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Financial planners help clients manage their money to achieve their goals. Certain professionals may require a financial planning license, while others do not. Whether you need a license to work as a financial planner depends largely on the type of services you provide.
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If you need a financial planning license
Broadly speaking, a financial planning license is required if federal or state regulatory guidelines require it. For example, if you plan to become a registered investment advisor, you must meet licensing requirements set by the Securities and Exchange Commission. State regulatory boards may also require licenses from registered advisors.
Financial planners who provide certain types of advice or sell certain types of securities also require a license. For example, an advisor who plans to sell insurance products to clients will need an insurance license.
A financial planning license may not be a prerequisite for obtaining a professional designation. For example, if you want to become a Certified Financial Planner, you must complete a course of study approved by the CFP Board, meet experience requirements, and pass the CFP exam. A bachelor’s degree or higher is also required, but you do not need to have a financial planning license to receive certification.
General Financial Planning License
There are several securities licenses you can obtain as a financial planner. Again, whether you need one or all of them largely depends on the type of service you provide.
Here’s an overview of each financial planning license and when you need to obtain one.
Series 6 license
The Series 6 license is administered by FINRA and allows you to sell certain types of investments, including:
A Series 6 license does not allow you to sell individual stocks or bonds. If you work for a bank, brokerage, or insurance company and sell packaged securities, you may need this type of license. Individuals who can hold a Series 6 license include financial advisors, investment bankers, and registered agents.
Series 7 license
The Series 7 license is widely considered to be the most difficult license to obtain due to the difficult exam required. However, it is also the most comprehensive license you can get as a financial planner.
With a Series 7 license, you can sell virtually any type of investment product. This includes individual stocks and bonds, as well as options and futures. You can also sell investments covered by Series 6 licenses.
However, there are some exceptions. You cannot sell products, product futures, or product options with a Series 7 license. To do so, you will 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. If you charge a fee for your services rather than paying a fee, most states require this license for registration.
If you hold other licenses or certifications, you may be able to waive the Series 65 license requirement. For example, if you hold a Certified Financial Planner designation or a Certified Financial Analyst designation, you may be able to receive an exemption from your state. Series 7 or Series 66 licenses may also be considered as an alternative to Series 65 licenses.
Series 66 license
The Series 66 license is designed for professionals who wish to register as securities agents and investment advisory agents. The exam required to obtain this license covers some of the same topics as the Series 65 and Series 63 exams, which test your knowledge of state securities regulations.
In most cases, you will need a Series 66 license and a Series 7 license to work as an investment advisor representative. A Series 7 license allows you to sell securities, but does not authorize you to provide investment advisory services. On the other hand, Series 66 licenses are valid.
How to obtain a financial planning license
If you’re interested in getting a financial planning license, or need one to advance your career, you need to know what steps to take.
How you obtain a license depends on which license you want to obtain. Using a Series 7 license as an example, you need to:
Although it may sound easy, the study and preparation required for these exams is not. Candidates typically spend weeks to months studying before the exam date. In addition to the time investment, you also need to consider the money investment.
A Series 7 exam prep course can cost hundreds or even thousands of dollars. You will also need to pay the required fees to register for these exams, unless your employer covers some or all of the cost.
Is it worth getting a financial planning license?
Obtaining one or more licenses may give you a competitive advantage. Prospective clients may be more inclined to work with you if they believe you are the most qualified candidate based on the licenses, designations, and certifications you hold.
Additionally, in some cases, you may need to secure one or more licenses to serve your customers and operate your business. Thinking about what you want to do to grow your business and the types of services you plan to provide will help you decide whether getting a license makes sense.
conclusion
Financial planning is a broad term that covers many different types of activities. Knowing when you need a financial planning license can help you plan your career path to success.
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The post What licenses do financial planners need first appeared on SmartReads by SmartAsset.
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