What’s Life Like As A Financial Advisor? Depends On Your Pain Tolerance

Are you wondering what's life like as a financial advisor? You're in luck as the following guest post from Ben comes on the heels of “Should Your Financial Advisor Be Richer Or Smarter Than You?” where I discuss the plight of the less experienced wanting to break into a notoriously difficult industry with a high failure rate. 

Ben from Wealth Gospel shares his experience going through training as a junior financial advisor. I can't help but wonder by the end of the article whether the key to any successful career is to just survive through the initial hardship. Hope you enjoy the insights!

Chart showing share of wealth accruing to various wealth groups - financial advisor opportunity to make money

According to the Bureau of Labor Statistics, a career in financial planning is on the up and up. Their research shows that the number of financial advisors is expected to increase by 32% from 2010 to 2021, much faster than the 14% average growth across all career fields.

But if you take a look at the current group of advisors, less than 5% of them are under 30. That means the insane growth is more likely to come from career changers than young college graduates. Why is that?

Well, having worked in the industry, I’ve seen first-hand why the younger generation doesn’t want to touch it. But at the same time, I also learned how to scale those barriers that are scaring people away from a potentially lucrative and meaningful career in financial planning.

Financial Advisor And The Inverted Triangle

We all learned in Geometry that the triangle is the most stable shape because of its wide base and narrow top. But what happens when you flip that triangle upside down? That’s what it’s like to start a career as a financial advisor. There is almost zero stability. And we’re not talking here about starting out on salary. We’re talking pure, commission-only financial planning goodness. A six-figure salary is likely a decade out.

One of the veteran advisors I worked with put it this way: “For your first five years, you’re eating crap sandwiches every day. And if you want to be successful, you have to make the choice to eat that crap sandwich, and you have to love it.” Yum, right?

But coming from someone who’s been in the business for almost 20 years and makes upwards of a few hundred grand a year, it was as inspiring as it could get. He had gone through the rough stuff and now has all the stability in the world. The only people who can fire him are his clients.

And that’s what young people don’t understand. They opt for the corporate triangle because it feels more secure: solid salary, benefits and hopefully reasonable hours. Their minds have been filled with thoughts of how bad the economy is and how horrible the future is, so they go with what’s safe. But the higher up you get in that triangle, your stability actually decreases.

Politics, nepotism, and shareholder expectations make it difficult to keep everyone satisfied all the time. My father-in-law lost his job a couple of years ago after working 12-16 hour days for a year to keep his boss happy.

In the end, his boss fired him to hire one of his buddies. And the average tenure for a Fortune 500 CEO is just a little bit longer than a presidential term. No wonder so many people switch to it after working the corporate scene for ten or twenty years.

So the real question is when do you want to eat the crap sandwich?

The Crap Sandwich

During your first 5 years as a financial advisor, it’s all about the numbers. Decades of studies within the industry show that for every ten people you contact, you can get three of them in front of you for an initial meeting, and one of them will become a client at some point in the next 3 years. So if you’re following those numbers, there’s going to be a heck of a lot of phone calls to a heck of a lot of leads.

When you’re starting out, those are going to be to your family and friends, people you went to elementary school with (“Dude! I haven’t seen you since that time I flicked a booger in your eye!”) and your fellow college alumni (That is, if you were smart enough to keep the directory).

Of course, you don’t want people to think it’s a pyramid scheme, but your other options are to whip out the phone book or go from door to door. Mmmm…can you taste that sandwich? You’re going to get a lot of noes and not a whole lot of yeses.

You’re going to lose every bit of confidence you ever had, and if you’re married, your spouse is probably going to start wondering why they married you. You’ll be desperate to meet with people, so if someone wants to do a phone appointment at 6:00 a.m. or doesn’t get off work until 9:00 p.m., their schedule becomes your schedule.

Eventually, you get to the point where you have to decide whether or not to keep chewing. Most people do. In fact, the success rate in the financial services industry hovers around 12%. It’s hard. And if you aren’t good at it, or you don’t have a good network of people to start off with, it only gets worse.

It’s important, therefore, to make sure you have a good support system. Find a mentor. Have your mentor’s wife be your wife’s mentor, because she’ll need it too. Leverage your optimism and keep a large reserve of it. You’ll have some great days and great paychecks, but you’ll mostly have really crappy days and sometimes minuscule paychecks.

