Absolutely not! But, you should take the accolades of bringing it out in me. So, congratulations on finally achieving something in your life, finally!
Brilliant stuff. Touché.
Iginla2010 Wrote: ------------------------------------------------------- > No, my point is you can be ripping people off in > whatever capacity/profession if that’s your > intention. You sound like you haven’t really met > any ‘real’ advisors in your life and have a very > narrow perspective. Come out of your little well > and I can open your eyes. It’s almost like me > saying all Americans are ignorant, self-serving > rude sons of b!tches because a lot of the ones I > know, are. But, that’s not really true. > > You need to learn a lot, my friend. Most of the > advisors I know will school almost anybody in > investing. Do you really believe hedge fund > managers haven’t ripped people off? That’s, at > best, laughable. What about lawyers, doctors, > dentists, etc. Do they not rip people off? If you > want to throw a stereotypical and generalized > statement out there, merely because you don’t have > the intelectual strength to do any better, then > you have found the perfect platform for it - an > anonymous online forum where you can get-off > whenever you want. Now look who’s ignorant. > > My point is, every profession has bad apples, but > that does not entitle us to throw a blanket > statement like yours. Think! Oh snap son! I love it
Be careful, cuz you’ll keep falling off consistently, whether it’s from your chair, or from the high horse that you’re riding.
Thanks for the input everyone. It is true that in order to be successful as an FA you have to know what kind of advisor you want to be, know your ideal client, and almost above all…build solid relationships (all else equal people do business with a friend, all else unequal people do business with a friend). While I agree that there are many advisors in the industry who can’t/don’t add value, there will always be a need for ethical/intelligent professionals who can advise clients on financial matters. Being on the ‘front edge’ of what will likely be a long career, it seems fulfilling/profitable to at least put some serious consideration into the field.
I’m on Iginla’s side on this one. And it’s not cause I was in the financial advisory business. I hated that damn job. But, I do think, as Iginla pointed out, a lot of finance professionals are out to screw you. It doesn’t matter what job they have. The CFA program blatantly teaches us that the average portfolio manager can’t beat the S&P 500. Where’s the average portfolio manager’s value if he/she can’t beat me investing in an index fund with lower fees? Where’s the value in sell-side research analysts? They have price targets that aren’t reflective of real value. A friend of mine works in private wealth management and her clients are movie stars. Now, these clients of hers don’t give a $hit about the market and are willing to pay that extra fee to not have to worry about it. Is this fair? I dunno. Economics teaches us (and I don’t believe it’s true) that wealth will flow to the most productive assets/people. Well, if this is true, why do financial advisors make decent to excellent money?
I’m also going into advisory mostly because I consider myself a good people person and I have a solid financial background that I’m building through the CFA. I landed a role as an assistant to a team of advisors with a big book. While I’m happy that I get daily exposure to the business my old boss (an IA building his book) told me that the best experience prior to being IA is doing sales (he did private banking, then accounting, then iBanking, and told me that no doubt his first job was the most useful for the role he has now). Iginla I also work for a big Canadian bank. How long have you been an associate? what do you like/hate the most about it?
CWindjammer - Do you or have you ever used an FA before? If so, why?
Iginla2010 Wrote: ------------------------------------------------------- > thommo77 Wrote: > -------------------------------------------------- > ----- > > Iginla2010, what sort of multiple are you > looking > > at to buy the assets from the senior dude when > he > > retires? How do you determine the value of his > > book and what you will pay to buy the assets? > What > > if he decides to sell to another dude that is > > willing to pay him a higher multiple? > > thommo: I work for a big Canadian bank and they > have their formula that they use to calculate the > payout. Usually, it is the PV of annual gross > revenue (an avg of past 3-4 yrs) amortized for 5 > yrs. So, let’s say the turn is about 75 bps on a > book of $200 million, so you generate $1.5 mill. > Roughly, you would amortize that for 5 yrs at 300K > per yr. This is just a rough idea, though. > > You actually sign a contract when you get into > this agreement. So, it’s not just a rosey picture > that everyone is painting. It will stand in the > court of law. Plus, you have the Branch Manager, > the Regional VP, and the compliance officers > involved in the paperwork. It could happen in a > smaller shop that the senior guy changes his mind > and sells the book to someone else, doesn’t happen > where I come from. > Guys with CFA are the most successful in my > office, and i’m sure it’s not a spurious > relationship. Iginla - thanks for the info. Why would a retiring veteran sign any type of legal document to transition his book to a guy that has 2 or 3 years experience? What is the reason for him to do this. Surely, if he really wanted to sell his book he could call up one of his buddies in the industry who he likes. How did you get him to sign a legal document?
