How To Become a Certified Financial Planner (CFP)

I get asked pretty frequently about what the requirements are to become a Certified Financial Planner™ and what I went through to achieve the designation. Knowing there are over 800,000 people who can be considered “financial advisors” to some degree, I knew I had to differentiate myself. But, it wasn’t all about being different; it was also about having a deeper understanding and appreciation of the financial planning process.

But before we dive into how, let’s take a step back. Let me tell you more about how I got inspired to become a CFP. For those of you who don’t already know, here is what a CFP does, and how they are different than other financial planners.

I love my job. I can’t tell you how lucky and fortunate I feel to be able to truthfully say this. Is my job easy? H-E-Double-Hockey-Sticks no! Being a financial advisor requires a certain skill set I had no idea I had until I got started in the business. But I’m not here to tell you how successful I am. What I want to do is to address the most common question I get from prospective advisors:

Whew. That might seem like an easy question to answer, but SO much has changed since I got in the business over 15 years ago.

How I Got Started: A Look Back In Time

Pretty soon it would be the end of a good run — graduation was approaching. I had just had one of the best interviews of my life with A.G. Edwards and Sons (they were purchased by Wells Fargo). It was so good, in fact, I felt I had secured a position with their corporate office in St. Louis, and I would soon be living the dream of riding the corporate ladder to the top. It all looked good; then the “Dot Com” bubble burst. Things changed. And not for the better. A. G. Edwards, at the time, had a been in existence for 117 years and never had any company layoffs. Never. That is, until, I was getting ready to graduate. Of course, right? My future, which once had visions of me living in St. Louis, was gone. Now what I’m going to do?

Um… How about Plan B?

Part of me getting the opportunity to have a great interview was because I was already interning at the local A.G. Edwards office in my hometown. I landed the internship as kind of a desperate measure between my junior and senior year. I had one of those pucker moments where I realized that other than my work history of local retail jobs and my military experience, there was nothing really outstanding on my resume. It hit me how I would be graduating in a year and I still needed to get up and do something, and I needed to do it now. Through a connection, I inquired about a summer internship at the local A.G. Edwards branch, and I was lucky enough to get it. It was like any other internship you would imagine: filing, paper shredding, all the administrative tasks that no one else in the office wanted to do. Although the tasks were remedial, I treated the internship like a real job. I showed up on time, dressed the part, did everything which was asked of me (and above), and made a lot of good impressions on the staff.

Amazing What a Little Bit of Effort Will Do

Along the way, I was asked by one of the assistance of the top producers in the branch if I could help file away some financial statements which had been piling up on them. I’m the intern, of course, I’ll help. As I started to file them away, I realized their filing system was a little bit out-dated. In fact, it was a mess. So I took it upon myself to re-setup their file system which I thought would help them out in the long run. Turns out, the little extra effort made a very good impression. As it turns out, the top producer was looking to hire someone part-time to help out his assistant with their day-to-day tasks. At this time, I was getting ready to be a senior in college. I was already working 15 to 20 hours a week at a mall job. But I thought it was good opportunity to get my foot in the door. My senior year, I was hired to work 8 a.m. – noon, Monday, Wednesday, and Friday (most of my classes were on Tuesday and Thursdays), and then I would also work at my mall job in the evenings and weekends. I didn’t think much of the job at the time, about what it may turn into. Turns out it would lead to much, much more. I continued working for them and helping them out with just their day-to-day tasks. Then, along the way, the broker had asked me if I’d be interested in cold-calling for him. I had never done anything of the sort, but I thought, oh, what the heck, we’ll give it a try. Every once in a while I would call randomly from a list he had purchased of residents in the local community. I was calling just to set appointments for him, with a basic spiel; and, to both his and my amazement, I landed him a few appointments.

That’s when it started to happen.

My first nameplate – how exciting!

As graduation was getting closer, it turns out this producer who I had helped with his filing, was looking to hire a junior broker. He had asked if I was interested, but initially I turned him down, primarily because I had bigger dreams. I had planned on working a corporate job up in St. Louis, and also I felt I was way too young to handle people’s money. I had noticed many of the top clients who came in the branch were at least twice, if not three times my age. I felt I had no business advising them on their retirement planning. So I kept plugging away, hoping for the next bigger and better thing. As graduation approached, I realized the bigger and better thing was not coming. I didn’t want to graduate without having something lined up, so I accepted his offer.

