Becoming a Fee-Only Financial Advisor Help

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Mr400meterdash
Posts: 54
Joined: Wed Dec 13, 2017 10:24 am

Becoming a Fee-Only Financial Advisor Help

Post by Mr400meterdash » Thu Dec 14, 2017 6:20 pm

So I just graduated from University in the Spring of 2017. I graduated with a degree in Kinesiology in the hopes of becoming a Physical Therapist. I took a few free financial classes that a person from the town taught and he taught everything everyone teaches on this web site. He got me hooked on finances and I want to now become a fee-only advisor so that people can come to me for advice instead of a company that will charge them hidden fees and loads. My goal is mainly to charge hourly in the hopes that I can teach people what they need to do so that they can do it on their own and if they want to come back once a year or so to refine everything, that would be an option. If people would want my help all year round, I would have to set up something there so that if I am managing their accounts that I get paid still but at a low cost. Really all I want to do is help people understand and learn about their finances for a low fee.

If there are any of you out there who have been fee-only financial advisors or have any knowledge of how to become one, any advice or websites would be very helpful as I do not know where to start!

Edit: If I wanted to become an CFP, would I be able to just start taking courses or would I have to take my series 65 and series 7 tests beforehand?
And if people wanted me to handle their assets under my management, I would have to charge a fee for that because I would have to do their re-balancing and all that but how do you do that while still being a fee only? Or could I charge something like .4 of their portfolio to do all of that for them so that I would still be cheap but not fee only anymore.
Last edited by Mr400meterdash on Sun Dec 17, 2017 3:21 pm, edited 1 time in total.

gerntz
Posts: 466
Joined: Fri May 06, 2011 3:37 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by gerntz » Thu Dec 14, 2017 6:26 pm

How much will you pay me to let you be my advisor?

Silk McCue
Posts: 1127
Joined: Thu Feb 25, 2016 7:11 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by Silk McCue » Thu Dec 14, 2017 6:33 pm

This is a well respected group of fee only advisors. I expect you can poke around their site and learn a thing or two about the industry. Best of Luck.

https://www.garrettplanningnetwork.com

User avatar
WoodSpinner
Posts: 518
Joined: Mon Feb 27, 2017 1:15 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by WoodSpinner » Thu Dec 14, 2017 7:03 pm

OP,

You might also spend some time at Michael Kitces site, Inthink you will find some useful information and perspectives on the Financial Advisor industry.

Good luck

:beer

User avatar
LadyGeek
Site Admin
Posts: 48056
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Becoming a Fee-Only Financial Advisor Help

Post by LadyGeek » Thu Dec 14, 2017 7:48 pm

FYI - The OP is requesting help with his portfolio here: Young Investor: When to diversify

The wiki has some background info: Investment adviser

Also see: For Industry Professionals | FINRA.org to understand what it takes to get your license(s).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
Sandtrap
Posts: 5324
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: Becoming a Fee-Only Financial Advisor Help

Post by Sandtrap » Thu Dec 14, 2017 9:53 pm

Investment advisor path, schools, certification.
https://www.kitces.com/blog/how-to-pick ... quirement/

User avatar
arcticpineapplecorp.
Posts: 3218
Joined: Tue Mar 06, 2012 9:22 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by arcticpineapplecorp. » Thu Dec 14, 2017 10:00 pm

https://www.kitces.com/blog/anna-sergun ... g-network/

#FASuccess Ep 049: Getting Paid For (Hourly) Financial Planning By Packaging Financial Advice with Anna Sergunina

Good luck and let us know how it goes.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

venkman
Posts: 698
Joined: Tue Mar 14, 2017 10:33 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by venkman » Thu Dec 14, 2017 10:53 pm

Mr400meterdash wrote:
Thu Dec 14, 2017 6:20 pm
If there are any of you out there who have been fee-only financial advisors or have any knowledge of how to become one, any advice or websites would be very helpful as I do not know where to start!
Assuming you just want to be an investment adviser (as opposed to a CFP, etc.), you need to pass the Series 65 exam and register with the appropriate authority (usually a state Administrator). You can set yourself up as an Investment Adviser and go from there. If you want to actually have custody of client funds, it gets more complicated.

It's probably doable enough if you want to treat it as a side job, where you just meet people somewhere and go over their investment options and they write you a check for a modest amount. If you want it to be a full-time gig, with your own office and everything, that's going to be a lot harder. You'd need to start from nothing and build up a big client base, and you'll be competing against big-name professional firms whose names the public routinely sees advertised on national television.

