If you are planning to pursue a CFP program, asking the question ‘how much would I make’ and ‘how would I get paid’ is not wrong. It’s equally important to know the financial fruits as much as the growth chart and learning opportunities of a role before you jump into it.
A financial planner can play varied roles in the financial industry. He can work in the wealth management department of an insurance company or any bank, or he can also work in corporate/MNCs as a financial advisor or a financial consultant. Let’s look at the various hats that a CFP can wear in his professional career and how would he get paid in each of these roles.
Roles of a financial planner
Work As A Financial Advisor
A Certified Financial Planner in a bank could work as financial advisor into the marketing division or a sales division. Sales division involves selling different kinds of commercial products such as bonds, insurance policies, stocks and more. A financial planner working with the financial industry gets paid as per industry standards with remarkable growth rates in salaries.
The second option for CFP would be to work in a financial firm run by a CFP. Here the pay will be less than the corporate industry or banks, but may come with a flexible work culture along with a lot of challenging opportunities.
A CFP can also set his own practice; he can earn money by selling financial products, life and health insurance, etc. A CFP can charge fees for financial advice, for consulting services and for writing blogs. For a CFP, the initial earning could be low for an individual practice but eventually, it will grow based on your potentials and reputation amongst the clients.
Types of remuneration a CFP can earn:
Commission Based Charges
Apart from salary from corporate industry; a financial planner can get paid by two ways – commission-based compensation and fees. When a CFP sells any investment product or any financial product; he receives payment on a commission basis. But this commission sometimes creates conflicts and can be harmful to both. So from last few years, the term fiduciary was coined in the finance industry. This is a standard that makes sure that an advisor is legally bound to provide high standard services with fixed charges.
Fee-based Advisory Charges
These days most of the advisors are working as a fee-based advisor. These fees can vary from client to client and situation. A CFP can also earn through trading funds and fund expenses. When you sell or buy a stock, ETF – exchange-traded fund, mutual fund, you can gain trading costs.
Earn Through Internal Expense
Internal expense cost is also another way to earn money. The cost associated with operation or management of the mutual funds is nothing but internal cost. All these mutual funds and ETF have an internal cost associated with it.
In short, a financial planner can play a variety of job roles and can earn a lot if they are aware of current market trends and display requisite skills such as transparency and hard work to succeed.