Author Topic: Career change into financial planning (CFP advice?)  (Read 678 times)

teltic

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Career change into financial planning (CFP advice?)
« on: July 08, 2019, 10:44:30 AM »
Hello everyone!

I've been a complainypants for the last 3 years of my career in corporate finance.  I thought I could survive till FIRE (3 years for leanFI, 8 years for fatFI/wife n kids FI), but realistically I don't think I truly want to RE... I just switched companies and boosted my salary for $65k to $101k.  I should be happy right?  Sadly, I am not.

With the realization that retiring early (well, retiring at 31) may not be in my blood... I want to be a personal financial planner.  This will delay FI, but will hopefully increase my overall happiness (that’s the overall goal, right?).

How hard is it to break into financial planning?  Any CFPs out there? ChFC?  CFPs appear to be king, but I noticed getting a ChFC will count as the education portion to sit for the CFP.  My company will pay for my school starting in Oct ($5k per calendar year after 6 months in as a employee).

How big of a paycut should I expect? Does my 5 years of financial analyst experience mean anything?  Masters in Finance? Hurts to “throw away” that experience and start from scratch…

Can/should I become a financial planner before taking the time to get CFP/ChFC?

Thank you in advance! 😊 Cheers

Candace

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Re: Career change into financial planning (CFP advice?)
« Reply #1 on: July 08, 2019, 11:53:52 AM »
See https://www.napfa.org/ .

It probably varies by state. In Virginia, you don't have to be a CFP. You do have to pass a Series 65 exam to become registered, and a Registered Investment Advisor firm has to sign on to your application to be registered.

Series 65 is known as the Uniform Investment Adviser Law exam. It's a much lower bar than a CFP.

See https://www.investopedia.com/terms/s/series65.asp

If you don't know this stuff already, I would suggest doing some research into what being a financial planner entails before taking the plunge. Just hanging a shingle and accepting payment before making sure your firm meets compliance rules could run you into trouble.

mozar

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Re: Career change into financial planning (CFP advice?)
« Reply #2 on: July 09, 2019, 08:47:58 AM »
How good are you in sales and marketing?

teltic

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Re: Career change into financial planning (CFP advice?)
« Reply #3 on: July 09, 2019, 09:34:14 AM »
In Utah I believe I just need a 65 as well... I was thinking of getting a CFP just for the designation to make me more marketable?  But maybe a masters in finance is enough?

How good are you in sales and marketing?

I don't know, honestly.  I've always swayed away from this field, because of the sales side of it.... I'm to the point that I'm so burned out of corporate finance, I just need something new. The company I work for have financial planners.  I'm almost 100% certain they are salaried... So even if I suck at sales, it won't affect my salary?

Huskie87

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Re: Career change into financial planning (CFP advice?)
« Reply #4 on: July 09, 2019, 10:15:22 AM »
10 years in the industry.  Get your CFP and try to get experience working with financial planning software.  Best way to learn is to build your own in excel, so you can start to understand the interplay between spending/returns/taxes/withdrawal strategies.

teltic

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Re: Career change into financial planning (CFP advice?)
« Reply #5 on: July 09, 2019, 01:39:19 PM »
10 years in the industry.  Get your CFP and try to get experience working with financial planning software.  Best way to learn is to build your own in excel, so you can start to understand the interplay between spending/returns/taxes/withdrawal strategies.

Any suggestions on prep classes for CFP?  I can see my local school (University of Utah) has a 6 course "professional certificate of Financial Planning" that preps you for the CFP (and counts as the education requirement to take the test?).  $4200.  My company would pay it all. I know the ChFC is $5200, and counts towards CFP education requirements.

How much salesman/marketing is involved in this career? 

Huskie87

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Re: Career change into financial planning (CFP advice?)
« Reply #6 on: July 10, 2019, 08:34:09 AM »
Can't help you on the programs.  I've got my CFA which allows me to skip straight to the test, so I'm not the right person to ask about the studying.  Don't bother with any designation but the CFP.  I bet if you polled 100 financial advisors maybe 2 would know what ChFC is and no client will.  There's tons of designations and if it's not CFA/CFP/CPA it's generally regarded as inferior.

