RPF0139-Advice_for_Getting_Into_Financial

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00:00:14.080 | - Okay, okay, okay, fine, fine, fine, fine, fine.

00:00:18.420 | After dozens and dozens of requests,

00:00:21.540 | I'll do the show for you.

00:00:24.700 | What is Joshua's advice for how to get

00:00:26.620 | into the financial planning field?

00:00:28.300 | That's today, I give you my thoughts.

00:00:30.260 | (upbeat music)

00:00:32.840 | Welcome to the Radical Personal Finance Podcast.

00:00:48.420 | My name is Joshua Sheets.

00:00:49.660 | Today is Thursday, January 22, 2015.

00:00:54.020 | This is the show where we talk about

00:00:55.380 | all things financial planning,

00:00:57.320 | both from a consumer perspective

00:00:58.820 | and also from a professional perspective.

00:01:01.260 | No secrets here.

00:01:02.560 | Everything I know I'll give you

00:01:03.760 | from either side of the table.

00:01:06.380 | And today I answer probably one of the more

00:01:08.940 | asked questions that I get.

00:01:11.160 | How would I get into financial planning

00:01:13.240 | if I were interested?

00:01:14.340 | (upbeat music)

00:01:16.920 | I really have been asked this question

00:01:20.140 | at least a few dozen times.

00:01:22.020 | And I've been meaning to do a show on it.

00:01:23.340 | And I've done some, I've skirted around the issue

00:01:25.420 | a little bit.

00:01:26.740 | But today I'm gonna tackle it straight on.

00:01:28.700 | And I'm gonna try to give you my perspective,

00:01:30.740 | my opinions, my advice on getting into this industry

00:01:34.620 | and getting into this field.

00:01:36.460 | Now you need to recognize, however,

00:01:37.700 | that this is my opinion and my experience.

00:01:39.780 | And my experience is limited.

00:01:41.960 | But I'll do my best to give you some thoughts.

00:01:44.140 | And essentially this is the speech that I would give you

00:01:46.500 | if we were sitting down having a drink together

00:01:48.940 | and you wanted to get into the financial planning business

00:01:51.420 | and we're interested in how to approach it.

00:01:54.380 | As we start, let me give you a brief view

00:01:57.100 | into some of the types of emails that I get.

00:01:59.380 | I've chosen four to read to you.

00:02:01.940 | And I've trimmed them a little bit for time

00:02:03.580 | and for content.

00:02:04.420 | But let me just give you an idea.

00:02:06.300 | The first two are interesting.

00:02:07.580 | The first one comes from Jordan

00:02:08.660 | and the second one comes from Tim.

00:02:10.160 | These came in to my email inbox

00:02:12.340 | within 45 minutes of each other over the Christmas break.

00:02:15.260 | (laughing)

00:02:16.100 | And I was fascinated by these questions

00:02:19.940 | and just how similar they were

00:02:21.820 | and how close they were in time.

00:02:24.640 | Question from Jordan.

00:02:25.480 | Hey, Joshua, I consider personal finance

00:02:27.240 | and financial planning a hobby

00:02:28.600 | and I dole out my amateur advice

00:02:30.320 | to friends, colleagues, and family.

00:02:33.720 | A little bit of background.

00:02:34.620 | I'm 25 years old and currently working as an auditor

00:02:37.100 | in the big four in my third year

00:02:39.000 | and I've just been early promoted to senior associate.

00:02:41.880 | The thing is I don't see myself auditing forever

00:02:43.960 | and I really want to get into financial planning.

00:02:46.140 | My plan is to start taking the courses for the CFP

00:02:48.840 | in May and June of 2015 after my busy season is over.

00:02:53.100 | I feel secure in my job but I just don't love it.

00:02:55.960 | Do you have any advice for a 20-something

00:02:58.680 | wanting to transition to a career in financial planning

00:03:01.840 | with zero experience?

00:03:03.740 | Next question, 45 minutes later.

00:03:06.960 | Hey, Joshua, I'm writing because I'd love to get your insight

00:03:09.160 | in a career as a financial advisor.

00:03:11.400 | A little background on myself.

00:03:12.640 | I'm a 28-year-old CPA who has worked as an auditor

00:03:15.620 | at a large CPA firm for the past four years.

00:03:18.400 | I've been thinking about making a career change

00:03:20.120 | and given my interests, I've begun looking

00:03:22.320 | into possibly starting a career as a financial advisor.

00:03:25.400 | I really enjoy the technical side of financial planning,

00:03:27.840 | including the tax side of planning,

00:03:29.800 | but I'm also enjoying learning

00:03:31.160 | about the investing side as well.

00:03:33.720 | In talking with a few other people,

00:03:35.400 | I have heard that being a financial advisor

00:03:37.360 | is basically a sales job where you are asked

00:03:40.280 | to utilize your own contacts to push financial products on.

00:03:43.920 | What I have heard is basically the only way to make money

00:03:46.560 | is to have rich friends or family to get established.

00:03:49.600 | I really like the fact that I could be helping people

00:03:52.280 | but the cold calling and pushing financial products

00:03:54.760 | on people does not sound appealing.

00:03:57.240 | Also, I don't believe I have the wealthy contacts needed

00:04:00.080 | to get established.

00:04:01.500 | I would love to get your insight on this matter

00:04:03.400 | and to hear if the stories I hear about careers

00:04:05.600 | as a financial advisor are correct.

00:04:07.720 | Additionally, I'd love to hear any recommendations

00:04:09.680 | you would have for somebody looking to get into a career

00:04:11.700 | as a financial advisor.

00:04:12.840 | Thanks, Tim.

00:04:13.900 | I guess the auditing community is gonna be losing

00:04:17.880 | a couple of its good representatives.

00:04:20.560 | Next email from Eric.

00:04:22.240 | Hi, Josh.

00:04:23.080 | In 2013, I became completely obsessed

00:04:25.240 | with all things finance.

00:04:26.920 | I first picked up books about stock picking

00:04:29.140 | because I thought that was the way to go.

00:04:31.000 | But within a month or two, I was recommended

00:04:32.760 | the Intelligent Investor and I've been going

00:04:34.960 | with the Boglehead strategy since then.

00:04:37.160 | I've been very lucky in getting a job

00:04:38.800 | straight out of college that pays quite well

00:04:40.600 | in the software industry and since I started in July 2013,

00:04:44.440 | I've saved 70 to 80% of my take home income.

00:04:47.440 | I figure within 2015, I will become

00:04:49.760 | financially independent at age 25.

00:04:52.240 | I've been listening to your podcast daily

00:04:53.920 | since I discovered it last month

00:04:55.520 | and needless to say, it has quickly become

00:04:57.800 | my favorite podcast.

00:04:59.280 | Keep up the awesome work.

00:05:00.580 | I listen to every new episode.

00:05:02.600 | I am interested in becoming a fee-only financial planner.

00:05:05.560 | Every time I get the opportunity to talk with someone

00:05:07.800 | who is also interested in finance,

00:05:09.720 | believe me, this is super rare, I get very excited.

00:05:13.340 | Nothing makes me happier, basically.

00:05:15.640 | I have a bachelor's degree in computer engineering

00:05:18.000 | right now.

00:05:18.960 | I'm wondering, what is the shortest path

00:05:21.280 | that I could take to get to the place

00:05:22.880 | where I can hang out a shingle

00:05:24.520 | and start advising people for a small fee?

00:05:27.280 | I am not interested in charging for assets under management.

00:05:30.560 | I simply want to share knowledge with people

00:05:32.280 | so they can make their own investments

00:05:33.840 | and financial decisions.

00:05:35.380 | I want to do the opposite of most advisors, basically.

00:05:38.600 | I'd be okay charging very little money

00:05:40.440 | for just a consultation because I will be

00:05:42.200 | financially independent.

00:05:43.660 | You mentioned in one episode that you got

00:05:45.320 | a master's degree in financial planning

00:05:47.040 | and I know you need the CFP certification.

00:05:49.560 | With just my bachelor's degree, could I get this CFP

00:05:52.240 | and start taking on clients?

00:05:53.560 | Or would I need other certifications as well?

00:05:55.920 | Thanks, Eric.

00:05:57.280 | And those are representative of many emails that I get.

00:06:01.440 | And then I'll finish with a fourth one here,

00:06:04.000 | just a different life situation.

00:06:05.740 | I've gotten a few different ones from clients,

00:06:09.000 | or from prospective clients.

00:06:10.160 | I've gotten one from men, from women.

00:06:11.960 | These are from three young men.

00:06:14.000 | And this one is from an older man,

00:06:15.360 | but I've gotten a couple from some ladies

00:06:17.600 | who are kind of mid-career and they've asked me

00:06:19.700 | this question.

00:06:20.760 | And so here would be another example

00:06:22.580 | of a different take on the question.

00:06:23.960 | And this one wasn't a specific question,

00:06:25.760 | it was part of an email exchange

00:06:26.920 | that I was having with a listener.

00:06:28.320 | Listener says, Joshua, I've realized over time

00:06:30.920 | that I'm a poor candidate for the traditional

00:06:32.920 | early retirement.

00:06:34.200 | And instead, I would like to focus my next 15 to 17 years,

00:06:38.160 | roughly ages 52 to 67, on doing something that I like.

00:06:42.880 | This person was actually a practicing physician.

00:06:46.160 | Be it as an administrator in a medical business

00:06:48.060 | that I believe in, being a health coach

00:06:49.840 | for middle-aged guys trying to get back into shape,

00:06:52.160 | or opening a gelato shop in my neighborhood.

00:06:54.560 | Actually, my dream job would probably be selling tickets

00:06:57.040 | in a booth at a ski resort, but maybe later on that one.

00:07:00.480 | I've also thought about becoming a personal finance coach

00:07:04.080 | or advisor for doctors.

00:07:06.300 | I see them make stupid mistakes all the time.

00:07:09.280 | I could probably do a series of podcasts

00:07:11.200 | on stupid things my partners have done.

00:07:13.520 | Perhaps you could help me get that one off the ground.

00:07:16.720 | All the best.

00:07:17.560 | And again, this was a man who is a physician.

00:07:21.040 | So, these are representative,

00:07:23.720 | and I should have included in my preparing for the show

00:07:27.520 | just a few of the ones from the ladies,

00:07:28.880 | and I get yelled at from you guys.

00:07:30.760 | It's not just a male, it is a male-dominated industry,

00:07:35.600 | but there are more and more ladies who are getting into it.

00:07:38.460 | Some of the most effective financial advisors

00:07:40.880 | that I've ever worked with have been ladies.

00:07:43.520 | So, it's an interesting question,

00:07:46.640 | 'cause all of these come at it from a different angle.

00:07:48.840 | And so, I wanna talk about just some different,

00:07:53.400 | I'm gonna talk a little bit about

00:07:54.820 | the way the financial advice industry is currently.

00:07:59.820 | And one of the things I'm most excited about

00:08:02.880 | is today, in 2015, there is no one model

00:08:07.880 | which is gonna be the most effective

00:08:10.680 | or the most important.

00:08:12.680 | There are many models that are emerging,

00:08:16.740 | and especially with some of the changes in technology,

00:08:19.360 | there are some new models being tested.

00:08:22.120 | I'm excited about some of the new models

00:08:24.060 | that are being tested.

00:08:25.000 | And I think we need, frankly, I think we need more models.

00:08:27.360 | And I'm excited about seeing and helping those develop,

00:08:30.480 | profiling people who are trying new things

00:08:33.280 | and building new ways of working with clients.

00:08:36.760 | The key is to understand the different models

00:08:39.080 | and approaches to a financial planning practice

00:08:41.800 | that are available, and then figure out

00:08:43.620 | which one will be effective for you.

00:08:45.820 | There are actually many historical models

00:08:49.080 | that are time-honored and still work,

00:08:52.800 | and then there are some brand new ones.

00:08:54.560 | One of the oldest models of giving financial advice

00:08:56.920 | is the model of a traditional life insurance agent.

00:09:01.360 | Years, I mean, back in the 1800s

00:09:04.520 | was when life insurance first started to be developed.

00:09:06.880 | Life insurance companies were started,

00:09:08.360 | and at that time, there were life insurance agents

00:09:11.400 | riding around on horseback from farm to farm to farm,

00:09:14.440 | selling the farmers and their families

00:09:18.520 | life insurance policies.

00:09:20.160 | And as far as I'm concerned,

00:09:21.640 | that was an amazingly valuable service,

00:09:26.080 | and that was financial planning.

00:09:27.680 | Now, today, there are many fewer people doing that,

00:09:31.400 | but there's nothing, in my opinion,

00:09:33.040 | that has changed about the model

00:09:34.260 | that makes the idea and the model

00:09:36.000 | of being a life insurance agent less relevant.

00:09:38.880 | I'm gonna talk in detail about some different ways

00:09:40.720 | that that can be approached even today.

00:09:42.800 | You also traditionally had a stockbroker,

00:09:44.960 | and so a stockbroker historically was one

00:09:47.960 | who helped handle the transaction in individual securities.

00:09:52.500 | Now, that changed, that model was destroyed over time,

00:09:55.440 | and so many stockbrokers moved on

00:09:58.000 | to managing some portfolios, choosing individual stocks.

00:10:01.560 | That model, as far as I can tell,

00:10:03.480 | has pretty much been destroyed by the mutual fund industry.

00:10:07.040 | So many stockbrokers have moved on to selling mutual funds.

00:10:10.200 | That model is quickly disappearing,

00:10:12.960 | the sale of mutual funds for a commission.

00:10:16.360 | Charles Schwab, was it Schwab who destroyed that business

00:10:19.440 | with his mutual fund supermarket back in the day?

00:10:24.440 | I mean, some of these models have just changed over time.

00:10:27.840 | The index fund has taken a serious bite

00:10:31.080 | out of the actively managed fund marketplace.

