RPF0312-Whats_the_Financial_Advisor_Career_Actually

00:00:00.000 | Let's do a Q&A today on radical personal finance.

00:00:05.520 | Kay writes in, asks me a question, says, "Joshua, I would like your thoughts on transitioning

00:00:12.320 | from working in the job of a physician to becoming a financial advisor, specifically

00:00:19.220 | to becoming a financial advisor with a large insurance company like you were a part of.

00:00:25.720 | Would you do it?"

00:00:42.880 | Welcome to the Radical Personal Finance Podcast.

00:00:44.760 | My name is Joshua Sheets and I'm your host.

00:00:46.440 | Thank you for being with me today.

00:00:47.860 | Today we do this Q&A.

00:00:50.600 | If you were a 31-year-old physician making $150,000 a year and you'd spent the last decade

00:00:55.100 | of your life preparing for your career but are really frustrated with it, would you make

00:00:59.720 | this switch?

00:01:00.720 | I'm going to dish the dirt today on radical personal finance and tell you what the business

00:01:05.800 | is really like.

00:01:08.800 | I love to do these Q&A questions and I never expected really the question of giving so

00:01:23.020 | much information about the business of being a financial advisor to be so popular on the

00:01:27.360 | show.

00:01:28.360 | But what I've learned is that there are many, many of you who have a deep interest in pursuing

00:01:32.720 | this career path in some form or another.

00:01:35.120 | So you're asking me about it.

00:01:37.120 | Let me just start with reading the email here.

00:01:39.600 | Yes, I print emails.

00:01:41.720 | I'm going to read them on the show.

00:01:43.780 | You never know when a computer goes down right in the middle of filming your show.

00:01:47.240 | So this comes in from a listener.

00:01:48.240 | We're just going to call this listener Kay.

00:01:49.560 | Kay says, "Hi, Joshua.

00:01:50.560 | I've been really into personal finance for about five years now and I'm considering becoming

00:01:54.740 | a financial advisor with a specific large company very similar to the one you used to

00:01:58.980 | work for.

00:01:59.980 | I'm currently a 31-year-old physician making around $150,000 a year.

00:02:04.100 | I've spent a long time preparing for my career but I'm always drawn to becoming a financial

00:02:08.340 | advisor.

00:02:09.340 | The medical field is becoming increasingly draining with charting, liability, decreasing

00:02:13.860 | reimbursement, increased regulations, etc.

00:02:16.820 | The problem is in my career I can only make so much money.

00:02:19.460 | I can see some more patients every day but eventually you can only work so much and with

00:02:23.360 | that it would just take more time.

00:02:24.980 | I already work from 8 a.m. to 8 p.m. every day, not even including my commute.

00:02:30.060 | More patients would just add more time to that.

00:02:32.300 | Quite frankly, with the liability and difficult patients I see all the time, I don't think

00:02:36.340 | I'm paid enough of a premium to take on the risks I take.

00:02:39.620 | Now, I know everyone says they aren't paid enough but I can literally be sued for anything,

00:02:43.700 | especially the surgeries I do.

00:02:45.760 | In addition, the aggravation of arguing with some patients on deductibles they owe, co-pays,

00:02:50.340 | etc.

00:02:51.340 | I don't know if you know what it's like to feel – I don't know if you know what

00:02:54.120 | it's like to argue with somebody about a $32 bill after giving them necessary medical

00:02:58.960 | services because they have insurance and feel they are entitled to everything medically

00:03:03.080 | related for free but it is draining.

00:03:05.520 | I'd love to hear your thoughts on becoming a financial advisor with a company like you

00:03:08.840 | were with.

00:03:10.000 | Pros and cons, what kind of income can I expect and for how long, what was a day like for

00:03:14.400 | you?

00:03:15.400 | Can you really start taking off with your career?

00:03:16.760 | Do a lot of people make it?

00:03:18.640 | Why not?

00:03:19.640 | How do you actually make money as an advisor?

00:03:21.320 | Do you develop a niche or do everything?

