Finding Your Career in Financial Planning

So, you’ve decided you want to be a financial planner. But what does that actually look like?

You probably chose this career path because you have a basic idea of what you want to do — you want to help people with their money. But that can mean so many different things!

Do you want to help people learn to budget? Plan for retirement? Manage their investments? Save on taxes?

Those are just a few of the specialties that exist under the financial planning umbrella. So how do you figure out which niche you want to pursue? How do you know what type of planning style would be best for your ideal clients?

It’s normal not to have answers to those questions at the start of your career. And that’s OK!

The first step toward career clarity is to learn more about the available options. So let’s dive in and take a look at some of the most common financial planning approaches and career paths — and find out how to start moving in the right direction for your professional goals.

Exploring Financial Planning Career Paths

When you think about looking for a job, what type of company do you picture working for? What does your day-to-day look like? What types of clients do you imagine serving?

You might not have a clear picture yet, so let’s look at some of the different types of firms, financial planning focus areas, and career opportunities out there.

Types of Financial Planning Firms

Before you can decide what type of firm you’d like to work in, it’s crucial to understand the differences between each type. Once you do, you can start evaluating them to determine which one offers the best job for you.

Registered Investment Advisors (RIAs)

An RIA firm focuses on helping clients with securities investments. These companies must be registered with the Securities and Exchange Commission (SEC) or the securities administrators in their state. If you work in an RIA firm, you may help clients manage their financial portfolios and offer advice on securities investments.

RIA professionals act as fiduciaries — they have a legal obligation to only provide investment advice that’s in a client’s best interest.

Main characteristics:

Fee-based compensation: An RIA (or RIA firm) earns income by charging a fee that’s usually based on a percentage of the client’s assets under management.
Personalized guidance: Because RIAs are fiduciaries, they offer personalized advice that’s centered on the client’s best interest and aren’t limited to offering proprietary financial products.
Holistic planning: Most RIA firms can offer clients guidance in a wide range of financial matters, such as investments, taxes, estate planning, and retirement.

Key considerations:

Fiduciary responsibility: You must act in the client’s best interest and avoid any conflicts of interest related to financial products or services.
Compliance: You must comply with regulations from the SEC and the Financial Industry Regulatory Authority (FINRA).

Broker-Dealer Firms

This type of firm is very different from an RIA — it makes money by buying and selling financial securities. The broker aspect means acting as a client’s agent to execute trading orders. As a dealer, the firm trades on its own behalf.

Broker-dealer firms are generally categorized as either wirehouses or independent broker-dealers (see below).

Main characteristics:

Commission income: Broker-dealers make money by selling products and/or executing purchases and sales for their clients
Sales focus: Some broker-dealers offer financial planning services, but others only focus on securities transactions.
Financial products: Broker-dealers can help their clients access a variety of investment products, often including proprietary options.

Key considerations:

Quotas: Some broker-dealers set sales quotas for their employees, which may not be an ideal work environment for planners who don’t enjoy selling.
Investment focus: You may have access to many investment options for your clients, but you must be wary to avoid conflicts of interest.

Wirehouses

A wirehouse is a type of broker-dealer that advises clients on stocks and can execute trades on their behalf. Additionally, wirehouses can sell proprietary investment products to their clients.

Main characteristics:

Extensive options: Most wirehouses are large, full-service brokers with access to a wide range of opportunities and products to offer their clients.
Brand recognition: Well-known wirehouses like Morgan Stanley and Wells Fargo have the name recognition to easily attract clients, so you may be able to build your client list quickly.
Professional development: Working at a large wirehouse may give you access to on-the-job training, administrative support, marketing assets, and lead-generation tools.

Key considerations:

Less flexibility: You may be encouraged to promote in-house products to your clients instead of providing advice solely based on the client’s best interest.
Established processes: Wirehouses generally have specific guidelines for financial planning and investment management, which means more structure and less autonomy.

Independent Broker-Dealers

Known as IBDs, independent broker-dealers still buy and sell financial securities and execute trades for their clients. But they often provide more freedom for their employees and flexibility for their clients because they’re not tied to a large wirehouse.

