Financial Advisors-This question is for you!

[Lefty_3Jack]

I'm a 37 year old industrial salesman. I make a good clip of money, work off of commission only and have made it my living for the last 13 years. I think I've done about as well as you could possibly think of with regards to what I make for a salesman, but I've noticed our club is littered with financial advisors/money managers. A few questions:

I know virtually nothing about the stock market, how it works, what it means when a stock splits, etc. Where is a good place/good book/etc to learn the basics about investing in the market? While I don't follow the Total Money Makeover from Dave Ramsey we generally follow his principles. We don't carry credit card debt, we have taken out loans for vehicles, but have paid them off in 3 years or less and we're currently working on paying ourselves a car payment a month so that the next vehicle for each of us will be paid in cash. So while not literate in the investing world, we're not bad off financially. Have you seen anyone my age with little to no experience make it as a money manager/financial advisor? I had someone tell me the only scenario they see would be find someone who will sell me their business and bring me on for 2-5 years to learn the business prior to them retiring. I know a golf forum is an odd place to ask this, but I thought there might be a lot of money managers on here that play golf.

[uitar9]

I am not a money manager or financial advisor. I work in banking and work besides many wealth management types.

Couple of observations:

-If you want to work selling mutual funds, stocks, bonds or are providing investment advice, you need to be licensed. Check out the licensing required in your state. They will often post the reading material. In Canada a couple of basic text required support the Canadian Securites Course or Personal Investment adviser Course. Your state probably has something comparable

-One of the first things you will discover is that investing, not day trading hoping for home runs, has to have a goal. and that goal fits an individuals age and risk tolerance. So the "stock market" only forms a piece of that long term strategy. It's a big world

-Whenever you switch industries, you'll take a step or two back in the annual salary at first. You've got 13 years in so have probably met a lot of people. make sure you keep their contact info and stay in contact with them as you get your feet in. One thing about money management, every body needs it.

-Golf is a great way to spend quality time with a client. Its no more expensive than a martini lunch, quieter, longer and you have a chance to really get to know a client and their family. I find clients will see right through you if you cheat on your score. An honest 98 on a tough course will get you more points than a BS 79.

-Buy low, sell high. Seems simple in theory but most folks are driven by fear and greed and do the opposite.

[puttnforthe8]

You could be successful, but it will take a long time. You need to be trusted or get in good with someone who is trusted and get some of the to 'rub off" onto you. Otherwise, you just start with everyone else....at the bottom.

[BeerPerHole]

I'm an engineer. But, several years back I went back to school to study finance at the UC. After a couple courses in my firm I was a client at hired me to become a registered investment advisor. I took and passed the Series 7 and 66 and ran my own advisory business for almost seven years before hanging it up and selling that business. It was small and I had 75 clients at that time. I had my engineering work the whole time and still do that work. But, may go back into finance when I hang up my engineering work in the not-too-distant future. Dave Ramsey is pretty good in his advice to people about basic household finance (annuities, life insurance, etc). If you "know nothing" about how the stock market works you've got some studying to do. If you want to dig deep into the fundamentals of how it works get a good study guide for the Series 7 exam. Dry reading, but worth it. A first go-to for people, IMO, is the website "investopedia" for good, basic explanations of various related facets. It's an interesting industry. It's a lot more sales-oriented than many realize. I know a guy who's a marginal advisor but great salesman who works long hours and he's made a bundle. I may go back into the industry as a quant.

The general public is woefully uneducated on this stuff, for a collection of reasons. And, most don't seem to care until the market pummels them...

Feel free to PM me.

[The Pearl]

If you make the switch you need to stay away from the commissioned sales firms. They are dead, dying, or have horrific reputations. Not all, but most. Learn the difference before you make the switch. Wirehosues, banks, insurance agents, etc. are not real advisors. They are hired guns whose duty of loyalty is always to the firm's products, not the clients. Selling products to people is shameful in today's landscape.

You will want to go the "fee only" route which in today's marketplace will likely result in pursing the CFP designation. In order to get the CFP designation I believe a bachelor's degree is necessary, but it does not have to be in finance. It also requires experience/work requirements within an existing firm. The course work is an absolute bear if you have little or zero finance, insurance, accounting, estate-planning background.

With that said, there is literally no barrier to entrance to becoming licensed as a "financial advisor". All it requires is passing the Series 65 and registering with the State or SEC. There are no educational requirements beyond that. Many, many "financial advisors" know squat about markets or financial planning, but are good at marketing and BS.

