10 year side-step - now starting over

[Andrew_G]

10 years ago I went through the Georgia State M.S. PFP program after completing my B.S. in Accounting in NY two years earlier. I sat for the CFP exam (did not pass) and entertained a few offers, but made the decision to build my sales skills, my nest egg and get my life on track before I took the long and frugal road into planning.

During these last years I have accomplished the following:

- Built a contact database with about 5% doctors / dentists, 20% teachers, 10% nurses, 30% corporate sales professionals and 40% mid level management professionals
- Achieved top sales performance in corporate business to business marketing ( $2M quota ), HR SaaS Software Sales ( $750K quota ) and Online Media Advertising ( $2M quota ).
- Obtained a series 7 and 63 which have since lapsed
- Built up my own small retail business and sold it for a profit ( many high net worth contacts acquired from this)
- Saved enough money to live for 6 months and not need any additional income to support my current financial obligations

The thinking behind this was simple. I could of either started out as a planner in NYC and built up a practice slowly while making some decisions based more on my need for immediate income possibly at the expense of my clients best interest, or I could develop some deep skills in sales and marketing and get to a point where re-entering the profession was not a paycheck to paycheck experience. I chose the later and am at the crossroads as I speak.

I am going to keep this forum post active as I make my move back into financial planning. I am hoping it can serve as a kind of blog / road map for those with career changes and similar backgrounds.

Steps I've taken in the past 2 weeks:

- Started to explore options with regards to membership in the Financial Planning Association of MA
- Obtained transcripts from Georgia State University
- Have made the decision to enroll in the fall Financial Planning program at Boston University ( to refresh myself on current topics and re-study for the exam)
- Started learning about where I would like to land : B/D local branch office, paraplanner, self funded RIA, Bank Trust and Wealth Divisions, or local planning offices / CPA offices.
- Considered attending the Life-Cycle Investing for Financial Planners conference in Boston July 26-28

Any comments or words of advice would be greatly appreciated!

[Bob H]

- Started learning about where I would like to land : B/D local branch office, paraplanner, self funded RIA, Bank Trust and Wealth Divisions, or local planning offices / CPA offices.

Any comments or words of advice would be greatly appreciated!

Make a decision on which path you want to pursue then begin to call your leads.

Bob

[Andrew_G]

Update:

-Interviews are lined up with Edward Jones, Metlife and possibly Morgan / SB. I wouldn't even call them interviews since they are "intro" sessions designed to introduce their program to me and for them to see if I would make a strong fit with their group.

-Had some contact with Waddell & Reed, and Prudential and so far have no pursued these leads.

-Met with one asset management firm. This was from an old contact I had and there are some interesting ideas there, with me focusing more on the business development / lead gen and then shadowing the team for a year to learn the ropes.

-Back and forth as to if I should sign up for the BU program and use it as a refresher, or just skip it and start studying for the exam. I called the board and since I've already sat for the exam once I can take it again and do not need to complete the education requirement.

Joined the FPA.

Thoughts:

I have to find someone who just started their own RIA and went from there. The compliance paperwork is astonishing, so I have little faith that this can be managed while still prospecting for clients. Also, my safe guess on this is that it is going to take 3-4 years of lean lean times to get this to the point where the revenue is adequate. It almost seems to me that I need a part time job while trying to build this up.

Over the next few weeks I'll have gained more information on the programs mentioned in the first bullet.

[Bradly T.]

All firms listed (except Waddell) offer both bd/regrep comp and RIA/IAR platforms. A hard working marketer and good presenter certainly can make a living on bd comp with funds and annuities and life while slowly building AUM in managed accounts. Most listed firms should offer 12-24 month support income with increasing production quotas to qualify.


Jones, Met, and Morgan are very distinct business models from one another. All three should provide significant training and mentoring for first two years and career tracks with success potential thereafter. Regardless of choice, focus on what you have and can do and NOT on all the greener grass apparently on the other side of the fence. No model is perfect and neither is any BD or RIA.

[northwoodsjoe]

It seems to me that you are very organized and analytical. If that is the case, you will make a good planner. Having said that, these firms you mentioned are going to want production 1st. It will be sales, sales, sales and paperwork/planning next.
I realize you have had some success with sales. Just keep in mind, that will be your primary focus in the early years. If planning is your passion, get with a veteran advisor and do his/her planning for a while. Learn the rope from a pro and get you game plan together.



Waddell does have a managed money platform. But it is still a sub-standard company. Stay away from them..........regardless of whatever you do. Ed Jones has good training but I would say they are not the best for "career advisors".

Just my 2 cents.

[Andrew_G]

Joe:

Thank you for the input. The process thus far has been eye opening to say the least. You are spot on when you say the focus is on sales with the firms I mentioned. It comes down to this - 1 out of 5 entry level "planners" will not make it past two years. During this time, the firm will pay a salary between $45,000 and $65,000. Many of the planners I've interviewed mention that once the salary is cut off, they are still short when it comes to staying afloat financially.

