate planning, and retirement. Financial planners are then required to take part in annual education programs from the CFP board in order to sustain their certification and skills.


Other than technical and professional skills, a financial planner must have relationship-building skills to work better with their clients. Building strong relationships with a client is very important for client retention and expanding network. As a financial planner, chances of success and growth are very higher when a financial planner has gripping knowledge about personal finance.

There are different factors that play an important part in building and executing financial plans, and a financial planner should have exquisite skills in financial topics. Moreover, a financial planner must be very good at analyzing data and convert it into meaningful interpretations. High profile financial planners tend to retain and analyze a substantial amount of data.

How much a financial planner earns?
According To Glassdoor, On Average, A Financial Planner Earns Almost 57000$ Per Year.

How much a financial planner earns?:

According to Glassdoor, on average, a financial planner earns almost 57000$ per year. However, a financial planner’s major portion of income is generated from a blend of fee-based services and commissions through selling products of various corporations. Such as annuities, mutual funds or exchange-traded funds, sale of securities, and life insurance. According to a report issued by the Bureau of Labor, the yearly income of the financial planners was ranging from $41,000 to over $200,000 (as of May 2016).

If they are working with any large firm, they will get lower commission. On the other hand, if they run their own firm, they will earn more. Thus, working alone is better for them.

Selecting a financial planner:

While choosing a financial planner, some questions must be asked to your financial planner:

  1. What is your qualification, certifications or credentials?
  2. What and how do you charge for your services? Is it fee-only or commission?
  3. What are your particular skills or areas of expertise?
  4. What kind of services can be expected from you?
  5. Are you aware of the rights and responsibilities of fiduciary and willing to act as one?
  6. How can we settle our future disputes?


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