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That shot their credibility all to heck.
Anyhow, I feel about the same way about everything I have been doing for my career. Throughout my entire childhood (well, since I was eight and cared) I wanted to be an architect. I took drafting classed, loved to learn about carpentry, took shop classes, and I designed houses in my free time. When I was 14 I taught myself HTML, and somehow landed a job straight out of high school doing light support and web development. That somehow migrated to network administration, and I have been doing that since. I am an MCSE, and I am about to graduate from business school majoring in Information Systems. I thought about minoring in Music and maybe getting a MA in Music. However, for a couple years, my plan has been to do an MBA or MBA/JD. I am thinking I will do them seperately, though. Indiana University has an online MBA program that you meet one week per year (all two years...) onsite. It is very expensive... ~$800/credit hour... but I can probably get my employer to cover most of it. They are a top 25 MBA school, which matters to some of the big boys... but not so much to others. However, I do not really even want to work for anyone, so I don't know why I care. I will probably do the JD at IU as well, as they rank highly, and it is in town at the Indianapolis campus. I always wanted to go to Notre Dame, for architecture, but it is almost in Michigan, and it is very expensive. My best shot would be the MBA, as they have an Executive MBA program that meets three days a month, but you need a few years of managerial experience already... and the extent of my managerial experience includes a year at Burger King, and a year at MSN in the tech support department. I highly doubt that would work for me. So, it looks like it is IU for me.
As far as MoneyDummy said, those other results have me questioning the credibility of the article as well. If you have a PhD or something, they make good money and get plenty of time to research things they enjoy... but beyond that, you would have to be a very liberal person to enjoy the internal politics of a university... and I am pretty much the anti-thesis of that.
I was looking at taking a course or two just for fun and discovered that UCLA offers CFP certification classes online - finish the program and you're eligible for the exam. Just thought you might be interested. Good luck with the new job!
Cathy
What exactly are you looking at doing as a financial advisor/financial planner, Mr. Flexo?
If I were a financial advisor, I'd want to teach people to pay off their debts, help them learn to save, instill good money habits. Learning to invest is certainly a piece of this, but it's not the only piece, and I suspect that's the primary focus of financial advisors. What's more, I'm willing to bet that financial advisors are required to shill for the comanies that employ them, and that would kill me. I don't want to be a salesman. I want to teach people good financial skills. Goading them into buying my investments is just shifting bad habits to my favor (or the favor of my company).
Still, I'm going to take a deeper look into this...
It would mean working for myself (though possibly not at first) to make sure I'm not tied to any specific company's products.
My thoughts are along the lines of J.D.'s above.
A good source for reading up on financial planning is at the boards of financial-planning.com (http://www.financial-planning.com/phorum/index.php)
Good luck!
I agree that working for a fee only planning firm is the way to go. If you are sales averse, however, this is not the profession for you. Before you can advise a client, they must trust you enough to agree to pay you in some form. That is sales. There are so many people in this industry telling people that they are financial advisers, when in fact they may be insurance salespeople, stock brokers or mutual fund or annuity salespeople that the masses do not know what to think or whom to trust. You can tell them, "but I'm a fee only planner, I'm the one you can trust." But the other guys are saying other things and convincing the people to trust them.
The income potential is high, the flexibility is nice, but yes, it is stressful. Clients expect performance and top service. If you don't deliver, there are a thousand waiting in the wings. Clients can be fickle. One client expects you to outperform the market, the other expects you to outperform his brother who got lucky dumping a bunch of money in a gold fund a year ago.
If you are serious about it, go for the CFP. See my post on how to become a CFP. You can start the process by taking the classes. Even if you complete the classes and pass the comprehensive exam, you cannot call yourself CFP until you have two years of advising clients.
Good luck, let me know if you want any further advice. If you have any specific questions, you can email me at lamoneyguy (at) gmail.com
Gary
Good luck
Jim
My career has evolved and now I run the financial planning offering for a fee-based wealth management firm. We are currently only offering planning for our investment management clients and charge between $2500 and $5000 for a plan, depending on its complexity. I love what I do, it's challenging and rewarding.
