Have you ever thought about becoming a financial advisor? Stop thinking right now. It doesn't matter how many sources predict that the industry will grow. The industry can never grow past its present size, and will be much smaller in the future. Allow me to explain.
First of all, Baby Boomers haven't saved nearly what they need to prepare for retirement, so all of those advisors counting on 401(k) rollovers into IRAs they can manage are going to be sorely disappointed between now and, say, 2020.
Secondly, the great credit/solvency/sovereignty crunch of 2008 onward is going to force a lot of brokerages to trim fat until they bleed. Horizontally integrated investment firms will have a hard time justifying the employment of anyone who can't gross at least a few hundred thousand dollars annually. That means cutting a lot of low-producing financial advisors. The ones who can fend for themselves will go independent, assuming their clients are tied to a human being and not some shiny platform.
Finally, advising has finally become a career path designed by the rich, for the rich. The Do Not Call legislation has pretty much eliminated the dinnertime cold call that generations of broker trainees used to build their books. Firms now expect their trainees to walk in the door with millions that will immediately generate revenue for the firm. Sorry, but Chris Gardner would never be allowed in the door at a brokerage today, except as an affirmative action hire to dress up the firm's HR quotas and avoid lawsuits.
How can I be so sure of this? A few years ago I actually worked as a financial advisor at a brand name firm. I was the only non-millionaire trainee in the office, hired for my education and background, and I was the only one in my group who didn't make it all the way through the program. The trust fund babies sitting around doing nothing thought that my Chris Gardner work ethic was a joke, and my silver-spoon bred managers couldn't relate to me once they saw my non-millionaire net worth. These managers hooked up the millionaire trainees with the firm's investment bankers as a reward for bringing in their parents' money. No way were they going to do that for me.
Firms nowadays design trainee performance targets so that their revenue targets greatly outpace the actual revenue their asset targets will produce after a couple of years in the program. This creates a deliberate gap between the gross revenue you're expected to generate after your second year and what your asset target will really generate. The only way to bridge this gap is to get the first ten million or so from your immediate family. The non-wealthy trainees who work extra-hard to bring in assets will be pushed out, and their assets handed on a silver platter to . . . the rich kids who walked in the door on day one with daddy's trust funds.
Financial advising is now a career path designed by the rich, for the rich. If you're not from a family of multigenerational millionaires, you won't make it. It really is that simple.
First of all, Baby Boomers haven't saved nearly what they need to prepare for retirement, so all of those advisors counting on 401(k) rollovers into IRAs they can manage are going to be sorely disappointed between now and, say, 2020.
Secondly, the great credit/solvency/sovereignty crunch of 2008 onward is going to force a lot of brokerages to trim fat until they bleed. Horizontally integrated investment firms will have a hard time justifying the employment of anyone who can't gross at least a few hundred thousand dollars annually. That means cutting a lot of low-producing financial advisors. The ones who can fend for themselves will go independent, assuming their clients are tied to a human being and not some shiny platform.
Finally, advising has finally become a career path designed by the rich, for the rich. The Do Not Call legislation has pretty much eliminated the dinnertime cold call that generations of broker trainees used to build their books. Firms now expect their trainees to walk in the door with millions that will immediately generate revenue for the firm. Sorry, but Chris Gardner would never be allowed in the door at a brokerage today, except as an affirmative action hire to dress up the firm's HR quotas and avoid lawsuits.
How can I be so sure of this? A few years ago I actually worked as a financial advisor at a brand name firm. I was the only non-millionaire trainee in the office, hired for my education and background, and I was the only one in my group who didn't make it all the way through the program. The trust fund babies sitting around doing nothing thought that my Chris Gardner work ethic was a joke, and my silver-spoon bred managers couldn't relate to me once they saw my non-millionaire net worth. These managers hooked up the millionaire trainees with the firm's investment bankers as a reward for bringing in their parents' money. No way were they going to do that for me.
Firms nowadays design trainee performance targets so that their revenue targets greatly outpace the actual revenue their asset targets will produce after a couple of years in the program. This creates a deliberate gap between the gross revenue you're expected to generate after your second year and what your asset target will really generate. The only way to bridge this gap is to get the first ten million or so from your immediate family. The non-wealthy trainees who work extra-hard to bring in assets will be pushed out, and their assets handed on a silver platter to . . . the rich kids who walked in the door on day one with daddy's trust funds.
Financial advising is now a career path designed by the rich, for the rich. If you're not from a family of multigenerational millionaires, you won't make it. It really is that simple.
