Do you have to live in a large city to be a Certified Financial Planner?

As far as getting work, it depends on how small your town is. You can either start work on your own or get hired by a company. Unless you have substantial cash to live off of while you build a client base, a company is your best shot.

Now, for your other questions:

Financial planners and advisors are interchangeable terms. There are many different kinds of advisors, though. There are a million and one designations, and they’re not all equal. Here is a brief summary:

CFA – Chartered Financial Analyst. the most time consuming/difficult certification to get. Arguably the most prestigous of all. You need a degree or four years work experience in select financial professions. Consists of three tests, each needing about 300 hours of study to pass. CFA holders do mostly investment analysis, as the tests are focused on investments.

CFP – Certified Financial Planner. Another designation which is arguably the most prestigous. Bachelor’s degree and three years experience required. Consists of six tests/courses and a comprehensive exam:
– Financial Planning: Process and Overview
– Fundamentals of Insurance
– Income Tax
– Planning for Retirement Needs (also deals with employee benefits)
– Investments
– Estate Planning
– comprehensive exam: Test-taker is given a situation and information and is asked questions based on the mock-scenario. A two day test.

ChFC – Chartered Financial Consultant. Same thing as CFP, but a degree is not required and there is no comprehensive exam; there is, however, two additional elective courses. In October 2009, there will be a seventh required course. I am working on this one, as I do not have a degree. Despite the fact that this is almost identical to the CFP, it is less well-known; therefore, it is less respected/less of a “wow!” factor.
Still, recognized as an excellent designation. Many think this focuses on insurance, but in fact it is just as well-rounded as a CFP. Three years experience required.

CLU – Chartered Life Underwriter. Similar to the ChFC/CFP in that it requires well-rounded courses, but there is a focus on life insurance. A degree is not required, but three years experience is.

REBC – Registered Employee Benefits Consultant. Like the CFP/ChFC, but focused on employee benefits.

RHU – Registered Health Underwriter. Like the CFP/ChFC, but focused on health insurance.

CPCU – Chartered Property Casualty Underwriter. Like the CFP/ChFC but focused on property and liability insurance.

There are a few other legitimate, respectable certifications, but many are easy to get and nothing impressive. For example, if you ever see somebody with the letters RIA after their name, run away. Registered Investment Advisors are nothing special; in fact, financial advisors are required to be one. What does it take to be an RIA? Filling out a form. That’s it. On a side note, using the acronym RIA is illegal; if somebody wants to tout their “status,” he or she can say “registered investment advisor,” but not RIA.

Financial advisors make many different amounts of money. You can make as little as $ 40,000 working for a company, or you can have your own firm and make $ 150,000+.

Financial advisors are often insurance salesmen, yes. They are often investment advisors, as well. Most companies who hire advisors only require the Series 7 license, a relatively easy license to get (about 100 hours of studying necessary), which allows a person to buy securities (stock, bonds, etc) directly, without going through a broker. Usually, a Series 63 or other minor license (varies by state) is required as well.

Advisors are salesmen who draft up financial plans for clients. They are either compensated on commission, a fee, or both. Usually, they sell the products of the company they work for. For instance, Ameriprise financial advisors will sell Ameriprise mutual funds to clients.

The process starts by analyzing where a client is financially, then developing a plan to help him or her get to a secure financial position. Developing security comes first, which consists of getting appropriate insurance (which the advisor sells), getting an emergency fund, budgeting, goal setting (saving for their children’s education, etc), and setting up a retirement plan (which the advisor may sell).

Next, the advisor helps the client build wealth. This is where the advisor sells the client investments.

Finally, comes the phase where the advisor helps the client secure his or her wealth. This is where the advisor sells the client different estate planning vehicles which are designed to pass on to the client’s heirs and to prevent the government from taxing it to death.

Many say fee based advisors are better, since the advisors do not have the option to sell the client things he or she does not need. But, others say commission based advisors are better, since the advisors have a desire to make sure the client makes money; the more m