Financial Advisor Anyone?

Now that I’m near the end of this CFA journey I’ve been contemplating what roles I will be pursuing when this is all over. Ideally I would like to land in portfolio management or be a research analyst. I’m also thinking about becoming a Financial Advisor. (I know a CFA designation is probably overkill for a Financial Advisor position, CFP is better.) I like the fact that you’re kind of running your own business and get to use some of the theory we’ve learned to help people achieve financial goals. On the other hand I hear it’s practically a big sales job. Anyone out there thinking about the Financial Advisor role as well? Any current Financial Advisors out that that can offer some wisdom into that career path? What are we missing in the CFA program that is included in the CFP program?

anyone can be a financial advisor…you dont even need a business degree. It’s a comission job they really dont care who they hire as long as you sell. it kinda seems like a waste to have spent 1000+ hours of your life studying for the exam when this is what you wanted to do, IMHO. Those hours could have been better spent selling/prospecting clients since you’re really only as good as the size of your client book.

depends on the job… alot of times fa’s get a bad rap because there are fa’s out there who really aren’t fa’s… they are just sales people… if you are at a good company it can be a very rewarding job. imo cfa is WAY better than cfp (i just passed the CFP comprehensive) except most people don’t know what the CFA is while they will know what the CFP is… CFP just has tax, estate planning, retirement plans, insurance, and basics of financial planning… the investment stuff is a joke… learn most of it on the job though… definitely try and get into the High Net Worth space… more prestigious… get to do cooler stuff… ie… less 529’s and more private equity and real estate funds. too hard to make a living with small clients too…

A good friend of mine is a Financial Advisor with a mitfull of designations (CFA, CFP, CIM, FCSI), and based on discussions with him, very few of his clients understand the value of his credentials, and he is constantly frustrated by the lack of barriers to entry. Like CPA said, anyone can be a Financial Advisor, which can be extremely frustrating. I think my friend said it best when he said “people are funny when it comes to money”… People always expect you to make them money, regardless of how the market is performing. You may have outperformed the market in a downturn (i.e. many of his clients were down 10-15% when the market was down 30%), but they were all still pissed at him. I know I wouldn’t be able to handle it. He got into the industry with the hopes of helping people, and providing a true service to his clients… Unfortunately, uneducated clients will never respect your knowledge/credentials, all they care about is whether you made them more than their neighbor (there’s little comprehension of risk tolerance among uneducated investors). On the flip side, when dealing with mutual fund managers and the like, he’s given the utmost respect, and this is solely due to his designation. Maybe Private Wealth Management is better?!?, but when it comes to the FA side of things, I’d steer clear.

Being a Financial Advisor can cover a wide range of roles and responsibilities. There are plenty of people out there who are sales-focused, which shouldn’t be called FA’s imho. The lack of barriers to entry is a problem. It makes it hard to be valued or respected. There are plenty of more ‘finance’ focused roles in the industry too though. For example, your sole job might be to review HNW portfolios, write recommendations, present investment ideas to clients, author market and financial newsletters or reports…

All great comments. Thanks guys. I am not set on becoming an FA, just considering the options out there that interest me. I have some FA friends who are successful and seem really happy with their careers which led me to think “Hmmm…maybe”. But I agree, after spending 3 years and and insane amount of hours only to become an FA trying to build a book may not be the smartest move. Several of the points you guys made echoed my concerns about the profession, mainly having to meet unrealistic client expectations, having my credentials taken for granted or not understood at all, and taking a HUGE paycut early on until my book is built. My buddies have been doing this for a while and are long past the low pay stage. One of them inherited a book from someone who left their firm. Let me ask you guys this though (this may have already been covered in prior threads). It seems that all of the Portfolio Management and research analyst type roles I see out there require prior experience. I’ve been in banking for a while, but in general analytical/spreadsheet jock type roles. Nothing in asset management or research. What’s the best way to get someone to take a chance on you. I know face-to-face networking helps, but what if you don’t know many people in those types of roles?

It’s all what you make of it. I know an Advisor with a CFA charter who is 40 years old making close to $10M a year and he works 3 days a week. Spends the rest of time with his family. I think that’s pretty good.

