Sep 306 min read

Education Requirements for Financial Advisors - Or Lack Thereof

The requirements to call yourself a financial advisor are pretty lax.

So how do you know they know what they’re doing?

I thought I’d provide a little bit of my background - specifically around the exams I’ve studied for and passed (thankfully, I don’t have any stories about failed exams), and how they’ve allowed me to practice from a regulatory perspective.

Before I start, I’d like to point out that I tend to use the term “financial planner.” I use this term for a few reasons:

I feel that it does a better job describing what I do than other common terms (like financial advisor, wealth manager, investment advisor, or wealth advisor).
It’s more commonly used by other financial planners who take a true financial planning approach.
People in general have a more positive perception of the term “financial planner” than any of the other terms (#marketing!).

That said, there are no rules. Anyone can call themself a financial planner. Anyone can say they’re a financial advisor. There’s no one out there telling you not to.

Now generally, if someone is holding themselves out as a financial advisor, it means they have some sort of license. The unlicensed people in the space tend to call themselves “financial coaches.”

But what does it take to get the various licenses, and what do they allow?

Life Insurance (summer of 2018)

The first license I got was my life insurance license.

I was working at Primerica, and we spent one weekend going through a 24-hour course on life insurance (this is for a Wisconsin license).

A few days later, I took the exam, passed it (score of 70% or higher) and just like that, I could sell life insurance and annuities.

That’s not all types of life insurance and annuities - anything that invests in the market (typically denoted as “variable”) requires additional licensing.

But it does open the world up to:

Term life insurance
Whole life insurance
Universal life (UL) insurance
Indexed universal life (IUL) insurance
Fixed annuities
Fixed-indexed annuities

Think I had a good understanding of all of those products after I passed that exam?

Me neither.

FINRA exams

The next exams for me to take at Primerica were the Series 6 (July 2018) and Series 63 (September 2018) exam. Back when I took them, you could jump right into them, but now, you have to pass the Securities Industry Essentials (SIE) exam first.

These are brokerage licenses - they allow you to sell investment products like mutual funds and the “variable” stuff I mentioned in the life insurance section. You need to be sponsored by a brokerage firm to sit for the Series 6, so not just anyone can take it, but again, the passing scores for these are 70%.

Once I passed these exams, I was considered a “Registered Representative” of Primerica. Did I have business cards that said I was a financial advisor at this point? You bet. Still didn’t really know what I was doing though.

At this point, I was still in college. I did most of my studying over the summer when I was working 3 jobs.

After about a year at Primerica, I got an internship/job at CliftonLarsonAllen Wealth Advisors LLC (CLA) in May of 2019. Fast forward a few months, and I graduated with my BBA in Business Finance from the University of Wisconsin Eau Claire in December of 2019.

While I was going through finals, I started studying for the Series 65 exam - this was required by CLA, and it’s the exam required to act as a fiduciary investment advisor (as opposed to an investment product sales-person).

Once passed, you can advise on pretty much any investment that you won’t get paid a commission on. The 65 is separate from the others listed and is actually the only one you need to pass to become an advisor. In January of 2020, I passed this one - again, I scored something over 70% to pass it.

Lastly for the Series exams, I took the Series 7 in September of 2021 (shortly after I passed my CFP® exam). The Series 7 basically opens up the entire brokerage world - any product that pays a commission is yours to sell. I needed this to recommend certain private investments for clients.

Interestingly, now that I run a fee-only Registered Investment Advisor Firm (RIA), I don’t need the 7, 6, or 63 anymore. In fact, they’ll lapse at some point in 2025. I’m not going back to selling products, so I’m happy to let it happen.

The Letters (CFP® and EA)

The letters behind my name don’t really allow me to do much that I couldn’t do before. The EA allows me to represent taxpayers before the IRS, but I don’t foresee doing a whole lot of that - mainly I’m just providing tax advice and filing returns.

I am a firm believer that advisors should be working on an experienced team and NOT serving clients independently until they have the experience and education required for the CFP® certification or something like it (like the ChFC).

The CFP® certification took me about a year and a half. I started studying shortly after I passed the Series 65 exam (February of 2020) and passed the exam in July of 2021.

The CFP® certification consists of seven courses (listed below) that each have a self-proctored exam that needs to be passed before moving on.

General Financial Planning Principals, Professional Conduct, and Client Psychology
Risk Management, Insurance, and Employee Benefits Planning
Investment Planning
Tax Planning
Retirement Savings and Income Planning
Estate Planning
Financial Plan Development (considered the capstone)

Once you get through the courses, there’s a comprehensive exam with a 6-hour time limit.

In order to use the marks, you need to have a bachelor’s degree or higher (doesn’t matter what the degree focus was) and have 3 years of experience or 2 years of experience working under a CFP® Professional.

The CFP® Board also reserves the right to bar someone from using the marks for misconduct or ethics violations.

The bachelor’s degree requirement is a little odd in my opinion, and they should either make it a requirement to be in finance or get rid of it entirely.

The ChFC is similar coursework (eight courses instead of seven) and also has an experience requirement, but it doesn’t require a bachelor’s degree (just a high school diploma), and there isn’t a comprehensive exam at the end.

To become an Enrolled Agent (EA), I took three exams in the summer of 2023. The first covered individual taxes, which wasn’t very different from the Tax Planning course of the CFP®. The second covered business taxes, and the third was focused on ethics.

What’s next? At some point, I plan to get a master’s degree in financial planning (yeah, those exist). It’s probably something I’ll start before I’m 30, but I doubt I’ll be finishing it before I’m 30. Stay tuned.

Continuing Education (CE)

All of these exams require some form of continuing education. Since my Series 6, 63, and 7 licenses aren’t active, I don’t have any CE requirements for them, but with the 65, I need to take 12 CE hours each year: 6 for ethics and 6 for products and practices.

In order to keep my life insurance license, I need 24 hours of CE every 2 years, and 3 of those hours must be for ethics.

To continue to use the CFP® marks, I need 30 hours of CE every 2 years, and 2 of them must be for ethics.

And for the EA, I need 72 hours of CE every 3 years, with a minimum of 16 hours per year.

Thankfully, some of these overlap. In fact, I can probably get by with an average of about 50 CE hours per year.

Conclusion

Curious about your advisor’s background? Don’t be shy - ask away! Most will be happy to share. After all, it’s not like it’s just a walk in the park.

As always, keep in mind that you don't have to go it alone. I’m Austin Preece, a financial planner in Eau Claire, Wisconsin, and I work virtually with people across the US. Check out my website to see what it's like to work with me and reach out if you have any questions.

If you found this post helpful, help spread the word! Share with friends and family that you think may benefit as well. But remember, this is solely for educational purposes - it's not advice.