Finance Recruit: Careers in Banking Financial Planner / Investment Advisor (from CMC’s “Careers in Business” Guide) Financial Planning and Investing The terms “Financial Planner” and “Financial Advisor” will be used interchangeably, although the meaning of these titles can vary somewhat from one financial services setting to another. Financial Planners work with clients to plan and achieve certain financial goals. Financial Planners offer a variety of services such as analyzing client assets, liabilities and cash flow, current insurance coverage, investments, or tax strategies. After recommendations have been set by the planner they will either follow through or coordinate the process between the client and other professionals like attorneys. Depending how long the relationship lasts, Financial Planners usually meet with clients yearly or after any life changes like marriage, disability, or retirement. Much of a personal financial advisor’s time is taken up by marketing, as it is very important to build a strong client base by word of mouth referrals. Planners have to make sales calls, and some even give seminars or lectures to potential clients to market their services and expertise. Financial Advisors can either work for financial services firms or independently. They can also specialize in a number of areas such as retirement and estate planning or risk management. To work as a Financial Advisor, a bachelor’s degree in accounting, finance, economics, business, mathematics, or law is recommended. In Canada, Financial Planners also need certain credentials such as the Canadian Securities Course (CSC) and Personal Financial Planner (PFP), which are administered through the Canadian Securities Institute. Another useful credential is the Certified Financial Planner (CFP), which is administered by the Certified Financial Planner Board of Standards, and requires a bachelor’s degree, three years of relevant experience, passing an examination, and adherence to the organization’s code of ethics. There are also Investment Advisors, who advise clients about which individual securities to invest in. They earn their fees on a commission basis: for every purchase or sale they make, the brokerage house with which they work charges a fee and pays them part of that fee. Given that Investment Advisors work on commission, people sometimes fear that they put "making the sale" above the client's best interest (of course, if they "churn" clients' accounts - that is, make trades for no good reason - they are in violation of provincial securities regulations and are operating against their long-term interests since they depend on referrals for new business). Given that Financial Planners and Investment Advisors are in a position to either help or hurt clients dramatically, and they labour against the suspicion that they may really be serving their own interests first, they need exceptionally good interpersonal skills. Gaining clients' trust is critical for retaining them as customers and obtaining new referrals from them. Because their clients are not highly skilled investors with whom institutional securities salespeople interact, it is particularly important that Financial Planners and Investment Advisors know how to communicate information well. Also, given that clients can sometimes become very emotional when it comes to their own money, Financial Planners and Investment Advisors must be able to navigate their relationships with customers in a sensitive and diplomatic manner. Finance Recruit: Careers in Banking Financial Planner / Investment Advisor (from CareerLeader) Careers in financial planning and stock brokerage cover a wide range of activities. Professionals in these arenas include: retail stock brokers who sell stocks, bonds, and other investment instruments to individual clients independent financial planners who help clients decide how much life insurance they should have, what kinds of mutual funds they should invest in, how much they should save for retirement and their children's education, etc. personal investment managers who make investment decisions on behalf of clients whose funds they manage (including trust-fund accounts) private bankers, or private client-services providers Financial planning and stock brokerage differ in: the training and legal licensing they require the breadth and depth of their responsibilities their compensation methods However, they share a focus on managing the finances of individual clients. This focus contrasts with that of investment fund managers, who make investment decisions for entire groups of people (such as investors in a mutual fund, or employees who have retirement funds). As such, financial planning and stock brokerage are professional service businesses, like medicine or law. Financial planners help clients make decisions about long-term financial issues. They typically charge an hourly or flat fee -- though some who offer advice regarding mutual funds charge a percentage of the assets a client has invested. Stock brokers advise clients about which individual stocks and bonds to invest in. They earn their fees on a commission basis. For every purchase or sale they make, the brokerage house they work with charges a fee and pays them part of that fee. Because brokers work on commission, people sometimes fear that they put "the sale" above their clients' best interest. Of course, if brokers "churn" client accounts -- that is, make trades for no good reason other than to earn commissions -- they violate Securities and Exchange Commission regulations. They also operate against their own long-term interests, since they depend on referrals for new business. Personal investment managers are compensated based on the amount of money they manage (their "assets under management"). As a result, they have no reason to make trades that might not be in their clients' best interest. On the other hand, since they earn a percentage of client assets regardless of how well they manage those investments, some clients worry that there's no incentive for these managers to work as hard as they can. Financial planners and stock brokers need extraordinary interpersonal skills for several reasons: They're in a position to help or hurt clients dramatically. Their clients are always suspicious that they may be serving their own interests first. Their clients aren't highly skilled investors, and may become very emotional when making decisions about their own money. Finance Recruit: Careers in Banking Therefore, to keep existing customers and get new referrals from them, professionals in this field have to win their clients' trust. They can do so by communicating complex information clearly to clients, and by using sensitivity and diplomacy in navigating their relationships with customers. INTERESTS The key factor for a career in Financial Planning and Stock Brokerage is a high interest in Quantitative Analysis (compared to other Business Core Interests). Most satisfied, successful business professionals working in this career hold this as a very strong interest. If your interest is relatively weak, this is likely to present a problem. One of the reasons these professionals chose this career -- and are successful and satisfied in it -- is precisely because it matches their interests. Financial planners and stockbrokers will also have an interest in Influencing Others. In working with individual investors, these professionals have to constantly focus on building and maintaining relationships with their clients. In some careers, becoming a "rainmaker" and bringing in new clients is the key to success at more senior levels (for example, management consulting and law). But, to succeed in a career in Financial Planning and Stock Brokerage, you have to be a rainmaker from the beginning. If this is a strong interest, this is a part of the career you will enjoy. If it is not, you have to be willing to do it anyway. People who underestimate the importance of "sales" in this career, or who are simply not willing to accept that it is a critically important part of their job, will not succeed. Enterprise Control will be an interest for some people in this career -- specifically, people who are drawn to it out of a sense that as financial planners and stock brokers, they are essentially entrepreneurs running their own businesses. Finally, Coaching and Mentoring is a strong interest for some. In their role as trusted advisors, these professionals learn a great deal about their clients' lives, concerns, ambitions, dreams, and fears, and tailor their recommendations to each clients' unique needs. MOTIVATORS The ways people are rewarded in this, or any other career, can vary greatly from company to company, group (within the organization) to group, even manager to manager. Like what is required of you, the rewards you are likely to get early in your career are likely to be different in your mid- or later career years (and not only in pure compensation). In addition, how people define rewards differs - and sometimes dramatically, from person to person. One person's "exceptional financial reward" (Financial Gain) may make another cringe, and turn away. One person's good Lifestyle means no travel, no weekends, and no evenings. While another's good Lifestyle means no travel on weekends, home by 10:00, and weekend work mostly being done from home. These are the rewards that are, by most people's definition, generally found in this career. But, remember to take into account how you define each of the motivators CareerLeader