Financial Advisor/Planner Career

[Field123]

Ever since I discovered MMM and similar personal finance sites, I've really developed a strong interest and passion for maximizing my knowledge of every aspect of personal finance. I imagine that sentiment rings true for many of this forum's regular readers and contributors.

The question for discussion is, whether anyone has (or is considering) using our mustachian knowledge and perspective to make a career in financial planning?

Certainly such an endeavor requires far beyond what can be gleamed on this and other websites (credentials, licensing, financial issues for non-FIRE people), but I would think an honest, mustachian financial advisor would be worth their weight in gold.

Thoughts on this? And for those in the industry, what would be the recommended steps to pursue such a career. I ask this question specifically because I am interested in this for me (In my 4th year as an Attorney currently, education is a JD/MBA) and also for everyone else who may have had similar ideas.

[Linea_Norway]

On TV I sometimes see people who are in financial trouble, like having debts on multiple credit cards. They are then helped by some economic advisors to straighten things up. Those advisors are always saying very sensible, Mustachian things. I would consider that to be a nice job for myself. I noticed that these people typically studied consumer economy and are employed by a bank.
For myself, I am too much settled to switch careers now. Although it might be a nice part time job beside FIRE.

[KMMK]

I'm working on it but am not actively seeking clients yet (prep phase is long).
Not sure how it will go but I had to try.

[Frugalman19]

Im a financial planner (CFP). I use MMM principles with almost every client I talk to. Especially the young ones. One of the perks that I give my clients is that I will work with their children at no cost and help them get set up financially. I have referred tons of people to this site as well as Dave Ramsey.

Unfortunately, there is no way for you to make money with the MMM principles as an advisor. I use the advice to help those who have already retired or who are thinking of retiring get comfortable spending alot less and living off of a fixed income.

[trollwithamustache]

Miss Troll works for an independent advisor, so I only hear the complaining parts when she needs to vent :)  The advisor is first and foremost a salesman.  That's how he makes his living. He's actually a good guy, he genuinely cares about his clients, he  tries to invest their money well and has been switching over to lower cost vanguard type stuff.  He tries to get them to follow a financial plan ect.

But, first and foremost he needs to sell his services to get people signed up. Then he needs to sell his plan to them.  And then the market moves or Trump gets elected and everyone panics and he needs to re-sell them on his services/plan.   His plans are way more David Ramsey than they are MMM, and that's a tough sell already.  The advisor is making his clients lives better and more secure but they are no were near MMM type levels of planning and I suspect the clients wouldn't tolerate that.   But if you can sell, and people ignoring big chunks of your plan doesn't bother you, it appears to be a very lucrative field and very amenable to early retirement / working part time type set ups.

[Cwadda]

You could become a fiduciary. IMO this is one of the only ways of doing it.

[NESailor]

I'm a CPA working as a corporate accountant.  I help friends and family with some simple financial planning advice.  Just testing the waters basically.  I'd like to get into it but only as a very minor extra income stream.  The problem is that those who need your help the most are least likely to seek it out.

Also, people not following your advice can be an interesting experience.  If you're not OK with it then this is probably not for you.  As an example - I reviewed a friendly couple's "books" a few months ago.  They're doing great by most standards and I told them so.

"If you just stay the course you'll be relatively rich by the time you're 60 and will retire in at least as much comfort as you have today.  If you're only a bit more careful you could bring that down to 55.  If you make a serious effort at this you could have a million saved up by 50".  Their interpretation?  One week later they financed a brand new car.

[Travis]

I've thought about doing this on a volunteer basis after I FIRE. I can't see it being a profitable venture since truly sincere financial advice should consist of things like not spending too much money on someone like me. While new soldiers get financial briefings when they show up to new duty stations, it's never long enough to teach much and it's not consistent enough to stick. I'd like to sit somewhere on post and just dispense advice, review budgets, or give classes to groups often enough to make a difference.

[deeshen13]

I'm a Financial Planner at a top ten (in assets) Registered Investment Advisor (RIA). I have passed all 3 levels of the CFA exam, which was very important in breaking into the industry. At the end of the year, I will finish my MBA with an emphasis in investment management. Finally, the nice part of getting your CFA is that the CFP board allows you to sit for their exam without completing the coursework. So in due time I will be MBA/CFA/CFP trio.

The reason I mention this is that it is a very tough industry to break into without advanced designations or connections. I would strongly consider the CFA/CFP combo if you are serious about becoming a planner or advisor. Additionally, as a previously poster mentioned, many advisors are just salesmen in disguise. Of the approximately 1M+ people in the US who identify as advisors, roughly half are insurance agents (suitability standard), half are stockbrokers (suitability standard), and 1% are RIA members (fiduciary standard). Important to know the difference.

It's a very rewarding career if you can find the right fit. I'm at a firm which charges 1% AUM, and we utilize low-cost index funds for the most part (weighted average expense fee = 0.44%). Yes, most advisors don't bring enough value to their clients to earn 1%. However, there are many people out there who are missing terrible low hanging fruit that we on this board take for granted. Maxing tax-deferred and tax-advantaged accounts; HSAs; tax-minimization strategies; staying invested (hand holding) through volatility; social security filing strategies; estate planning; distribution strategies; pension analysis; etc. -- those areas allow a good advisor/planner to bring a lot of value to people and earn their fee. But undoubtedly it's tough to find these people who are knowledgeable enough to be value-added and additionally take the fiduciary rule seriously.

[Frugalman19]

I'm a Financial Planner at a top ten (in assets) Registered Investment Advisor (RIA). I have passed all 3 levels of the CFA exam, which was very important in breaking into the industry. At the end of the year, I will finish my MBA with an emphasis in investment management. Finally, the nice part of getting your CFA is that the CFP board allows you to sit for their exam without completing the coursework. So in due time I will be MBA/CFA/CFP trio.

The reason I mention this is that it is a very tough industry to break into without advanced designations or connections. I would strongly consider the CFA/CFP combo if you are serious about becoming a planner or advisor. Additionally, as a previously poster mentioned, many advisors are just salesmen in disguise. Of the approximately 1M+ people in the US who identify as advisors, roughly half are insurance agents (suitability standard), half are stockbrokers (suitability standard), and 1% are RIA members (fiduciary standard). Important to know the difference.

It's a very rewarding career if you can find the right fit. I'm at a firm which charges 1% AUM, and we utilize low-cost index funds for the most part (weighted average expense fee = 0.44%). Yes, most advisors don't bring enough value to their clients to earn 1%. However, there are many people out there who are missing terrible low hanging fruit that we on this board take for granted. Maxing tax-deferred and tax-advantaged accounts; HSAs; tax-minimization strategies; staying invested (hand holding) through volatility; social security filing strategies; estate planning; distribution strategies; pension analysis; etc. -- those areas allow a good advisor/planner to bring a lot of value to people and earn their fee. But undoubtedly it's tough to find these people who are knowledgeable enough to be value-added and additionally take the fiduciary rule seriously.

I would like to add, I applaud the fact that you went the CFA route. But most planners should not waste their time with this in my opinion. I have never seen a CFA who actually stayed as a financial advisor, because they could make so much more money elsewhere and they are so underutilized as a planner. The CFA process is a 3 year plus process that ultimately wont make you a better planner for people.

Just coming from someone who is in the industry(CFP who has an SEC registered RIA), you absolutely do not need to get your CFA or MBA to get into the industry. There is nothing about having a MBA or a CFA that will make you a better planner if you plan on working with normal people. The investing of assets is literally 5% of the job, the rest is planning and continued monitoring.

All that being said if your goal is to manage large corporation's finances (which MMM principles wont apply) than yes they will matter, but for being a financial planner for a normal person, just being a CFP puts you in the top 10% and you are still a fiduciary.

[mousebandit]

I'm considering doing this, but from a different angle than the CFA/CFP route.  My goal will be to have a small clientele and I will offer Abundance Coaching.  I know that probably sounds hokey to most of my MMM friends, lol.  However, it will resonate with the people I want to work with, and won't tie me into the regulations that CFP deal with.  I will be looking to develop long term relationships with the clients, moving through the different stages of financial understanding, from budgeting, through debt elimination, to tax planning, investments and savings and FIRE planning, to estate planning, to nonprofits, foundations and philanthropy.  There's a lot of different services I can offer. 

I am starting my new side gig of tax preparation in a few weeks, and am loving the opportunity to see what is being offered for financial planning by my employer and comparing it to what I see as potential needs.  I'm also taking advantage of the tons of free training I can get from this employer.  From what I've seen so far, the certified crowd is hugely restricted in what they can and do offer and there is very little thinking outside the box.  That's what I see as a big opportunity.

I am planning on starting my Abundance Coaching on a very limited basis after this tax season. 

[Trouble]

I am just starting out in my financial planning career, and I think a certain amount of credit has to go to blogs like this for getting me there. When returning to work after a 4.5 year break having kids, I decided to do the thing I always read and talk about.
My long term goal is to help young people achieve their goals like retiring early, but at the moment am just working with whoever walks into the office and helping them maximise their current position while still training up.
I'm in Australia so we have some differences to you guys, but the goal is a CFP and a Masters in Financial Planning.

[Playing with Fire UK]

I'd like to do something like this post-FIRE, predominantly helping lower income folk. I don't think there will be any money in it for me.

I like Mousebandit's idea of Abundance Coaching (although not the name, sorry!)

[daymare]

So, I did this.  I work as a financial planner at an RIA - we are fee-only and fiduciaries (and advocate long-term investing with low cost index and DFA funds), and I have no business development requirement for my role at this point.  I'm salaried and have a bonus (as far as compensation structure).  I found the whole process of getting into the industry really frustrating, but am really happy to be in this industry and am excited about my future career trajectory.  (Just passed my CFP exam.)

Here's how the process went for me: I have a BS in econ+ math, and a finance degree from a top school.  When I wanted to explore my options for getting into financial planning, I went on the NAPFA website (fee-only advisors) and emailed a senior person at every firm in my city to get coffee and ask for advice (which was ultimately very fruitful and led me to other people who eventually introduced me to a recruiter through whom I found a job).  I read this book - https://www.amazon.com/Want-Financial-Planner-Guide-Career/dp/1603530150 .  I joined the FPA (financial planning association - not only fee-only, but bigger locally than NAPFA) because they had a cheap student membership, and attended all events in the area.  Started taking CFP classes at the recommendation of some people I talked to.  Attended NAPFA study groups.  Ultimately applied for and received scholarships from both organizations for conferences.  Got introduced to Caleb Brown - http://newplannerrecruiting.com/ .  He is a recruiter for young planners who want to get in the industry.  (The companies are his clients - they pay him to find employees.)  Through him, I got an interview to a local firm, and ultimately got my job.

You may need to go out on your own to fulfill the vision you have - and it's tricky, because I think a lot of Mustachians would be uninterested in paying for full AUM-style management of assets and financial planning.  But who knows.  The Garrett network (fee-only hourly planning) - http://www.garrettplanningnetwork.com/ is also a good resource if you want to go hourly planning.  XYPN is a great network for advisors that work virtually and on a retainer model (not based on assets ... often a way to be able to work with clients in their 20s/30s) - http://www.xyplanningnetwork.com/ .  You should check out their podcast in the same name - they have lots of interviews where they talk to folks about how they got in the industry and advanced.

