I'm thinking about becoming a financial adviser...but I need some guidance.

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Sanmar
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I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Sanmar » Wed Jun 03, 2015 6:57 am

How do I find out if becoming a financial adviser is the right career move for me? I am a male, 36 years old, married with one child, sole income earner in the medical field working two jobs (one full time, one per-diem). I'll probably make about 90K to 100k???? this year. I will provide more info about my jobs a little later but first I want to mention why I'm thinking about this career move. 

I became extremely interested in financial investing/planning soon after my daughter was born 6 months ago. Her birth was the catalyst that took me on a journey that started by dealing with a very well known financial adviser, to reading books, to constantly finding helpful links to this forum while trying to better understand what I was reading. The additional knowledge I gained led me to kick my RIA to the curb and move my family's investments to Vanguard after my big "Aha!" moment of the beauty of investing in index funds. I'm still reading more books and visiting this forum and other sites to learn more about investing, the markets, and retirement. 

I realized that I had been doing so many things wrong when it came to saving and thought: "Why didn't I heed what I heard years ago in my early 20s about paying myself first?" But that was just the beginning. I thought about why I hadn't heard about "passive investing" until late 2014? Why are people given bad retirement advice by "professionals" in the financial industry? Even worse, why are people sold bad financial products or suckered into paying high fees to someone managing their portfolio. The industry has come a long way but it still has a long way to go in truly serving investors and future retirees. 

The more I read, the more I realize that I want to let people know that there is a way for them to have a bright future when they retire. I've already talked with many of my co-workers about investing and retirement, and some even ask me for asset allocation advice. I am planning on how to let my young nieces and nephews get through their heads to do the correct things I did not do when I was their age. I'm also trying to compel my father to change his ways and start saving. To me, wanting to teach people about what they can do to have a great retirement feels like the only time in my life that I can say feels like a calling. I've never felt like this before with any job I've had and certainly not with the career that I have now. 

In fact, I actually just started this career almost three years ago. In my per-diem job, I recently started working (working/training) in what is considered the "top-flight" specialty in my field and also the highest paying when someone starts working in the specialty full-time and takes call. Within my first full time year (which I can potentially start sometime next year), I'll probably make 110K. Within a few years, I'll make 130K. The ceiling is probably 150K in my facility and probably 170K if I decide to jump ship to another hospital. I got this opportunity by working hard, having some decent skills and a little bit of luck. However, I have come to realize that I don't like this specialty. There are some pros (besides the money) over the entry-level specialty but the cons (including the additional stress) really make me wake up wishing the day is over quickly when I have to work doing the "top-flight" specialty. I think I really don't like it but the money is significantly better. Right now, that's the main reason why I'm considering continuing with this specialty. The other specialties I also find uninteresting and they don't bring in as much money. I don't want to consider management because I don't love my job. Those who go into management for the most part like working in this field. I simply think it's an ok field. I don't want to go into management not liking this field because I believe I will make other people's jobs (those under me) harder. That will in turn make my job harder and unappealing. One last major reason I don't love this field is that it's not good for my back. I never had as many back issues as I have had since I started this career. 

So if I'm making a decent living with 90K at the moment working in jobs I'm not passionate about, then will becoming a financial adviser provide me with a job where I can make decent money and that I'm passionate about? Might it provide me even more money than the top-flight specialty.  

I have to figure out a few main things before I try to make a jump into this new career. I need to know if this is really my calling. Am I going to like the everyday tasks of the job? Will I be a good adviser? How soon will I start making money (I do have a family to feed after all)?

I was thinking that maybe I can spend some time with RIAs, see what they do everyday and find out if that's something I would enjoy doing. Would I even be able to be good at it? It would not be good to make a jump into a career and find out I'm not good at it. I also need to know if I will start making money within a reasonable time-frame (6 months to 12 months??). Can I start off part time or is it best to go into it full-time? What's the best way to learn this profession? What are the main skills that I need to be successful? 

What else should I be aware of? What am I not considering? What else--good and bad--do I need to consider about this profession? 

BTW, at the moment I'm leaning toward becoming a fee-only adviser and becoming a CFP (I have a BS in healthcare administration). I believe any other designation might put me in some conflict of interest with clients, however I would also consider getting paid through asset management fees--reasonable fees (1% seems too high a fee for me). 

Any feedback, especially from current advisers/planners, would be greatly appreciated. I thank you wholeheartedly in advance. 

MN Finance
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by MN Finance » Wed Jun 03, 2015 9:49 am

You have limited options. If you had some years of experience you could get hired as a salaried advisor for a quality RIA (quality meaning someone that doesn't screw investors.) You don't.

In order to gain the experience mentioned above your only entry point is financial sales (which is still called financial advising.) You would have to sell products on commission or at least sell managed money (like the 1%.) The skill needed to be successful is 90% sales ability, 10% financial knowledge.

If you want to start your own fee only practice, you probably need experience to convince people to take your advice, or possibly a large network of people that would trust you despite your inexperience. Even if that does happen you have to produce significant volume in order to make the economics work without overcharging.