00:03:23.160 | I always imagine being in a nice clean office creating a plan for people's finances.

00:03:27.160 | Is there a bad side to the business in terms of lifestyle?

00:03:29.840 | Is it really difficult finding clients?

00:03:31.480 | I know there are hundreds of thousands of advisors out there so there's a lot of competition.

00:03:36.600 | Also does the regional location make a big difference?

00:03:39.360 | I'm a regular listener of your show.

00:03:41.260 | Not only have I listened to every episode but I've done so numerous times.

00:03:44.200 | I have all the frugality and investment stuff down for the most part but I'm trying to explore

00:03:48.640 | the whole quality of life and work as if I can never retire type of mentality.

00:03:53.280 | Obviously this is a huge decision so I wanted to get as much detail on the job as possible.

00:03:56.840 | Thanks so much, Kay.

00:03:57.840 | Well, Kay, it's your lucky day and I'm going to do my best to give you all of the details

00:04:03.180 | that I can based upon my personal experience of what the industry is actually like.

00:04:08.080 | I'm going to tell it to you with as much detail and as much information as I can and I'm going

00:04:13.280 | to try to give you the good, the bad and the ugly because you know what?

00:04:16.880 | Every career has things that are awesome.

00:04:19.800 | Every career has things that are not awesome and everything – every career has things

00:04:23.660 | that are questionable and there are great things about everything.

00:04:27.160 | So I'm going to dig into these questions individually one by one.

00:04:31.080 | I'm going to answer each one of them for you.

00:04:33.580 | So if you have interest in this type of content or interest in this field, then this is a

00:04:37.600 | show that you will enjoy listening to.

00:04:40.600 | Before I answer these questions though, sponsor of today's show is Trade King.

00:04:44.040 | Now I need to do this ad up front before we go into the business of a financial advisor

00:04:50.440 | because I'll talk about the things that are difficult about the financial advisory

00:04:55.960 | business.

00:04:56.960 | Does everybody need a financial advisor?

00:05:00.680 | I think a lot about that question.

00:05:02.240 | My general answer is yes, but I'll tell you there are a few people who have convinced

00:05:06.260 | me that they didn't.

00:05:07.760 | But those of you who have convinced me of that, you guys are freaks of nature.

00:05:11.120 | It's just totally detail-oriented and very committed learners and I think that's awesome.

00:05:17.360 | But does everybody need a financial advisor to house their stocks?

00:05:19.800 | Now my answer is no.

00:05:21.320 | There are many different ways that you can work with a financial advisor.

00:05:25.760 | Sometimes you may want to manage your investment portfolio yourself.

00:05:29.120 | You may want to work with somebody that you just pay a straight fee for advice or you

00:05:32.720 | may want to manage your portfolio, a side portfolio that you're engaged in trading

00:05:37.120 | stocks or doing something interesting and engaging with that.

00:05:40.120 | If that's the case and if you'd like to hold your investments outside of the clutches

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00:06:20.160 | Personally, they're right down in Fort Lauderdale.

00:06:21.800 | If there's a problem – we had one problem a couple of months ago with one listener and

00:06:25.920 | I immediately sent an email to the Trade King team.

00:06:28.280 | The listener hadn't gotten everything fully credited to their account.

00:06:31.160 | The bonus for using it, I immediately sent an email to the Trade King team and they straightened

00:06:34.920 | it out in the next day or two.

00:06:36.760 | So that's what I love.

00:06:38.480 | I could get the CEO of Trade King on the phone.

00:06:40.880 | If I needed to, I could drive down to Fort Lauderdale and knock on his door.

00:06:44.040 | So consider becoming a – consider transferring or opening a brokerage account with Trade

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00:06:54.760 | to understand the performance of their ad campaign here on my show.

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00:07:04.680 | That's in essence in some ways a 10% return.

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00:07:14.920 | Please use TradeKing.com/radical.

00:07:15.920 | So, Kay, I'm going to answer these questions that you asked in the context of your email

00:07:22.720 | and I'm just going to go through it one by one.