98% of financial advisors are salesmen.  They work for Ameriprise, Edward Jones, Mass Mutual, Morgan Stanley, JPMorgan or a bank.  If you go to work there they'll want you to have strong local connections and a good prospect list of friends and family.  You'll get training on how to sell, some marketing materials on how to pitch proprietary products and services and you'll generally walk/talk/sound like a real advisor.  These people live in the front curve of dunning-kruger.

If you are actually interested in giving good advice, you have to understand that good financial planning is too complex for any one individual.  Good financial planning is done by a team of experts in various fields (investing/tax/insurance/financial planning/estate).  As you'll gain experience you'll come to understand the complexities in each field and why each client needs unique financial advice and how every field is integrated.  A decision as simple as someone taking a pension vs. lump sum distribution requires an in-depth analysis of spending/income sources/asset location breakdown/family longevity and health/end of life goals/charitable inclination/risk tolerance and more.  Give me 10 65 year old couples with the same decision and you're going to get very different rationales behind why one option is appropriate for them vs. the alternative.

Right now the team approach is mostly adopted by independent RIAs that are fiduciaries.  Just a quick search for 'utah independent fiduciary RIA' give lots of results, skimming through I'd be interested in learning more about Trajan Wealth, Soltis, Stonecreek wealth advisors, arbor wealth management.  To name a few.  These firms are likely going to have both 'advisors' and 'financial planners', because sales/relationship management and financial planning are two very different careers that require very different personalities/skillsets.  If you're interested in financial planning, I'd talk to them now, talk about your interest in a career path, and ask them what you could do to make yourself attractive to them over the next two years.  CFP is going to be the first thing out of their mouth and maybe they'll be interested in bringing you on quickly to train you the right way.

catccc

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Re: Career change into financial planning (CFP advice?)
« Reply #7 on: July 10, 2019, 09:14:18 AM »
98% of financial advisors are salesmen.  They work for Ameriprise, Edward Jones, Mass Mutual, Morgan Stanley, JPMorgan or a bank.  If you go to work there they'll want you to have strong local connections and a good prospect list of friends and family.  You'll get training on how to sell, some marketing materials on how to pitch proprietary products and services and you'll generally walk/talk/sound like a real advisor.  These people live in the front curve of dunning-kruger.

This.  If you think you want to be a CFP because you are into the idea of FIRE or tax optimization or your own personal finances, please do consider that most financial planning jobs are sales.  Not all, but a great majority.  IDK about you, but given the PF knowledge I personally have, I'd have a hard time selling costly insurance products or convincing people that I should get 1% of their assets under management.  My conscience just wouldn't allow it.

reeshau

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Re: Career change into financial planning (CFP advice?)
« Reply #8 on: July 10, 2019, 09:24:26 AM »
I have a similar interest in CFP, as a post-FIRE job.  I have not acted on the idea much, other than thinking and some research.  But, to the points about so many advisors being salespeople, and @Huskie87 's point about researching local firms, I would look at both the Garrett Planning Network and XY Planning Network for prospects.  While they don't necessarily avoid selling, at the core they are both fee-only planning.  I did see that TD Ameritrade had paid CFP training as one of their perks, but I agree with @catccc ; I think I would just be the worst failure in their program, because I would not sell anything except low-cost index funds.

Huskie87

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Re: Career change into financial planning (CFP advice?)
« Reply #9 on: July 10, 2019, 09:57:32 AM »

[/quote]

This.  If you think you want to be a CFP because you are into the idea of FIRE or tax optimization or your own personal finances, please do consider that most financial planning jobs are sales.  Not all, but a great majority.  IDK about you, but given the PF knowledge I personally have, I'd have a hard time selling costly insurance products or convincing people that I should get 1% of their assets under management.  My conscience just wouldn't allow it.
[/quote]

Generally what I'll tell a client is that they can do all this themselves, it's not overly difficult.  If they're hiring me it's because they don't have the time, expertise or desire to do it themselves.  Usually, for prospects under 50, we educate and send them out the door, telling them it's not worth it to hire us yet.  However, if someone in their 50's 60's or 70's lacks in one of those three areas, they often gain far more than 1% in value.