Related: An Easy Guide To DIY Investing

Average Won’t Cut It As A Financial Advisor

During the last semester of my undergraduate degree, I met with the professor of the Financial Planning course I was taking to discuss my career aspirations. I told him that I was doing an internship with a financial services firm doing financial planning and planned on doing that full-time after graduation.

He looked me straight in the eye and said, “The problem with that job is that you only get paid in commissions.” It was a very condescending tone, but he was right. That is a problem for a lot of people. When looking at information for the company I was working as well as similar companies, the average first-year salary for college graduates was somewhere around $16,000. And that’s just not going to cut it.

Suddenly it made complete sense that the business school pushed investment banking and public accounting so much and did so little to partner with companies like ours to recruit for summer internships and after-graduation jobs.

Not only does it kill their numbers to have their “average” college grads reporting $16,000 incomes their first year out of school, but what business school wants to convince their students to take a career with an 88% failure rate? If you want that, get into the entrepreneurship program where failure is actually exciting.

But those numbers don’t tell the whole story. The reality is that the average first-year “commission-only” salary for the top quartile of advisors is a little over $100,000. We even had one such guy in our office who was just a rock star.

At 10 years that average is around $325,000 and at 20 years it’s close to $650,000. Those numbers look pretty awesome, but that’s still the top quartile for financial advisors.

Being A Financial Advisor Is Not for Everyone

The younger generation seems to shy away from that line of work because they’re just not disciplined enough for it. Time management is a huge struggle because, although most companies have minimums you have to meet, no one’s going to keep you on task. And the golf and client appreciation events are fun, but the day to day cold calls and sales pitches…not so much.

You have to be able to maintain focus, have a clear vision of what you want and what you’ll do to get it, and be ready to work your butt off. That being said; it’s not for everyone, and that’s okay. Some people just aren’t passionate about it. Some people don’t have the work ethic. Some people just freaking hate sales.

But if you are passionate about being a financial advisor and are willing to eat those sandwiches every day, don’t let those cold hard facts scare you. Being a financial advisor can be a very rewarding experience, monetarily as well as with the relationships you build and the good you can do for people who cannot do it for themselves.

As for me, I’m no longer in the financial advisor industry because of some private circumstances. My wife and I had an experience that made us decide to move closer to her family.

Since we didn’t know anyone there, I’d be moving from a “warm” market where I knew a lot of people and where my clientele was, to a “cold” market where I would have to start from scratch all over again.

After a lot of thought, it just didn’t feel right to keep going, so now I’m looking to help people in a different way through writing about personal finance. I’m also working on an online business to help people in the financial planning arena, but that’s still a few years away. Oh, the anticipation!

Hopefully you now have a better idea of what life is like as a financial advisor. It's a tough career in the beginning, but it can get better over time.


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63 thoughts on “What’s Life Like As A Financial Advisor? Depends On Your Pain Tolerance”

  1. Sam and Ben,

    Great article. I got licensed for Life and Health recently after studying retirement planning, life insurance and annuities for 2 years for my husband and I. After talking to several financial planners and getting conflicting answers, some bashed the others’ ideas, some gave very unique perspectives, I decided I wanted to make the industry better and start with financial education for clients. I joined the industry when I heard a presentation on eradicating financial illiteracy and this company will take part-timers. So I joined. They provide marketing tools, social media posts, blog posts, email address, CRM, training, field support – but they only pay 25% to start. Then 35%. And of course you can make more money when you are securities licensed and create a team and get overrides. I’m still at the beginning stages, battling the urge to clean vs make phone calls. Not sure how I feel about the recruiting side – I guess any financial or real estate firm recruits, right?

    I’m interested to know your take on WFG World Financial Group. There are many very successful people in our group. How do they compare to other financial groups regarding pay/ commission rates? Is it better to start out in a firm that does not include recruiting?

    Thanks much for your insights! Renee

  2. Peter Horsfield

    Previously I studied and trained to be a teacher. After meeting a financial planner I thought what an awesome job.

    As with any start up there is a high failure rate. That’s life!

    And if you want to be successful at anything in life, remember this ‘ money always flows to where it’s most valued”

    I’m coming up to 20 years as a financial planner. Over this time I have learnt how to make and keep money, not prioritize money over relationships and doing so now choose to work instead of needing to work.

