Financial planners salaries: Financial advisor vs. financial planner: who makes more money?

Financial advisor vs. financial planner: who makes more money?

Those entering the profession may be curious about the comparison of financial advisor vs. financial planner. Which one makes more? This is a very direct and to-the-point analysis of their definitions, salary, and job responsibilities.

I’m going to give it to you straight with no fluff. Are you ready?

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Differences in job roles

I’ve written about the various financial advisor jobs in other blogs. But just to review:

Financial advisor: definition

Financial advisors are commonly defined as people who manage wealth for their clients, from their investment portfolios to their financial plans. Many, but not all, financial advisors include financial planning with the scope of work that they do.

Financial planner: definition

A financial planner puts together a roadmap for the client that takes into account their goals etc. It may include a budget and cash flow plan. If you want to learn about the process of getting to be a financial planner or a financial advisor, I’ve written blogs on these subjects.

There’s a great deal of overlap in the role of financial advisor and financial planner. The two roles are not necessarily mutual exclusive.

• Some people are just financial advisors.
• Some people are just financial planners.
• Some people are both financial advisors and financial planners.

Financial planning is the trend, my friend

With investment advice becoming commoditized and clients looking for more than just portfolio management, financial planning has become highly demanded amongst investors in Generations X and Y. Industry thought leader Bob Veres thinks financial planning is the future of the industry.

Read these blogs about financial planners who are making a difference.

Hourly financial advisor success story

Flat fee financial advisor success story

There is an up and coming trend within financial planning called “advice only financial advisors.” This means that a financial advisor provides financial planning but not investment management services. It has an appeal because it is viewed as more purely focused on the client’s needs as it removes the products from the equation.

If you are a flat fee, hourly fee, or advice only financial advisor, or looking to become one, join my LinkedIn group for Advice Rockers and join our community!

Difference in salaries between financial advisors and planners

How do financial advisors and planners earn money?

Most of the time, financial advisors are paid on the assets they manage. They may or may not charge for the planning, fi they are doing any. The average financial advisor fee is a little less than 1% of the assets they manage (and 1% is a high fee to make nowadays given all the fee compression). Others work on commission for trades recommended. There are various regulatory differences that apply here, but that’s too boring for me to cover in this blog.

Financial planners, on the other hand, charge hourly (usually between $150 to $400 per hour) or they may charge a flat fee which is usually about $2,000 to $4,000.

Let me put it bluntly: financial advisors make more money than financial planners.

Yeah, I said it.

Financial planners who solely work on flat or hourly fees have a far less scalable business than a financial advisor who can pile on accounts an earn a cut of the assets.

Just a rough sketch of a comparative scenario.

• Let’s say you’re a financial advisor with 50 clients, each having $1MM in assets. You make 1% on those assets. You’re making $500k a year. (Btw, is 1% good for a financial advisor to earn? You bet your bippy it is, in today’s market. It’s not like it used to be!)
• Let’s say you’re a financial planner with 50 clients, each paying you $4,000 for a financial plan. You make $200,00 a year. However you may not be able to charge the full planning fee next year, because they may not need a full analysis one year after they just got one.

In this example, the financial planner is making less than half of what the advisor makes. Just a hypothetical scenario (before you send me a nasty email), but you can see how it’s harder to make money as a financial planner than it is as an advisor. You work your butt off when you have to work for an hourly or flat fee as opposed to being on retainer. Most advisors don’t work on hourly or flat fees for that reason. If the industry were set up like that, it would be a far less appealing career than it is currently.

But all of this is changing, as financial planning (see above – advice only, flat fee, hourly financial advisors) are finding new ways to reach clients in a more scalable way, and the demand trends are rising for this kind of service. Investors are becoming more and more disenchanted with Wall Street and its shiny objects. In the future, it is only going to become harder and harder to make money by providing investment advice.

Which job is better to have: financial advisor vs. financial planner

It’s a personal decision highly dependent upon what your values are and what you are passionate about. Some people don’t like the stock market, and they want to help people with finding an overall strategy and focus them on connecting with their life goals. In these cases, being a financial planner is better.

Some people like the stock market and are adept at helping people manage the risks associated with it. In this case, a financial advisor job is possibly good for you.

Or maybe you like both…

To be real, there are alot of people who are in the profession for money, and in that case it’s better to be a financial advisor. I’ve discussed what financial advisors earn in other blogs. To summarize it:

• A good financial advisor salary is $150-250k per year, after you pass the entry level.
• A starting out financial advisory may make between $30k to $80k starting salary.
• Lastly, from my experience, I have found it is not uncommon for them to earn more than $250k.

