Early Retirement as Financial Advisor

Water Cooler Careers
#1

I’m thinking about the idea of retiring before 50 and working the remainder of my life as a financial advisor with my own book of clients. Any advice from experienced financial advisors would be appreciated.

Question #1: Does it even make sense to look at part-time financial advisor shops like Edward Jones/Raymond James, etc?

Question #2: What’s the best designation for a financial advisor? Is a CFP or ChFC sufficient or should I go with a CPA to be more comprehensive?

Question #3: If you’re an experienced advisor; how did you generate/grow your book of clients?

This is longer term thinking but I do want to get started on working towards a designation next year.

#2

Buddy of mine used to work as a financial advisor at a bank in Canada, and was facing a mandatory move to the prairies, instead of which he switched to a small firm, where he bought the book from a guy who was retiring.

Around here, rightly or wrongly, Edward Jones has the reputation of going door-to-door

#3

I’m more or less striving for straight up early retirement… when I retire early I’ll simply stop working and pursue my hobbies with occasional travel.

I plan to keep my monthly budget around $1500/mo (no more than $2000/mo) even if I made over $10,000 a month.

I’ll save the rest of the money in a well-diversified portfolio (which will continue to improve as I progress through the CFA program.)

Then maybe add some real estate investments to the mix after a few years.

Hopefully I can retire at 50 or earlier and no longer work after that (living off of rent payments, dividends, coupon payments, capital gains, etc.)

#4

@blackomen, Monthly budget of $1,500? Where do you live West Virginia? Also, I don’t see how you will be spending only $1,500/month especially when you factor in inflation($1,500 won’t go very far when you’re 50), health car costs, and etc.

@all, Has anyone read this, http://www.leighdrogen.com/the-hedge-fund-structure-is-dead/

#5

I live on $1500/mo in California, btw.

Here’s a peek at my budget:

$610/mo rent (living with GF)

$150/mo in gas (drive a Honda Civic that’s completely paid for… no plans to get rid of it for at least another 50K-100K miles.)

$50/mo in Auto Insurance

$300/mo in Food

$75/mo in Utilities

$50/mo in Auto Maintenance (ammortized)

$200/mo in Misc expenses

Total: $1435/mo

No credit card, student loan, mortgage, etc. debts. Health insurance is provided by employer.

My smartphone costs only $25/mo and has unlimited data (included in the misc budget item.) I don’t have a landline, cable TV, Netflix, or gym membership.

Btw, I’m overestimating my expenses here… according to Mint.com, my actual expenses have actually fallen short of $1500 a month last few months.

Also, my dad, who has a little more than $1Mil in net worth and is near retirement, easily spends less than $1500/mo (closer to $1000/mo) since he has a car and house all paid for in the Midwest.

#6

Dude, you must stay home all the time; which is good cause you’re saving a lot of money. Looks like you’re very frugal but like I said:

  1. 20yrs from now $1,500 won’t be enough to cover these same expenses due to inflation.

  2. Also, when you retire, medical expenses won’t be covered by your employer and I don’t think it’s a good idea to count on Medicare.

When you’ve factored this in, the true cost of retiring is more than double the $1,500 you’ve stated.

#7

Studying for Level 1 has left very little free time for me to pursue expensive hobbies… I guess that’s killing 2 birds with 1 stone. This trend will probably continue with Level 2 and 3 for me…

True, living expenses will increase over time but I’d probably think anyone who has gone through the CFA program probably could create a relatively low-risk portfolio that’ll keep up with the rate of inflation. (I’m personally using the Permanent Portfolio until I figure out something better.) Plus, when you make 10K or more a month (about the average after-tax salary for a charterholder) and only spend 2K, your wealth will accumulate FAST even if you’re only making maybe 3-5% returns after inflation and taxes.

#8

I know an MD who is probably the cheapest guy I know. Lives with wife and kid in a very moderate small home, cheap on EVERYTHING, he will buy a used TV for $30 and use that, clips coupons, loads up when there’s a sale, eat at home… etc

This guy makes easily 500k a year. totally just raking it in.

#9

@iteracom, Does he know he can’t take the money with him when he dies? At what point does saving becoming hoarding? i.e., just accumulating money for the sake of it.

#10

Making a decent living as an F.A might be a bit more demanding than you think. Do you already have a book of clients? If you are starting from scratch with no track record it will be tough to build a book. Even if you do win a few clients quickly you will find that (1) you can make a higher margins working with small retail-type clients but its tought to get the scale (2) large private-banking type clients give a you scale but competition is feirce and margins smaller.

Your best chance would be to join a bank and hope to take over an existing book. But hat’s hardly a retiremnet gig.

#11

You must be right out of university…good luck

#12

A.W.A.R.E is very aware of the landscape you will be competing in, there is only about 25% success rate for new advisors and the first three years while you build a book are a grind. If you can buy a book or inherit one it’ll be considerably easier. You should be aware that this job is 95% sales, if you arent outgoing, can hande rejection or don’t know how to listen to people and build trust you’re done.

One thing though, once you have achieved critical mass through your persistance and dedication the role of an IA is probably unbettable in personal fullfillment (if you like working with people), work life balance as well as compensation.