EJ compensation question

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Jul 31, 2008 1:48 am

Some background on me: MBA, corporate accountant, studying for CPA Exam, married, 1 infant child, live in San Diego and unwilling to relocate, life's goals are to own my own business, to have an annual net income of $150-250k while we're young enough to enjoy it, be financially independent, and be able to spend as much time with my family as I want. 

EJ is pursuing me for a FA position.  Had two interviews so far.  Haven't asked about salary because interview ettiquette typically frowns on such questions until after a job offer is made.

My questions are this:
(1) For California, what is the average starting base salary I can expect from EJ?
(2) Would I be better off working a number of years as a CPA and then later becoming an RIA as a second career once I already have built up a book of business and trust?  Seems smart.  Build up a CPA practice, build client trust, sell CPA practice for profit, keep client trust and manage their investments.

Jul 31, 2008 10:52 am

If I were you, I would start the CPA practice, then incorporate RIA work or get your RR licenses.  I would not stop all of that to work for Jones, unless you hook up with a large office as a Goodknight or take over a large office.  CPA work is more in demand than advisory work (there are just more of us out there).

 
Clients LOVE their CPA's.  They trust them FAR more than they trust us (in general).  It also will give you more options down the road.
 
JMHO, and I work at Jones.
Jul 31, 2008 11:44 am

I would not recommend going to Jones. As B24 said, unless you can get a large Goodknight or take over a large (over $20M) office, you're going to have some lean years. Especially in San Diego.  Also, if you are promised a large office, make sure the number thrown around is no the asset number of when the rep left.  If the office had $25,000,000 when the rep left, it's probably half that now (or less in many cases).

 
Also, Jones will not let you use your CPA license at all.
Jul 31, 2008 12:02 pm

I've always found it strange that if you are a CPA or lawyer before coming to Jones, you cannot advertise that in any way--especially not on your business card. You are also prohibited from giving legal or tax advice. I understand the liability issues, but it just seems  weird.


I have an uncle who is a CPA of 30 years and transitioned into the advisory side of the industry approximately 10 years ago. He has a captive client base and is hitting it out of the park year after year after year, i.e., $750,000-$1,000,000 net annual income.
 
He's built up his fee based business and works half as much as he did when he was slaving as a tax/accounting guy and now makes decidedly more $$.
 
My advice is the same as the two posters' above: Build a CPA practice and then transition into the advisory role.
 
FYI--I came to Jones under the promise that I would be taking over a $26 million office in a non-competitive situation. (Which was the only condition under which I was willing to come on board.) However, after the dust settled, I walked into a $15 mil. office. Be very careful about relying on promises from recruiters...you'd be amazed at how quickly things can change once you've signed on the dotted line.
Jul 31, 2008 1:15 pm

Thanks everyone.  I needed to hear it from seasoned professionals in the advisory/broker business. 

Jul 31, 2008 6:53 pm

B24, That is quality stuff on your part. You didnt just launch into an essay about the benefits of EJ. You gave an honest opinion and what I believe to be the correct one in answering hall's question.



Hall - EJ would love to have you, but I think you should also go the other route.

Aug 1, 2008 8:47 am

Thanks GT.  Sometimes things make sense, sometimes they don't.  But I tell you, in my area, CPA's are in such short supply, that if someone wanted to open a tax prep office, they could probably clip off 250-300 returns in the first season.  All the CPA's in my area are maxed out.  They turn business away.  Some of them will accept more clients, but only if they agree to mandatory extensions.  None of them can expand because there are no candidates out there (other than some seasonal people that can crank out a bunch of returns each season), and anyone coming out of their first 3 years in a big firm wants too much money - they are all going into private industry. 

Sep 2, 2008 12:40 pm

I am basically in the same boat as the original poster and have thought a lot about doing exactly what most are advising in this thread.

