|
Posted by on March 29, 2007, 5:00 am
I am considering a career switch from software engineering to personal
financial planning. I would pursue an MS in Finance and then get on
the CFP track.
Question for the group: Is there a successful business model for
personal financial planning that does not rely upon commission-based
sales of branded, actively-managed mutual funds?
How do fee-based planners make a living?
I am concerned primarily that in order to reach an acceptable bottom
line and good income in the long run, I may have to advocate products
and moves that I may not think are really necessary.
I think the planner's business model may work fine if you can accept
fees for purchase of actively-managed MFs, annuities, or stock
picking. But what if I primarily want to advocate passive strategies
for personal investment ( i.e, indexing/ETFs, allocation strategy, tax-
protected accounts, cost/tax minimization)?
Suppose I agree with arguments made in David Swensen's Unconventional
Success: A Fundamental Approach to Personal Investment. How would I
construct a planner's business model that would be a thriving and
profitable business?
I'm sure it could be a fee-only business but I'm not sure how
profitable that could really be without a tremendous # of clients.
That worries me. It seems to me that one really needs to be actively
managing other people's money (and a fair amount of it) in the long
run in order to succeed as a CFP.
|
|
Posted by Mark Bole on March 29, 2007, 8:01 pm
davidelliottburke@gmail.com wrote:
> I am considering a career switch from software engineering to personal
> financial planning. I would pursue an MS in Finance and then get on
> the CFP track.
>
> Question for the group: Is there a successful business model for
> personal financial planning that does not rely upon commission-based
> sales of branded, actively-managed mutual funds?
>
> How do fee-based planners make a living?
>
> I am concerned primarily that in order to reach an acceptable bottom
> line and good income in the long run, I may have to advocate products
> and moves that I may not think are really necessary.
I am not a CFP, but I am a former IT professional now working in a
finance-related industry. I share your concern: if you can't "advocate
products and moves that [you] may not think are really necessary" then I
predict you will not make a lot of money. Have you ever tried and
succeeded in a sales-based job? If not, then you are facing an uphill
struggle -- make sure you have an adequate personal financial cushion
before submitting your resignation at your current job.
Disclaimer: I have never been a very good salesman.
-Mark Bole
|
|
Posted by jIM on April 2, 2007, 2:29 pm
> davidelliottbu...@gmail.com wrote:
> > I am considering a career switch from software engineering to personal
> > financial planning. I would pursue an MS in Finance and then get on
> > the CFP track.
>
I have often thought of a similar switch once I didn't need to work 7
to 5, and could retire early, go back to school, and do this.
What licensing would a CFP need? Do they need a series 7? I assume
licenses depend on what would be "sold" (investments vs services vs
insurance products)?
Can these be studied for (as far as licenses) or is a Bachelors/Master
in a business field needed?
|
|
Posted by kastnna on April 2, 2007, 5:27 pm
> What licensing would a CFP need? Do they need a series 7? I assume
> licenses depend on what would be "sold" (investments vs services vs
> insurance products)?
To sit for the CFP you must have a bachelors degree from an accredited
university and pass the prelicensing certification course (offered by
multiple universities). If you already have a CPA, CLU, ChFC, CFA or
numerous other designations the prelicensing course is not required.
Prelicensing is $5000 - $8000 if taken via distance learning.
Once you pass the CFP examination, you cannot actually refer to
yourself as a CFP until you have at least three years in the financial
planning industry. This is usually accomplished by working for someone
that already is a CFP, ChFC, CLU, blah, blah... Of course, you cannot
actually sell investments or insurance just because you are a CFP. As
a matter of fact, without the proper licenses it is a violation of
NASD/SEC code just to recommend specific investments to clients.
Whether they ever purchase them or not does not matter.
To sell stocks and bonds you need a series 7 license (a bear of a test
IMO), however a series 6 allows you to sell mutual funds and variable
annuities ONLY (the test is much easier I have heard).
A series 63 is also required to sell securities. It covers the state
specific rules of securities trading (series 7 is federal).
To sell insurance you must pass your state specific insurance
examination and usually a prelicensing course. For variable life/
annuities you must pass an additional insurance test and already have
a series 6 or 7 license.
Off the top of my head, that should give you the certifications you
need to get a good start. Its not as bad as it looks on paper. Of
course, the more you learn/license the more you can offer clients and
the easier it is to earn $$$. When you can legally handle a client's
taxes, legal paperwork, and finances all in one shot it is easier to
justify your fees.
|
|
Posted by jIM on April 3, 2007, 4:59 am
>
> > What licensing would a CFP need? Do they need a series 7? I assume
> > licenses depend on what would be "sold" (investments vs services vs
> > insurance products)?
>
> To sit for the CFP you must have a bachelors degree from an accredited
> university and pass the prelicensing certification course (offered by
> multiple universities). If you already have a CPA, CLU, ChFC, CFA or
> numerous other designations the prelicensing course is not required.
> Prelicensing is $5000 - $8000 if taken via distance learning.
>
This is good info... the degree is a requirement? In a business field
or any field?
The tests a person passes... does this skill need to be maintained
(pass the test every year/decade...) or does "continuing education"
come into play to maintain credential?
The pre-licensing which costs 5k-8k... is there a course or distance
program which you would recomend? Would it be better to spend the 8k
to get a second Bachelors degree (to prepare take the test) or to just
prepare for the test?
|
| Similar Threads | Posted | | Personal financial planning | December 30, 2006, 10:15 am |
| Developing a franchise business of financial product | June 6, 2008, 11:55 am |
| Limited liability for a financial advisory business | September 12, 2008, 5:36 pm |
| need to do financial planning | September 24, 2006, 10:34 am |
| Help with some financial planning | September 24, 2006, 2:47 pm |
| Ages for financial planning | September 29, 2006, 11:10 am |
| best approach to financial planning | October 2, 2006, 7:15 pm |
| Dental Financial Planning | January 31, 2007, 5:27 pm |
| Choices to be made in Financial Planning | April 8, 2007, 7:38 pm |
| financial planning for natural disaster | May 7, 2007, 12:44 pm |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap