Financial planning and wealth management: graduate area of work
Financial planners recommend the courses of action and financial products that will be most beneficial to their clients, who may be individuals or organisations.
Some companies only work with clients possessing a certain wealth (£250,000 of liquid assets, for example) and others might specialise in footballers or film stars, anybody may choose to pay professionals for guidance on managing their finances.
Financial planners understand their clients’ life situations in depth and advise on topics such as risk management, investment, estate planning, tax, education planning, mortgages and pension planning; some will specialise in certain areas.
The emphasis of the financial planner’s role is now on building longer-term relationships between a professional and a client rather than on meeting short-term sales targets on the products they recommend.
The Retail Distribution Review (RDR) and its impact on job prospects in financial planning
Employment opportunities in financial planning are predicted to rise much faster than average in the coming years. This is largely a result of the Retail Distribution Review (RDR), which has had a positive impact on career prospects. More companies are now recruiting people with no previous sector experience after adjusting their business models, and after some advisers left the sector.
The key points of the RDR are twofold:
- An end to income through commission: income now comes from clients paying for advice rather than on the sales of particular products.
- An increase in the level of professional qualification required to practise as a provider: before the end of 2012, a Level 3 professional qualification (such as the Certificate in Financial Planning) was the level of qualification required; from 1 January 2013, this has moved up to a Level 4 professional qualification (such as the Diploma in Regulated Financial Planning).
What are the differences between financial planners, independent financial advisers and wealth managers?
The terms financial planner, financial adviser and wealth manager are fairly interchangeable; they all refer to professionals who help to secure a person’s – or a company’s – financial future.
What they choose to call themselves often reflects the type of clients that they work with. A wealth manager will work with higher net-worth individuals but what they do is essentially the same, focusing on each client’s needs and understanding their aspirations for the future.
Who are the employers of graduate financial planners?
Financial planners typically work in small to medium-sized companies (SMEs). Few larger companies are financial planning specialists, although big accountancy firms often have financial planning arms.
Financial planners and advisers (unlike independent financial advisers) also work in banks, where they recommend only the financial products provided by that bank rather than those available on the whole market.
In the last few years there has been a reduction in the number of bank-based financial planners and the SME sector has become even more important.
When they have significant experience behind them, many financial planners choose to become self-employed and acquire their own clients.
How do graduates start out in financial planning?
When you join a company you will generally start in a back office role, either as an administrator, who supports the business, or a paraplanner, who researches the market for the best products to recommend to clients. From this, it is possible to become qualified and progress to a financial planner role.
This is the typical path, although there are many possible routes into financial planning. People may switch from a variety of professions such as accountancy or the armed forces. There are also opportunities at the Financial Adviser School and graduate schemes are available even in SMEs.
What degree background do I need to become a financial planner?
Employers recruit graduates of all disciplines, although a numerate degree such as economics, accounting, finance or mathematics may be advantageous. A strong A level in a numerate subject, however, is sometimes required.
Business or law degrees also prove popular ways into the profession, as do courses in risk management, investment, taxation and estate planning. Financial planning degrees, while rarely required by employers, are also available at some universities.
It is possible to transfer into financial planning from a related professional field such as accountancy, insurance, law or financial services sales.
What are the professional qualifications for financial planners?
Financial planning is a licence-to-practise area: it is necessary to hold a professional qualification if you want to become a financial planner. Many people will spend their time as paraplanners becoming qualified to progress to a financial planner role.
The professional body through which financial planners become chartered is the Personal Finance Society (PFS). The PFS is part of the CII and has 35,000 members, 3,700 of whom are chartered.
It is possible to become a certified financial planner through the Institute of Financial Planning (IFP) – a Financial Conduct Authority accredited body. There are almost 1,000 certified financial planners in the UK.
What skills should I have to be a financial planner?
- Excellent interpersonal and communication skills: financial planning is a client-facing role and so it is essential to be a good listener and able to explain complicated matters clearly; if you would rather not be client-facing, paraplanning might be a better fit.
- Interpretation and evaluation: these are important when it comes to formulating the most suitable advice from the information available.
- Solid mathematical abilities: there are significant numerical aspects to the job.
- Persuasive: it is important that the client trusts your advice.
- Organisational skills
- Ability to maintain a broad and up-to-date knowledge of financial services
- Entrepreneurial skills: if you wish to go on to open your own business, these will be key.
What salary can I expect as a financial planner?
Salaries vary according to location and company size. A starting salary (for an administrator or paraplanner role) is likely to be between £15,000 and £25,000.
After qualification, a financial planner’s salary can be expected to rise to around £50,000, potentially reaching six figures for more experienced professionals working with high net-worth clients.
Salaries in this sector are often conditional on meeting targets (even in graduate roles) so the highest-performing individuals in the industry tend to make the most, earning on a similar level to partners in law and accountancy firms.
TARGETjobs would like to thank Caspar Bartington, relationship manager at the Chartered Insurance Institute, for his help with this article.
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