00:10:34.960 | The hedge fund industry has taken a lot of some business

00:10:39.080 | away from the mutual fund industry.

00:10:40.920 | So the idea of selling mutual funds for a commission,

00:10:43.640 | this has changed, although there are plenty

00:10:45.560 | of people still doing this,

00:10:46.660 | but that has certainly changed the model.

00:10:48.760 | And now, the most popular model is to do fee-based

00:10:52.440 | or fee-only planning, where instead of being paid commissions

00:10:56.160 | off of the sale of investments,

00:10:57.320 | you are billing fees to the account.

00:10:59.540 | But all of these are some variation of financial planning,

00:11:02.520 | even accounting.

00:11:03.340 | Historically, you would have a time-honored model

00:11:07.760 | of working as an accountant,

00:11:09.240 | perhaps a tax planner where you are working

00:11:13.120 | and preparing individual tax returns,

00:11:15.160 | corporate tax returns, giving tax advice

00:11:17.260 | and accounting services.

00:11:18.400 | And that's absolutely financial planning.

00:11:20.400 | In fact, today in 2015, the most trusted advisor

00:11:24.280 | for most people who are wealthy

00:11:27.040 | is generally their accountant.

00:11:29.160 | Many of us who came in from the product side,

00:11:32.320 | the life insurance side or the investment side,

00:11:35.480 | have often been jealous of accountants.

00:11:38.400 | And I know several friends who started as tax preparers

00:11:42.000 | and have added on financial products to their business.

00:11:46.280 | Now, financial planning as its own discipline

00:11:48.760 | is still extremely young as a professional discipline,

00:11:53.320 | but it's emerging.

00:11:54.360 | And it started largely, if you're interested,

00:11:55.960 | to go back and listen to the episode with Michael Kitsis

00:11:58.600 | in the archives.

00:12:01.240 | And that episode number is episode 92.

00:12:06.240 | So you can find that at radicalpersonalfinance.com/92.

00:12:09.940 | But Kitsis and I tried to talk a lot about the history

00:12:12.860 | of the financial planning industry.

00:12:14.100 | And we tried to be very,

00:12:15.900 | there were no curtain held there,

00:12:20.200 | just simply we talked about the history

00:12:21.400 | and the different models

00:12:22.240 | and different things that are there.

00:12:24.240 | And so financial planning,

00:12:26.440 | it originally kind of started to be developed

00:12:28.560 | largely as a way to sell more product.

00:12:31.240 | It was added on as a benefit.

00:12:33.360 | But frankly, I think the best product salespeople

00:12:36.200 | have largely always been great financial planners.

00:12:40.400 | I think of two specific people

00:12:42.800 | that I have read a lot of their work.

00:12:45.800 | The more recent of the two was a man,

00:12:47.360 | he just died a year ago, a couple of years ago,

00:12:50.340 | named Al Granum.

00:12:51.720 | Al is a legend in the life insurance business.

00:12:55.360 | He originally started with Northwestern Mutual

00:12:58.200 | as a young man.

00:13:00.080 | He built one of the most successful life insurance agencies

00:13:03.360 | while Northwestern Mutual history

00:13:07.320 | and Northwestern in industry history.

00:13:09.320 | And he perfected a sales system called the one card system,

00:13:13.420 | which is a subject for another day.

00:13:14.720 | But it was actually the system that I was trained on

00:13:17.020 | as a new life insurance agent.

00:13:18.520 | And it was basically a system

00:13:20.080 | of measuring your daily activity,

00:13:22.000 | where you tracked how many phone calls you made,

00:13:24.320 | how many people you saw, what you did on a daily basis.

00:13:27.280 | And he probably has had a bigger impact

00:13:29.160 | on the life insurance industry than just about anybody else.

00:13:32.360 | But if you go back and you read his books that he wrote,

00:13:35.800 | he has one that is, I would say,

00:13:38.760 | is a mandatory must read for anybody

00:13:40.620 | who's interested in building a financial services practice.

00:13:43.200 | That book is called "Building a Financial Services Clientele,"

00:13:46.760 | I think is what it's entitled.

00:13:48.200 | And he goes through the entire process

00:13:49.720 | of how to start from nothing to today.

00:13:52.760 | But he's had a bigger impact on just about anybody than,

00:13:57.760 | excuse me, he's had a bigger impact on the industry

00:14:00.920 | than just about anybody else.

00:14:02.800 | But he was absolutely a financial planner,

00:14:06.160 | just wasn't called that.

00:14:07.580 | But the point was he was finding out

00:14:09.600 | what people's goals were,

00:14:10.740 | what they were trying to accomplish,

00:14:12.160 | and then helping to solve those goals.

00:14:14.380 | And the solutions involved financial products.

00:14:17.500 | That's how people often forget,

00:14:18.640 | and which I'm gonna get to in just a minute

00:14:20.280 | about the connection between selling.

00:14:23.160 | We all have financial products,

00:14:25.280 | and I'm gonna talk about professional selling in a minute.

00:14:28.200 | But it's very difficult to,

00:14:30.360 | we can't solve our financial needs

00:14:32.000 | without some sort of financial product.

00:14:33.960 | That may be a savings account that's offered by your bank,

00:14:36.480 | a CD that's offered by your bank or by a brokerage firm.

00:14:39.740 | It may be some gold coins that you buy

00:14:41.760 | from a local coin dealer,

00:14:43.440 | or some, I don't know, some silver bullion

00:14:47.220 | that you hold offshore with somebody

00:14:49.120 | that advertises over the internet.

00:14:50.640 | That might be a mutual fund

00:14:53.520 | that's run by a mutual fund company,

00:14:55.560 | a life insurance policy

00:14:56.840 | that's run by a life insurance company.

00:14:58.840 | The financial products, we all consume them.

00:15:01.420 | And so Al Granum was, in his day,

00:15:05.200 | was a comprehensive financial planner,

00:15:10.200 | even though I doubt that he personally

00:15:13.480 | ever worked with investments.

00:15:15.200 | He was almost surely primarily working with insurance.

00:15:19.960 | The other person that I think of

00:15:21.360 | is a man named Ben Feldman.

00:15:22.760 | And to the best of my knowledge, Ben still holds the,

00:15:26.040 | or he's dead now, he died 10 years ago,

00:15:28.320 | but he still holds the title

00:15:30.440 | as the world's greatest life insurance salesperson.

00:15:34.480 | He worked with New York Life,

00:15:36.880 | which is another amazing insurance company

00:15:40.320 | with a tremendous history.

00:15:42.400 | And he sold, let's see,

00:15:44.480 | he sold, I pulled up his Wikipedia page,

00:15:46.120 | he sold $1.8 billion worth of life insurance

00:15:49.560 | for New York Life from 1942 through 1993.

00:15:54.400 | And he once held the world record

00:15:57.820 | for the most products sold by value

00:16:00.860 | by a salesperson in a career,

00:16:02.560 | in his total career.

00:16:04.840 | In a year, he sold $100 million of life insurance in a year,

00:16:07.720 | and in a single day,

00:16:08.560 | he sold $20 million of life insurance.

00:16:11.260 | And so now to put that into context,

00:16:14.440 | in Ben Feldman's day as an active producer,

00:16:17.880 | there's an organization in the life insurance industry

00:16:20.320 | called Million Dollar Roundtable.

00:16:21.960 | And it's titled that

00:16:22.920 | because to sell a million dollars worth of insurance

00:16:25.720 | in a year was a massive achievement,

00:16:28.320 | a million dollars worth of total,

00:16:30.160 | what we call in the insurance business, face amount,

00:16:32.320 | total, if you sold $10,000 or a million dollars,

00:16:34.920 | that would count into that million dollar roundtable.

00:16:37.280 | Today, I very rarely, when I was in life insurance,

00:16:40.240 | it was rare for me to sell a policy,

00:16:41.680 | I don't know, less than half a million.

00:16:44.040 | So you could hit a million bucks

00:16:45.360 | with just any normal family.

00:16:46.880 | I'd try to never leave anybody

00:16:48.760 | without at least a million bucks of life insurance.

00:16:51.720 | But back in Ben Feldman's day,

00:16:53.660 | that would have been a year's accomplishment.

00:16:55.280 | So when you put his numbers into inflation adjusted terms,

00:16:58.520 | it was stunning.

00:16:59.360 | So I read a couple of his books

00:17:00.560 | and just understood what he did and how he sold.

00:17:04.160 | And the man was a financial planner.

00:17:06.040 | He was a financial planner.

00:17:08.000 | Just wasn't called that at the time.

00:17:11.880 | Now in today's world, again,

00:17:13.480 | there's a greater need for financial planning

00:17:16.440 | as its own discipline than there's ever been.

00:17:19.520 | Simply because our financial lives

00:17:21.760 | are much more complex than they've ever been.

00:17:24.600 | There are some major trends

00:17:26.540 | that are dramatically pressing,

00:17:28.800 | frankly, the global population,

00:17:30.360 | but at least in the United States of America.

00:17:32.600 | One of the biggest ones is the destruction

00:17:36.600 | of the defined benefit pension program.

00:17:39.060 | For many years, people never conceived of retiring.

00:17:42.020 | Then when they did conceive of retiring,

00:17:44.120 | then you could plan on a defined benefit pension

00:17:47.280 | from your company, and those are largely destroyed.

00:17:51.240 | People are living longer

00:17:52.360 | and being responsible for retiring.

00:17:54.500 | There are more financial products

00:17:56.360 | that have been invented and marketed

00:17:58.240 | to individuals than ever before.

00:18:00.160 | And these financial products are more complex

00:18:02.560 | than anything in the history of mankind.

00:18:04.680 | I mean, you just sit down and try to read,

00:18:06.120 | try to sit down and read a prospectus

00:18:07.560 | for your average mutual fund,

00:18:09.320 | let alone your average variable annuity

00:18:11.200 | or something like an equity indexed annuity.

00:18:13.740 | Just sit down and read the prospectus,

00:18:15.600 | and it's overwhelming.

00:18:18.480 | The tax code is more complex

00:18:20.320 | than it's ever been in the history of mankind.

00:18:22.920 | It's, how many pages is it?

00:18:25.800 | It's over 70,000 pages now, 70,320 pages long,

00:18:30.800 | and more than 3.7 million words.

00:18:34.400 | That's just the tax code, let alone insurance products.

00:18:37.680 | And I could list off 30 different types

00:18:42.280 | of life insurance that exist today.

00:18:44.440 | I could list, I mean, there are dozens

00:18:46.040 | of investment products that have been created.

00:18:49.860 | I mean, we've got, I mean, everyone knows,

00:18:51.960 | okay, we've got open-end mutual funds,

00:18:53.400 | closed-end mutual funds, unit investment trusts,

00:18:55.400 | guaranteed investment contracts.

00:18:57.560 | You've got annuity contracts.

00:18:58.520 | I mean, there's dozens of hedge funds.

00:19:00.160 | I mean, just these words, you know,

00:19:02.400 | the word hedge fund has no meaning

00:19:04.600 | other than a general classification,

00:19:06.880 | but there are dozens, you know, all these subtypes.

00:19:09.560 | So the investment marketplace

00:19:11.720 | has gotten more complex than ever,

00:19:13.600 | and the legal code has gotten more complex than ever,

00:19:16.160 | and family situations and planning

00:19:18.840 | has gotten more complex than ever.

00:19:20.800 | In a world where the majority, you know, it seems,

00:19:23.840 | I think the majority of families are,

00:19:26.800 | where many families are blended families,

00:19:30.840 | and you've got, dad has his two kids

00:19:33.380 | from his first marriage,

00:19:34.400 | and mom has her two kids from her first marriage,

00:19:36.420 | and now there's two kids together,

00:19:37.840 | and we're trying to equalize, you know,

00:19:40.200 | planning and figure out who's gonna care for what,

00:19:42.240 | and who's gonna be this, and who's gonna do that,

00:19:44.200 | the needs for whether you're,

00:19:46.720 | just every aspect of planning

00:19:48.160 | has gotten more and more complex.

00:19:50.280 | And so what, in many days, you know,

00:19:52.880 | if I go back and just paint a very simple picture,

00:19:57.880 | in many ways, all somebody needed in the past

00:20:01.320 | was a few simple products, you know,

00:20:03.420 | long-term care products didn't exist,

00:20:05.320 | disability products didn't exist,

00:20:06.740 | maybe a small life insurance policy

00:20:09.000 | for dad and an investment contract,

00:20:11.360 | and the kids were there,

00:20:12.200 | and maybe just some simple blue chip stocks.

00:20:16.320 | The world was relatively simple,

00:20:18.720 | but now it's incredibly complex.

00:20:21.040 | So I scratch my head to understand

00:20:23.400 | how anybody can possibly get through effectively

00:20:27.860 | this current world without either in-depth

00:20:30.580 | financial knowledge, if you're a do-it-yourselfer,

00:20:32.520 | without a good, caring, trustworthy, trusted advisor.

00:20:36.500 | So financial planning as an independent discipline

00:20:40.960 | has really, really grown.

00:20:42.960 | Now the key is, in the industry,

00:20:45.660 | there has always been specialization.

00:20:48.840 | There have always been boutique,

00:20:51.480 | specialist firms, and consultants,

00:20:53.560 | no matter what aspect of the industry that you look at.

00:20:57.240 | So if you were focused on,

00:20:58.680 | I'll use life insurance as an example,

00:21:00.640 | then life insurance had many different aspects.

00:21:04.960 | There's what I call kitchen table selling,

00:21:08.340 | working with median income,

00:21:10.460 | American households sitting at the kitchen table

00:21:13.240 | on Tuesday night at seven o'clock,

00:21:15.120 | doing a needs analysis,

00:21:16.380 | and figuring out how much life insurance,

00:21:18.040 | and working with individual families

00:21:19.880 | to protect mom, to protect dad in case they die.