 
My question is how does someone who is admitedly ignorant about the financial planning profession get trained, and hook up with a company that can provide the neccessary support to add fincial advising to a tax prep/accoutning practice?  Does anyone have recommendations for companies that will take independents with no expereince and no book...   Thanks for the feedback!
Sep 2, 2008 12:46 pm

If you are an accountant, you need to talk to HD Vest - that's their market!

Sep 2, 2008 1:16 pm
CoachXD:

I am basically in the same boat as the original poster and have thought a lot about doing exactly what most are advising in this thread.

 
My question is how does someone who is admitedly ignorant about the financial planning profession get trained, and hook up with a company that can provide the neccessary support to add fincial advising to a tax prep/accoutning practice?  Does anyone have recommendations for companies that will take independents with no expereince and no book...   Thanks for the feedback!
 
Coach,
 
If you are CURRENTLY a CPA, think about your book of clients and if you would be able to naturally bring any of them into your practice as advisory clients.  Also think about what you want going forward.  IMHO, you cannot have both a robust CPA practice AND a robust advisory practice.  I have seen a few in my area try to do it, and some of their clients tell me they just never get the time of day from them, especially during tax season.  The exception of course is if you have staff to hanlde both jobs (i.e. you do the tax stuff, and you hire an RIA or RR to handle investments).
 
If you go it alone, you can go a couple different ways: (1) stricly RIA work with strict minimums.  For example, only do the advisory work on fee basis for clients with over 500K.  This will keep the number of advisory clients low, but the dollars high.  (2) Become a RR (such as thru HDVest) and just go for volume - take all those "you need to contribute to your IRA this year" accounts and put the money into balanced funds that doesn't require much oversight.    But if you try to be all things to all people, you will probably be mediocre at both.
 
 
Sep 2, 2008 2:51 pm

Hey OldLady & B24 thank you both for the feedback.  I don't currently have a CPA practice-I work for a company doing accounting and financial analysis for them, but I'm tired of the big corporation environment and have always wanted to venture out on my own.  I worked for a large regional CPA firm for several years and enjoyed the client interaction and advicory capacity that I got a chance to operate in but I hated the tax compliance and even worse the auditing work.

 
I agree that there is no way I can be a good CPA and Financial Advisor all on my own especially not at tax time, but my goal would be to build a base of tax prep clients that I could convert to investment clients and as I do so hire in some tax prep help (I would review the returns for errors and tax savings opportunities but that's it).  Long story short, over a couple years I would move away from tax prep and focus my efforts on bringing in clients and doing higher level advising on both tax and financial planning.
 
Why would I want to go back and do something for a year or two that I didn't like much before?  Two reasons:
1. I think it will be less of a pain knowing that I'm doing it for myself and my business
2. The same reason those new to EJ  knock on doors or those at the wirehouses make cold calls.
 
What do you think?  In my mind this would be a good way to meet prospective clients and likely convert more of them than I would if I just knocked on the door or gave them a call....
 
Thanks again for the input.
Sep 2, 2008 2:59 pm

Coach - Compliance may or may not be an issue. Are you a CPA or Financial Advisor? Are you " holding yourself out as ??? " which Profession?

That being said , I would respectfully suggest that building your Financial Practice is in itself a full time job.
Sep 2, 2008 3:03 pm

Also, I'm not familiar with HD Vest, but I will look into their model.  What I would prefer to do is have both fee based work or comission work as options so that I can utilize the approach most appropriate to the clients situation.  I don't anticipate brigning in clients at first that have a huge net worth and this is going to sound funny but I kind of think I would prefer to work with the "Average Joe's" at first anyway.  I really want to help people take control of their finances and start building that net worth that they may not have right now.

Sep 2, 2008 3:07 pm

Hey Norway,

 
I am a CPA but not currently operating a practice so I'm not holding myself out as either.
 
