7 Reasons Why I’m Not A Financial Advisor

We have been writing this newsletter for close to 3 years and have had an online presence for almost 5 years.  In that time period I have been asked by subscribers and readers dozens of times why I am not a financial advisor. I can’t help but chuckle ever time I hear that question because I get the same question from my mom at our family gatherings.

Everyone who knows me personally, knows without a doubt that I love personal finance and investing. Some people like their cars, others like their sports, I love my finances. Truth be told I actually looked into becoming a financial advisor about a year ago, unfortunately the in depth job description I found was very disappointing.

Financial Advisor Job Description

1.) Part Time Does Not Exist – All reputable firms that hire entry level financial advisors do not offer part time work. In fact any firm worth their salt require all new financial advisors to work approximately 50-60 hour work weeks. I love working hard just as much as the next guy, but I am happy at my current job and the possibility of scaling into financial advising is not available.

2.) Business Model – Speaking of scaling in, when I researched the average personal financial advisor salary it was another nail in the coffin. Successful advisors make a very good living however, it takes a lot of hard work to get there and doesn’t happen overnight. There are a couple ways advisors are compensated (Fees, commissions, etc) but typically most advisors at big brokerage firms charge approximately 1-2% of assets under management.

As I said before I am happy at my current job and am handsomely compensated. In order to match my current salary it would require a lot of time and sales within my first year. While not impossible, after talking to some financial advisors they said it is not typical to see that type of success in the first year. I crunched some quick numbers and here’s what I found:

  • $50,000 salary – $5 million Assets Under Management
  • $75,000 salary – $7.5 million Assets Under Management
  • $100,000 salary – $10 million Assets under Management

Now granted your income opportunities are virtually unlimited acquiring between $7.5 & 10 million in Assets Under Management is no easy task.

3.) Red Tape/Legal Requirements – Oh my gosh, then came the red tape. The SEA of red tape I should say. I honestly do not know where to start. I will say as a financial advisor for a bigger reputable firm they have entire departments that keep the red tape at a minimum to advisors but it’s still there. A couple of the biggest things that stuck out to me were the following:

4.) Licensing & Qualifications – Series 65 exam, plus you will more than likely want a financial designation (CFP, CFA, PFS) which requires more schooling and previous financial work experience.

5.) Federal & State Regulation/Compliance – These are the laws that you must abide by as an investment advisor. They actually were not all that bad but seemed very tedious and in short a huge headache. File this form…. Report this…. Pay this fee…

6.) Sales Aspect – This is the cold hard truth in my opinion of the financial advisor industry. If you are not making money for your company then you are not an asset. This means if you are not gaining clients you will surely lose your job. Your financial knowledge is absolutely meaningless if you cannot convince a potential client to invest with you and your firm. I have the utmost respect for those individuals in sales and I am humble enough to state that sales is not my strong point. I simply try to add value to someone’s life and if they choose to except my advice “good” if they don’t then “no hard feelings.” The pressure of having to make a sale is not something that I want in my life right now.

7.) Life Style – At my current job I am fortunate enough to come into work put in my hours and go home. I literally take nothing home with me at all. This means uninterrupted time with my family and I am not anchored to my smartphone dreading communication from my office. I personally place a large value on my current situation compared to the alternative as an investment advisor. Any advisor worth their salt in my opinion would be available 24/7 for their clients. Additionally, in order to acquire new clients advisors attend a lot of networking and social events that occur during non traditional work hours.

The Big Takeaway

While I love finances and believe I would thoroughly enjoy being a financial advisor, I am a husband and a father before anything else. As the sole provider for my household I will not take the risk to become an advisor and jeopardize the stability of my household. Please make no mistake, their are a lot of great financial advisors available, but for my particular situation it is not feasible at this time.

 

23 Comments

  • Abdul Hassim

    Reply Reply February 1, 2016

    Great advice. I would like to ask you a question. Do you think it is possible to transition a career from financial advisory to something else.

    • Marvin

      Reply Reply February 1, 2016

      Absolutely, we know plenty of former financial advisors with a lot of knowledge and skill sets who have transitioned.