I was going to be a junior broker.

I didn’t have the same ring as “corporate executive” or “investment banker”, but I was still excited for the prospects of what could come. Most everything in life I’d ever tried out, or even attempted, I had always succeeded; so naturally, I thought this would be no different. I still didn’t know if this was what I would do for the rest of my life, but I was excited for the opportunity to see what could happen. And as they say, “the rest is history.” If you’re at the same point in your life, where you’re truly considering the possibility of becoming a CERTIFIED FINANCIAL PLANNER™, you might be wondering what exactly the process looks like from beginning to end. Well, here’s exactly what it takes.

The Steps You Need to Take To Become a CFP™

1 | Complete the Education Requirement

Before you can even apply to the CFP® program, you have to satisfy the preliminary education requirements. At the point in my career, I decided to pursue the CFP® certification, I was more than five years removed from college, with my Bachelor’s in finance, so I easily satisfied the education requirement. Currently, the CFP Board allows three different paths to achieve these requirements. Taken directly from the CFP.net website:

Complete a CFP Board-Registered Education Program

Academic degrees and credentials which fulfill the educational requirements include:

• Certified Public Accountant (CPA) – inactive license acceptable
• Licensed attorney – inactive license acceptable
• Chartered Financial Analyst® (CFA®)
• Doctor of Business Administration
• Chartered Financial Consultant (ChFC)
• Ph.D. in business or economics
• Chartered Life Underwriter (CLU)

Request a Transcript Review

Certain industry credentials recognized by CFP Board, or the successful completion of upper-division level college courses, may satisfy some or all of the education requirements set by CFP Board.

Bachelor’s Degree Requirement

A bachelor’s degree (or higher), or its equivalent,1 in any discipline, from an accredited college or university2 is required to attain CFP® certification. The bachelor’s degree requirement is a condition of initial certification; it is not a requirement to be eligible to take the CFP® Certification Examination. After you pass the CFP® Certification Examination, you will be required to provide evidence (official transcript from the degree-granting institution) you hold a qualified bachelor’s degree or higher degree. Jim Blakenship, CFP® and author of Getting Your Financial Ducks in a Row, shares his experience on achieving the CFP® designation:

I took the American College Chartered Financial Consultant (ChFC) course which fulfilled the education prereq. The ChFC course was provided by my employer at the time (an insurance company). I followed this up with a CFP self-study course from Dalton. Then I went to a two-weekend live review from Dalton. The Dalton courses were much more useful than the American College course, in my experience.

2 | Pass the CFP® Certification Examination

Wholey Moley, what an exam!

The two day, 10-hour exam applied all the key areas of comprehensive financial planning. Although all questions are multiple choice, they are arranged in a way where every question “almost” sounds right. That’s what makes the test so challenging. The exam is administered three times a year – generally on the third Friday and Saturday of March, July, and November, at about 50 domestic locations. I took mine at the University of Missouri-St.Louis in November of 2007. The application deadline is approximately seven weeks prior to each exam date (e.g., February 1, June 1, and October 1). To apply to take the exam, complete the online application, download an application, or call 800-487-1497 to have one mailed to you. Completed applications, including payment of the $595 fee, must be received by the deadlines printed on the applications – there are no exceptions.

How I Prepared For the Exam

My previous firm had an arrangement with Kaplan University which offered a “boot camp” style class. Once a month, for nine months, I traveled to St. Louis to sit in on a four-day (8 a.m. – 6 p.m.) lecture. I’ve never drank more Diet Coke and coffee in my life! Our instructor was insanely smart and helped us trudge our way through all the concepts. Imagine learning about estate planning for 9+ hours a day. Are you jealous, yet? After all the sessions, we then had a final recap with a different instructor a month before the actual exam. Reflecting back, I really don’t know another way I could have absorbed so much information in such a small amount of time. If I had to do the CFP program by self study, I would probably still be without the designation (no joke). Richard T. Freight, CFP® who also authors the blog Think Beyond the Numbers, confirms my suspicions by sharing his experience with the CFP self-study program:

After failing to discipline myself with self study, over the course of 3 years I took the individual courses (5 in 1998) at 3 different community college and universities, often traveling an hour each way, twice a week, to pass the exams. Then I took Ken Zahn’s “blitz” 3-day course to pass the overall exam. I know it sounds like the old walking uphill both ways to school in the snow, but it wasn’t a cake walk by any means. My overall exam had a pass rate of 49% across the U.S. that year.

