Newbie Financial Advisor: How To Be Successful.
After a successful job in college as a donations solicitor, I thought I could make a long-term career out of convincing people to part with their money. After speaking to a Financial advisor at Merrill Lynch, I was convinced this was the perfect career for me. Three interviews and three rejections later, following my graduation, I wasn’t so sure anymore.
The general feedback, usually subtly relayed, was that I didn’t know any rich people. Being a recent graduate with no job experience, a child of immigrants and raised in a middle income household, I had no network of ultra high net worth folks. If I did, I wouldn’t have taken out student loans!
So my question is, how does a person like me compensate for this “deficit”? And is the effort even worth it, or are you really doomed without an initial pool?
As my university housemate always used to say '50 no's and a yes is still yes', admittedly this wasn't in the context of jobs but the message is the same.
I went to a UK equivalent of a non-target (It wasn't even in the top 40), had no connections to anyone of any considerable means and have managed to land a job at an investment management firm, so I have no doubt that you can too.
I can't speak for BB firms, but at least where I work, your ability, willingness to learn and personality go much further than how many people you know worth more than 7 figures.
I know its mentioned a lot, but networking is probably your biggest bet of getting your foot in the door of almost any firm. I personally reached out to a guy I knew was an investment director in a local firm who was a notable alumni of my old high school. I asked him questions, I showed some interest and it just so happened that the following year he was promoted to the head of the office. Now obviously I understand that this is not exactly easy to replicate, but what i'm trying to get at is that all it takes is for one person to see something in you and want to give you a chance. In my experience, successful people jump at the chance to talk about their career and how they've done it so find a connection to someone, humour him/her over coffee or a drink and more often than not, they'll be happy to help you however they can.
I completely agree with you! And in line with "getting my foot in the door" at the very least, I spoke to a close relative who is an FA at Merrill Lynch, about my interests. She managed to get me in as a client associate. Even though it's a more administrative and almost secretarial function, it has put me in a room full of financial advisors with whom I can network and ask loads of questions and even figure out if financial advisory is, indeed, the path for me. I hope to take full advantage of this and who knows what could happen in the next year or so!
Good luck, just remember that there are going to be other people trying to do what you do. Make sure you stand out, work hard and make them want to have you on their team.
Another version of what your housemate says is this...
Many salespeople look back and see that they may get told "no" 200 times on average before they get someone to say "yes." So when they are prospecting, they take on the mindset that "I'm trying to get 200 "no's" so I can get to my one "yes."
You are not doomed without a deep network of wealthy people. However, you are going to have a very difficult time "making it" through a wirehouse training program in your early twenties. The wirehouse business model wants you to work with households $250K+ (and preferably much higher). Getting strangers to give you that kind of money is going to be difficult...very difficult.
In the "old" days, you could start at a wire and build your book cold calling 12 hours a day pitching bonds. Make a point or two on an initial trade to get yourself a seat at the clients table, and then work your way into the rest of the household AUM from there. The "do not call" list, upcoming DOL regulations, and move to fee-based business is making this achievable.
If you are hell bent on starting at a wirehouse, your best bet is to show them you will not quit. Remember, this is sales, not really finance. Don't apply online. Don't email your resume. Call the branch and ask for a meeting with the branch manager. I don't know how you handled your interviews, but they do NOT care about your GPA, the way you'll manage money, or anything else related to academics or finance. You need to focus on how you love sales, and how you will bring in business. Come to them with a business plan. Tell them how you plan to graduate training. Here are a few things they will love to hear:
You're going to cold call. A lot. 300 dials a day if this is your main prospecting strategy. You're going to get in early so you can call business owners, lawyers, and accountants from 7 AM - 9 AM before their gatekeepers (secretaries) arrive to screen you out. Then you're going to buy corporate directories and call those people at work from 9 - 5 (no DNC list because you're calling them at work).
You're going to "cold walk." This is basically cold calling in person. Door to door sales (really, introducing yourself, getting phone numbers, making a good impression, and following up in a week asking for a real meeting). This will work well in rural areas, especially in the Midwest and southeast. It may get you killed in the northeast, especially in Boston or NYC (only partly kidding).
You're also going to do seminars. Three per quarter. Held in the evenings at a decent restaurant. Tell them you're going to ask wholesalers to help supplement your marketing budget. You're going to use a mail marketing firm (like SeminarsDirect) to fill the seats. You're going to talk about Social Security Planning, Creating a Private Pension / Not Outliving your Money, Earning Tax-Free Interest, Earning more than 1% on your savings, etc. Topics that will attract people with money. Be clear that seminars can be done in the evening and will be supplemental to your daily grind of cold calling / cold walking.
