Are you considering a career as a Certified Financial Planner (CFP)? One of the most important factors to consider is the potential salary you could earn in this field.
As a CFP, you will be responsible for helping individuals and families manage their finances, plan for the future, and make informed investment decisions. But how much can you expect to make as a CFP?
The answer to this question depends on a variety of factors, including your level of experience, the region where you work, and the type of firm you work for.
In this article, we will explore the average CFP salary, as well as the salaries you can expect at different stages of your career. We will also compare CFP salaries to other financial careers and help you determine whether pursuing a career as a CFP is worth it for you.
So, let’s dive in and explore the world of CFP salaries!
Key Takeaways
- The average salary for a Certified Financial Planner (CFP) is influenced by factors such as experience, location, and industry specialization.
- Entry-level CFPs can expect to earn a salary in the range of $50,000 to $75,000, while mid-career CFPs can earn between $75,000 to $150,000, and senior-level CFPs can earn upwards of $150,000.
- Compared to other financial careers, CFPs tend to earn a higher salary due to the specialized knowledge and skills required for the role.
- Pursuing a career as a CFP offers opportunities for growth and advancement, as well as the potential for a high salary and job stability.
What is a Certified Financial Planner (CFP)?
So, you’re interested in becoming a CFP? Well, let me tell you, it’s a professional designation for financial planners who’ve undergone rigorous training and passed a comprehensive exam.
A CFP is someone who’s trained to help individuals and families achieve their financial goals and navigate the complex world of finance. To become a CFP, you must complete a rigorous course of study that covers a wide range of financial topics, including investment planning, tax planning, retirement planning, and estate planning.
You must also pass a comprehensive exam that tests your knowledge of these topics and your ability to apply them to real-world situations. Once you’ve earned the CFP designation, you’ll be recognized as a trusted advisor who can help people make informed decisions about their finances and achieve their financial goals.
Factors that Affect CFP Salary
The salary of a Certified Financial Planner is influenced by various factors, and these factors can either increase or decrease their earnings, depending on the circumstances.
Here are some of the factors that affect a CFP’s salary:
- Level of education and credentials
- Years of experience in the industry
- Geographic location of the practice
- Type of firm or company the CFP works for
It’s important to note that these factors don’t work in isolation. Rather, they work together to determine a CFP’s salary.
For instance, if a CFP has a higher level of education and is credentialed, they may earn more than someone with less education and fewer credentials. Similarly, a CFP who has been in the industry for a long time and works for a reputable company may earn more than a CFP who is just starting out and works for a smaller firm.
Overall, it’s clear that there are many factors that can impact a CFP’s salary, and it’s important to take these into consideration when pursuing a career in financial planning.
Average CFP Salary
You may be curious about what kind of salary you can expect as a Certified Financial Planner. According to the Bureau of Labor Statistics, the average salary for a CFP in the United States is around $89,000 per year. However, this number can vary depending on factors such as location, experience, and the type of firm you work for.
To give you a better idea of what to expect, here is a table outlining the average salaries for CFPs in different states:
| State | Average Salary |
|---|---|
| California | $108,000 |
| New York | $98,000 |
| Texas | $84,000 |
| Florida | $77,000 |
| Ohio | $70,000 |
Keep in mind that these are just averages and your actual salary may be higher or lower depending on your individual circumstances. However, becoming a CFP can be a financially rewarding career choice.
Entry-Level CFP Salaries
Starting out as a CFP may not lead to an immediate financial windfall, but the potential for long-term success and stability is worth the effort.
According to recent data, the average entry-level CFP salary is around $52,000 per year. However, this number can vary depending on factors such as location, experience, and education level.
While the starting salary for a CFP may not be as high as some other professions, the potential for growth is significant. As you gain more experience and build your client base, your income can increase substantially. Additionally, the demand for financial planners is expected to continue to grow, providing even more opportunities for CFPs to increase their earning potential.
Ultimately, if you’re willing to put in the time and effort to build your skills and network, becoming a CFP can lead to a rewarding and lucrative career.
Mid-Career CFP Salaries
Now that you’re established in your CFP career, it’s exciting to know that your earning potential can increase significantly as mid-career CFP salaries can vary depending on location, experience, and education level.
According to Payscale, the average mid-career CFP salary in the United States is around $87,000 per year. However, location plays a big factor in determining salaries, with CFPs in cities like New York and San Francisco earning upwards of $100,000 per year.
But it’s not just location that affects earning potential. Experience and education level also play a role. CFPs with 5-9 years of experience can expect to earn an average of $97,000 per year, while those with 10-19 years of experience can earn upwards of $120,000 per year.
Additionally, holding advanced degrees such as a Master’s in Financial Planning or a Certified Financial Planner designation can also lead to higher salaries.
Overall, the mid-career stage of a CFP’s career can be a lucrative one, with potential for continued growth and earning potential.
Senior-Level CFP Salaries
If you’ve been in the CFP field for a while and are looking to advance to a senior-level position, you’ll be interested in knowing that the earning potential can increase even more.
According to the CFP Board’s 2020 Compensation Guide, the median total compensation for senior-level CFP professionals with at least 20 years of experience is $215,000. This includes salaries, bonuses, and other forms of compensation.
While this may seem like a significant increase from mid-career salaries, it’s important to note that senior-level positions often come with more responsibility and require a higher level of skill and expertise.
Additionally, the compensation may vary based on factors such as geographic location, size and type of firm, and specific job responsibilities. However, for those who have put in the time and effort to become a senior-level CFP professional, the potential for higher earnings can be a rewarding aspect of their career growth.