Test Results

I sat for the exam in November of 2007 and didn’t receive my test results until early January. Talk about suspense. I just happened to be home the day when the mail came. I remember seeing the thin, little white envelope from the CFP Board and my heart sank. Why was the envelope so thin? Was it a bad sign? I nervously paced inside and finally just ripped the envelope open….Congratulations you passed. I screamed with excitement and then called my wife to share the good news. Typically, each testing period has about a 50% pass rate and this was about the same with my group. This is why I was so thankful I passed. When you receive notice you passed, you then have to satisfy the remaining requirements.

3 | Meet the Experience Requirement

In March of 2007, I began the Kaplan University CFP® course. At that time, I had been a financial advisor for already five years, which satisfied the experience requirement. The CFP Board requires you have at least three years of qualifying full-time work experience. According to the website, the experience can be gained in a number of ways including:

Joe Pitzl, CFP® shares how he got a head start in completing his experience requirement:

To get a head start on fulfilling my experience requirement, I held three financial planning internships and filed tax returns in a tax firm for two years while in school (it counted for about a year collectively). I then worked for a year as a full-time financial planner before taking and passing the exam. Six months later, I had officially fulfilled the 3-year requirement and became a CFP®.

4 | Background Check… Do You Pass?

Applicants for CFP® certification must pass CFP Board’s Candidate Fitness Standards, which describe conduct which may bar an individual from being certified. This is one of the aspects which makes being a CFP® professional so much more prominent; we are held to a higher standard than your typical financial advisors. The board will conduct a background check as you make your commitment to adhere to the CFP Board’s Code of Ethics and Professional Responsibility and Financial Planning Practice Standards. Brian Plain, CFP® shares a similar accelerated approach to achieving his designation:

Apparently I’m a glutton for punishment as I fulfilled my education requirement through the accelerated 9-month program at Northwestern and then did a 4-day live review course prior to taking my exam…for the first time. Getting the “fail” letter in the mail was deflating, but it was also made me appreciate the experience so much more when I received my “pass” letter the next time I sat for the exam. Needless to say, I still have the letter!

5 | Time to Pay Your Dues

After you verify those three steps, it’s time to pay up (yeah, the $595 fee from before was just to apply). You’ll have to pay a one-time, non-refundable initial certification application fee of $100 for the background check. In addition, you will be responsible for a biennial certification fee of $360. To me, this cost is minimal, compared to the amount of knowledge I have gained through the whole process. Jason McGarraugh, CFP® gives a detailed account of his path to becoming licensed:

I went the Degree Plan rout. After spending 4 years getting a BBA in Corporate Finance at Texas Tech I graduated without any of the Financial Planning knowledge that I wanted. Circa 2000 I discovered that Texas Tech actually had a Masters program in Financial Planning. I spent 2 1/2 years working on my Master of Science in Personal Financial Planning which included the necessary CFP® courses with additional classes to round out the degree plan. After graduating I spent a semester working for a private school in Singapore that taught the CFP® courses there. I moved back to Lubbock in May of 2003 and began the two month live review with the professors at Tech to prepare for the July exam. I made enough money In Singapore to pay for the review and a few months of rent with some friends that were also taking the review. I studied 6 days a week for two months and passed the exam on the first go round. I probably put in about 250 hours of study and class time. I made it a point to take one random day off a week to relax. It took about a month to get the results back and during this time I was interviewing for jobs. By early October 2003 I was fully licensed for insurance and securities and working with Waddell & Reed in Fort Worth, TX (plan B). I reached my 3 years in October of 2005 thanks to 12 months of experience as a Peer Financial Counselor with Tech’s Red to Black program.

6 | Congratulations! You Are Officially a CERTIFIED FINANCIAL PLANNER™ Professional

Once everything is complete, you will get a notice you are officially a CFP® and you can refer to yourself as one. After making it this far, you deserve it. Now it’s time to order new business cards and make the appropriate updates to your website. I never thought I would be so excited over “three little letters” but all the time invested to achieve those letters makes them extra special.