Here's the depressing part: Both you and I know that people will probably be FAR better off going to you (I'm assuming you're competent and will only provide BH-approved advice. :happy ) than to a firm that charges an annual 1-2% AUM fee. But your potential client base DOESN'T know that. ("Once you know enough to choose a good financial adviser, you no longer need one...") Look at it from an average person's point of view: You know nothing about investing and are a little intimidated by the whole process, so you decide to hire someone to help you with it. You can choose to entrust your life savings to a nationally-branded investment firm, or some independent local guy who seems nice, but you don't know anything about him. As far as you know, they will both do the same thing for you. You figure you might pay a little more with the big firm, but it's probably worth it because they're backed up by their big company's security and analysts and quality control, etc. Plus, they'll only charge you 1.5% per year, which seems like almost nothing, AND they'll deduct it from your account for you--you don't even have to worry about paying! The local guy wants actual money up front.

I'm not saying it can't possibly work; I'm just saying it might be a good idea to temper your expectations. Whatever you decide, good luck with it. :happy

Mr400meterdash
Posts: 54
Joined: Wed Dec 13, 2017 10:24 am

Re: Becoming a Fee-Only Financial Advisor Help

Post by Mr400meterdash » Fri Dec 15, 2017 10:38 am

venkman wrote:
Thu Dec 14, 2017 10:53 pm
Mr400meterdash wrote:
Thu Dec 14, 2017 6:20 pm
If there are any of you out there who have been fee-only financial advisors or have any knowledge of how to become one, any advice or websites would be very helpful as I do not know where to start!
Assuming you just want to be an investment adviser (as opposed to a CFP, etc.), you need to pass the Series 65 exam and register with the appropriate authority (usually a state Administrator). You can set yourself up as an Investment Adviser and go from there. If you want to actually have custody of client funds, it gets more complicated.

It's probably doable enough if you want to treat it as a side job, where you just meet people somewhere and go over their investment options and they write you a check for a modest amount. If you want it to be a full-time gig, with your own office and everything, that's going to be a lot harder. You'd need to start from nothing and build up a big client base, and you'll be competing against big-name professional firms whose names the public routinely sees advertised on national television.

Here's the depressing part: Both you and I know that people will probably be FAR better off going to you (I'm assuming you're competent and will only provide BH-approved advice. :happy ) than to a firm that charges an annual 1-2% AUM fee. But your potential client base DOESN'T know that. ("Once you know enough to choose a good financial adviser, you no longer need one...") Look at it from an average person's point of view: You know nothing about investing and are a little intimidated by the whole process, so you decide to hire someone to help you with it. You can choose to entrust your life savings to a nationally-branded investment firm, or some independent local guy who seems nice, but you don't know anything about him. As far as you know, they will both do the same thing for you. You figure you might pay a little more with the big firm, but it's probably worth it because they're backed up by their big company's security and analysts and quality control, etc. Plus, they'll only charge you 1.5% per year, which seems like almost nothing, AND they'll deduct it from your account for you--you don't even have to worry about paying! The local guy wants actual money up front.

I'm not saying it can't possibly work; I'm just saying it might be a good idea to temper your expectations. Whatever you decide, good luck with it. :happy
Thank you for the advice and warnings as well. A CFP would be the ultimate goal but you have to have something like 3 years of experience or a certain amount of hours to even start that process. I am just working right now making some money and trying to learn in my free time about finances by reading books that you all would suggest, reading scholarly articles about finance and learning about the past and the present as well as reading books on how to better myself and learn how other people work as well. I know this is not something that will come easy or even in the near future but I know that I need to start the process and just start heading in that direction. I know of a few fee-only advisors in my area and I will be trying to meet with them and see how they work and hopefully one of them might reach out to me and take me under there wing. But I also realize that to build up a client base I may have to work for someone that I do not necessarily approve of and branch off from there. But I do appreciate you being honest with me and telling me that it won't be an easy road but that is all part of the fun!

Thanks!