CFP Salary vs. Other Financial Careers
Comparing salaries of CFP professionals to other financial careers can be eye-opening. While CFPs typically make a median salary of around $89,000 per year, financial analysts make a median salary of $85,660 per year, according to the Bureau of Labor Statistics. However, financial analysts typically only require a bachelor’s degree, while CFPs need to complete extensive coursework and pass a rigorous exam to become certified.
Other financial careers, such as investment bankers and hedge fund managers, can make significantly more than CFPs. Investment bankers can make six-figure salaries straight out of college, with the potential to earn millions in bonuses. Hedge fund managers can also make millions of dollars in a single year, although this career path requires significant experience and success in the industry.
While these careers may seem more lucrative, they also come with high levels of stress, long hours, and a competitive work environment. Ultimately, the salary of a CFP may be lower than some other financial careers, but the job also comes with a more reasonable work-life balance and the satisfaction of helping clients achieve their financial goals.
Is Pursuing a Career as a CFP Worth It?
You should definitely consider pursuing a career as a CFP because it offers a sense of fulfillment and a healthy work-life balance while helping clients achieve their financial goals. As a CFP, you have the opportunity to make a positive impact on people’s lives by providing them with personalized financial advice and helping them navigate complex financial situations.
This sense of fulfillment comes from knowing that you’ve helped improve your clients’ financial well-being and given them peace of mind. In addition to the sense of fulfillment, pursuing a career as a CFP also offers a healthy work-life balance. You have the flexibility to set your own hours and work from anywhere, making it easier to balance your career with personal commitments.
Moreover, as a CFP, you have the potential to earn a competitive salary, which can help you achieve your own financial goals. Overall, pursuing a career as a CFP can be a rewarding and fulfilling experience that offers a healthy work-life balance and the potential for financial success.
Frequently Asked Questions
What are the educational requirements to become a Certified Financial Planner (CFP)?
To become a certified financial planner (CFP), you’ll need to meet certain educational requirements. First, you’ll need to have a bachelor’s degree from an accredited institution. This degree can be in any field, but it’s recommended that you major in finance, economics, or a related subject.
You’ll also need to complete a CFP Board-registered education program, which consists of courses in financial planning, insurance, investments, retirement, and tax planning. After completing the education program, you’ll need to pass the CFP exam, which tests your knowledge in these areas.
Once you’ve passed the exam, you’ll need to meet the experience requirement, which involves at least three years of full-time financial planning experience. Overall, becoming a CFP requires a significant amount of education and experience, but it can lead to a rewarding career helping individuals and families plan for their financial futures.
How long does it typically take to become a CFP?
To become a certified financial planner (CFP), you typically need to complete a bachelor’s degree in finance, accounting, economics, or a related field.
After that, you’ll need to complete a CFP Board-registered education program or equivalent coursework.
You’ll also need to have at least three years of professional experience in financial planning or a related field.
Once you’ve met these requirements, you can sit for the CFP exam. The exam is a six-hour, computer-based test that covers a wide range of topics, including financial planning, tax planning, investment planning, and retirement planning.
After passing the exam, you’ll need to complete a background check and agree to abide by the CFP Board’s code of ethics and standards of conduct.
The entire process typically takes several years to complete, but it can vary depending on your educational background and work experience.
What types of companies typically hire CFPs?
Companies across various industries hire Certified Financial Planners (CFPs) to help clients achieve their financial goals. As a CFP, you could work for financial planning firms, banks, insurance companies, accounting firms, or even start your own practice.
Your job would involve analyzing financial data, developing and implementing financial plans, and advising clients on investment opportunities, insurance options, and retirement planning. Depending on your experience and expertise, you could also specialize in areas such as estate planning, tax planning, or risk management.
With the increasing demand for financial planning services, the job outlook for CFPs is positive, and you could look forward to a rewarding career in the financial services industry.
Are there any additional certifications or designations that can increase a CFP’s salary?
If you’re a Certified Financial Planner (CFP), getting additional certifications and designations can potentially increase your salary. Adding a Chartered Financial Analyst (CFA) designation to your qualifications can demonstrate advanced knowledge and skills in investment analysis and management. Becoming a Certified Public Accountant (CPA) can show expertise in tax planning and accounting.
These additional certifications can make you a more competitive candidate for higher-paying positions in finance, wealth management, and related fields. However, it’s important to note that salary varies greatly depending on factors such as location, experience, and industry.
What are some common career paths for CFPs beyond traditional financial planning roles?
If you’re a certified financial planner (CFP) and looking for alternative career paths beyond traditional financial planning roles, there are several options available to you.
One path is to become a portfolio manager or investment analyst, where you’ll analyze financial markets and make investment decisions on behalf of clients.
Another option is to work as a financial advisor for a specific industry, such as healthcare or technology, where you’ll specialize in the unique financial needs of that industry.
Alternatively, you can consider becoming a financial educator or writer, using your expertise to educate others on financial literacy.
Whatever path you choose, having a CFP certification will give you a strong foundation to build upon and increase your earning potential.
Conclusion
Congratulations! You now have a better understanding of how much a Certified Financial Planner (CFP) can make in a year. As we discussed, the average CFP salary varies depending on several factors, including experience, location, and industry.
If you’re just starting out as a CFP, you can expect an entry-level salary of around $50,000 per year. However, with mid-career experience, you can earn upwards of $100,000 annually, and senior-level CFPs can make over $200,000 per year.
Despite the variation in salary, pursuing a career as a CFP can be a lucrative and fulfilling choice. Not only can you earn a comfortable living, but you can also make a positive impact on people’s lives by helping them achieve their financial goals.
So, if you have a passion for finance and a desire to help others, becoming a CFP may be worth it for you.
