Well, it's official: my job will probably be eliminated and the days of financial advisors/wealth management making 200k-500k are probably behind us due to government regulations. I think that the incredibly tenured and seasoned advisors will probably be "okay" but experience a drop in income by way of fee compression and technology competition. What would you monkeys do in my situation? I'm in my late twenties with good enough stats to get into an M7 (and actually got into several this past season), but I will have to walk away from a 40 hour week job that currently grosses 200k+ because in a few more years, my income will probably drop to around 140k+. I will then be in my early/mid thirties, fat, bald, and unemployable when the robo-advisors have taken over and the government completely dictates what I can and can't sell.
Jump to ibanking in my early thirties post MBA? Work in operations at some middle market PE fund? Shit, being a retail investment salesperson doesn't seem to have any exit opportunities...
my name is goldstein stay away from this field bro.
I'm relatively new to this forum, and not sure what you might mean with the Goldstein comment.
Ignore it. He's making fun of someone else on the forum.
If you're letting your clients' fees drop 3,000 BP (200->140 = -30%) over the span of a few years I think your practice bigger problems..
Wealth management isn't going anywhere. At least in my practice, we don't shoot for clients that are worried about fees. They know we're not the cheapest resource out there, but we are the least stressful option, and for them, that reassurance is enough to justify the fees.
Even with services like Betterment and Wealthfront, I really don't think there is anything to worry about. They've been saying we'll be replaced by machines since the 70's, but I don't see it happening. Sure, it won't be as lucrative for those who are just starting vs 30 years ago, but many FA's will still find themselves in the 200,000-500,000 pre tax income levels if they play their hands right.
I work at a wirehouse ML/MS/WFA/UBS/ type of environment in which every investment product is receiving a drop in commission thanks to new DOL ruling. So we're going to have to be gathering new assets and selling more products in order to make up for the 20-30% drop in commissions to ANY investment product that is not fee based. As for the fee based accounts, my firm is also changing some things that would somewhat change the pay as well. Of course 200k is still attainable if I am able to grow up assets under management another 30%, but given the current environment we're in, the odds of attaining this goal would be slim. Again, I just don't want to wake up at age 40 and realize I'm stuck making 150k/year for the rest of my life.
Question, what portion of your book are retirement accounts? DOL is only impacting retirement/IRA accounts, and even then you have the Best Interest Contract Exemption available to you. Also, what is your firm's fee structure on non-managed fee based accounts? I do agree that there is a fee compression across all asset classes but how does creating a FI portfolio (for example 15yr ladder) and charging a max markup of 2% will get you less payout than charging 50-150bps AUM annually?
what's your business mix? transactional? annuities? what?
the era of easy money in PWM is over, but PWM is far from dead. the cream will rise to the top as they did in the UK and AUS (originators of the fiduciary rule), and the guys who milked the system will leave the business.
which one do you want to be?
Roughly 1/2 fee based, 1/4 annuities, 1/4 transactional.
I have zero intention of "milking the system" and treat my clients like family, but I have also been noticing that it has been harder and harder to capture new assets/accounts, and existing clients have been complaining more and more about fees.
In my view the addition of robo-advisors to the industry will just cut out the bottom third or half of the advisors that deal with the everyday clients with assets sub 250k. As it stands there are already too many advisors giving sub par advice which gives the industry as a whole a bad name.
For example my experience with is within Canada, if you are on the bank side as a financial planner you should definitely worry about your earning potential. If are an advisor with bank at their wealth management side you should have nothing to worry about (think RBC Dominion Securities, TD Wealth management, CIBC Wood Gundy) these shops deal with HNW and UHNW clients and these clients will always need advice because their situations are much more complex than the everyday guy with 100k in investable assets.
Possible valid point. I work at a wirehouse ML/MS/WFA/UBS so we typically target 250k-1MM accounts for our clients. I've only been in the industry for about 5-10 years so I don't have a whole lot of 3MM+ client relationships yet. However, I have also noticed that our HNW and UHNW department is also having a lot of difficulty winning new relationships AND also seeing a growing number of their clients complain about existing advisory fees.