7 | Continuing Education Requirements for a CFP®

Once you pass the exam, you’re not done, however. Every two years you’ll have to satisfy continuing education requirements to keep your CFP® credentials. The CE requirements consist of:

It’s up to you where and how you complete the CE requirements, you just have to make sure it’s a pre-approved program by the CFP board. There are plenty of resources nowadays to do this. One of my favorites is mini quizzes found in trade journals such as Financial Advisor Magazine and the Journal of Financial Planning. It’s always nice to learn something new and get credit for it, too!

Are you still considering becoming a financial planner? Think you’re ready? Keep reading.

Going Solo – The True Costs of Starting Your Own Financial Planning Firm

In 2011, I embarked on one of the most exciting business transitions of my life – I formed my own registered investment advisory firm. I get a lot of questions from advisors wanting to know about the process.

• How does it work?
• How much does it cost?
• Is it worth it?

Plus, I have friends and blogging friends who are also curious and would love a look behind the scenes of starting a financial planning business. Since I have over 5 years underneath my belt of starting my own firm, I thought I would share a little bit of how it all went down. I’m also trying to get a sense of how much I have spent in the past year in doing so… thank goodness for my CPA! Before I begin, let’s first start with a jump back to my story so you can understand exactly what had happened since getting my “three little letters” approved.

The First Step

In 2007, three others advisors and I left A.G. Edwards and Sons, which had recently been bought out by Wachovia (now Wells Fargo) and started Alliance Investment Planning Group. We were an independent financial planning firm under the independent broker-dealer, LPL Financial. LPL Financial was the largest independent brokerage firm and the big difference between them and an Edward Jones or a Merrill Lynch (or any major brokerage firm), at least from the advisor standpoint, is they allow you to create your own company at the local level. That’s why we operated as a DBA (doing business as) Alliance Investment Planning Group. Essentially, in the relationship, I was an independent contractor utilizing their services, and then LPL held my licenses: my Series 7, and my insurance licenses. Keep in mind many advisors don’t take this step, although it’s becoming more popular. From a payout standpoint, it definitely pays to take some risks. Let me explain…

With A.G. Edwards, my payout was 40%.

That meant for every commission or fee earned, I would give the company 60% of every dollar. That was my price for having the company name behind me, back office support, my fully furnished office (phone, computer, desk, etc), a receptionist and anything else you would need to run an office. For many, it takes away all the added pressure of running a business so you can just focus on your existing clients (and also acquiring more).

Unfortunately, if you’re an obsessed entrepreneur like myself; it just wasn’t quite enough.

Moving to LPL meant we now became true business owners. We had to find our own office building, buy our own computers, desks, printers, filing cabinets, phone systems, 47″ TV’s (I will argue to this day it’s a necessity!), receptionist, etc. Why would anyone want to deal with that? Because the payout increased from 40% to 90%. Yes, that’s a pretty substantial raise. What made it even more substantial is we were able to split costs 4 ways. (We eventually added 3 more advisors so everything was split 7 ways.) This meant more money in my pocket! My revenue increased dramatically because of this. In fact, it has increased 4-5 times more where I was at when I left A.G. Edwards in 2007.

Trapped in a Box

My practice continued to grow and, honestly, I had no reason to change. No reason whatsoever. There was, however, this one little thing which occurred which eventually made me realize change was not only coming, it was inevitable. That “occurrence” was this blog. As my blog continued to take off, and I got tired of the compliance hurdles, I knew I needed to make a change. If you have a Series 7 license, anything you do online comes with great scrutiny and everything, I mean EVERYTHING, has to be pre-approved first.

Pre-approval is very time consuming, but it wasn’t the most frustrating part. I was also limited to what I could say and how I could say it. As an example, my post 7 Financial Advisors I Would Like to Punch in the Face would never have been approved. Never! And that’s why I enjoyed writing it so much more.

Dropping the 7

To get the freedom I wanted, it required me dropping my Series 7 and then forming my own RIA (registered investment advisory firm) with the state of Illinois. There were a lot of hurdles in my way because I didn’t know how it all worked.

