Author Topic: How to be a successful financial advisor?  (Read 3632 times)

shanesauce

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How to be a successful financial advisor?
« on: March 13, 2016, 10:49:58 PM »
How hard is it to become a successful financial advisor? I have been soaking up all the info from this websites and a few others, I consider myself to be in the best financial shape of my life and things are getting better every day. Being FIRE is in the very close future for me. So let's say I wanted to start a "business" helping people get their financial house in order and giving general investment advice as well as investing money for people, what would be the best course of action?

I often get the urge to help people with their finances or give simple investment tips but I usually refrain because I don't want to come off too aggressive. And to the majority of people finances are a very secret thing and most people don't want to put it all out on the table for some random coworker etc.

FIRE me

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Re: How to be a successful financial advisor?
« Reply #1 on: March 14, 2016, 12:28:25 AM »
I'd say charge them 2% to open a Vanguard account for them, then another 1 or 2% annually. Then don't forget to tell them how lucky they are that you are “helping” them.

shanesauce

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Re: How to be a successful financial advisor?
« Reply #2 on: March 14, 2016, 01:08:55 AM »
I'd say charge them 2% to open a Vanguard account for them, then another 1 or 2% annually. Then don't forget to tell them how lucky they are that you are “helping” them.

The sarcasm is strong with this post! You do bring up a good point though, would it not be to my advantage to bring this up to the clients? Something like "Hey, anywhere else you go and invest your money they are going to basically destroy your earning potential over a long period of time with their cuts they take off the top."

Maybe my initial post came off the wrong way, I basically want to pursue this to make "fun money" in the future once I am FIRE. My investment income will cover all of the monthly expenses but it would be a great thing to be able to help people and make some extra cash to pay for travel or other purchases in the future. It just blows my mind how simple the whole FIRE thing really is but nobody wants to open their eyes and see just how easy it really is. However, some people feel better with someone else in control of their retirement even if it is truly that simple.

Hell, the whole thing that drew me in on this whole lifestyle was the "30 and retired" headline that I saw about Mr. Money Mustache. Surely if people saw that I was living this retired at 30 lifestyle they would feel comfortable coming to me for financial advice? There has to be a system where I can make a decent side income without destroying someones retirement account? I'm not interested in taking cuts and killing someones earning potential. Maybe some sort of flat annual "account maintenance" fee? Give me some ideas here guys & gals.

trashmanz

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Re: How to be a successful financial advisor?
« Reply #3 on: March 14, 2016, 01:20:31 AM »
Seems more life life coaching than financial advice.  Anyone can be a life coach. 

englyn

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Re: How to be a successful financial advisor?
« Reply #4 on: March 14, 2016, 01:51:42 AM »
I was seriously looking at something like this for the same reasons (travel fund after FIRE, or part time self employment as ramp down to RE) but couldn't figure out how to do it and get enough experience to have enough credibility without holding a full time job for a while with a large institution selling their crap. So partly I'm posting to follow. However, they're changing the requirements here to need a whole uni degree, and that just seems silly.
The other thing I've considered is financial counselling for people who are struggling as part part-time-fun-money-fund and part making-the-world-slightly-better-charityish-work. Dunno if I have the patience to avoid facepunching people though.

mozar

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Re: How to be a successful financial advisor?
« Reply #5 on: March 14, 2016, 06:27:51 PM »
So you want to be a fee-only financial adviser. You can get certified for that. And buy insurance for yourself.

There are two main types of people who seek financial help. People who are wealthy and need tax planning and investing management, and people who are court ordered to get financial counseling. Every one else can either look it up themselves, or don't care. There really isn't much money for the rest of people. Heck, there are all kinds of free financial services/workshops in my area and people don't go to that.

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Surely if people saw that I was living this retired at 30 lifestyle they would feel comfortable coming to me for financial advice?

Not necessarily.

And do you really want someone calling you at 3am freaking out because the DJIA lost 20% in a day?

Also you also have to compete with robo-advisors, that can do what you are saying for less $.

There are regular posts on here from people who want to become financial advisers, and they often have unrealistic expectations, that's probably where the sarcasm is coming from.

