Financial Planning as a Career?

At this time of year, hundreds of thousands of pupils and students in schools, colleges and universities across the UK are involved in, or just finished their exams. It is a very stressful time as success or otherwise, in exams can have a profound impact on a young person’s life for years to come.

The stress, however, does not end there – at the back of many entrant’s mind is – even if I do succeed and get great grades – what then? How do I go about finding a career that will reward my hard work and that I will find interesting and stimulating? Above all, with a huge percentage of one’s life spent at work – how do I find a job that I really enjoy?

It is fair to say that Financial Planning as a career path has slipped under the radar somewhat. Compared to say the law, or accountancy which have existed for centuries, financial planning is a relatively new profession. Yet it can be as demanding and rewarding, if not more so, than many other more established paths.

The pinnacles of the financial planning profession are that of a Chartered and/or Certified Financial Planner. In both cases, the roads to attaining these levels are long, and involve studying and passing many professional exams, as well as gaining much relevant workplace experience.

Financial Planning is a multi-faceted discipline and gaining relevant technical knowledge on matters such as tax, investments, pensions, trust planning, inheritance planning and many other areas is essential in order simply to be competent. Yet at its heart financial planning is all about dealing with people and, as the name suggests, planning.

Let us look at an example of a couple, potential new clients, coming in to see a financial planning firm for the first time:

Andy is a company director aged 42 and is married to Jo, 39, who is a primary school teacher, having returned to work after having their two children, now aged 5 and 3. Andy pays himself a small salary and tops up income from dividends. Jo’s earnings are less than they were as she is now part-time, but essential for the family to balance the books. They have a large mortgage which is not due to be repaid until Andy is 65. They are an ambitious couple and hope that both children will be able to go to university one day. Jo’s aunt recently died and left her an inheritance. Over the years, Andy, in particular, has acquired a number of pensions and investments but has no real idea of what they are worth.

By carefully discussing in a relaxed and comfortable environment, the financial planner amongst other things would be looking to establish with Andy and Jo:

  • What are their short, medium and long-term goals, financial or otherwise? For example, perhaps they want to be sure that they will be able to fund the children’s further education in years to come without scrabbling around at the last minute. Perhaps they would like to travel the world one day. Or start another business.
  • At what age would they like to be financially independent? In other words, when would they like the option of stopping work, even if they choose not to? And at that point, what income, in today’s terms, would they like, after tax, on a monthly basis? This could be a very different figure to their present requirements.
  • Are their current pensions and investments providing them with value for money, or are they underperforming and being overcharged for the privilege? The harsh reality is that failing to act in these circumstances can add years to the age of reaching financial independence.
  • What are Jo’s plans for the inheritance? Would it be wise to reduce the mortgage or would investing some of the money make more sense?
  • What about a disaster recovery plan? Andy is a high earner, but what would happen if he was unable to work through ill-health for example?

Above all, the aim when a financial planner meets new clients initially should be the creation of their own financial plan, with measurable and meaningful objectives. Essentially this will provide a financial roadmap for the clients which will give them complete clarity on the path they are following. And once done, rather than the plan gathering cobwebs, it is essential to revisit it each year because circumstances, legislation and a host of other things change each and every year.

Financial planning is a tremendously rewarding profession – essentially it is all about helping people. There is a long road of professional exams that involves gaining and retaining a lot of technical information, but at its heart, it is a people business. For that reason, gaining trust, being personable, a great listener and being able to explain complex matters simply, in terms that anyone can completely understand are the greatest requirements.

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