Back to the topic… spope: as someone has said it on this thread, it depends on what kind of advisory business you want to build. There are around 10-11 Investment Advisors in my office that are also Portfolio Managers. Some have developed the understanding with their clients such that 100% of their book is discretionary managed. Where as, others have some portion of the book discretionary. My goal is to manage portfolios on a discretionary basis down the road. But, it all depends on how much trust and comfort your clients have in you. It’s funny having celebrities as clients actually. We have some NHL players that are clients and they are all supe-nice guys, not at all as tough in real life as they are on the ice.
thommo: it all takes time. I have been in this office for four years now, in a different role. But I guess, I did all the right things. Plus, I also consider myself getting lucky. The guy retiring has many advantages by hiring a ‘green’ associate: 1) As I said earlier, retention is his key to make sure he actually gets paid for selling his book. The associate comes in and continues the same management style as his mentor and makes sure that the clients are still comfortable. 2) This leads to clients not leaving and being comfortable where they are. Which makes sure the vet gets paid. 3) The associate gets paid by the house (at least at my firm), so it doesn’t cost the IA anything. 4) IA’s want to do a deal where they transition slowly into retirement because they like the cash flow that the book provides and don’t want to see it vanish all of a sudden. Also, the associate manning the ship makes sure the last few years of their career are easy, more vacation days, etc. 5) The management likes the fact that an old IA is transitioning the book to a young guy. So, as an example, I can potentially continue to manage relationships for another 30 yrs! Which brings stability. Where as, if they sell it to someone who has been doing this for a while, they run the risk of losing clients. It’s not as smooth a process, and the other IA will probably end up changing the composition of portfolios, clients won’t be comfortable, wouldn’t have the trust in this guy, etc. Also, the other guy can pick and choose his assets when it comes to buying. He probably won’t buy a charitable entity’s account, for eg., that has most of it’s money invested in Treasuries, AAA corps, etc, where the turn would only be a mere 30 bps or so. You, as a rookie, are not going to bargain. And they like that. In bigger shops, like mine, it’s tough to just call up your buddy and bring him onboard to sell him the assets. Plus, the assets can’t go outside of the firm, the management won’t allow that. All these factors combined together favor guys like myself.
Iginla2010 Wrote: ------------------------------------------------------- > thommo: it all takes time. I have been in this > office for four years now, in a different role. > But I guess, I did all the right things. Plus, I > also consider myself getting lucky. > > The guy retiring has many advantages by hiring a > ‘green’ associate: > 1) As I said earlier, retention is his key to make > sure he actually gets paid for selling his book. > The associate comes in and continues the same > management style as his mentor and makes sure that > the clients are still comfortable. > 2) This leads to clients not leaving and being > comfortable where they are. Which makes sure the > vet gets paid. > 3) The associate gets paid by the house (at least > at my firm), so it doesn’t cost the IA anything. > 4) IA’s want to do a deal where they transition > slowly into retirement because they like the cash > flow that the book provides and don’t want to see > it vanish all of a sudden. Also, the associate > manning the ship makes sure the last few years of > their career are easy, more vacation days, etc. > 5) The management likes the fact that an old IA is > transitioning the book to a young guy. So, as an > example, I can potentially continue to manage > relationships for another 30 yrs! Which brings > stability. > > Where as, if they sell it to someone who has been > doing this for a while, they run the risk of > losing clients. It’s not as smooth a process, and > the other IA will probably end up changing the > composition of portfolios, clients won’t be > comfortable, wouldn’t have the trust in this guy, > etc. Also, the other guy can pick and choose his > assets when it comes to buying. He probably won’t > buy a charitable entity’s account, for eg., that > has most of it’s money invested in Treasuries, AAA > corps, etc, where the turn would only be a mere 30 > bps or so. You, as a rookie, are not going to > bargain. And they like that. > > In bigger shops, like mine, it’s tough to just > call up your buddy and bring him onboard to sell > him the assets. Plus, the assets can’t go outside > of the firm, the management won’t allow that. All > these factors combined together favor guys like > myself. Awesome info. Thanks much. Makes sense to me now. It sounds like you have a great gig going on and thanks for sharing your insights.
