Failing

I believe that it is a combination of hard work, good luck, and a strong natural market in the beginning.  After that, your work speaks for itself.

I think it is because most people won’t trust a 23 year old with their life savings. I think if most people started as an asst. or worked for a mutual fund company and entered the business around 30 or so success rates would be way higher.

[quote=bankrep1]I think it is because most people won't trust a 23 year old with their life savings. I think if most people started as an asst. or worked for a mutual fund company and entered the business around 30 or so success rates would be way higher.[/quote]

YOU ARE COMPLETELY RIGHT

Most new hires fail because they are lured to the industry by the glamor and money that many brokers are making.They leave because they should either be on an appointment, or setting one, and instead focus on researching and everything else but talking to prospects. Too much training is on products and not prospecting, leading to a failure to focus.

20 somethings should focus on mutual funds and the longevity of the firm and fund managers experience, not why they believe xyz stock is going to go from 10 to 30.

90% of this business is in your head, most new hires aren't around long enough to realize that.

Just my ramblings,

Stok

Simple answer:

1 in 10  new businesses fail across the board no matter what industry you're in.  Brokers are no exception.

[quote=stokwiz]

Too much training is on products and not prospecting, leading to a failure to focus.

[/quote]

I couldn't disagree more. Firms focus too much on teaching you ABSOLUTELY USELESS prospecting tactics that DON'T WORK. The vast majority of trainees are given the title of "Financial Advisor" when they are completely untrained to perform the task.

No, I repeat; No sales trainer is going to teach you how to get clients. If they knew, they'd be a successful financial advisor. Even a successful financial advisor can't tell you how to get clients, only how THEY did it. Only YOU can figure out how to get clients.

This is, in my humble opinion, the best job in the world and is certainly better than being some crappy Zig Ziegler (sp?) type - traveling around the southwest and staying in various airport Ramada Inns and the like. Sales trainers are failed salespeople. They don't know; cause they didn't succeed. That's why they do sales training thing. It's the EASIEST thing to sell.

Everyone wants to think that ANYONE can do this business. That's simply not true - its a rare combination of salesmanship, intelligence, discipline and ability to build networks that drives success. It's a very hard business to break into, but it's not 'too much education' that's the culprit.

Most rookies are so inexperienced and green that any prospects that are smart, educated and wealthy enough to matter will immediately identify their limited knowledge by cursory discussion - particularly if they have 20 years on you...

Unfortunately, this job is now about both (1) pounding the pavement (intelligently) and (2) intensive education. Both are equally important. Expect to work 80 hours a week your first few years in this brave, new world. Expect to need to know a lot about investments, business math, retirement plans and much, much more to succeed.

In the end, I think that good salesmen develop their skills long before they are even old enough to shave. Training won't teach empathy and insight into the human motivations. 

The only "coaching" that is useful is essentially management consulting: it teaches you how to do this job.

Great post SFB.  What are the best suggestions for people preparing for this career to do before they get the green light to sell?  (Other than pass the exams.)

solid post san fran.<!–
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[quote=opie]Great post SFB.  What are the best suggestions for people preparing for this career to do before they get the green light to sell?  (Other than pass the exams.)[/quote]

Get on the phone and raise money for your favorite charity.  "Mr. Johnson, my name is Nathen Newbroker and I am calling today to ask you to make a contribution to The American Heart Association......"

This will develop a certain amount of comfort dealing with getting decision makers on the phone--and do good too.

[quote=opie]Great post SFB.  What are the best suggestions for people preparing for this career to do before they get the green light to sell?  (Other than pass the exams.)[/quote]

My thinking is that one should have at least a few years of experience in the industry. Ideally as an SA or wholesaler. The best kind of education for this job is the CFP. I don't have one, but I took a review course recently for it (I plan to eventually challenge the exam) and I was very impressed by the curriculum.

Some degree of involvement in their local charities I would say. Fundraising would be an excellent activity, as another poster indicated.

