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Thoughts on becoming a CFP

Chris Farrell Mar 16, 2012

Question: I am a mother of five, wife to one and hold a job as a sales and marketing executive. At this time, I see it necessary to switch to a position that allows me to work more from home, without too much travel, and to build a business that I can grow into my golden years. I have started taking classes to become a Certified Financial Planner.

Right now, I rise at 4:30 a.m. to study and then perform my regular family and work duties. I am tired. I really want to do this, but I’m concerned my vision for being a CFP might not be viable. I would like to be fee-only and help middle-income people make sound decisions for their financial future. I have spoken with another CFP, and he has told me the focus for the industry is on high-net-worth people, which is not a path that I wish to pursue. Do you have any suggestions for finding other like minded CFPs? Do you see another path that could help reach this goal of serving others while earning a living? Any advice or thoughts is most appreciated. Best regards, Sarah, Rock Hall, MD

Answer: The CFP is a tough exam. I admire what you’re doing and your dream. I wouldn’t give it up — at least not yet. I am going to suggest that you do additional research first.

Here’s my take: The certified financial planner you talked to is right: CFPs are expensive. Most planners prefer working with high-net-worth households. They’ve invested a lot in their education and it isn’t a cheap business to run.

Sad to say, the economics of the CFP means that many middle-income families learn, to their chagrin, that it’s almost impossible to find someone with the broad financial expertise of a CFP who also charges a reasonable fee. Yet these are the people who often need help the most. 

However, I wouldn’t give up your idea to reach out to these people. The answer largely depends on the trade-offs and business model you’re willing to accept. I hesitate to receommend this approach to you since I know how tight time is for you — getting up at 4:30 to study, go to work, and maintain a house and family. Still, I think you need to spend time learning more about your options as a financial planner.

I am a big believer in networking, networking and networking. I would gather as much information as you can from people currently in your business. For example, I would go to events sponsored by the Financial Planning Association of Maryland. (There are similar organizations in every state.) Reach out to leaders in the organization. Buttonhole everyone you can. Tell them what you want to do. Ask for their advice and insight. Is your idea viable or not?

I would also reach out to CFPs that have developed a business model more targeted at middle-income families. For example, the Garrett Planning Network offers a break on fees by slicing financial problems into discrete issues, such as buying a home and saving for college. Another fee-only network you might want to open up a conversation with is the Alliance of Cambridge Advisors.

What else? Well, what sort of career path do you see ahead of you? Financial planning is an entrepreneurial business. You could end up at a large financial services firm, a small independent shop, or after you’ve gained experience, put out your own shingle. What are your income expectations? And, depending on the kind of employment you choose, how much you can expect to make?

You’re right to think that financial planning is the kind of career you can do well into the traditional retirement years. Working longer can also affect how you think about income. You can have the same standard of living earning a lower income and working to 70, compared to someone who makes more money but retires at 60. These are the kinds of calculations and trade-offs I would consider.

Create a small business blueprint for yourself first, a practical path. And then focus on getting the degree — assuming you still want it.

I know we have CFPs and other financial planners that read this blog, so please chime in with your insights, additional thoughts, agreements and disagreements.

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