00:21:23.280 | There's a whole market of life insurance

00:21:26.800 | that's still very active today.

00:21:27.980 | It's called final expense insurance,

00:21:29.880 | and it's a sale of a life insurance product

00:21:33.640 | that is purely intended to provide a cash payment

00:21:37.720 | for any final expenses, and a burial policy.

00:21:42.280 | This is very active.

00:21:43.200 | There are many life insurance agents

00:21:44.840 | that this is what they do.

00:21:46.160 | It still exists today, believe it or not,

00:21:49.760 | but it used to be much more popular.

00:21:51.100 | I've spoken with life insurance agents

00:21:53.000 | who started in this industry.

00:21:55.000 | There's something called a debit policy,

00:21:57.320 | or industrial life insurance,

00:21:58.880 | and this is essentially where the agent,

00:22:01.360 | a policy would be sold door to door,

00:22:03.280 | and the agent would go by

00:22:04.480 | and collect the premiums every month.

00:22:06.320 | And I've spoken with agents here where I live

00:22:09.000 | who started in this, and they would go every month,

00:22:10.720 | and collect the premium in working class neighborhoods

00:22:14.060 | for just a little bit of money.

00:22:15.600 | And that has largely collapsed,

00:22:19.000 | but it still does exist in a measure.

00:22:21.360 | At the other end of the spectrum,

00:22:24.640 | there have always been firms in life insurance

00:22:26.960 | that specialize in deferred compensation programs,

00:22:30.640 | and defined benefit planning.

00:22:31.840 | If you listened to last week's Q&A shows,

00:22:35.480 | I went through just a rudimentary introduction

00:22:37.660 | to deferred compensation,

00:22:39.780 | and deferred compensation programs

00:22:41.440 | are often funded with life insurance contracts.

00:22:44.480 | So there are specialist firms

00:22:46.080 | that work with large Fortune 500 companies,

00:22:48.580 | and do massive, multi-million dollar

00:22:51.320 | cash value life insurance policies

00:22:53.200 | for the purpose of funding deferred compensation.

00:22:55.960 | And that may be on an individual level,

00:22:58.040 | it may be in the corporate-owned life insurance market,

00:23:00.600 | the Coley market, there are various,

00:23:02.280 | it's a specialized market.

00:23:03.840 | There's a market of life insurance planning

00:23:05.500 | called BOLI, bank-owned life insurance.

00:23:07.520 | And this today, I have one friend here in West,

00:23:10.040 | two friends that do this, and they are specialists,

00:23:12.240 | and they don't work with anybody locally,

00:23:13.480 | they don't ever work with individuals.

00:23:15.000 | They are exclusively working with bank boards of directors,

00:23:19.520 | and bank executive leadership teams

00:23:22.680 | to put in place large, bank-owned life insurance policies.

00:23:26.640 | And the way these work, if you've never heard of this,

00:23:28.980 | is in essence, the cash values of the policies

00:23:32.480 | form a portion of the bank's cash reserves.

00:23:36.040 | So they get a little bit higher interest on it

00:23:37.680 | while still being able to keep their cash reserves on hand,

00:23:40.280 | and they do it through putting policies

00:23:42.520 | on their boards of directors, on their key employees.

00:23:46.060 | It's kind of a unique market.

00:23:47.760 | Someday maybe I'll do a show on it.

00:23:49.520 | You have, to this day, estate planning firms,

00:23:51.720 | boutique estate planning firms that specialize

00:23:54.200 | in only estate planning life insurance.

00:23:55.960 | I have a couple friends, there are several firms here

00:23:58.240 | where I live in the Palm Beach market,

00:24:00.320 | but most of their business is done, frankly,

00:24:02.320 | on a national basis, and they're just as likely

00:24:04.880 | to fly out to see a large client in Chicago,

00:24:09.000 | or fly out to Kansas City,

00:24:11.160 | or to work with this sports team president,

00:24:12.840 | or fly out to California.

00:24:13.880 | I mean, it's a large national market.

00:24:15.700 | So there is always a boutique firm in every industry.

00:24:19.440 | There are occupation-specific niches,

00:24:21.600 | so there are people who have built

00:24:23.800 | financial planning practices that are based upon,

00:24:27.040 | whether it's something as regular as physicians,

00:24:30.360 | or whether it's something like race car drivers.

00:24:32.680 | Doesn't, I mean, it doesn't matter.

00:24:34.200 | There are people who specialize in this.

00:24:35.880 | There are firms that specialize exclusively

00:24:38.480 | in working with celebrity athletes,

00:24:40.480 | and they do comprehensive wealth management

00:24:43.280 | for celebrity assets, excuse me,

00:24:45.680 | celebrity athletes, or movie stars,

00:24:48.360 | or whatever their niche is

00:24:50.240 | that they've figured out how to work in.

00:24:52.120 | There are also firms that,

00:24:53.920 | instead of marketing to a specific client base,

00:24:57.520 | that have built their practice

00:24:59.840 | based upon a certain technical skill.

00:25:02.760 | So perhaps their technical skill

00:25:04.280 | is a certain type of investment management,

00:25:06.500 | or portfolio management, and this would range every bit

00:25:09.760 | from a local $100 million firm

00:25:13.280 | working with local business people

00:25:14.880 | that manages a million-dollar fee-only accounts,

00:25:18.900 | to something like, I don't know, Peter Schiff,

00:25:22.280 | and his global strategies for managing,

00:25:25.440 | was it the Euro-Pacific, is that the name of his firm?

00:25:28.760 | Yeah, it's Euro-Pacific Capital,

00:25:30.120 | and here he is working with people,

00:25:33.020 | trying to help US citizens practically, basically,

00:25:36.200 | divest themselves of the US dollar in exchange for that.

00:25:40.120 | There are certain geographic specialties,

00:25:41.760 | so if you go into many, you know, some town,

00:25:44.240 | and this specific financial advisor

00:25:46.720 | has all of the business in this local town.

00:25:49.280 | My point in going through this list of specialties,

00:25:52.680 | or specialized approaches, is to point out

00:25:54.840 | that being a financial advisor can mean many, many things,

00:25:59.480 | and all of those are legitimate aspects

00:26:02.360 | of being a financial advisor.

00:26:04.860 | But what's changing more than ever

00:26:06.360 | is ways of marketing your services.

00:26:09.200 | So there are plenty of financial advisory firms

00:26:12.760 | that are old and established,

00:26:15.160 | maybe they're practically a family office at this point.

00:26:18.520 | I mean, we have a gazillion family offices here in Palm Beach

00:26:20.880 | or multi-family offices,

00:26:23.040 | which is essentially a family office

00:26:24.480 | is if you are a wealthy family,

00:26:26.240 | you'll put together your own financial planning firm

00:26:29.120 | just purely to serve your family.

00:26:30.880 | At some point, I need to get some of these guys

00:26:33.880 | and gals that work here in Palm Beach on the show.

00:26:36.440 | I gotta find someone to do it,

00:26:37.840 | and they won't tell who their families are,

00:26:39.840 | but I've talked with a few of them.

00:26:41.380 | But, you know, this famous rich family A,

00:26:45.020 | they've got $3 billion that they're managing.

00:26:47.400 | And so they might be doing everything from handling,

00:26:50.480 | well, they are, they're doing everything.

00:26:52.160 | And there'll be an in-house accountant,

00:26:54.040 | there'll be an in-house investment person,

00:26:55.760 | there'll be an in-house coordinator,

00:26:57.680 | an in-house administrative staff,

00:26:59.520 | which is responsible for paying all the bills.

00:27:02.200 | It's a really interesting market.

00:27:05.080 | There's also the small multi-family office.

00:27:08.760 | So instead of, you know, hey, I don't have $4 billion,

00:27:11.240 | but I've got 400 million,

00:27:12.880 | maybe if you bring your 400 million

00:27:14.600 | and I bring my 400 million,

00:27:16.240 | and we get Joe to bring, you know, his 300 million,

00:27:19.240 | and we get Sally to bring her half a billion,

00:27:21.680 | we put enough together, enough money.

00:27:22.960 | I mean, I'm making things up.

00:27:24.280 | There are a lot of those here as well.

00:27:26.360 | And so they don't accept clients,

00:27:27.780 | but they're a financial planner.

00:27:29.640 | They're working in a financial advisory space.

00:27:32.400 | Or there are just, like I said,

00:27:33.880 | a firm, you know, Smith Capital Management.

00:27:37.600 | And Smith has 100 different families

00:27:40.400 | that are all established here in the community.

00:27:43.200 | And he works only by referral.

00:27:46.920 | So he doesn't market except by referral.

00:27:49.320 | Satisfied client sends a satisfied client.

00:27:51.820 | Some larger firms build a reputation

00:27:54.080 | in their marketing plan,

00:27:55.280 | is their reputation for a certain level of service,

00:27:57.840 | or for a certain type of service.

00:27:59.600 | So the best example here would be a bank trust department.

00:28:03.560 | Some banks, example, there's one near my house

00:28:05.620 | called Comerica Bank.

00:28:06.800 | Comerica is well-known for their trust management services.

00:28:10.400 | And the trust services at banks

00:28:12.120 | is usually the most conservative aspect

00:28:14.120 | of financial planning that you'll ever find.

00:28:15.900 | But they hire and have financial advisors

00:28:18.280 | that work with their families

00:28:20.440 | for whom they provide trust services

00:28:22.400 | in a comprehensive manner.

00:28:24.000 | Or if you had pure trust companies,

00:28:26.220 | standalone trust companies like Bessemer Trust

00:28:28.220 | or Northern Trust, these are long-established firms.

00:28:32.980 | You'll never hear them in the news.

00:28:34.240 | They're very conservative.

00:28:35.760 | But they don't market on the basis of picking up the phone

00:28:39.200 | and calling individual,

00:28:44.200 | median income net worth people.

00:28:47.760 | Everything is based upon referral

00:28:49.760 | within a very tight, high net worth community.

00:28:53.600 | If that type of community is there for you,

00:28:55.520 | it's possible to set up your own firm

00:28:57.260 | and network your way in.

00:28:58.400 | It's gonna take time, but again, here in Palm Beach,

00:29:00.860 | I know several firms that exclusively work

00:29:03.620 | in the affluent Palm Beach marketplace,

00:29:06.120 | and they've just built it up over time.

00:29:08.040 | Now, some firms are more mass market.

00:29:10.220 | So if you went and joined one of the large wire houses,

00:29:13.080 | that would be more mass market.

00:29:15.080 | Or that was how I got into the business

00:29:17.400 | was I was working in a mass market approach,

00:29:20.760 | and I started with the people that I knew

00:29:22.660 | and the people that they knew.

00:29:23.620 | And I worked from friend to friend to friend,

00:29:25.760 | calling my friends, asking for introductions

00:29:27.840 | to their friends, asking for introductions

00:29:29.900 | to their friends, and doing that.

00:29:31.880 | Some people start with cold calling.

00:29:33.280 | I never did that.

00:29:34.120 | I thought it was, I didn't need to.

00:29:35.460 | I had a large, warm market of people with whom I could work.

00:29:40.200 | But you could still start today with cold calling.

00:29:42.440 | It's tougher than ever.

00:29:44.000 | But one of the keys is that marketing is changing,

00:29:46.320 | even today.

00:29:47.160 | And by the way, I'm gonna share my experience

00:29:48.640 | 'cause that was what the second email

00:29:50.640 | was specifically asking about.

00:29:51.880 | And I'll explain what makes doing that well

00:29:54.600 | versus what makes doing that not well.

00:29:56.800 | Like what makes that professional versus not professional.

00:29:59.720 | But marketing is changing today.

00:30:01.120 | And today, you've got the big people

00:30:05.500 | with the big media presence.

00:30:06.700 | So some, Rick Edelman, he's got his entire firm

00:30:11.020 | is all of the prospects are coming

00:30:13.000 | based upon his marketing brilliance

00:30:14.700 | and driving clients to his firm.

00:30:16.980 | He's built the largest firm.

00:30:19.420 | It's just an amazing business.

00:30:21.340 | Or if you've got other radio people, Dave Ramsey,

00:30:23.900 | he's got his endorsed local provider.

00:30:25.340 | So the people that sign on

00:30:26.900 | for his endorsed local provider program,

00:30:28.860 | they pay him a fee, and in exchange,

00:30:30.580 | he sends clients their way.

00:30:31.700 | And so that's their marketing method.

00:30:33.700 | You've got the marketing method now

00:30:35.320 | that's really being built with technological solutions.

00:30:38.400 | So an example here would be something like personal capital.

00:30:41.020 | Personal capital builds this beautiful interface

00:30:44.720 | for you to see all of your accounts in one place,

00:30:48.140 | to look at your fees, and an exchange on the backend

00:30:51.200 | that gives the advisors that they have backend service

00:30:54.260 | to review your portfolio

00:30:55.340 | and to have everything in one place.

00:30:56.900 | And so it's a brilliant business model

00:30:58.940 | because instead of me as an individual going out

00:31:01.620 | and sitting down at a table with a legal pad

00:31:03.660 | writing down all your assets,

00:31:05.040 | you just load them all into the computer

00:31:06.460 | and you can see them.

00:31:07.740 | You see the marketing efforts

00:31:09.120 | with the so-called robo-advisors today.

00:31:12.140 | So examples here would be Betterment.

00:31:14.580 | And you see Betterment building their marketplace.

00:31:17.140 | And what they're touting is their technological solution,

00:31:20.140 | that we are able to manage a portfolio more efficiently

00:31:23.200 | and at a lower cost, so therefore,

00:31:24.860 | bring us your portfolio and we will cover it for you.

00:31:29.060 | Or you have a firm like Wealthfront.