I would say that someone should have the level of knowledge that the CFP equates before they can reasonably argue that they are giving educated advice. The material could easily be completed from scratch. I think that Kaplan has a course.

SFB - your passion is wonderful!  I would also add that most new people fail because they expect someone else to tell them what to do everyday.  They blame the training, the market, their family, the economy, politics, war, oil prices, hot weather, cold weather, summertime slow down, poor branch management, poor brand awareness of their firm, poor marketing departments, bad lists, no not call registery, decaf coffee, etc.  However, they leave the most important factor out of the equation - they don't look at themselves.

80 hours per week - it would be hard to lose.

I think most people “fail” because they can’t get through the initial 3 or 4 years of paying the rent with a credit card.

Correction:  All I said above, plus a healthy bank account!

A big part of the problem is the low barriers to entry.  There are no specific education or experience requirements for this field, just a handful of fairly easy exams to pass.  So the industry is flooded by mostly unqualified people that see the easy and lucrative life of a veteran.  What they don't see is the very difficult and low paying life of a rookie.

I would agree with the others that the best way to enter this field, particularly if you are young and/or inexperienced in sales, is through the backdoor.  Be a wholesaler, an assistant, work at a bank, or do some other job where you can learn the ropes and get your CFP, then jump into it.

Stokwiz,

You are absolutely correct. The most successful in my office are the ones who are always on the phone and meeting with clients. Seems like all our training is on products and not enough on presentations and smart prospecting. It's funny how these posts start off with a simple question and evolve into something totally off topic.

People fail because most of what financial institutions teach is wrong.  They teach you from day 1 to postion yourself as a sales person by chsing people with YOUR agenda (e.g. send product literature).  But people run from sales people and thay are not interested in your agenda.  Firms never teach you to position yourself as a professional because they teach only what the lowest common denominator–the dumbest guy, can learn. This business does not require talent–it requires the religious following of systems and methods that are proven to work.  Unfortunately, firms dont teach this.  For what its worth, I teach about this on a teleconference.  This is not a plug–I dont care if you attend or now.  It’s for you if you want it www.nfcom.com/register.  I also recommend you find a very successful mentor and be his/her lacky for one to two years and then just copy what they do.  You learn the best lessons from those people already successful.  I mentored one guy and he is now branch manager at another firm and was a star in his class.

Kleino- Another shameless self promotion.

Of course people run from salespeople; most aren't interested in your agenda; and guess what- most people aren't even qualified to make a significant investment with you as they lack the means.  That is why it's called a numbers' game.  Talk to 100 people and (eventually) one of them will open a qualified new account.  That is how you survive; you then work on generating referrals, gathering additional assets, etc to really prosper.

I imagine you are pushing a seminar program.  People "run" from seminars as well as they don't want to be subjected to a pitch (or a pitch diguised as a "topic") and be surrounded by strangers.  And the cost is very prohibitive.  The best seminars are client seminars where they bring a friend.  Or if you are able to show up at a company and "lecture" their employees.

[quote=kleino]This business does not require talent--it requires the religious following of systems and methods that are proven to work.  Unfortunately, firms dont teach this.  For what its worth, I teach about this on a teleconference.  This is not a plug--I dont care if you attend or now.  It's for you if you want it www.nfcom.com/register.  QUOTE]

Oh yeah, you can go the route of hard work, education and entrepreneurship... or you can go with this guy's get rich quick scheme.

I'm sure you'll get rich... and quick!

[quote=kleino]I mentored one guy and he is now branch manager at another firm and was a star in his class.[/quote]

Wow... a branch manager!

I agree with the posts thus far (other than the seminar shill) and this is a topic that I have thought about myself.

I believe that those who fail can be divided into two groups:

1. Folks that would not make it given an infinite amount of time due to being lazy, dumb or dishonest.

2. Folks that could have made it, but gave up too soon or had firms that gave up on them too soon.

I believe the first situation is a function of low barriers to entry (as noted by a previous poster and as confirmed, perhaps unintentionally, by any number of posters on this board in the past) and a lack of training for branch managers.  I was shocked by the low quality of some of the trainees when I started in this business and I worked for the same major firm that I work for today.  I believe that many managers are picked on the basis of production and receive inadequate training in assessing and hiring candidates.  I've screened, interviewed and hired a great number of people prior to getting into this industry and I can tell you that it is often done wrong by brokerage firms.