Data from the Bureau of Labor Statistics states that financial planner median salary in 2020 was $89,330. To me that sounds low, but I wouldn’t see the actual number in reality as being astronomically higher given what I’ve said before about the scalability of financial planning being considerably limited.

Sara’s upshot: comparison of financial advisor vs. financial planner

What’d ya think? Was this helpful?

If yes…

Learn what to say to prospects on social media messenger apps without sounding like a washing machine salesperson. This e-book contains 47 financial advisor LinkedIn messages, sequences, and scripts, and they are all two sentences or less.

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Thanks for reading. I hope you’ll at least join my weekly newsletter about financial advisor lead generation.

See you in the next one!

-Sara G

Sources

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Personal Financial Advisors,
at https://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm (visited February 08, 2022).

How Much Do Financial Planners Make?

Having a clear understanding of earnings potential is important, especially if you are researching career paths or considering changing jobs. If you’re one of those people, and you’re curious what kind of salary Financial Planners make, you’ve come to the right place.

The Best Adult Colleges and Careers Guide has compiled rich information about salary for Financial Planners and related jobs, including details about average compensation, salary trends and job growth. We’ve also gathered advertised salaries from actual job postings to provide insight into what employers of Financial Planners are offering as compensation.

Keep reading to learn more about how much Financial Planners can expect to make in the United States.

At a Glance: Salary & Jobs for Financial Planners

226,139

$89,336

57,438

According to data from 2021, there were about 226,139 jobs listed for Financial Planners in the United States. In terms of salary, the national median salary for Financial Planners was reported to be $89,336. Additionally, when examining job posting demand, employers across the country posted 57,438 job postings related to positions for Financial Planners in 2021.

What Salary do Financial Planners Make?

Median salary is just one data point. To build a better understanding of how much Financial Planners and related positions can expect to make in the United States, it can be helpful to look at the full range of compensation for those jobs.

Let’s look more deeply at data that was reported to the U.S. Bureau of Labor Statistics (BLS) for detail into the lowest and highest earners for Financial Planners.

Annual Salary for Financial Planners

According to the BLS, the lowest earners for Financial Planners and related professions earned about $44,096 per year in 2021. Meanwhile, at the other end of the spectrum, the highest earners made about $217,291 annually.

As mentioned previously, the median salary for Financial Planners in the United States in 2021 was $89,336.

Hourly Salary for Financial Planners

The BLS also breaks down compensation for Financial Planners by hourly salary, and the median average hourly pay for Financial Planners in 2021 was $43. Lowest hourly earners took home $21 while the highest reported hourly salaries for Financial Planners was $104.

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Advertised Compensation For Financial Planners

Data from the BLS is one way to dig into compensation for Financial Planners, but another way to build a more real-time understanding of salary is to look at actual job postings and see what pay is being offered to open positions for Financial Planners.

Keep in mind that salary data is not included in each and every job posting, so the information compiled here is reflective of the data that could be found.

Annual Salary From Job Postings For Financial Planners

During a review of 70,999 job postings related to Financial Planners, advertised salary was included in 12,900 of them, which was 18%. Based on those postings, the median advertised salary for Financial Planners was $67,456 per year.

Hourly Salary From Job Postings For Financial Planners

A similar analysis of job postings provides insight into advertised hourly salary for Financial Planners. Based on 22% of postings with advertised compensation, the median hourly salary for open Financial Planners positions in the United States is about $32.

Salary Trend For Financial Planners

You may want to understand how compensation has changed over time for Financial Planners if you’re thinking about pursuing a career in the field. The chart below provides a snapshot of advertised salaries over the past three years.

Based on compensation data that was included in job postings for Financial Planners dating back to September 2018, advertised salaries for Financial Planners have increased 8%.

Advertised Wage Trend For Financial Planners

Are Jobs Growing For Financial Planners?

Another data point that someone thinking about a career path should consider is whether or not jobs are expected to see growth in the future. The chart below looks at projected employment for Financial Planners over the next 10 years.

According to the data, there were 226,110 jobs for Financial Planners in the U.S. in 2021. By 2031, it is expected that about 25,612 jobs will be added. That’s a 11.3% increase over the next 10-year period.

Learn how to become a financial planner • BUOM

December 10, 2019

What does a financial planner do?

Financial planners are financial professionals who provide clients with money management services and advice. They evaluate clients’ finances and make plans for investments, retirement, savings, and more. In addition, a financial planner may also have the following responsibilities:

• Meeting with clients to discuss current financial situation, setting goals and assessing potential risks

• Helping clients create personal budgets that help them achieve savings goals

• Helping clients with tax returns, wealth management, retirement planning , mortgage and real estate and other financial tasks.