Anyone considering becoming certified as a financial planner should keep in mind that one of the requirements is 3 years experience in the business. The curriculum and exam preparation can also be quite expensive. Find an employer who will help pay some of the costs.
The biggest downside to being a successful advisor is then first few years - your services are seldom "bought" initially - they're usually sold. SO, the first few years involves essentially selling yourself. If you don't have a salesman's (or wonman's) personality and a REALLY thick skin, it's not an easy thing. However, once the business is built, it's pretty good.
As for being a "perfessor", I'd disagree that it's that high on the list - it should be HIGHER. It's different for different fields, but I think being a finance professor is at the top of the heap (other may differ, but they can make their own comment). There are lots of jobs and you spend your days asksing (and answering) interesting questions (at least if you;re at a research school). You get to teahch people about something you find really interesting. And best of all, they pay you extremely well (at better schools the starting pay is around $105-120K+ a year.
The downside is that you need a Ph.D., which almost always involves minimum of three years (and more likely 4-5) of post-MBA work, a lot of extremely difficult coursework (math out the yazoo), and writing a dissertation. But if you make it through those hoops, I think it's about the most fun you can have with your clothes on.
Eh, who knows. A career as a financial advisor could be rewarding. And you'd have great insight to write personal finance articles!!!!
It became so depressing to me, that I found a psychologist that deals with people who have career issuse. After speaking with me and having me take some interest inventory, she seemed to think I should look into becoming a Financial advisor. Even before the Money magazine article. Now I am facing the issue of finding more info about how to get into this field.
Also, I am thinking about going back for my MBA. It was useful when I was a consultant, but not much as a 'desk junkie QA'.
The emotional and financial rollercoaster that comes with any sales job.
You've got to sell stuff (mainly yourself) but you've got to sell a product and/or a service...otherwise, you can kiss that six figure income goodbye.
Lamoneyguy makes some good points in his comment. When you decide to be a financial advisor, you have to consider how you want to specialize. You mentioned that the "psychologist" aspect of advising appeals to you. You'd be surprised how few advisors are good at reading through the lines and understanding their clients. Many advisors have a financial way of thinking and aren't all that good with people skills. The problem generally comes up onnce you manage enough money to make a living- and you find yourself less interested in meeting with clients and more focused on gathering assets. Working for an independent firm is, in my opinion, a good idea, and becoming a CFP never hurts. I wouldn't say to work on a "fee-only" basis b/c sometimes, believe it or not, clients prefer to pay on a commission scale. You might as well give yourself the choice to do both. Regards.
Thanks,
Mich
I too am suspect since it seems all the big companies are offering these training programs -- I have to wonder," What's the catch?"
Can anyone tell me if having a degree is required in addition to the CFP?
I do not have a college degree. However, I served seven years active duty Army from 94-01 and have a very likable personality and strong work ethic. Since leaving the Army in 01, I have achieved the six figure income I dreamed of while not enjoying the job (computer work) and living in Northern Virginia.
I've recently given up the six figure income and relocated to Oklahoma City for a better quality of life. People here just seem to be more real.
I enjoy crunching numbers and analyzing different strategies on how to best make my money work for me. I drive my wife nuts!
At any rate, any additional information on how to move forward with pursuing this profession will be greatly appreciated.
Cheers,
Chad
I may be mistaken but ANYONE can call themselves a "financial advisor" and if you can find anyone to pay you for your advice/services, you are in the business. I am considering this line of work down the road when I retire in a maximum of 10 years. I want to be at the point where I don't need the money and will do it because I enjoy it.
I am not a salesman but would enjoy helping people (by word of mouth) build a plan for low cost. A lot of this stuff is not rocket science and there's a niche of people that don't need a professional (CFP) to work with them. I'm not willing to put the work/expense into what it would take for that (CFP) but I possess a lot of personal experience that I feel I can share with certain folks. Unfortunately, if you have to make a living off of financial advising, it will take more than the casual effort I'm prepared to give.
I'm still working towards my degree in Finance, if I ever get to the point of a CFP I'll let you know :)
a CFP, a ChFC or a PFS (Personal Financial Specialist).-thanks :)
CFP is Certified Financial Planner.
Est. income: ~$60k
ChFC - Chartered Financial Consultant has a higher income (according to one site) of 51%.