00:31:30.940 | These are the more well-known ones right now,

00:31:32.700 | but Wealthfront, working with an individual advisor,

00:31:35.580 | but with this mass market virtual relationship.

00:31:38.700 | So whether that's, or you have, I mean,

00:31:41.460 | the insurance business, the best example would be

00:31:43.700 | the infinite banking concepts or Bank on Yourself.

00:31:47.460 | This is their marketing plan.

00:31:49.060 | Write a book, infinite banking or Bank on Yourself.

00:31:51.740 | Write a book about the virtues

00:31:53.060 | of whole life insurance policies.

00:31:54.800 | And then this is the marketing plan.

00:31:56.780 | People find it, they read it, and then they call you up

00:31:58.620 | and you're able to work with them

00:32:00.220 | on life insurance perspective.

00:32:02.140 | Marketing is key to any business.

00:32:06.140 | And that's why one of my actually most concerning statements

00:32:09.340 | in these emails is in Tim's email,

00:32:14.340 | because where Tim is concerned about,

00:32:17.140 | I don't want a cold call,

00:32:18.620 | I don't want to push financial products on people.

00:32:21.180 | And there's a right way and a wrong way to, in my opinion,

00:32:24.740 | to approach that, meaning that certainly the idea

00:32:28.420 | of cold calling and pushing products on people is,

00:32:31.860 | it doesn't sound, I mean, I don't know anyone

00:32:33.460 | that that would be attractive to.

00:32:35.460 | If that's a general idea of I don't like sales,

00:32:39.100 | and I hear this a lot, I've heard this in other emails,

00:32:41.280 | which I didn't bring in to read

00:32:43.060 | at the beginning of the show,

00:32:43.940 | but people say, well, I don't like selling.

00:32:46.100 | As your financial advisor, at least your virtual advisor,

00:32:50.840 | let me commend to you that not liking selling

00:32:54.300 | or not being willing or able to sell

00:32:56.700 | is going to be pretty destructive to your wealth.

00:32:59.640 | Sales is the key to every single business.

00:33:03.740 | And if you are interested in being wealthy,

00:33:07.740 | no matter what job you do, you better like sales.

00:33:10.640 | Because if you are working a job that you say,

00:33:14.100 | I don't have to be in sales,

00:33:15.320 | I've just been working this specific job

00:33:17.220 | and I just do my job and go home.

00:33:19.020 | The reality is if you're an investor,

00:33:22.180 | you'd better have great sales forces

00:33:25.060 | in the companies into which you're investing.

00:33:27.700 | 'Cause businesses live or die based upon their sales.

00:33:30.660 | So you'd better like sales

00:33:33.060 | even if you don't view yourself as a salesperson.

00:33:35.560 | But as an individual or an entrepreneur,

00:33:37.520 | especially as an entrepreneur,

00:33:38.620 | you'd better be brilliant at selling.

00:33:41.280 | Selling is one of the most valuable skills you can have,

00:33:43.880 | especially financially valuable skills,

00:33:45.740 | because there's always a direct connection

00:33:48.740 | between your sales skill and revenue.

00:33:51.140 | So that means that your compensation

00:33:52.700 | can be directly tied to revenue.

00:33:54.140 | That's what commissions are all about.

00:33:56.020 | I personally am and desire to be even better,

00:34:00.420 | but I'm a world-class salesperson

00:34:01.980 | and I'm very proud of that,

00:34:03.340 | because I set out to become a world-class salesperson.

00:34:07.680 | Now, where does sales go wrong?

00:34:10.020 | Where do we get this perspective of sales

00:34:13.520 | not being something that we admire

00:34:15.060 | and not something that we wanna do?

00:34:16.940 | I commend to you that it goes wrong

00:34:20.380 | when it's not professional.

00:34:22.460 | And by professional, I mean it goes wrong

00:34:24.380 | when you try to sell something

00:34:26.040 | that's not a right fit for a client.

00:34:27.840 | And this is a problem in the financial market.

00:34:31.560 | I believe that the majority of the bad reputation

00:34:37.820 | that the financial services industry has developed

00:34:43.420 | is due to a bad connection

00:34:46.980 | where simply a product is not a right fit for a customer.

00:34:50.900 | If you don't have a good fit

00:34:52.980 | between your product and your customer,

00:34:56.060 | you've got problems.

00:34:57.060 | But if you've got a great fit

00:34:58.300 | between your product and your customer,

00:34:59.620 | no matter the product and no matter the customer,

00:35:02.700 | you're gonna be in great shape.

00:35:05.180 | One person says, "Hey, I need the most economical car

00:35:10.340 | "that I can find, and my biggest priorities

00:35:14.300 | "in buying a car are fuel efficiency, low price,

00:35:19.300 | "low upfront cost, and long-term quality."

00:35:22.220 | Now, if the car salesperson has three cars on their lot,

00:35:27.900 | one is a Honda Civic, one is a Chevy Corvette,

00:35:31.060 | and another is a Ford one-ton pickup truck,

00:35:34.220 | if they sell the person in that needs base a Honda Civic,

00:35:40.000 | is there a good chance that person

00:35:41.580 | is gonna be thrilled with their purchase

00:35:43.340 | and very happy if the salesperson

00:35:45.960 | treats them professionally

00:35:47.200 | and takes care of all of the details

00:35:48.860 | and makes it a smooth and excellent process?

00:35:53.660 | Of course they're gonna be happy.

00:35:55.780 | Now, flip it around, guy comes in,

00:35:57.220 | he's wearing work boots, work pants,

00:35:58.540 | says, "I gotta tow a 20,000-pound trailer."

00:36:01.460 | If all of a sudden the salesperson says,

00:36:03.180 | "Hey, you gotta buy this Corvette,"

00:36:05.260 | unhappy customer, bad reputation.

00:36:09.300 | But if the sales guy says, "I got a one-ton truck over here,"

00:36:12.300 | now we've got a good situation,

00:36:15.660 | and you can make up the Corvette example.

00:36:18.020 | Now, let's do it this way.

00:36:19.980 | How does the salesperson sell professionally

00:36:22.220 | if, take away, he doesn't have the one-ton truck on his lot,

00:36:25.660 | and the client comes in and says,

00:36:27.880 | "Listen, I'm wearing work boots and a flannel shirt,

00:36:30.320 | "and I gotta tow my backhoe or my bobcat,

00:36:33.280 | "and the thing is gonna weigh 20,000 pounds

00:36:34.940 | "by the time I load up the truck and I load up the trailer."

00:36:37.940 | If there's no dually on the lot,

00:36:41.200 | does the salesperson all of a sudden

00:36:43.620 | try to talk the guy into a fuel-efficient Honda Civic?

00:36:47.780 | Or does he say, "Listen, you gotta go down the road

00:36:49.540 | "and see my buddy Bob.

00:36:50.740 | "Bob works at the Ford dealership,

00:36:52.240 | "and man, they've got a row of duallys out front

00:36:54.200 | "that's beautiful."

00:36:55.260 | That's professional selling.

00:36:57.680 | So in the insurance business, or in the investment business,

00:37:02.260 | or in the accounting business,

00:37:04.060 | or in any aspect of financial planning,

00:37:06.620 | you've gotta have a good fit

00:37:08.100 | between the capabilities of your firm,

00:37:11.180 | the products of your firm,

00:37:12.820 | and the goals, needs, and desires of your client.

00:37:15.820 | If you don't have that,

00:37:17.780 | then an ethical professional salesperson

00:37:20.100 | will not consummate the sale, and will not push for it,

00:37:23.220 | but will make the recommendation

00:37:24.620 | and the referral that needs to be made.

00:37:26.580 | So if you're a salesperson,

00:37:29.580 | and you're working in a call center

00:37:31.740 | with inbound term life insurance leads,

00:37:33.900 | because your company is advertising on CNN every night

00:37:37.380 | and saying, "Buy term insurance,"

00:37:39.900 | then all your customer wants from you

00:37:41.340 | is to help them square away

00:37:42.380 | and figure out how much insurance,

00:37:44.140 | and where can they get the best price

00:37:45.820 | if they've got high blood pressure.

00:37:47.620 | That's professional selling.

00:37:49.380 | If you all of a sudden try to start pushing

00:37:51.620 | the high-end hedge funds onto this client,

00:37:54.020 | and you're talking about,

00:37:55.020 | "Well, let me explain to you the lockup period

00:37:56.700 | "and the two and 20 compensation model,

00:37:58.380 | "and we've got this really great manager,"

00:38:00.420 | are you gonna have a satisfied customer

00:38:01.940 | with a good feeling in their heart?

00:38:04.360 | No, you're gonna destroy that relationship.

00:38:06.800 | But if you're sitting down over a cup of coffee

00:38:09.960 | with a high-end multimillionaire,

00:38:11.660 | and this gal says to you,

00:38:13.680 | "Listen, I'm interested in hedge funds.

00:38:16.460 | "All my friends have been investing.

00:38:18.040 | "I'm thinking about putting a portion of my capital

00:38:20.160 | "into hedge funds.

00:38:21.220 | "Could you educate me on what the risks are,

00:38:24.040 | "what the advantages are,

00:38:25.500 | "and tell me what the different options would be,

00:38:29.360 | "and what the costs would be,

00:38:31.320 | "what those types of things are,"

00:38:33.060 | if all of a sudden you say,

00:38:34.600 | "Listen, I got a great life insurance,"

00:38:36.300 | even closer, "Listen, let me tell you about index funds,"

00:38:40.460 | are you gonna have a satisfied customer?

00:38:43.160 | Probably not.

00:38:44.340 | Now, if you perceive through that process

00:38:46.740 | that having a five-year lockup period for somebody,

00:38:49.940 | two-year lockup period is more appropriate,

00:38:52.220 | for somebody who's not,

00:38:53.140 | and you're working with somebody

00:38:53.980 | who's not an accredited investor,

00:38:55.620 | and they're just getting started,

00:38:56.820 | and they're talking about,

00:38:57.660 | "Hey, I gotta put money in the Roth IRA,"

00:39:00.180 | chances are you're not gonna,

00:39:01.340 | I mean, you just immediately say,

00:39:02.700 | "Listen, this isn't a good fit.

00:39:03.760 | "Hedge funds are not for you."

00:39:05.260 | Everything is about fit.

00:39:08.820 | Fit with the right product and the right person.

00:39:12.580 | That's the need.

00:39:13.540 | That's the key.

00:39:14.460 | Does the H&R Block accountant

00:39:18.100 | all of a sudden need to start talking to somebody

00:39:20.160 | who's coming in and getting

00:39:22.100 | a low-priced tax return prepared

00:39:24.080 | about some beautiful strategy

00:39:26.300 | of moving their company to Puerto Rico,

00:39:28.820 | and, you know, or moving all of their assets offshore

00:39:32.780 | to protect themselves from the US dollar,

00:39:34.780 | and the person says,

00:39:35.620 | "Listen, I just need a tax return done."

00:39:38.620 | There's a bad fit.

00:39:40.140 | So the key is to connect what you can sell

00:39:42.980 | with the appropriate model,

00:39:44.700 | and be able to work through it

00:39:45.940 | with a proper, fully disclosed ethical compensation model.

00:39:49.540 | Professional selling is,

00:39:52.180 | if you're being sold to by a professional salesperson,

00:39:55.180 | it should be an absolutely wonderful experience.

00:39:59.140 | If you're being sold to by a non-professional salesperson,

00:40:02.200 | it is awful.

00:40:03.260 | I love great salespeople,

00:40:06.660 | and I despise dealing with horrible ones,

00:40:09.780 | because, I don't know, I like to study sales,

00:40:11.980 | and I think it's important.

00:40:13.760 | And I'll give you one short anecdote.

00:40:16.720 | Recently was called on by somebody selling solar,

00:40:21.720 | basically solar systems, various types of solar,

00:40:24.460 | both photovoltaic electrical panels,

00:40:26.920 | and also solar-heated water systems.

00:40:30.720 | Now, I've got an issue in my house right now

00:40:32.200 | that I've got to replace my water heater.

00:40:33.460 | It's super old,

00:40:34.580 | and my insurance company is requiring me

00:40:37.820 | to update it and improve it.

00:40:39.640 | So I am probably the most perfect prospect

00:40:43.340 | at this stage in my life for a water heater system.

00:40:46.740 | I don't know as much as I need to know about water heaters.

00:40:49.220 | I don't know what I need.

00:40:50.620 | I'm very interested in energy efficiency.

00:40:53.020 | I'm very interested in maximum bang for my buck.

00:40:55.900 | And so this salesperson called on me,

00:40:58.860 | and I said, "Absolutely, I'm very interested."

00:41:01.660 | It was one of the worst sales presentations

00:41:03.700 | I've ever had in my life.

00:41:05.380 | It was awful.

00:41:06.340 | It was absolutely awful.

00:41:08.700 | And I am a great person to sell to

00:41:11.600 | because I've been a professional salesperson.

00:41:13.900 | So I am, if you want information, man,

00:41:16.000 | I'll give you every bit of data that you need.

00:41:17.700 | That was always, when I was doing face-to-face sales,

00:41:21.000 | I always just, I need information.

00:41:22.380 | I need it, like, and that's one of the great skills

00:41:24.780 | of being a salesperson,

00:41:26.220 | is being able to pull information out of somebody

00:41:28.380 | in a gentle and appropriate and professional way.

00:41:31.940 | So I'm willing to give all the information.

00:41:33.980 | I'm willing to go through electrical statements.

00:41:35.660 | I'm willing to go and look at all the things.

00:41:36.900 | Well, 10 minutes into the presentation,

00:41:38.980 | the guy slaps a legal pad down,

00:41:40.660 | starts writing a pen and says,

00:41:42.100 | "Well, normally the system that we can do for you

00:41:43.900 | "is about $20,000, but today only,

00:41:45.700 | "we've got a special discount.