You will network. BNI, chamber of commerce. But be CLEAR to them that you know this is long term marketing of your brand to keep you top of mind with other professionals and you do NOT expect business to come from these activities until years down the road.
The whole interview is about sales. Remember that. Not finance. They don't care. They don't care now. They won't care later. At no point in your career in PWM will you EVER be evaluated or rewarded based on your finance acumen or your investment returns. Re-read that. Take it to heart. And relentless pursue your spot in a wirehouse training program by being that guy (or girl).
In a subsequent post, I'm going to post some alternatives to you starting at a wirehouse...
For a younger guy right out of college, I think there are other channels you should consider. If for no other reason, as a backup plan since a) you are having trouble getting in at a wirehouse and b) you have a 90% chance of getting fired anyway for failing to meet production hurdles (I'm not kidding or judging you, it's just the way the wires are).
Alternative 1: Go to Edward Jones. If you can't get in at a wirehouse, they will probably take you. If you get fired for production at a wirehouse, they will definitely take you. Go to a local Edward Jones office and tell the advisor there you want to work at EDJ as an FA. Try to pick the most successful EDJ guy/girl in your area because they will put your name in and they get credit for referring you (so it's in their best interest that you get hired). The bigger producer they are, the more say they will have if you get hired. It helps if they are a "Regional Leader" (EDJ speak), GP (doubtful), or at least an LP (likely if they are a $500K+ producer).
You will also want to ask EDJ about their "Goodknight Program." This is where veteran FAs give you some of their smaller accounts to work with in the beginning. It gives you people to cultivate (you will still have to heavily focus on cold prospecting), and gets smaller accounts off a veteran FAs books, allowing them to be more productive (plus, they get paid a portion of the revenue you generate from those accounts).
You could get extremely lucky and they may have an open office you could take over from an FA that left for another firm or failed out (or got fired). Don't count on it, but it's like winning the lottery.
I mention Edward Jones first because they will still pay you a salary and benefits while you get licensed and train, and their hurdles are MUCH easier than a wirehouse. Plus, they don't have account minimums. You can make money (and your hurdles) doing $50,000 rollovers for 35 year olds. At EDJ, everyone you meet (just about) is a qualified prospect. At a wirehouse, that isn't the case. And being in your early 20's, I'm guessing your network is much more heavily weighted towards people that have small 401Ks from old jobs, need 529 plans for their kids, could benefit from putting a few bucks a month into a Roth IRA, and buying life insurance because they still have a mortgage and college debt.
Alternative 2: Get a job with a local independent advisory firm (one that clears through LPL, Raymond James, Commonwealth, or Cambridge...or that is straight RIA). There likely won't be a formal training program, so you aren't going to have big hurdles to overcome. If you get lucky, they may even split some of their smaller accounts with you to help you get started (and you help them turn some of their "C" clients into "A" clients). On the downside, pay is probably going to suck (but then again, you get into PWM for the book you build 5 - 10 years out, not for the salary and vacation time they give you when you start).
I mention this route because it's really all over the board. You're just talking to people and you never know what kind of setup you may find. Your first step is getting licensed and learning what the heck you're doing. If you build your book correctly, you own the relationships. If you become unhappy down the road, you can always change firms or start your own. Step #1 is getting your 7, 66, life/health licenses, and learn what an ACAT is. Starting at a local firm is one way to do that.
Alternative 3: Get a job with a life insurance broker/dealer (Mass Mutual, Guardian, NY Life, Northwestern Mutual). They will almost certainly hire you and sponsor you for licenses. You'll probably be commission only from the start, so if you need income NOW, this might now work for you. A lot of young guys do really well in this channel because it's MUCH easier to sell someone life insurance when you're 22 years old than it is to convince them to give you their life's savings. You have to avoid digesting the insurance industry kool aid (i.e. life insurance solves all financial problems), but you can get your start, build some relationships, and learn how to sell/prospect.
One benefit of a life insurance b/d is that if you decide to move down the road, you can always move to Raymond James to do your securities business (or other b/ds / RIA custodians), and keep your contract with Mass Mutual or NY Life for life, long term care, and disability insurance. Northwestern Mutual is the exception to this rule...they don't broker their insurance. You can only sell it as a career agent at Northwestern.