The average client coming in with a 401k plan/IRA and other assets will have 50 basis points of internal mutual fund/etf expenses.  We can cut that in half easy, 25bps saved.
Proper asset location can add 10-30bps of annual tax deferred growth.
Proper rebalancing strategies can add 10-20bps of annual growth over time.
Tax loss harvesting, charitable stacking, roth conversions in low-income years can save tens of thousands in tax for someone in their 60s, allowing for significant compound growth over retirement.
Pension decisions (discussed above)
Navigating the world of long-term care carries significant potholes that can be very expensive if you choose wrong.

Just a few examples.  I think a good advisory firm can justify their fee, even before we talk about the three major value-adds of a complete financial plan that can give you confidence in your retirement decision/spending plan, partner with you throughout retirement to prevent poor decision making as you age, and offer a sound investment strategy.

I'll concede that most advisors are not doing these things, and are not worth their 1% fee.  And obviously, a DIY approach for someone that has the time/interest changes the value proposition.

Huskie87

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Re: Career change into financial planning (CFP advice?)
« Reply #10 on: July 10, 2019, 10:04:41 AM »
I have a similar interest in CFP, as a post-FIRE job.  I have not acted on the idea much, other than thinking and some research.  But, to the points about so many advisors being salespeople, and @Huskie87 's point about researching local firms, I would look at both the Garrett Planning Network and XY Planning Network for prospects.  While they don't necessarily avoid selling, at the core they are both fee-only planning.  I did see that TD Ameritrade had paid CFP training as one of their perks, but I agree with @catccc ; I think I would just be the worst failure in their program, because I would not sell anything except low-cost index funds.

XY Planning Network is good.  Garrett is a pay-to-play operation so you're getting people who are paying to be members.  Obviously that means the advice is biased, and good firms that aren't paying a membership fee aren't going to show up.  Not the worst way to search, but the google search I used is going to provide better options.

Edit - looks like XY is pay to play too.  I only know their rep from the recruiting they do, never looked at their advisor search platform.
« Last Edit: July 10, 2019, 10:13:31 AM by Huskie87 »

reeshau

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Re: Career change into financial planning (CFP advice?)
« Reply #11 on: July 10, 2019, 12:13:18 PM »
I have a similar interest in CFP, as a post-FIRE job.  I have not acted on the idea much, other than thinking and some research.  But, to the points about so many advisors being salespeople, and @Huskie87 's point about researching local firms, I would look at both the Garrett Planning Network and XY Planning Network for prospects.  While they don't necessarily avoid selling, at the core they are both fee-only planning.  I did see that TD Ameritrade had paid CFP training as one of their perks, but I agree with @catccc ; I think I would just be the worst failure in their program, because I would not sell anything except low-cost index funds.

XY Planning Network is good.  Garrett is a pay-to-play operation so you're getting people who are paying to be members.  Obviously that means the advice is biased, and good firms that aren't paying a membership fee aren't going to show up.  Not the worst way to search, but the google search I used is going to provide better options.

Edit - looks like XY is pay to play too.  I only know their rep from the recruiting they do, never looked at their advisor search platform.

Sure, both are brands, so they charge for franchising those brands.  But they also have guidelines for member operations.  As you say, It's just a way to filter--it's no guarantee.  But googling works best if you know what you are looking for, rather than starting from a blank slate.

One thing that brings credibility to XY is that Michael Kitces is an involved founder.  However, their fee structure is by retainer, rather than an hourly basis.  So, it may be intimidating to start with them due to the commitment.  There are reasons for this structure,  it It's another thing to need to understand.

mozar

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Re: Career change into financial planning (CFP advice?)
« Reply #12 on: July 10, 2019, 12:27:58 PM »
Since your company has a financial planning division take one of those co workers to coffee and ask what the requirements are to get a job there.

teltic

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Re: Career change into financial planning (CFP advice?)
« Reply #13 on: July 10, 2019, 06:33:31 PM »
98% of financial advisors are salesmen. 