PFS - Personal Financial Specialist is for CPAs who want to get into financial planning.
PFS sounds like your best option (IMHO) but the other two require more experience in the financial sector (if I read it right). You should always double-check, as I am not any of these designations, just a Finance Student!
Here's an article that goes more in-depth: link
the sad part about BK is that kids are not really the ones filling, the grown ups are doin it in large numbers at least til the new rules became effective aprox 30% of the grown up US population. just by constantly reading the horror stories of how ignorant most people are when it comes to ther finances. leads me to believe that there's a great deal of opportunity in the profession. i've been involved in a similar profession the last 14 years of my life achieving the 6 figure income but of course it's getting old for me so I think a change will do me good, I know I'm good with people so for me it's just a matter of compleating all my courses and hooking up with the right company. Any recommendation of a good company will be greatly appreciated.
I want to be able to help people and I think this is a good way to do it.
The only university faculty who get paid well are teaching in colleges of business, law, or medicine, or are researchers in engineering & pure science. With a Ph.D. in English; 15 years of real-world experience as a journalist; two scholarly books, three trade books; and uncountable magazine and newspaper articles in print; 10 years of teaching experience--with top performance ratings--on the upper-division and graduate level, I was earning $43,500 before I moved to a better-paying supervisory job. The local newspaper published an article listing wages for city workers; staff in the city's maintenance department were earning more than I was.
At my university, the people who earn in the triple digits are in business, law, medicine, & the sciences. The rest of us who have the privilege of teaching gigantic classes of required courses never come anywhere near that kind of earning power.
1 You are always on call. You depend on your clients for your income and referrals, so your cell is always near, and always on.
2. You will get yelled at all of the time. It is a numbers game. With 700 clients, 10% will be mad at you. That is a lot of yelling.
3. People are sue happy. If you happen to start during a bear market, look out. Most advisors are always under the stress of being sued.
Other than that, there are a lot of positives. Best of luck!
Well, what do you think? I am 45, no children, great husband who also teaches, but we never have enough money!
DEcisions decisions...
The only thing that really kills me about the CFA position is the selling. I am sooo not a sales person and I like working from home in my pajamas.
I have been investigating this job thoroughly because I am interviewing for positions and am planning on accepting my offer from Smith Barney.
If you love finance but you do not like sales, then this is not the career for you. You would likely be happier as an analyst at an investment company. Similarly if you are an excellent salesman but have not started studying finances this is going to be very difficult and probably not a good choice long term. A financial advisor must posses two very different personality traits they must be highly social and highly analytical.
The first few years you need to build a book of business. After you get your insurance and broker licenses you are basically expected given a business card and told that you have X amount of time to get Y millions of dollars under management. Now what? Here is where you will need to sell. In order to sell to people the idea that you should advise them on their finances and investments they will expect you to know about finances. Hopefully you are like me and investing is has been a passion of yours for years.
As time progresses the job transitions from sales to consulting. Eventually you have built a large enough book of business, and have enough clients that trust you with their investments, such that you do not spend much of anytime selling. Now the job is to make sure that all of your clients are meeting their financial goals, and that their assets are allocated properly. If you do this well you should get a few more referrals and your business continues to grow to your ideal level.
All of the companies out there have different offers. Northwestern basically wants you to peddle insurance. You make money no matter what you sell, but you make a heck of a lot more when it is their insurance. I could never work in an environment like that. I want to be able to do what is truly best for my clients. Then their are companies like Ameriprise financial. They seem to want everyone with a bachelors degree that can pass a relatively easy test. They had about twenty of us in a conference room where they tried to sell us on the job. Evidently the base salary and commission is in the middle tier and they charge clients in the middle range. Ameriprise also expects the financial advisor to front the $1,000 for the insurance and brokerage licenses. Then after about ten weeks of study and waiting for the results, if you pass they will hire you and they will reimburse you for the licenses.
Edward Jones pays slightly higher than Ameriprise.
At the high end of training and salary are Smith Barney, Merrill Lynch, Morgan Stanley, and UBS. These are full brokerage wirehouses that also have the resources of the largest investment banks in the world. For example Smith Barney is owned by Citigroup. In the list of the top 100 advisors in terms of assets under management it is dominated by Smith Barney and Merrill Lynch, with a slight edge to Smith Barney.