Some of these comments are fair and some are not… Here is my two cents: First and foremost I have been in the private wealth management side of things for about 9 years now in different roles, one role years ago being a FA. Financial Advisor could mean many things depending on what company you work for. It ranges from Insurance Sales Person to full on Financial Planner (who does Estate, Tax, Investment, Retirement planning along other financial planning needs). So yes the title has be used and abused over the years and hence the respect for it has fallen out of favor with people on most parts. If you are looking into becoming a FA, I would look into a solid company that really does the full Financial Planning. That is where I found you can contribute the most to people’s lives by giving them sound advice on every aspect of their finances. These roles are typically salary based + bonuses (not commissions) therefore you are more likely to be seen as a consultant to your client than a sales person. Off course you will get paid on the Asset Under Management so your income will grow as your book does, however you will not be hungry for commissions because you are getting paid a salary which allows you to really concentrate on relationship building not sales. Sales comes naturally once you have build a good relationship with your client. I have to disagree with people who say their clients grind them about returns and other crap like that. No disrespect to anyone out there but advisors who complain about their clients should really look at themselves in the mirror. Typically it is the advisor who has not done a good job of setting expectations with clients, properly educating them and actually responding to their true needs and goals. Being an advisor or FP is all about helping the client through educating them. I currently look after (train and help) about 100 FP and Advisors in a big region and not one of them have ever said to me “my client was pissed because he did not make 30% or lost 15% last year”…this is because they focus on what matters in the long run and not one or two year returns. If you are planning on going down this route CFP will help you a great deal as it is very applicable to the industry. Yes CFA will help too but not as much as CFP. CFA is definitely much harder but also very different. CFA is very corporate focused (until L3) while CFP is all about personal Finance. If you want to go into Corp. Finance don’t bother looking into personal finance as you will have a very very hard time crossing over if you ever can (unless you are planning on doing a MBA). Last but not least do not become a broker FA or IA as that is a cut throat business and in my opinion a dying breed since industry is focusing more and more on full financial planning. Hope my rant helps you. Do drop me an email if you have more specific questions at Cheer NVC

CardShark Wrote: ------------------------------------------------------- > It’s all what you make of it. > > I know an Advisor with a CFA charter who is 40 > years old making close to $10M a year and he works > 3 days a week. Spends the rest of time with his > family. > > I think that’s pretty good. this is the EXCEPTION, not the standard.

I am a bond portfolio manager and i can tell you first hand that it’s very difficult to get into the money management field in a PM/ trader/ analyst roll… there are so many qualified candidates for entry level positions (we’re you’d have to start with zero experience) and so few opportunities (especially in the current environment). You may want to check out the Register Investment Advisor roll (you’re paid much like a mutual fund manager and act like a high net worth advisor… think “asset allocation”). has a good article on RIAs or perhaps consider a wholesale position slinging product for one of the buyside firms (essentially you are the liaison, or “sales guy”, that sells not to retail investors but to the FA and planner types), you’ll have a huge leg up on the nitwit FA’s and that is helpful when selling anything. Wholesalers also has interaction with the PM’s of the funds they sell, and this in another example of how having the CFA designation will command some respect from the PM when very little is typical (wholesalers can be dumb sales guys too). careers are long, and having diverse experience is very good. just realize that your first job is usually not strongly correlated with your second and third throughout your career.

Let’s say you’ve been doing tactical and strategic asset allocation roles for HNW’s for a while and hold the CFA - what are your chances of moving into a buyside role as say an equities analyst or maybe assistant PM? Any crossover or too big a river to jump?

not very high… on the buy side the most sought after analysts are people with specific industry or consulting experience (i.e. the lead engineer at a semiconductor company, or a consultant for energy companies etc etc). I’m not trying to burst anyone’s bubble, and by no means is what i say always the case so i encourage people to be persistent. Just don’t have the impression that after the CFA you can just step into an investment position. Those three letters do help you get the interview and prevent having your resume circular filled, but that’s about it. Once you’re “in” then the Charter will help a few years later when it comes to promotions and moving up the ranks (so to speak) you’d have a better chance starting on the sell side… or getting an MBA

hmmmm…interesting. Thanks for the insights.

CPAbeatsCFA Wrote: ------------------------------------------------------- > CardShark Wrote: > -------------------------------------------------- > ----- > > It’s all what you make of it. > > > > I know an Advisor with a CFA charter who is 40 > > years old making close to $10M a year and he > works > > 3 days a week. Spends the rest of time with > his > > family. > > > > I think that’s pretty good. > > this is the EXCEPTION, not the standard. Very much agreed. I should have mentioned that. Being successful as an FA requires a wide range of things to work in your favor: investment skills, presentation skills, sales skills, networks, and of course a good chunk of luck along the way too.