I think it's ultimately really hard to find a job at a fee-only RIA where you're a fiduciary financial planner because ... such a small segment of the industry operates in that way, and ultimately many of those firms are small and hire rarely.  And most of the firms who have the funds to bring in a financial planner without clients are those working with wealthy clients.  My job can be very rewarding, and I find all things personal-finance interesting, but I definitely know that my MMM views are really different from those of the firm owners and many clients.  I save more $$ that lots of my clients, even though I make a lot less than them.  Sometimes I wish I had more clients who were younger and could really benefit from cash flow planning and being introduced to these principles.  The good thing is that this is an industry where going out on your own (as long as you can find clients to pay you) is feasible - not a lot of upfront costs, low overhead (if you focus on keeping it that way), and succeeding is based partly on being communicative, organized, and thoughtful in managing client relationships, as well as having the intelligence and know-how to make financial plans and conduct analyses.  I love having a job where intelligence and interpersonal skills are a big asset (and requirement).

[Playing with Fire UK]

Thanks Daymare that is really useful information!

[katsiki]

I've thought about doing this on a volunteer basis after I FIRE. I can't see it being a profitable venture since truly sincere financial advice should consist of things like not spending too much money on someone like me. While new soldiers get financial briefings when they show up to new duty stations, it's never long enough to teach much and it's not consistent enough to stick. I'd like to sit somewhere on post and just dispense advice, review budgets, or give classes to groups often enough to make a difference.

This is awesome!  I hope you do it..  Our soldiers should be getting this kind of support, imo.

I have thought about doing something like this on a pro bono basis later in life as well.

[Playing with Fire UK]

I've thought about doing this on a volunteer basis after I FIRE. I can't see it being a profitable venture since truly sincere financial advice should consist of things like not spending too much money on someone like me. While new soldiers get financial briefings when they show up to new duty stations, it's never long enough to teach much and it's not consistent enough to stick. I'd like to sit somewhere on post and just dispense advice, review budgets, or give classes to groups often enough to make a difference.

This is awesome!  I hope you do it..  Our soldiers should be getting this kind of support, imo.
I have thought about doing something like this on a pro bono basis later in life as well.

I can see a service where you download people's bank and credit card statements (in some unknown secure way), and then provide feedback and guidance on how they are actually spending their money and changes they could make. I learn so much when I do this myself, but it's too much work for someone who isn't interested, and they don't have the same awareness of what is 'needed' and 'normal'.

[Proud Foot]

I'm considering doing this, but from a different angle than the CFA/CFP route.  My goal will be to have a small clientele and I will offer Abundance Coaching.  I know that probably sounds hokey to most of my MMM friends, lol.  However, it will resonate with the people I want to work with, and won't tie me into the regulations that CFP deal with.  I will be looking to develop long term relationships with the clients, moving through the different stages of financial understanding, from budgeting, through debt elimination, to tax planning, investments and savings and FIRE planning, to estate planning, to nonprofits, foundations and philanthropy.  There's a lot of different services I can offer. 

I am starting my new side gig of tax preparation in a few weeks, and am loving the opportunity to see what is being offered for financial planning by my employer and comparing it to what I see as potential needs.  I'm also taking advantage of the tons of free training I can get from this employer.  From what I've seen so far, the certified crowd is hugely restricted in what they can and do offer and there is very little thinking outside the box.  That's what I see as a big opportunity.

I am planning on starting my Abundance Coaching on a very limited basis after this tax season.

To me that sounds similar to a Dave Ramsey coach. Not sure if you would want to become an actual DR coach as I don't know how it is all set up and what his requirements are.  I think a good place to start finding prospective clients would be as a FPU facilitator.  Yes the class would be all DR advice, but you could use it to make connections and bring them to use your services once the class is over.

[mousebandit]

Hmmm, I hadn't thought about going through the DR channels.  We went through FPU ourselves years ago, and even went to DR financial guy, and were THOROUGHLY disappointed in him.  He took one look at my complex spreadsheet budget and said I was way ahead of him, to just keep doing what we were doing, basically.  I was pretty disgusted. 