I had a lot of fact-finding to do. Thanks to some good contacts, I learned it was possible to operate in the same office as my other partners, I would just to create a separate entity, ergo, Alliance Wealth Management, LLC, was born. I had to get a new phone number, order new business cards, and change my literature to reflect these changes, too. Now, the question was who was going to be my custodian. The custodian is the provider who offers statements, a trading platform to buy and sell investments, among other things. LPL Financial has an RIA platform, I just didn’t know if it would all work out. Sure enough, it did. This was an easy transition for many of my clients since they would continue to get the same statements and most would keep the same account numbers.

So, once I found out I could be in the same office and I could stay on with LPL as my custodian, it was time to begin the process. That’s when I contacted a compliance attorney who would set up all the documents I would need and help me get registered with the state. I also needed to set up a new LLC., and then contacted my CPA who helped me through the process. In May of 2011, the transition was ready to begin.

Setting up Shop

As mentioned above, I end up sticking with LPL Financial as my RIA custodian. So, in that regard, there wasn’t any cost in switching. A few other ones I looked at were Schwab, Scottrade, E-trade, and Fidelity. The biggest reason for me sticking with the LPL was:

With most of my revenue coming from assets under management (I earn a % of my clients assets invested with me), LPL takes care of calculating the fee, deducting the fee, and then sending me the appropriate payment. When I researched a few other custodians, I learned this was something I had to do on my own, and it honestly did not excite me at all; so, as far as costs associated with being with LPL, mostly it’s just ticket charges. Mutual funds were ranked anywhere from $5 to $26.50; equity trades are approximately $15, and other investments such as bonds or UITs are somewhere in the $50 range. Note that I don’t do a lot of these trades, so I don’t know the exact cost. Most of my trading costs involve mutual funds, stocks, and ETFs.

The Major Expenses

Compliance

The first major expense was compliance. I had to find someone to set up my ADV (client brochure) and begin the process of setting up my advisory firm with the State of Illinois. LPL had a few vendors who they referred me to, and I tried calling a few of them, but their timelines did not mesh with mine. Their costs ranged anywhere from $2000 to $5000, depending mostly on what state they were located. The ones in New York seemed to charge the most. Through my blog, I’d met another advisor who had gone the RIA direction, and he referred me to his compliance guy who he had used. The setup fee was $3,000, and he took care of the entire process; and let me tell you, the $3,000 was totally worth it. Total cost: $3,000.00. Recurring cost: $2,000 per year.

LLC Setup

The second major expense was getting the LLC set up; fortunately, I lived in the state of Illinois, where just to set up an LLC runs you around $450 to $500 (note: heavy sarcasm). I could have set it up myself, but I honestly didn’t feel comfortable, so my CPA helped in the process. Total cost there was $850. Total Cost: $850. Recurring cost: $250 per year.

Business Lost

The other major cost for me was the business I lost. I had a decent amount of money tied up in variable annuities and some 529 and 403(b) accounts I wouldn’t be able to transfer. In addition, I had a relationship with a local credit union where I was their choice advisor who they would refer all their investment business to me. This was another relationship I had to give up if I was going to start my own firm. While, it’s hard to tell the exact numbers; I’m estimating that I gave up approximately $36,000 every year of recurring income to go the RIA direction. Total revenue lost: approximately $36,000 per year.

Insurance

Oh, the joys of having your own business. With my profession, you need both business liability insurance and professional liability insurance (E&O). The business liability runs us $1,470 per year (this also includes worker’s comp for my new employee) and $3,654 per year for E&O. The E&O is about $1,000 more per year than I was paying with LPL, but I decided to go with a carrier who specializes in investment advisers. Total cost: $5,124 per year. Recurring: same.

Office Expenses

Since the office was already set up, we already had phone systems intact, and the way it worked before was we all just split the phone bill equal ways with my other partners. Now that I had to have my own dedicated phone line, I had to add two full extensions and a fax line for my new office. Luckily, we were able to program those new lines on the existing phone systems so there wasn’t the cost of having to buy new phones. Furthermore, one of my partners in the office has a good friend who works for the local phone company, so I was able to get the installation costs waived, which was a big savings, but having to get my new phone systems still added on an additional $140 a month to have my own phone system. Total cost: $140 per month. Recurring: same.

New Fax Line

One area where I was able to cut costs was the fax line. I figured I was paying approximately $30 a month just to have an open fax line, and that was without sending any faxes. I looked into some online providers, and the one I settled on was Nextiva. For $60 for the entire year – $5 a month – I was able to have a fax line which works directly with my email system. It was very reliable, and I would definitely recommend it to any small office who needs a fax line but doesn’t send hundreds of faxes per month. Total cost: $60 per year. Recurring: same.

