Do I need to be licensed to offer financial planning help?
I have an idea of offering basic financial help to new college graduates in my area. This includes setting up their first budgets, setting aside some money for their savings, paying off loans, etc. I would charge a minimum fee for the advice I provide. I am planning on completing the CFP training next year, but am not currently certified. Are there any laws or regulations that prevent this? I'm not going to advertise myself as having any of these certificates until I actually have them and will not be investing anyone's money.
You would need to discuss this with your state. There are no licensing requirements for financial planning, per se, but there may be a requirement that you register as a Registered Investment Advisor.
I can see why your service may not need licensing since it is dealing with past or present, but what about the future savings - securities or cash?
That’s a legal question and I’ll not tackle it directly. Instead, let’s think about some practical aspects of your idea. First, budgeting and basic finance are relatively simple and well-documented. Anyone interested can buy a book or visit one of hundreds of free websites. Second, the American population is self-sorting on financial issues; that is, people who care about money tend to find information or advisors, and people who don’t, don’t. Obviously, the profitable market is among the group that cares. Since they usually seek out information or advisors, what makes you think they’d choose someone without a license or credentials? So, the notion of taking the CFP® courses and passing the exam is a great one and I encourage you to do it. In the meantime, try to get hired on to a legitimate advisory firm for mentoring and experience … when you pass the exam, you’ll be ready to go. Finally, I don’t want to discourage your idea for serving young college graduates, but I’ll offer my observation that it likely needs a different pricing model than is common today. Young college graduates often struggle to pay what a qualified advisor is worth … today, it takes ridiculous volume of smaller clients to make a good living. Maybe you can crack that nut!
There's no doubt that new college graduates need sound financial advice. The subjects about about which you want to teach them are especially important. I whole-heartedly encourage you to get qualified to do so: get professional training; get licensed; get the proper affiliations and market supervision.
If you neglect these essentials, I think you are heading for big trouble with the regulatory agencies. They love to penalize people who don't have the proper licensing, who don't give the proper disclosures, and who don’t meet all the other requirements financial advisors must meet. You could lose your career before you start it.
Why rush things? If you want to make contact with prospective future clients, just sit and shmooze with people. No fees, no advice, no product or company recommendations. Get to know people, and their needs, wants, goals, and desires. This intel will be invaluable when you finally set up your practice.
In theory you can have up to 15 clients as long as no more than 5 live in any one state, without being registered. However, it makes much more sense to study for the Series 65 exam, pass, and then register with your state. There is an exam fee around $125 and then the annual registration cost will be $260 per year paid to finra.org. That way you will be officially listed and you'll get plenty of free magazines soon afterward. You should also register with the IRS as an LLC and file a Schedule C each year to prevent tax problems; the annual LLC fee is usually around a hundred dollars depending upon your state. This way you can proudly show your credentials rather than having to repeatedly apologize for not having them. The Series 65 requires study but you should do okay if you focus on accomplishing your goal.
CFP training is not needed but if you want to make financial advising your full-time career then you can consider it. I never got my CFP and I'm doing fine.