I would feel pretty conflicted about signing up as a DR referral.  Just not sure.  I believe that I could offer some great assistance, but not sure I want to be associated with his network, if you know what I mean.  I will think it over though - thanks for the idea, either way! 

MB

[Goldielocks]

daymare,

in a interesting bit of irony,  I clicked on the amazon book link you so thoughtfully provided, and the price is now stated as "New, starting at $335"..

Great post though, and thanks.

[Frugalman19]

So, I did this.  I work as a financial planner at an RIA - we are fee-only and fiduciaries (and advocate long-term investing with low cost index and DFA funds), and I have no business development requirement for my role at this point.  I'm salaried and have a bonus (as far as compensation structure).  I found the whole process of getting into the industry really frustrating, but am really happy to be in this industry and am excited about my future career trajectory.  (Just passed my CFP exam.)

Here's how the process went for me: I have a BS in econ+ math, and a finance degree from a top school.  When I wanted to explore my options for getting into financial planning, I went on the NAPFA website (fee-only advisors) and emailed a senior person at every firm in my city to get coffee and ask for advice (which was ultimately very fruitful and led me to other people who eventually introduced me to a recruiter through whom I found a job).  I read this book - https://www.amazon.com/Want-Financial-Planner-Guide-Career/dp/1603530150 .  I joined the FPA (financial planning association - not only fee-only, but bigger locally than NAPFA) because they had a cheap student membership, and attended all events in the area.  Started taking CFP classes at the recommendation of some people I talked to.  Attended NAPFA study groups.  Ultimately applied for and received scholarships from both organizations for conferences.  Got introduced to Caleb Brown - http://newplannerrecruiting.com/ .  He is a recruiter for young planners who want to get in the industry.  (The companies are his clients - they pay him to find employees.)  Through him, I got an interview to a local firm, and ultimately got my job.

You may need to go out on your own to fulfill the vision you have - and it's tricky, because I think a lot of Mustachians would be uninterested in paying for full AUM-style management of assets and financial planning.  But who knows.  The Garrett network (fee-only hourly planning) - http://www.garrettplanningnetwork.com/ is also a good resource if you want to go hourly planning.  XYPN is a great network for advisors that work virtually and on a retainer model (not based on assets ... often a way to be able to work with clients in their 20s/30s) - http://www.xyplanningnetwork.com/ .  You should check out their podcast in the same name - they have lots of interviews where they talk to folks about how they got in the industry and advanced.

I think it's ultimately really hard to find a job at a fee-only RIA where you're a fiduciary financial planner because ... such a small segment of the industry operates in that way, and ultimately many of those firms are small and hire rarely.  And most of the firms who have the funds to bring in a financial planner without clients are those working with wealthy clients.  My job can be very rewarding, and I find all things personal-finance interesting, but I definitely know that my MMM views are really different from those of the firm owners and many clients.  I save more $$ that lots of my clients, even though I make a lot less than them.  Sometimes I wish I had more clients who were younger and could really benefit from cash flow planning and being introduced to these principles.  The good thing is that this is an industry where going out on your own (as long as you can find clients to pay you) is feasible - not a lot of upfront costs, low overhead (if you focus on keeping it that way), and succeeding is based partly on being communicative, organized, and thoughtful in managing client relationships, as well as having the intelligence and know-how to make financial plans and conduct analyses.  I love having a job where intelligence and interpersonal skills are a big asset (and requirement).

Basically everything you need to get started, great post. I would also add, when you go to the FPA meetings, constantly ask about how to get into the business, people love talking about their story and love giving recommendations. Its really not a competetive busines, 10,000 baby boomers are retiring everyday. There are so many people that need help and dont have access to it.

Looks like you went the best route, very similar to mine. Congrats on the CFP!