Advice - 2B or not 2B

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Feb 1, 2007 2:06 pm

Hi all, I have a decision to make and I need your advice, especially those of you more seasoned in this business.  I'm a mid-50s guy who been pushed out of the high-tech industry by age discrimination.  So I considered Financial Investments.  Edward Jones helped earn a series 7 and 63 but I found I didn’t care for their business model.  Afterwards I put a year in at a Schwab phone center; a fine company but taking inbound calls didn’t appeal to me either.  Besides, I’m looking for more than a hard 50 hours a week for about $45K.  I now believe I want to begin working towards a CFP position and eventually go independent.  Here’s my dilemma.  I can’t get comfortable with my mental picture of or the viability of this plan.  Frankly, I’m not sure of all the implications of this plan.  Can anyone out there paint me a clear picture of the potential and the obstacles of developing my own practice?  Your opinions and advice are greatly appreciated.

Feb 1, 2007 2:19 pm

Postive picture: Drive a few minutes to your neighborhood office every day. Return telephone calls, jump online with home office and do a few service transactions.


Work a few hours or work a full day. Proactively service the money you have under management by pulling up asset allocation summaries and account details - think about the portfolio, the client's personal situation, their goals, what's going on with the market, what you want to do.


Call them up - invite them to come to the office for a meeting, set up a phone meeting, or just do your proactive work right here and now.


Have your part time assistant set up a client appreciation - bring - a -friend "golf lesson and lunch". Tell every client about it as you work through your service and proactive management.


Do some paperwork, read some e-mails, make sure you are in compliance with your broker dealer's franchise agreement.


Read a journal article, take one hour of CFP credit online. Stop by here and get some perspective and ideas, contribute a few comments.


Leave early to get the oil changed or hit some golf balls.

Feb 1, 2007 2:59 pm

Don't forget the obstacles,


#1 and only - Getting enough clients to support your business!!!!!!!!

Feb 1, 2007 4:09 pm

Thanks for the replies, thus far.  Everyone I talk to tells me about what a dream job it is "once you're established."  What I need to know is what will it take to become established.  How will I feed my family.  In other words, what is the first and second year's income potential just starting out.


Also, I'm working outside the industry right now.  How would you reccomend I get back in and still stay on track to work toward that independent office scenario?  Thanks.


Feb 1, 2007 5:06 pm

You might consider going around to some indy offices near your home, see if you can meet someone who is established and is really cool - you both have a lot in common.


Sign on as an associate and start working with clients right away. See if you can get some nice incentives to grow the business by referral, through client appreciation events.


You won't be the owner, but as time goes on, you will be closely tied to many of the clients. Both you and the indy would have motivation to keep you happy.


The price of starting from scratch is very high, in all regards. The fact that you have no proven track record with the clients you start working with extracts a very high economic toll, that's why a lot of (new advisor) initial client relationships are basically manipulative in nature.


Be hard-headed, be smart. Use your age to your advantage - don't put yourself in a position where you are chasing after people. I think clients think it's cute to have a twenty something chase after them. When a 50 year old chases, it might feel a little wierd and unprofessional. At least, maybe it felt that way for you at EDJ, which is a decent outfit at which to learn the business.

Feb 1, 2007 8:14 pm

owehunt, unfortunately you are going to have to do some of the things you disliked at Jones.  Their model is not so unique that being an independant will get you away from it (at least not when starting out).  Yes, it will be very different once you are established, but getting there is a grind, no matter who you are or where you are.  I think at your stage in life, you should probably hook up with some type of team or other planner to help jumpstart things.  If you go indy by yourself, what would you do on day 1?

Feb 2, 2007 10:17 am

Plancoach - Thanks! All good advice; especially the last paragraph.


Broker24 - Thanks for your good advice as well.  I don't expect it to be easy.  I don't mind a challange as long as I can visulize the outcome - especially at my age.  There's not enough time to start over if this doesn't pan out for me.  What I didn't like at EDJ was what Plancoach referred to...namely chasing after money, especially door-to-door.  With that being said, I'm sure it will take time to build a business and I don't mind working in someone else's office until I learn enough. 


How did you guys start to "fill the pipe" and what were your first couple of years like?  What prospecting techniques worked best during that time?  And, again, what do you think a reasonable annual income could be expected for those first couple of years?

Feb 2, 2007 10:38 am

What a joke.


So, you want to find a way to do this, but you don't want it to be hard?  And you take training from companies, but dump them without helping them recoup the time they have put into you?


You have to have a burning fire in your belly to do this job.


To live, you have to have at least $25 million in assets under management before you can go the indy route (figure .6% revenue) with a 80 or 90% payout.