• Stay up to date with financial product, tax law and industry updates that affect their customers

• Maintain relationships with clients and inform them of financial changes in their account

• Refer clients to service providers and other financial professionals as needed

Average salary

Most financial planners work full-time . Some work for investment firms or banks, while others are self-employed. Their salaries are often based on geographic location, years of experience, and level of education in addition to any relevant certifications.

• Regular US salary: $66,575 per year

• Some salaries range from $14,000 to $150,000 per year.

Financial Planner Requirements

Financial planners often need a combination of the following requirements to secure employment and help clients effectively: or the economy. Some colleges and universities offer degree programs or courses in personal financial planning. Many of these financial professionals also choose to earn a Master of Business Administration (MBA) or other relevant master’s degree to advance their careers, specialize in certain types of financial planning, or increase their earning potential.

Professional Development

Most financial planners receive some on-the-job training when they join the firm. They are taught the procedures and policies of the firm and may be guided by a senior financial planner.

Those financial planners who wish to become certified must gain experience and training in financial planning before taking the certification exam. One way to do this is to complete an internship with a certified financial planner or related financial professional, which typically lasts two years. This experience offers hands-on experience and observation of money management advice, savings and investment plans, learning the most effective strategies to best serve clients.

Certifications

Some states require financial planners to obtain a license to sell securities, stocks, bonds, options, futures, and other regulated financial products. These licenses include series 6, 7, 63, and 65. These professionals can check their state’s requirements to obtain these types of licenses, often by taking knowledge exams administered by the North American Securities Administrators Association.

Financial planners can be certified to sell certain investment products, improve their skills and knowledge, and become more desirable candidates to potential employers and clients. One such certification is the Certified Financial Planner, which is offered by the Certified Financial Planner Standards Board, Inc. (CFP Board). The path to certification includes education, experience, an exam, and an ethics module. To apply for CFP status, applicants must have a bachelor’s degree with coursework in financial planning. CFPs must also have three years of financial planning experience before they can receive the title.

Skills

Financial planners need a variety of hard and social skills that can be developed through education and experience. To be a successful financial planner candidate, acquire the following skills:

Mathematics

Financial planners make budgets, invest capital, and make other financial decisions, so they need to be confident when dealing with large amounts of money. Comfort with math, money, and basic accounting is essential.

Data analysis

Research is also central to the work of a financial planner. They monitor the latest statistics, changes and trends in the financial markets and analyze this data to make informed decisions that positively influence clients’ financial plans.

Organization

Financial planners often work with many different clients, each of whom trusts the planner with their financial security. Financial planners work diligently to organize their schedules and complete client files, including sensitive financial information. Some planners work with clients in different geographical locations that have different financial needs. These professionals must keep each client file separate and secure.

Customer Service

Financial planners must be able to earn and retain the trust of their clients in order to run a successful financial planner business or secure employment with the firm. To gain trust and build relationships, financial planners use customer service skills such as active listening, empathy, and kindness. They also quickly inform clients of any potential financial issues, changes or opportunities.

Presentation

Financial planners are tasked with creating plans, portfolios and budgets and then presenting them to clients for review. The stronger the presentation, the more likely the client will be happy to accept the suggestions of their financial planner. These professionals use sales techniques, effective public speaking, and persuasive skills to provide customers with the most compelling options.

Financial Planner Workspace

Financial planners usually work in an office. They work for banks, credit unions, government agencies and corporate offices, and some work for individuals and families. Although they operate in cities around the world, there are a few things that almost any financial planner can expect from their work environment:

• Sitting at a desk or office desk

• Communicating with a specific group of long time

• Working on phones and computers, writing reports frequently, doing research, checking financial statistics, and keeping in touch with clients.

• Full-time job, Monday through Friday, with some positions requiring weekends, bank holidays and cell phones.

• Travel to meet clients, especially if the planner is an independent contractor

Becoming a financial planner

If you want to become a financial planner, follow these steps:

1. Continue your education. After earning a high school diploma or GED, complete a bachelor’s degree in accounting, business, or finance to gain the basic knowledge often needed to become a financial planner.

2. Get experience. Before you get certified, you’ll want to gain experience as a financial planner. Look for an apprenticeship, internship, or entry-level position at a firm or bank.

3. Become licensed. Some states require financial planners to obtain a license to sell certain types of securities and investments. Review your state’s requirements and obtain the type of licenses you need to sell investment products that interest you professionally.

