Financial planners help clients manage their money to reach financial 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.
SmartAsset’s Advisor Marketing Platform offers financial advisors services like client lead generation, automated marketing and more. Learn about SmartAsset AMP today.
When a Financial Planning License Is Required
Broadly speaking, financial advisors may need to obtain certain licenses under federal and state regulatory guidelines. For example, if you plan to become a registered investment advisor (RIA), you’ll need to meet licensing requirements set by the Securities and Exchange Commission. State regulatory boards can also require licensing for registered advisors.
While there isn’t a specific license that advisors must acquire to offer financial planning services, planners who offer specific types of advice or sell certain types of securities will need to be licensed. For example, an insurance license is necessary for advisors who plan to sell insurance products to their clients.
A financial planning license also isn’t a prerequisite to obtain professional credentials. 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 pass 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 Licenses for Financial Planners
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 administered by FINRA allows you to sell specific types of investments, including:
- Open-end mutual funds
- Variable annuities
- Variable life insurance policies
- Unit investment trusts
- Certain municipal funds
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. A Series 6 license doesn’t allow you to sell individual stocks and bonds, though.
Series 7 License
A Series 7 license is widely regarded as the most difficult license to obtain, thanks to the challenging nature of the exam. However, it’s also the most comprehensive license you can hold as a financial advisor.
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 (IAR). This license is required for registration in most states if you charge fees for your services, rather than getting paid via 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 the CFP® or chartered financial analyst (CFA) designations. 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 License as a Financial Planner
If you’re a financial planner who wants to obtain a 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:
- Take and pass the Securities Industry Essentials (SIE) exam
- Take and pass the Series 7 exam
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. 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 License Worth It?
Having one or more licenses under your belt could give you a competitive advantage as a financial planner. 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.
Bottom Line
Financial planning is a broad term that can span many different types of activities. Knowing when a license is necessary to offer specific services like investment advice can help you chart your career path to success.
Tips for Growing Your Advisory Business
- SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
- 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.
Photo credit: ©iStock/shironosov, ©iStock/brankokosteski, ©iStock/wichayada suwanachun