00:41:46.660 | "I give it to you at 50% off

00:41:47.800 | "and you get a tax rebate and blah, blah, blah, blah, blah."

00:41:49.580 | And the dude hadn't once gotten up from my kitchen table

00:41:52.980 | to walk even over to my water heater

00:41:54.860 | and see how many BTUs I have or how big it is.

00:41:57.700 | He didn't go out and look at my air conditioner

00:41:59.500 | and figure out how big of a unit it is.

00:42:01.940 | Didn't ask if I had one air conditioning unit or two.

00:42:04.620 | Didn't ask if I was interested in energy.

00:42:06.740 | It was awful.

00:42:08.040 | And yet people do that in financial sales all the time.

00:42:12.700 | And that's the problem.

00:42:16.620 | Trot in off the street, say,

00:42:19.900 | "Listen, I gotta tell you

00:42:20.860 | "about my great whole life insurance policy

00:42:23.040 | "and the realities."

00:42:24.020 | You didn't ask a single question.

00:42:25.940 | "Let me tell you about the tax benefits."

00:42:28.860 | What a bunch of bunk.

00:42:30.580 | Now, find out the details.

00:42:32.660 | And if you have a client

00:42:33.620 | who needs a whole life insurance policy,

00:42:35.780 | man, work it out and do it in the right situation.

00:42:40.780 | But don't trot in when the person needs a term life policy

00:42:44.340 | and sell a whole life policy, and that's the problem.

00:42:46.780 | Don't come in and start talking

00:42:47.980 | about long-term care insurance

00:42:50.060 | when the person doesn't have any money.

00:42:52.180 | But on the flip side,

00:42:53.340 | don't come in and talk about portfolio management

00:42:56.020 | and the ability to get an extra 13 basis points

00:42:58.660 | or alpha when the person's biggest risk is,

00:43:01.820 | "I need long-term care insurance."

00:43:03.620 | Do your job, in other words.

00:43:06.740 | Professional selling is a job

00:43:08.260 | and it's important to do it right.

00:43:10.140 | And if every single financial advisor

00:43:14.340 | and financial planner would work very hard

00:43:17.420 | at being a professional salesperson,

00:43:19.580 | then our industry would have a wonderful reputation

00:43:23.380 | and people would love working

00:43:25.060 | with a great financial advisor.

00:43:28.500 | So why doesn't it happen?

00:43:29.800 | Well, a bunch of reasons.

00:43:32.740 | But usually, it's due to one of these things or multiple.

00:43:37.480 | You could simply have an ignorant advisor,

00:43:40.780 | a well-meaning but ignorant person.

00:43:43.140 | And I've been that way.

00:43:44.420 | I have been ignorant and still am ignorant

00:43:46.660 | on certain aspects of financial planning.

00:43:49.380 | I'm ignorant of many of the most complex aspects

00:43:52.860 | of portfolio management, for example.

00:43:55.340 | I'm ignorant of how to hedge my currency risk

00:43:57.840 | when managing a multi-billion dollar portfolio.

00:43:59.540 | I don't have a clue what I'm talking about

00:44:00.860 | when it comes to that.

00:44:02.340 | So if I get into a situation

00:44:04.820 | where I'm asked for my opinion on that,

00:44:06.700 | I'm gonna immediately say,

00:44:07.540 | "I don't know anything about that.

00:44:08.460 | "I'm sorry, I can't help you."

00:44:10.060 | But some people don't and that's a problem.

00:44:14.060 | So somebody could be very well-meaning and very ignorant.

00:44:17.780 | They could just simply be unethical.

00:44:19.700 | Ethics is a big deal.

00:44:21.500 | And one of the things that is most difficult

00:44:24.420 | is ethical systems are very much based

00:44:27.100 | upon somebody's worldview,

00:44:29.060 | but what they think is right to do

00:44:30.600 | and what they think is wrong to do.

00:44:32.360 | And this is a tough one for you as a consumer to figure out.

00:44:37.300 | How do you judge somebody's ethics?

00:44:39.440 | What do ethics do different worldviews permit?

00:44:43.180 | I mean, it's a whole challenging philosophical conversation.

00:44:47.960 | But ethics are not the same for every person.

00:44:51.660 | It's very much dependent on what someone's worldview is.

00:44:54.820 | There could just be simply a bad fit for capabilities

00:44:57.260 | and there could be a reason why

00:44:59.300 | an advisor is trying to push something.

00:45:01.580 | So maybe there's a bad compensation model

00:45:03.460 | or the advisors feeling a shortfall

00:45:05.940 | and they're like, "I gotta make this deal."

00:45:07.460 | And so they start pushing.

00:45:08.540 | This happens a lot because of the different

00:45:10.120 | compensation models in the financial planning industry.

00:45:12.940 | Or it could just be a bad service or a poorly run firm

00:45:15.340 | or a poorly designed product.

00:45:17.780 | I mean, there could be many, many reasons.

00:45:20.420 | So what do you do?

00:45:23.620 | As somebody who's interested in getting into

00:45:26.740 | the financial planning industry in an intelligent way,

00:45:31.340 | I'd say, what are your skills?

00:45:32.980 | What do you actually bring to the table?

00:45:35.040 | The most difficult skill to find

00:45:37.820 | is not technical financial planning knowledge.

00:45:40.220 | There are many people out there

00:45:41.260 | who have an interest in personal finance,

00:45:42.860 | an interest in financial knowledge,

00:45:44.620 | an expertise in some level of technical planning.

00:45:50.040 | That's actually incredibly easy to find.

00:45:51.780 | There's a lot of people on the market that have that.

00:45:53.520 | What's difficult to find is marketing skill.

00:45:56.180 | That's the most difficult thing.

00:45:59.180 | And that's what many people who are interested in finance

00:46:03.620 | and who pursue don't have,

00:46:05.260 | the ability to market their services effectively.

00:46:08.060 | Whether that's face-to-face, person-to-person,

00:46:10.140 | phone call after phone call, verbally, audibly,

00:46:14.020 | in writing, on a blog, in video, on a podcast,

00:46:17.620 | that's the toughest skill to find.

00:46:19.740 | And you gotta start with that.

00:46:20.660 | If you don't have marketing skills,

00:46:22.540 | you need to recognize that and not go into a position

00:46:26.280 | which is going to require marketing skills.

00:46:28.480 | So as an example, the third email that I read,

00:46:31.120 | Eric, if you're interested in going in

00:46:33.440 | and working with people, you better have a marketing plan.

00:46:35.800 | Now I recognize that you might be financially independent,

00:46:38.000 | which by the way, be careful when you declare yourself

00:46:40.120 | financially independent at 25 with a few $200,000 of assets

00:46:44.280 | 'cause you can live on $1,500 a month.

00:46:45.920 | I'm not saying you can't do it.

00:46:47.400 | I think it's awesome that if you did,

00:46:49.160 | but life has a habit of changing

00:46:51.040 | and your goals might evolve over time.

00:46:54.140 | Mine have, and they might still.

00:46:55.580 | So I have my own numbers,

00:46:57.220 | but your goals might develop over time.

00:47:00.500 | So make sure you're just aware of that mentally.

00:47:03.660 | But if, for example, if you don't have a marketing plan,

00:47:06.060 | it doesn't matter how interested you are in finance

00:47:08.940 | or how great you are at having a discussion,

00:47:10.700 | you're not gonna have a client

00:47:12.840 | because the reality is most of your friends

00:47:14.900 | don't wanna hear about you with money.

00:47:16.300 | I have a rule, I don't give free financial advice.

00:47:18.380 | Either somebody asked for it,

00:47:21.080 | and if it's somebody that I care about,

00:47:23.440 | I'm willing to help,

00:47:24.560 | but I don't offer financial advice anymore.

00:47:27.400 | I made that mistake for a long time.

00:47:29.680 | That's why I do a podcast.

00:47:30.720 | It's here for you if you want it,

00:47:31.880 | but you have to seek it out.

00:47:33.680 | But you need a marketing plan for your services.

00:47:35.720 | If you don't have one, again,

00:47:36.800 | you gotta go somewhere where you don't need one.

00:47:38.880 | And so now instead of setting up your own firm

00:47:41.480 | or working in a position where you're gonna be outbound,

00:47:44.420 | which is what many of the positions

00:47:46.480 | that are the easiest to get are,

00:47:48.040 | you're gonna have to build some other unique skill.

00:47:50.500 | So perhaps your skill is you are a tax attorney,

00:47:53.180 | and you are an expert at tax planning,

00:47:56.220 | or estate tax planning, perhaps, or income tax planning.

00:47:59.260 | Well, now you trot down to Northern Trust

00:48:01.460 | and you apply for one of their positions, or Bessemer,

00:48:03.620 | and there's no sales requirements there,

00:48:07.300 | but you're not setting up an independent firm.

00:48:09.540 | You're gonna die if you don't have marketing skills.

00:48:11.300 | You need to go find a job that's gonna fit that.

00:48:13.700 | Whatever market you're pursuing,

00:48:16.140 | you need to make sure there's a good fit

00:48:17.560 | for your ability to serve that market.

00:48:19.540 | So Eric, someone like you,

00:48:21.100 | if you're interested in financial independence,

00:48:23.280 | then I would suggest to you that,

00:48:24.980 | and if you consider yourself financially independent,

00:48:26.740 | then maybe you need to set up a boutique practice

00:48:28.920 | where you exclusively work with people

00:48:30.900 | who are interested in becoming financially independent

00:48:33.180 | at an early age.

00:48:34.180 | But you gotta figure out your marketing plan.

00:48:37.260 | Same thing with our physician friend who wrote me the email.

00:48:42.040 | That would be a really great fit,

00:48:44.340 | it may be working with physicians,

00:48:45.560 | but you gotta build up then the technical expertise.

00:48:48.220 | So I'll give you my story

00:48:49.180 | of how I started in the industry and why.

00:48:51.100 | And I've mentioned this before on the show,

00:48:52.340 | but I'll try to give a little bit of detail

00:48:54.140 | that will be helpful.

00:48:55.700 | When I started in the industry,

00:48:56.660 | I'd been laid off from my previous job.

00:48:58.660 | And I knew that I wanted to be an entrepreneur,

00:49:01.460 | but I didn't have a great idea,

00:49:03.240 | or necessarily the background of a specific business

00:49:06.640 | that I really wanted to pursue.

00:49:08.500 | I had a few ideas,

00:49:09.520 | and they ranged from some blue collar businesses

00:49:11.920 | to some product ideas,

00:49:14.180 | but I didn't know how to go out and figure out

00:49:17.460 | how to get my product designed and prototyped

00:49:19.700 | and ship it in from China and set that up.

00:49:22.500 | And I knew that I wasn't quite ready for that.

00:49:25.140 | So I wanted something where I could be paid,

00:49:27.160 | not for the hours that I worked, but for what I produced.

00:49:29.780 | I wanted something that was my own business,

00:49:32.660 | but that I built up ongoing income.

00:49:34.660 | I didn't wanna go and sell houses as an example,

00:49:37.060 | where you only get income if you sell a house.

00:49:40.220 | I wanted something that built up residual income

00:49:42.620 | and residual value, equity in a business that I could sell.

00:49:47.180 | I wanted something that I wasn't tied to one location,

00:49:51.180 | either during the day,

00:49:53.100 | 'cause I got sick and tired of sitting in an office

00:49:55.140 | under a fluorescent light all day.

00:49:56.700 | That was for me.

00:49:57.540 | I wanted to be out and about,

00:49:58.760 | and/or geographically with regard to where I lived.

00:50:02.180 | And so I was trying to build,

00:50:03.500 | you know, I was very interested in travel

00:50:04.940 | and independence of location independence.

00:50:07.420 | And so I was trying to build that.

00:50:08.660 | And I wanted something that I enjoyed

00:50:10.220 | and that I could do well at and feel good about.

00:50:13.940 | So I was interested in finance,

00:50:15.180 | and then I got the referral to,

00:50:16.580 | it was Northwestern Mutual was where I got referred to.

00:50:19.420 | But I had very strong feelings about finance.

00:50:21.820 | And I didn't like certain ways of approaches.

00:50:25.340 | Because I had the good fortune to be introduced

00:50:28.580 | to somebody who was a comprehensive financial planner,

00:50:30.980 | I actually had a good personality fit

00:50:33.020 | with this specific office of that company.

00:50:36.700 | And I liked the fact that we didn't push product

00:50:41.060 | in the sense of, you know,

00:50:44.140 | hey, listen, Joshua, we gotta move 20,000 shares

00:50:45.980 | of XYZ stock, or we gotta move 50,000 ABC bonds.

00:50:48.980 | And the person with whom I interviewed

00:50:50.980 | was extremely low key and was extremely down to earth.

00:50:53.820 | And I liked that.

00:50:54.660 | I've never been attracted to the flashy personality.

00:50:59.260 | So I started with insurance planning.

00:51:01.900 | And the reality with insurance planning

00:51:03.460 | is that the vast majority of people

00:51:05.180 | in the United States of America are underinsured.

00:51:07.980 | And if you're willing to do the work,

00:51:12.540 | you can build an amazing business by doing excellent,

00:51:16.340 | ethical, important, and valued insurance planning

00:51:19.860 | only for individual clients.

00:51:22.740 | Many people would greatly value an insurance expert

00:51:28.820 | doing a review of their situation.

00:51:30.780 | And you can reasonably quickly

00:51:33.220 | become an expert at insurance.

00:51:35.140 | Or at least on general market,

00:51:36.940 | mainstream employees type of insurance.

00:51:40.740 | I focused on life insurance, disability insurance,

00:51:44.220 | long-term care insurance,

00:51:45.380 | and I did a very small amount of health insurance

00:51:48.380 | in very select cases, actually,

00:51:50.460 | until the Affordable Care Act was passed

00:51:53.020 | and it destroyed the individual health insurance market.

