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FA vs corporate finance career

Posted: Wed Mar 13, 2019 5:25 pm
by robsta
Hi all,

I have over 2 years of experience in the financial services industry and am deciding between taking a job offer to work as a financial advisor for a large brokerage firm or start an MBA program at a solid regional school that would hopefully land me a role in corporate finance after graduation. Any thoughts?

Re: FA vs corporate finance career

Posted: Wed Mar 13, 2019 6:36 pm
by HEDGEFUNDIE
These are two totally different paths.

Do you want to work in sales or as an office worker bee?

Re: FA vs corporate finance career

Posted: Wed Mar 13, 2019 6:47 pm
by robsta
Yeah that’s exactly what I’m trying to decide. The FA role I am familiar with - salesand relationship management heavy. I am not really familiar with corporate finance but it seems to be more analytical, excel heavy.

Re: FA vs corporate finance career

Posted: Wed Mar 13, 2019 6:49 pm
by Boglegrappler
Depends on how good the MBA program is at placing its grads. That will in part depend on how well you can do at it.

I think the brokerage financial advisor business is becoming tougher and tougher to succeed at. Certainly requires a certain energy and personality.

Re: FA vs corporate finance career

Posted: Wed Mar 13, 2019 11:06 pm
by venkman
robsta wrote:
Wed Mar 13, 2019 5:25 pm
I have over 2 years of experience in the financial services industry and am deciding between taking a job offer to work as a financial advisor for a large brokerage firm...
Can you overcome the inherent ethical dilemma of being a FA who gets paid a percentage of AUM (I'm assuming that will be the case at a large brokerage firm), knowing that your clients' best interest would almost certainly be served better by investing in a simple index portfolio--either on their own or by paying a one-time fee to an hourly FA--and not losing 1%+ per year to AUM fees?

One of the major tenets of BH is that costs matter; and if someone really needs an AUM advisor, Vanguard will do it for 30 bps and put clients exclusively in low-fee mutual funds.

Nothing against you personally. It's just that the job you've been offered represents the antithesis of what these forums stand for.

Re: FA vs corporate finance career

Posted: Wed Mar 13, 2019 11:43 pm
by robsta
I appreciate that perspective regarding the potential conflict of interest posed by AUM fees or commissions generated by FAs. I used to have the same reservations as you but from my experience talking to people every day who are sitting in cash or CDs or some other ultra-conservative product and worried about losing money in the markets, I can confidently say that most people who are paying an advisor 1% AUM fees are better off than they would be otherwise. I do not think the general population has the knowledge or the discipline to invest in an appropriate lineup of index funds with a proper asset allocation. So although in an ideal world, everyone would be a BH and knowledgeable regarding their money, that's not reality IMHO.

Re: FA vs corporate finance career

Posted: Thu Mar 14, 2019 6:52 am
by Grt2bOutdoors
robsta wrote:
Wed Mar 13, 2019 11:43 pm
I appreciate that perspective regarding the potential conflict of interest posed by AUM fees or commissions generated by FAs. I used to have the same reservations as you but from my experience talking to people every day who are sitting in cash or CDs or some other ultra-conservative product and worried about losing money in the markets, I can confidently say that most people who are paying an advisor 1% AUM fees are better off than they would be otherwise. I do not think the general population has the knowledge or the discipline to invest in an appropriate lineup of index funds with a proper asset allocation. So although in an ideal world, everyone would be a BH and knowledgeable regarding their money, that's not reality IMHO.
That is today. What you must be prepared for is disruption, disruption in the field you pursue. Technology is disrupting the traditional advisory relationship that used to exist, technology is also disrupting the traditional office environment. A corporate finance job interview may be easier to obtain if you hold a degree from a Top 10 program, how will the MBA from the top regional school differentiate you from the rest of the pack? You have to answer this, not the marketing department of the school you are looking at. Of course the school is going to point to their successful alumni but do they delve into the nitty gritty on the course that alumni were required to go through career wise to get to the pinnacle? You know the answer to that. MBA does not equal dream job most of the time. If you want to try FA job, then go for it, if you fail then you can always go for MBA later on.

Re: FA vs corporate finance career

Posted: Thu Mar 14, 2019 7:12 am
by stan1
Are you in your 20s? I agree there is going to be a lot of disruption in these career fields. As you know financial advisors are a sales job. With financial advisors there is going to be a lot of pressure on the AUM model. I think it is going to transition into a gig economy model where someone might pay $250-500 when they get married or have a new baby or switch jobs to get one time advice. There's going to be a large group of people under 50 trying to balance student loans, mortgage debt, income volatility, etc. who may want one time or intermittent advice also. Of course there will be older people less comfortable with that model but there will be a lot fewer of them around when you are in your 50s.

Finance is also going to be disrupted by improved algorithms that replace mid-tier white collar knowledge workers (e.g. machine learning, AI). Functions like audit will increasingly be automated by the use of compliant systems. You'd want to go into it with a focus on data science not Excel spreadsheets. It's becoming a tech job. You'd want an MBA program that prepares you for that. I think a regional MBA can work if you plan to stay in that geographic area and if there are plenty of opportunities there. Not everyone intends to take a Top 10 MBA to Wall Street. The reason to get the MBA is to build a network with people you have a common bond with that will last the rest of your career. You also have to work the rest of your career to maintain that, but if you are OK with working in sales you probably already understand that. Also look carefully at their career placement metrics. What companies are graduates going to and are those the types of jobs you would want?