This is what I'm scared of.

Given the PF knowledge I personally have, I'd have a hard time selling costly insurance products or convincing people that I should get 1% of their assets under management.  My conscience just wouldn't allow it.

This.  I worked in operations for a small financial advising firm.  It hurt seeing their 12% commissions for private real estate deals.  Expensive Annuities. 1% mutual fund fees (Probably some kick back, not sure).  It would kill me to do that.

But.  I loved the asset allocation.  I guess being in a 1% fund is better than not being in the market at all?  I am overall worried I'll be a salesman (not sure if I'll thrive in that setting.



Since your company has a financial planning division take one of those co workers to coffee and ask what the requirements are to get a job there.

This is a good idea.  I'll message one of them to see if I can chat with them.


But guys... Fuck. This FIRE movement has pushed me through 4.5 years of my 5 year career in corporate finance (found MMM Jan 2015).  I'm 3 years from FI (although It's lean, and I expect higher expenses once I find a wife and produce kids).

Age: 28
Salary: $101k (I'm overpaid, comparing numbers with classmates/previous coworkers/glassdoor/etc), MCOL
NW: $270k
Annual expenses: $20k

I've recently found Gary Vee on youtube.  His lifestyle is so inspiring.  I don't believe I will retire early.  I'm a busy bee (which I believe most mustashians are).  It's just who I am.  part time school with full time work.  Full time work with a side hustle/part time job.

https://www.youtube.com/watch?v=1ClbiB7_YYg
"How you make your money is more important than how much you make"

I'm not overly stressed at my job.  I should be happy.  It's not very hard.  But... I do feel like I am wasting my time. Satisfaction is low.

So yeah.  I appreciate any help. My thoughts are:
1. Quit April 2020.  My 1 year mark.  401k will let me contribute 90% of my salary, meaning I can max it quick.  I can max my HSA by April, contribute my $6k in my roth, make a little over $12k that won't get taxed (standard deduction).  I could even squeeze a semester of school paid by my company (no clawback period, $5k). Then take the rest of 2020 off to cool off, and find passion.
2. Financial Planning.  I do have passion for personal finance (as I'm sure we all are).  I am worried as hell about it being a salesman job.
3. Computer Science.  I won't lie the salaries look good.  I did enjoy writing VBA code to automate... Automating a 5 hour report into 5 seconds?  It doesn't get better than that.  Does small VBA coding (dynamic range, baby loops, small shit) convert into enjoying coding?  Not sure.   Is it worth walking down this path to find out?  Maybe.
4. Suck it up. I think this is unlikely... But I can see the value of dragging it out 3 years to become FI.  Trade 3 years for a lifetime of FI?  Seems like a decent tradeoff.

Again.  Any tips/advice is greatly appreciated.

mozar

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Re: Career change into financial planning (CFP advice?)
« Reply #14 on: July 12, 2019, 09:10:23 AM »
3 years is an eternity when you are unhappy. You have FU money. Just know that you might never make that much money again, and you might not retire early if you quit now. Are you ok with that?
While you think about it you can start applying for financial planning jobs and finance jobs that involve a lot of coding. It doesn't have to be quit and be happy or stay and be unhappy. There are lots of options in between.

Huskie87

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Re: Career change into financial planning (CFP advice?)
« Reply #15 on: July 12, 2019, 09:43:14 AM »
"This.  I worked in operations for a small financial advising firm.  It hurt seeing their 12% commissions for private real estate deals.  Expensive Annuities. 1% mutual fund fees (Probably some kick back, not sure).  It would kill me to do that.

But.  I loved the asset allocation.  I guess being in a 1% fund is better than not being in the market at all?  I am overall worried I'll be a salesman (not sure if I'll thrive in that setting)."