00:51:56.580 | The key is to know who you actually help.

00:51:59.220 | So let me give you an example with health insurance.

00:52:01.340 | I only did a very small amount of health insurance

00:52:03.980 | for a few specific individuals

00:52:07.420 | because I didn't have the capacity to deliver

00:52:10.300 | on any promise that I could make on a larger basis.

00:52:13.740 | I wasn't staffed up to walk into a company

00:52:15.900 | with 300 employees and say,

00:52:17.700 | "Listen, I'm an expert on group health insurance."

00:52:19.740 | I wasn't.

00:52:20.740 | So I never pursued that.

00:52:22.180 | When people asked me about that, I always referred it out.

00:52:25.100 | And to make sure that clients were satisfied,

00:52:27.540 | I always told people, "I don't do much insurance,

00:52:29.940 | "but I did become an expert at a couple of companies

00:52:32.740 | "that in my area had good networks,

00:52:34.940 | "and those couple of companies

00:52:36.540 | "did individual health insurance."

00:52:39.340 | If I had a larger case,

00:52:42.900 | I had a few small companies that I worked with,

00:52:47.900 | but I always worked with a partner who was an expert.

00:52:50.580 | And we split the commissions.

00:52:51.940 | My partner serviced that case,

00:52:54.700 | and those actually, one of them didn't go well.

00:52:57.620 | And it was because I was working in a market

00:52:59.580 | where I wasn't an expert

00:53:02.300 | and I wasn't close enough to it.

00:53:03.860 | And looking back now, I shouldn't have done it.

00:53:05.860 | Now, I didn't do anything ethically wrong.

00:53:07.660 | It just wasn't a great fit for my ability to deliver.

00:53:10.100 | And eventually the client left

00:53:11.700 | and found someone that was better able to fit their needs.

00:53:15.060 | So the key was I did a very small amount

00:53:17.700 | of health insurance,

00:53:18.540 | but when it comes to something like life insurance,

00:53:20.380 | I was an expert.

00:53:21.300 | I didn't try to position myself as an expert on 401(k) plans.

00:53:25.620 | I don't have any ability to go in

00:53:26.780 | and service a 401(k) for 200 employees.

00:53:31.740 | I focused on life insurance, disability insurance planning,

00:53:34.780 | long-term care insurance planning, and that was it.

00:53:37.660 | And then because I had chosen a market

00:53:41.340 | where I had multiple insurance options,

00:53:43.260 | I didn't try to force massive whole life insurance policies

00:53:46.260 | on young broke couples.

00:53:47.560 | I sold them disability insurance,

00:53:49.780 | which is what they actually needed.

00:53:52.260 | I get so angry when I come across bad insurance planning

00:53:54.780 | because if you'll just care for a client

00:53:58.180 | and provide good planning over time,

00:54:01.300 | you'll build a lifelong client.

00:54:03.220 | And if you've got those three to four product sets

00:54:06.540 | in your back pocket,

00:54:07.420 | you've got life insurance, disability insurance,

00:54:10.220 | and long-term care insurance,

00:54:11.460 | you could do a great job with many, many people.

00:54:14.300 | There are enough commissions that you can earn

00:54:16.700 | with term insurance and disability insurance

00:54:18.980 | with young families of median income

00:54:20.900 | that you're able to do an effective job over time

00:54:23.540 | and able to eat while you're building up your knowledge.

00:54:26.300 | And it's important that you understand

00:54:29.700 | who do I have to work with and what market do I need

00:54:33.420 | and how can I service effectively?

00:54:35.580 | When I started, I was 23 years old.

00:54:37.060 | I didn't have a marketplace of million dollar accounts

00:54:42.060 | and I wouldn't have known what to do

00:54:44.020 | with a million dollar account if I'd come across it.

00:54:47.820 | There wouldn't have been a chance in the world

00:54:49.340 | I could have won the business.

00:54:50.720 | And I shouldn't have because I didn't have any skill.

00:54:53.860 | And that's how it should be, so recognize that.

00:54:55.860 | So I started with something

00:54:56.820 | that I could become an expert at.

00:54:59.660 | That's the key, what can you become an expert at?

00:55:02.620 | What capabilities do you have?

00:55:04.580 | Who can you actually serve?

00:55:07.100 | And make sure you're in a product set

00:55:08.860 | where you could actually serve somebody.

00:55:12.020 | I'll give you an example.

00:55:13.020 | There's a company that, I guess it doesn't matter.

00:55:18.020 | There's a company called,

00:55:19.780 | it's Art Williams' old company called Primerica.

00:55:22.000 | Well, it's Primerica now, he sold it.

00:55:23.380 | It was the A.L. Williams Life Insurance Company

00:55:25.020 | for a long time.

00:55:26.140 | But Primerica is a company, I interviewed with them.

00:55:29.340 | I've been recruited multiple times to work with them.

00:55:32.260 | And when I looked at their product set,

00:55:36.420 | I came to the conclusion that practically the only product

00:55:39.700 | that I could represent under their contract

00:55:44.140 | was term life insurance.

00:55:45.780 | And the term life insurance didn't have any competitive,

00:55:48.680 | didn't have any competitive advantage in the marketplace.

00:55:53.340 | It wasn't the cheapest, it wasn't necessarily the best.

00:55:56.460 | It was just that there was a marketing force

00:55:58.180 | behind that specific product.

00:56:00.220 | Now, what I came to the conclusion of

00:56:02.140 | was how could I make enough money

00:56:04.580 | only having term life insurance in my back pocket?

00:56:08.060 | Now, anybody who's worked with Primerica knows

00:56:09.640 | they do have other products,

00:56:10.620 | but I couldn't see how it could work

00:56:13.580 | with only having term life insurance.

00:56:15.260 | There's not enough money, enough compensation

00:56:17.740 | when you've got, let's see,

00:56:20.140 | you've got $20 a month times two, you got $40 a month.

00:56:23.300 | So you've got $480 of annual premium.

00:56:27.980 | And I don't remember what their commission rate is,

00:56:32.180 | but average is somewhere between 50 to 100%.

00:56:34.020 | Let's just say it's 100% of the first year commission.

00:56:36.380 | So it's $480 of commissions on a case.

00:56:41.100 | And if you actually know the numbers

00:56:42.620 | in the life insurance business,

00:56:44.040 | the numbers of people that you have to call on,

00:56:45.980 | that you have to see, that you have to build a plan for

00:56:48.580 | and to actually have a client,

00:56:52.080 | there was no way to make enough money

00:56:53.580 | to where I'd be making any kind of reasonable wage.

00:56:56.140 | And so this is what you find

00:56:57.580 | is people always wonder if you go online

00:56:59.140 | and you start looking around,

00:56:59.980 | it's like why are people pushing the business opportunity?

00:57:02.260 | Well, if the products that you have

00:57:04.780 | in your back pocket as a financial advisor

00:57:06.940 | are life insurance and a business opportunity,

00:57:11.940 | and the business opportunity makes you more money,

00:57:15.760 | is it any surprise that you're gonna start

00:57:18.060 | pushing the business opportunity

00:57:19.220 | on people who probably aren't a good fit for it?

00:57:22.180 | Now, they do have other products.

00:57:23.500 | They have investment products and other things as well.

00:57:25.540 | So I'm not mad at Primeirica,

00:57:27.380 | but a little bit mad 'cause of one experience

00:57:32.380 | with one friend that I was able to rescue from it.

00:57:34.780 | But there's nothing unethical necessarily about it.

00:57:38.700 | But if you look at what are the interests

00:57:42.180 | for the person who's involved?

00:57:44.060 | And so you need a certain product set

00:57:45.980 | that's gonna work for you.

00:57:46.860 | So as I started off in that,

00:57:48.540 | I was able to make enough money to live.

00:57:51.460 | And one of the things that's important

00:57:52.620 | is I did not wanna start with a firm

00:57:54.540 | that paid a salary.

00:57:56.060 | I wanted to start with a firm where it was commissioned.

00:57:58.540 | I didn't want a boss.

00:58:00.060 | I didn't want somebody that said,

00:58:00.980 | "You have to be here at this certain time."

00:58:02.340 | I've always pried it, praised, preferred,

00:58:04.580 | not the wrong word.

00:58:05.420 | I've always wanted my own personal lifestyle independence.

00:58:08.300 | And if I have a salary and I'm expected to be in the office

00:58:11.380 | at 7.30 in the morning in order for me to get my salary

00:58:14.420 | while I'm in training, I didn't want that.

00:58:16.160 | I'd rather work and just be responsible for myself.

00:58:19.140 | And when I started, I had savings.

00:58:21.740 | I had at least six months of cash.

00:58:24.000 | So I could get through that initial period

00:58:25.900 | until I could get my client base started to be set up.

00:58:28.340 | And that's an important consideration.

00:58:31.020 | So along the way, me personally,

00:58:32.540 | I studied and I tried to learn what I needed to know

00:58:35.620 | in order to work my way into new markets.

00:58:38.140 | I learned that I enjoy complex planning.

00:58:41.380 | So I started to move into the retirement market

00:58:43.300 | and away from the kitchen table market.

00:58:45.380 | Nothing wrong with kitchen table market.

00:58:47.100 | I just didn't particularly enjoy it.

00:58:48.780 | I like complex scenarios.

00:58:50.500 | I like sitting down and looking at a client

00:58:53.440 | that has an inheritance here and a piece of real estate there

00:58:55.860 | and a rental property here and some land here

00:58:58.660 | and a house here and kids here and a college fund.

00:59:01.540 | I like that complexity 'cause it interests me.

00:59:03.780 | It engages that part of my personality.

00:59:06.360 | I don't like doing the same thing over and over again.

00:59:08.620 | There are financial people that I have known

00:59:11.300 | that love doing the same thing over again.

00:59:13.860 | They're a better fit for the kitchen table market.

00:59:17.020 | So I learned what I needed to learn

00:59:18.860 | so that I could switch over.

00:59:21.380 | And so the key is knowing what you want to do,

00:59:24.360 | but that comes with time.

00:59:26.320 | Now, over time I got to the point

00:59:29.280 | where I could set up a firm on my own.

00:59:32.020 | Today, I could set up my own firm and run my own firm.

00:59:36.500 | There is not a chance in the world

00:59:37.600 | I could have done that at 23 years old.

00:59:40.080 | I needed training.

00:59:41.480 | I needed somebody to show me

00:59:42.800 | how to have a financial conversation,

00:59:44.560 | how to ask somebody how much money they make.

00:59:46.720 | If you've never done that,

00:59:47.560 | that is a very difficult thing to ask your first time.

00:59:51.540 | You're used to not talking about money

00:59:52.980 | and you ask someone, "How much do you make?"

00:59:54.580 | You need a little training on that.

00:59:56.140 | And so I needed to work somewhere where I could be trained.

00:59:59.180 | I can't conceive of how most people

01:00:02.140 | could start on their own,

01:00:03.860 | setting up an independent firm from the beginning,

01:00:06.100 | and make it a success.

01:00:07.140 | I really can't.

01:00:08.000 | So I needed a training company.

01:00:11.780 | That was one of the things that attracted me

01:00:13.060 | to the firm that I joined is I needed the training.

01:00:14.820 | And they were well known for having excellent training.

01:00:17.580 | Now, you also need for whatever your firm is,

01:00:21.180 | you need a marketing plan that's gonna allow you to connect

01:00:23.560 | with an appropriate audience.

01:00:25.600 | So here would be a good example.

01:00:26.580 | Let's say that you have a real passion for helping people

01:00:29.240 | with their individual personal finances,

01:00:31.240 | their budget coaching, and helping people get out of debt.

01:00:34.600 | How are you going to connect with people

01:00:37.680 | who need to get out of debt,

01:00:39.240 | who are willing to actually do the work,

01:00:41.160 | and who are willing to pay you

01:00:43.160 | for your advice on getting out of debt?

01:00:45.160 | Frankly, I don't know how anybody

01:00:47.400 | can make this business model work.

01:00:48.760 | I've spoken with a couple of people who are working at it.

01:00:52.840 | I haven't, and I had a couple of people

01:00:54.320 | that I've interacted with that tried it.

01:00:56.280 | Dave Ramsey has a whole organization of debt coaches.

01:00:59.920 | I'm sure he has some people that are successful with that.

01:01:02.680 | I haven't met them yet.

01:01:03.960 | I don't know how you can charge someone

01:01:05.740 | who's not financially responsible

01:01:08.440 | to help get out of debt and have that work

01:01:11.340 | on a long-term basis and find enough of those people.

01:01:14.040 | If you have a massive marketing plan,

01:01:16.740 | for example, i.e. the Dave Ramsey show,

01:01:18.720 | I think you can do it,

01:01:19.720 | but I don't see how an individual person

01:01:21.300 | without that large of a marketing audience behind them

01:01:24.200 | can actually set that up and do it.

01:01:26.400 | But if that's the case, though,

01:01:28.320 | you need to figure out who's my marketing plan.

01:01:31.040 | Okay, I need people to get out of debt.

01:01:32.320 | That means I'm not working on Palm Beach.

01:01:33.760 | I'm not working on Jupiter Island.

01:01:34.960 | I'm not working in San Francisco with tech billionaires.

01:01:38.800 | I'm working with people who get out of debt.

01:01:40.440 | So that would be a great approach

01:01:41.440 | to set up a get out of debt blog,

01:01:43.200 | set up a get out of debt podcast,

01:01:45.200 | and build that up.

01:01:48.720 | But if you want to do portfolio management

01:01:51.400 | and you have a unique investment strategy

01:01:53.360 | that you think has value,

01:01:55.640 | you've got to figure out

01:01:56.640 | what's my marketing plan in that direction.

01:01:58.340 | How are you going to build that firm?