00:07:25.920 | In the intro here, I read briefly through the email.

00:07:28.040 | I'm going to read the specific questions that you wrote here.

00:07:30.840 | But I want to start with what you wrote in the introduction and this might be the most

00:07:36.960 | valuable thing.

00:07:38.680 | You said, "The problem is in my career, I can only make so much money."

00:07:45.440 | Let me point out to you, that's not the problem of your career.

00:07:50.880 | That's the problem of the way that you are participating in your career.

00:07:56.040 | The reason I know that is because there are lots of medical doctors who are making way

00:08:00.240 | more money and there are lots of medical doctors who are participating in the practice and

00:08:03.960 | business of medicine in a business structure that doesn't involve their trading time

00:08:11.240 | for money.

00:08:14.120 | You've invested a lot of time and a lot of energy into becoming a physician.

00:08:20.120 | I'm going to give you the inside scoop on what the financial advisory business is like.

00:08:26.440 | But you've got to recognize you've invested a lot of time and energy into becoming a physician.

00:08:31.240 | Now should you just automatically say, "Well, because I've invested so much time and energy

00:08:35.920 | into this career," no.

00:08:38.600 | If you were to say that, we would be succumbing to what we've talked about in the past is

00:08:43.180 | the sunk cost fallacy.

00:08:45.640 | In general, you always want to ignore what's happened in the past when you're making a

00:08:49.100 | fresh decision.

00:08:50.280 | You want to ignore the fact that you have invested a decade into something.

00:08:54.600 | If you've invested a decade of blood, sweat, and tears and time into this career, that's

00:09:01.320 | not necessarily any reason for you to keep doing it.

00:09:04.520 | If you can't stand the career, if you can't stand the business, if you don't have any

00:09:08.520 | interest in it, if you don't have any desire or passion for it in any way, then there's

00:09:14.240 | no reason to waste another year of your life on it.

00:09:17.440 | So what if you've invested a decade?

00:09:18.840 | It's all done.

00:09:19.840 | It's gone.

00:09:20.840 | It's irrelevant.

00:09:21.840 | It's sunk.

00:09:22.840 | So we call it the sunk cost fallacy.

00:09:24.220 | You look forward and say, "Am I still excited about this going forward?"

00:09:29.640 | Zero-based thinking, famous, most important question, one of the most valuable ways of

00:09:34.640 | thinking, "Is there anything which, knowing what I now know, if I were going to do it

00:09:38.220 | over again, that I would do differently?"

00:09:40.840 | Ask yourself that question.

00:09:41.840 | Now, it would appear to me, especially since you said that you've listened to all the past

00:09:45.100 | episodes of the show, it would appear to me that you've been doing that.

00:09:48.260 | And your answer to the question is no.

00:09:52.220 | If you were to do it all over again, work through the process of becoming a physician,

00:09:57.420 | would you do it over again, knowing what you now know?

00:09:58.960 | The answer is no.

00:09:59.960 | At least that's what I'm picking up from your email.

00:10:04.740 | But that doesn't necessarily mean that you automatically need to change from the career

00:10:10.820 | of a physician to being in the career of a financial advisor.

00:10:16.120 | Because my guess is what's actually going on here, it's not that you don't like medicine.

00:10:20.660 | It's not that you don't appreciate certain aspects of working with people and helping

00:10:24.000 | people with their medical problems.

00:10:26.040 | Rather, it's that there are some aspects of your job now that are really driving you crazy.

00:10:31.320 | And because of those things that are driving you crazy, you're feeling extremely disillusioned

00:10:35.720 | with the whole business.

00:10:37.280 | But it's probably not the whole business that's the problem.

00:10:41.600 | It's probably just parts of it.

00:10:43.840 | And it's very possible and very doable for you to adjust and change within the practice

00:10:50.200 | of medicine into something that's more like what you would like to do.

00:10:55.740 | You probably had some deep-seated desire to want to help people gain their health.

