To the Future FA


Over the past few years, I have started to notice more members taking the route of becoming Financial Advisors. As you are most likely aware I went through this same process myself at one of the largest investment banks in the country. This lesson will help walk you through what you think you will be doing (or want to be doing) vs what you will actually be doing as well as some important lessons to speed up your learning curve of this fun, yet challenging profession. 

In the beginning, most of you cannot wait to be a licensed advisor getting your Series 7, 66 or 63 depending on the state you reside in, maybe get your SIE and your insurance license while you are at it. Prior to getting this license, you might dream of name dropping at a bar or to friends that you have such licenses, and how you will continue to get all the other numbered licenses under the sun.

But after you get them, you realize the last thing you will be doing is bragging about your licenses, just like how you have not mentioned your college degree since the day after you graduated.

If you are starting to study for your license, here are a few tips that helped me. Study first thing in the morning, leave your phone in the other room with the ringer off, as well as any other distractions. If you get an answer wrong, write out the correct answer with a pen and paper like it's 1992. Eventually, this long list of incorrect answers will get shorter and shorter as you start to memorize the answers. This is just like college, memorize a bunch of useless information that you will never use the day after you pass the exam. During this phase it's often referred to as Pre Production


After you are licensed, you are now in Production, meaning you are ready to bring on clients. Wherever you are working, whether it be at an investment bank, retail broker, or independent shop, the primary goal will always be the same, to raise assets. The more assets you raise, the more revenue you will bring on for your firm and yourself. Most firms will have a guideline of how much assets they expect you to raise and revenue expected to be brought. If you have seen any mobster movies when the underboss has to pay tribute to the main boss every week, the same principle applies here. 

Now for me coming from the trading side, I assumed that my trading skill would be a huge value add and that I would be individually trading every client's account, as I’m sure you too, are more than likely assuming the same.

This thought is a dream, but in reality, it's a nightmare. If you do this you will be wasting a massive amount of time and will take away from what is most important (raising assets). I foolishly did this for my first year, calling clients to get trade approval and explaining the trades to them, only creating more work and more complaining when I didn't buy the dead low and sell the dead high. What I did do in time, and what I strongly recommend you do, is create a repeatable process that you can scale.

For myself, my process was simple, I had a set of questions that I would ask the prospect to learn more about them. You have already gone through a sample of this at the end of Trading Psychology, where I find out your age, if you are married, what your income is (in the latter questions instead of leading with this), what type of accounts you have, how much your contributions are etc. Once I have this information, I can spot the weak areas, as well as applaud the positives (if there are any). 

After collecting this information, virtually every broker will have a financial planning program, where you can plug all this information in and more, and it will spit out a professional presentation that will give your prospects a reason to come meet with you. 

Quick Recap

You are a licensed advisor, you meet a prospect, collect the answers from your questions, you let the client know that you will put a proposal together and will follow up in a few days to review in person or on the phone, whichever they prefer. 

Once the plan is ready, you follow up with a phone call or email asking when they would like to meet to review (give an A/B option) or if they would like to do it over the phone.

“Hey, Mr. Smith would you like to jump on a call Tuesday or Wednesday this week at noon to go over your Financial Plan?”

I did 90% of this over the phone, remember, never send them the plan until the day of the meeting that you have already confirmed. I cannot count how many times I put the plan together and sent it over days early, only for the prospect to go radio silent when the day arrived to review it.

If they are married, you most likely will have gotten this information from the man of the house, however, the wife calls the shots. Go above and beyond to include the spouse and make sure she is on the call and that you speak to both of them and specifically address the wife as often as possible. Trust me, she is calling the shots after the call is over, she is the one deciding who they go with. 

Now with most shops, the planning software will split out an 80-100 page document, forget the Monte Carlo simulation, and Stock Selection nonsense. You want to simplify and cut out all the fat, go over their goals, their current net worth, concerns, and your recommendations.

The duration of these calls should be anywhere from 45 minutes to an hour, longer if they have good questions. Meetings in person can easily be a few hours. Breakfast is the most cost-effective or lunch, always pay and avoid diners, as they will get costly. A $300 dinner on a prospect that might only bring in $300 a year in revenue is not scalable. Breakfast is $20 a person even if they get a bagel with lox. Focus on breakfast and lunch meetings. Avoid dinners unless they are already clients or wealthy clients. 

After each major section, pause for a moment and ask “what questions do you have on this section?” Avoid the “do you have any questions?” as this often forces a “no” as most are too embarrassed to ask. 

Now after you have presented your plan, and explained what you would do to help them if they become your client, explain what the next step is. For myself it went something like this:

“What questions do you have for me today?”

If they don't bring up what it will cost or what you will provide, my follow up would be:

“If you decide to work with me, I’ve found that most people I work with want to know 2 main things, what they will get from my service and what my service will cost. Once I take over as your advisor, you will receive a call from me quarterly to keep you updated on your account and the markets. We will meet yearly to update your financial plan, I will help you with your 401k planning, and any other major financial decisions (insert the rest of what you will do). All of my services come at a flat cost that is billed (monthly, quarterly, or annually). Based on your account size it would be (approx this much a month) if this works for you the next step is...”