If you want to be a pro and have a long and rewarding career with long-term clients than you will have to pay the price. I see only two roads:

Find somebody that will hire or mentor you from the ground level. You will likely have to put in several years of basically "interning" for little pay. But they might be willing to short cut your process, teach you the necessary skill set, sponsor your CFP program, etc. This route will require you to plunge yourself into learning much of the technical skills on your own.Go back to school and get on the finance/CFP track and you most likely will hire on upon graduation. This programs are not at every college.One warning is that you better love it, be passionate about markets and personal finance. If not, you are going to be miserable. Perhaps more important, you will have to learn to deal with people in terms of their emotions, etc.

Just some thoughts. Let me know if you have any questions.

Start following those in the Financial Planning community on their blogs or their twitter feeds.

Most advisors think Dave Ramsey is a hack, but I think he happens to do a ton of good work on the basics which is what most people need.

 

 

 

[stlouismark]

You sound fairly successful in your current career. Any particular reason you want to switch? People can certainly earn a lot as a financial advisor, but lots of FAs don’t make a lot, and many wash out of the biz. It’s generally like any financial services sales career (mortgage, insurance, etc). I would be prepared to earn little money for several years, likely a lot less than you are now, until you can build up a book of business.

Edited August 24, 2020 by stlouismark

[uitar9]

I see this thread came back to life...did you move any further with this idea?

 

[scomac2002]

Better still:  A random Walk Down Wall Street by Burton Malkiel

[Triple Lindy]

On 5/27/2020 at 9:16 AM, Lefty_3Jack said:

Have you seen anyone my age with little to no experience make it as a money manager/financial advisor?

Way too many. Most are really just salespeople who push funds that pay them the most commission. And I’m not knocking sales - that’s where I spent my career. It’s just that I’ve found the financial advisor world is littered with people who really don’t understand, or worse, don’t care about basic investment strategies. 
 

Anyone interested in a super simple model that beats the majority of managed funds should check out Scott Burns’ Couch Potato portfolio. 50% total U.S. stock market and 50% total U.S. bond market. Rebalance once per year to maintain that 50/50 ratio - literally takes a few seconds. Low expense ratios using index funds and no advisor fees. No other knowledge required.

 

I used that model, along with staying out of debt, to retire at 55, sending 3 kids to college and paying off my mortgage before retirement.

 

If only golf was as easy…..

Edited August 24, 2022 by Triple Lindy

[smeal818]

On 8/24/2022 at 9:02 AM, Triple Lindy said:

Way too many. Most are really just salespeople who push funds that pay them the most commission. And I’m not knocking sales - that’s where I spent my career. It’s just that I’ve found the financial advisor world is littered with people who really don’t understand, or worse, don’t care about basic investment strategies. 
 

Anyone interested in a super simple model that beats the majority of managed funds should check out Scott Burns’ Couch Potato portfolio. 50% total U.S. stock market and 50% total U.S. bond market. Rebalance once per year to maintain that 50/50 ratio - literally takes a few seconds. Low expense ratios using index funds and no advisor fees. No other knowledge required.

 

I used that model, along with staying out of debt, to retire at 55, sending 3 kids to college and paying off my mortgage before retirement.

 

If only golf was as easy…..

Agreed on way too many salespeople in the fin services world versus actual advisors - fortunately this has been trending in the right direction. Also, kudos to you for being a great saver, 99% of people would have a hard time accomplishing what you did.

 

I'd vehemently disagree on the 50/50 portfolio as you're leaving PLENTY of returns on the table in an accumulation phase. I like to see as much $ in stocks until someone is retired and/ or withdrawing from the portfolio.

[Triple Lindy]

1 minute ago, smeal818 said:

I'd vehemently disagree on the 50/50 portfolio as you're leaving PLENTY of returns on the table in an accumulation phase.

Completely understand and everyone has their own strategies and risk tolerances. Scott Burns has multiple risk/investment models, all of which consider expenses and are super easy to follow. The 50/50 model (Couch Potato), as risk averse as it is, still beats more than 95% of managed funds.

[Lefty_3Jack]

On 2/14/2022 at 2:13 PM, uitar9 said:

I see this thread came back to life...did you move any further with this idea?

 

Wow didn't see this from February!  I am currently still doing the same work, but still looking for an exit.  Money is still good doing what I do which has prevented me from leaving.