Financial planners help clients manage money to reach goals. While certain professionals may need to have a financial planning license, others do not. Whether you’ll need a license to work as a financial planner depends largely on the types of services you offer.
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When a Financial Planning License Is Required
Broadly speaking, a financial planning license is necessary when it’s required by federal or state regulatory guidelines. For example, if you plan to become a registered investment advisor, you’ll need to meet licensing requirements set by the Securities and Exchange Commission. State regulatory boards can also require licensing for registered advisors.
Licensing is also required for financial planners who offer specific types of advice or sell certain types of securities. For example, an insurance license is necessary for advisors who plan to sell insurance products to their clients.
A financial planning license may not be a prerequisite to obtaining professional designations. For example, if you’d like to become a certified financial planner, you’ll need to complete a course of study that’s approved by the CFP Board, satisfy the experience requirements and successfully complete the CFP exam. A bachelor’s degree or higher is also required but you don’t need to have a financial planning license to get certified.
Common Financial Planning Licenses
There are several securities licenses that you might obtain as a financial planner. Again, whether you need one or all of them will depend largely on the type of services you provide.
Here’s an overview of each financial planning license and when you’re required to have them.
Series 6 License
The Series 6 license is administered by FINRA, and this license allows you to sell specific types of investments, including:
A Series 6 license would not allow you to sell individual stocks and bonds. You might need this type of license if you’re working for a bank, brokerage firm or insurance company and you sell packaged securities. Individuals who can hold a Series 6 license include financial advisors, investment bankers and registered representatives.
Series 7 License
A Series 7 license is widely held to be the most difficult license to obtain, thanks to the challenging nature of the required exam. However, it’s also the most comprehensive license you can hold as a financial planner.
With a Series 7 license, you can sell virtually any type of investment product. That includes individual stocks and bonds, as well as options and futures. You can also sell the investments that would otherwise be covered by a Series 6 license.
There are some exceptions, however. You can’t sell commodities, commodities futures or commodities options with a Series 7 license. For that, you’ll need to obtain a Series 3 license.
Series 65 License
A Series 65 license allows you to provide investment and financial advice to clients as an investment advisor representative. This license is required for registration in most states if you charge fees for your services, rather than getting paid commissions.
You might be able to waive the Series 65 license requirement if you hold other licenses or certifications. For example, you may be able to get an exemption from your state if you hold a certified financial planner certification or a chartered financial analyst designation. A Series 7 or Series 66 license may also be considered as a substitute for a Series 65 license.
Series 66 License
The Series 66 license is designed for professionals who want to register as securities agents and investment advisor representatives. The exam that’s required to obtain this license spans some of the same topics as the Series 65 exam and the Series 63 exam, which tests your knowledge of state securities regulations.
In most cases, you’ll need a Series 66 license and a Series 7 license to work as an investment advisor representative. While a Series 7 license allows you to sell securities, it doesn’t give you the authority to provide investment advisory services. A Series 66 license, on the other hand, does.
How to Obtain a Financial Planning License
If you’re interested in getting a financial planning license or need to do so in order to advance your career, you’ll need to know what steps to take.
How you go about getting a license depends on which one you’re seeking. Using the Series 7 license as an example, here’s what you’ll need to do:
It might sound simple, but the amount of studying and preparation these exams require isn’t. Exam-takers typically spend anywhere from a few weeks to a few months studying in advance of their test date. In addition to an investment of time, there’s also an investment of money to consider.
Series 7 exam prep courses can cost several hundred dollars, or in some cases, several thousand. You’ll also need to pay the required fees to register for these exams unless your employer covers some or all of the cost for you.
Is Obtaining a Financial Planning License Worth It?
Having one or more licenses under your belt could give you a competitive advantage. Prospective clients may be more inclined to work with you if they believe that you’re the most qualified candidate based on the licenses, designations and certifications you hold.
And in some instances, you may be required to secure one or more licenses in order to serve your clients and run your business. Thinking about what you want to do to grow your business and the type of services you plan to provide can help you determine whether it makes sense to pursue licensing.
Financial planning is a broad term that can span many different types of activities. Knowing when a financial planning license is necessary can help you chart your career path to success.
Tips for Growing Your Advisory Business
If you’re not visible in online searches you could be missing out on opportunities to connect with prospective clients. Having a professional website and putting effort into social media marketing can pay dividends if you’re able to generate more leads and increase conversions. When you don’t have a lot of time to focus on increasing your digital footprint, you might turn to an online lead generation tool to do the heavy lifting for you. SmartAdvisor, for instance, makes it easier to match with leads without tying up precious hours in your day.
If you’re thinking of starting an RIA firm, consider what you’ll need to do to get licensed and register your business. Whether you register with the SEC or your state regulatory agency will depend on the amount of client assets you manage. Once you’re registered and your business is up and running, remember that you’ll need to stay compliant with financial advisor regulations at all times.
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