Mr400meterdash
Posts: 54
Joined: Wed Dec 13, 2017 10:24 am

Re: Becoming a Fee-Only Financial Advisor Help

Post by Mr400meterdash » Fri Dec 15, 2017 10:39 am

Thank you all for the websites and tips that you provided. I will be going over them in hopes of getting a little closer to my dream!

captaindorky
Posts: 31
Joined: Tue Jan 31, 2017 10:04 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by captaindorky » Fri Dec 15, 2017 11:43 am

Here's the depressing part: Both you and I know that people will probably be FAR better off going to you (I'm assuming you're competent and will only provide BH-approved advice. :happy ) than to a firm that charges an annual 1-2% AUM fee. But your potential client base DOESN'T know that. ("Once you know enough to choose a good financial adviser, you no longer need one...") Look at it from an average person's point of view: You know nothing about investing and are a little intimidated by the whole process, so you decide to hire someone to help you with it. You can choose to entrust your life savings to a nationally-branded investment firm, or some independent local guy who seems nice, but you don't know anything about him. As far as you know, they will both do the same thing for you. You figure you might pay a little more with the big firm, but it's probably worth it because they're backed up by their big company's security and analysts and quality control, etc. Plus, they'll only charge you 1.5% per year, which seems like almost nothing, AND they'll deduct it from your account for you--you don't even have to worry about paying! The local guy wants actual money up front.
This. I'm in a healthcare profession and am amazed by how a few individuals have sunk their teeth into my fellow colleagues for whole life products and other inappropriate investment vehicles. I've always been interested in finances in general and had thought a CFP designation with a fee only service felt like the ticket.

I've reviewed the CFP materials and had considered going through the coursework just to fully understand all of it. As far as getting the designation itself, that requires time working with someone (years) - and I just don't know how I can make that work.

I guess a question here is, if it is worth it to go through the coursework if you were only considering to offer fee only advice (in a Boglehead philosophy, of course) or just do the series 65? I don't want to hold anyone's assets and charge AUM fees. Merely provide information on how folks can simplify and hopefully create a successful portfolio for the long haul.

Sorry to hijack the thread - but I find myself asking 'what if?' frequently.

Thanks

CD

Slapshot
Posts: 263
Joined: Fri Mar 02, 2007 12:26 pm
Location: SE Mass.

Re: Becoming a Fee-Only Financial Advisor Help

Post by Slapshot » Fri Dec 15, 2017 2:21 pm

I had the same idea as you at one time. I retired early and was looking for something interesting to do. So I enrolled in a financial planner program at Boston Institute for Finance, which is affiliated with Boston University. It was an online program. I completed all the coursework but eventually realized that I didn't want to put in the time nor effort to jump through all the hoops to become a certified Financial Planner. But taking the courses was worthwhile as I learned a lot. Maybe you should check it out if it's still around.
This time, like all times, is the best of times if we but know what to do with it.

GridironGems
Posts: 146
Joined: Mon Aug 14, 2017 8:50 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by GridironGems » Fri Dec 15, 2017 6:48 pm

Sandtrap wrote:
Thu Dec 14, 2017 9:53 pm
Investment advisor path, schools, certification.
https://www.kitces.com/blog/how-to-pick ... quirement/
i graduated from Kansas State University in 2009 and work for KSU. I took an undergrad Personal Financial Planning class this semester and am starting on the Certificate program here at KSU next semester! Since I am on campus, I am actually attending class in person instead of doing it online

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Becoming a Fee-Only Financial Advisor Help

Post by dbr » Fri Dec 15, 2017 6:53 pm

My caveat is that I am not intimately familiar with the business of being a financial advisor, but I can't help but be persuaded by the likely fact that if investors can't afford to pay what financial advisors need to charge (which I believe they can't) then financial advisors need to charge more than investors can afford to pay. The question is where that leaves you other than in poverty but at least able to feel good.

tibbitts
Posts: 8006
Joined: Tue Feb 27, 2007 6:50 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by tibbitts » Fri Dec 15, 2017 8:38 pm

It seems to me that the advisory business is about 98% sales, but I have a feeling that you may be envisioning sitting behind a desk and having pre-screened clients walking in nonstop, one after the other, for advice. I think a lot of Bogleheads would love to do that 2% of the job - it's the 98% sales that deters them.

venkman
Posts: 698
Joined: Tue Mar 14, 2017 10:33 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by venkman » Fri Dec 15, 2017 10:14 pm

captaindorky wrote:
Fri Dec 15, 2017 11:43 am
I've reviewed the CFP materials and had considered going through the coursework just to fully understand all of it. As far as getting the designation itself, that requires time working with someone (years) - and I just don't know how I can make that work.