The only path I can see that actually stays in line with diehards philosophy is someone doing it part time, primarily as a hobby, which may or may not take off enough to make it full time.

I can tell you almost all advisors start out in a crappy sales role before they can move to something more client friendly. This is the rub. Everyone laments bad advisors but since a 'good' advisor by definition is extremely low cost, the barrier to entry is high (unless you can raise your family on 30k per year.

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kenyan
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by kenyan » Wed Jun 03, 2015 9:51 am

No real experience to offer you on this, but from what I've read, getting a foothold in the field is almost entirely about being a salesman - cold calls, door-to-door, dinner seminars, etc. If you don't think you can be a salesman full-time (at least until you've got an established client base and/or reputation), then I'd proceed with extreme caution.

If you ever browse forums dedicated to Registered Investment Advisers, they are 90+% about sales tactics, with very little dedicated to financial products, theories, or advice.
Retirement investing is a marathon.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by sschullo » Wed Jun 03, 2015 10:12 am

Take a look at these two professional organizations. If I ever need an adviser and I will eventually, I will be calling for adviser from one these two professional organizations. Set your goal to be a genuine fiduciary adviser that charges by the hour and AUM (depending on what people bring to the table).
Good luck,

http://garrettplanningnetwork.com/

http://www.napfa.org/
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

Sanmar
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Sanmar » Wed Jun 03, 2015 11:38 am

Thank you everyone for taking your time to reply.

@MN Finance--Yes, I have no experience at all. I find your idea about starting out the venture as a hobby intriguing. :sharebeer How ironic that the "good" advisers are the cheap ones, and the "bad" advisers are usually very expensive. I suppose in the end it's easier to be a "bad" one but that's not what I would like to do.

@kenyan and @MN Finance--I thought that sales was going to be a big part starting out but I didn't think it would be 90%. Not that I think I can't do it, I just have very little experience doing it. I think I underestimated that I would need to start out as a "bad" adviser to make decent money starting out. The entry barrier for a "good adviser" is definitely high and it's not something I can afford now that I have a family.

@ssschull--a genuine fiduciary adviser is definitely the goal. Thank you for the links. I will check out the websites.

tj
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by tj » Wed Jun 03, 2015 11:46 am

sschullo wrote:Take a look at these two professional organizations. If I ever need an adviser and I will eventually, I will be calling for adviser from one these two professional organizations. Set your goal to be a genuine fiduciary adviser that charges by the hour and AUM (depending on what people bring to the table).
Good luck,

http://garrettplanningnetwork.com/

http://www.napfa.org/

I can't really agree with this. These are paid marketing networks. How much due diligence do they do on the members other than collecting their membership fee?

I had a friend who tried it out and this was her assessment:
This woman wanted me to open an IRA with her. All she was going to do was put my money in a target retirement account. I wanted more daily financial advice and it was "save as much as you can and pay off as much debt as you can". I could have told myself that. I was more looking for someone to guide me in how much is reasonable to spend, save, etc. things like that.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by backpacker » Wed Jun 03, 2015 12:11 pm

Sanmar wrote:How do I find out if becoming a financial adviser is the right career move for me? I am a male, 36 years old, married with one child, sole income earner in the medical field working two jobs (one full time, one per-diem).
The financial service industry IMO will undergo massive downsizing. Small clients will increasingly use target date funds and automated services. That leaves a large number of human advisors to fight over the few remaining wealthy clients who aren't interested in managing their own finances. I would think that your current job is much more secure.
Last edited by backpacker on Wed Jun 03, 2015 12:12 pm, edited 1 time in total.

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cheese_breath
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by cheese_breath » Wed Jun 03, 2015 12:12 pm

Go back to college, and get a degree in finance. Apply to one of the big fund companies such as Vanguard or Fidelity. Your first job will probable be manning the phones as a customer rep. Work your way up in the organization and gain experience until you're ready to strike out on your own.
The surest way to know the future is when it becomes the past.

691175002
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by 691175002 » Wed Jun 03, 2015 12:22 pm

It has always been a challenging business to get started in, and its only getting harder.

Pretty much all you need to ask yourself is whether you are capable of bringing in 20-40 million in assets within 2-3 years. Are you comfortable asking all your friends and family to trust you with their retirement? Do your friends and family have sufficient assets to be worth managing? Do you think you can convert strangers into clients?

Twenty years ago if a person wanted to invest theironly option was working through a broker. Cold calling used to work, and strangers would show up wanting to trade. Today it is really hard to get people to trust you with their life savings, especially if you are new to the industry.

Note that the passive business model isn't really compatible with a financial advisor who is starting out. Best case you pull in 40M assets at 0.5% fee. You are making 200k gross and the company takes 60% of that. Firms generally want to see 400k gross or they will start to squeeze you.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by sschullo » Wed Jun 03, 2015 12:29 pm

tj wrote:
sschullo wrote:Take a look at these two professional organizations. If I ever need an adviser and I will eventually, I will be calling for adviser from one these two professional organizations. Set your goal to be a genuine fiduciary adviser that charges by the hour and AUM (depending on what people bring to the table).
Good luck,

http://garrettplanningnetwork.com/

http://www.napfa.org/

I can't really agree with this. These are paid marketing networks. How much due diligence do they do on the members other than collecting their membership fee?

