http://www.gentlerainaffluentmarketing.com/

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

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 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

Any advice would be greatly appreciated if there are other approaches I should consider.

thx, Charles

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 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.

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.

Well, what do you think? I am 45, no children, great husband who also teaches, but we never have enough money!

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!

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.

I want to be able to help people and I think this is a good way to do it.