Alternative 4: Get sponsored by a bottom feeder firm (Primerica, Waddell & Reed, etc.) and then try and move to one of the above firms (or a bank program) on the premise that you realized immediately that these firms are garbage and you don't want to build a career there. You'll be more marketable, even to a wire, because they don't have to pay you for 3 months while you get licensed, you can hit production almost immediately.
Alternative 5: Get a job in the call center of Schwab, Fidelity, TDA, or Etrade. You will get licensed. Get a salary. Learn the ropes. And learn how to sell. You'll never have your own clients, and it's just a job. But it would get you started (and you can make some decent money if you decide to just stay there and climb the ranks). Once again, getting licensed and having some experience will make you much more hirable at other firms.
In my opinion, I'd at least TRY to use my approach and get in at a wirehouse first, but realize you will likely get fired in the next 24 months. But you will get paid the most whle you train and get licensed. Why not make $50K to study and learn how to do a rollover?
Plus, and I'm dead serious about this, any other firm out there will take you without question after you get fired from a wirehouse for missing production hurdles. Edward Jones. Independent. Insurance. Probably even another wirehouse (ironically). The whole industry knows how hard it is to get started and how unreasonable the hurdles are at a wire. There is no shame in not making it out of training your first time.
This has been absolutely helpful! Even though you make my chances at a warehouse sound daunting, I do not dispute the fact that you are absolutely right! I've been here a little more than a week and heard so many horror stories of new FA's being let go, it's more the norm than the anomaly and scares me to say the least. Being in the position as an observer for now, I feel like, I can, in the next 6 moths of so, by watching firsthand, decide if this is for me. So far I LOVE being able to talk to people and not particularly deterred by the rejection from cold calling. But you are right about warehouses like Merrill having a higher standard to live up to. By all means, I am not dead set in my ways and will consider the other options you lay out.
This was an excellent post still relevant 5 years later, thank you!
You have to remember when getting hired on a team, or starting out as a sales assistant at a wire, it isn't likely to lead to being an advisor. This career is unlike almost any other. Doing your job well (as a paraplanner, sales assistant, or even doing research) gets you exactly zero steps closer to being a financial advisor.
It's about sales. If you focus on doing great research, building awesome portfolios, or really efficiently servicing existing customers, you'll still be doing that in 15 years. The ONLY way to progress and succeed is to be a rainmaker. That's the only way you become a partner on a team. That's the only way you become important to your manager. That's the only way you become attractive to other firms. And it's the only way you control your own destiny.
And be careful. The majority of the time young guys start on a team at a wirehouse, the gloss over the fact that you'll be their cold calling monkey until you fail out, and then they will keep the assets you brought in.
Just keep your eyes open. The easiest part about PWM is getting hired and licensed. The hardest part is navigating the b.s. and building a book of business.
Lol. Herein lies my dilemma. Going all out to prove myself by finding prospects and leads and also not exhausting all my leads and potential clients in the event that things don't pan out the way I want them to.
I'd avoid doing business with anyone you know already for at least 3 years. Bringing your existing network on as clients doesn't do anything to help you learn to build a book, it won't be enough AUM to graduate the training program, let alone survive on, and like you said, if you end up going in a different direction 18 months from now, you don't want to burn any bridges.
If you take this career path, build it on strangers. Never solicit people you know.
You should also take a look into the analyst program withing JP Morgan's Private Bank.
Financial Advisors (Originally Posted: 10/06/2011)
just a quick question. can financial advisors make millions of dollars a year? someone told me such thing but i have a hard time believing it
Yes
But don't expect to be a cookie cutter entry level financial advisor at your local bank and making that kind of money. Usually it's the guys who've been in the industry for years and take their client base with them as they move around shops.
I think the usual fee rates are 0.4%-1.4%, the more money you manage the the lower the rate you charge them. Most people will fall into the 0.4%, unless you want a thousand different clients at 1% rate
well i am gonna be starting the broker training program at merril lynch.. is that a good firm to grow at in all aspects including salary and commision?
Financial Advisors, as well as people from virtually any profession, can make millions of dollars per year but it is definitely not the norm. While possible, there are (in my estimate) only probably 100-200 financial advisors who take home more than $2mm per year. To be honest, very very few investment bankers make "millions of dollars per year" either so I am not sure why you are interested in this multi-million benchmark...
