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How to Become a Financial Counselor

Growth Trends for Related Jobs

Everyone wants to know how to reduce debt and have more money in the bank, and a financial counselor specializes in helping with just that. However, the financial counselor position is also sometimes confused with that of a financial planner, who serves a wealthier client base. Financial counselors need, at minimum, a bachelor’s degree, as well as specialized coursework in financial counseling, to qualify to take the Accredited Financial Counselor exam.

Become a Finance Counselor

Financial counselors provide advice on financial matters to clients. Their client base is typically low- to middle-income consumers who need help coming up with a plan to get out of debt, build credit, boost savings, or a combination of some or all of the above. To become certified, a financial counselor will become an Accredited Financial Counselor, which requires getting the right education and experience and passing the AFC exam.

A Certified Financial Planner, on the other hand, typically advises higher-income clients and businesses on topics related to investing and retirement savings. To become a CFP, you will need to get the correct education, acquire some experience, and successfully sit for and pass the CFP exam. When comparing the AFC vs. CFP, the difference has to do with the clients they see and the type of experience they’ll need to qualify for professional certification.

Certified Financial Planners

A Certified Financial Planner is given that designation by the Certified Financial Planner Board of Standards, Inc. To meet the requirements for certification, you’ll need to participate in formal education, pass the CFP exam, gain the required work experience and maintain ethical standards.

To pursue certification as a financial planner, you’ll need at least a bachelor’s degree from an accredited institution of higher learning. Even with that education, though, you’ll need coursework in financial planning to become certified. If you’re weighing the benefits of AFC vs. CFP, you can become a CFP with no experience as a counselor, while becoming an AFP requires experience.

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Accredited Financial Counselors

Many financial counselors fall in the category of Accredited Financial Counselors. This newer credential was created by the Association for Financial Counseling and Planning Education to give professionals the training and credentials necessary to excel in their fields. To become an AFC, you’ll need at least 1,000 hours of experience in the field of financial counseling.

One thing you’ll see in comparing AFC vs. CFP is that CFPs can have general experience in finance, while AFC credential holders must have specific experience in financial counseling to qualify. On the other hand, the AFC exam isn’t quite as difficult as the CFP exam, but you will find more questions related to working with lower- and middle-class consumers.

Required Experience CFPs vs. AFCs

Before you can become certified as a financial planner, you’ll need to gain a minimum number of hours of experience in the industry equal to 6,000 hours or three years or more of full-time professional work in finance. If you don’t have this experience, you can substitute it with at least two years of experience as an apprentice plus additional individual requirements.

AFCs, on the other hand, will need at least 1,000 hours of actual professional counseling experience, which can include financial counselors and those who supervise them. It can be very beneficial to decide the type of financial counseling you hope to do and seek a job in that field. If you aren’t yet certified, it can help to write up case studies and get recommendations from people you’ve helped in the past.

What’s on the CFP Exam?

Like a finance counselor, a financial planner needs to pass the CFP exam, which is administered via computer during the testing periods in March, July and November of each year. There are more than 265 U.S. testing sites, making it likely that most financial planners will find one nearby. The exam is in multiple-choice format, with 170 questions.

The CFP exam is made up of eight principal knowledge topics categories and eight major domains. Principal knowledge topics include professional conduct and risk management, as well as education, investment, tax and retirement planning. Major domains include the client-planner relationship and developing and sharing recommendations with clients.

In 2018, the pass rate for the CFP exam was 60 percent, with the pass rate for those taking it for the first time higher, at 64 percent. There is no set number of questions that need to be answered correctly to pass. Instead, the board has come up with a minimum overall competency score necessary to be considered a Certified Financial Planner.

What’s on the AFC Exam?

If you’ve taken the CFP exam, you’ll find you’re already partly prepared to go for AFC status. You may need a refresher, but the first part of the exam includes much of what you studied when you became a CFP. Topics will include retirement and estate planning and life and property casualty insurance, as well as investing and taxes.

The second part of the AFC exam is where things begin to differ. You’ll find questions on topics you’ll deal with when counseling clients, including consumer fraud and credit health. You’ll also be quizzed on the human interaction skills needed to effectively counsel others.

Work Environment for Financial Counselors

A financial counselor typically works for financial firms, nonprofits and government agencies with the goal of helping reduce debt and improve financial solvency. Their employers make money by charging customers for debt advice.

A financial planner, on the other hand, is more likely to work for finance and insurance companies. Four out of 10 financial planners are self-employed, charging customers directly for the financial advice they provide.