4. Get certified. You can also consider pursuing training as a Certified Financial Planner (CFP) and taking an exam. By becoming a CFP, you will be able to sell certain investment products and prove your knowledge of financial planning to potential employers and clients.

5. Write your resume. In your resume, include any educational documents, licenses, certifications, and experience you may have. You can use wording in your job description to better align your qualifications with the employer’s expectations.

Example Financial Planner Job Description

A local group of financial advisors is looking for an experienced and certified financial planner to work with new clients in our downtown office. This professional must have at least five years of experience providing financial advice to a wide range of individuals and families. Our firm specializes in debt management, investments and personal budgeting. The ideal candidate must hold a Series 65 license. Our client-focused team is looking to hire a full-time, flexible financial planner. For the right candidate, this position offers the potential for career advancement.

Associated Careers

Working as a Financial Planner – Financial Encyclopedia

Working as a financial planner, also known as a personal financial advisor, gives you the opportunity to work directly with clients and businesses to navigate the fundamental principles of personal finance.

Financial planners advise their clients on how to achieve their financial goals. Some financial planners provide comprehensive planning services without advice, while others offer both planning and transactional services.

Financial planners often work for larger investment or insurance companies, but there are also those who operate independently. Regardless of the service structure or environment in which they operate, all financial planners have similar job descriptions.

Job Description

Financial planners work with individuals, families and businesses to help these clients understand their financial situation and how to achieve their short and long term financial goals. Clients provide relevant financial information during the initial interview, answering questions about their total annual income, debt obligations, monthly non-debt expenses, current investment holdings, savings account balances, tax liabilities, and insurance plans. Financial planners analyze this information and provide realistic, meaningful recommendations based on their clients’ financial situation and goals.

Financial planners discuss many personal finance topics with their clients, including debt management, savings goals and strategies, and personal and family budgeting. They also discuss investment strategies, estate planning considerations, insurance protection planning, and retirement savings and distribution tactics.

Financial planners can provide information on tax performance, but they usually do not deal with tax returns. A financial planner working with a business or institutional client can analyze and provide recommendations on topics such as cash flow, revenue projections, debt management, or employee benefits. Each of these aspects play a role in the overall financial health of an individual or company, so financial planners can have a significant impact on a client’s financial future.

Searching, that is, the process of finding new clients, is an important part of a financial planner’s job. This often involves making contacts with other recognized professionals such as certified public accountants (CPAs) or estate planning attorneys. Financial planners can also attend social or charitable events and make connections at them. The search process ensures that financial planners build relationships with their clients, thereby maintaining a high retention rate.

Education and training

Financial planning career path does not require a formal higher education, but a bachelor’s degree is recommended. A master’s degree, such as a Master of Business Administration (MBA) with a focus on finance or marketing, can be beneficial for an individual who wants to start a financial planning firm. However, a degree is not required for success.

Financial planners must also hold certain licenses to provide advice and perform certain transactions related to securities or insurance. Securities licenses often include a Series 7 Financial Industry Regulatory Authority (FINRA) that tests knowledge of the securities industry and certain investment transactions, including the sale of variable annuities, options, government securities, municipal bonds, and corporate securities. A FINRA Series 66 license, which is an exam by the North American Securities Administrators Association (NASAA), may also be required. Each FINRA license contains continuing education requirements to maintain a good reputation with the regulator.

Additional certifications can help advance a career in financial planning. For example, the financial industry and potential clients highly value being a Certified Financial Planner (CFP). CFP certification requires a bachelor’s degree, an intensive six-hour exam, and continuing education.4

Skills and Abilities

Successful financial planners quickly develop strong relationships with their clients. Making connections with other people is essential for both networking and retaining clients in a career. Similarly, clients need to be sure that their financial planner has their best interests at heart.

Financial planners thrive when they have a deep knowledge and passion for personal finance. Several factors play a role in the creation and implementation of a financial plan, and a financial planner must be well versed in financial matters. In addition, financial planners must be able to meaningfully interpret the financial data of their clients. The most successful financial planners can analyze and store a significant amount of information.

Salary

According to Glassdoor, financial planners in the US earn an average base salary of approximately $65,800. However, most of the financial planner’s annual income comes from a combination of paid planning services and product commissions, such as the sale of investment securities, annuities, life or disability insurance, and mutual funds or exchange-traded funds (ETFs). According to the Bureau of Statistics Labor, as of May 2019year (latest data available), total financial planner remuneration ranged from approximately $43,000 to over $200,000.

A financial planner working for a larger investment firm or insurance company may receive a lower commission than someone who runs their own firm. However, benefits from profit-sharing plans, health insurance subsidies, and education reimbursement may offset lower commissions over time.