How to Begin a CFP Practice

A degree in any subject from an accredited college, work experience of at least three years, and professional certification from the Certified Financial Planner Board of Standards Inc. -- these are the credentials needed to begin a certified financial planner (CFP) practice. In addition to academic qualifications, it is important that you possess a natural flair for numbers and penchant for finances. Earning a professional certification will give you a competitive edge over other financial planners.

Instructions

1. Write a business plan with specific details of the goals you wish to achieve and a realistic estimate of the time frame required. Specify the area you would focus on -- taxes, investments, insurance, pension plans, real estate, mortgages or securities. Seek the help of an accountant to prepare financial projections with specific details of expected revenue and expenditure.

2. Define your practice structure clearly. Sole proprietorship may seem ideal, but financial planning requires experience in addition to credentials and analytical skills. It would be in your best interest to involve a senior practitioner as a partner or adviser.

3. Choose a business model that will make you stand out from other financial planners. Decide whether you would work on a fixed-fee or a commission basis. Licensing requirements for financial planning practice vary based on the type of compensation.

4. Call your county clerk and local IRS office to find information on local laws and tax regulations that have to be followed in order to begin a CFP practice.

5. Visit the regional office of the U.S. Securities and Exchange Commission for information on registration and compliance. You can also visit the SEC website and download the required information. Financial planners are regarded as investment advisers by the North American Industry Classification System.

6. Hire experienced employees to take care of the back-office and administrative work. This will enable you to devote sufficient time and effort in planning your clients' tax and investment strategies. It will also give you time to keep abreast of global economic trends and the latest financial products.

7. Enroll in your local financial planners association. Attend any seminars or continuing education programs on financial planning in your city. Attending study programs run by organizations such as the Registered Financial Planners Institute will enable you to enhance your professional competency. You will update your knowledge, increase your visibility and build professional relationships.

Tips & Warnings

• Hire a lawyer if you have adequate financial resources to take care of the legal issues that arise.

• Insure your practice against possible financial risks and malpractice suits.

• Noncompliance with the code of ethics of the CFP Board of Standards will result in revocation of your license.

References

• U.S. Securities and Exchange Commission: Advice to New Investment Advisors
• Small Business Notes: Starting a Financial Planning Business
• Home Business Center: How to Start Financial Planning Business
• Investopedia: Starting your Own Financial Planning Firm
• Certified Financial Planner Board of Standards Inc.: How to Become a Certified Financial Planner