00:11:01.280 | And that's the common thread that you are finding between personal finance and working

00:11:06.460 | as a doctor, is wanting to help people improve their health.

00:11:09.440 | In one sense, their physical health, in another sense, their financial health.

00:11:13.200 | That's probably a common thread.

00:11:14.640 | So my guess is you haven't lost this past – you're still the same person that you

00:11:20.320 | were a decade past, but you just learned that there are some aspects of your job and your

00:11:25.320 | business that are no longer suitable to you.

00:11:28.320 | And you know what?

00:11:29.320 | The same thing happens to financial advisors.

00:11:32.640 | Financial advisors may start in one company, in one format, one style of practice, and

00:11:39.280 | they get into that and they learn.

00:11:40.840 | And then they have to realize, "You know what?

00:11:42.560 | Where I started isn't exactly still the best place for me to be."

00:11:45.540 | And they have to adjust and they have to move from one style of practice to a different

00:11:50.100 | style of practice.

00:11:51.100 | This is normal for every career.

00:11:54.280 | So I encourage you, spend a lot of time thinking and searching for a solution that is going

00:12:01.340 | to – that might be a little simpler than to make this dramatic transition.

00:12:07.400 | I'm not saying to deny your interest in something else.

00:12:11.480 | I am saying you've got a starting place in the world of a physician that's much

00:12:16.720 | stronger than you do as a financial advisor.

00:12:19.480 | There is practically no transference of skill or background or ability to change from a

00:12:26.800 | physician to a financial advisor.

00:12:28.080 | There's really nothing that goes with you except the fact that you're a physician.

00:12:32.120 | And that might help you a little bit to perhaps if you wanted to work with other physicians

00:12:36.520 | in financial planning, which by the way I don't necessarily recommend because it's

00:12:40.640 | probably the most competitive place.

00:12:42.480 | So it might help you a little bit to understand what a physician is going through.

00:12:45.960 | But it's not going to help you nearly as much as if say you wanted to get involved

00:12:51.120 | in building some – opening some new urgent care facilities there in your town.

00:12:59.280 | And there you've got the background in medicine and you can add on the experience of business.

00:13:03.280 | Or if you wanted to develop a consulting group of some kind or if you wanted to transition

00:13:07.660 | and let's say you're looking for a life of adventure and you want to go be a physician

00:13:11.600 | for Doctors Without Borders and travel to war zones and help people in that context

00:13:16.780 | and you don't make as much money or any money but you now can use those skills of

00:13:21.620 | being a physician to still pursue that primary passion.

00:13:24.880 | I don't know what it is.

00:13:26.420 | My only point is that you've got a strong foundation to build on.

00:13:31.000 | And the example that I would draw for you would be look at why I'm able to speak effectively

00:13:39.840 | here in Radical Personal Finance.

00:13:41.680 | It's because of the background that I have.

00:13:44.880 | It's because I'm an authority in this area because of my experience.

00:13:49.400 | Now does that mean that I couldn't go and build a podcast on parenting?

00:13:54.520 | Of course not.

00:13:56.280 | I'm doing that.

00:13:58.640 | But I'll tell you I don't have really any credentials in that area.

00:14:03.200 | And so there's a totally different approach.

00:14:05.320 | Now I still like doing it but I was confident transitioning to Radical Personal Finance

00:14:12.580 | as a business venture.

00:14:14.280 | I would not be confident transitioning to being some kind of parenting guru as a business

00:14:19.280 | venture.

00:14:21.420 | So there may very well be an opportunity for you in the medical field that would fit some

00:14:27.000 | of the things that you're looking for and I would encourage you practice zero-based

00:14:31.320 | thinking.

00:14:32.840 | But don't throw away who you actually are or what you actually have because there's

00:14:37.680 | this relationship there between not being overwhelmed by the past but recognizing what

00:14:44.360 | you now have from the past.

00:14:48.720 | You need to draw those things forward and use those strengths, those leverages.