Fees will always be an issue and clients will always complain about them. What I have noticed is that clients are forgetful about strategies that you have incorporated in the past that are now saving them thousands of dollars. A good strategy you can start to implement with your clients is to show them the $ value you have saved them from incorporating strategies you suggested. This will not only help you solidify the relationship but will jog the clients memory and possibly lead the discussion elsewhere, and maybe get you a few referrals in the process.
I feel you. I'm in my thirties now and have seen a shrinking S&T desk (which was my industry for a while). I mean, there will always be S&T but it certainly isn't like how it was when I started and it certainly hasn't gotten any better. I work in ops now, where I have better hours, more pay and I actually sit next to a window so I can see the weather. I am often tempted to go back into S&T, but really debate if that's something I want to do given how that industry is shrinking and the pot is shrinking right along with it making it more competitive to make those 500K+ jobs. Plus I've seen far too many other people get fired at 40 or so and really flounder looking for jobs afterwards because they aren't marketable. It's that fear that keeps me in operations as while I doubt I'll ever have a year where I will pull in 500k (unless I make it to the COO level) it's a far more consistent line of work.
I appreciate the honesty - threw over a silver banana for you. Good news is that you at least have developed skills in a back office role so I am assuming you can lateral into another bank or fund? Sure the money isn't great, but you'll always have some level of job security. Mind if I ask if you have a family? and your future plans?
I, on the other hand, only have sales experience so I guess I can always be a pharmaceutical sales rep if all else fails. Maybe sell cars or real estate? Who knows. FML, should have studied harder in high school.
Don't have a family yet but I want one....which also ties into me not wanting to leave the current set up.
You should be partnering with FAs who are retiring in the next few years.
Oldest FA we have in our region would be roughly 55-58 and he just bought a $5MM house, so I don't think he's interested in retiring any time soon...
For IB: It's going to be an absolute shock going from a 40 hour/wk schedule to a on-call 24/7, 80-100 hour/wk schedule and constant fire drills. While there is obviously high upside in the field and you already seem to have the relationships/soft skills built in, you'd have to have the right expectations of your work/life balance leading in or you're setting yourself up for failure.
What about growth-based PE funds?
Useful advice! Threw you a silver banana. I don't have much of a social life with the exception of my girlfriend, who is a consultant with no social life herself, so that would not be much of a problem.
Growth-based PE funds? Would you mind explaining that to me as if I were a golden retriever? Please keep in mind that I'm not too keen on finance terms as I've only been in retail investments and have been lurking the forum, picking up stuff here and there.
I would focus on building your book instead of worrying about margin compression. Double your assets and a 50% haircut has no impact.
I work in the industry and find it proplexing you are thinking your assets will be the same in the future. Should always be prospecting...
Let me ask you - how long have you been gathering assets? and have you noticed that it has been much more difficult in the last few days? No knock, just wanted some objectivity.
things have been slow, absolutely. doesn't mean you shouldn't be casting lines in the water, you never know when someone's going to have an event that causes them to think about you. sometimes it's a bear market, sometimes it's their advisor fucking up, could be anything. this business ebbs and flows, and while it will fundamentally change, it doesn't mean it won't remain a lucrative field
I think getting an MBA is a pretty solid investment especially MBA business schools ">M7, however I would also consider learning more technical skills. Maybe go into a more financial role at a tech company?
Do you have any regrets getting your MBA? And what do you mean by a financial role at a tech company? FPA?
Oh no I am nowhere near a MBA, however from experience and people I work with a MBA business schools ">M7 MBA is a sure fire investment for the future.
In terms of the tech company thing, I meant a more data analytics role or business analyst role... FPA can work as well but as more and more financial firms move towards tech it's only inevitable to happen in every field not just banking or IA.
Consider making the switch over to Tech Sales. If you've been working hard in a sales type role, I know that FA/WM types tend to see a good transition.
Everyone in my office ranging from the 22 year old newbie to the 40 year old single mom is making north of $100,000 in Dallas. With some hitting close to $225,000 which in Dallas is great money with about a 40 hour work week. This is SMB (small and medium business) with very little MM (middle market companies).
Look up Account Executive or Business Development positions and you could make a lateral into a new industry but still have the big dollar payouts. Especially if you get into Enterprise level tech.
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