Choosing a career path is difficult. Most people want to find work that is fulfilling while also providing financial security.
If you are considering a career in financial planning, it's important to understand the earning potential. Financial planners who develop expertise and grow their book of business can earn comfortable six-figure salaries.
This article will give you a detailed overview of financial planner salaries - from the median income to top pay. You'll see how experience level, qualifications, firm type, location and services offered impact wealth planner pay. You'll also learn about growth opportunities to increase your income potential over time.
Introduction to Financial Planner Salaries
Financial planners help individuals and families develop plans to achieve their financial goals. They offer expertise on investments, taxes, retirement, estate planning, and more. Understanding financial planner salaries can help those considering this career path.
Defining the Role of a Financial Planner
Financial planners typically:
- Meet with clients to understand their financial situations and goals
- Develop comprehensive financial plans to meet those goals
- Recommend and implement investments aligned with client goals
- Provide advice on topics like budgeting, debt, taxes, insurance, retirement planning, college savings, and estate planning
- Monitor client progress and adapt plans as needed
They must understand complex financial concepts but also effectively communicate with clients. Strong interpersonal skills are essential.
Key Specializations Within Wealth Planning
Common specializations include:
- Investments: Recommending and managing investment portfolios
- Tax planning: Minimizing taxes using strategies like tax-advantaged accounts
- Retirement planning: Helping clients prepare for retirement through vehicles like 401(k)s and IRAs
- Estate planning: Preparing wills, trusts, and related documents to transfer wealth
- Insurance: Advising on and selling various insurance products
Specializations allow financial planners to better serve specific client needs.
Median Salary and Income Range for Financial Planners
According to the Bureau of Labor Statistics:
- The median annual salary for financial planners is $87,850.
- The lowest 10% earn less than $43,320.
- The highest 10% earn more than $208,000.
Salaries vary based on:
- Experience: More experienced planners earn higher salaries.
- Credentials: Relevant certifications can increase salaries. Common credentials include CFP, ChFC, CFA, and CPA.
- Location: Salaries tend to be higher in major metropolitan areas.
- Firm type: Planners at large firms typically earn more than those in smaller practices.
So while some entry-level financial planners earn around $40,000, salaries of $100,000+ are common for those with years of experience and credentials.
Factors That Impact Financial Planner Salaries
Financial planners can earn a wide range of salaries based on several key factors. These include:
Experience Level and Qualifications
More experienced financial planners with advanced credentials like a CFP (Certified Financial Planner), CFA (Chartered Financial Analyst), or CPA (Certified Public Accountant) certification tend to earn higher salaries than entry-level planners. Those with 5-10 years of experience may earn $70,000-$120,000 on average, while planners with over 10 years of experience can earn $100,000-$300,000+. Obtaining credentials shows expertise and can increase earning potential.
Type and Size of Firm
The type and size of firm a planner works for impacts income. Those at large Wall Street firms and wirehouses typically earn higher base salaries plus bonuses and commissions compared to independent fee-only planners or those at smaller boutique firms. Wirehouse planners may earn $100,000-$500,000 while independent planners earn $60,000-$150,000 on average.
Geographic Location
A planner's geographic location significantly influences earning potential. Those working in major metropolitan areas and financial hubs like New York, San Francisco, and Chicago tend to earn higher salaries given the increased cost of living. Average salaries in smaller towns may be $60,000-$90,000 versus $150,000+ in cities. Location, firm type, experience level and credentials all interact to impact planner salaries.
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Comparing Salaries for Wealth Management Roles
Benchmark financial planner incomes against related jobs like investment advisors, accountants, financial analysts, and financial managers.
Financial Planner vs Investment Advisor
Compare median salaries and earning potential between financial planners and investment advisors providing portfolio management services.
Financial planners and investment advisors often work closely together, but have some key differences when it comes to salary and compensation structures.
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Financial planners typically earn a median salary of around $90,640 per year. However, many financial planners earn money through fees and commissions, taking a percentage of assets under management rather than a flat salary. High performers can earn over $150,000.
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Investment advisors focused specifically on portfolio management tend to earn higher median salaries of approximately $100,000 per year. Their income also comes predominantly from asset-based fees rather than a flat salary. Top investment advisors manage over $100 million in assets and earn multimillion dollar incomes.