I had a friend who tried it out and this was her assessment:
This woman wanted me to open an IRA with her. All she was going to do was put my money in a target retirement account. I wanted more daily financial advice and it was "save as much as you can and pay off as much debt as you can". I could have told myself that. I was more looking for someone to guide me in how much is reasonable to spend, save, etc. things like that.
The OP wants to be an advisor and I suggested that he check out these organizations due to having similar investing philosophies that we follow here. I talked to NAPFA with your question a few years ago as I was curious too. They said that if a member sells a commissioned security they can monitor that activity. Garrett only has 350 members throughout the country. Is it 100% perfect, probably not. So what is the alternative, going to a broker or in the OP situation become a broker? Or selling annuities to naive' k-12 educators?
I do not plan on using either one of these organizations because in my mind, they charge too much even with the hourly rate and AUM, without commissions and advisory fees! We are extremely lucky that most Bogleheads can do this on our own, but the world "out there" is very different. Unfortunately most people need advice and they are going to pay for it.

And when I cannot decide for myself because of having many birthdays, this will be the first place I will look for an adviser.

Rick Ferri went to Garrett conference a few years ago and was impressed: viewtopic.php?t=62197
Last edited by sschullo on Wed Jun 03, 2015 12:45 pm, edited 2 times in total.
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by stoptothink » Wed Jun 03, 2015 12:32 pm

backpacker wrote:
Sanmar wrote:How do I find out if becoming a financial adviser is the right career move for me? I am a male, 36 years old, married with one child, sole income earner in the medical field working two jobs (one full time, one per-diem).
The financial service industry IMO will undergo massive downsizing. Small clients will increasingly use target date funds and automated services. That leaves a large number of human advisors to fight over the few remaining wealthy clients who aren't interested in managing their own finances. I would think that your current job is much more secure.
That's my take. OP also has to understand that being financially successful as an FA is far more dependent upon your sales skills than it is about your actual knowledge. My two best friends are FA's; one has a liberal arts degree and makes a ton of money because he has that innate ability to convince anybody that insurance and annuities are good things, the other has a Wharton MBA and every certification/license in the book but morally refuses to sell products which he himself wouldn't buy...he's transitioning into a different area of finance. If you are good at and enjoy sales, it might be the right career for you, otherwise I would stick to the current career.

mlipps
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by mlipps » Wed Jun 03, 2015 12:35 pm

There's a thread like this every month. We all want to share our enlightenment with the world, but its not easy. Try searching for some of the old threads, they're incessant.

amateurnovice
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by amateurnovice » Wed Jun 03, 2015 12:38 pm

It's not an impossibility to start this late to become one. There is something to the "salesman" image of it, as well as just knowing people willing to let your manage their money. Are you planning on taking the Series 65 or getting a CFP license? Either way will require more than just interest in the field. You will have to study for the 65 and maintain registration with either a jurisdiction or the SEC & FINRA and the CFP requires continuing education on a yearly basis. Not to mention, the fees involved for each regulatory authority. You may want to check with your state's securities agency or FINRA before you take any big leaps to see what is required of you where you live.

There is quite a bit to it. Getting clients may be the biggest struggle. A couple small accounts from family members willing to give you a shot is probably the best way to get started. That is, if they're willing to pay you whatever fee you want to help them manage the money, so it better be enough that they're willing to help with your income as well. That is when the salesman role has to kick in.

I know a guy who has his own RIA that worked for years for mid-level brokerages and cannot find one client. Could just be him, or it could be there isn't anyone willing to pay him his fees.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by prudent » Wed Jun 03, 2015 12:46 pm

Here's how the general public sees it: there are free planners, and there are planners that cost a fortune. The ones who "cost a fortune" are the fee-only advisors. The "free" ones are the ones who earn via commissions, front-end loads, referral fees, 12b-1 fees and AUM fees. How do you get the general public to understand they actually pay more for what appears to be free, when most of what they pay never appears on an invoice or statement? How do you get them to understand your value proposition, when in order to understand it they have to know more than they do now?

I think it would be very, very challenging to provide the kind of guidance you want to offer while maintaining your income without some down years. You'd have to overcome billions of dollars of advertising that tells people they need to use some huge company for investment guidance because it's scary and too complicated for the average person. I don't know how you break through that when most people aren't that interested in exploring alternatives anyway. They don't care about what a fiduciary is. Some people actually want to be able to say, "Oh, my guy at Schwab knows his stuff" like they have hit the big time.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Broken Man 1999 » Wed Jun 03, 2015 1:52 pm

I believe also there is a generation behind the Baby Boomers that will really take to the new "Robo-Advisors". Each generation gets more comfortable to work in the vapor, so to speak.

