Hi all,

So I applied to be a financial advisor the other day with a insurance and securities company. I will graduate in May of 2008 and I took some tests for the company and placed very high. Needless to say I am getting called and emailed quite a bit to take the next step and I am heavily considering it.

I want to know what the pro's and con's are of the industry from people who are in it already. I would also like to know basica stats, how many sales meetings on average does it take to get a sale. I know that depends on the personal expertise of course but maybe if you all state what you know I can get a better idea of that.

The commission levels are pretty high IMO but I am just leary of quitting my full time job due to financial reasons. I would have to get my series 6, 63 and 7 to get the job so there would be some out of pocket expenses I am sure. The propoganda I got from the website and the recruiting guy stated the average for the first year person is 50K and the top 100 sales people in the company get about 180K a year.

What do you guys/gals think?

Hi!

It is a fine industry, but know what you are getting into. It is a good career out of college as your expenses and responsibilities are low. However, it takes a unique individual to be successful.

Pros: Control of schedule (once successful), above-average income, ability to help people reach their financial goals, and control over your income. Excellent retirement programs.

Cons: Highly competitive marketplace, difficulty differentiating oneself, keeping clients from making mistakes, breadth of knowledge/skills/experience necessary, legal liability (in some cases), marketing/growing business, high business expenses, etc. Sometimes poor benefits.

Sales: If you are in it for sales transactions, you'll be out of the business in under 3 years. People can perform sales transactions on the internet and in their own accounts, they don't need you for that. What they need you for is sound, prudent, appropriate financial advice.

Meetings: The national numbers go something like this... if you set 10 appointments, 3 will show. Of those 3, 1 will be a sale. Some companies are worse and few are better. Closely track your own personal ratios, and then you'll know how many appointments you have to have to reach the income you would like.

OK, first off, you won't need both the Series 6 and 7, because the 7 encompasses the 6. You'll just need the 7/63. The 7 is one of the toughest exams you'll likely ever take, while the 6 is a breeze. A good company will pay for all the testing.

Quitting your full time job is the wrong move if you don't have considerable savings. Save up as much as you can before taking the jump. You'll need money for business expenses (marketing, supplies, clothes, etc), and it is likely your income early on may be inconsistent. Managing your own finances during this time is no different than starting any other business, and you really need to focus on it.

The top 100 salespeople in the company have likely been doing it for a long time, and their numbers are unrealistic. Also, I'd question those numbers. The top 100 salespeople in my parent firm make closer to $750k per year! $180k seems pretty low to me if it is a firm that has been around a while.

Again, if you are in the industry for the money, you'll likely do OK initially, but you'll bomb out in the long-term. The industry is not for the timid, mind you, so having a good attitude and work ethic are great. But understand that it is about your client, NOT about what you can make.

A financial advisor career is a very serious endeavor. Make sure you are not getting "pumped". You see, financial services firms understand that it is a numbers game. They know how many people they have to hire, and of those, how many will succeed/fail, and of those, how many will be around after 5 years. Because of this, they ultimately don't care if you sink or swim. What I mean by "pumped" is "pump and dump". This is where the firm asks you to list out 100-200 contacts of yours, and then you try to get them as clients right from the get go. This isn't a big deal, but understand that if you sign up 50 of your closest friends and family as clients and then fail in the industry, they will be assigned a different advisor. From the firm's point of view, they got a bunch of new clients even if you fail, and if you succeed then all the better.

Last piece of advice: Choose the company wisely. In fact, choose the company that, if you were a client with millions of dollars, you would choose over the competition. If you can't answer why you'd choose this company over anyone else (from a client's perspective), then keep looking! Also, compare what financial planners do versus stockbrokers, insurance agents, etc. Because they all do things a bit differently.

Thanks for all the great advice, Mynion. One more question. In your opion is it easier to get hired from a large firm such as Edward Jones or any other large firm if you already have the licenses? I applied at Edward Jones and they didnt bat an eye at me so I am wondering what would help to get into one of those companies.

First, bigger is not always better. And Edward Jones is one of the fastest growing firms today. But firms like Edward Jones have name recognition, which can make marketing a little bit easier.

What I don't like about Edward Jones is their revenue sharing. Go to edwardjones.com and at the very bottom is a link to a page titled Disclosures. Read through them all.

Revenue sharing is simple. Edward Jones has 7 or 8 mutual fund families (companies) that give EJ kickbacks (read: big moolah) in exchange for being on EJ's Preferred List. Most EJ agents sell entirely off this list, and at one point I think they were actually required to sell ONLY mutual funds from this list (you can verify that last part, although it comes from a reliable source).

I'm sorry, but there are 25000+ mutual funds out there and I am not willing to concede that limiting your client's opportunities to the less than 100 mutual funds on the "list" is in your client's best interests.

This is the same problem I have with 401k's, Variable Annuities, and Variable Life Insurance. It's called the Cost of Limitation and it is a significant cost to your clients. Easy example: You live in a small town and the only hardware store for 50+ miles sells a hammer for $10. But if there were a Walmart nearby, you could buy the hammer for $6. The Cost of Limitation for this situation is $4. It cost you $4 due to the fact you have limited choices.

EJ is a good company and has some great benefits. They have excellent support for their agents and their training program has gotten rave reviews from those that have been through it. You could do a lot worse than beginning your career with this company!

Just know what you are getting into! You'll do fine...

Chris

Best of luck with it, Jim.

I'd definitely recommend with being wary of upbeat earnings prospects - what they can often fail to mention is that such earnings projections are based on On Target Earnings (OTE) and these aren't necessarily going to have a basis in practical reality.

Also, when it comes to sales, some people excel, and other people suck. The best will always cream a good earning from it, but these are the exception, not the norm.

Anyway, here's genuinely hoping you're able to make the best from it.

Thanks for all the great information guys. I am still looking over the information and trying to decide what to do, it is a big choice so I want to take my time with it.

Point well taken Jim, good luck in whatever you decide, and please don't hesitate to bring further questions here.

I think the main difficulty is starting. You need to build a client base before the fees coming in are significant, and many people don't trust a young college graduate as much as an older financial advisor. If the company you are working with is structured well and will provide you with good support for finding clients, the job will be better. Just be aware that there will be a sales component to the job.

Those are my biggest worries and I need to make sure I can get a decent client base before I will jump in. I know there will be sales and that doesnt really bother me much cause I pretty much do sales now for my full time job and my own business.

From my experience in the financial industry for several years now, my advice would be to do a personality or career profile. Your profile will enable you to see if you are suited for this career.

After many years in sales, & going against my nature, (which I found out later when I did the profiling) I don't enjoy the work that much though it give me fairly good income.

Would I have earned the same income have I stuck to my old profession as an engineering grad, I think I'd probably do better, as an engineer. But I'd never know.

What I do know is that God wired us up in some ways and someone of us, don't that well in certain type of industries. you may still go well but you could be doing great if your jobs suit your like a glove.