While both roles involve advising clients on investments and financial planning, investment advisors tend to focus more narrowly on portfolio performance while financial planners take a broader view of a client's overall financial health across all areas of their financial life. This wider scope of practice for financial planners accounts for some of the difference in average salary.
Financial Planner vs Accountant
Contrast the incomes for financial planners focusing on long-term planning vs accountants providing various tax, audit, and advisory services.
Financial planners and accountants work together to serve clients, but their day-to-day responsibilities differ significantly.
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Financial planners earn median pay of approximately $90,640 per year. As mentioned above, they also have the potential to earn fees and commissions tied to assets under management.
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Accountants such as CPAs earn median salaries closer to $73,000 per year. Entry level accounting salaries start around $45,000, with senior managers and partners earning up to $150,000 at large firms.
A few key factors contribute to financial planners typically earning higher incomes than accountants:
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Financial planning requires additional certifications and qualifications like the CFP on top of a college degree.
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Financial planners focus on higher-level strategic advice rather than technical execution.
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Top financial planners build broad, long-term relationships with clients and accumulate assets under management.
So while accountants and financial planners need to work hand-in-hand, their distinct roles command different salary ranges.
Financial Planner vs Financial Analyst
Differentiate between financial planners working directly with clients vs financial analysts doing investment research and analytics.
Financial analysts who work at investment banks and equity research firms earn salaries largely based on performance. Median pay is around $85,000, with top performers earning over $150,000 per year.
By comparison, the median salary for financial planners is $90,640 as stated earlier. An important differentiator, however, is that financial analysts earn this type of compensation without needing to acquire clients and assets under management themselves.
Financial analysts also tend to focus on specific asset classes and markets rather than looking holistically at a client's entire financial picture. While their analysis and modeling is critical to driving investment performance, client interactions tend to be less central to the job.
So while financial analysts support the recommendations and portfolio performance financial planners deliver to clients, financial planners earn slightly higher total compensation from serving clients directly and accumulating assets under management over time.
Earning Potential for Wealth Planners
Financial planners have several paths to increase their income as they grow in their careers. By expanding assets under management, securing new clients, and offering additional services, planners can steadily boost their earnings.
Growing Assets Under Management
As financial planners demonstrate strong investment performance and provide value-added advice, clients entrust them with more investable assets. Since fees are often charged as a percentage of assets under management (AUM), this directly translates into higher revenues. Planners may start out servicing smaller clients, then progress to higher net worth individuals and families over time. This enables them to earn fees on larger AUM totals.
Securing New Clients
In addition to growing assets from existing client rosters, financial planners can increase their incomes by taking on new clients. As planners establish strong reputations and referrals, they are able to continually add to their book of business. With each new client relationship comes additional assets to manage and service fees to collect. Expanding one's client base is a tried and true way for planners to boost their overall compensation.
Offering Additional Services
Offering complementary services beyond investment management and financial planning is another way for planners to increase their profitability. For example, some planners obtain credentials to provide tax preparation or estate planning legal services. Others become licensed to sell insurance products. With the proper qualifications, financial planners can capture more wallet share from existing clients while also appealing to new clients with diverse needs. Expanding one's capabilities and service offerings opens up additional high-margin revenue streams.
Conclusion and Summary
Median Salaries and Range of Incomes
The median salary for financial planners in the US is around $87,850 per year. Entry-level planners tend to earn $45,000 to $65,000, while experienced planners at large firms can make $150,000 or more. The range of incomes is wide based on credentials, firm type, client assets managed, and geographic location.
Variables Impacting Financial Planner Pay
There are several key factors that influence financial planner salaries:
- Credentials - Obtaining certifications like the CFP can increase earning potential.
- Years of Experience - Incomes tend to rise steadily with more years in the industry.
- Firm Type and Size - Boutique firms pay less than large wealth management companies.
- Client Assets and Production - Planners are often compensated based on percentage of assets they oversee and revenue generated.
- Location - Major metro areas like New York and San Francisco tend to offer higher salaries.
Growth Opportunities
The wealth management field provides strong income growth potential over the course of a career. As planners take on more clients, expand assets under management, and offer additional services like tax planning and estate planning, they stand to significantly increase their annual compensation. With dedication and hard work, six-figure incomes are achievable for many financial planners after 5-10 years in the profession.
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