There are a great many people who believe that they would like to be a financial advisor. It seems that some people are very much wired to enjoy topics around personal finance. In the past couple of decades, and more intensely in the last 10, the interest in personal finance has evolved an entire online culture. I completely understand the fascination and I am going to share with you why I love being a financial advisor from my perspective of being one for just over 20 years.
To “normal” people it probably seems a bit strange. I mean, most people don’t get into discussions about fund expenses, retiring in their 30s, or creative passive streams of income. Just went to a social gathering on Saturday evening (outdoor with distancing) and none of that came up in casual conversation.
But to people like me, those sorts of discussions are always welcomed. We’re a special sort of people, that’s for sure.
My obsession with all things finance and really business began in my teens. For Christmas in 1991, my grandfather gave me a few shares of Merck. I was 14 at that time and I was fascinated with the idea of owning the stock. Back then you still got actual certificates, I thought they were so cool.
Every day I’d grab the newspaper to check the price of the stock. Kinda funny to think about how far removed we are from all that now. I get real-time stock quotes on a phone that I stick in my pocket and carry around with me everywhere.
After going to college, I worked briefly in a couple of jobs that were what of the “I need a job and they’re paying” variety. In the summer of 2000, I took my first position in the financial services industry, had the title “financial representative”. The reasons I had that title and not “financial advisor” are mind-numbingly boring. To explain it all completely would require a lengthy discussion of all the various regulators involved and their various opinions about titles.
The basics are that I got a license to sell life insurance and another securities license. Later I got other versions of each, but the specifics don’t matter, they just allowed me to offer my clients a different type of asset or a different type of insurance product. Thus began my official career in the financial advice business.
Personal experience of seeing bad financial advice
As time moves on and you spend 20+ years witnessing the aftermath of really bad financial advice, you become more motivated to change the way things are done. And to do what you can to help rid the world of the worst of it. Of course, that’s pretty idealistic, I understand, but it is a worthwhile pursuit that provides a little extra motivation for me when things get really tough.
One of the more often scenarios I have experienced is people who are spending thousands of dollars every year on poorly designed whole life insurance.
Notice I didn’t refer to it as bad whole life insurance. In my opinion, it’s hard to call it bad per se when it has a death benefit that will pay when the insured passes away. Though most of our time is spent focused on helping people maximize the growth of cash value in a whole life policy, you should never discount that it still has a death benefit.
What I’m talking about more specifically is when someone reaches out to us (as they do quite often) because they’re looking for a second opinion on a policy they already own and paying $20,000 a year for as an example. They are rightfully concerned that despite paying $100,000 in total premium over the last five years their policy cash value seems to be struggling to grow. Many policies that are poorly designed may have less than $50,000 after five premium payments of $20k annually. Seen way more of them than we should have.
When you see this sort of thing over and over and over, it provides a constant reminder of why it is important to keep going, to keep spreading the message that we have been putting out there for the last nine years. The hard work of being a financial advisor becomes much more of a mission to rescue people from bad advice and poor execution (of whole life insurance in particular).
Why do so many financial advisors fail?
Ahhh…here’s where the rubber meets the road when looking at being a financial advisor and for us as well. One of the more interesting aspects of being an advisor is that you need to be technically proficient in a wide array of financial problem-solving. Most of us, enjoy that part of the job. For many, that’s what the initial draw to the profession was and it’s what we imagine our lives being.
In a perfect world where you close your eyes and visualize the perfect day as a financial advisor, you imagine clients sitting in your office or on a zoom meeting (it is 2020 after all) and being pleased with your work as you listen to their problems and figure out the best ways to solve them. Ultimately, the greatest satisfaction comes from knowing that you, as an advisor, can help your clients connect solutions to achieve their desired outcome.
Then there is the reality of being a financial advisor. In the beginning, especially, there is no real difference from opening any other business. You have to find clients and you have to persuade them that you are the best person to help solve their financial problems. Easy to say, easy to write, but infinitely more difficult to figure out. At the end of the day, you have to find some way to attract the right clients or you have to develop an outbound sales strategy that you can repeat daily. Otherwise, your new career will produce no revenue and it will quickly become your old career.
Let me be explicit so that there is no confusion: you have to become an expert in marketing and sales. The skills in performing the functions of the job itself are secondary. I am not saying the actual skills and knowledge are unimportant. Just pointing out the reality that having knowledge doesn’t actually pay the bills. The only way you are going to have long-term success as a financial advisor is to find a systematic way to get your particular message in front of your desired group of clients in a way that leaves them wanting to work with you.
And it’s really very interesting because sales ability and being technically proficient at giving good financial advice are two separate universes. Many financial advisors never solve this riddle and as such many talented people fail as financial advisors.
What does it take to succeed?
Ahhh, yes, let’s end this on a positive note. Please keep in mind this is accumulated knowledge from my own experience. There are multiple paths you can take to create success as a financial advisor. But I’m going to share two distinct paths here just to give you a range.
- You can work with an advisor that has an existing practice. In many cases, successful advisors are extraordinarily busy as the demand for their services begins to exceed their ability to effective deliver. These successful advisors are oftentimes looking for less experienced advisors or even just advisors that have a different set of skills than themselves to help balance the workload. We know a handful of people that have found success in working first as an employee in this capacity and later as a partner.
- You become a student of marketing and you hone your message to specifically target the group of people that you would like to reach. The advisors that we know personally with the greatest success tend to specialize in reaching one specific group with one specific message. That doesn’t mean that the work they do for these clients is single-minded. No, they still do more comprehensive work for their clients but they are able to attract those clients by using a single focus. These advisors also tend to build very process-oriented practices so that they can efficiently work with many clients and deliver great results. It’s not easy or simple and there’s no one way to achieve this success but it is definitely doable with enough focused effort (some capital to invest in marketing can help as well).
I love being a financial advisor because there are really no two client situations or problems that are the same. In over two decades of doing this, there are really no two days that are the same and for me, that provides tremendous motivation. Plus, I get all the flexibility and perks of running my own business. It’s not without challenges but it is fulfilling and it never gets boring.