Just in case you really want to help people, I'll let you in on a little secret. Institutions make this stuff hard to understand on purpose. There is no reason why finance should be complicated but there are many vested interests lobbying the government to make sure investing products remain complicated to understand, and to keep the IRS from doing what it should do, which is to just send most people an already filled out return and have them sign in and send it back.

So if you are serious about helping people you would join people who are trying to change that. Don't be a part of the problem. Be a part of the solution.

And finally to answer your question. A financial adviser is basically a sales position, so if you are comfortable with cold calling and hassling people, and self promotion, you'll be successful at it.

ysette9

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Re: How to be a successful financial advisor?
« Reply #6 on: March 14, 2016, 09:12:20 PM »
I have sort of toyed with the idea of preaching the financial gospel once I no longer have to work for a living. The only thing that has come to mind so far was something I saw advertised at my local library. Apparently there are a series of adult workshops offered to teach people life skills. Think of teaching adults to read and the like. They were looking for people to teach fundamental personal finance stuff to adults. I thought that sounded like a great place to start and see if I even liked it/had a knack for helping others. You may consider starting there for free to test the waters out.

SandyBoxx

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Re: How to be a successful financial advisor?
« Reply #7 on: March 14, 2016, 09:32:01 PM »
I have sort of toyed with the idea of preaching the financial gospel once I no longer have to work for a living. The only thing that has come to mind so far was something I saw advertised at my local library. Apparently there are a series of adult workshops offered to teach people life skills. Think of teaching adults to read and the like. They were looking for people to teach fundamental personal finance stuff to adults. I thought that sounded like a great place to start and see if I even liked it/had a knack for helping others. You may consider starting there for free to test the waters out.

We are not FI (yet) but this is very similar to what I do. 

I volunteered the first time round (though received an honorarium at the end), and am now paid by our local literacy foundation to teach/facilitate weekly financial literacy sessions to young families.  I tend to do 6-9 weeks of facilitation of a basic financial literacy program, then I get the last 4-6 weeks to do topics of my choosing.  It has been SO fulfilling - and I keep getting offers for cash to help people on an individual basis...not sure if I want to go there, or how...

I can definitely see that there is more opportunity to do this with other groups as well - through the library (like the example above,) in the high school with the youth programs, newcomers (to our country) groups etc.

I would speak to some not-for-profits...lots of times there is funding available if you can create a program that fits within the funding guidelines.

SwordGuy

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Re: How to be a successful financial advisor?
« Reply #8 on: March 14, 2016, 10:12:31 PM »
Community colleges have continuing education classes.  They don't pay well, but that doesn't seem to be the prime motivation.  Plus you can siphon some of the better students off as clients after the class.

Indexer

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Re: How to be a successful financial advisor?
« Reply #9 on: March 15, 2016, 05:43:53 AM »
I work in the investment asset management industry and I've held the title Financial Advisor multiple times in the past. What I do now is still related. Once I was commission based which I hated, and once I was fee-only which I really liked. I love helping people improve their lives by helping them understand their finances. I'll be honest from the start, just loving helping people with their finances isn't enough to be successful as a financial planner. That will give you passion, but a huge part of the job is sales/positioning/relationship management. If those are strong suits you are ready to go. If they are not I would go the teaching route.

Here is a good article on becoming a planner. It says everything I would say about pay structure options, being a broker VS a planner, possible positions, etc.: http://cashcowcouple.com/financial-planning/how-to-become-a-financial-advisor/

I will say if you want to manage assets and trade securities on behalf of clients that is going to require a lot more in the way of licenses then if you just build plans focusing on budgeting/cash flow/etc. or if you were teaching financial literacy classes. Asset management is one of the most regulated industries on Earth.

Everything mentioned so far is the easy part. Getting people to trust you with their money is another story. That is the really hard part. Plan on lots of networking, being able to speak more confidently about investing than Jordan Belfort(obviously without the illegal and unethical aspects), being able to overcome the craziest objections, make people trust you in less than an hour, managing those relationships long term, and enjoying all of that. If you lack experience, education, and designations everything will be that much harder. Getting the right designations also helps, but that takes time. Even if you pass the CFP exam you need 3 years of work history related to financial planning before you can call yourself a CFP.

I'm not trying to scare you away. I have loved financial planning and wealth management. However that route will be much harder and more rewarding than just teaching financial literacy classes at a community college.