New Letterhead and Business Cards

Since I had a new business name, new phone number, and new email address, I had to get new stationary. I didn’t change the logo very much, so our logo graphic designer was able to make changes fairly easily. Overall, I think I had to pay about $200 to get new stationary and business cards, which wasn’t that bad. Total cost: $200. Recurring: none.

New Website

Now that I had a new business, I knew I had to have a new website, especially one which looks slick, but I wasn’t crazy about having to pay $300-$500 to set this up. I was lucky, in that a friend of mine offered to essentially set it up for free. I already purchased the domain for $10, and I got a snazzy-looking website. Nothing like saving a little bit of money! Total cost: $10. Recurring: $10 per year.

Banking Costs

The other most annoying fee is with our local bank. We currently have free checking with complete online access, and my wife is a big fan of being able to pay stuff online; but now, instead of getting paid as an individual, I get paid into my business account, Alliance Wealth Management LLC. It has its own separate tax ID number, and my bank does not allow to do online transfers when you have two tax ID numbers. (Side note – I also have another LLC set up for my online business.) To be able to transfer money between the three different tax ID numbers, the bank charges us $35 a month to do so. Right now, we are paying it, as it is a convenience, and we’ve been with this bank since I was sixteen years old. I will say that we are exploring other options. Recurring cost: $35 per month.

The Current Rent

Before beginning the transition, my total overhead was $1,075 per month. I am sure many people would look at that and laugh. Yes, I lived in the Midwest where things are cheap. Since I’m still occupying the same office, I have the same printer, same desk, computer, the bookshelf that I had before, and so there weren’t any greater expenses on that end. We had a 3500-square-foot building that we pay just about a dollar a square foot a month for rent. We also had one assistant and all the typical expenses you would have in a professional office. All those expenses are split seven ways, which makes my share ridiculously inexpensive. Those costs include the other phone system, postage, Direct TV – that’s for my 47-inch television in my office – heating and air condition, electricity, taxes, and insurance. Recurring Cost: $1075 per month.

Other Costs of Running a Financial Planning Practice

What I’ve pretty much outlined up above are the essential costs that I must have to run the business. These others are add-ons, meaning I could probably get by without them, but they definitely make running a practice much easier:

Association Costs

As a CERTIFIED FINANCIAL PLANNER™ professional, I also have the dues I have to pay. Total Cost: $325 every 2 years I’m also a member of the Financial Planning Association. FPA is the largest membership organization for personal financial planning experts in the U.S. and includes professionals from all backgrounds and business models. Total Cost is $395 per year Lastly, I have kept my insurance license open and that costs me roughly $180 every 2 years.

Total Costs

As you can see, it’s not cheap to start your own financial planning firm, but I can say that’s it definitely worth it. I’m exactly where I needed to be to grow my practice, and my blog, on my terms. The one cost I haven’t mentioned yet is hiring additional employees after starting my own RIA. That has brought on a whole new set up challenges, but once again has been worth it. Now that I was all set up, success just came knocking on my door… right? Right? Not so fast. Let’s talk about what it takes to go from setup to success.

GF¢ 056: The 7 Rules on How to Become (and stay) a Successful Financial Advisor

Podcast: The 7 Rules on How to Become (and stay) a Successful Financial Advisor

First, how do you define success?

Success can come from many aspects: life, career, family. Often I get asked how I became a financial advisor and what has led to my success. When someone views me as successful, I’m always flattered. While I do consider myself successful, I’m also very humble. By industry standards, I’m just a pea. I’m not a rainmaker, not a million dollar producer, not one of Forbes Top 100 financial advisors. I don’t have hundreds of millions under management. Most big-time producers would probably chuckle if they knew the size of my book of clients. So, why do others and myself consider me to be successful? Because I love what I do (and it shows) and I get paid very well to help people each and every day. Being a financial advisor is not easy. That’s something I really didn’t know when I got started in the business because my naivety and inexperience– but quickly found out.

How hard is it to get started?

