Looking for a career in financial services? READ this first

Why taking a position as a financial salesperson is not a good path to becoming a financial adviser, and how those who are interested in actually becoming financial advisers can pursue a better first job instead.

I am lucky.

I love my job and understand the power professional financial services has to transform lives and improve the world.

But every so often I get an email like the one below:

“Dear Mr Instone, I’m new to the industry and I’ve been offered an opportunity to make a lot of money from a big international firm to become a financial adviser/business developer with them. I’m really excited to be an adviser, but I’m nervous because it’s essentially self-employed.  Do you think this is a reputable firm and a good job opportunity?”

The answer I give almost every time:

“No. Statistically, it’s unlikely to work out. It’s not a good path to becoming a financial adviser, not a good opportunity and you’ll probably scar yourself for life!”

More often than not, this wisdom falls on deaf ears.

Because the role doesn’t require any prior experience and the empty promise of riches, a jet-set lifestyle and easy money tempts good (but inexperienced and often broke) people into making a career mistake from which they often never recover.

This story isn’t about choosing one big firm over another.

It’s about a systemic problem in the entire path to becoming a professional financial adviser.

This begins with confusion and misunderstanding for the recruits themselves.

The reality is that when a ‘financial adviser’ or ‘business coordinator’ is hired from the start to get new clients and generate their own revenue - it’s not really a ‘financial adviser’ job (the profession I love) at all; it’s a job offer to be a financial salesperson (the industry I hate). 

The difference is massive.  

Background 

Here’s the truth.

Getting started as a financial adviser is difficult.

Most job offers in the international marketplace are commission-only/self-employed roles.

You are required to get all your own clients from scratch. 

Cold calling, LinkedIn ‘fishing’ or other skulduggery…

This is a terrible way to start a career as a financial adviser and a burden to be forever carried not a badge of distinction. 

According to data from Cerulli, only about 20% to 30% of financial salespeople who join a firm even survive the first 3 years - the rest fail and leave.

The problem is that financial services has an ‘outer’ and ‘inner’ game. 

Some people ‘inside’ understand the widely different operating models, nuances and practices. 

Others don’t.

Most salespeople think they really are ‘advisers’. 

Worse still, many clients think the same.

They’re not.

To most people outside – even well-informed observers – we largely all look the same/sound the same/do the same.

No one really cares about the difference indicated below. 

Until its often too late. 

The unsuspecting public often assume that financial services operates like other professions. 

I’m talking about lawyers, accountants etc.

In other words, professionals who charge for their time.

They don’t understand the differences that make those in the bottom left quadrant (self-employed commission-only roles) more like double glazing, photocopier and car sales.

This is because the key to success for financial salespeople is not selling the adviser’s time or expertise, but the distribution of company-approved products instead.

Often to their ‘friends’, their ‘community’ and their ‘network.’

With a salesperson, the cost of this pyramid selling is concealed through hidden commission as ‘free advice’ makes the products easy to sell! 

A ‘real’ adviser will charge a fee.

The difference between a financial adviser and a financial salesperson 

Regardless of what title a company gives to its representatives (no one calls them salespeople because the word ‘sales’ is taboo, while ‘adviser’ sounds professional), the reality is apparent when you look at the duties expected at banks, brokers and most large international firms that hire ‘financial advisers’.

These firms are looking for financial salespeople to distribute their insurance or investment products.

The biggest clue is that you are expected to get ‘your own’ clients from day one.

Let’s be honest and think about reality.

No one is going to pay you for your financial advice when you have no formal education as an adviser, no Chartered Financial Planner certification, and not one day of actual experience as a financial adviser.

A few clients may buy a product through your company if they think it can help them with their financial situation.

Maybe they’re under-insured and need more life insurance?

Perhaps they have excess money each month and want to save?

Maybe you can bamboozle them regarding complex things such as pensions?

But the reason you can help them with these problems is not because you’re getting paid to provide financial advice, it’s because you’re representing a company that sells insurance or investments.

The situations I describe are scenarios where these people may be potential buyers of one of those products.

And if everything goes well with your sale – you’ll get paid for selling the company’s product, because that’s how the system works.

And that’s why ‘the company’ wants you to get your own clients.

Because your job is to find people who will buy ‘products.’

That’s the job of a financial salesperson.

Not a financial adviser.

You won’t understand the difference at the start (it can take years) – but, more seriously, neither will the client.

Big firms let you sell products from day one because it doesn’t take nearly as much time to learn to be a financial salesperson (a week) compared to becoming a Chartered Financial Planner (at least five years).

You can potentially start generating revenue without any real investment in you!

As a financial salesperson you need no more than sales training (the “gentleman’s” agreement), training on your company’s products (red, green or blue) and how they work (a diagram or lifeline).

Many would argue, the less formal training, the better for a product salesperson.

Why?

Because the more professional knowledge you gain – the greater the disgust you will likely develop for the typically opaque, inflexible and expensive products which are required to generate commission and the damage these can cause to clients.

As a salesperson, you are also unlikely to get much or any support to develop professionally or become a Chartered Financial Planner or Chartered Insurance Broker.

This kind of support may compromise the focus on sales training, how products work, and how to implement them in various scenarios.

It will typically act as a disincentive to remain with that organisation, unless you misuse the knowledge you gain.

But this is not a debate of about fees against commissions, fiduciary versus broker.

That’s a whole other discussion.

This is to make you aware that ‘real financial advisers’ do actually exist.

