Looking for advice to succeed in this biz

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Jul 11, 2008 7:03 pm

I hope you all can give me some insight.

I have been with my current firm for 2 years.  Our firm focuses on working with public educators (403b and 457), and does not have much experience working with any other professionals.  Much of my business comes in from doing seminars at K-12.  I have finally found that this area is not very profitable (my fault for now initially realizing this). 

Most of my fellow colleague advisors came from a teaching background, and assured me that I would do “very well” if I were to follow their mentoring.  I followed their advice and mentoring to the T, and after 2 years, they all agree that I am doing “very well” and agreed that I have followed their advice. 

Being former teachers, I now understand that they are content making $50K to $120K per year after being in the industry for 10+ years, selling mainly VA and FA.  But on the other hand, I realize after much reading and researching, that AUM is the way to go.  I am a very good mentee, and would appreciate some advice on which firm(s) to join that would give good guidance and mentoring.  Also, would employers frown upon hiring me for being in the industry for 2 years, and not making it?

I appreciate any help and advice!

Jul 11, 2008 8:23 pm

Look at traditional wires & regionals, an indy firm that is trying to hire someone that has some training, but rather “entry level”, or an insurance company with good securities platform. I assume you are not S7 licensed? That will be a requisite at any firm, so you will need to think about study time for that. Also, think about exactly what you WANT to do (is it advisory work??)

Jul 11, 2008 8:50 pm

Thanks for your reply. 

I am already S7 and 66 licensed.  The problem is that my current indy firm claimed that they had great training too, so I was trained to be what they consider of standard.

I want to do advisory work.  Would wire houses look down upon me for having my licenses, and mainly having VA and FA as the bulk of my existing business.  If so, how can I get past that obstacle, and which ones would you recommend that would have a mentorship program that I can follow to the T and succeed?

Jul 11, 2008 8:52 pm

What do you specifically mean by, “I want to do advisory work”?

Jul 11, 2008 10:02 pm

Get out now while you still can.

Jul 11, 2008 10:42 pm

Not only what do you mean by ‘advisory work,’ what do you mean by your existing business is ‘FA’? I also don’t understand what you mean by ‘AUM is the way to go?’  The bottom line is are you profitable, that is measured by production, not AUM.  You could sell only VAs and out-produce a fee-based broker with 4 times the AUM.  Obviously the more assets the more revenue potential, but don’t think a large number of assets alone impresses any firm.  The wires will LOVE the VA experience, everyone gets paid well.  If by ‘advisory’ and ‘FA’ you mean fee-based business, again, wires will LOVE that.  There is nothing better for the wires than annuitized business.  Mentorship programs do not really exist at wires.  You can become a Junior Broker if a seasoned FA can use the help and is willing take you on, but this could become a glorified CSA position.  You have clients and two years of experience; just pick a good firm, make the move and it sounds like you’ll be fine.  Take a look at your basics: Morgan Stanley, Merrill Lynch, UBS, Smith Barney, Wachovia, etc… 

Jul 12, 2008 4:46 am

Hi Wlooney, when I mentioned that I want to do “advisory work”, it was just an answer to B24’s question…didn’t mean to be vague.  My existing business mainly consists of fixed annuities (FA) and variable annuities (VA) because those were really the only products that my mentor taught me to sell.  Also, rather than AUM, I really meant that I eventually want the bulk of my business to be fee-based so that I can have trailing income each year. 

Tell me if I’m wrong, but working at a firm that only focuses on educators (403b) really limits my profitability.  And as a result, I feel that it will handicap my chances of getting in to the next firm.

Jul 12, 2008 12:07 pm

A few comments mrcl:

First, if you are not allowed to prospect outside of the 403b market you are certainly limited in your choice of business model.  It doesn’t mean you CAN’T be profitable or succeed there - many do - but in other firms you would have the option to broaden or shift your focus.  So if you don’t like the 403b focus, change.   Don’t worry too much about lack of AUM or a stigma from working the 403b market.  If you show any ability to effectively prospect, you will have plenty of opportunities.  Prospecting is key where ever you may go.

Second, take more ownership of and responsibility for your own results.  Saying that  your existing business is limited “because those were really the only products
that my mentor taught me to sell” is simply a cop out.  It may be harder to do something new without mentoring, but having that passive attitude will hold you back far more than lack of a mentor ever will.  It’s your life - take charge of it.

Finally, be realistic about the fee based business model.  Yes, it has the advantage of recurring revenue (or what you mislabel as trailing income, which is a different thing).  The very strong flip side to that is you will make LESS money in the SHORT run using fees than you would using more traditional commission business since commissions pay more upfront (income today).  The trade off is steadier income in the future IF you survive that long and IF you retain that client for more than a few years.

That, in a nutshell, is why so many talk about being fee based when far fewer actually do it - because often one is unable or unwilling to sacrifice the higher payout in the short run for the expectation of more in the long run.  It’s especially tough for newbies, as if you need money to survive today, it’s hard to choose fees over upfront commissions.

Good luck.