Right now, you can get pretty solid advice for much less than a FA would charge. Granted, investments aren't the only reason a FA is helpful, but it is a start.

Once someone is comfortable with a "Robo-Advisor", I believe it would be difficult to pry them loose, unless they hit it big in life and needed more advice/services than was originally being provided. I see the progressive FAs using robo-advising similar to a farmer planting a garden. When the customers have grown large enough, they can be "harvested" and turned over to a live FA. Additional services can be provided, and additional fees earned.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by powermega » Wed Jun 03, 2015 2:35 pm

Interesting thread. I feel like I'm in a similar place myself, though I do enjoy my day job right now. I was thinking about doing this part-time, and continuing it into retirement as a source of income. I have a hard time seeing this paying as much money as my day job right now though.

For the CFP industry designation, you do need about 3 years of work experience in the field. I see that as the hardest obstacle to getting the CFP designation.
Even a stopped clock is right twice a day.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by anil686 » Wed Jun 03, 2015 2:48 pm

While I agree with the general sentiment provided in this thread, I think it is possible but you may have to be flexible. I guess I would start by flipping the question - you know what you want to do - how do you get there? I would recommend calling places like Vanguard to find out how you can become a VG CFP or advisor. I don't know the answer - and it may require some work/formal education on your part - but who knows? Frankly, I do not see the future for new "local" fee based advisors - I just don't. I think the sentiment mentioned earlier in this thread about younger individuals using robo advisors and then when they approach retirement and need asset allocation advice/tax advice/estate planning - may switch to a personal advisor. Rick Ferri did a podcast with Ritholtz from Bloomberg a couple of months ago and they talked about this idea of starting with robo's - progressing to a point where the investor's situation is too much for a robo - and the robo has a built in "real person" advisor who picks up there (and can be located anywhere) and continues with it. JMO though...

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BL
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by BL » Wed Jun 03, 2015 3:08 pm

You could probably get some experience if you don't let your conscience get in your way and if you are willing to hit on you friends and relatives.

How is it going with converting your father? If he follows your advice, what is he going to say when the market crashes and who will he blame? Most of us realize you can't change anyone's thinking there unless they want to change. Perhaps that is why many of us end up here where the odds of someone wanting to change seem greater.

Perhaps young people would be more likely to accept advice, but I don't know. Here is a little on-line booklet that your young relatives might read:
http://www.etf.com/docs/IfYouCan.pdf

MN Finance
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by MN Finance » Wed Jun 03, 2015 6:09 pm

Garrett is just paid advertising. You pay 5k per year to be featured in their search engine. Most AUM advisors would be willing to pay, but true fee only planners (no aum) probably find that fee much too high.

CFP is fine for formal education but it's still mainly window dressing. Just a college level course and a test.

To get into a sales role with an insurance co or broker, you don't need any education or experience, so not worth spending time on education. If you try to get a job with VG, Fidelity et al, they probably want some education and experience (minimal.) But you're almost sure to be in a service role, maybe not client facing.

Again, starting part time for fun, expecting no money, is probably the only path. If you work from home, have no staff and personal connections it may work with maybe 10k a year in overhead costs. If it take off, then great. If not then you didn't quit your day job.

If you manage money, yes you compete against robo advisors, but only for younger clients with modest balances. Older clients with larger balances, on the whole, aren't ever going to flock to the internet because they're engaging people not computers. The rub though, is that second group won't be satisfied with you and your laptop in the basement.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by robert88 » Wed Jun 03, 2015 8:29 pm

Here's a market need that I'm not sure the financial community has a good solution to yet. There's a lot of elderly with some stage of dementia or Alzheimers who may need help managing their finances, ideally by someone with a legal fiduciary duty.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Beat The Street » Wed Jun 03, 2015 9:21 pm

Unless you are really well connected it may be of shock to you how hard it is to bring in assets. No doubt you will give better advice than most advisors, but how do you convince the client your advice is better? If you slam the competitors fees or commissions, they will think you are just bashing the other person to steal business. Also, most investors are not fee conscious. They think the difference between 0.5% and 1.0% is nothing.

Another downside for you is people are more unlikely to switch advisors in a bull market. Every dummy out there that peddled American funds the last 5 years looks like a genius. The industry is highly frustrating if you are the analytical, non-salesy type. I have built a sizable business pretty quickly though, but I partnered with a bank that refers business to me, otherwise I would have starved.
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by tj » Wed Jun 03, 2015 10:16 pm

Beat The Street wrote:Unless you are really well connected it may be of shock to you how hard it is to bring in assets. No doubt you will give better advice than most advisors, but how do you convince the client your advice is better? If you slam the competitors fees or commissions, they will think you are just bashing the other person to steal business. Also, most investors are not fee conscious. They think the difference between 0.5% and 1.0% is nothing.