    If you have a passion for anything in life, then get into it, learn, grow, give back, push through the hard times and stay true to your values and add more value to your clients lives, because they are the ones who keep you in business, as you help them with their business.

    1. Michael Mallon

      Well written Peter….currently studying for CFP to hopefully open up my practice one day. I would hope to find the same success and build relationships with my clients as you have over your career.

      Thank you again for your insight!

  3. I’m confused. Did the author (who I am, maybe erroneously, assuming is “Sam”) work in financial planning/wealth management for 13 years or work in “Investment Banking” for 13 years before retiring in his 30s? Please advise.

  4. I just recently started a career in Financial Planning, and I have to say it is as tough as you say, simply because of that sales aspect :( however I love the planning aspect of the job so I will persevere.

    I’m 27, with a short career background in banking. The company I work with pays no basic salary, only commission, and we also have the threat of clawbacks (policy lapses and having to pay back the commission earned). I have to say I hate the uncertainty of this career, especially in the beginning. I feel it’s made to be unnecessarily painful, with all the risks being borne by the employee.

    What you say about eating crap sandwiches is definitely true. This career is not for the faint of heart. Your friends and family will think you’re crazy for giving up a stable salary (and many times you’ll agree with them). People will think you’re just trying to sell something or that you want to take their money. People will drop the phone on you. People will make you feel like you don’t know anything. Like it is sooooo tough and can be so disheartening.

    However as scary and terrible as this sounds, imagine if you make it? Imagine how successful you could be? Imagine how great it will be once the referrals start coming in and you can choose your clientele? Imagine how many people you could really help? Imagine how many advisors you could groom in turn? Imagine if you could make the industry better and more inviting for young talent? (Lol I have big dreams)

    As painful as this job can be, always remember your “Why”. Why did you choose to be a financial advisor? For me it’s because I love helping people make better financial decisions, because I hate seeing people struggle once retirement age comes, and because I believe cycles of poverty can be broken. You must remember your “Why” when things are tough, it may be the only thing that gets you out of bed in those tough times.

    Anyway let’s hope I’m still pushing the dream (slash nightmare ) in the years to come. It would be great to have some sort of Financial Advisor Support Group, especially for the newbies.

    1. Hi,

      I read your comment and I wanted to know if you were still a financial advisor. If so, could you offer any advice since you wrote this?

  5. Thank you, thank you, thank you! You’ve just cured me of the silly idea of wanting to study for the CFP.

    Now I see; it’s clearly not the right career path for someone like me who hates selling.

  6. Thank you for the excellent insight! I’m considering a career as a financial planner as a 29 year old and have a background in economics and a sales manager in a corporate environment.

    On a scale of 1-10, how important is a robust personal/professional network before you even start as a financial planner? Can you sustain yourself in the first 3 years without a huge network (for example if you’re in a new city?)

    How serious of a threat are digital invest options, DIY investment tools etc that will be available to upcoming generations – will this hurt the current financial planning model and landscape?

    Are there any big differences between an investment advisor and a financial planner in terms of a competitive advantage?


  7. This was very helpful and VERY honest. I have been a Financial Planning Assistant for about 8 years now and considered branching out as an advisor for a few reasons (wanting to make real use of my licenses as one of them). I have seen the success of the team I work with and even inquired about working with them in the capacity of a junior advisor or something similar. Let’s just say I am still waiting. So, the logical thing to do would be to take my licenses and operational experience and run.

    I have interviewed with SEVERAL financial planning firms (large and small), and while the compensations structure varies from place to place (I have seen a majority of them offer a small beginning salary until you get on your feet) they all only seemed to be excited by the the fact that they would not have to pay to have me licensed and I had over 1,500 friends via Facebook and LinkedIn. They were all experts at “selling” the pipe dream…..

    I am a married women and the mother of a toddler and hopefully one on the way soon. My husband works, but I make a tad more than he does right now. I’ve seen the good and the bad of the industry and its potential. Maybe one day, assuming this industry remains lucrative, I will make that step. Right now, I just don’t think its the right. This post confirmed what I already knew but didn’t really want to admit to myself. If I was the only one have to eat the crap sandwiches; not so bad. I wouldn’t feel right placing that burden on my husband and my young ens right now.

    Thank you for you unbiased view and realistic view.

  8. “First prize is a Cadillac Eldorado…Second prize is a set of steak knives…Third prize is you’re fired.”

