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Jan 5, 2011 7:36 pm

I initially posted this as a response to a question I read about taking a Financial Advising position with Waddell & Reed.  I came across this forum about a year and a half ago when I was asking myself the same questions I keep seeing about W&R and Financial Advising as a career path in general.  When you Google W&R, this collection of misguided drivel is the second thing that comes up.  This is completely ridiculous and unfair to those actually seeking real answers if you ask me...  I can tell that most of you who post complaints or opinions don't have the slightest idea what you are talking about and you are cluttering this dialog with your blabber.  My advice to you would be to inform yourselves before you preach your nonsense to the world as if it were the gospel.  Now that I have a solid understanding of the company and industry I make my living in, I figured I would take a minute to give my two cents and hopefully clear up some of the questions I wish I had answered before entering the business.

The first thing I would like to suggest is know what you are getting into before you enter the office wearing your new suit and shined shoes, but without a clue as to what you are going to do when you sit down at your desk.  9 out of 10 new advisors that walk into my office do exactly this and they are the same ones that are packing up their desks at year end when they miss the quota.  It doesn't matter which firm you work for, nobody is going to tell you the right way to build your practice.  You need to figure it out for yourself!  Some people buy leads, some people door knock, some people depend on family and friends (all of which are losing business models if you ask me)...  In the end, all that matters is that you develop a business model that you can implement and sustain, and then execute that business plan on a daily basis.  This is not easy to do and is exactly the reason only 20% of advisors make it through their first three years.  

Second, understand the company's incentives.  Again, this pertains to every firm in the industry, not just W&R (although W&R might be more blatant about it).  Depending on the office, most managing principals will hire just about anybody that walks though the door.  This is contingent however, upon you being able to pass the series 7, 66 and life and health exams.  W&R uses this process to weed out the people that are obviously not cut out for the business.  Once you pass your exams and become activated, the company's only incentive to train you and give you a desk to work at is to MAKE MONEY!  Your MP and DMs will tell you to go out and petition your friends and family, sell them insurance, investments, financial plans, etc. so that they can GET PAID and HIT THEIR NUMBERS!  Once you bring in your family and friends and exhaust your natural market, the company could care less if you don't close another deal and fail out.  They have 30 other naïve new hires getting licensed and talking to their parents about variable annuities too.  Ask your MP and DMs how they get paid, then you will
understand where they are coming from when they tell you what to do.  Every firm has this unfortunate incentive structure, so as long as you understand it and make it work for you, you will be fine.  My advice, figure out a way to generate business without depending on your friends and family.  That's how you build a sustainable practice, and it also lets you keep a few cards up your sleeve if times get tough, as they inevitably will.  FYI, most people that don’t fail out in the first year fail in the second year because they have used up all their connections and have no idea how to get in front of new prospects.

Third, the grass is always greener.  Everyone always talks about how EJ, UBS, ML, MSSB, Ameraprise, NEF, etc. have all these great training programs, how the office is so nice, how you have assistants to do your paperwork, blah blah blah.  Nothing in this world is free, you sacrifice for everything you are given.  At W&R for example, you will constantly find yourself explaining who the hell W&R is.  This is because the company does no national marketing.  Within the industry however, W&R is well known to be a top of the line firm with great investments.  You will quickly realize W&R is a stingy company, meaning they will not give you handouts out of the goodness of their hearts.  You will have to buy your own computer, pay technology fees, do your own paperwork, buy your own leads, etc.  What do you get for this sacrifice?  The best pay out in the business!  I ask anyone to find me a firm that pays a higher percentage to their new advisors than W&R does.  At ML your office admin, computer, chair, desk on the 40th floor, name on your business card and commercials on TV all come out of your paycheck - at W&R that goes into your pocket.  Every company has its benefits and drawbacks.  I can tell you that if I had started at ML or MSSB, there is NO WAY I could have made it through my first year with their minimums and annual quotas.  How many people with $250K in investable assets to you know?  The learning curve is steep and it takes a while to learn the business if you want to do it right and ensure your survival for the
first 3 years.  

And finally, to address the rest of the questions that I don't feel are worthy of a full paragraph:  MBAs carry no weight in this business - you're wasting your time and money.  Get a CFP.  Don't worry about the licensing fees, if you hit your numbers you will get them reimbursed.  Stop thinking that everyone is out to screw you because they are evil predators – it’s just business.  There is no salary in financial planning!  Some firms claim they offer a salary, but it is always contingent upon hitting your numbers and the larger the salary the smaller the commission split.  You aren't going into financial planning to get a fat salary and sit on your ass.  You are going into this because you want to be directly compensated for your effort and hard work.  This is a commission game; no firm out there is going to pay you a salary without demanding something in return.  W&R is a good place to build a practice.  You have to demand the training from your MPs and DMs; but when it comes down to it, there is no better way to learn how to swim than to be thrown into the pool.  Don't expect any hand holding in financial planning, because you won't get it.  So why do it?  Because you get paid, you work for yourself, you are not expendable and you can help people on a daily basis.  With that said, you will probably fail and come back to write a whiney post on this page explaining how you got duped and scammed.  I will tell you this business is what you make of it.  