This is where you will explain that you charge a flat cost*, not a flat fee. Fee is a dirty word that for some odd reason only financial advisors, airlines, and ATMs still use. You charge a flat cost, say it out loud, you charge a flat cost. That could be 1% a year, 1.5%, I would get in the habit of starting with 1.5%, so if they say it’s too costly, you can counter that if they bring in a certain amount (a breakpoint) it will only be 1.25% or 1%. If meeting in person it is great to have this typed up. 

>$1,000,000+ = 1% yearly

$999,999-$500,000 = 1.25% yearly

$500,000-$100,000 = 1.50% yearly

$100,000-$25,000 = 1.75% yearly

You do want to create a min to open an account as most will start there as you build your relationship. If you say it's $1,000, most will give you $1,000, which is $20 a year. So pick a realistic floor such as $25,000 or $100,000. Be willing to bend that rule from time to time, but get into the habit of avoiding small accounts as those people tend to focus on every penny and can be much more of a headache than someone with money. 

After you go over your flat cost, spell it out in $ amount as well.

Mr. and Mrs. Smith, you have a $100,000 account, at 1% that would be about $80 a month for my service. 

There have been a few times where clients of mine misunderstood the cost and would call to complain. Easier to be upfront and as transparent as possible so there is no confusion. 

After you have gone over their questions, then you have to ask to close, an example of this below, if you don’t ask, trust me, no one is going to be running over to give you their money.  

“Mr. and Mrs. Smith, if you like the plan I have put together for you both and would like to move forward, the next step will be as follows. I will need a copy of your driver's license and a copy of your last statement from XYZ broker. Once I have that I can get everything in motion and we can get started”

Important to remember, always focus on the next step, not the next steps, if you rattle off the next 3 things they need to do, you lost them. The next step is to send me your recent statement and a copy of your driver's license. If you are doing this on the phone, remind them that you will send them an email summary as well (make it as easy as possible for them).

Now they said yes, and they want you to manage their money and the money comes into the account you opened. No investment firm you work at will give you any help or advice on how to manage the money, and for good reason. They don't want to be liable for your mistakes. When I present my plan, I would offer 3 different investment models. After the money arrives, it is a good idea to get in the habit of calling back and going over the model that you will put them in. I would offer 3 different models, an example is below:

Model 1 Very Conservative - 50/50 equity, fixed income (age 50+)

Model 2 Moderate - 80/20 equity, fixed income (age 40-50)

Model 3 Aggressive - 100 equity with international exposure (age 20-40)

All 3 models had the same 10-15 Vanguard ETFs with different allocations, it was simple, scalable, and repeatable. Again, 99.99% will not care what the 10-15 funds are so don’t waste your time explaining them, focus on choice A, B, or C. 

There is a term often used in the financial world called managing your inventory. Say you have 100 clients and each has a different portfolio of 10-15 stocks. You need to be a wizard of thousands of stocks, and when those miss on earnings believe me those people will be calling to give you an earful. Yet if you have a small inventory of the best ETFs (think Big Picture), they will outperform your stock selection in the long run and make your job that much easier. 

Let's recap one more time

Step 1 - Meet prospect 

Step 2 - Collect information 

Step 3 - Present Plan

Step 4 - Ask to Close

Step 5 - Invest in 1 of 3 models 

Step 6 - Rinse and Repeat

This is the job of an advisor. Plain and simple, to meet as many prospects as possible and bring in assets. For myself, the one big advantage that helped me outperform my peers was a focus on weekly saving. Most advisors’ focus was to bring in the $1 million or $100k account, yet after that, they were onto the next. My focus was also on the $1 million or $100k account, however, every client had to save weekly or I would not bring them on. This was not up for discussion, if they were not willing to stoke their fire, I could not help them. As a result over 95% of my clients saved weekly, now you start to pick up your first 100, 200, 300 clients and each is saving weekly. Those $100 x 100 people start to add up without any additional work on your end. Each year I was raising an extra million plus in assets automatically from this simple step that 90% of advisors would never do.

Just like the min account size, my weekly min was $100 a week (to max out their IRA), then every time I spoke with them, I would bring up increasing it by a few dollars. Over time, I increased the weekly floor to $200, then $300 and the snowball effect continued to build. Remember this is something that is scalable and repeatable.

Being an FA comes with great responsibility as your clients are trusting you with their money. Most firms, even my own, will nudge you to push products or services that will bring in revenue for them first, you second, yet won't really benefit the client at all. Don’t fall for the short term boost in revenue, focus on helping the client first, yourself second, and lastly the firm. Your firm will do just fine with or without you and in time, you will eventually move to another firm to cut a better deal. Your clients are the ones who will come with you when you make a change if you do right by them first.

The Secret Task 

If you are an advisor or studying to be one, you have 2 tasks:

  • Send me over your step by step process
  • Send me over the 1st step of your process and I will be your prospect (role play)


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