Another downside for you is people are more unlikely to switch advisors in a bull market. Every dummy out there that peddled American funds the last 5 years looks like a genius. The industry is highly frustrating if you are the analytical, non-salesy type. I have built a sizable business pretty quickly though, but I partnered with a bank that refers business to me, otherwise I would have starved.
How does this partnership work? What does the bank get out of it?

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by WhyNotUs » Thu Jun 04, 2015 12:05 am

Seems like your initial question is whether it is your calling. Hard to know and the easily identified entry points would likely make you dislike the industry.
Cold calls and selling front loaded funds are the jobs available.

Your passion sounds more like a hobby passion at this point. Don't mean that in a bad way. I love sailing and have some level of ability/won a few races but it is not a practical employment path for me. I could chuck it all and become a charter boat captain but I would probably not love sailing any more given my personality type.

I would suggest putting a course together at a local community college but they usually want to see some credentials. Hmm, voluntary free advice to seniors? Talks at a local library or your place of employment? How to establish credibility and a potential client list while get certification and keeping your existing job? Not seeing it without big pay cut and/or selling junk.

With regard to does it make sense financially, not really. If you were a fee only advisor you would need to gross $175,000- $200,000 to net your $100k in current income (you would then be paying SE tax, office, business expenses, perhaps office help, health insurance, business insurance, 100% of your own retirement plan, no paid vacation, etc.). Out of a 2000 hour year you will need 875 billable hours annually to get back to where you are right now. Getting from 0-875 billable will take between 0 and forever years. Are you currently in outside sales? If so, that would increase the odds of you feeding your family as it will be all sales for several years.

Start by making yourself your first client--- free yourself of debt, create a 6 month emergency fund, fund your retirement, establish an AA that you have lived with through an economic downturn using low cost, diversified funds, and then ask yourself what you want to do for the next phase of your career. You will have a six month window to try something. Does sound like you are miserable in current job and that there is a more lucrative option in the near future. You are smart to think through this now as it gets harder once you are at $170k, especially if you have lifestyle creep.
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by carolinaman » Thu Jun 04, 2015 7:39 am

MN Finance wrote:You have limited options. If you had some years of experience you could get hired as a salaried advisor for a quality RIA (quality meaning someone that doesn't screw investors.) You don't.

In order to gain the experience mentioned above your only entry point is financial sales (which is still called financial advising.) You would have to sell products on commission or at least sell managed money (like the 1%.) The skill needed to be successful is 90% sales ability, 10% financial knowledge.

If you want to start your own fee only practice, you probably need experience to convince people to take your advice, or possibly a large network of people that would trust you despite your inexperience. Even if that does happen you have to produce significant volume in order to make the economics work without overcharging.

The only path I can see that actually stays in line with diehards philosophy is someone doing it part time, primarily as a hobby, which may or may not take off enough to make it full time.

I can tell you almost all advisors start out in a crappy sales role before they can move to something more client friendly. This is the rub. Everyone laments bad advisors but since a 'good' advisor by definition is extremely low cost, the barrier to entry is high (unless you can raise your family on 30k per year.
I have never been a financial adviser but what MN Finance says is consistent with my understanding. I considered becoming a financial adviser after my retirement but concluded for similar reasons that it would include more sales than I wanted to do and less of the financial advising. Like the OP, I did not want to exploit my customers.

Beat The Street
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Beat The Street » Thu Jun 04, 2015 10:35 am

tj wrote:
Beat The Street wrote:Unless you are really well connected it may be of shock to you how hard it is to bring in assets. No doubt you will give better advice than most advisors, but how do you convince the client your advice is better? If you slam the competitors fees or commissions, they will think you are just bashing the other person to steal business. Also, most investors are not fee conscious. They think the difference between 0.5% and 1.0% is nothing.

Another downside for you is people are more unlikely to switch advisors in a bull market. Every dummy out there that peddled American funds the last 5 years looks like a genius. The industry is highly frustrating if you are the analytical, non-salesy type. I have built a sizable business pretty quickly though, but I partnered with a bank that refers business to me, otherwise I would have starved.
How does this partnership work? What does the bank get out of it?
They get a portion of the revenue from the clients they refer to me. The client fee is the same whether or not they are referred by the bank though.
“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.” -Taleb

Matt48Ritchie
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Matt48Ritchie » Thu Jun 04, 2015 1:16 pm

Beat The Street wrote: They get a portion of the revenue from the clients they refer to me. The client fee is the same whether or not they are referred by the bank though.
Would that system prevent you from joining NAPFA if you wanted to?

Sanmar
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Sanmar » Thu Jun 04, 2015 2:12 pm

@amateurnovice--Ideally, I would want the CFP designation but that requires three years of working experience. Those are three years in which I won't be making much money.

Yes, you along with many others here are correct that the biggest struggle will be getting clients. I think it all goes back to sales skills and making prospective clients trust me with their money.

I think before I go back to school to get another degree I would need to find out what the minimum requirements are for me to work at a decent place like Vanguard or even, Fidelity (as anil686 suggests). I don't want to spend unnecessary time and money on schooling if I don't need it immediately to break into the industry. And like another person on this thread posted, it's more about the ability to convince others than the knowledge that I possess.