  • Abdul Hassim

    Reply Reply February 2, 2016

    I’ve recently been offered a position in a financial advisory graduate programme. I’m considering accepting the job just to get my foot in, however I have no intention of pursuing a career as a financial advisor in the long term. Any advice?

    • Lu

      Reply Reply February 4, 2016

      Don’t do it.
      If you have no intention of staying, prospects can tell and won’t sign up.
      Failing is no fun in any job. At a brokerage firm, they will make you feel worthless when you start failing out. It will be quick but not painless. If you’re not hitting goals they start forcing you to be on early morning training calls, etc. You will be miserable very quickly

    • Marvin

      Reply Reply February 4, 2016

      If you know it’s not something your heart is fully set on then I would think long and hard about moving forward. I understand we all must work places that aren’t our #1 choice but the financial advisory industry is cut throat and unless you give it 100% 24/7 you will likely be unsuccessful.

  • Abdul Hassim

    Reply Reply February 4, 2016

    How many years of experience would you say one requires before they can become an independent advisor?

    • Marvin

      Reply Reply February 5, 2016

      From everything I’ve seen it really depends on the person. In my opinion you must understand being a successful financial advisor requires that you become extremely proficient at selling to people.

  • Abdul Hassim

    Reply Reply February 7, 2016

    I was told I could move into different divisions within the company. One possibility is becoming an investment specialist. What do you think about this career path?

    • Marvin

      Reply Reply February 7, 2016

      As someone who loves the art and grind of investment analysis, an investment specialist is my dream job. But the fact is, investment specialist have limited earning power as where financial advisors have unlimited earning power.

  • Abdul Hassim

    Reply Reply February 12, 2016

    Thanks for all the advice. Really appreciate it.

    • Marvin

      Reply Reply February 13, 2016

      Our pleasure!

  • Megan

    Reply Reply February 26, 2016

    Marvin, so if your not a financial advisor what is it that you do? I am looking to make a career change and researching different path opportunities.

    • Marvin

      Reply Reply February 26, 2016

      Good morning Megan

      Please understand this is simply my own personal opinion and decision at the moment. Perhaps being a financial advisor is right for you. What career change are you looking for?

      • Megan

        Reply Reply February 28, 2016

        I’m not sure. I want something business related. I have a passion for helping people. Preferably a Monday through Friday job with benefits.

        • Marvin

          Reply Reply February 29, 2016

          If that’s the case then perhaps becoming a financial advisor may be right for you. Have you looked into banking at all?

  • GADS

    Reply Reply February 29, 2016

    As an older worker (53) female coming from the P&C insurance industry I was considering a career in insurance based financial planning. I am currently working for a reputable life company and have my life disability and health license.
    Since I am looking at only another 15 years of work(Id love to work til Im 80 but I have to be realistic) is insurance based financial advising a good move at this point?
    I am very interested in selling long term care as well as life products but I am concerned about supporting myself since I am alone and single and its strictly commission based.
    What should an older worker consider when making the switch? Is it realistic?

    • Marvin

      Reply Reply February 29, 2016

      This might be a question for a current financial advisor as they would know the particular requirements and job atmosphere. From what I have been told the first year of becoming a financial advisor is quite rigorous, it’s a lot of long hours and stress. Just something to consider.

  • idan

    Reply Reply April 25, 2016

    You keep mentioning “at your current job” but never addressed what your current job is at the moment.

    • Marvin

      Reply Reply April 26, 2016

      Due to policies I am not allowed to reveal my current job.

  • Steven Trinh

    Reply Reply June 19, 2016

    Would you say only those with an outgoing personality are successful in this field?? Currently working in HR but looking for a job that has higher potential in terms of compensation..

    • Marvin

      Reply Reply June 19, 2016

      It’s not a prerequisite but for all intents and purposes you are a salesman. You will need to talk to people on a consistent basis and convince them to hire you.

  • Rbroast

    Reply Reply July 30, 2016

    What if you weren’t the provider. Would you be an advisor then?

    • Marvin

      Reply Reply August 1, 2016

      In order to give financial advice you must be a licensed advisor.

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