For stock brokers, gaining the Certified Financial Planner (CFP) designation increases their value to investors considerably.
Ideally, a wise investor desires to find a knowledgeable professional with special qualifications to entrust their life savings with.
Stock brokers and Certified Financial Planners are both employed in the financial market but a CFP focuses more on the individual client.
Stock brokers assist investors in buying and selling securities while certified financial planners can do that and help guide people through other financial situations like:
- Estate Planning
- College Funds
And since they offer help in a variety of financial situations, they are more valuable and can earn higher income.
Certified Financial Planner Vs. Stock Broker Salary Differences
According to Payscale, the average salary of a certified financial planner is $63,969. The average salary of a stock broker, however, is $49,076 (these values were updated in Sept, 2015).
A certified financial planner typically has the knowledge, resources and ability to assist wealthier clients earning higher commissions and generating more revenue from fees.
Stock brokers are great candidates when it comes to pursuing the CFP designation as they are already qualifying the experiential requirement. Additionally, once they’ve achieved the CFP designation they can offer more services to their already existing clients.
So in addition to commissions, they’ll receive fee-based income that’s usually around 1-2 percent of the of money they manage. Assisting an individual who has $1 million in retirement would earn them a $10,000 fee.
How to Become One?
(1) – Education Requirement:
It’s not entirely too difficult to become a CFP, just takes a bit more education and experience. Essentially, a bachelor’s degree is required plus coursework from a CFP board registered program which includes:
- Investment Planning
- Estate Planning
- Retirement Planning
- Income Tax Planning
- General Principles of Financial Planning
- Interpersonal Communication
- Professional Conduct and Fiduciary Responsibilities
- Financial Plan Development Course (Capstone)
(2) – Take the CFP Exam
It is entirely computer base yet can only be taken at proctored testing centers. The costs are:
Standard Fee – $695
Early Bird – $595
Late Registration – $795
4) – Experience Requirement
In order to become a Certified Financial Planner, experience of either 3 years (6,000 hours) performing qualified tasks in the financial planning process that include investing, financial management, estate, retirement, taxes and insurance/risk management is required.
Alternatively, 2 years (4,000 hours) in the apprenticeship exemption category is required.
(5) – Continuing Education
To maintain your CFP Designation, you must pay the $325 annual fee, complete 30 hours of continuing education and complete a certification application bi-annually.
Being a CFP can grant you elevated positions in the corporate setting and will greatly increase your hire-ability when looking for work elsewhere. Other areas of flexibility include:
Certified financial planners are given the chance to travel more and meet up with important clients enabling them to improve in their communication, finance and analytic skills; whereas stock brokers do not travel a lot as they mainly can perform all their tasks within a brokerage firm.
(b) Job Outlook
According to the BLS, the job outlook for personal financial advisors is 27% compared to 11% for the stock broker profession. CFPs can work for large investment firms, group together with other financial professionals and form smaller businesses or be entirely self-employed.
Certified Financial Planners can earn income in a few different ways. They can be fee-only, receive fees and commission or earn income entirely in commissions.
Certified financial planners are viewed as the dynamic and respected professionals in the industry. This is because they are recognized by recruiters and potential employers as the most desirable professionals which the field offers; while stock brokers are not viewed in the same light.
In general, stock brokers only act as sales people and they are not required to put the client’s interests above their own and this is what makes them not viewed as one-on-one standard finance professionals. On the other hand, certified financial planners work closely with a client to give him or her financial solutions whenever necessary.