In both careers, you may find yourself working either alone or as part of a team. You can expect to work long hours, especially in the early years of your career as you build your client base and establish yourself in your profession. Many financial counselors must work nights and weekends to meet client demand, although financial planners may find it easier to stick to office hours.

Job Duties of Financial Counselors

An accredited financial counselor typically works with low- to middle income individuals to help them improve their finances. A financial counselor will review your situation and make recommendations and even help you set a budget. Financial counselors can also reach out to your creditors and negotiate your debt to make things more manageable.

Financial planners are more likely to serve higher-income individuals interested in building an investment portfolio or retirement savings. A financial planner may meet with other professionals in their clients’ lives, including attorneys, accountants and investment bankers. You’ll spend a great deal of time on research, both into your clients’ financial situation and into various investment options.

Salary for Financial Counselors

An accredited financial counselor can expect to earn an average salary of $35,755, or about $17 an hour. Wages may be higher at a private company versus a nonprofit or government agency, and those lower salaries can affect the average salary.

A financial planner, on the other hand, can usually expect to make more once the appropriate credentials are in place. Certified Financial Planners average $66,478, with a range of $45,000 to $118,000. CFPs are more likely to work for investment and insurance companies, which generally pay more than nonprofits and government agencies.

Required Skills for Financial Counselors

Interpersonal skills are necessary for anyone who regularly meets with clients, including both financial counselors and financial planners. A finance counselor meets with consumers, typically on issues related to personal debt and savings. You will spend a great deal of time going through a client’s financial records to come up with recommendations.

Financial planners typically offer advice that spans a wide range of areas, including insurance and stocks. This requires having an aptitude for staying on top of the latest information in all of these areas, as well as an ability to apply it to a client’s own investment needs. As a financial planner, you’ll probably be expected to dress appropriately for routinely dealing with higher-level executives and consumers, such as investment bankers and corporate CEOs.

Both financial planners and counselors may find their expertise is in demand for workshops and seminars, which can also be a great way to line up new clients. If you choose to go this route, you’ll need to bone up on your public speaking skills. The expertise you gain in your career can also position you to teach classes locally on the side or perhaps as a post-retirement career.

Job Outlook for Financial Counselors

The demand for financial advisors, whether as an accredited financial counselor or financial planner, is expected to grow in the years to come. The U.S. Bureau of Labor Statistics predicts a 15 percent growth in the industry, which is a rate much faster than average.

One reason for this growth is an aging population. As baby boomers continue to reach retirement age in larger-than-ever numbers, the need to prepare financially for those golden years is only expected to increase as well. The disappearance of pensions for most Americans has also driven a need for financial planning, pushing consumers at all economic levels to seek alternative retirement savings options.

Licensing for Financial Counselors

If you’re seeking a career as a financial counselor or financial planner, you’ll need to look into the licensing requirements. Although you won’t need a license to provide financial advice to consumers, you will need a license to sell investment products like stocks and bonds. If you’re working for a debt counseling firm, that service will need to hold appropriate licenses in any state in which it does business.

Selling securities like mutual funds requires a Series 6 license, and a Series 7 license covers almost every type of investment you’ll encounter in your career. If you plan to sell commodities, you’ll need a Series 3 license. For those who get paid in fees rather than commissions, a Series 65 license is necessary.

If you sell securities, your state will also require you to get a Series 63 license, which requires passing a brief exam. However, you won’t have to pursue a Series 63 license if you’re doing business in Colorado, Florida, Louisiana, Maryland, New Jersey, Ohio, Vermont, the District of Columbia or Puerto Rico.

Financial Management Careers

If you want to push your salary up to the six-figure level, a job as a financial manager may be a better option. With an average salary of nearly $128,000, financial managers typically work for banks, insurance companies and large corporations, overseeing the financial health of the organization. Duties include generating financial reports and managing investments.

To qualify for a financial manager position, you’ll need a financial background. In fact, work as a financial consultant or financial planner could be the perfect background for a career as a financial manager. You’ll need at least five years of experience in a finance-related position to qualify for most financial manager jobs.

About the Author

Stephanie Faris is a novelist and business writer whose work has appeared on numerous small business blogs, including Zappos, GoDaddy, 99Designs, and the Intuit Small Business Blog. She worked for the State of Tennessee for 19 years, the latter six of which were spent as a supervisor. She has written about business for entrepreneurs and marketing firms since 2011.

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