I've been reading through Marc's Book ( Oversold and Underserved ) and this so far has been the best source of info. He raises a great point when he compares the fruits of my initial efforts to gain AUM as follows:

Working with one of the big players :

Land a 500,000 fee based account, charge the 1% fee and keep $2K assuming a 25-40% payout. High volume production required.

----or----

Working on your own, assume a 70-100% payout and earn $3,500 - $5,000. Mid level production required.

The key thing here is AUM. Working with a big player, in 2 years maybe I'll have 100-200 small accounts. It's going to be hard to be the type of planner that I want to be servicing so many small clients. But in order to justify my salary, I need to keep production in mind at all times.

Going on my own, or joining a smaller firm, I can go at my own pace, be more selective about clients vs. customers ( tire kickers ) and focus more on a particular demographic that in turn will standardize my planning focus thus making me more efficient. In this route, there will little if any salary.

These next two weeks I will finish up with my round robin interviews with the major players. Then I am going to switch gears and starting mailing a small cover letter and resume to local planners. My goal is to understand the timeline of growing my book of business on my own, or joining with a regional firm with less of a payout. Which has the more efficient break even? How does the production of a one person shop with a 40yr old career changer compare to an established shop with more variety in their practice?

[Bradly T.]

Sorry....but your payout assumptions are way off target. A 90-95% payout comes with huge ala carte expense menu and/or a large production requirement. Even if you are not BD affiliated and RIA only, the startup and operational expenses are BIG! My experience has been there's little difference in net payout between 60-90% with any solid BD.... they package expenses at 60% and nickel and dime you to a similiar net at 90% on "menu" expenses.


Do you have a business plan for start up? Lots of issues to work through PRIOR to counting your income. Do you have 50-100K in bank....can you live for 2 years with expenses but no net profit? Do you have the skills and business model to be profitable.....ever? Anyone who thinks they can avoid the marketing, sales, and management priority demands of any employer by simply "going independent" are like people who start resturaunts because they like to eat.



Your statistic of rookie survival is a lie perpetuated by recruiters....no where near 80% survive two years....they must be counting only those who made it 18 months first.

[Andrew_G]

The stat on Rookie survival was "1 out of 5", so I'm saying 20% make it, not 80%.

The big 5 recruiting process is a lot like their process on acquiring accounts. Sell it, bake it, and move on. To me, so far at least, it seems like everyone would love to bring on a new FA and have them work hard for two years. At the end, so few make it, but the best of the accounts will just be rolled into management with the old guard. It is a fantastic way to bird dog for new accounts, just like they have a fantastic way of finding new advisors.

For some of these ( Raymond James, Met..etc..etc) I am amazed that their recruiting process is so long, so detailed, so many steps....yet in the end so few of the candidates are making it. How is that possible if they've spent so much time researching their candidates up front? IMO, it comes down to the inability of most to distinguish the intangible value of trust. This is what these firms need. A candidate who exudes trust and can do wonders with the company name on their business card. Its hard to pick up on this during the interview process when so many are placing more value on the ability of the candidate to sell rather than grow AUM.

And you are right on start up fees. I'm well aware of that. Marketing costs alone upfront are going to be very large, so this is why I am leaning now towards joining an established B/D that needs an apprentice. I'll still be doing more research on the topic.

[Bradly T.]

As a former branch and district manager, I can tell you we/they don't like the model either....it is still an old production model....you must show dedication, tenacity, and results far quicker than you can demonstrate any expertise. Learning while succeeding (or failing) is an age old revolving door which, as you suggest, has an aggregation effect of net new business for firm (and manager and veterns in firm) despite the newbie turnover. I've seen a lot of great potential fail or exit due to relentlesly rising production quotas. Managers are managed themselves by unrealistic ivory tower production quotas which leave little room for professional development and are very focused on sales targets. Basically, if you can sell, the firm will teach you the "skills" they feel are important over time (or not) but you must sell first. Some will pay you modestly while you learn to eat what you kill and the deadlier you are, the safer your position.....no one messes with big hitters or "production forgives all else". Lots of managers hate their big producers (and vice versa) but they better not act against them or the RVP will put the manager back in "production" too!!


There's also too many "managers" who have been promoted (via Peter's principle) from great producers to incompetent managers and bring their enormous egos (and bad habits) to bear on rookies. It can be very caustic and confusing at least, if not repugnunt. That's why I say most of us who succeeded did so despite our beginning and not because of it. You WILL be strong if you survive!! But this process does work if the rookie is focused, hard working, trainable, self motivated, and self responsible (they have to know it's up to them to drive through and overcome adversity and self doubt and management!). There have been many posters here who claim things are changing in newer business models and I hope they are right.



But just a little secret 'tween me and thee......it is and will always remain true - the rainmakers make the most money and drive the success of every firm, big or small and of every kind and rainmaking is SELLING something to someone (product, service, concept, system...it don't matter). Someone MUST find and engage a prospect and then convert (convince) them into being a client and this process has nothing to do with professional craft skill or ethics. Skill and ethics are delivered (if ever) AFTER engagement and are of little help prior to (with the notable exceptions of reputation and referral generation).



Hope you find your starting place and a true mentor. Just don't expect to find the perfect place for the perfect beginning.