  9. Ryan @ Impersonal Finance :
    That’s nuts. It also seems very similar to being an insurance broker.

    This shouldn’t be too surprising as the origin of financial planning can be traced back to the insurance industry. How ingenious to have devised a process requiring the prospective client to describe his/her financial position in detail! Not only could the insurance salesperson quickly figure out what insurance to offer, but it opened up additional opportunities like selling annuities and mutual funds.

  10. I am actually in the field myself (back office support type role). Fair recap Ben. I think one thing that was missed was the freedom the job has. Like mentioned above you could probably replace the title with any commission based job, but most offices don’t care how you spend your day as long as you are producing…fantastic freedom!

  11. Ben, I have long considered financial planning as a great second career but I wonder if you could address another factor, that may also have a role.

    I am in a technical field, but I do have an MBA. I am working informally with friends and family, helping them weather the last few extraordinary years. I have talked with several people who have made the switch to financial planning as an encore, and they seem to confirm these beliefs:

    1 – informal networks (actually talking about finances, not just contacts) jump-start a practice
    2 – as an encore career, you may be in a financial position that you don’t need to grow income: you can do part-time if you want, or keep going. (tune it to your level of commitment)
    3 – the real question: that age is a plus here. In effect, you trust an older adviser more than a younger one, because you assume that they have a level of experience. This is exactly opposite of technical fields. Although I have not experienced any kind of ageism myself, I do see it regularly applied to others. There is a poetic aspect to turning a problem in the current situation into a strength.

    In your experience, do you see this as true?

    1. Ben @ The Wealth Gospel

      Hi Matt,

      It’s definitely true that age is a plus. Now is a great time to get in the industry because baby boomers are either retiring or about to retire, and they’ll need a lot of help knowing how to keep those investments going and plan distributions, and you better believe they don’t want some 25-year old kid doing that for them.

      And yes you can use it as a part-time thing, but I know that a lot of firms will have minimums that they expect you to meet, so you would either have to find one that would allow you to do that without complying with the minimums or just start out the first few years working full-time and then slow down.

      Informal networks are great because you usually have a relationship with those people that can easily be turned into a professional relationship. With that, though, you’ll need to make sure to work with other advisors who have more experience, because your friends and family trust you, but they know you’re new. So having another advisor acting as a mentor can give them peace of mind.

      Let me know if you have any other questions! And good luck if you end up deciding to do it!

    2. Ben @ The Wealth Gospel

      Matt, sorry for some reason my reply from yesterday didn’t show up. Yes, informal networks are great because you already have a somewhat professional relationship there, although it’s important that you work with a more experienced advisor at first, otherwise it can be hard for someone who knows you’re new to trust you.

      As far as doing it part-time as a sort of encore career, I know that some companies have minimums they expect you to meet sales wise, so it’s usually best to start out full-time and build your clientele. Eventually you get to the point where you can choose to keep doing it full bore or to pull back and spend more time with the family.

      And yes, age is definitely a plus. I had a hard time working with older people because of that, and the biggest market right now is the baby boomer generation since they are retiring or retiring soon.

      I wish you luck in your decision!

  12. You described most commission jobs, just change the title. It takes a lot to get through the early years of no income, but the payoff is there if you like what you doing. Similar professions would be stock broker, insurance and real estate. When I was investing i income property, I thought about becoming a real estate broker. I decided against it because I do not enjoy the sales process.

    1. Ben @ The Wealth Gospel

      Agreed! The sales process is definitely something I don’t miss. If I didn’t have the passion for helping people get their finances in order, I probably wouldn’t have lasted a week because of how much I hated selling.

  13. One last thing:

    I have read that a lot of evenings and weekends are involved dealing with clients. Could you elaborate on what this means? Is it making cold calls at night? Meeting with them or calling them about their portfolio? Schmoozing? Networking?

    Is it all day everyday?

    What this comes down to is that while I don’t have kids yet and I am only recently married; I don’t want to be one of those dads/husbands who wasn’t there because he was off living his passion.

    I understand I might not make it to every game/practice and I might not always be home for dinner. However, is there opportunity there to still have a life outside work on occasion? Maybe take the family on a vacation etc.