I don't know about all of these companies internal pay scales, but I went through interviews with Smith Barney and have received an offer. They allow advisors to build the business as that advisor seems appropriate within approved guidelines. This means you can build a business where you make purely a commission on everything that your clients buy and sell, or you can make a fee for assets held under management. Like most Smith Barney Advisors I would choose to build my business in a Fee Only or Fee Based style. I do not like the idea of my income being purely tied to when a client buys or sells stock. It creates a bad incentive for me to buy and sell stock rather than create wealth. I will want my clients to know that I only make more money by making them more money.
Someone asked how much they would make with Smith Barney. There is probably a range depending on your background and what you made in your last position. That said, the three year base salary I was offered is in the mid $50s for the first 2 years and then begins to decline. With this base, the research I have seen shows that after all the bonuses and fees the first year total compensation range is $60,000 for such bad performance that you should start looking for a new job to $120,000 for the top ten percent. This is assuming you are brand new and are not bringing existing clients with you from another advisory. As you can imagine they are highly selective about who they will choose. Even after being carefully selected only about 60% of the new advisors build a successful book of business, and survive past one and a half years. The vast majority of those that hit the rigorous 1.5 year keep your job quota will survive to make a successful business. Five years out the average earnings for a Smith Barney advisor is approximately $250,000. Top 10% performers earn in the millions at that point. For a reference Edward Jones had similar failure rates but the average starting earnings was half to two thirds of this and the five year out pay was closer to what is quoted in the above magazine article. It is much like starting your own business except with lower failure rates and not quite as large of a financial pay off. Maybe half make it and they have a solid shot at being a millionaire. Try to start the next Microsoft and you are looking at maybe 2% make it but if you make it you have a shot at getting on the Forbes list. Just like any investment there is a trade off between risk and reward.
There are also independent advisor companies. Raymond James is one of the best in that area. They allow you to buy the franchise and have less oversight. The veterans are moving this way because they do not like the compliance that comes with being with one of the major wirehouses. They also get more freedom, but they have to do all their own back office work and they give up all of the research and company professionals that work for the worlds largest banking companies. In addition, I find the independent route particularly challenging for someone like me who is brand new in the business. I could really use the training, mentoring, and brand name recognition that is available at a company like Citigroup's Smith Barney Advisors, Merrill Lynch, Morgan Stanley, or UBS.
1. How to get out of debt before retirement.
2. How to get the maximum sustainable lifetime income from the nest egg.
3. How to get control of monthly expenses.
4. How to minimize tax liabilities.
There are 3 quadrants of the personal balance sheet that are being completely ignored by the wirehouse advisors.
....and, you don't need to be a "registered rep" to work with people in these areas. You can be completely independent, make a good income, and it's not about selling, either. It's about educating. It's about positioning.
People have big problems out there. There are practical and effective solutions. By positioning yourself between the two, your have value. Client will seek that value and you don't have to "sell" anything.
Thanks for your post. That really gave some great information. I am currently interviewing with Smith Barney and Wachovia Securities. I really like the fact that Smith Barney doesn't decline the salary for two years. Most first start declining the salary very quickly.
Did you start with Smith Barney?
I can remember getting my B.S. in finance and later my MBA and interviewed with MSDW, SSB, the Pru and Axa. Everytime I was offered a job I didnt like the 1) instability of the economy (my B.S. was earned and 9/11 happened immediately after, consequently driving the stock market down..and upon getting my MBA we have hit a major recession) and 2) the attrition rates. I opted for the accounting side of business and have worked in it for close to 10 years. I found the stability of a paycheck a better bet than making the big bucks. I make around 50k now but I work in the educational finance field. I occasionally get offers from advisors.."well, hey you have degree in finance and an MBA, you would do great" To me that sounds more like they are recruiting someone with a heartbeat. I dont get paid a whole lot but great health benefits and stability give me more piece of mind. Now in my 40's and single w/ no children I still will opt for the slow and steady (and smart) route to retirement rather than jump on a fast train to nowhere. Your writing has helped me understand what I need to understand at mid-life...I'm just not cut out for the sales oriented business..my gut has always told me this..so I stick with govt work, rely on years of service and highest pay grade to solidify my happy retirement. Thanks for the words
Thanks for your candid rant...I feel enlightened and appreciate your posts!