When I began my career with A.G. Edwards & Sons in 2002, I was in a training class of around 55 people. My class ranged from 23 year-olds, like myself, starting their careers to 50+ year-olds attempting a third career. After completing training and being “in production” (better know as licensed to sell) for a year, our class of 55 had been slashed to less than half. At my five-year anniversary mark, there were only 5 of us left. If you’re a numbers geek and you use my class as an example of your odds of surviving, then you have a 91% chance you are going to fail if you decide to become a financial advisor. How do you like your odds? As I reflect on my career, I’m truly thankful for many blessings which have been bestowed to me. There have been many emotional roller coasters along the way, but I know the following basic fundamental principles have been the foundation to my success. So, you didn’t think I was blowing smoke, I recruited two other successful financial advisors, Russ Thornton and Brian Plain, to give their take what it takes to truly succeed in our business.

1. Abide by the Golden Rule

One of the keys to my success has much to do with how I was raised. My family has always taught me live by the golden rule:

Treat others the way that I would like to be treated.

It’s such simple advice which rings true in every situation. I apply this basic principle in life and, most importantly, in my career. If a client calls me while I’m on the phone, I’m sure to call them back as soon as I can. Why? Because I hate having to wait on someone to call me back and I don’t want my client having to wait. Same thing on emails and sending out paperwork. Brian concurs,

Always do what’s right for your client. This will often mean giving up short term financial gain. Do what’s right for your client because it is the RIGHT thing to do. Do it early and often and you’ll see it come back to you in spades.

2. Give 110% (and Then Some)

This business is not for everyone. I’ve seen many people get started and think to themselves that they have what it takes, only to see them fizzle out in under a year. What made me different? Because I wanted it. My first year, I spent all day and 2-3 nights, per week, cold calling. Yes, I was the annoying guy who would interrupt your favorite TV show by asking you the following:

Hi, Mr. So and So. My name is Jeff Rose, and I’m calling from A.G. Edwards here in Carbondale. I”m just calling you today to see if you are an investor and if you are open to new investment ideas from time to time.

That was it. That was my magical spiel. Imagine saying that 100-200 times a day. If you weren’t jealous of me yet then I’m sure you’re jealous now. After cold-calling, I started hosting lunch and dinner seminars. I used to beg/invite potential clients to a free meal so they could hear me talk about some general investment message. I used to do one of these every 6 weeks or so trying to get my name out there. In addition, I would sacrifice weekends setting up booths at trade shows. I would and have driven over 2 hours to meet with somebody hoping they would do business with me. There were many highs and lows and I’ve enjoyed every moment.

3. Be Persistent, Not Pushy

When I first started in the business I had no clients given to me and it was up to me to find new ones. When I came across someone who was a potential prospect, I was very eager to convert them to a client. I was so eager I would follow up more so than was properly necessary. I learned along the way you have to wait until people are ready to act, BUT you still want to make sure they think of you when the time is right. That’s why it is important to follow up: phone call, e-mail, even draft hand written notes. Just make sure when you do follow up, it’s not too often. Russ adds a bit of his experience in working in a Wall Street firm,

A Wall St. brokerage firm is a sales firm. I’m not criticizing sales because it’s a critical function in any healthy business. In fact, though I’m an independent advisor today, I’m still selling my advice. I guess my point is that you should understand up-front and make a career choice on the basis of what you want, and are willing, to sell to people.

4. Shut Pp and Listen!

How you ever been to cocktail party and got stuck having to listen to a person who felt the need to tell you EVERYTHING about them even though you never asked? Don’t worry I won’t do this to you. One thing about me is I’m a very curious person by nature. I like to ask a lot of questions and most importantly: L-I-S-T-E-N. Brian adds,

Be an educator and share your knowledge. A successful advisor talks WITH clients, not AT clients. Making things simple and understandable isn’t easy, but it is essential.

5. Learn How To Be a Teacher

A child mis-educated is a child lost. – John F. Kennedy

One of the surprising aspects of job is how much I play the role as educator. Most people I work with don’t have the desire to know or understand what the beta or standard deviation is on their portfolio. All they know is they have worked their butt off to save as much as they have and that money has to last them the rest of their life. And they are hiring me to help them through the process. Some part of the process is easy – I need X amount dollars per month to survive – while other aspects can be confusing – I’m looking to set up an A-B Trust to protect my assets from estate tax. Whatever the circumstance, it’s imperative all parties have a good understanding of what we are trying to accomplish. Without the general understanding, and the education of the financial goals at hand, any major bump along the way could jeopardize the desired result. Russ points out,

When it’s all said and done, it’s the client’s money. You can give them the best advice and listen to anything and everything they’re willing to share with you, but they have the final say in any decisions that are made. I’ve found the best way to work with clients is to be a caring educator. No, I’m not trying to teach them everything I know, but I want my clients to have a thorough understanding of their choices and the possible consequences of each choice they might make.