    1. Ben @ The Wealth Gospel

      For me it was mostly meeting with clients and potential clients. I personally never did cold calls, all my calls were referrals, but I made a lot of those at night. And it’s definitely good to throw some networking and schmoozing in there too :) And like I said above, the great thing about it is that you get to choose your schedule. If you can manage your time well enough and work your butt off, you should be able to find the time to spend with your family.

        1. Ben @ The Wealth Gospel

          Thanks! I really appreciate it. And if you end up deciding to go for it, email me sometime and let me know how it’s going! Just find the contact page on my site :)

  14. Hi Ben,
    Love this article and you seem to have written it at exactly the right time for me. I recently graduated with a non-finance degree but I have decided that the career field I’m in isn’t for me and I have always been interested in financial planning but I don’t know if it is for me. I was hoping you might be able to answer a few questions for me? I have tried everything from yahoo answers to career forums but haven’t had much luck:

    1. Would I need to go back to school? I could get my MBA or I could simply take a few classes in finance etc.

    2. Is it easy to have life balance i.e. wife and kids vs work?

    3. I understand you need to work as many hours as it takes but I was wondering if you could give me a range? i.e. some weeks you might work __ hours and others you might work ___. Does it stay that way for your entire career or will it eventually get better? If so how long does it take? Is there really any time to take a vacation?

    4. Does your network need to only exist in the area around where you are physically located? For example I have a decent network but unfortunately I just moved to GA for this job and live pretty far away from that network. Is this career feasible if I have to rely on cold calls alone to people I don’t know?

    5. Is there a certain cluster of the country I would have to work in starting out? i.e. NC, NYC etc. Also, once I become an independent CFP would it be feasible to set up shop in my current location or one that is similar to my current location (Suburb about an hour outside of Atlanta)?

    6. Any other advice you have

    1. Ben @ The Wealth Gospel

      Chris, great questions! Making any career change is a difficult decision, so I wish you all the luck in the world. And I’ll answer your questions the best I can based on my experience, although I can’t guarantee that will be the same as what you experience:

      1. You could go back to school to get an MBA to give you a better background, but my mentor graduated with a history/philosophy major and slowly made his way over to financial planning. His strength was in his ability to interact with people genuinely and work ethic. The financial knowledge will come as you study to pass the various licensing exams and as you work with other advisors.

      2. At first, having a work/life balance can be hard. Your wife will have to brace herself because you’ll probably be working a lot for the first five or so years. But if you’re successful, you can get to the point where you have total control over your schedule and can be there for your family when you feel the need (or want).

      3. When I started, I was working around 55-60 hours a week, but I could have chosen to work more or less. That’s the thing about it. Everyone’s different, and you can choose what you will and won’t do. I knew a veteran who only worked one night a week past 6 p.m. and he did well. I worked with a lot of younger people so I found myself working most nights. And when it lets up depends on how successful you are. It may take you a few years, but you could also be a rockstar and get there sooner. And as far as the vacations, I took vacations because I love to travel and I didn’t want my job to restrict me. But it definitely hurt my business when I was away for a week and came back to nothing.

      4. Nah, you can do appointments over the phone. I knew a guy who grew up in California and he did most of his business over the phone with people there. For me personally, I have a strong aversion to cold calls, so I didn’t want to do it. But there have been some people who have built everything from scratch with cold calls. They say it puts hair on your chest :)

      5. Many of the big firms have locations all over, so you could probably start where you live now, and then when you set up your own shop, you’ll probably know by then where would be the best market to do it.

      6. If it’s something you’re passionate about, don’t let your fear of failure kill it. Worst case scenario: you try it out, don’t do well, have to go back to the corporate world, and you learn a lot more about how to manage your own financial plan. Or you could be like me and start a blog ;)

  15. I like the chart you have at the beginning of the article…there are so many people who are up in arms about only the “Rich get Richer”, well guess what: they are the ones willing to work hard and sacrifice to get there! yes there are outliers, but for the most part it follows the exact analogy that only a few people actually have the perseverance to make in in a tough field like financial planning. It is only 1 out of 20 who are disciplined and grounded enough to get to that wealth building end of the pyramid. Great article!

    1. Glad you commented on the chart. I was thinking of an informative graphic to spur some conversation. I don’t know ANYTHING lucrative that’s easy to achieve at first. Do you?

      So it makes me think about how much EFFORT plays a part in everything? The drive to stick with things and never give up.