@prudent--Excellent points. I know a person who would say the same thing but about his Ameriprise guy (who happens to have a yacht, but where is my friend's yacht I ask?)

@BL--I think my conscience will get in my way if I want to gain some quick and dirty work experience. My father is finally going to make a living trust soon after he takes care of a selling a house he should have never bought. He's stubborn. His biggest weakness is his inability to stop spending money. I need to keep working on him. You and I are on the same page on William Bernstein's short booklet. That's one of the tools I already had in mind to use on my nieces and nephews.
stoptothink wrote: If you are good at and enjoy sales, it might be the right career for you, otherwise I would stick to the current career.
I would need to jump into a sales job part-time and see if I enjoy it.
Beat The Street wrote:Unless you are really well connected it may be of shock to you how hard it is to bring in assets. No doubt you will give better advice than most advisors, but how do you convince the client your advice is better? If you slam the competitors fees or commissions, they will think you are just bashing the other person to steal business. Also, most investors are not fee conscious. They think the difference between 0.5% and 1.0% is nothing.

Another downside for you is people are more unlikely to switch advisors in a bull market. Every dummy out there that peddled American funds the last 5 years looks like a genius. The industry is highly frustrating if you are the analytical, non-salesy type. I have built a sizable business pretty quickly though, but I partnered with a bank that refers business to me, otherwise I would have starved.
I can see that being well connected would help immensely in bringing in assets. What's the main reason you partnered with a bank? Do you work within the bank or does the bank refer people to your office? Are you the "salesy" or analytical type?
WhyNotUs wrote:Seems like your initial question is whether it is your calling. Hard to know and the easily identified entry points would likely make you dislike the industry.
Cold calls and selling front loaded funds are the jobs available.

Your passion sounds more like a hobby passion at this point. Don't mean that in a bad way. I love sailing and have some level of ability/won a few races but it is not a practical employment path for me. I could chuck it all and become a charter boat captain but I would probably not love sailing any more given my personality type.

I would suggest putting a course together at a local community college but they usually want to see some credentials. Hmm, voluntary free advice to seniors? Talks at a local library or your place of employment? How to establish credibility and a potential client list while get certification and keeping your existing job? Not seeing it without big pay cut and/or selling junk.

With regard to does it make sense financially, not really. If you were a fee only advisor you would need to gross $175,000- $200,000 to net your $100k in current income (you would then be paying SE tax, office, business expenses, perhaps office help, health insurance, business insurance, 100% of your own retirement plan, no paid vacation, etc.). Out of a 2000 hour year you will need 875 billable hours annually to get back to where you are right now. Getting from 0-875 billable will take between 0 and forever years. Are you currently in outside sales? If so, that would increase the odds of you feeding your family as it will be all sales for several years.

Start by making yourself your first client--- free yourself of debt, create a 6 month emergency fund, fund your retirement, establish an AA that you have lived with through an economic downturn using low cost, diversified funds, and then ask yourself what you want to do for the next phase of your career. You will have a six month window to try something. Does sound like you are miserable in current job and that there is a more lucrative option in the near future. You are smart to think through this now as it gets harder once you are at $170k, especially if you have lifestyle creep.
Cold calling does not sound fun, and I am totally against selling front loaded funds. And I am not in outside sales. I totally understand your point about me having a hobby passion. I have thought about putting together a class for one of my places of work. Doing it for the library or seniors is also a good idea.

I am my first client :-). I have done everything you mentioned above--I just need to finish chucking away at the last of our school loans, and I need to live through an economic downturn in my current AA of low cost, diversified index funds.

To be clear, the entry level job I have is ok. It's the second "top-flight," higher paying job that disappointed me. The main benefits I see are the higher pay and it's a little easier on my body. But the entry-level job isn't paying enough right now, and it caps out at around 90K in 7 seven years working the graveyard shifts. If I want to make more, then I will need to keep working a second job. I'm trying to prevent lifestyle creep as much as possible. I dread the thought of that creep.

So far, from what everyone has been posting, it seems like I might not be able to leave either of my jobs and pursue a job as a financial adviser just yet. I think it's like some of you have posted: I will need to start off part-time, doing it for fun, for free, starting with friends, family, and co-workers. Then branch off into the libraries and other public places that will accept my course. . .

AWH_CPA
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by AWH_CPA » Thu Jun 04, 2015 4:21 pm

You're probably better off just keeping this as a hobby. Help your friends and co workers for free. Know that you will have impacted their life for the better.

10 years ago you could have switched. Now you probably shouldn't. Stay current on financial topics and in 15 years maybe you could do planning for the docs at the hospital that you have built relationships with.

dodonnell
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NAPFA 2nd former Chairmen to go to jail

Post by dodonnell » Thu Jun 04, 2015 5:40 pm

sschullo wrote:
tj wrote:
sschullo wrote:Take a look at these two professional organizations. If I ever need an adviser and I will eventually, I will be calling for adviser from one these two professional organizations. Set your goal to be a genuine fiduciary adviser that charges by the hour and AUM (depending on what people bring to the table).
Good luck,

http://garrettplanningnetwork.com/

http://www.napfa.org/

I can't really agree with this. These are paid marketing networks. How much due diligence do they do on the members other than collecting their membership fee?

