Location location location
I've thought about leaving my practice that I've spent a lot of hard work building up and moving to a part of the country that I would better enjoy and that has a lot more potential for business. I would hate to start over but I've only been in production for one year and am finding there aren't a lot of high networth people where I live. Don't get me wrong, they are here and I have some as clients but the numbers are small. I live in a mid-size midwestern town with about 30 FA working in the larger firms and about that many as independents, insurance/financial planners.
Don't tell me how hard it would be or what a mistake it would be, I'm simply want your opinions about where is a good place to have a practice.
You're kidding yourself if you think that another place will be better with more potential. If you don't like where you live, by all means move, but if it is for business purposes, you're making a mistake.
Don't worry about picking just one location. Narrow it down to the top 5 places that sound perfect compared to where you are now. Pick one and when after a year high net worth clients aren't knocking down your door any more than where you are, pack up and try location number two on your list.
Keep repeating the same process every year or so until you've tried all the places on your list where the grass is greener. Then make a new list of perfect locations and repeat the process.
I'm with EDJ, successful and a very small town. You can be successful ANYWHERE. Figure out where you want to live and go be successful there.
I have actually thought about this 'Go where the grass is greener' theory and it makes sense. Say you do business in a town where the average person earned 35K a year vs a town where the average person earns 70K a year. The difference should be that your book will be twice as big in town #2 after 100+ clients than it would be in town #1.
With that in mind, you should be able to adopt the standards of living of the community in which you serve, but you'd have to research the demographics to make sure the community you choose to do business in meets are the requirements you set out which is not simply limited to average income. Age, cost of living, popular careers and job outlook would be important to discover. A town full of financial advisors that earn twice as much as a town full of biologists would probably not be a better place to do business.
It is a theory that makes sense and is most likely plausible, but you'd have to take into consideration much more than incomes. Find a wealthy town that is young and specialized in non-financial industries and that would probably work fine.
Ryan, stick with asking questions and not answering them. Your theory only makes sense because you don't know anything as of yet.
1)In the investment business, it is about investable assets and not income. On the insurance side, income plays a much bigger role.
2)Averages don't matter. There just has to be enough people who meet your qualifications of an acceptable prospect. Would you rather be in a town where there are 10 people and all 10 of them have $100,000 to invest or would you prefer a town where there are 20 people and 11 of them have $100,000 to invest and the other 9 are penniless?
3)You can only work with so many people, so all that matters is that you have the ability to work with enough of them. If you do a good job, and work your butt off, no matter where you are you will do great.
4)Averages don't matter. What matters more is the number of people who meet your minimum qualifications.
5) You are only one person. You can only work with so many people. There simply needs to be enough people who meet your qualifications.
6) There are plenty of people in smaller places that are giant producers.
7) You aren't limited to your town.
I moved across the country early in my career because I didn't like where I was living (which is where I went to college).
Here's what I found: The average net worth of people I came into contact with in the new area was much higher. By sheer numbers, there were more people in my target market in the new area as it is a very big metropolitan area. That being said, there is also A LOT more competition.
I feel like the amount of advisors per investors in an area is like an efficient market. Things will take care of themselves if an area becomes over saturated.
If you follow Nick Murray's advice, you only want 250 households with an average net worth of $400,000. I would rather just have 125 households with an average net worth of $800,000, but regardless, it's not that many people no matter where you live.
There is money all over the place. Anon is correct in that you shouldn't worry about averages. Fact of the matter is that we don't work with average people.
Figure out where you want to live, and work there. I kind of want to get to the point where I can live in one place for half the year and another place the other half and work from both places. All you need is a place to meet people, a phone, computer and fax machine.
I have told this story before, but I have a friend I trained with....she lives/works out in noplace Wisconsin. Her town has like 2500 people or something. There are NO brokers or advisors for about 50 miles in any direction (except the bank). The only investments people own are CD's. Other than her "Coffee Club" at the local diner and a little doorknocking, she did virtually no prospecting. She now (after 2+ years) has about 20mm AUM and is doing about 15-25K gross per month. She said people are falling over themselves to come invest with her. And she rarely makes outgoing calls. She is no brain surgeon, and most of her investment ideas revolve around CD's, corp/muni bonds, and AMF Funds (because that is the risk tolerance of most people there). She is nice, and sweet, and is making a killing (in her terms) working out in Noplace with virtually No people. Now look at the FA's in St. Louis - they are virtually falling over each other, and the washout rate is probably 25% (and that's of people taking over offices, not new/new's). Try doorknocking or doing seminars there. Uggghh.
That should give you some perspective. Just go live where you will love to live. Unless you are living in some ghetto area, there are always people with money. Business will take care of itself. I would argue that the small, rural areas may be more ripe for this business than the large, wealthy, urban areas overrun by wirehouses and "wealth management" firms.
I say go to Los Angeles high competition, but great weather and a lot of concentrated wealth. Plus if you don't make it you can always try your hand at the entertainment thing!