I recently retired from the Military (23 years) and was pursuing a second career as a FA. I have a B.S. in Computer Science & Mathematics and a MS in Computer Science. Neither degree is current nor do I have a passion to become a 'code monkey'. For me programming and technology has always been a recreational interest. I always told myself my second career needed to be a passion regardless of income; hence, the idea of becoming an FA.
I don't have formal training in finance but I've always been passionate about investing. With that said, I'm currently in the last phase of the being hired as a FA with Edward Jones. One of the steps prior to the final interview with Edward Jones was to knock on doors and conduct surveys. The exercise was very applicable and generally defined what would be expected. I spent 4 hours knocking on 110 doors that resulted in 15 'decline to interviews' and 25 'full interviews'. Many people were not home or chose not to answer the door. I believe in the value of being a FA and I can sell the hell out of things I believe in. I can easily see my self doing this for 2 years or so to develop my client book eventually shifting more to an advisory roll vs a client building roll; however, the possibility of having the rug pulled out from under me after putting the insane effort into building a client book has me second guessing the FA path. My final interview is scheduled for Friday and I find myself browsing the web for nuggets of clarity. What to do what to do?
Options as I see it:
1. Become an FA. Obtain the series 7 license and CFP designation. Fulfill the 3 year contract obligation and then decide to remain a FA or take my new found experience and move on to another area within the finance industry...maybe become a Financial Analyst instead. 3 years wasted??? Depends on how you look at it. Fortunately, I'm collecting a retirement and my family won't starve if I'm limited to making chump change.
2. Considering the crappy economy and the current unemployment rate, go back to school and earn my MBA. I'm considering an Executive MBA but don't know the pros and cons of an EMBA. Bottom line: Those baby boomers WILL eventually retire and corporate America will need management types to move up the food chain. I used to manage Defense contracts for the government and I believe a fast track may be there for me, who knows.
Anyway, I just wanted to post a Thank You for the insight you provided.
I am a recent business commerce graduate and interested in becoming an Financial Advisor and starting my own business. I read a blog here recently referring to advisors transitioning a Financial Advisor Business to a successor. Discussing also the growing population of investors becoming underserved by advisors due to financial advisors retiring at the same time baby boomers are requiring retirement planning services. I've not yet found a Mentorship program or advisor in my area looking for a junior advisor to step in as a successor, but all of the research I've done seems to come back to The Advisor Business Exchange site looks like a great way to get your foot in the door! I'm hoping this year with depreciated portfolio values and also baby boomers retiring, the timing will be right for me to start a career as a financial planner.
Any advice would be greatly appreciated if there are other approaches I should consider.
thx, Charles
I have found these posts useful, especially those from experienced advisors. I have been managing
my porfolios for 15 years, with detailed tracking of 8 personal portfolios vs. various indexes, and
enter the value of each converted to a NAV on a friday closing basis, so I can track all this over time
on an excel sheet, during various market cycles and market events.
I exited the marke largely in 2007/2008, and have largely re-invested (70%) mostly in March/April,
anticipating a bottom to the bear market. I follow market cycles and look at a lot of historical data
and trends. I have perhaps 10-15 friends and aquaintences that have asked me to manage their
accounts, and I've looked at starting an RIA business. But I would prefer to work with an established
RIA for the mentoring, and so I would not have to re-invent the wheel. I basically would charge a %
of assets under management (1%+), but primarily educate and guide clients on all their financlal
and related matters, as I have a natural nack for this, and meet people all the time who need help.
I almost took a position with AG Edwards (which I thought was one of the better Brokerage firms), but
they were very inclined to push high fee accounts, and didn't seem to care about market cycles or
protecting the clients portfolio. I also talked with 2 private money managers, and would like to work
with a money manager as a support person, and also to grow an expanding client base on a
platform of asset allocation which makes sense and takes advantage of market cycles and trends.
If there is any advisor in the NJ area who might need some help or is willing to help with information;
I really would like to help the growth of a business, while I grow my own business and assets.
Thanks, FIV