New financial advisors are often overwhelmed when trying to build their book of business.
Does door knocking work? Should you buy an advisor’s book? Is it better to go alone or partner with someone? Will your young age work against you?
Generally, there are 5 broad actions you can take to get started:
- Build your network: Attend industry conferences and events, join industry associations such as the Financial Planning Association, and connect with other advisors in your area through social media or networking groups. For example, attending events like the National Association of Personal Financial Advisors (NAPFA) or XY Planning Network (XYPN) can help you connect with like-minded professionals and build relationships with potential clients.
- Stay up-to-date: Read industry publications, attend webinars hosted by industry experts or organizations like the CFP Board or the Financial Planning Association, and consider getting additional certifications such as the Certified Financial Planner (CFP) designation or the Chartered Financial Analyst (CFA) credential. For example, attending webinars hosted by industry experts can provide valuable insights on financial planning trends and best practices.
- Focus on communication: Listen carefully to clients to understand their goals and concerns, explain complex financial concepts clearly and concisely, and maintain regular contact through newsletters, emails, or phone calls. For example, using a tool like Client Relationship Management (CRM) software can help you keep track of client communication and ensure that you’re providing a high level of service.
- Establish a niche: Specializing in a particular area of financial planning can help you differentiate yourself from other advisors. For example, you may focus on retirement planning for small business owners or provide financial planning services to the LGBT community. By developing expertise in a specific area, you can become known as a go-to advisor in that space.
- Be patient: Building a successful career as a financial advisor takes time and patience. Don’t get discouraged by early setbacks, and focus on building a solid foundation of satisfied clients who will refer you to others. For example, rather than expecting immediate success, focus on building strong relationships with a few clients and providing them with excellent service. Over time, your reputation will grow, and more clients will come your way.
The following are quotes from actual veteran financial advisors speaking to young, new recruits:
I encourage you to network with other advisors in the area, preferably with RIAs if possible. I’ve spent 5 years in the industry and the broker dealers are a burnout factory. It was wise to knock out CFP curriculum ahead of time.
I’ll be working at a broker dealer again based on family emergency that cropped up this year but based on personal experience you’ll encounter less ethical conflicts in offering more affordable services and actually doing financial planning for people you work with at an RIA vs a broker dealer or insurance company.
Former <company name redacted> guy here. I started there fresh out of grad school. That place is a grind, but you can get some valuable experience. Your toolbox isn’t going to be nearly as large as Indy folks. Heck, you’ll even lose lose out on features to Morgan Stanley and Merrill Lynch advisors. It sucks to be one step above NWM, but if you are able to stick around for a couple of years you’ll really learn to do more with less which is an invaluable skill. I hated my time there, but looking back I learned some great lessons that I would have had a hard time getting anywhere else. Keep your head down, do your best, learn to grind, and squeeze every last bit of usefulness you can from them. And absolutely do not drink the green kool aid lol. EJ is a good place to start, but a better place to leave.
Since I know how <redacted> works so well I’ve been able to build a large part of my book by poaching their clients. I’m able to give them better service at a cheaper price and my payout is much higher since I’m Indy. It’s a win for me and the client.
Also, don’t hold your breath on them adding new features. They’ve been promising to get rid of the green screen for 20 years now and it’s still going strong lol.
What I hated most about <redacted> were the annoying rules. They are slowly changing this, but in years past <redacted> would hire pretty much anyone who had sales skills, financial knowledge be damned. This means they have to structure their accounts to cater to the lowest common denominator and have to have a ton of red tape. If you don’t know anything about finance it’s great because you really can’t screw it up. If you deviate even a little from their rigid formula you get a home office call and have to explain yourself. It’s stifling if you’re someone like me who enjoys getting into the weeds of financial planning.
I also hated the level coaches and how levels themselves worked. You need net new assets and commissions to move levels. The assets is easy (relatively speaking), but if you’re a person who wants to be fee only it takes forever to move up because your commissions will be very low. This forces you to do some brokerage business or sell a few large insurance cases. I never even took my insurance test because I don’t want to be associated with insurance salesmen at all. Because my commissions were low, even though I had highest new assets by a lot, I always was made to get on calls with my level coaches and be “coached” on how to raise my commissions. It was a waste of my time and I hated it. This will vary heavily region to region. If you have a good region you might actually enjoy those calls. I did not have a good region.
Plan to make 3-4 resets (jumps) if you’re building from scratch. That’s what I did and I needed every extra day possible to survive. Stay in the game as long as you can and sell yourself, not the logo. I’m solo with 70 AUM. Only 100 clients. Take only the best with you at every turn. But I will be honest; if you can partner up to buy a biz… DO IT! Prospect other Advisors a bit, when you can. Good luck! Work smart and hard!