Merrill Lynch has a good program but it also has a 97% failure rate. This is true for single wealth management firm out there. If I were you, I would work hard, be professional, be well-liked and exemplify a strong sense of commitment / ethics. The key is to join a team and partner up with someone older. Otherwise, you have no chance of suriving as a sole practitioner these days.
its been a personal goal for me to make a million dollars a year since i was a kid, still kinda stuck on it. but thank you for all that info, explained a lot, i will definitely take all that advice.
also another quick question, is it possible after working a few years in financial advising to start a hedge fund? does the skill set apply to hedgefunds?
Start a hedge fund after working a few years in financial advising?
No - you won't start a hedge fund after working a few years, you know, at a hedge fund.
But with an incredible amount of networking, persistence and luck, you may be able to end up at a junior role at a hedge fund. But that's a rare path.
Financial Advisor Interest (Originally Posted: 04/16/2017)
Hello WSO,
I'm graduating in 3 semesters from a B school in NYC. I love sales and enjoy cold calling. I make up to 500 dials a day selling merchant cash advances and cc processing.
I do want to transition to something 'cleaner' though.
What is the current state and future of financial advising? What are the exit opps? I have friends in Investment banking and they have told me its very hard to make it if you don't come from wealth (which I don't).
Thank you!
Lmao you enjoy cold calling? And bruh you don't have to post the same thread in 3 different groups we can all still see it. Who ever told you that you have to come from wealth for IB is just lying to you and probably doesn't really work in IB, so don't ever listen to them again. On the topic of Financial Advising, mom and pop probably will always need someone to help manage their money. You sound like your looking for a PWM role so you should look into that. As for exit ops from pwm, idk.
They said its hard to make it as a financial adviser if you don't come from a wealth, not for IB.
Bump
check my blog posts, I go into a lot of detail about the industry.
welcome to WSO.
also, you shouldn't go into PWM if you want exit opps, it's a career, not a stepping stone like IB analyst.
Financial Advisor (Originally Posted: 12/27/2010)
Is a Financial Advisor considered a Back office job?
And can a financial advisor make $100,000 a year after 5 years?
On how much money a FA can make, it all really depends how many clients the FA has and how much money his clients let him invest.
FAs are not back office - you're generally in a client facing sales role. Depending on where you work, you'll get a decent base for the first 3ish years and derive additional income from commissions or charging a % of clients' assets that you manage. After the initial base-paying years, you're typically left with all your income coming from commissions/% of client asset fees.
If you're a great salesman working for a solid institution, you'll easily be making 100K+ in 5 years - probably even sooner than that. Note though that the FA business has an extremely high attrition rate because, let's face it, sales is a bitch for most people. If you really think you like it, and something like cold-calling sounds like an excellent way to spend the day, you'll generally be handsomely compensated for your efforts (if you're good, ha). Sales jobs in almost any field tend to be highly demanding but also comparably higher in compensation than non client facing roles.
Hope this helps.
what exactly do they do once they get clients? Invest in stocks and mututal funds with their money?
It all depends on your clientele. Most FA's have very few people calling into the office just to trade. Those days are gone.
seems like FA is a decent job. why does nobody want to be an FA here
Being an FA can be a great career like anything else. It just takes time building a book, many can't wait it out or get weeded out along the way.
I am a senior at a non target and have a subpar GPA of 3.35 . I had 1 internship at Bank of America last summer for Wealth management.
Realistically speaking, I probably wont make iBanking so what is another lucrative career for me where I can make 6 figures?
Just network your ass off and hope for the best.
This is hilarious how could anybody even think a FA could be a back office job!! Obviously it's as front office as you possibly can get. You are client facing, the front line generating revenue for you and your company. If you don't generate revenue you don't get paid its as simple as that..I'm confused how you talk about 100k US Dollars!! Maybe in America but good FA usually earn in excess of £200k so that's at least US$300k. In some cases its way in excess of this figure hence why many ex ibankers move into it and make a great deal of money assuming they are good enough and/or have an extensive network. SO why doesn't anybody want to be an FA here? Hmmmm ANSWER most people here don't like the idea of the tough option, being an FA is like running your own business, in Ibanking terms it's essentially top level VP MD client facing which is hard sales! If your not good enough you are going to get found out very soon and fired!! You can't hide behind your spreadsheets in this game. This is not for boys and girls so it's actually better to get some strong experience in ibanking or other areas of financial services first and preferably build up a network before moving into this area otherwise you struggle survive.
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