The people that give up too soon have some combination of inadequate finances to cover the lean years, a spouse that does not support him or her, unrealistic goals set by their firm, etc.

Finally, I thought my firm actually did a pretty good job of exposing us to different prospecting methods.  That said, the training is a little like getting a driver's license in that it does not make you a good driver, but it will hopefully prepare you to really learn how to drive.

Good stuff, proton.

However, I would also add a third category:

3. Those who did not realize what the job entails.

This category would include those who left this business and did not go back into sales, in some other area of business. An example would be someone who left a salaried job, went into this business, and left to go into another salaried job. They weren't lazy or dumb, just not the right person for the job.

[quote=doberman]

3. Those who did not realize what the job entails.

This category would include those who left this business and did not go back into sales, in some other area of business. An example would be someone who left a salaried job, went into this business, and left to go into another salaried job. They weren't lazy or dumb, just not the right person for the job.

[/quote]

I agree with this. I think that a decent number of new hires are people who couldn't find a job elsewhere in finance and decided that they would "settle" for retail. 'How hard can it be?' and 'I'm certainly smarter than that jerk I met the other day...' are phrases that I assume go through people's heads all the time and consequently they join expecting that it somehow won't be hard for them. There are so many people who get hired that simply cannot handle the rejection...

I agree with the post that hiring practices are pretty terrible. Very 'throw 'em against the wall and see who sticks'. Considering the expense of training, I am shocked that they still do this. Much better to leave guys alone for 3 years and let them find their legs.

The hardest part is the annuitized business model and how long it takes to actually build it. It took me 3 years to build a business that was 80% fee based and I wouldn't have survived if it hadn't been for a healthy bank account. Managers tell you they want recurring revenue and then give you targets that can only be met by selling A, B shares and annuities. How many guys leave after 2 years isn't as shocking as how many leave after 5. They look at their book and see so many dead assets. If they just build into their goals that you make about 1/10 the revenue off of doing that managed account instead of that A share, but then you do it forever. Clients are happier too. It takes 5 years to get a decent business off fee-based, but once you do....

I'm on the A list now, but I can remember getting crap about lousy numbers in my 2nd year:

"But 70% of my gross is fee-based..."

"Yeah, but your in the 4th quintile..."

"But I will also make that money next year, and the next...."

"Yeah, but your in the 4th quintile..."

Now I'm in the 1st.... Because I was willing to be in the 4th...

SFB: Now we’re talking.  This is exactly the issue I’ve been trying to raise during the interview process.  The firm that answers this question the best will likely win.  Well, that and salary

I agree…if a company could build a realistic timeline of slow and steady

fee-based business building, they’d be able to attract the best and brightest

and up the success rate. Perhaps the team approach combined with the

current 2 yr salary deal can accomplish this–IF you give the established

advisors a reason to pick up a new guy and assume some of the burden of

continuing to train, mentor, financially support (temporarily), and generally

take responsibility for someone. OR if you only hire them that way, which

seems to be the way the top few firms are trying to figure out. The beauty

of the fee-based world if that someone really isn’t performing (not just not

hitting transaction revenue type goals), if they leave one way or the other,

they leave something that generates fees for the firm to compensate for

their trouble of hiring and training the guy.

[quote=san fran broker][quote=doberman]

3. Those who did not realize what the job entails.

This category would include those who left this business and did not go back into sales, in some other area of business. An example would be someone who left a salaried job, went into this business, and left to go into another salaried job. They weren't lazy or dumb, just not the right person for the job.