My idea is to begin operating a CPA practice for the reasons mentioned in an earlier post (a lot of demand & ability to win client's trust making it easier to turn them into investment clients).  I understand the angle that you're coming from about it being a full time job to just run a FA or RR practice, but if managed properly wouldn't they be complimentary?
Sep 2, 2008 3:12 pm
CoachXD:

Also, I'm not familiar with HD Vest, but I will look into their model.  What I would prefer to do is have both fee based work or comission work as options so that I can utilize the approach most appropriate to the clients situation.  I don't anticipate brigning in clients at first that have a huge net worth and this is going to sound funny but I kind of think I would prefer to work with the "Average Joe's" at first anyway.  I really want to help people take control of their finances and start building that net worth that they may not have right now.

 
Couple things, Coach:
(1) Be careful about how "Average" those Average Joe's are going to be.  Tax work is all about time and money - meaning, you can only do so many returns, so you need to make them count.  The H&R Block model works because of volume.  If you are going to be doing the $450 tax returns, you are going to need to do a lot of them to make any money, or have real low overhead.  Being a solo CPA, it would be tough to crank out more than 250 returns per season (meaning with no support staff to book apointments, consolidate returns, print, mail, file, etc.).
 
(2) I don't know your age, but it might be best for you to hook up with a large local or small regional CPA firm and cut your teeth doing taxes there first.  You never know what type of contacts you make doing that, and you could end up working with someone like-minded as you and form your own partnership, and possibly buy a small tax prep book from a retiring CPA.  Just going out on your own, hanging a shingle, without any previous experience (in other words, no direct tax prep work) doesn't seem like the best move to me.  But I don't know you, so I may be wrong.  It sounds sort of like going out as an Indy Financial Advisor without any previous experience - doesn't typically happen.
 
Sep 2, 2008 3:21 pm

Coach , not suggesting the idea does not have merit. Here is what you need to think about : 1) Time and 2) Area of Concentration. Perhaps most important what is your REAL

PASSION?
If you are a Financial Advisor you need to focus on that activity or Tax Preperation? During Tax Season .....you need to focus on returns. What happens to your Financial Advisor function? I can only speak from a Canadian perpective but Tax Time and RRSP ( Registered Retirement Savings Plan )  Season is the same time period , that would definitely pose a very difficult problem.
Sep 2, 2008 3:22 pm

Hey B24 I agree on both points.  I do have some direct tax prep experience but it's been a couple years and I definitely need to do some brushing up, which is another reason the "Average Joe" return would be appealing to start with.  However, you make a good point about volume neccessary to make a profit.  Maybe I will put some feelers out there to see if there is a small practice (especially one where the owner is looking to get out soon) where I can do my brushing up.  Thanks for the suggestion. 


 
Now to the second issue, what is the best way to get training on the FA/RR side of things?  Would a place like Raymond James work with me if I'm just starting out?
Sep 3, 2008 7:38 am
CoachXD:

Hey B24 I agree on both points. I do have some direct tax prep experience but it's been a couple years and I definitely need to do some brushing up, which is another reason the "Average Joe" return would be appealing to start with. However, you make a good point about volume neccessary to make a profit. Maybe I will put some feelers out there to see if there is a small practice (especially one where the owner is looking to get out soon) where I can do my brushing up. Thanks for the suggestion.





Now to the second issue, what is the best way to get training on the FA/RR side of things? Would a place like Raymond James work with me if I'm just starting out?





No, RayJay, nor most any other firm, would give you a shot without a book already.



Coach, here's the deal - in order to get into this business, you either need to go both feet in with a B/D (captive, like wirehouse, EDJ, employee at indy firm, whatever), or you need to start a CPA practice (then at some point when you are stabilized, add advisory work). In my mind, that seems like your two options. Learning this business and finding clients is more than a full-time job.

Dec 2, 2008 1:45 pm

great topic and posts.  book I ran across:

 
http://www.amazon.com/Guide-Adding-Financial-Services-Practice/dp/0974369403/ref=sr1_5?ie=UTF8&s=books&qid=1228243183&sr=8-5
Feb 4, 2009 2:45 pm

WOW someone got a 15 mil office handed to them and they are upset. Boy you got screwed!