Reader e-mail: Advice on becoming a Financial Planner (CFP)

I received this email from reader, Christy, regarding a career change to financial advisory:

Hello. I saw your email and advice on a forum and was wondering if you would be willing to advise me.  My name is Christy and I am 31 years old and will be graduating with my MBA in December. I have four children (young ones) and am looking to return to the workforce after being off for a year and a half. I have fourteen years of accounting experience and am wondering if I should become a financial advisor. I do not have ANY sales experience but I am a likealbe person and a very hard worker. I interviewed with Merrill Lynch and have been given the opportunity to go through their training program. I am not sure if this is what I want to do. I need advice. I want to know if anyone has worked for them and also if this is the best company to go through? I also am curious to what the actual job entails? How many hours do I really have to work over 40 and would working my forty plus maybe a Monday night and Saturday morning would do? Also, would it be more feasible to just go get a job or do this? Any advice would be greatly appreciated?
Thanks
Christy

I have received similar emails inquiring about the CFP exam and about starting a career in financial planning, and will provide my response to Christy below.  My advice won't apply the same to everyone, because Christy's situation is not the same as most.  If anyone else who has any experience in the financial services, financial planning, investment management, etc. business can add anything I, and I'm sure Christy, would appreciate it.

My response:

I guess the first question that I would ask is, "why would you want to be a financial advisor?"  There's no right answer.  Well, I take that back.  There are many right answers, but perhaps no wrong answer.  Heck, "to make lots of money" is an acceptable answer.  As long as you are honest with yourself and ethical with your clients.

Here are the typical reasons people are attracted to this business (in no particular order):

1. The money can be good
2. The work is interesting and challenging
3. You get to help people find solutions to their money problems
4. You enjoy sales and marketing
5. You have an interest in stocks and markets

Did I miss any?  Think hard about this one.  This is going to determine a) whether or not you should become a financial advisor, and b) which company you should join.

I'm not going to speak about the quality, culture, or potential at any particular firm, but I will share some general thoughts and experiences.

First, this is a business of sales.  It is high level sales, not used cars or timeshares, but sometimes life insurance.  If reason #3 is the one that excited you the most, understand that in order to help people with their money, you have to convince them that you are the best person to do that and that your advice is worth paying for.  This is in the midst of brokers, insurance salespeople, bankers, and a host of others competing for their business, each blurring the lines between one another.

I can't emphasize this one enough.  This is a business of sales.  If sales turns you off, stop now.  You don't have to be Dale Carnegie or Zig Ziglar, but you can't be afraid of sales.  Being a "likeable person" as you mention is very important.  I have found that former engineers are sometimes attracted to this business because of the analytical aspect of stocks and markets.  However, I have also found that former teachers are often more successful because selling is often teaching.

The work and the service that you provide.  It is important to understand what is the primary service of the firm that you are considering.  Is it stocks, mutual funds, managed accounts, insurance, annuities, financial plans?  All of those may be available to clients, but their primary business will be the one that your employer will want you to focus on.  Most insurance companies sell investments.  But if you are working for one and are not selling any insurance, you will likely be out of a job.

If your primary interest is in stock and markets, I would encourage you to follow the route of analyst.  Get the CFA, and be a junior analyst somewhere.  With your accounting background and MBA, some management company or mutual fund would snatch you up in a hurry.  It also depends on where you are located.  If you are Boston or New York, the world is your oyster.  Los Angeles and San Francisco offer some opportunity, but not as much.  If you are in a small town, this may be a difficult road.

If you are serious about "helping people", remember my point from above, "this is a business of sales."  If you are okay with that, then the next thing I would tell you is to begin studying for the CFP.  Helping people properly means covering all aspects of their financial lives.  If this is the primary objective, avoid the brokerage houses.  Find a local CFP and apply to be a junior planner, para-planner, assistant planner, or whatever they call it.  The pay will suck, but you'll learn a lot.

I guess the other question that I would have for Christy is, why don't you want to be an accountant anymore?

As far as the day to day, it varies some and depends on where you work.  It is definitely not a "punch in, punch out" sort of job.  More than 40 hours is expected, and how those hours are put in may vary.  Weeknight "call nights" are common.  Saturday or evening seminars or meetings with clients are also common.  If you keep market hours, your hours will depend on your location.  If you are on the West Coast (as I am), you will begin your day at 6:30 or earlier, and may be done around 4:00pm.  The good part, as a parent, you may be home early enough to see your kids.  On the other hand, leaving at 4:00pm may be difficult.