I guess a question here is, if it is worth it to go through the coursework if you were only considering to offer fee only advice (in a Boglehead philosophy, of course) or just do the series 65? I don't want to hold anyone's assets and charge AUM fees. Merely provide information on how folks can simplify and hopefully create a successful portfolio for the long haul.
I'm not a financial professional. I passed the Series 65 mostly to convince a family member that I could handle their investments just as well as the Wells-Fargo RIA who was charging 1.5% per year to put them in active mutual funds with a 1% ER. (Right now, we're at the point where the family member seems to understand and believes me, but is somehow still reluctant to move their money. *sigh*)

If you only want to give investment advice, the Series 65 should be all you need. But I think there's a limited market of people who want to pay for advice on how to invest, and then handle all the transactions themselves. I also think that most of the people who would consider seeing a professional for financial advice want and need comprehensive advice that covers all aspects (investments, insurance, taxes, etc.), and those people will go to a CFP.

I think there is an absolutely HUGE amount of value that could be added by a fee-only, BH-type advisor who only does things like review someone's 401k options and advise them on the best available choices. A client who spent, say, $50 (or more) just for that sort of advice could be paid back HUNDREDS of times over, during the course of their investing life. But no one realizes how valuable that advice would be; and those type of advisors are hard to find anyway.

I'd say if you really want to give fee-based financial advice as a full-time career, being a CFP is probably the way to go. If you just want to give occasional investment advice for money, go with the Series 65 and register as an investment adviser with the appropriate authority.

JBTX
Posts: 4043
Joined: Wed Jul 26, 2017 12:46 pm

Re: Becoming a Fee-Only Financial Advisor Help

Post by JBTX » Fri Dec 15, 2017 10:59 pm

I would think it would be difficult for somebody who is young and relatively inexperienced to strike out as a fee only financial advisor. My guess (and it is that, a guess) is most financial advisors, especially those starting out, make their money on transactions costs - loads, commissions, fees, etc. Maybe 15-20 years ago I wondered if I'd like to be a CFP, because I enjoy personal finance and have a background in finance and accounting. I talked to a person at one of the major firms and came away realizing at lot of your success is going to be based upon sales, networking, etc, none of which are really my cup of tea.

Nate79
Posts: 3493
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Becoming a Fee-Only Financial Advisor Help

Post by Nate79 » Sat Dec 16, 2017 1:57 pm

As a side business this might be ok. But I hope you don't have high hopes for much income from this. It's a very tough business.

Mr400meterdash
Posts: 54
Joined: Wed Dec 13, 2017 10:24 am

Re: Becoming a Fee-Only Financial Advisor Help

Post by Mr400meterdash » Sun Dec 17, 2017 4:24 pm

tibbitts wrote:
Fri Dec 15, 2017 8:38 pm
It seems to me that the advisory business is about 98% sales, but I have a feeling that you may be envisioning sitting behind a desk and having pre-screened clients walking in nonstop, one after the other, for advice. I think a lot of Bogleheads would love to do that 2% of the job - it's the 98% sales that deters them.
I agree with you on the fact that a lot of it is sales but it more about selling yourself to the customer rather than a product. This is a positive and negative. The negative about that is that when you try to sell yourself, you are trying to convince someone why they should pay you for your information and it is not something tangible that you can point to and show them what it does and how it works. The positive is that I know who I am as a person and can sell myself better than anyone else as well as learn how people work and use that to sell myself better. And yes, I would love to just do that 2% of the job and I think as I gain experience and have a reputation, selling myself will decrease and the fun part will increase. Hopefully anyways!

Paulrbn
Posts: 7
Joined: Mon Feb 19, 2018 3:23 pm
Location: Berkeley, CA

Re: Becoming a Fee-Only Financial Advisor Help

Post by Paulrbn » Thu Feb 22, 2018 10:14 pm

I know this is delayed, but I recommend taking an introductory CFP course through a local program to see if you like it. I'm a CFP and took a course through UC Berkeley Extension to see if I liked it (I live in the Bay Area) and I did. You could also look at he College of Financial Planning if you want to do an online course (https://www.cffpinfo.com/).

With regards to sales, there is sales in any profession you do, with regards to selling yourself (and this goes for even if you work for someone else). However, I do understand that there is more of the stereotypical hard sell that you must do in the industry, but I also do not think it has to mean you are sleazy. I think if you do good, honest work and build such a reputation, then the selling part won't be as difficult. Just be yourself, transparent, and provide value (that is if you do go into this industry). This is also coming from someone who has not been in the industry that long (3-4 years) and has the same fears:-).

Good luck!

Post Reply