Putting the Person First in Financial Planning
To become a successful Personal Financial Planner, you need a solid academic background and a deep understanding of investments and retirement strategies. Those are the basics. Candidates must also pass a rigorous exam if they want to gain certification. But perhaps the most important quality is empathy — a desire to help others achieve their goals.
“I think effective communication, the ability to empathize, and a desire to continually improve are highly important traits,” said Avi Pai, instructor for DCE’s Personal Financial Planning certificate program. “When I say effective communication, I’m referring to both listening and speaking. In my experience, clients are not interested in being sold; they are more interested in being heard, educated, and assured they’re able to achieve their goals.”
The need to address these soft skills was recently recognized by the Certified Financial Planner Board of Standards, Inc. (CFP Board), which has added “The Psychology of Financial Planning” as a topic in their certification exam beginning in March. It’s an essential topic that has been incorporated into the DCE’s updated program curriculum, as well.
During his time as a planner, Pai has seen an increased emphasis on these qualities, starting when industry regulations became more focused on transparency between planner and client, taking steps that ensure the clients’ needs are understood and articulated to them, Pai said. The new focus on psychology is the latest step toward a more empathetic industry.
“The fiduciary standard and Regulation Best Interest (BI) have forced more transparency into recommendations and require people to be able to articulate why clients should invest the way they do far more than what the clients should invest in,” Pai said. “I think these changes make it easier for people that have a true desire to help people.”
Every five years the CFP Board reviews its Principal Knowledge Topics to ensure that certification requirements are continually updated to reflect current best practices. This latest update is a result of regular nationwide surveys to get a sense of what topics PFPs feel are in need of greater attention.
“I think students who have a lot of life experience make excellent financial planners, as they’ve been through major financial events themselves.”
Avi Pai, Personal Financial Planning instructor
Getting personal
The Personal Financial Planning program provides a strong foundation in all the hard and soft skills needed to succeed in this rewarding field. Intended for a range of students, from recent college grads to financial professionals looking to switch careers, the program fulfills all the requirements to qualify for taking the CFP® exam and gaining certification — the industry’s gold standard for excellence.
Courses cover all the principles of financial analysis, with a deep dive into retirement and tax planning, investment strategies and more. Students also receive a $100 discount on Dalton Education’s CFP® exam review course.
A career as a planner can be both financially and personally rewarding, with a median salary of $88,000 up to $217,000 for highly experienced PFPs. The career is booming and much in demand, with more than 200,000 job openings with projected growth of over 11% through 2029 (Emsi Burning Glass – economicmodeling.com).
Although a wide-ranging academic background is essential, Pai believes that it’s extremely helpful when PFPs can draw from their own life experiences, like buying a home or caring for aging parents. It helps planners relate to clients’ needs and can inform important aspects of their overall strategy.
“I think students who have a lot of life experience can make excellent financial planners, as they’ve been through major financial events themselves,” he said. “Experience with buying or selling a home, marriage, birth of children, loss of friends or loved ones, career changes and moving. These help planners understand what clients are dealing with.”
Pai pointed to some of his own life events that made him a more empathetic financial planner, like the time he and his wife bought a home before realizing it wasn’t a good fit after all. They soon cut their losses and moved to a place they loved.
“This made me realize things clients should consider if they’re going to buy a home. It even made me realize why some people prefer to rent where they live.”
Making the case for caring
An important part of building trust with clients is understanding their personal values, making sure they’re comfortable with the investments and financial strategies the planner is advocating, explaining everything in terms that their clients can relate to. Once trust and a personal bond are established, clients are far less likely to have “knee-jerk” reactions in times of roiling, uncertain financial markets.
To help establish that trust, the best PFPs take a keen personal interest in their clients’ lives, going beyond the basics of risk tolerance, tax sensitivity and time horizons, getting a sense of their overall life experience and situation, Pai said.
“I ask about their children, since they may have plans to fund their college education, and I am increasingly seeing adult children being dependent on their parents. I also ask about clients’ parents’ financial and health situations. I often find that the clients may be the most successful out of their siblings, and if their parents have not saved enough for retirement or future healthcare, we need to plan so they don’t have to sacrifice their own retirement due to supporting their parents.”
When Pai first got into financial planning he had a different attitude. He felt it was most important to show off his education and deep knowledge of the industry, offering Modern Portfolio Theory statistics and dissecting different complex estate-planning strategies. Over time, he developed a different perspective — putting himself in his clients’ shoes.
“My friends who are physicians have talked about how they need to work on their bedside manner with patients to be more effective. And I think it’s very similar for financial planners,” he said. “At first, I thought it was most important to show off how much I knew. Then I came to appreciate the maxim, ‘People don’t care about how much you know until they know you care.’
Learn more about the Personal Financial Planning Certificate Program.