New to the business, but with a potential client pool---where do I start?
My situation is probably a little unique. I'm the former president/CFO
of a $300 million publicly traded community bank. We sold out a few
years ago before the market collapsed and I took a few years off to help raise
the kids while my wife pursued a new career.
Three years later and I'm going nuts-I really need a new challenge and
career. I'm passionate about financial planning and investing- I
also have a fair amount of experience. I managed money for the bank and have
read just about everything I could find on financial planning over the past
five years. I've built my own excel models and purchased and learned to
use several financial planning/investment software packages as well.
Like anyone looking to enter this field, I bring both pros and cons to the
Potential client pool of over one hundred contacts (a few HNW) who did quite
well as both employees and investors at the bank I was with.
I do not need to make a lot of money doing this, and very little to start
with. Over time, I'd be fine with considerably less than six figures and a
decent work/life balance.
I am willing and able to make an equity investment into an existing firm or
to buy into an existing practice.
I'm fifty years old, maybe too old to get started, and I'm too used to being
my own boss.
I'm an introvert. I'm a good communicator and I am a driven
goal-oriented person, but I don't have the personality attributes of the
typical successful salesperson.
I would want to work with a fee-based model, which obviously limits my
I have no licenses or sales experience (though I am currently studying for
the Series 65 on my own).
I have received numerous emails from insurance companies trying to solict me
as a salesperson--Prudential, Metlife, etc. ---really not what I'm looking for.
I thought about establishing my own practice as an RIA, but most of what
I've read on these forums indicates a minimum of $10-15 million AUM before
that's even a remotely viable option. I suppose I could try to land
something at Jones but the idea of spending the next two years knocking on
doors doesn't hold a lot of appeal. I've thought of reaching out to banks, but
I'm not really interested in peddling variable annuities.
I know there are plenty of noobs (and knobs) asking for advice about
starting out in this business (no wonder the attrition rate is so high).
But I'd greatly appreciate the input of anyone who has an opinion on whether I
may be a viable candidate for success in this field, and if so, what might be
the best way for me to enter it.
Based on that nice summary, I'd suggest that you contact a number of independent brokerage firms, and discuss opportunities to buy a book of business. Those do not come by very often, it could take a couple of years to find something. You could also find a Indy rep in your area, that is successful, and ask to work with them, pay expenses, and get a revenue sharing agreement going. You talk about salesman personality, don't worry about it, know lots of folks like that who are quite successful anyways. Before you put both feet into this, you might find a way to see what an FC job is REALLY like, before making that big leap? Financial planning, economics, advanced theories of investments have little to do with being successful in this biz, because... you're supposed to know that stuff. Not that folks actually do know... Our industry will gladly bring aboard a great salesman that knows nothing about finance, but are very reluctant to hire the econ nerd, that knows nothing about sales. Hope that helps.
If you are near a Wells Fargo Advisors office, contact the manager. You are the type of person we would be looking for. (you wouln't have to go door to door with WFA)
Once you start you could try to team up with a veteran or just go solo. It sounds like you would be able to make it. Good luck.
Or another good option would be to find a successful indie FA who needs some help.
Actually, with your low income requirements, you should absolutely establish your own RIA. The hurdles talked about are for people that are trying to convert from one practice to another, and need the same (or similar) level of income. You can easily start frm zero with very low overhead. And 50 is NOT too old to start in this business given your income requirements. You can do this job into your 70's if you want.
I would NOT go into the brokerage business if I were you. Too many headaches.
I think this guys a bit of a tool, but here is a blogsite that chronicles a guy that started an RIA from scratch with no client base:
Start from the beginning, not the end, of his blog.
I know lots of Jones FAs who only doorknocked during the training period. Don't let that dissuade you from considering Jones.
Now, what I might say would dissuade you from Jones are the commission goals that steadily keep rising. If you don't want to be making $100K in a few years, Jones and the other wirehouse models aren't really going to be a lot of fun for you. Too much pressure to perform. And not a lot of balance between work and family at first.
Although the WFA gig sounds great because they don't doorknock, they probably do prospect somehow and have commission goals you have to meet to keep your job.
Some of the best FAs in the business are introvert, very type B personalities. They are typically the strategic planner type and attract clients based on their knowledge rather than their charisma. You have to have some ability to communicate with them, but you don't really have to be an eloquent speaker or a politician to make it in this biz.
Thanks a lot for the feedback guys. This is a great forum for learning about the inner workings of this business.