      1. Yep, if it were easy everybody would be doing it! Reality is in a world that gives out 8th place ribbons, it is easier for people to say “eh, good enough” vs. busting ass to be the best. The whole (90% perspiration) is about spot on in my opinion. I love it when I get told “well you were just lucky”…I just smile and say “yes sir I was”.

  16. I spent nearly 6 years in the Insurance and Financial services industry. It was the hardest, yet most rewarding experience of my life. I learned a lot about myself and how I tick and what motivates me and what does not. I had mo nth I made $40 and months I made $40,000. But the stress wasn’t worth it to me anymore and I was offered a great job by one of my clients I just couldn’t pass up. I’d recommend this career to anyone who wants an unlimited income potential, but has a great support system to help weather the storms and the lows. Because the lows are LOW and the highs are HIGH. I often consider going back and the triangle analogy is probably the best I’ve ever heard.

    1. Ben @ The Wealth Gospel

      I was going to ask the same question. What was so enticing that made you want to leave? (Although not enticing enough to keep you from still thinking about going back) :) My boss showed me a $40,000 check once, and that was just from his investments for the month. It didn’t include insurance, renewals, persistency fees, etc. It’s definitely exciting to think about what you can do once you’ve “made it”.

  17. I had a friend in the commission only business. He was starting to do OK then had a “charge back” (not sure what that means exactly) but he lost a lot of the money he made. His wife basically had a breakdown and told him if he wanted to stay in that line, he would have to find another wife. He got another job.

    I admire people who can get through that and add value to people’s lives. I think it takes an extraordinary skill set.

    1. Ben @ The Wealth Gospel

      Ouch! A charge back is basically when you make a big sale and you get the commission for it, then the customer ends up cancelling the sale and the company reverses the commission. We called them reversals on the insurance side. I saw one guy who had over $1 million in reversals, but he also had over $2 million in commissions, so he was still doing pretty well for himself.

  18. Commissions only would be a huge turn off for me. As someone who has spent their life in tech and engineering, my social skills tip on the awkward end of the scale. I don’t doubt that with a lot of work and time, I could succeed eventually in that type of career field. The issue would be the time committment would be too great and I think I would burn out before ever really making real progress. So I’ll stick to my laboratory settings and work on honing my technical expertise.

    1. Ben @ The Wealth Gospel

      You would be surprised at how many introverts are in that field. It definitely takes work to start out and build your clientele, but I met a lot of people who didn’t study finance and had no sales experience before changing to financial planning and they were able to do it. It just takes a lot of work and passion.

  19. Great article, but wow, commission-only sales. I can already feel the pain.

    This sounds on par with another commission-only sales gig that I’m more familiar with, the friendly neighborhood Realtor. Last I heard, the success rate on that is in the single-digit percentage

    Thanks for sharing your experience.

    1. Is being a successful Realtor only in the single digits as well? If so, I gotta do some more due diligence because when you earn 2.5-3% after splitting the fees with your company after selling a median $1 million home in SF, you can last for at least 6 months although somewhat spartanly.

      1. Yes, a $1M sale is a great boost, but to get there takes a large investment of both time and money up front, including membership dues, websites, marketing, etc.

        With all of that overhead, I think most people don’t have enough reserves to wait for the first big payday.

        1. Jason, you make an excellent point about “pain”, and Sam, a $1mm sale is $25,000 to each broker in CA. Of that, $5K goes to marketing expenses. $10K to the company, and $10K to the broker who participated in the sale. That’s all, just $10,000! After making car lease payments, wardrobe/hair, rent/insurance/utilities, etc. it doesn’t last long.

          A family member had ZERO sales for four years (his wife worked a great state job with benefits) and he was just about out of the business and the only thing holding him back was he couldn’t find another job. He sold an $8 million office building in Orange County, out of nowhere. This was years ago, and not a sale since. He is just one of thousands of RE professionals in O.C., waiting for lightning to strike again, and he’s in his 40s now. I admire his guts, and know I could never do it.

      2. Sam, your figure assumes the realtor represents both buyer and seller; that happens less than 10% of the time, so you are looking at another split. The $25K fee still needs marketing expenses (web ads, print ads, MLS listing, photographer, all the stuff your tennis pal incurred) subtracted. So call it $20K after marketing, and then split it again, and you get to $10K for selling a $1mm home. Also, if a realtor “double-ends” the transaction, the standard CA fee of 5% (used to be 6% up until the ’90s) is reduced another 1/2%, for a total of 4.5%.