I had a friend who tried it out and this was her assessment:
This woman wanted me to open an IRA with her. All she was going to do was put my money in a target retirement account. I wanted more daily financial advice and it was "save as much as you can and pay off as much debt as you can". I could have told myself that. I was more looking for someone to guide me in how much is reasonable to spend, save, etc. things like that.
The OP wants to be an advisor and I suggested that he check out these organizations due to having similar investing philosophies that we follow here. I talked to NAPFA with your question a few years ago as I was curious too. They said that if a member sells a commissioned security they can monitor that activity. Garrett only has 350 members throughout the country. Is it 100% perfect, probably not. So what is the alternative, going to a broker or in the OP situation become a broker? Or selling annuities to naive' k-12 educators?
I do not plan on using either one of these organizations because in my mind, they charge too much even with the hourly rate and AUM, without commissions and advisory fees! We are extremely lucky that most Bogleheads can do this on our own, but the world "out there" is very different. Unfortunately most people need advice and they are going to pay for it.

And when I cannot decide for myself because of having many birthdays, this will be the first place I will look for an adviser.

Rick Ferri went to Garrett conference a few years ago and was impressed: viewtopic.php?t=62197
Blind faith is dangerous. Due Diligence is always required, regardless of the associations or famous author of books (or anonymous blog posters).
NAPFA has far from a clean track record. Two different former heads of NAPFA were taken down one in 2012, another in 2014:

SEC charges former president of NAPFA and his firm with taking $2.48M in kickbacks (2012)
Former NAPFA Chair Serving 16-Year Prison Term (2015)
NAPFA Fraud Cases - Wikipedia

Don't get me started on CFP:
Chairman-Elect Joe Votava Resigns From CFP Board of Directors

dmlauffer
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by dmlauffer » Thu Jun 04, 2015 8:10 pm

Being a good advisor is more than making sure your clients are buying low cost index funds. You will need to be able to deal with complicated situations and estate planning to really add value. It is those complicated services people will pay for. These are the services the robo-adviosrs are not replacing...at least not yet.

Beat The Street
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Beat The Street » Thu Jun 04, 2015 8:11 pm

Matt48Ritchie wrote:
Beat The Street wrote: They get a portion of the revenue from the clients they refer to me. The client fee is the same whether or not they are referred by the bank though.
Would that system prevent you from joining NAPFA if you wanted to?
I don't know, not a member and not planning on joining.
Beat The Street wrote:Unless you are really well connected it may be of shock to you how hard it is to bring in assets. No doubt you will give better advice than most advisors, but how do you convince the client your advice is better? If you slam the competitors fees or commissions, they will think you are just bashing the other person to steal business. Also, most investors are not fee conscious. They think the difference between 0.5% and 1.0% is nothing.

Another downside for you is people are more unlikely to switch advisors in a bull market. Every dummy out there that peddled American funds the last 5 years looks like a genius. The industry is highly frustrating if you are the analytical, non-salesy type. I have built a sizable business pretty quickly though, but I partnered with a bank that refers business to me, otherwise I would have starved.
I can see that being well connected would help immensely in bringing in assets. What's the main reason you partnered with a bank? Do you work within the bank or does the bank refer people to your office? Are you the "salesy" or analytical type?


[/quote]

. . .[/quote]

I partnered with a bank to grow my book quicker than prospecting on my own. When I say partnered I actually am employed by the bank, but the investment platform is open to whatever I decide. I am not salesy, much more analytical, but to me much of the boglehead philosophy sells itself.
“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.” -Taleb

Sanmar
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Sanmar » Fri Jun 05, 2015 6:46 am

AWH_CPA wrote:You're probably better off just keeping this as a hobby. Help your friends and co workers for free. Know that you will have impacted their life for the better.

10 years ago you could have switched. Now you probably shouldn't. Stay current on financial topics and in 15 years maybe you could do planning for the docs at the hospital that you have built relationships with.
Yep, at least I will make a good impact on their lives. I'm thinking keeping it a hobby might be the best for now.
dmlauffer wrote:Being a good advisor is more than making sure your clients are buying low cost index funds. You will need to be able to deal with complicated situations and estate planning to really add value. It is those complicated services people will pay for. These are the services the robo-adviosrs are not replacing...at least not yet.
I'm well aware that advising to invest in low cost index funds is just the tip of the iceberg. That's why I think the robo-advisers aren't replacing many real advisers (not yet, at least like you also commented).

@Beat The Street--I think it's great that the bank allows you to have your own investment platform. Was it through the bank that you got started? Also, what will happen to your accounts if you decide to leave the bank?

