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‘Ironic and Scary’: A brutally honest look at the life of an entry-level financial advisor

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You’re young and bright-eyed – probably 25 or 26 – and you just lined up your first “real” job interview since graduating from college. You’re sitting down with a bulge-bracket bank to talk about a financial adviser position.

Likely, you’re polishing up your knowledge of the market, coming up with grandiose ideas for stock picks and other investment vehicles. Like others before you, you’re doing it all wrong. Banks don’t want stock pickers. They want salespeople with healthy networks.

We sat down with three financial advisers – two current and one former – to get a better understanding of the interview process, the first few months on the job and the tools necessary to be successful. They spoke anonymously. Here’s what they said.

The Interview

Interviewing for a financial adviser role can make you take a step back if you’re not ready for it. “They didn’t want to know if I knew anything about stock or bonds,” said one 30-year-old adviser who interviewed with several large firms. “Frankly, they couldn’t have cared less. It’s ironic and a bit scary.”

Rather, nearly the entire interview is a game of “who do you know.” Banking recruiters will inquire about your “natural markets” – a neat phrase that encapsulates all the places you belong where you may have access to rich people: golf courses, lawn clubs, private schools your kids attend etc.

Some firms may ask you to come up with a “hot list” and even a marketing plan. They’ll ask you to come back in with a list of 200 people who you know who you can call on tomorrow with the potential of setting up a meeting.

One of the advisers was asked to conduct a market survey where he would reach out to people in his network and ask potential targets questions about their biggest fears about the market and other general personal inquiries. At the end, he needed to ask whether the person – a friend or family member – would be willing to take a meeting with them and a senior adviser if they in fact got the job.

“If I can get 25% of the people to sit down with an experienced advisor, the bank doesn’t care what happens to me,” he said. “They win either way.”

The Job

Once you get hired, and you go through all the testing and certifications, you’ll likely be given a sales target, say $5,000 a month in production. Now it’s time to get out your personal rolodex.

“They say a lot of people who are young and make it have no natural market – they are just hard working,” said a more veteran adviser. This, according to all three sources, is the common office fib brokerage houses use to inspire you to never stop picking up the phone. “Personally, I don’t know anyone under the age of 45 who has made it by cold calling,” said the veteran adviser.

And know that it isn’t as easy as having a robust personal network. You then need to call on those people and, as a young person with no experience, ask them to trust you with their financial security.

“A lot people say they are willing to cold call friends and family, but when sh*t hits the fan after a few awkward calls, they sit at their computer for six months checking email until they get fired,” said the veteran adviser. “I see it every day.” He joined his first firm with 30 other recruits and now stands as the only one still in the business. Roughly 5% of new hires make a career out of it.

If you have the confidence and willingness to cold call your friends and family, you’re likely to face another moral dilemma soon after. To hit your monthly target, you’ll need immediate production. Unfortunately, immediate production doesn’t always match up with the best interests of the client.

“You can bring in a $1 million account and charge 50 basis points, setting yourself up for years down the road, but will you still be employed at that point?” said the younger adviser. “Or you can sell $100k annuity and generate the money upfront. The system doesn’t align interest of client and adviser. It really is like Boiler Room.”

The end result is that the majority of financial advisers who make it are better salespeople than wealth managers. If 100 make it, around 90 will be pure salespeople, said the veteran adviser.

So Why Do It?

The early stages of being a financial adviser are difficult. If you have the network and the stomach to make it, however, the career offers many advantages. Once you build a book of business large enough to support yourself and ensure your job security, you can finally put on your adviser hat and align your own interests with that of your clients.

Moreover, you’ll run your own desk and have the opportunity to almost guarantee a comfortable level of income each year. And you’ll be in high demand. As you can imagine, banks kill for proven advisers with healthy books of business. Six and even seven-figure signing bonuses are available for those willing to move from one brokerage house to another.

Advice

If you are thinking about getting into the business, your best bet is to join a team where you can learn under a veteran while picking up some of his scraps – customers who don’t generate a ton of revenue but who need attention. It’s a much better starting point. Try touching base with an individual adviser – not the bank itself – when considering moving into wealth management.

Comments (2)

Comments
  1. This is the best article I’ve ever seen on this topic. Having lived this I can see absolutely every point the author hits is true, and its a painful process arriving at that understanding. At least a bank will try and let you know they don’t care about your knowledge up front. There is a huge disconnect about doing what is right for the client and doing what is right for the bank. And if you getinto an insurance sales situation, double jeopardy! Places like “MoonLife” let us say, lock you in to dreadful deals where you have to “Pay back” commissions someone else may have earned should you accept clients to service … you get the residuals which are a minor positive but you get ALL of the risk should the client leave. The conclusion is the best advice I wish I’d had when I started out.

  2. I’m currently in CFP school as a career changer. This story taught me nothing I didn’t already know.

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