There are very many people who think they would like to be a financial advisor. It seems that some people are very wired to enjoy topics related to personal finance. In recent decades, and more intensively in the last 10, the interest in personal finance has developed into a whole online culture. I fully understand the fascination and I will tell you why I love being a financial advisor from my perspective of being one for over 20 years.
For "normal" people, it probably seems a little strange. I mean, most people do not get into discussions about fund spending, retirement in the 30s, or creative passive income streams. Just went to a social meeting on Saturday night (outdoors with distancing) and none of it came up in a casual conversation.
But for people like me, such discussions are always welcome. We're a special kind of people, that's for sure.
My obsession with everything related to economics and real business began in my teens. At Christmas 1991, my grandfather gave me some shares in Merck. I was 14 at the time and I was fascinated by the idea of owning the stock. Then you still got actual certificates, I thought they were so cool.
Every day I would grab the newspaper to check the share price. A little fun to think about how far we are away from all that now. I get stock quotes in real time on a phone that I hold in my pocket and carry with me everywhere.
After going to college, I worked briefly in some jobs that were what kind of "I need a job and they pay". In the summer of 2000, I took up my first position in the financial sector and was given the title "financial representative". The reasons why I had that title and not "financial advisor" are incredibly sad. Explaining everything completely would require a long discussion about all the different regulatory authorities involved and their different views on 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 details do not matter, they only allowed me to offer my customers a different type of asset or a different type of insurance product. Thus began my official career in financial consulting.
Personal experience of seeing bad financial advice
As time goes on and you spend 20+ years witnessing the consequences of really bad financial advice you become more motivated to change the way things are done. And to do what you can to free the world from the worst. Of course, it's pretty idealistic, I understand, but it's a profitable endeavor that gives me a little extra motivation when it gets really tough.
One of the more common scenarios I have experienced is people spending thousands of dollars each year on poorly designed whole life insurance policies.
Please note that I did not call it bad whole life insurance. In my opinion, it is difficult to call it bad in itself when it has a death benefit that will pay when the insured dies. Although most of our time is spent helping people maximize the growth of cash value in an entire 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 (which they do quite often) because they are looking for a second opinion on a policy they already own and pay $ 20,000 a year for as an example. They are rightly worried that even though they have paid $ 100,000 in total premiums over the past five years, their insurance value seems to be struggling to grow. Many poorly designed insurance policies can have less than $ 50,000 after five premium payments of $ 20,000 per year. Seen more of them than we should have.
When you see this kind of thing over and over again, it provides a constant reminder of why it is important to keep going, to spread the message we have been putting out for the last nine years. The hard work of being a financial advisor becomes much more of a task to save people from bad advice and poor performance (of the 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 too. One of the more interesting aspects of being an advisor is that you need to be technically proficient in a wide range of financial problem solving. Most of us have a laid back attitude when it comes to painting a picture about ourselves. For many, it is the first attraction to the profession and it is what we imagine our lives are.
In a perfect world where you close your eyes and visualize the perfect day as a financial advisor, you can imagine customers sitting in your office or at a zoom meeting (it is after all 2020) and are happy with your work when you listen to their problems and figure out the best ways to solve them. In the end, the greatest satisfaction will be knowing that you as an advisor can help your clients connect solutions to achieve the desired result.
Then there is the reality of being a financial advisor. In the beginning, in particular, there is no real difference from starting another business. You need to find customers and you need to convince them that you are the best person to help solve their financial problems. Easy to say, easy to write, but infinitely harder to figure out. At the end of the day, you need to find some way to attract the right customers or you need to develop an outbound sales strategy that you can repeat daily. Otherwise, your new career will not generate any revenue and it will quickly become your old career.
Let me be clear so that there is no confusion: you have to become an expert in marketing and sales. The skills in performing the job itself are secondary. I am not saying that the actual knowledge and skills are unimportant. Just pointing out the reality of having knowledge does not actually pay the bills. The only way you will have long-term success as a financial advisor is to find a systematic way to get your specific message in front of your desired group of clients in a way that makes them want to work with you.
And it's really very interesting because sales ability and being technically proficient at providing good financial advice are two separate universes. Many financial advisors never solve this mystery and therefore many talented people fail as financial advisors.
What does it take to succeed?
Ahhh, yes, let's end this on a positive note. Remember that this is accumulated knowledge from my own experience. There are several paths you can take to create success as a financial advisor. But I will share two different paths here just to give you an interval.
- You can work with an advisor who has an existing practice. In many cases, successful advisors are extremely busy as the demand for their services begins to exceed their ability to deliver efficiently. These successful counselors are often looking for less experienced counselors or even just counselors who have a different set of skills than themselves to balance the workload. We know a handful of people who have succeeded in working first as an employee in this capacity and later as a partner.
- You become a student in marketing and refine your message to specifically target the group of people you want to reach. The advisors we personally know with the greatest success tend to specialize in reaching a specific group with a specific message. This does not mean that the work they do for these customers is one-sided. No, they still do more extensive work for their customers but they can attract these customers with a single focus. These advisors also tend to build highly process-oriented methods so that they can work effectively with many clients and deliver amazing results. It's not easy or simple and there is no way to achieve this success but it is definitely feasible with enough focused effort (a little capital to invest in marketing can also help.)
I love being a financial advisor because it really is not there are any two client situations or problems that are the same. For over two decades of doing this, there are really no two days that are the same and for me it gives a huge motivation. In addition, I get all the flexibility and benefits of running my own business. It is not without challenges but it is fulfilled and it never gets boring.