Mike Scott
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Mike Scott » Fri Jun 05, 2015 6:59 am

Is tax prep, then tax planning, then maybe general financial advising and/or insurance broker an easier way to get in? Many people who may not even invest at all are used to paying for tax prep and insurance.

Sanmar
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Sanmar » Fri Jun 05, 2015 11:30 pm

I was also wondering the same thing, Mike Scott.

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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by kaudrey » Mon Jun 08, 2015 4:14 pm

Sanmar,

Although this doesn't help you change careers, I will support what others have said about doing this in peripheral ways.

Like others, I looked into it years ago, and decided I wasn't a saleman.

So, I kept my job, but now I volunteer with a local organization that teaches basic finance, budgeting, and investment planning to low-income people. I also mentor with them - working one-on-one with people for 3-6 months to set up budgets and financial plans - to help them get back on their feet. Their issues are usually not very complicated compared to the issues we deal with here on Bogleheads, but often get into areas such as disability, tax credits, community resources etc. I find it rewarding.

I limit other financial advice to various family members and a few close friends who ask for help. But, my background is finance and I have a CFA, so that is why people close to me trust me.

Matt48Ritchie
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by Matt48Ritchie » Tue Jun 09, 2015 9:23 am

kaudrey wrote:Sanmar,

Although this doesn't help you change careers, I will support what others have said about doing this in peripheral ways.

Like others, I looked into it years ago, and decided I wasn't a saleman.

So, I kept my job, but now I volunteer with a local organization that teaches basic finance, budgeting, and investment planning to low-income people. I also mentor with them - working one-on-one with people for 3-6 months to set up budgets and financial plans - to help them get back on their feet. Their issues are usually not very complicated compared to the issues we deal with here on Bogleheads, but often get into areas such as disability, tax credits, community resources etc. I find it rewarding.

I limit other financial advice to various family members and a few close friends who ask for help. But, my background is finance and I have a CFA, so that is why people close to me trust me.
That sounds like a good organization. What's the name of it? Do you know if they partner with organizations that do similar things in other areas?

kaudrey
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by kaudrey » Mon Jun 22, 2015 1:58 pm

Matt48Ritchie wrote:
kaudrey wrote:Sanmar,

Although this doesn't help you change careers, I will support what others have said about doing this in peripheral ways.

Like others, I looked into it years ago, and decided I wasn't a saleman.

So, I kept my job, but now I volunteer with a local organization that teaches basic finance, budgeting, and investment planning to low-income people. I also mentor with them - working one-on-one with people for 3-6 months to set up budgets and financial plans - to help them get back on their feet. Their issues are usually not very complicated compared to the issues we deal with here on Bogleheads, but often get into areas such as disability, tax credits, community resources etc. I find it rewarding.

I limit other financial advice to various family members and a few close friends who ask for help. But, my background is finance and I have a CFA, so that is why people close to me trust me.
That sounds like a good organization. What's the name of it? Do you know if they partner with organizations that do similar things in other areas?
Hi Matt,

It's called Our Daily Bread, located in Fairfax, VA. They are pretty local - they work with the county; I don't think they work beyond Fairfax.

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neutics
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Re: I'm thinking about becoming a financial adviser...but I need some guidance.

Post by neutics » Mon Jun 22, 2015 3:18 pm

Sanmar, perhaps I can help as someone who recently went through the very transition you are considering (at age 33 in my case).

Left a nearly 6-figure job at a tech company in which I despised the cubicle culture where I managed an international team and worked weird hours. I had a wife and a baby on the way at the time, and as the primary earner was obviously concerned about providing our livelihood but had my wife's support. In my case I have been a Boglehead unofficially for 10+ years and always had in the back of my mind that this could be a career. After college I was a military pilot for 7+ years, then did my MBA, then started at the aforementioned tech company. Within the first 3 months there I was miserable and knew I didn't want to be stuck there in 3-5 years. So, enrolled in the CFP curriculum at our local college, which normally takes 2 years (1 night/week). At the end of that program they hosted a career day in conjunction with the local Financial Planning Association chapter, so I figured it wouldn't hurt to go.

At career day there were a dozen or so different companies looking to hire from every corner of the financial world. Fortunately at least two of them there were fee-only and hiring for an Associate Advisor role. Both invited me to their offices for interviews and to meet the other staff, but only one formally offered. Again, I wasn't necessarily seeking the position, but after weighing the pro's and con's I took the dive a little over a year ago. I passed both the Series 65 and the CFP exam, and received a 20% raise recently, and in general I enjoy the role and am much happier.

That said, I'll agree with the others that finding the right firm/fit is very difficult and extremely important. In my case we share the same values and investing beliefs (the Boglehead way!) and I can truly say we are making a difference in the lives of our clients. There is no pressure or expectation that I bring in new business, because God knows I'm not a salesman, and our firm is growing well enough already through referrals.

Again, ignore some of the naysayers who did not have the courage to try. If this is your calling, then there is a way to make it work.

Feel free to PM me if you have more specific questions or concerns. Where are you located?

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