If this was easy, everyone would be doing it.  You sound like you need a salary job.

Feb 2, 2007 11:11 am

Forget the CFP. Find something that you want to sell and sell a whole bunch of it.

Feb 2, 2007 11:26 am

Vbrainy - Thanks for beating up on the new guy.  I'm not joking only trying to chart my course.  With that being said, there's value in your comments and I agree.  And I'm trying to gather fuel for that belly-fire.  Further, your "salary job" reference was also correct.  I've had that all my life and its hard to leave that warm blanket.  So I'm comming to the experts to scope it out.  Your feedback is appreciated.

Feb 2, 2007 11:28 am

My Inner Child - I come from a background where credentials buy credibility.  I understand a "bottom line" approach, but why forget the CFP?

Feb 2, 2007 11:47 am

If you need credentials to buy credibility, unfortunately, you're not credible. 


Early in my career, I got asked relatively consistently about whether I had a CFP.  Now, the question almost never gets asked.


Learn to sell and prospect first.  If you can't learn this, the CFP is useless.  After you learn to prospect and sell, by all means get your CFP and any other letters that you desire.

Feb 2, 2007 12:58 pm

How did you guys start to "fill the pipe" and what were your first couple of years like?  What prospecting techniques worked best during that time?  And, again, what do you think a reasonable annual income could be expected for those first couple of years?


Let's take a quick look at the geopolitical setting, then get specific. Before filling the pipeline, inspect the quality of the long term contracts and building materials.


You can either be affiliated with a broker dealer, or work as a Registered Investment Advisor. The former requires sponsorship from a firm, the latter, basically, experience and being established - joining an RIA firm. The problem is not only having clients, the problem is learning the business.  


If you agree to work for someone or with someone, you could take either route. Being trained at a broker dealer is being an employee, although you might start out as an "independent contractor", since you don't have clients or know the business, you are dependent.


You need to have a very clear idea why you are choosing "broker dealer" or "RIA". Both have advantages and disadvantages. Do a lot of research, and consider this decision to be the geographic location of your pipe ( I'd rather have mine in the USA instead of somewhere else). How you define security is a matter of matching your values to your location.


The pipeline is your particular structure for providing the service for moving the product. Do you ever really own the pipeline? If I am a solo RIA affiliated with Schwab, and I get sued by a client, I find out very quickly that the pipeline is mine - at least, it is at risk to be mine. Can it be taken away in a law suit? Absolutely.


If I am affiliated with a broker dealer, I am also on the hook. Especially if I was dishonest. However, there is an extra layer of protection from the broker dealer - we both own the pipeline, to the extent that I have been honest and diligent and conscientious. Broker dealers have some powers to help protect our pipeline.


Do you think it is important to know where you stand regarding this structural issue before you commit to filling the pipeline?


Getting your CFP is just one longer term structural issue. Of course you should get it - over a longer period of time. Having your CFP is not at all about clients - it is about you having thorough and systematic exposure to the body of knowledge that defines our profession. It is a license, with continuing education and ethical requirements. Saying that the CFP is not important is a losing proposition.  


There is no silver bullet to filling the pipeline. Helping someone else in their practice is servicing existing clients with someone looking over your shoulder - not filling the pipeline.


Getting those first clients is basically a manipulative process, honestly. Because you have no proven track record as a financial advisor, there can be a lot of smoke and mirrors as to why anyone should trust you with their money. Until you really go through a severe down market running a lot of really nice people's money just a little too aggressively, it is all just theory. We all know that.


When you join a training firm and use a franchised system and franchised compliance, the client is getting some quality assurances. But the smoke and mirrors part is, that oversight function is a big corporation that need to maximize profits, and you are a newly engage advisor with that entity, so the manipulative part is, "trust me to monitor the alignment of your interests, my interests, my corporation's interests, and the corporate shareholder interests."


How do you get new clients in that pipeline? Since there is no silver bullet, it comes down to: the telephone and personal contact.


Consider the vision: your own practice. Picture an inverted pyramid. At the top, the broad inverted base, is all the stuff you have to do to learn the business and generate results. At the bottom, the tip, very efficient. To get to the bottom, you have to struggle. The reason the pyramid is inverted is, the struggle down will make you humble.


So once you have a vision, and a little technical training, and a pipeline to help you move the goods and get clients to where they need to go, with hurting them, go look at yourself in the mirror.


You are a great person, and now it is time to go eat some humble pie. At Jones you walk around the neighborhood and show people who you are. You get permission to call them. You call them and call them and call them. After a while, some come into the office and become clients. Since there is no silver bullet, this is 1/3 of how you get your new clients. It works, so they teach this technique. Another firm just gives you leads that were developed from sending information to people who were solicited in certain zip codes. Some of the leads are pitiful, like the leads in the movie, Glengarry Glenross". But you suck it up, and you become a more humble person and a better advisor.