Yeah that's the used car salesman way of doing business.  Like I outlined, there are real firms out there that genuinely care about providing good advice and delivering more value than what they charge.  That list I gave you, guarantee none of them sell commission products or use mutual funds/etfs with expense ratios over 50bps.  Guarantee they have no hidden commissions.  You just have to do the work to find a good firm and you'll have no ethical dilemma while providing advice.

Indexer

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Re: Career change into financial planning (CFP advice?)
« Reply #16 on: July 13, 2019, 09:16:02 AM »
Another CFP here.

I'll second everything @Huskie87 has said.

"98% of financial advisors are salesmen."

Very true. I worked at Edward Jones right out of college. I left because I felt they put selling & commissions above comprehensive financial planning & helping people. I will add that even the ~2% that aren't salesmen will still need really good positioning skills. Whether you're fee-only or commission(salesmen) based, you will have to position to prospective clients why they should hire you over the competition.

Like Huskie, I tell prospective clients that they can do it themselves, but if they aren't doing everything I would be doing they can easily cost themselves a lot more than our fee(<0.5%). We also don't use any commissioned products and we act in a fiduciary capacity.

In addition to the benefits Huskie mentioned, I would add behavioral coaching. If someone sold near the bottom in 08 they cost themselves a whole lot more than they would have paid a financial planner. We are all human, and I've talked to very bright individuals who under the right circumstances were going to make terrible decisions based on emotions. There will also be times you know a client needs to do X, but they don't want to for whatever reason, and you need to present the idea in a way that will really resonate with them. In summary, being a good Financial Advisor is going to feel like being a money psychologist at times.

Quote
How big of a paycut should I expect? Does my 5 years of financial analyst experience mean anything?  Masters in Finance? Hurts to “throw away” that experience and start from scratch…

In the short term you might see a paycut. In the long run, you might make even more. A seasoned CFP with a good book of clients can make a lot more than 101k. A masters in finance and 5 years of financial analyst experience should help you get your foot in the door.


My path: I took the path of starting at an entry level advising position with a wealth management firm. The prior experience at Edward Jones and a bachelors in Finance helped me get that position. I started without the CFP and I spent my time helping clients with modest accounts while I studied for the CFP.  The firm paid for my CFP prep(we used Kaplan) and the test. Having the CFP opened the door to working with higher net worth clients. Working and getting the CFP at the same time meant a lot of 60+ hour weeks early on. Now I've been in the industry 10 years, and I have a healthy book of clients. My FIRE plan is probably not to quit outright. I'll cut my hours to 10-15hrs/week, and cut my book down to my favorite clients(friends at this point). I know other advisors who've done this, and they love it. It doesn't feel like a job to talk to your friends about your favorite topic.

In terms of prep programs, I liked Kaplan's program. It's all online, and it can be done in 1 year. They send you textbooks, there are online live classes(recorded in case you miss it) a couple times a week, and they have thousands of test questions so you can create mock tests. It's also flexible. For instance, I knew I didn't need to do all of that studying for the investments course so I jumped straight to the tests, passed, and spent that time prepping for the next course.

I searched their website and the advertised price for the whole program is $5,799. Source: https://www.kaplanfinancial.com/cfp/education-program?select=0

MrThatsDifferent

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Re: Career change into financial planning (CFP advice?)
« Reply #17 on: July 13, 2019, 11:07:12 AM »
OP, I’m going to take the different tack of suggesting, suck it up. 3 years isn’t that long. Especially not when you’re only 28. This is my only concern about this so called movement, some people feeling like they need to achieve this now and their jobs, which normally would be ok, are suddenly unacceptable. You’re on a good path, you’re almost at the end. One of the things that’s helped me is the, you made a plan, stick to it. If you had a work situation that was destroying your quality of life and was unhealthy, then sure, find something else. You seem to be more in an existential crisis of trying to decide what to do post FIRE? I get that. You don’t have to blow things up to prepare for that. You can, achieve FIRE, then decide what to do without any pressures. In the meantime, get work to pay for your education, sure, why not? I’d also look into financial coaching. But keep to your original plan. Shift the focus to FI, and don’t get caught up on RE.