There's a lot that's appealing about being a financial advisor. You can make your own hours, work from anywhere, and take on as many or as few clients as you like. For finance professionals looking to make a career change, it's an increasingly popular choice and as baby boomers begin to plan their savings for retirement and the number of seniors grows, so does the demand for such services.
But with all its perks, too often folks stepping into the job are naïve about how much planning and work they need to do to succeed as an advisor. "You just can't hang out a shingle and call yourself a financial planner," said Jeff Rattiner, president of Colorado-based JR Financial Group Inc. and author of the book "Getting Started As a Financial Planner." From training and certification, to developing a client base, there are a number of steps to take on the road to success as an advisor.
Do Your Research
Figure out who you want to work for. You can start out as a financial advisor through a brokerage firm, a bank, a financial advising firm, or independently. Kevin Alm, general partner for financial advisor training at investment firm Edward Jones, suggests interviewing with a number of places to determine which one best fits your work-style and goals. For brand-new advisors with limited experience, working for a firm that offers more support and training might be a smart approach, said Alm. "Every firm of every size is going to have some best-practice method of identifying prospective clients," he said. Take the time to figure out which one you like best.
While many decide to go into financial planning because of the high earning potential, your first year may not prove nearly as lucrative as you'd like. At a larger traditional firm, you can expect a salary coupled with commission and a performance bonus, while taking an independent approach will mean you likely won't have a salary but will have higher commission payouts.
Regardless of the approach you take, it's reasonable to expect to make from $50,000 to $60,000 in your first year, with annual income increases of $20,000 to $30,000 if you're putting in the work, said Alm. "Early on, you need to be willing to take a lower income," he said. "You have to be willing to give up some instant gratification for a long-term return."
Find a Mentor
Learning from someone who has been at the job for a while and seen success will really help you get started. While one firm might pair you with a mentor or put you through a rigorous training process, others might provide less structured mentorship. At Wells Fargo, for example, new financial advisors are put through a 31-week training program. Elsewhere, you might find yourself on your own when it comes to getting a mentor. In this case, Rattiner suggests contacting your local financial planning association, many of which have mentoring programs that can hook you up with someone to shadow.
But try out a number of mentors before settling on one, said John Napolitano, CEO of U.S. Wealth Management LLC, a Braintree, Mass.-based firm and author of "The Complete Idiot's Guide to Success as a Personal Financial Planner," that way you can determine whose style you like best.
Identify Your Network
One of the trickiest first steps when getting started is developing a client-base. But thinking strategically about who you know and being proactive about reaching out to them is really important, said Napolitano. Try to get as many clients as possible early on. "Regardless of how technically skilled you are, you have more convincing to do of people than technical work in the beginning," he said. "If you're never successful at the convincing part, you'll never get to show how good you are at what you do."
Rookie advisors should aim to have a network of at least 750 to 800 households they think would be willing to invest between $8-to-$10 million in their first year, said Scott Critchfield, senior training manager at Wells Fargo Advisors.
When you start out, it's a time to get your name out there and figure out what kind of clients you want to work with moving forward. But the only way to do that, said Critchfield, is to work with as many different people as possible. Clients might initially come to you looking for basic advice like how to roll over a CD or 401k, for example; helping them with smaller issues will give them the confidence to go back to you later with more complex problems. "Get as many customers as you can in the first year so they've got a reason to talk with you," he said.
Sorting Through Certifications
Start researching what certifications you'll need and how you need to prepare for them. For example, you'll need to be professionally licensed to sell stocks, bonds, insurance, and mutual funds. While exams for the Series 7 certification and others that provide you with the necessary licensing only take about a week to study for, each of these require you to have a sponsor to sit for them, said Rattiner.
Planning to become a Certified Financial Planner is also something to keep in mind. While a CFP certification is not necessary, it will train you in useful areas like education planning, estate planning, small business owner planning, personal insurance planning, employee benefit and retirement planning, and income tax. "Having a CFP is really convenient," said Rattiner. "It gives you the education you need to be conversant in those areas."
Critchfield advises new financial planners hold off on working toward the CFP in their first year when developing a client base is most critical. Instead he suggests getting certified as a Chartered Retirement Planning Counselor, a designation required of all first-year planners at Wells Fargo. "It's a good head start on that designation path towards a CFP," he said.
Another option to consider if you have the financial means, said Napolitano, is a masters degree in financial planning.
Make a Work Model
What are you going to do each day to build your client base and get your business going? Whether it's making a certain amount of phone-calls or face-to-face contacts or having a process to follow-up with your clients, developing a routine early on is critical to making sure you're working as efficiently and effectively as possible. At Edward Jones, for example, new advisors are expected to make 25 face-to-face contacts a day in their first year. "People who are successful are very systematically daily, measuring what they are doing," said Alm.
Develop a Message
While your first year on the job is a time to discover what areas most interest you, being able to articulate what services you offer to clients will make you more marketable and allow them to refer you to other people more easily. Begin to develop a specific message about the work you do. What areas of their financial planning can you help clients with?
"The sooner you can identify your niche and your direction, the better opportunity you have to develop your business," said Critchfield.
While becoming a financial planner has its perks -- from setting your own hours to working from wherever you like -- getting yourself on the right career path requires self-discipline, planning, and a willingness to put yourself out there. Take the time to do your research, identify your client base, develop a work plan, get your certifications and start thinking about the message you want to put out to clients. More than anything, seasoned advisors and professionals in the field say resilience, compassion and a positive attitude are what you need for long-term success.
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