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Do I Need a License to Work as an Independent Financial Planner?
If your financial planner business involves just collecting client information and presenting clients with comprehensive financial plans, you can probably set up a business with nothing more than a local business license. However, if your planning services include plan implementation, you will need additional licenses, registrations and certifications. These professional registrations show you have the experience and knowledge that financial planning customers need and want.
Although there is no specific license for financial planners, obtaining one of the planner professional certifications shows clients you have the knowledge to provide useful planning advice. The best known planner designation is the Certified Financial Planner. The American Institute of Certified Financial Planner Board of Standards awards the CFP designation only after a planner has shown at least three years of financial service experience and completed a college degree-level courses, and passed tests covering different aspects of a comprehensive financial plan. The Chartered Financial Consultant designation is another certification a planner may obtain to show expertise in the field.
Giving Investment Advice
A financial planner who sells investment products such as mutual funds or provides detailed investment advice for a fee needs one of several investments related licenses or registrations. To sell investment products, you need a registered representative license from the Financial Industry Regulatory Authority. The Series 6 license lets you sell packaged products such as mutual funds and variable annuities. The Series 7 license lets you act as a full-range investment broker and sell most types of investment products. To give investment advice without earning commissions, you need to become a Registered Investment Advisor, registering either with your state or the Securities and Exchange Commission, depending on the number of client assets you advise.
Discussing Insurance Coverage
As a financial planner, you also advise clients on protecting assets using life, disability and property insurance products. With a life insurance license you can help ensure your clients purchase the life and disability insurance coverage you recommend and earn commissions for your practice. Selling insurance also keeps your clients from working with other insurance agents who may want to offer competitive financial planning types of services.
Other Possible Certifications
As a financial planner, you may want or need other types of certifications or licenses, depending on the planning services your business offers. Additional designations financial planners hold include the Certified Public Accountant designation, the Chartered Financial Analyst designation, or a law degree and an attorney license. For planners with these designations, the career path often starts as a CPA or lawyer and evolves into a full service financial planning business that centers on the expertise of the earlier acquired designation or license.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.