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Each advisor and certified financial planner (CFP) has different motivations for getting into the business. For some, there’s altruism. They enjoy working with people, want to help clients reach important and put their soft skills to good use.
For others, they’re good at sales or they’re entrepreneurial and want to chart their own course. Others love the research and securities evaluation/selection of being a CFP. All strong reasons to be sure and there are certainly plenty of other reasons to enter the industry.
Of course, no one should be faulted if they say they became a CFP because the money is good. Thinking about that response from a client’s perspective, the reasoning is quite valid. After all, what client wants to work with a CFP or an advisor that is struggling financially? It’s a bad look.
With those factors in mind, let’s explore some of the nitty gritty of CFP compensation.
It’s a Good Living
As those that have it know, CFP is an official designation and it can be earned through the CFP Board, which recently published a study on compensation trends for those with the designation. The news is good.
In 2022, the median compensation, which included salary, variable pay and profit sharing, for a financial planner was $198,500 with that figure being 12% higher for those with the CFP designation, according to the CFP Board. Alone, that’s a nice number and it begs the question as to why more folks aren’t entering the field. Perhaps they should consider it because the overall compensation for CFPs is compelling.
“CFP® professionals’ compensation goes beyond cash salaries and bonuses. Valuable employee benefits — including health, dental, life and disability insurance, and professional development opportunities — can add up to thousands of additional dollars,” according to the CFP Board. “Virtually all CFP® professionals’ compensation packages include quality retirement benefits that provides a foundation for financial security for when they retire.”
The survey indicates 97% of CFP have access to defined contribution retirement plans and 46% work for firms with profit sharing. For those that are ambitious and have leadership, this is a compelling statistic: a CFP that leads a team of at least six garners median compensation of $385,000. That’s a lot of money.
Other Benefits
Cash is king and it’s certainly nice to have a strong base salary and other cash/equity-related perks, but there are also significant quality of life benefits that come with being a CFP. For example, 20% of CFPs can work anywhere they so choose at least four days and 36% have unlimited paid time off, notes the CFP Board.
Those are big-time perks and can create “revenue streams” in their rights because, specific to working from home, that can reduce the grind of a commute, reduce car fuel and repair bills and potentially reduce the amount a CFP doles out every month for childcare.
In other words, it’s surprising that being a CFP doesn’t get more attention as an excellent career choice.