There are other bullets - sustained social networking. Show people who you are.


The way I built my business, I netted about ten thousand dollars in the first year. Sometimes I see clients, or (ex) prospects in the grocery store. I can look anyone in the eye and smile, having never pressured anyone or put my interests, or the firm's interests, or the shareholder's interests, ahead of the client.


This is just the story of one little weener solo shop owner. Over time, you can make a very nice living, but if you don't need all the money in the world, or even if you do, take the time to build the business of your vision.





Feb 2, 2007 1:48 pm

   Plancoach - Very nice reply and very good advice.  
      Thank you, Obiwan!

Feb 2, 2007 1:58 pm

May the force be with you. This work is spiritual in nature.

Feb 2, 2007 9:23 pm

Well put Planr.

Feb 2, 2007 11:09 pm

owehunt - man like investment do what the masses did not do.



I suspect by you coming here you are at least competent to research and listen. Hopefully you have other skills like communication, networking and vision.



Some of these skills should already have you bumping into other INDY's with similer experiences. When I say this I am talking about them being in your church, Fire Department or other organization. Maybe there is one who is related to a friend. If so go to the one you respect and would like to be with and start talking. Focus on how you can help them and bring in assets.



In the eyes of the INDY they are looking for integrity, communication skills, work ethic and desire to win. Of course they may want someone to fill out forms and take messages also, but if they are going to give you a cut, hell yeah!



So my point it we all hear how hard one has to work and how many fail. My point in all this is be smart and you could save your self hundreds of useless hours. At the same time I do not know your detailed background makes it tough for me to give you a big thumbs up. Good luck!

Feb 5, 2007 12:55 pm

AirForce, et al  Thanks for your advice.  I am trying to be "smart" about this change in my career; that's why I'm seeking input from you guys.  I wish that I had found this site before I signed on with EDJ.  I believe my research skills (and listening) skills are very good, and I can communicate well (better in written form).  However, my networking skills are poor; the result of being a career techno-geek stuck in an cube/office all my life.  But I'm not afraid of people (or selling) and I can learn the rest.  And finally my vision (of this opportunity) is what I'm trying to crystalize here.


OK, so this is what I've learned..


1) I shouldn't have used the term "Indy."  Clearly I've many miles to go and much to learn before that is even a consideration.  Since I liked Schwab perhaps I'll try to return.  Or maybe even EDJ since they seem to align more with my perceived goal of a neighbor hood office.  I don't know how hard going back to either company may be.  Thoughts here?


2) No one seems to have talked much (a little, but not much) about additional study, education or certifications.  My assumption then that this industry is more about service/relationships than technical detail, although there is plenty of both.  Although I've not built an extended network in my life, I believe I enjoy people and pleasing people.  At least that is how I interact with my family.  I can see reward in extending this type interaction to customers.   


3)  The first years (1 to 3) are very hard, very lean and are used to gather momentum.  The following years, although still hard work (as is any worthwhile job), benefit from the intial sacrifice.  Working hard doesn't bother me.  60+ hour work weeks are common in my past profession.  It was "anything to get the project out the door" environment.  My stumbling block is asking my family to pull back in our present lifestyle (that was built by my previous positions) until the ball is rolling in this career.  That may mean downscaling the house and eating beans for a while; the stuff I did in my 20s.  And as mentioned previously, committing myself to work on commissison versus salary is difficult paradigm shift way outside of my comfort zone.  This perhaps (most likely) is why I didn't stick it out at EDJ.  Thoughts here?


4) The worst I'm likely to do is make a good living and the best is even better.


Further input appreciated.

Feb 5, 2007 1:01 pm

Don't worry about getting additional certifications until you're at LEAST a year or two in, and have a full pipeline of prospects and active marketing programs, and are making your minimum new asset and production goals.

Keep things as simple as you can, and try to find solid reliable products that you can explain well and use over and over.

Feb 5, 2007 2:01 pm

And as mentioned previously, committing myself to work on commissison versus salary is difficult paradigm shift way outside of my comfort zone.  This perhaps (most likely) is why I didn't stick it out at EDJ.  Thoughts here?


Joe gave you the answer:


Keep things as simple as you can, and try to find solid reliable products that you can explain well and use over and over.


At this point it is about activity. Simple ... over and over.


This career is a lot like golf. Everyone pays their dues. There are no short cuts, if you are athletic in another sport, you still pay your dues learning golf.


The analogy to your previous career: you are smart to think, and set the framework. Next, you can't think your way out of implementing Joe's advice. Not that you want to.