01:02:00.400 | And you need a financially viable path

01:02:02.900 | to make the transition.

01:02:04.560 | How are you actually going to fund yourself as you start?

01:02:08.440 | So when I started with Northwestern Mutual,

01:02:11.840 | I knew that I couldn't go down and figure out

01:02:15.720 | I don't have a million dollar people in my pocket.

01:02:18.560 | Somehow that I can pick up the phone

01:02:19.560 | and get a bunch of appointments

01:02:20.560 | and bring in million dollar portfolios.

01:02:21.560 | I was 23 years old.

01:02:22.560 | I had a baby face.

01:02:23.560 | I've always been – I had a baby face

01:02:27.220 | and I looked 12 until I stood up

01:02:29.200 | and then people thought I was 30.

01:02:30.380 | But the point is that I needed to work

01:02:33.920 | on somewhere where I could actually do it

01:02:35.360 | and I had the funds to get started

01:02:37.200 | in straight commission insurance sales.

01:02:41.160 | Now if I didn't,

01:02:43.400 | I would have needed to do something else.

01:02:45.440 | I would have needed to work as a staff planner

01:02:47.640 | if I had a CFP.

01:02:48.960 | I would have needed to work

01:02:49.960 | as an administrative assistant.

01:02:51.600 | I would have needed to work someplace

01:02:53.000 | where they would pay me a salary

01:02:54.220 | to be in a supporting role on a team

01:02:56.480 | while I learned what I needed to know.

01:02:58.320 | You got to figure out what's the planning time.

01:03:00.320 | So for example,

01:03:01.320 | I think the certified financial planning designation

01:03:03.440 | is quickly going to become

01:03:04.880 | not a nice to have in the financial industry

01:03:07.480 | but an entry level you must have this

01:03:09.520 | in many ways in the way

01:03:10.520 | that the CPA designation has become for accountants.

01:03:14.280 | For many accounting majors

01:03:15.360 | who have an interest in accounting and working,

01:03:18.200 | it's become – I mean the CPA is expected

01:03:22.120 | more than it ever was in the past.

01:03:23.520 | I'll put it that way.

01:03:25.400 | Although I did just read something

01:03:26.400 | that made me question that

01:03:27.400 | that I realized I needed to research

01:03:28.680 | and make sure that's still the case.

01:03:31.160 | But if you don't have –

01:03:32.600 | the point is the CFP,

01:03:33.600 | you're going to need three years of experience.

01:03:36.000 | So if you're going to hold yourself out

01:03:37.920 | as a fee only financial planner,

01:03:40.560 | how are you going to get the experience

01:03:42.320 | that you need in order to launch your own firm?

01:03:47.360 | That would be a question.

01:03:49.680 | I think you need to clearly identify

01:03:53.040 | what you want to do.

01:03:54.240 | So when you're building a firm,

01:03:55.880 | who do you want to work with?

01:03:56.880 | What kind of practice do you want?

01:03:58.440 | Do you want a local office

01:03:59.440 | or do you want a virtual office?

01:04:01.240 | At this stage, my backup plan

01:04:03.200 | if this radical personal finance

01:04:04.800 | business venture fails,

01:04:06.560 | my backup plan is I'll start

01:04:07.680 | another financial planning firm

01:04:08.720 | but I will do it virtually.

01:04:09.720 | I don't have any desire

01:04:11.240 | to have a physical office space.

01:04:13.160 | I would do it virtually.

01:04:15.640 | And who knows?

01:04:16.960 | I don't think at this stage

01:04:18.280 | that I'll do that but maybe someday I will.

01:04:20.680 | You never know.

01:04:22.360 | When you figure out

01:04:23.360 | what kind of client do you want,

01:04:24.880 | do you want a mainstream professional?

01:04:28.040 | Are you a really detailed oriented person

01:04:30.320 | that you like working with engineers?

01:04:32.840 | Do you like working with doctors?

01:04:34.400 | Do you like working with attorneys?

01:04:37.040 | Those are three professions

01:04:38.240 | that I would prefer.

01:04:39.880 | I only had one or two engineers

01:04:41.440 | that I was able to effectively work with

01:04:43.080 | and many physicians and attorneys

01:04:44.600 | I've not worked well with as an individual.

01:04:47.360 | Not that there's necessarily anything wrong

01:04:49.080 | but sometimes the personality,

01:04:50.760 | there can be certain personality conflicts.

01:04:53.240 | I like blue collar business owners.

01:04:55.000 | That's who I have enjoyed working with,

01:04:56.800 | more down to earth, less flashy.

01:04:58.960 | That's kind of my personality.

01:05:01.200 | But do you want to work with mainstream clients?

01:05:03.480 | Were you doing mainstream planning?

01:05:04.560 | Are you, the dollar's going to crash

01:05:06.800 | and let me figure out how to get you

01:05:07.640 | into precious metals.

01:05:08.480 | Well, go do that then.

01:05:09.960 | Are you into international expatriation?

01:05:12.560 | So you're going to launch a consulting

01:05:14.160 | financial planning firm,

01:05:15.360 | helping people to get out of the United States

01:05:18.160 | and move to Singapore or wherever.

01:05:21.480 | Or do you like taxes?

01:05:22.560 | So therefore you're going to be a tax consultant.

01:05:24.280 | Well, are you going to do tax returns?

01:05:26.480 | Or are you going to just simply be a consultant?

01:05:30.640 | Are you going to do life insurance,

01:05:31.680 | general planning or whatever?

01:05:33.000 | So you got to figure out what kind of practice you want,

01:05:35.000 | what kind of client you want.

01:05:36.560 | Then you need to know, is it financially viable?

01:05:39.000 | How long does it take to actually build a client base?

01:05:43.440 | It takes a while.

01:05:46.000 | You've got to talk to a lot of people

01:05:47.880 | and you got to find people in any business,

01:05:50.440 | especially in financial planning,

01:05:51.640 | you got to find people who are at an appropriate stage

01:05:55.360 | where they're ready to make a transition

01:05:57.560 | and you're on their radar screen.

01:05:59.400 | The financial planning business is very much about timing.

01:06:02.320 | The timing has to be right for there to be a good fit.

01:06:07.200 | Clients working to get out of debt,

01:06:09.440 | timing is not so great for investments.

01:06:11.400 | They might like you, they might love you,

01:06:15.360 | but they're working on getting out of debt

01:06:17.520 | and that's what they should be doing.

01:06:19.240 | So you've got to, in financial planning,

01:06:21.640 | a lot of it is just being on the radar screen of somebody

01:06:24.680 | at the appropriate timing.

01:06:26.200 | And so you got to know,

01:06:27.960 | can I afford to actually do this?

01:06:30.760 | Or do I need to go and get a corporate job working

01:06:33.080 | so I can save some money till I can't afford to do it?

01:06:36.400 | What skills do you actually have?

01:06:38.840 | And what skills don't you have that you need to develop?

01:06:42.360 | Personal finance knowledge may qualify you

01:06:46.680 | to help as a budget coach.

01:06:49.880 | It may qualify you to help somebody

01:06:52.080 | with building out a goal plan.

01:06:55.640 | Hey, listen, you can put some money aside.

01:06:58.000 | It does not qualify you to give in-depth financial advice.

01:07:02.120 | That's why I do this show,

01:07:03.080 | 'cause I get sick and tired of people

01:07:04.280 | who are not qualified to give in-depth financial advice

01:07:06.800 | giving in-depth financial advice.

01:07:09.160 | 529 or ESA is not just a slam dunk where you give a rule.

01:07:13.320 | It's very much about an individual.

01:07:14.720 | And I said, somebody needs to do this better.

01:07:16.840 | But I tell you, I could not have done this show

01:07:19.200 | when I was 23.

01:07:21.560 | I thought I was arrogant enough to think I could.

01:07:24.680 | 'Cause after all, I know everything I know

01:07:26.920 | about personal finance.

01:07:28.000 | I was typical 23-year-old, I guess.

01:07:30.560 | But I thought I could, but I could not have done it.

01:07:34.640 | Some years of reading personal finance books

01:07:36.720 | and some years of trolling around forums

01:07:39.360 | and reading blogs did not prepare me,

01:07:41.360 | would not have prepared me to do what I do on this show.

01:07:44.200 | And that's okay.

01:07:45.040 | It's okay to take time to learn something.

01:07:47.600 | I'll tell you what I couldn't have done

01:07:49.120 | is I had everything,

01:07:50.200 | and for one or two of the authors writing to me,

01:07:53.800 | who knows, maybe for you,

01:07:55.240 | this is supposed to have a general audience,

01:07:56.520 | but I'll tell you, if I had tried to start doing this show

01:08:00.000 | at 23, I'll tell you where I would have gone wrong.

01:08:02.560 | I didn't have at that time any personal empathy

01:08:06.920 | for the challenges of real people.

01:08:08.760 | At that time, I had everything worked out in my brain

01:08:11.980 | of how everything should ideally be.

01:08:14.760 | But having not walked with clients

01:08:16.620 | through difficult situations

01:08:18.560 | and having not grown up a little bit,

01:08:20.720 | I don't think I would have had any of the perspective

01:08:23.520 | that it takes to actually be able to appeal

01:08:27.840 | to a larger audience.

01:08:29.960 | I hadn't worked with going through with a grandfather

01:08:32.960 | who had dementia and then knowing what that was like,

01:08:35.840 | so now I can understand people

01:08:37.500 | who are working as caregivers for their grandparents.

01:08:40.440 | Hadn't gone through what it's like to get married,

01:08:43.200 | so I wouldn't have been qualified to give advice

01:08:46.760 | on here's what you need to do to go through being married.

01:08:50.700 | Hadn't gone through the challenges

01:08:52.600 | of finding people with radically different perspectives,

01:08:56.240 | with radically different goals,

01:08:57.960 | and understanding that there are different people

01:08:59.820 | who love different fee structures,

01:09:01.840 | different approaches, different perspectives.

01:09:04.360 | How do you work with someone

01:09:05.280 | who doesn't trust the stock market

01:09:07.120 | and give good financial advice?

01:09:08.960 | How do you work with someone

01:09:09.880 | who only wants to invest in the stock market

01:09:12.120 | and give financial advice?

01:09:13.080 | I couldn't have done that without those six years

01:09:15.680 | of working with clients.

01:09:16.620 | I learned a lot.

01:09:18.080 | And I guess, I think we short circuit this sometimes.

01:09:21.800 | I tend to, we have a culture today

01:09:24.160 | that seems to prize and praise the quick starter,

01:09:28.520 | the quick success story.

01:09:31.320 | I'm a millionaire by 25, that's awesome,

01:09:33.240 | but you know what?

01:09:34.400 | That's tough for many people to repeat.

01:09:36.280 | Hopefully I can lay out a, sketch out a plan

01:09:38.680 | to help my son do that, but what does that say

01:09:43.680 | to the people who aren't millionaires at 25

01:09:45.680 | or millionaires at 55?

01:09:48.200 | It takes a little time to build some compassion

01:09:51.080 | to work with people.

01:09:52.200 | And so you might recognize

01:09:53.760 | that I need to get started at something.

01:09:55.280 | I might need to work something.

01:09:56.400 | It's like, who is qualified to be an executive chef

01:09:59.840 | when they just got out of culinary school at 20 years old?

01:10:02.320 | You're not, you're simply not.

01:10:04.800 | And in our culture, we seem to have forgotten that a lot,

01:10:07.800 | especially in the internet world.

01:10:10.000 | My advice to young people, be careful

01:10:12.160 | what advice you get in the internet world

01:10:13.720 | because there may be ways to become a quick success story,

01:10:17.080 | but I tell you, the more success stories I look at,

01:10:19.240 | just doesn't happen.

01:10:20.680 | It's a lot of hard work that's not been seen.

01:10:22.960 | I read an article last night by Gary Vaynerchuk

01:10:27.240 | and he was talking about, it was an article

01:10:29.880 | that he published on Medium.

01:10:32.360 | He entitled it, "Stop asking me about your personal brand

01:10:35.240 | "and start doing some work."

01:10:37.600 | He talked about the people, he's known as this branding guy.

01:10:40.560 | People say, "How do I set up my brand?"

01:10:41.720 | And he says, "I spent 10 years working like a crazy man

01:10:45.480 | "to build up my knowledge and to build up,

01:10:49.040 | "to become somebody that knew something."

01:10:51.840 | And in many ways, we've inserted this idea

01:10:55.680 | of credentialization as knowledge,

01:10:57.800 | or have this degree or have this certification

01:10:59.840 | and that's knowledge, and we've discarded

01:11:01.640 | the value of experience, but experience has value.

01:11:04.760 | At some point, who am I to tell you

01:11:06.920 | when you're experienced enough?

01:11:08.040 | But you have to ask yourself, am I experienced enough?

01:11:11.040 | Telling you, go work as a staff planner somewhere

01:11:15.320 | for a few years before you try to open your own business

01:11:17.840 | and you'll learn a little bit in person.

01:11:20.160 | Anybody who's done something that,

01:11:23.900 | I hesitate to use myself, but,

01:11:27.960 | gaffing a CFP credential is really not that big of a deal.

01:11:33.200 | I mean, it is a big deal.

01:11:34.480 | Let me diminish other people's achievements,

01:11:36.440 | but it's not a big deal as it is if you think about

01:11:39.960 | all the other work that's involved.

01:11:41.360 | I spent a lot of mornings of my life getting up

01:11:43.200 | very early and studying a lot of really boring textbooks

01:11:47.280 | to be able to do what I do now.

01:11:48.960 | So you've got to put that time in.

01:11:50.160 | It's not just a matter of, oh, I've got some personal

01:11:52.280 | finance knowledge, now I'm gonna be a brilliant advisor.

01:11:54.760 | Becoming a really great financial advisor,

01:11:56.640 | I think, is one of the most difficult things in the world.