Jan 5, 2011 7:58 pm

Great post. Whether you are newby, first couple few years, or veteran. Add some thoughts for folks contemplating being an RR.

I'd toss in, that whoever your hiring manager is going to be, is incredibly important. You want that guy/gal to take a personal interest in you, root for you, treat you like their son/daughter. Make sure they are going to stick around for a while.

Go to work in a place/city, that you will stay the rest of your life. Don't waste your time building something up, just to move later to be closer to family, better weather, etc. 

If you don't got what it takes to get beat up daily, pound a phone making sales presentations, and cannot handle massively intense feelings of failure from time to time, forget it. This is not namby pamby land ....

If you're older than 30, are married, kids, the money you make in the first several years, along with the stress, might create a huge strain on your family. Can you afford/handle that?

The market is really tough now for new business, prospecting is the hardest it has EVER been. Can you defy the toughest of odds, in fact, defy the "impossible"?  

Do you have a clean criminal and financial record? If not, chances are extremely slim you'd be hired.

Do your homework before you get hired, know what you're getting into. Before you get licensed, make sure you have a plan/list of many thousands of folks/businesses you could call upon.

Jan 5, 2011 8:22 pm

Wow.  And you have the audacity to call someone else's opinion of W&R drivel. 

OK, first of all the rest of the industry sees W&R as a mediocre shop manned with a bunch of guys who sell proprietary products to people who don't understand the conflict of interest in selling a proprietary product.  Call it the dumb leading the blind.  At least Ameriprise was smart enough to rename their funds RiverSource so that you don't immediately see the conflict. 

Ivy/W&R does have some good funds.  I love Ivy Asset Strategy.  I use it frequently. 

I don't know much about the payout at W&R.  You may be right about that.  But if payout is what you're looking for, why tie yourself to a firm like W&R?  Why not go indy?  If you're going to have to buy all of the things you mentioned anyway, why not build your own brand, not W&R's?

Thank you for your advice based on 18 months at W&R.  When you can start measuring your tenure in years vs months perhaps you'll figure out that you really owe it to yourself to look elsewhere for employment. 

Jan 6, 2011 2:57 am


I think you make some great points for the young guys starting out about the difficulties of getting a business off the ground.  However, I think you jumped the gun a little quick in your critique of other firms and other advisors.  As spaceman pointed out 18 months in this business does not make you an expert.  If payout is what you want to hang your hat on, then LPL would be a far better choice than W&R, if platform is the most important many of the wires will blow W&R away.  The opinion of most FA's is that W&R is a crappy firm, now I am not an expert but I have been doing this 7 plus years so I have talked to enough FA's to have a decent sample size. 

Also to make a statement that an MBA is means nothing in this business is non-sense.  Do you have an MBA to even know what clients think about it when meeting with them?  As someone who has both his MBA and CFP I can tell you some clients care a lot about it, some care about one and not the other and some do not care about either.  It is all about how you market yourself and your credentials.  If you are meeting with successful high net worth people many of them will be very well educated and like to work with others who are the same.  I'm not telling young guys to go out and start studying for the CFP or get an MBA but maybe you should take your own advice and "preach your nonsense to the world as if it were the gospel". 

Jan 7, 2011 4:23 pm

I barely passed high school, never spent a day in college. I don't think I'm biased, but a factor of determination in a broker's success has very little to do with education. And unfortunately, understanding of economics and finance doesn't either seem to be a great indicator of success. Self motivation, sales skills, history of success/track record, lifetime of sports/sales, vision, personal intensity, positive nature are the things I can clearly identify in the many folks I've known over the last 20 yrs that have been successful or stand outs in this business.

I'd add that if you take the ideal person, and put them in a bad place, they will still generally not succeed. But, they'll know they're good at this, and find the opportunity later. In the end, it's much easier to open an unlocked door... Something I didn't understand until many years later, is the importance of "finding a place of opportunity". Difficult to describe, but other veterans know exactly what I'm talking about.  

Jan 7, 2011 5:48 pm

Well said.

You are either in the business of giving your labor to others, accreting the labor of others, or working for yourself.

Once you find that place of opportunity it might look like the little eddy downstream of the third big rock that sticks up below the alder tree where the tasty insects like to hatch out.

Jan 7, 2011 6:17 pm

Hahha, ok, insects...

I went to work for a fairly unknown regional bank in the late 90s. Surprisingly, business was awesome, the people great, I'd finally found my way in this biz. I was upstairs in the branch, and in my window were lots of dead flies. Hardly the most impressive digs compared to some of the lush wirehouse branches I'd worked at. But, biz was great, and that taught me the value of opportunity.

Jan 7, 2011 8:08 pm

Late 90's, a CPA friend sent me a client in her 20's who had just been promoted to take over the local sales territory for Cisco Systems. She moved from customer service to take the job and was making $180,000 for basically taking orders. She was hot, and I was making half and looking at dead flies. Now she's probably looking at dead flies and I'm making a lot more money and working part time. Some good advice I got early on was, never, ever quit or let anyone take your book.