Main characteristics:

Flexibility: You’ll probably have more autonomy in how you work with clients and what products you sell than if you worked at a wirehouse.
Entrepreneurial focus: IBDs tend to attract financial professionals who prefer more independence over the set structure of a wirehouse.
Commission vs. expenses: Most independent broker-dealers make higher commissions than wirehouse employees, but they usually have to attract their own clients, which can mean higher expenses.

Key considerations:

Freedom: As an IBD, you can take a more personalized approach with clients and incorporate financial planning along with investment transactions.
Personal investment: You may not have access to the same level of infrastructure or support as at a wirehouse, which can make it harder to build your client base.

Banks

While banks aren’t the same as financial planning companies or investment firms, some banks also offer brokerage services. If you’d like a career that involves many different types of financial services, like loans, estate planning, and investments, you might want to consider working for a bank that also offers brokerage services.

Financial Planning Focus Areas

Just as there are various types of firms, not all financial planning work looks the same. Different financial planning specialties can work well for planners who want to become experts in a specific niche, and some planners choose to offer more generalized financial guidance.

Let’s look at a few different financial planning specialties. Remember, the type of firm you work for can also influence your financial planning approach.

Comprehensive Financial Planning

As the name implies, this is a holistic approach to financial planning. The idea is to help client all aspects of a client’s financial life:

Budgeting and cash flow
College savings
Tax strategy
Retirement planning
Investment management
Insurance
Estate planning
Risk management

If you like big-picture planning, this could be a good option. As a comprehensive planner, you’d help your clients understand how various aspects of money management can work together to help them reach their financial goals.

Investment Management

Investment managers focus on helping their clients optimize their portfolios to reach their financial goals. Here are some key aspects of this approach:

Portfolio diversification
Asset allocation
Risk assessment and management
Performance monitoring

If you want to help your clients understand how to align their investments with their financial priorities and goals, this could be a good niche to focus on.

Tax Planning

Some financial planners help their clients focus on minimizing their tax liability and planning for tax issues that may arise in the future. Even if you don’t get a CPA license, you can partner with tax professionals to help your clients better understand how taxes impact their overall finances.

Real-World Experience Brings Career Clarity

Learning more about different financial planning opportunities is important, but it can still be challenging to decide which one is right for you. How can you know which approach optimizes your skill set and aligns with your personal values if you can’t actually try them out?

That’s why real-world experience is so important for financial planners — especially at the beginning of their careers. Hands-on experience can help you figure out many essentials:

The kinds of topics and client conversations that you enjoy
Your preferred working style — 1:1 with your clients or as part of a collaborative team
Whether you like a fast-paced sales-focused role or something that’s relationship-based
If you like the security of a structured environment or the freedom of a flexible approach

Financial planning theory and classes can give you some insight into these decisions, but you might not be able to decide which career path is best without hands-on experience.

Real-world experience also makes you a better planner — no matter which niche you choose. You’ll learn to handle scenarios that don’t align with textbook examples and understand how to apply the financial planning theory you know to guide your clients.

The more real-world experience you can get at the start of your career, the better!

Discover Your Career Options at The Externship

Fortunately, traditional internships aren’t the only way to experience various financial planning opportunities. Now there’s The Externship!

While this innovative online training program offers many benefits, one of the most important advantages is exposure to real-life financial planning before you land a full-time job!

Through activities, presentations, assignments, and discussions, The Externships offers…

Access to unique case studies modeled after real clients
Perspectives from working planners with diverse backgrounds and unique roles
The chance to see how planners serve clients in different niches
Industry-standard tools used in various firms (eMoney, Asset-Map, Morningstar, and more!)
Detailed conversations about financial planning firms, philosophies, and clients.

The Externship gives you a clear, realistic look at what planners actually do each day on the job. Even if you don’t know exactly where you’re going after The Externship, you’ll have more information on the options so you can find your path forward.

Don’t Worry If Your Path Isn’t Clear Yet — Just Keep Exploring!

Career clarity doesn’t just happen once you finish your financial planner education. In most cases, you have to start doing the work to understand where you want to go next. So if you aren’t exactly sure what your career path looks like yet, that’s OK — just keep exploring the options, learning all you can, and taking any available opportunity to try out new things.

You can do all of that at The Externship! This virtual summer program gives you a look inside numerous aspects of financial planning plus the chance to hone your professional skill set and build your network.
Learn more about The Externship to see whether it’s the right program for you!