What does the job entail?  Again depends on the place, but mostly, lots of phone calls.  Hopefully, you will be given a list or have a way to cultivate a list of "warm calls."  This would be people who have expressed an interest in your firm, or people whom you know.  You will call them to schedule appointments to solicit business and referrals.  If you are afraid of the phone or afraid of making "telemarketing" calls, this may not be the right business for you.  No, you aren't a dinner time cold caller, but some folks on the other end of the line may make you feel that way.

Well, that's my advice.  I hope it's helpful.  Again, comments from anyone else who has had any experience in this business would be fantastic!

 

Comments

[Adam]

My roomate is an advisor for Ameriprise. He started working for them directly out of college (after taking a couple months to study for and pass a bunch of exams like the series 7, etc) His work schedule is pretty ridiculous. For the first year or so, they have 3 days of vacation i believe, which they cannot take consecutively. "Hours" are usually regular office hours during which they try to have as many meetings as possible with potential and current clients. Many nights they have "events" such as wine tastings or other places where ameriprise has a table where he tries to get numbers to call later. He also has to work every saturday at least from 8-12. Base pay is very low, basically everything he makes is from commissions. All in all, pretty brutal in my mind.

[Christy Taylor]

Thanks for both of your comments and for posting to this blog for me. My next question is: What do you think of Mass Mutual or Merrill Lynch? Anybody out there heard of them? When you say low base pay, what does that imply? What salary range should I be looking for for a training program? I am in the Midwest.

[Deborah]

Interesting post. People around me have been saying I should turn my number and stock sense into a job in the area and I've been kind of, why would I want to do that?

I only started looking at investments this year but I've done very well, ahead of the Dow by 377% since I started.

Your post has convinced me that just investing for myself is a plan that should work well enough for me.

[Goalzilla]

Hey, I just started my first entry-level financial planning job just recently. It's with a small, independent firm in the Midwest. (To follow my experience, visit my blog, link below. There is a post delay of about 2 weeks.)

My package: Paraplanner, $26k, 5 days paid vacation/quarter (4 weeks/year, with the possibility of earning 2 more for participating in company sponsored charity outings), SIMPLE IRA (3% match), health, with cafeteria for vision, dental, short/long-term disability, and life.

My qualifications: ~3.7 GPA, BS in Financial Planning, internship, and strong recommendation from eminent professor (most important).

My opinion: Don't work at any organization that has an active hate site (Ameriprise, Primerica, etc.), becaus they have a hate site for a reason. Don't work anyplace that starts you out by cold-calling. Don't work anyplace that has high turnover. Avoid a highly corporatized situation.

It will be very difficult to find a place that meets these simple requirements. It took me over 4 months to find my current place - but I am very happy I waited.

Here are my suggestions:

1) Complete your CFP education on your own dime. My degree qualifies as CFP education, which was a help.

2) Join the FPA (Financial Planning Assoc.) as a student if you can, otherwise find a way to finagle your way into the meetings. Networking is critical - talk to people! (NAPFA also)

3) Find good job boards like the FPA Career Corner and NAPFA's Career Center. They'll give you a good idea about expectations in the industry.

4) Get some financial planning software on a trial basis. If you're already familiar with the program, you'll be more employable. (Naviplan, if you can get it, Morningstar Principia, same same: they're the big ones.)

5) Find a mentor - don't be afraid to ask for help and be rejected a few dozen times. If you're sincere and enthusiastic, you'll eventually find someone. Then, shadow them (if you can, they might not let you due to client confidentiality). Interview them, pay for lunch, ask questions, write thank-you notes.

6) Be an intern. Most places require experience, so you should definately try the job before you commit. You probably won't be paid. Suck it up. The firm is sinking money into you by doing background checks and holding your temporarily incompetent hand.

7) If this sounds like too much work, don't become a financial planner! This is analagous to the continuing education, networking, and mild rejection you will experience daily. If this sounds like fun, then press on.

Good luck!

[bigbuddha]

I've been a Financial Planner for 8 years. My advise would be to work for a small/mid firm for a few years and save and save and save so you can then by your own existing client base. Ownce you own a client base which provides a continues income stream either via commissions or adviser service fees is a gold mine which will keep paying for yours. At this point you'll be able to pick and choose which clients to take on, which is the best situation because you then don't have to take the rats and mice of the world who are really "full" clients.

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Being a financial adviser is an attractive and well compensating career opportunity although this does not apply to all. For me, it is best for Christy to decide first whether she really wants to be a financial adviser or if she wants to take on a completely different career path from it.

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