I'd certainly prefer to go the RIA route, it just seems that establishing my own practice on top of learning the sales side of the business without any help seems pretty daunting. My best bet may be to look at some small RIAs in my area that may be interested in adding another rep.
If you were an existing RIA and I came to you with my story, what kind of pitch would interest you? Revenue/Split, upfront investment, equity buy-in?
The Wells Fargo way might actually be worth looking at. I'm not with them, but know several over there. Trick is, you must find a good oppty in their system. They're the only big firm I'd recommend to anyone. They actually got it mostly figured out.
Approaching an Indy? Offer to pick up all your expenses, and a proportionate amount of overhead, including sales assistant, lease, gas/ele, phone, insurance, etc. Take a 70, let them have the 20 out of the entire 90% payout. There's got to be something in it for them, otherwise you'd just be a nuisance. The total expenses, if you joined my office, I'd say that would run about $3000-$3,500 per month, in a nice but modest location, with a full time SA. Not exactly cheap eh?
Looks cheap to me. For the modest setup with a part time SA, I'm running about $5000. Ten percent for golf, and ten percent for direct advertising.
If I was trying to get into the business, I would be approaching offices like ours and trying to add value by marketing, while I learned the business.
Honestly, given your situation, I would still recommend the RIA route. You would be surprised how much more you know than the average person (given your background). Go to the CFFP and get your AAMS designation. Not for the designation, but because it will give you a little framework of knowledge to start with (and it only takes a few weeks of work if you are actually reading all the material in order to learn it). The next step (if you so choose) would be the CFP. That is a committment.
I just think going to a wirehouse (or even an indy shop) is going to be difficult.
To go with any brokerage firm would mean a lack of work-life balance for 5 years, minimum. And to start on your own as an RIA, without a mentor to seek help from, is scary. You need a resource where you can ask lots of dumb questions. It's one thing to create a financial plan for someone, it's another thing entirely to have the confidence in it. You won't be confident for a long time, moreso when you are entirely on your own. I like the idea of partnering with an existing independent advisor in your area, not necessarily an RIA. Perhaps an independent with LPL, RayJay, etc that would be willing to mentor you and of course receive a signifigant amount of the revenue you generate for a time being. Best wishes.
You wrote: I thought about establishing my own practice as an RIA, but most of what I've read on these forums indicates a minimum of $10-15 million AUM before that's even a remotely viable option.
If you don't have big income requirements, I don't see how the above applies to you. Set up costs are very low. You can find cheap office space most likely. The challenge for you seems to be the "introvert" statement. I literally wrote the book on how to pass the 65, but I can't stand the sales process. Like you, I could fill out Form ADV and hang a shingle. Trouble is--no clients. Then again, you could hire good sales people and share the advisory fee with them if they're registered IARs. Maybe you charge clients 1.5% and share 50 of those 150 basis points with your IARs--that's what Zack's offered me here in Chicago.
[quote=BigFirepower]The Wells Fargo way might actually be worth looking at. I'm not with them, but know several over there. Trick is, you must find a good oppty in their system. They're the only big firm I'd recommend to anyone. They actually got it mostly figured out.[/quote]
WFA???? "mostly figured out" ??????? Hate to say it but you are CLUELESS!!!!!!!!!!!!!!!!!!! Are you the skeethy eyed little dude that runs around kissing Danny's ass?
WFA wont even exist in 5 years. They will have run you off if you're anything other than a salaried non compete bank broker.
"I literally wrote the book on how to pass the 65, but I can't stand the sales process. Like you, I could fill out Form ADV and hang a shingle. Trouble is--no clients."
I took an RIA out to lunch a few months ago who asked me why I want to get into the business. I responded, "Because I've got a passion for financial planning and investment modeling"
He said, "Anybody can do that stuff. The question is can you sell?"
"Maybe you charge clients 1.5% and share 50 of those 150 basis points with your IARs--that's what Zack's offered me here in Chicago."
I'm from the Chicago area as well--maybe we can hang out a shingle together and only lose half as much...
I always heard CFP stood for 'Can't Find Profits'
Being able to make a reasonable rate of return unfortunately is far from a prerequisite for becoming a broker. The entire industry, and academia as their partner in crime, has over the last decade or two done everything they could to convince the public that 5% is a reasonable return. Now they can teach a broker to cold call, not manage money, and send him on his way to broker-hood. The banks prefer you to be clueless so you can use their magically expensive and sticky products. As long as a guy can sell something that is all that is needed or even wanted by the universal bank model.