Wed. Jun 7th, 2023

Financial Planning Companies

Financial planning companies offer various services to assist people in planning for their financial futures, and may also offer investment advice.

Financial advisors typically specialize in one area of finance, such as college savings or retirement planning, while they also handle more general matters, like taxes and estate planning.


Financial planners assist their clients with savings, investments, retirement planning, taxes and estate planning. Some specialize specifically in areas like insurance or securities while others sell products such as life, health or property insurance policies.

Aspiring financial planners typically need an undergraduate degree or relevant work experience. Bachelor’s programs often include classes on taxation, risk management and investing to prepare students for this industry; master’s programs in finance, accounting or business administration can further advance careers and increase earnings potential.

Certified Financial Planner (CFP) certification represents the pinnacle of achievement in financial planning and signifies an advisor has met education, training and ethical standards. To become certified as a CFP, an applicant must fulfill education and experience requirements before passing a comprehensive exam and agreeing to a code of ethics.

Investment advisers are licensed by either the Securities and Exchange Commission (SEC) or their state’s regulatory body to offer investment advice and offer investment recommendations. Sometimes known as stockbrokers or investment analysts, investment advisers can earn commission from selling financial securities such as stocks or bonds sold on commission.

Many financial planners specialize in one area of finance such as retirement planning, college savings or estate planning and may work closely with an attorney who offers legal advice in these areas.

Financial planners can also act as securities brokers and insurance agents, although these roles require additional qualifications. Stockbrokers and insurance agents must pass exams administered by either the Financial Industry Regulatory Authority or their state to qualify.

Some financial planning companies provide on-the-job training for new hires in financial planning. Here, they learn from more experienced professionals in the field while developing corporate skills necessary for becoming successful financial planners.

Financial planning companies typically employ specialized departments dedicated to training and supporting financial planners and staff members. Additionally, this department may provide opportunities for professional growth within the firm as well as opportunities for advancement within it.

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Financial planning companies make their living by charging fees for the services they offer, whether that is in the form of flat or percentage fees on client portfolio values. Fees can vary greatly depending on what services are required as well as asset sizes of clients’ accounts.

Traditional, in-person financial advisors generally charge one percent (1% AUM) of assets under management (AUM), while robo-advisors usually charge between 0.25% and 0.50% annually for their advisory services. When portfolio sizes increase, median AUM fees decline, becoming 0.75% over $2M, 0.65% over $3M and finally 0.50% when they go beyond $5 Million in assets under management (AUM).

Commission-based financial planners receive compensation in return for recommending products or generating specific sales, which often runs counter to their fiduciary duties of placing your interest first. Accordingly, The National Association of Personal Financial Advisers (NAPFA) advises fee-only planners.

Fee-only planners must disclose any compensation they receive from third parties – such as financial products they recommend – in order to avoid conflicts of interest and ensure they’re acting in your best interest.

Cost of financial planner services depends on a range of factors, including what services you need and the time that an adviser spends working with you. Some advisors charge an hourly or set monthly fee while others offer full packages including retirement planning, tax preparation and investment guidance at one flat fee price.

When choosing an advisor, look for credentials relevant to your needs and level of service you require. For instance, if you require comprehensive financial planning advice then look for a fee-only planner who is also a fiduciary.

If you have large assets or complex needs, seeking advice from a fee-only planner who’s also a fiduciary is also recommended to ensure the best advice possible is given for your unique circumstances. A fee-only model also ensures greater transparency than commission-based plans as there won’t be any potential conflicts of interest between recommending certain products and receiving compensation in return.

Business structure

Financial planning companies whose business structure varies can have significant ramifications on various aspects of their operations, including personal liability issues and federal income tax liabilities. Selecting an optimal structure is also key in aiding growth over time.

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When choosing the structure for your business, it’s essential to carefully consider its risks and future goals. Depending on which structure you select, raising capital may become easier or more difficult depending on whether it is new or already established.

Common business structures include sole proprietorships, LLCs and corporations (C and S corps). Deciding the most suitable structure for your company depends on many factors, including its legal liability and tax status.

Limited Liability Companies (LLCs), are often the ideal structure for small businesses, offering limited liability protection and making client acquisition simpler.

Establishing your business with dedicated bank accounts is another effective way of protecting personal assets should it become necessary to declare bankruptcy for whatever reason. Your personal assets won’t be at risk in such an instance.

Additionally, using an LLC for your business will enable you to maximize available tax deductions; however, before making this decision it would be prudent to consult a tax specialist first.

Financial planners must act in their clients’ best interest as fiduciaries, adhering to high ethical standards and complying with all state and federal laws.

For an easy way to determine whether your financial planner is acting in your best interest, simply ask. If they do not respond, look elsewhere for advice.

Beyond choosing your business structure, other tasks to be completed are to obtain a license from your state as well as pay any filing fees or make any required filings. Furthermore, insurance such as general liability and errors and omissions coverage (E&O coverage) will be essential components.

Financial planners can take advantage of several insurance products designed specifically for them, which provide protection from malpractice suits as well as compliance with state and federal regulations. Furthermore, data breach insurance provides protection should their business become the victim of cyber attacks that require legal costs to resolve.


Financial planning companies frequently utilize professional designations or certifications as a way to demonstrate their level of expertise and commitment to ethical standards. Such designations can help clients determine whether an advisor fits with their needs, potentially leading to referrals from previous customers.

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Financial planners come equipped with various certifications, so it’s essential that you select one suitable to your needs. For instance, if estate planning is one of your concerns then look for someone with CFP (Certified Financial Planner).

The Certified Financial Planner credential (CFP) is one of the world’s premier financial planning credentials and specializes in helping individuals to meet their financial goals. Becoming certified requires going through a stringent educational process, having vast experience, and adhering to an ethical code of practice.

CFPs possess in-depth knowledge of the financial planning process and can offer advice that’s tailor-made to your situation. In addition, they can equip you with tools for self-evaluation and setting financial goals.

Financial planners who hold the CFP designation are committed to fulfilling their responsibilities as fiduciaries for clients rather than selling financial products.

CFA designation holders are professional who possess in-depth knowledge in accounting, economics, portfolio management and securities analysis. As CFA professionals they offer research services as well as investment advice while serving in multiple capacities within the financial industry.

Bank and insurance industry employees often seek the expertise of financial consultants when making important financial decisions, as well as serving in advisory roles with large firms and working directly with individual investors who possess substantial assets or possess high net worths.

Some financial planners provide additional services, including tax planning. Tax planners can help to minimize taxes on retirement income while offering advice about investing for the future. In addition, estate and risk management services are often provided, too.

Jeffrey Augers
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By Jeffrey Augers

Jeffrey Augers is a highly skilled and experienced financial analyst with over 12 years of experience in the finance industry. He has a proven track record of delivering exceptional financial insights and recommendations to clients, empowering them to make informed decisions and achieve their financial goals. Jeffrey holds a Bachelor's degree in Finance from the University of Michigan, and an MBA from the Wharton School of Business.