Hi all, have a job offer to work for a colleague as a fin advisor, working with his book of clients and expanding his client base. I am weighing the following offer: 30K base Bonus of 25% of his revenue growth for the year. Let’s say his current rev is $1MM, so if the market or increased clients go up by 10%, his new rev being 1.1MM, I get 25% of that 100K increase, so a 25K bonus. Additionally I earn 50% off the rev I bring in. Does this sound competitive for someone just entering the FA field, yet still has over 10 years experience within finance and holds the CFA charter? The thought of just a 30K base, then being at the whims of the market for a good chunk of my bonus is giving me pause. Then there is also the discussion of benefits/ insurance coverage. Any thoughts on a counter offer?
So, this is the kind of package that makes some people very rich. If business goes well for some unknown reason, you can say “suck it, you agreed to pay me half”. Unlike say, my job where even if I earn millions and millions for the company, they will still pay me “market standard”. Unfortunately, when a company becomes more organized, they manage more risks, including “employee expense risk”.
Not that I think this is a golden ticket. I just think that employers who hand out packages like this are needlessly selling OTM call options.
$30k base seems pretty awful, and is even more awful if you live somewhere expensive. If you want to counter offer, obviously compare your offer to normal levels for your area and experience level (which we don’t know).
Over 10 years experience within finance and holds the CFA charter? Is this in the US? If it is that is god awful low. You should refer to Greenman’s thread about taking a pay cut to work for someone who promised “substantial upside”. You should also consider the downside scenario under which neither the firm nor you is able to bring in more revenue, would you be ok with making the 30k without any bonus?
Thanks for the feedback. Yes the 30K base is pretty bad, and I live in a big city where that amount after tax would hardly cover rent.
There is sizeable upside in the position, as he plans to purchase a colleague’s book within a couple years. That book would be split with me. ( I have read that those deals don’t get complete as often as ppl say tho).
I was going to counter on both the base and the % of growth bonus to 35% of Rev growth. I am prepared to walk away from the opportunity as I have a stable finance job (which I dislike). If anyone had any ideas as to what base/bonus figures sound right I’d love to hear it.
For nearly every financial advisor, revenues are going to decline. If you really want to work with this guy, ask for an $85k base and 80% of net revenue on what you bring in. Then go out and hustle.
A lot of FA’s get no base salary, keep approximately 40% of what they produce, and get nothing from firm revenue growth. From my perspective, you’ve been offered a relatively good deal. You need to really think about the role though. You have to love sales if you’re going to be an FA, because that’s all you’re going to be doing, forever.
Plans to purchase a colleague’s book in a couple of years? That’s nice, but that means nothing to you. You’ll have to hit the ground running now, or you’ll starve.
OP: I just don’t think this is a good idea for your situation. You have no experience working as a FA. Strike 1. Any potential upside of buying his buddy’s book in a few years…yes this can sound promising but things change and you don’t even know what you are buying. That book could be a loaded POS, (small account sizes, large number of small clients, transaction based, older clients, no fee-only model etc…) the list goes on and on. Who knows. Strike 2. The base pay is $30k. Enough said. Strike 3.
Source: I’m an Advisor who purchased a book from my old boss and have gone through this process.
If you really want to get into this business, you would be better off joining a RIA and working as a relationship manager or assistant to get experience before venturing off on your own (minimum 2-3 years).
Thanks everyone for the candid advice. I’m going to have to go back to the negotiating table on the base as well as the %. I’m not worried about the sales aspect, I just don’t want to starve while doing it…