Advisers who are in the business of delivering professional, transparent and transformative advice.

Who operate in a polar opposite manner to a product salesperson.

These advisers have a great deal of training, professional qualifications, years of experience, both as an apprentice and an adviser, to learn how to add value with their advice.

It’s to make you aware of what is happening when you’re starting from day one with no training and limited or no professional education.

And you find an advert saying...

“we want you to be an adviser – no experience required”…

Your job is to sell products.

The reason why this all matters is because 70% or 80% of the industry’s new recruits into sales don’t even last for 3 three years because sales is such a brutally difficult thing to do.

Many who do survive are forced to compromise their integrity and values, not because they are bad people but simply because ‘the system’ means they are unable to feed themselves or their children unless they sell products.

Even when you have sales experience, it’s tough because most consumers don’t trust ‘financial advisers’ because so many are financial salespeople – and consumers are rapidly figuring it out.

Unfortunately, the reality is the ‘industry’ has a long history of promising the world to attract ‘fresh meat’ to replace the high drop-out/failure rate because, from their perspective, for a newbie, one of three things happens:

1.  Either you’re really good at sales, in which case you’ll have a fine career as a salesperson unless you have a conscience.

2.  You’re really bad at sales, in which case you’re going to be gone in three to six months and it won’t cost them (the employer) anything.

3.  You try hard and struggle to get a few clients, then decide this isn’t for you and leave, and the employer keeps your clients.

So, from the company’s perspective, those three scenarios are win, win, and win.

But from your perspective, either you’re good at sales and stay (until you get a better commission rate from a different firm) or you’re not and you’ll be gone long before you ever get enough experience to actually get paid for your financial advice.

Fortunately, however, it is not this way at all firms. 

Starting your financial adviser career path

So, what’s the alternative for someone that’s looking to build a career as a real financial adviser?

Simply put, the answer is to find a non-sales job in a professional firm first. 

Ideally, this would be an entry-level role such as an administrator or associate where your job is to support other existing ‘real’ advisers with their existing clients.

This does not include anything to do with bringing in or finding new clients for advisers, but is likely to involve fielding enquiries, shadowing advisers, taking exams and working very hard to learn the ropes of professional, fee-based financial advice. 

These are roles that are needed at firms that are in the business of actually providing advice.

The caveat, though, is that firms hiring associates often want their candidates to have basic CII certification (or at least to have passed some CII exams), so if you are not at that stage, just getting your foot in the door (working in operations or another area) may be your best bet.

At a firm which has the clients’ best interests at heart.

You can find the perfect role for your particular unique abilities at some point down the road.

Just work towards getting the initial job you need to get started with your career.

Work very hard.

Get your exams.

Learn what you like doing and morph from there.

What those jobs look like varies by the firm.

Ultimately, the starting point in the advisory industry (from most to least preferred) would be:

1. a paraplanner or associate;

2. a role in operations, client services, or administration;

3. any other salaried role in financial services; and

4. a role as a financial salesperson or coordinator (difficult because of the baggage from your sales career).

The key is to understand that the real starting point for a career as a financial adviser is not to start selling products or finding clients from day one, and those companies hiring ‘advisers’ to do so are really hiring financial salespeople for a sales job instead.

Be realistic about your chances of long-term riches within financial sales.

I myself have never seen the financial salesperson’s dream end happily ever after in the way that I see law and tax firm partners happily retire.   

Understand the companies, the dynamics of the industry and what future career track is in place to help.

Ideally work with a firm where you can pay your dues, and get some real relevant experience and later move up the ladder as a true financial adviser.

One where the teams reputation for deep expertise and stunning service causes a thunderstorm of ‘inbound’ enquiries and you learn how to service its existing clients.

And the good news is these jobs are salaried.

Changing your career

Getting started, especially if you’re a career changer accustomed to a potentially higher standard of living is particularly difficult.

A lot of big firms solicit career changers – because you often come with what’s known as your own natural market, existing friends and networks with whom you can do business from day one, often from their former career or industry.

A ‘circle of influence.’

Remember - you’re not getting hired for your potential as a financial adviser, you’re getting hired because you’re coming to the table with good prospects for the company’s products.

You’re the marketing strategy!

The reality for career changers isn’t what you want to hear.

It’s that you should take an entry-level job for a period of time, get the experience you need and then move up.

The good news here is that experienced professional advisers, like lawyers and accountants, often take home excellent salaries year after year.

They have far better career progression and opportunity.

Best of all they actually help people.

But you have to start somewhere, which may mean taking one step back to take two steps forward, or taking one small entry-level step to try to climb bigger steps later.

Transforming lives

Zig Ziglar famously said’

‘You can have everything in life you want, if you will just help other people get what they want’.

International financial services offers this opportunity to transform lives and create positive change. 

But far too often people choose the easy route.

Don’t get misled.

Make sure you understand what kind of job you’re getting yourself into.

Understand that the long way is normally the right way.

There are no short-cuts.

Hard work, determination and good mentoring will succeed.

Short-cuts, sales-tricks and commission-based sales won’t.

Entry-level positions, not sales, are the way to go for anyone wanting a professional career.

‘Adviser’ jobs that require you to get clients from day one are not adviser jobs, they’re sales jobs.

My advice for those considering a career is to ask good interview questions.

Thanks to Michael Kitces and his blog for the ideas and inspiration behind this blog.

What do you think?

Still fancy that job now?

Please share your thoughts in the comments below!