6. Give a Darn

If you really want to be a successful financial advisor, you have to genuinely care about the people (your clients) you are helping. You can’t look at them as “how much money they have” or “how much you make off of them.” In 2008, when the market was falling, I could care less about how much I lost. I was more concerned about all my retired and soon-to-be-retiring clients and how this would affect them. If you don’t care—truly, genuinely care—people see right through you.

7. Have Some Faith

See, the LORD your God has given you the land. Go up and take possession of it as the LORD, the God of your fathers, told you. Do not be afraid; do not be discouraged. – Deuteronomy 1:21

I can remember in my first year of becoming a financial advisor I had one of the worst earning months of my short career. I made less in a month than I made when I was still working part-time at GNC making $6/hour while I was in college! Luckily, I was still young and didn’t have a family to support and I made it. Well, I wouldn’t necessarily say I made it, but I did survive. What also helped me is having God on my side and giving me the strength and power to not doubt myself and continue forward in order to succeed. Brian ends with,

Worry about the things you can control. Always take care of your clients and do right by them. Don’t be afraid to let them know how they can help you grow your practice. If you’re consistently exceeding your clients expectations, they’ll likely become your best source of potential referrals.

Russ concludes,

There are very few certainties in life. And there are perhaps even fewer in the financial services world. But, I sleep comfortably at night knowing I’m doing work I love and working hard to take the best possible care of my clients. I consider my clients part of my extended family and do my best to treat them as such. Sure, there will be problems and obstacles which inevitably pop up along the way, and there’s only so much I can do to minimize these, but I am comforted by the knowledge there is no one else out there who could care about my clients as much as I do.

Thanks for Brian and Russ for contributing!

Resources for Aspiring Advisors

A great organization I’m a proud member of is the Financial Planning Association. It’s a tremendous resource for consumers and financial professionals. For someone who is hoping to get in the financial planning business, FPA offers a residency program (think of it as an internship) which is a client-centered training experience using comprehensive and detailed case studies. By completing the 6-day internship program, candidates will be eligible for 30 hours of CFP Board continuing education credit or three months of financial planning work experience. You can learn more by visiting the FPA’s website.

Can You Become a Part-Time Financial Planner?

The question came from Derek:

Hey Jeff, First thing I want to say great blog! I’m currently in the workforce and entertaining a new profession as a financial planner. I really enjoy keeping up with the markets and many of my friends and co-workers come to me for advice on their investments. I’ve been doing some research in getting in the business and it seems daunting as many of the big brokerage firms want you to work crazy hours the first couple of years. I’m not ready to give up my day job and was considering giving it a go part-time. What do you think about the likelihood of being a part-time a financial planner?

Derek is NOT the 1st person to ask me about becoming a part-time financial advisor. In fact, many people who have a love for investing, numbers, and helping people have emailed asking me something similar. To all of those who are interested in the financial planning profession on part-time basis, this video is for you. Making sure I hadn’t missed anything regarding being a part-time financial advisor, I asked some of my colleagues to share their thoughts on the matter. Here are some comments from fellow financial advisors about whether you can do it part-time:

Part-time Financial Planning

I think if a person wants to pursue a part-time or “on the side” financial planning business, they need to first decide how they want to do it. Let’s assume for a minute it’s possible.

• Do they want to get into financial planning because they think it’s interesting?
• Because they want to help others?
• Because they have a personal interest in finances and investing?
• Or is it something else?

None is better or worse than the other, but I think getting clear on this up front will help clarify the rest of the thought process. Also, beyond an immediate friends and family circle, how will they market and attract new clients?

I know I’ve raised more questions than I’ve answered. I’m frankly not sure if it can be done, but rather than assume it can’t, I think anyone interested needs a thorough understanding of what role they want to play in the financial advice/planning industry before moving ahead.