01:11:58.880 | 'Cause you gotta take all the technical knowledge

01:12:00.800 | that actually doesn't matter to most people.

01:12:03.040 | 'Cause most people cannot distinguish

01:12:04.440 | the technical knowledge.

01:12:05.400 | And you gotta combine that with an ability

01:12:08.160 | to work with people relationally,

01:12:11.160 | and to recognize when you're being too aggressive

01:12:13.080 | and to recognize when you're not being aggressive enough,

01:12:15.400 | to recognize when you need to make someone uncomfortable,

01:12:17.920 | to recognize when you need to make someone comfortable,

01:12:20.160 | to recognize the scale at which you're dealing

01:12:22.280 | when you need to, it's, and I'm not sure

01:12:24.680 | that I'm even great at it,

01:12:25.580 | but I recognize the challenge of it.

01:12:28.080 | And so I commend it to you to really take it seriously.

01:12:31.620 | And you can do that.

01:12:34.080 | Just set out an education plan for yourself.

01:12:36.640 | And if you wanna transition from being an auditor,

01:12:39.840 | and you wanna get your CFP or your CPA/PFS

01:12:42.960 | or whatever you wanna do, set out the educational plan.

01:12:46.200 | And then start working with people.

01:12:48.200 | Start talking to a financial advisor.

01:12:49.880 | Start looking for opportunities.

01:12:52.200 | Start networking around and asking people,

01:12:54.380 | how do I develop this knowledge?

01:12:56.880 | Maybe do some tax planning on the side if you're a CPA.

01:12:59.520 | Do a little bit of, build up a side business of tax work.

01:13:03.120 | And let that be your entryway.

01:13:04.520 | If you don't have a marketing plan, start one today.

01:13:07.680 | Start your blog, start your podcast.

01:13:10.320 | Start, if you need to build up a network, build one.

01:13:14.480 | Start getting networked in the community.

01:13:16.040 | Go to Rotary, go to Kiwanis, go to Toastmasters,

01:13:20.080 | go to your Chamber of Commerce meetings.

01:13:22.440 | Build that plan.

01:13:24.560 | One of the reasons why I did well in my first couple years

01:13:27.320 | is when I sat down my first day as a financial advisor,

01:13:30.760 | I was 23, but I had 2,000 people sitting in my cell phone

01:13:34.840 | that had some connection with me

01:13:36.700 | that I could go to and talk to.

01:13:39.000 | That was a lot easier to get started there

01:13:41.680 | than to move on and start cold calling

01:13:44.000 | out of the phone book.

01:13:46.620 | So I had an asset, and I knew I had an asset

01:13:49.160 | because I'd been paying attention over the years.

01:13:51.080 | May not have been 2,000, may have been 1,000.

01:13:52.600 | I'm not sure the exact number.

01:13:53.720 | It was a lot.

01:13:54.560 | I never actually got through all of my initial phoning list.

01:13:57.760 | And by the way, if you're getting started

01:13:59.400 | in the financial planning business,

01:14:00.760 | don't expect anybody that you know to buy from you, period.

01:14:04.720 | Because they don't.

01:14:07.140 | Because they know you.

01:14:08.280 | And they're sick and tired of you telling them

01:14:09.920 | what to do with your money.

01:14:11.520 | Or what to do with their money.

01:14:13.720 | That's how it is.

01:14:14.840 | It takes years for the people that are closest to you

01:14:17.400 | to become your clients.

01:14:18.240 | It takes years.

01:14:19.640 | It really does.

01:14:20.580 | If you have a background,

01:14:25.800 | and I don't know what fit is right for you,

01:14:27.740 | it's not that tough today to go out

01:14:30.360 | and set up an independent firm.

01:14:31.560 | So for example, the listener who wrote me the email

01:14:35.640 | and is a physician and is in his 50s,

01:14:39.280 | with two or three years of focused study

01:14:41.760 | to build up the technical knowledge

01:14:43.240 | and all of that background in the medical business,

01:14:45.560 | if you had any interest in working

01:14:47.040 | in the medical marketplace,

01:14:49.320 | I would say that somebody in that perspective

01:14:51.880 | with business experience and customer experience

01:14:54.320 | and patient experience and all of the medical experience,

01:14:57.480 | I would say somebody in that market

01:14:59.280 | could set up an independent firm.

01:15:01.640 | And for basically today, 10 to 15,000 bucks out of pocket,

01:15:06.640 | you know, depending on your skill level,

01:15:08.420 | depending on how much you're willing to do yourself,

01:15:10.240 | for 10 grand, you can set up an independent firm.

01:15:13.520 | You can establish a registered investment advisory firm.

01:15:16.800 | You can go and get the appropriate licensing that you need.

01:15:20.080 | You need your 65, your series 65.

01:15:22.840 | Get your CFP designation.

01:15:25.080 | File your paperwork.

01:15:26.720 | You can have the money that you need

01:15:28.560 | to set up the compliance.

01:15:30.280 | You can set up the funds and reserve.

01:15:32.240 | I would say 10 to 15 grand is doable.

01:15:35.480 | And so that one could, you know,

01:15:37.780 | that listener could probably do this.

01:15:40.460 | If you're just interested in getting into the business

01:15:43.160 | and you don't have 10 or 15 grand

01:15:44.960 | or you don't have years of experience

01:15:47.080 | as someone like a physician

01:15:48.120 | who you're used to working with clients

01:15:49.720 | and asking difficult questions,

01:15:51.280 | that experience is very transferable.

01:15:53.500 | I'm not sure that the experience

01:15:54.840 | of being an auditor is transferable.

01:15:56.440 | Maybe it is, I've never been an auditor.

01:15:58.200 | But you would need to learn a little bit.

01:16:00.000 | And so I would just go and try to get into,

01:16:02.800 | you know, many accounting firms

01:16:04.920 | will have a financial services arm.

01:16:07.280 | Make friends there, see if you can transition over.

01:16:09.620 | When you're not in a busy season

01:16:11.320 | with corporate returns or individual returns

01:16:13.600 | or auditing work, I guess auditors,

01:16:15.760 | you're not necessarily gonna have that same season.

01:16:17.520 | But then maybe you can start working

01:16:19.700 | and make friends with the person in your firm

01:16:21.160 | who's doing financial services

01:16:22.380 | and go on some appointments, shadow,

01:16:24.500 | and see if it's something that you think would work.

01:16:28.160 | But you've gotta build out a transition plan.

01:16:29.720 | You need to be very honest with yourself

01:16:31.320 | about your actual skills.

01:16:32.900 | Don't dismiss just the need to go and work for a firm.

01:16:37.720 | I believe that at many firms, not all,

01:16:40.720 | I've got a few locally big names that I just,

01:16:43.480 | I'm not so sure about, but at many firms,

01:16:45.640 | you can find a way to work with clients

01:16:47.800 | in a really beautiful way.

01:16:49.600 | And you can do it ethically, you can do it

01:16:51.600 | and feel good about the work that you're doing.

01:16:53.720 | 'Cause I'll tell you this,

01:16:55.760 | there is so much of a demand for great financial advisors

01:17:00.080 | and I believe it's never been easier in life

01:17:01.960 | than to market to a niche audience.

01:17:03.400 | I really do think that the wire houses

01:17:05.440 | are gonna have to change in the coming years.

01:17:07.640 | The restriction, the reason I ultimately left Northwestern,

01:17:10.360 | I couldn't do this show.

01:17:11.600 | That's gotta change because with the number of emails

01:17:14.060 | that I get now from people saying,

01:17:15.760 | "Joshua, will you do planning work for me?"

01:17:18.560 | I mean, this is a powerful, powerful marketing tool.

01:17:22.400 | And the transition has gotta happen

01:17:25.320 | because the corporatized, I think people are sick

01:17:27.500 | and tired of the corporate sanitized professional image.

01:17:31.560 | And it's like, and the trust level is so low.

01:17:34.660 | So I don't know how it's gonna happen

01:17:36.260 | 'cause the rules are pretty strict for a broker dealer,

01:17:38.500 | but I think it is gonna happen.

01:17:40.600 | So I'm rambling a little bit here at the end,

01:17:42.840 | I'm off my outline, so I'm gonna wrap up.

01:17:44.920 | But I hope these thoughts are helpful for you.

01:17:47.320 | I'm not going through the technical details purposely

01:17:49.720 | of how do I set up an RIA and how do I write my form 80V

01:17:53.600 | and how do I do this, spend a little time online.

01:17:57.320 | It's pretty easy if you wanna go that route,

01:17:59.200 | but I just would hate to see somebody,

01:18:01.400 | I mean, it's not easy, but it's doable.

01:18:02.880 | Check out what Alan Moore is doing at XY Planning Network.

01:18:06.120 | They're basically building a turnkey business model

01:18:10.480 | where they can help you with coaches and with materials

01:18:13.520 | to set up an independent firm.

01:18:15.140 | If you've got some industry background,

01:18:17.960 | I think that can work for you.

01:18:19.040 | If you haven't, if you don't,

01:18:22.920 | maybe I just don't have enough confidence,

01:18:24.800 | but I can't imagine somebody who doesn't have

01:18:26.560 | a little bit of industry background

01:18:27.840 | or who hasn't been under somebody's wing

01:18:29.680 | in financial planning making that transition.

01:18:33.440 | If you're an accountant, get over and work

01:18:35.960 | in somebody's office as a support staff

01:18:39.500 | in financial planning and get that experience

01:18:42.640 | so that you can figure out if it's right for you.

01:18:45.640 | Hope this is helpful to some of you.

01:18:50.440 | It's a question I get a lot,

01:18:51.600 | and hopefully this provides a little bit of insight.

01:18:53.960 | I would say this.

01:18:55.400 | We need great financial advisors now,

01:18:57.840 | and the demand for great financial advisors is there,

01:19:00.060 | and the ability now in 2015 to cut this channel.

01:19:04.280 | Before, if you were gonna advertise,

01:19:05.680 | there wasn't any possibility

01:19:07.120 | that an individual could advertise.

01:19:08.680 | I couldn't afford to take out an ad in a newspaper

01:19:12.920 | and pay those fees for some stupid branding ad

01:19:17.360 | that didn't mean anything, but in today's world,

01:19:19.940 | when you can connect content to individual,

01:19:22.840 | I think we're gonna see a massive growth,

01:19:24.660 | and my hope is that we can help this.

01:19:26.680 | We in the financial services industry

01:19:28.680 | can rescue our ratings and our trust

01:19:32.780 | by making sure that we're not working with people

01:19:34.740 | who are not a good fit for us as a client

01:19:37.000 | and making sure that, just by making sure that.

01:19:40.560 | That's the key, is making sure that you're a good fit.

01:19:45.560 | There's a need for everything,

01:19:48.900 | but don't put someone who doesn't trust the stock market

01:19:51.080 | into the stock market, and don't try to sell

01:19:56.080 | the wrong products to the wrong people.

01:19:58.280 | Find the right people and make the right referrals,

01:20:01.040 | and that's what changes it over time.

01:20:03.660 | There are a lot of products I love.

01:20:06.040 | Probably the most contentious one

01:20:08.000 | is things like insurance, life insurance.

01:20:11.000 | This is the contentious one that everyone argues about.

01:20:13.720 | Biggest life insurance I made

01:20:14.900 | was my final year of my time at Northwestern.

01:20:17.840 | It was $50,000 of annual premium, and it was a perfect sale.

01:20:21.800 | The perfect set of needs, the perfect goals,

01:20:24.400 | the perfect client perspective,

01:20:26.080 | exactly the right design of the policy.

01:20:28.640 | It was 50,000 bucks of commission,

01:20:30.760 | excuse me, not commission, of premium.

01:20:33.320 | But the key was, you don't try to do that

01:20:36.640 | when you're three days in the industry

01:20:38.520 | and you don't have a clue what you're doing

01:20:39.800 | and you're just gonna go out and do that.

01:20:42.280 | I've done a lot of, anyway, I'm done.

01:20:44.780 | I hope this is helpful to you guys.

01:20:46.960 | Thank you guys so much for listening.

01:20:48.800 | Yeah, kind of an inside look

01:20:51.280 | at the financial planning business.

01:20:52.840 | I'll be back with you tomorrow for Q&A show

01:20:54.880 | and some exciting stuff next week

01:20:57.040 | on some more in-depth topics.

01:20:58.760 | Didn't mean to be so introspective here at the end.

01:21:00.800 | Have a great day, everybody.

01:21:02.200 | Thank you for listening to today's show.

01:21:09.160 | If you'd like to contact me personally,

01:21:11.300 | my email address is joshua@radicalpersonalfinance.com.

01:21:16.480 | You can also connect with the show on Twitter, @radicalpf,

01:21:19.920 | and at facebook.com/radicalpersonalfinance.

01:21:23.720 | This show is intended to provide entertainment,

01:21:26.900 | education, and financial enlightenment.

01:21:30.700 | But your situation is unique

01:21:32.480 | and I cannot deliver any actionable advice

01:21:36.200 | without knowing anything about you.

01:21:38.400 | Please, develop a team of professional advisors

01:21:42.840 | who you find to be caring, competent, and trustworthy,

01:21:47.040 | and consult them because they are the ones

01:21:50.400 | who can understand your specific needs,

01:21:53.320 | your specific goals,

01:21:55.600 | and provide specific answers to your questions.

01:21:59.400 | I've done my absolute best to be clear and accurate

01:22:02.240 | in today's show, but I'm one person and I make mistakes.

01:22:06.160 | If you spot a mistake in something I've said,

01:22:08.480 | please help me by coming to the show page and commenting

01:22:11.880 | so we can all learn together.

01:22:14.040 | Until tomorrow, thanks for being here.

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RPF0139-Advice_for_Getting_Into_Financial_Planning