Okay… here we go… usually just a lurker, but this is right up my alley so I can’t shut my mouth on this… I have been an FA for now 10yrs with ML (now BAC). As much as I hate to admit it, all of the above is true… FA’s are not perceived as anything else than sales people. You can sell shoes, stocks, fancy yachts… at the end you are in sales and most people I meet put a hand on their wallets when I tell them I am an FA. I do have both the CFP and thank God more recently got my CFA. The CFP is somewhat useful and somewhat recognized by the retail world. CFA is not but it was for me a fantastic journey of learning & personal development. Now that I got the nasty part out of the way… let me rub in the good ones!!! I am a very average FA doing about 600K in production and retaining about 40% of it. I bring home about $280K/yr counting the other incentive the firm is throwing at you. I am in the office usually at 7.00 am and home by noon at the latest. I usually never work more than 4 days out of the week and my life is very low stress. Most clients are in solid managed products (that you smart asses are managing!) and have an assistant at the office that contact me if there is anything important (which is never). This has been my lfie for the past 5 yrs (worked slightly more the first 5). I have two beautiful kids that I can enjoy and when I am at the baby park in the middle of the day I am literally the only dad there. And I get to go surfing literally every single day. All the free time allowed me to also do much more ‘out of office’ fun projects such as my private pilot license, all my diving certifications, tons of sport… etc This is for the quality of life, now let me go into the job security thing… when the economy/market turns to hell, not one second did I fear loosing my job. At the time when everybody is getting laid off, we have the most secure job on earth due to the simple fact we ‘own’ our book of client. If you are ambitious, you can even contemplate jumping to another firm and get an upfront pay out worth about 2x your prior year production. Also when trading desks, investment banking and others are loosing tons of $$$ we are the only unit still bringing revenues… and last but not least, despite the horrible reputation of brainless sales people we are, you guys would not exist if we were not bringing the money in! I personally can tell you that at 35, having lost my teen ambitions of being that uber-powerful investment banker sitting alone in a huge corner office in midtown spending my X-mass doing hostile takeovers… I have by far the best possible life one can have. I will more than likely never make millions of $$$, never have the respect a doctor, lawyer or CPA has, but looking back I would have seen my kids grow up while having a lot of fun! Just my 2 cents!

How did you manage to build your book during the first 5 years working hours like that? Just curious because that life style sounds too good to be true!

Crablegs, that is awesome! Seriously, thanks for sharing. I would die a very happy man with that type of work/life balance.

There’s a lot of good posts here already so I’m not sure how much more I have to offer. I currently work for a large RIA and I work pretty closely with the advisers who all have their CFPs. I can honestly say that although crablegs experience is pretty freakin awesome, he’s not that far off from what our advisers enjoy. They’re schedules are flexible, they’re pretty well compensated (200/k+ for an adviser with a big book), and in my opinion it seems like their quality of life is awesome. Obviously they aren’t going to make millions and retire by the time they’re 45 like the average Goldman employee, but they will get to see their kids grow up and do a lot of other things life has to offer. Basically, if you’ve given up on world domination becoming an adviser is not a bad thing to do. You definitely want to find a good firm, one where you don’t have to cold call that also has high average client net worth would probably be ideal. The avg client net worth is nice for when you inherit a book which happens often. Char-Lee also mentioned the role of liason for a fund company, which in my opinion is not a bad gig either. I’m not sure what they’re paid, but if you like to travel, its a pretty good gig. Many of our liasons have their charter and it seems like they enjoy their job. My first impression of a fund is set by the wholesaler who comes in and visits. DFA, Goldman, Partners Group, all seem to have sharp people representing them. Personally, since my background doesn’t really prepare me for what ideally I would want to do (Private Equity), I’ve thought a lot about both these routes. I would try and do what you really want to do now and think of Financial Advising as a safety net if it doesn’t work out as planned. BTW if you aren’t that great with people and are not great at teaching, becoming and adviser is probably not the thing to do. Another indicator may be how much you enjoyed the behavioral finance section, because you’ll be training your clients on a lot of that stuff to make things easier for you down the road.

If you are looking for a cross between the two, look into institutional sales. Whether you are selling bonds, equities, derivatives or asset management, you get the opportunity to get from behind the excel screen. The CFA is respected, as your clients are PMs, analysts, treasurers etc, but you also have the perks of a sales job…shorter hours, conferences, luncheons etc. At some firms it is salary plus bonus (mostly BB because if it was commission you would be making too much) and others commission only.

I noticed a few people mentioned Wholesalers…just to clarify something for you…don’t think getting a wholesaling job is easy either; at least not with a big reputable company because wholesalers usually do not leave that often. They get paid very well as they get a base + commission on their territory sales. And what they really do is Relationship Management (lots and lots of travel though, so not suggested for a person with family in my opinion)