thommo: you’re welcome. I know I came out blasting on this thread, but I really take a lot of pride in what I do and when some d!ck takes a stab at it, that’s when I drop my gloves. I am genuinely passionate about helping my clients. One time, this 62 yr old widowed client of mine asked me to come out on a Saturday morning with her to a car dealership just because she wanted someone by her side while she was making this big purchase. Of all the people in her life that could have qualified to be this person, she felt comfortable enough to ask me to come with her. It made me feel great!
Do not jump into FA-ing. Having several family friends who are successful FAs, this role is ALL about your network. My suggestion would be to try to build your network, some what, and slowly make the change. Perhaps more time will be required as you will be giving time, both to your current and future career, but much safer. I don’t know how much you make right now, nor am I asking, but first year, expect low income. It’s all residual.
MiserableLawStdnt Wrote: ------------------------------------------------------- > Do not jump into FA-ing. Having several family > friends who are successful FAs, this role is ALL > about your network. My suggestion would be to try > to build your network, some what, and slowly make > the change. Perhaps more time will be required as > you will be giving time, both to your current and > future career, but much safer. > > I don’t know how much you make right now, nor am I > asking, but first year, expect low income. It’s > all residual. Good advise and agreed. Thanks
Used car salesman of the finance world. Used car salesman can make a good living and there are plenty of peeps that will go to them when they don’t know better or don’t want to deal with the big dealerships. Both may rip you off, but the big shops often offer extra perks and may have some leverage when dealing with the automakers. Whether right or wrong, and I tend to believe “right”, many have a negative view of FAs and you should know that when making your career choice.
oops, can’t edit the poor grammar and spelling of my prior post (salesmen)
^ Enlighten us what you do for a living that is so much better than a used car saleman. All we keep hearing from you is that you are in a buyside shop (new job) and your firm is hiring MBAs. And that you fantasize about going to Wharton even without having written GMAT. What the hell are you doing on this forum anyway, since 2006??? It took you almost 5 yrs to pass level 1?? You just passed level 1 in Dec 2010 and you’ve been on this forum since Jan 2006, offering your precious advice to the lowly car salesmen here. You may be literate but you have a long way to go before you get educated. If you’re riding so high on a buyside horse, I’ve already been there done that. What is so special about what you do? Just curious!
Back to topic. 
Instead of a FA role, have you tried applying to established RIAs/wealth management firms? I think with your background you would be very desirable there, and I think it would be more secure than an FA.
OK, maybe I’m missing something here. Maybe I misunderstand what financial advisors do in the USA. Becasue Palantir’s post made me realize that he’s putting RIA/wealth management in separate category. Here is the deal - I work in Wealth Management branch of a large Canadian bank and we have Investment Advisors (Registered) and Portfolio Managers (Registered) in our office. We manage portfolios, do macro level asset allocation, buy companies, debt, commodities, currency, hedge portfolios. I just can’t understand the hate. Our branch manages over $60 billion in assets!