New Careers Emerging in the Finance Field

According to an August 2016 US News & Report article, 64 percent of millennials ages 22 to 35 who are employed U.S. residents, don’t expect to be able to save $1 million for retirement over their lifetime. Although 59 percent of millennials surveyed said they have started saving for retirement, 41 percent of those surveyed said they don’t earn enough to save for retirement. For those millennials who felt they will never save $1 million, the personal median income was $27,900.

In October 2016 the Journal of Accountancy reported Americans’ number one fear was running out of money during retirement. Americans frequently have to balance saving for retirement with additional expenses such as the cost of taking care of aging parents and paying for children’s college education. This combination of desires to save for retirement and pay for other demands along the way, such as college education, has created a growing demand for Certified Financial Planners (CFP). The role of a Certified Financial Planner is to be a smart friend who can help individuals with all areas of their finances, including savings, taxes, retirement, inheritance and college funds.

The objective of a Certified Financial Planner is to develop a customized financial plan that helps their clients achieve all their financial goals. Here’s how it works. Let’s go back to that Millennial earning $27,900 and feeling like he/she has no hope of ever saving $1 million for retirement. Following a simple recommendation at age 22 from a financial planner would allow this individual to not only achieve a retirement savings goal of $1 million, but actually exceed it! If you look at the chart above, you will see that the financial planner has recommended the client take advantage of the employer’s 401K savings plan by contributing 4 percent of each paycheck over the next 44 years of his or her working life. For that person earning $27,900, this means the client would save $1,116 per year or a trifling $3.05 per day.

By saving in the 401K, they would be investing that $3.05 per day in a stock mutual fund and earning market rates. Over time, the stock market returns on average 12 percent, which is why the financial planner has set the client’s annual rate of return at 12 percent as shown above. By saving just a little each pay period over his or her working years, this client will have saved $1,710,020 by the time he or she is ready to retire! If the company matches the contribution to the 401K (and most companies do match) then this means a total of 8 percent is being added to the client’s 401K per pay period and the balance at retirement is now an astounding $2,565,028! Not bad for a $27,900 annual income.

To become a Certified Financial Planner, you need a B.S. in any related area of study from an accredited school; Finance and accounting are the most common majors. Next you need to pass: (1) the comprehensive CFP® Certification Examination, and (2) CFP Board’s Fitness Standards for Candidates and Professionals Eligible for Reinstatement.

You must also agree to abide by CFP Board’s Code of Ethics and Professional Responsibility and Rules of Conduct which put clients’ interests first, and comply with the Financial Planning Practice Standards which spell out what clients should be able to reasonably expect from the financial planning engagement.

These are just some of the reasons why CFP® certification is becoming increasingly recognized. For more information, visit the CFP Board’s home page here.

Becoming a Certified Financial Planner means you are committing yourself to helping your clients achieve their ever changing financial needs over a lifetime. You are a professional financial coach and problem solver. According to CNN/Money and the Bureau of Labor Statistics, the demand for Certified Financial Planners is expected to grow at a rate 32.1 percent over the next 10 years with a reported median salary of $89,500 and top salary of $171,000.

This article was written by Jean Holt, Associate Professor of finance at Johnson & Wales University. You can follow Johnson & Wales University on Twitter @johnsonandwales, and read the the March/April Issue of DECA Direct here.

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