[/quote]

I agree with this. I think that a decent number of new hires are people who couldn't find a job elsewhere in finance and decided that they would "settle" for retail. 'How hard can it be?' and 'I'm certainly smarter than that jerk I met the other day...' are phrases that I assume go through people's heads all the time and consequently they join expecting that it somehow won't be hard for them. There are so many people who get hired that simply cannot handle the rejection...

I agree with the post that hiring practices are pretty terrible. Very 'throw 'em against the wall and see who sticks'. Considering the expense of training, I am shocked that they still do this. Much better to leave guys alone for 3 years and let them find their legs.

The hardest part is the annuitized business model and how long it takes to actually build it. It took me 3 years to build a business that was 80% fee based and I wouldn't have survived if it hadn't been for a healthy bank account. Managers tell you they want recurring revenue and then give you targets that can only be met by selling A, B shares and annuities. How many guys leave after 2 years isn't as shocking as how many leave after 5. They look at their book and see so many dead assets. If they just build into their goals that you make about 1/10 the revenue off of doing that managed account instead of that A share, but then you do it forever. Clients are happier too. It takes 5 years to get a decent business off fee-based, but once you do....

I'm on the A list now, but I can remember getting crap about lousy numbers in my 2nd year:

"But 70% of my gross is fee-based..."

"Yeah, but your in the 4th quintile..."

"But I will also make that money next year, and the next...."

"Yeah, but your in the 4th quintile..."

Now I'm in the 1st.... Because I was willing to be in the 4th...

[/quote]

That is a great point San Fran.  My hiring manager said the reason he was willing to take a chance on me is because I passed up other opportunities in Finance to take a sales job because of the challenging and rewarding nature of the position.  He said you can pretty much correlate the success of an Advisor with that one defining characteristic...whether they took a "job" because that's all they could get or they chose a "career" because of the challenge that sales presents.

SF,

I have embraced this model since entering this biz 2 years ago and had to deal with everything you wrote.

About 80% of my biz is fee based and in 2007 I will finally begin to realize the fruits of my labor since I project approx. 150k in revenue from trails alone.    Those numbers should grow appreciably year over year.

I knew the risks going in that I might not be given enough time to build my practice this way but I was willing to take a chance for something I felt was right.

scrim

way to go scrim!<!–
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I think a big problem for the new guy, is he has to give the first ten accounts he starts to the “senior stockbroker”, then split the next twenty with him (sharing commissions and eating PBJ sandwiches for lunch and dinner).

Then, (two years later) after starting 30 accounts, he’s thrown to the wolves with a book with ten accounts. Then he’s got another 3 or 3 years before he’s actually making a decent salary, which is negated by all his debt.

slim, is this a descripition you give of a wirehouse?

[quote=Slim2None]I think a big problem for the new guy, is he has to give the first ten accounts he starts to the “senior stockbroker”, then split the next twenty with him (sharing commissions and eating PBJ sandwiches for lunch and dinner).

Then, (two years later) after starting 30 accounts, he’s thrown to the wolves with a book with ten accounts. Then he’s got another 3 or 3 years before he’s actually making a decent salary, which is negated by all his debt.


[/quote]

First of all, that’s a business model I’ve generally only seen in bucket shots, not reputable firms.

Secondly, I darn sure hope this newbie broker is bringing in more than THIRTY accounts in TWO YEARS.  He deserves to starve if that’s all he does!!
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[quote=Slim2None]I
First of all, that's a business model I've generally only seen in bucket shots, not reputable firms.

Secondly, I darn sure hope this newbie broker is bringing in more than THIRTY accounts in TWO YEARS.  He deserves to starve if that's all he does!!
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I think that the only thing that I can say in support of the Lehman 1970s model (which is what all the bucket shops use today) is that at least they have a system.

Wirehouses seem to have no idea whatsoever what will produce successful trainees. My experience as a rookie broker (I might still be one - what's the gross number that brings you out of "rookie-dom"?) was one of management at a total loss on how to build a book. I don't see any difference lately in the total lack of a clue from the most current crop of management. 