        The team that sold my last home sold 80 homes in one year, with an office of 5 people (3 brokers, 2 staff). By contrast, in the same market a competing realty company has 45 realtors plus 10 staff (55 total) and was involved in 72 transactions for the year. So that second company is mostly housewives and dilettantes, and it isn’t a f/t living for anyone but the two owners and staff.

        Just curious, is your tennis pal still in the business? Prices are up but sales are down, so the chaff is falling away if they have other options.

        1. Ah yes, you are right in that the $25K needs to be split with Realtor’s employer. I don’t think it’s 50/50 though, and there’s no way the Realtor spends $5,000 in marketing expenses on a $1 million dollar home. They are a dime a dozen here (median price) and I bet the expenses are under $1,500. MLS fee, print up some flyers, send some e-mails, get jiggy. So maybe the Realtor pockets $15,000. Not great.

          My Realtor tennis pal seems to be happily playing tennis and traveling every chance he gets. I’m sure he’s still a Realtor but I haven’t inquired. THANK THE LORD I didn’t sell last year. Would be seriously kicking myself. Helps prove my point that you don’t need much to be happy, or there’s massive stealth wealth going on.

        2. FS, here is where the ‘Cognitive Egocentrism’ comes into play, with the $1mm homes that are “a dime a dozen” in SF. In the US for Oct 2013, the median price is $246K, and the mean/average price is $327K. In CA, the mean price is an RCH above $400K.

          Happy that you are happy with your decision not to sell. btw, the specifics for your sales fee charged by your Realtor tennis league pal are in the fine print of the contract, so you can be acquainted for next time you make a transaction. When the time is right, I’m sure you will share your real estate adventures! And as an old joke goes, “The secret to good Real Estate is identical to good stand up comedy. Both require a 2-drink minimum.”

    2. Ben @ The Wealth Gospel

      I take my hat off to the people who can do it. It takes a lot of grit and persistence.

  20. I’ve worked in brokerage since 1997. Veterans don’t bother to get to know the new people. Most of them don’t last. We had one guy last til lunch – he never came back.
    Financial advisors “earn” their money when the market drops.

    1. Ben @ The Wealth Gospel

      Ha very true. There were some younger guys who came in once and I never saw them again. There were also some older advisors who had been around for 30-40 years who wouldn’t give me the time of day, but luckily there were enough advisors in their first 10-15 years who were more than happy to work with my and mentor me.

      I agree that a lot of people will try to get in the game when the market drops, but I think that the really good advisors who earn the most are the ones who are in it for the long haul with their clients and have a relationship with them based on respect and trust.

  21. Great post Ben and Sam. It’s a great profession if you’re wired for it. I thought about going into money management because I loved managing my families investments since my early teens. In the end I got an engineering degree because I feared financial services would have made it very difficult to be the well-rounded guy I want to be. I still love researching investments and investing accordingly, but it’s still just for my family. I have the great track record, but a lot less money. No worries, life is good.

    1. Ben @ The Wealth Gospel

      It’s all about what makes you happy. Most people who do it for the money end up with an early exit anyway. That’s pretty impressive that you were managing your family’s investments so early! From my experience there tends to be a little distrust in that department within the family. I’m interested in hearing about your experience with that.

  22. That was the difficult part for me….I knew that I was walking away from an awesome income stream in exchange for a big fat check today (when I sold my business at 41). However, I really liked being a financial advisor, but just didn’t love it. I wanted to do other things before I got too old.

    …and that’s what that big check did for me. Being a financial advisor bought me the security to now do things I enjoy much more, and that pay less money.

    1. Ben @ The Wealth Gospel

      That’s great, Joe. The career gave you the freedom to choice from a position of strength rather than desperation. It’s also nice to note that your desires changed as you got older. A lot of people make a career path choice right out of college, and then they mismanage their money to the point that when they want to do something else 20 years down the road, they can’t because they’re stuck in their financial situation.

  23. The First Million is the Hardest

    I interviewed with a few financial planning firms straight out of college. I had thought it was a career I really wanted to pursue, even influencing my decision to major in finance. However once I started interviewing I realized that A) the companies didn’t care about anything other than my network and B) I really hated sales.