You don’t take clients, they follow you. I have never had a partner but I know most advisors who want to have a better chance at making it look for partnerships or equity buy in. I have never poached a book but have seen others do it. I have worked a C and D book and have found some gems. 2 of my largest clients came from junk hand me down books. They had less then 100k. Now both over $4 million. My response in this list is only meant for Financial Planners who build their own business on their own. Again, the easier way really is to find an older Advisor who will transition biz to you. I have not been that fortunate but I see this arrangement all the time around me.
I have a small biz with a just 100 clients. I work about 20 hours a week. That’s good enough for me. What’s great about this business is everyone’s book is different and we have the freedom to build how we want. My ultimate goal was to just work with a few great clients who I enjoy being around and they enjoy my advice and pay me for it.
It is more important to be able to relate and listen and understand a client’s point of view by asking great questions and paying attention than having a great “hot take” on the market. Yes you must be credible and yes you must know your stuff, but most people just want to feel heard and understood. I see young advisors commonly throw up tons of financial facts and perspectives in hopes of their clients being impressed. And for god’s sake if you do nothing else do not ever assume the man in the relationship is the one making the financial decisions. I closed a door on an ed Jones rep because he asked to speak to my husband. I work in the business and have a CFP. We were not going to get off on the right foot.
Without saying too much, <redacted> is making some dramatic moves to position itself in the market. Additional branch structures and roles, a headfirst dive into full fledged fiduciary planning, and a massive spending spree on technology in a very short period of time. You’ll be very happy with the firm. I’m a fairly large advisor and CFP and I’ve had a number of conversations with other CFPs and RIAs outside the firm. The flexibility of RIA can be great, but the comp has dramatically narrowed, especially as you grow. The flexibility and tech gap is shrinking rapidly as well. I run a nearly complete fee-based practice and take clients from wire house and RIAs monthly. The truth is, the firm doesn’t matter nearly as much as the quality of service that you provide. For me, I could make more outside of <redacted>, but the convenience, name recognition, compliance, and ease of running my practice makes it very unlikely that I will ever leave. Just because someone is at an RIA it doesn’t mean they run an ethical practice, and I witness that on a regular basis. Many of the naysayers on here haven’t been with the firm in years and haven’t seen the recent rapid progression. This is probably the easiest place to build a sustainable practice. Btw, I’ve never knocked on a door. It works, but is labor intensive. I built my practice through educational classes and networking. Almost every client that comes in comes in through attorney, cpa, or client referral. My practice averages about 3 mil/month in new assets, and there is no prospecting on my part. Build out your network, your job at this point it to build a solid reputation. As you gain experience and knowledge, it will be recognized and rewarded.
A couple of local <redacted> guys taught me door knocking.
It works well unless it’s in the middle of campaign season. Then people just assume you’re a politician and don’t want anything to do with you.
Advice: People care more about who you are than who your company is. <Redacted> guys can sell <redacted> all day. If you have talked to five different <redacted> guys, you know all about why they think <redacted> is the best thing since sliced cheese; but it’s hard to distinguish the benefit of working with any one of them over the other four. So sell you as a professional too.
Young advisors will get some pushback. But the things you want to reiterate here: you just recently got licensed meaning you very recently learned in depth the most current legislation and aspects of what is going on in the world of finance, namely securities. Also, it is highly unlikely that you’re going to retire on them and make them have to get used to someone else. If they like you, they get to keep you as long as they’re happy. Their beneficiaries should know you too by the time it matters assuming you’ve established that relationship.
Don’t crowd them. Knock on the door and take a step back. Maybe even get on the next step down from the door so you’re not RIGHT IN THEIR FACE.
Smile but don’t be creepy about it.
Expect anything- from someone yelling at you through a closed door that they’re not voting for you and not going to give you money. (This happened. I said back “I’m not a politician! I’m a financial advisor!” lo and behold they opened the door) to inviting you inside to check out their cool rock collection and the stuff they accumulated when they were into archaeology.
Being a young FA rocks. We leverage technology and have the ability to adapt better to new investments, and tax/legislation changes. I’m only 24, been in the business 3 years and got the CFP last year. I’m about to have a record year. On pace to quadruple my net flow goal for 2023 doing nothing more than providing great service, asking for referrals and getting out in my community.
Clients have all followed me. But all my transitions to other firms were in the first 5 years. I have been with a same wirehouse for the past 13 now. I had enough of a base to stay put which is really best for the client after you make, IMO. I have never purchased a book. My advice to someone who has an opportunity to purchase a book, do it! And if you have to pay a higher premium, because you are younger, and have zero clients, definitely do it! In the end, when you are 100% equity owner of that business, it will be worth it.