It seems to me that the way to turn rookies into successful brokers is to focus on excellent training and loss-leading lending products. But this is too expensive, I guess. It's really too bad, because the caliber of people failing out of the program at my firm is OUTSTANDING. It is such a waste that we're losing people because management is too cheap and incompetent to give them a fighting chance...

[quote=san fran broker]

I think that the only thing that I can say in support of the Lehman 1970s model (which is what all the bucket shops use today) is that at least they have a system.

Wirehouses seem to have no idea whatsoever what will produce successful trainees. My experience as a rookie broker (I might still be one - what's the gross number that brings you out of "rookie-dom"?) was one of management at a total loss on how to build a book. I don't see any difference lately in the total lack of a clue from the most current crop of management. 

It seems to me that the way to turn rookies into successful brokers is to focus on excellent training and loss-leading lending products. But this is too expensive, I guess. It's really too bad, because the caliber of people failing out of the program at my firm is OUTSTANDING. It is such a waste that we're losing people because management is too cheap and incompetent to give them a fighting chance...

[/quote]

It's not really a matter of training--this isn't rocket science.  It's a matter of mentoring and keeping the confidence going day after day, week after week, month after month, and year after year.

I've discussed this before so I won't take as long this time. The idea of mentoring holds the most promise--however, it is very difficult for the mentor to maintain his/her enthusiasm for their rookie when that rookie does not perform.

Suppose you were my mentor and you give me what you think is a great idea.  If I don't think it's a great idea I am not going to execute the idea with any degree of enthusiasm--so when it doesn't work you lose faith in me.  Repeat again and again and before you know it you're telling me, "Gosh Newbie, I really don't have time right now...how about tomorrow."

When I hear that two or three times I stop asking--the mentoring idea failed.  Not because it's a bad idea but because we're both humans.

Right now there are a lot of people washing out of the business because they no longer have the safety net of their training salary arrangement and investors are saying, "There's too much going on in the world right now.  I'm not going to be making any financial decisions for awhile, thanks for calling."

If you don't have the safety net and you don't have favorable responses to your prospecting efforts it's damn tough to stick it out.

The firms don't want to see you go, most have spent a lot of money on you, but they know you have obligations to be met and have to do what you have to do.

This is why it is so CRITICAL that you time your entry into the business as well as have a backup warchest.  Work in an easier industry until you're thirty-five--build your warchest as well as your Rolodex.

[quote=san fran broker]

[quote=Slim2None]I
First of all, that’s a business model I’ve generally only seen in bucket shots, not reputable firms.

Secondly, I darn sure hope this newbie broker is bringing in more than THIRTY accounts in TWO YEARS.  He deserves to starve if that’s all he does!!
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//–> [/quote]

I think that the only thing that I can say in support of the Lehman 1970s model (which is what all the bucket shops use today) is that at least they have a system.

Wirehouses seem to have no idea whatsoever what will produce successful trainees. My experience as a rookie broker (I might still be one - what's the gross number that brings you out of "rookie-dom"?) was one of management at a total loss on how to build a book. I don't see any difference lately in the total lack of a clue from the most current crop of management. 

It seems to me that the way to turn rookies into successful brokers is to focus on excellent training and loss-leading lending products. But this is too expensive, I guess. It's really too bad, because the caliber of people failing out of the program at my firm is OUTSTANDING. It is such a waste that we're losing people because management is too cheap and incompetent to give them a fighting chance...

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[quote=joedabrkr]

First of all, that’s a business model I’ve generally only seen in bucket shots, not reputable firms.
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[/quote]

I was in a bucket shot, then.

[quote=Slim2None] [quote=joedabrkr]

First of all, that's a business model I've generally only seen in bucket shots, not reputable firms.
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I was in a bucket shot, then.
[/quote]

That makes you proud?

[quote=NASD Newbie]

[quote=Slim2None] [quote=joedabrkr]

First of all, that’s a business model I’ve generally only seen in bucket shots, not reputable firms.
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I was in a bucket shot, then.
[/quote]

That makes you proud?