    It’s definitely a great career if you can hack it, and part of me wishes I gave it a shot. But it’s definitely hard to get established in as I’ve seen several friends wash out after only a few years.

    1. Unfortunately, that’s not how all firms are. Generally that’s just the larger firms that simply run recruiting as a numbers game themselves, pulling in as many recruits as they can, milking their networks, seeing who sticks, and letting the others “wash out.”

      Sadly, that still happens WAY too often in our industry, but worth noting that’s NOT the only path for becoming a financial planner today…
      – Michael

    2. Ben @ The Wealth Gospel

      It is unfortunate that there are so many firms out there like that. I was lucky enough to work for a firm that cared more about me than my contacts. If it had been the other way around, I would’ve walked out the door immediately.

      If you’re single and your expenses are low, it might be a good idea to try it out. Once you are married and have kids, it makes it a little harder to live with the lack of security.

      1. Linett Arevalo

        Hi Ben,

        I am currently looking to make a career change from retail management into the financial services world. I am interviewing with Northwestern Mutual and have a mutual friend that works for the company and has had a good career as an advisor. I have done some research and feel confident in the growth of the industry. I would like to know your thoughts on the early stages of building a network and what you would advise me to be cautious of if I were to make the career change. Any advise or thoughts would be appreciated!

  24. Ryan @ Impersonal Finance

    That’s nuts. It also seems very similar to being an insurance broker. There’s good money, but it’s hard to get to and can dry up quickly. I have a friend who works on commission only, and because he can have good months and bad months (sometimes very bad), he still lives with his parents, close to 30 years old. It’s a rough life. I love helping people, but I don’t think the commission only job is one for me.

    1. Ben @ The Wealth Gospel

      It’s definitely not for the faint of heart! Most people end up quitting rather than the firm letting them go. If I were still living with my parents at that point, I’d definitely be questioning if it’s the right career for me.

  25. Oh, yummy — a crap sandwich!

    The economy certainly isn’t the only factor going into the equation with a stable job (as you mentioned) — insurance is a big one. At least for me. With the insane costs of buying my own insurance, I’m far more likely to stay in a sucky job just for the great health insurance.

    I loved your reference to calling up random people you haven’t spoken with in years. My boyfriend is currently getting multiple calls a week from a kid we both knew from college. He is an insurance sales man now, and even though my boyfriend a) already has life insurance and b) has told this kid no multiple times, the phone still continues to ring. These types of jobs just remind me of watching the Pursuit of Happyness. Certainly a system designed to weed out the weak very early on!

    1. Ben @ The Wealth Gospel

      Yep. I actually heard on a podcast the other day that you should never get a job with benefits because they keep you just content enough to keep you there, and before you know it, you’ve been at the same job for far too long.

      Yeah, I definitely had a couple of awkward experiences with calling people I hadn’t talked to in a while, although they were generally people I actually had a good relationship with back then, and I would always respect “No” as a response. I imagine that old “friend” of your boyfriend won’t last much longer.

  26. Sam,
    Thanks for the article on the advisory world for those (bloggers?) thinking about entering.

    It’s worth noting, though, that not all entry level advisory positions into the industry are commission only. Historically, that’s absolutely the way that it’s been, but that is changing as advisory firms get larger and build out infrastructure and career tracks. Part of my businesses include one that hires new planners for entry level financial planning (salaried) positions, and the primary challenge is just finding the good people to fill how many openings we have (see for example).

    On the other hand, for many in the (PF) blogosphere in particular, becoming a financial advisor can actually be another way to monetize their blog (offering services to their readers); many current financial advisors are already trying to grow their businesses through blogging (e.g.,Brittney Castro of Financially Wise Women). Yet even that path doesn’t have to be commission-based products alone; it could be doing hourly planning/coaching with clients/readers for a fee (though similarly, it will be a “$0 of income until you get some clients” path).

    In any event, thanks for sharing!
    – Michael

    1. Ben @ The Wealth Gospel

      Michael, it’s true that a lot of firms are moving toward the salaried positions, but most of the ones I’ve seen put a pretty low ceiling on your earning potential. At the same time, though, you could get the experience you need with a little more stable salary base then move on to owning your own practice once you’re ready.

      Jeff Rose over at Good Financial Cents does a great job at using his skills to monetize his blog, and I’m sure he’s gotten a handful of solid clients who knew him as a blogger first. It’s definitely a great way to leverage your skills!

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