E&O Insurace

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Apr 9, 2008 6:13 pm

I am filling out licencing paperwork for a job as an investment advisor with ING Financial Partners. 

  At the end of the paperwork there is a section where you add up all your fees that are due.    its about $550 for the series 7 and then theres a place a place for E&O insurance for $1900   it says that this is a requirement and once you hand in the paperwork the preim. is fully earned.    I am having 2nd thoughts about taking this job 1-- it is all commossion.  and 2 it will costs me almost 3k to get license.  This dosent seem right,,,    any insight or feedback will be greatly appreciated 
Apr 9, 2008 7:01 pm

I guess I’m having a hard time understanding why you need E&O insurance before you are even allowed to solicit a product?  During the time you are studying to get licensed and not having any customer contact, I don’t see the need for coverage.

  Once you are out there selling and managing investments, insurance is a must.  If you think $1,900/year is expensive, try paying just one claim out of pocket.  As far as relative cost, $1,900 is just a shade less than what I pay per year.   Commission only means YOU decide how much YOU earn and whether YOU get a raise.  Successful people who are willing to work hard like this kind of system very much.  It may mean that things are a little thin to begin with, but it will provide great motivation to succeed, which is what you need in this business.
Apr 10, 2008 1:28 pm

Why would’t I be covered by the firm?

Apr 10, 2008 2:31 pm

That depends upon the firm.  One way or the other, you'll pay for it.  Firm 1 offers you commission only and the average broker/agent grosses enough to make, say $50,000 in his/her early years.  After paying your E&O coverage, your gross is $48,000.  Firm 2 offers you a $24,000 salary, covers your E&O and on the same gross, you make enough to generate a $20,000 commission bonus, making your total gross $44,000.

Which firm do you want to work for?

Apr 10, 2008 10:12 pm

jcoogen,  I’d be willing to bet that you would rather have a salary job that pays you $60-$120K.   If this is correct, don’t become an advisor.  The business is too hard for someone who is satisifed with ok money.   If you are willing to do whatever it takes to make $500,000+, then this might be the right career for you. 

Apr 10, 2008 10:40 pm

If you really want to give this business a shot, I would suggest looking at associating with either a wirehouse or regional firm that would pay you a base salary.  Worst case scenario is after 6 months or a year you don’t like the business or are not cut out for it, you find something else you like doing more.  No money out of your pocket except for the probably step down in income you take to try the business.  If you don’t make it, you could always look for a job at a MF or VA company or working directly for a b/d.  To start this business brand new as an independent advisor, without the manager of that office willing to cover your costs, just does not make financial sense.

Apr 11, 2008 11:29 pm

thats what i was thinking.  This seems like a deal for someone who has a client base or  a couple years  some experience.  These guys dont want to pay for shit..  why i am i going to pay someone 3k for a job. 

Apr 12, 2008 6:27 am

“why i am i going to pay someone 3k for a job”

  Provided that you are just looking for a job, you are correct.   This is the absolute wrong career for someone looking for a job.  On the other hand, if you are looking at this as a business opportunity, you'd be silly to let 3k be the determining factor.
Apr 12, 2008 5:23 pm

Listen I get it ..I dont need to hear some interview reteric :its a career not a job" crap.  Regardless... to pay 3k to work is horsecrap.  hands down 100%

Its a risk free approach by the firm.. if i make great if i dont well it didnt cost them a dime the more i think about it the more it makes me want to punch the guy in the face for thinking he can just run "game" on me.   Fuck ING Financial Partners
Apr 12, 2008 8:12 pm

jcoogen, your post shows that you don’t even begin to get it.   

  Paying 3k to work is horsecrap.    Paying 3k to start a business is incredible.  Name another business that you can start for less than 3K and have virtually no risk other than the fact that you may not earn enough?  Add in the fact that moderate talent and a top notch work ethic,  will allow you to earn 50K+ a month.    If the firm pays for you, all of the risk is on firm.  If you pony up some cash, risk is on both of you.  Even if you are paying the firm is taking on risk.    You have an employee mentality.  That's not meant as a criticism.  You just need to recognize that fact and proceed accordingly.  I have an employer mentality.  Out of school, I had my choice of public accounting firms.  Since they wouldn't hire me as a partner, there was no way for me to take the job.  I knew myself well enough to know that I could never handle being an employee. 
Apr 12, 2008 8:18 pm

Even if the firm pays for everything, it still costs you.  Maybe not money, but certainly time and you will be restricted from moving within the industry.  Weigh the positives and the negatives of your choices and go with the best risk/reward situation.