00:14:55.960 | So if we were using and thinking about the concept of the sunk cost, accounting term,

00:15:00.640 | we spent money on an investment project and we lost the money.

00:15:04.800 | Yes, we have to write that money off as gone.

00:15:07.680 | We're not going to consider it any longer.

00:15:09.560 | It's gone.

00:15:10.560 | It's sunk.

00:15:11.560 | It's dead.

00:15:12.560 | But we're not going to lose the lessons from it.

00:15:14.800 | We're not going to lose the learnings from it.

00:15:16.920 | We're not going to lose the experience that we've gained.

00:15:19.440 | We're not going to lose the insights that we've gained.

00:15:22.320 | We may have sunk a million dollars into some kind of research project and we may not get

00:15:26.580 | nearly a million dollars worth of benefit out of it.

00:15:28.480 | So it's a sunk cost.

00:15:29.480 | We can't worry about it.

00:15:30.800 | But we better use the results from that research project in today's world.

00:15:34.560 | Your career is no different.

00:15:36.160 | You better use those things that continue in you, whatever it is, the care, the medical

00:15:42.800 | authority, whatever it is, bring those things forward.

00:15:47.400 | And don't be scared to make a dramatic change but recognize the value that you have from

00:15:52.360 | that experience and from that learnings.

00:15:54.160 | So let's talk about the – becoming a financial advisor.

00:15:58.360 | And here I'm going to describe the path that I took because the word "financial

00:16:04.080 | advisor" is a very general nebulous term.

00:16:06.640 | There's lots of companies you could join.

00:16:08.880 | Every company has a different perspective.

00:16:10.980 | So you can join a big company.

00:16:12.840 | You can join a little company.

00:16:13.940 | You can join an established company.

00:16:15.320 | You can join a non-established company.

00:16:17.220 | You can join a company where you run your own deal from day one.

00:16:21.520 | You can join as a junior advisor under a team.

00:16:24.160 | You can focus on investments.

00:16:25.560 | You can focus on insurance.

00:16:27.000 | You can focus on a specific niche specialty.

00:16:30.900 | So there's all kinds of things.

00:16:31.900 | I'm going to specifically answer the question that you asked me, which was, "Joshua,

00:16:35.280 | what was your personal experience with this type of approach?"

00:16:40.600 | Meaning a large traditional insurance company which has transitioned into a comprehensive

00:16:46.560 | financial services company.

00:16:48.520 | And what did you learn from that?

00:16:49.760 | Pros and cons.

00:16:50.760 | You said, "What are the pros and cons?"

00:16:52.720 | Well, the best thing about the financial advisor business – and this is what really drew

00:16:58.320 | me to it – was you can build your own business from day one without having to come up with

00:17:05.720 | a product or an idea.

00:17:09.240 | So the lingo – if I were engaged in recruiting you, I would use words like, "You're in

00:17:15.640 | business for yourself."

00:17:17.000 | I'd say, "You're in business for yourself but not by yourself."

00:17:21.160 | And you know what?

00:17:22.160 | That is absolutely true.

00:17:23.840 | As a financial advisor in the path that I took, you're in business for yourself.

00:17:30.280 | I was in a situation where nobody told me when to come in, nobody told me when to leave.

00:17:35.560 | That's really powerful.

00:17:37.280 | And I knew that I wanted to be an entrepreneur.

00:17:40.600 | I knew that I didn't want my income to be tied to my time.

00:17:45.640 | I knew that.

00:17:47.160 | And so I was looking for an entrepreneurial opportunity but I didn't have a specific

00:17:51.400 | idea that I could implement.

00:17:53.360 | I didn't have an X-grade idea for a cool shoe company that I wanted to make.

00:17:56.680 | I didn't have an idea for a cool ballroom dancing storefront thing that I wanted to

00:18:01.320 | open.

00:18:02.320 | I didn't have an idea.

00:18:03.740 | So I had the opportunity to use somebody else's products, somebody else's ideas,

00:18:10.320 | but to build and run my own business.

00:18:13.800 | And that was really, really valuable.

00:18:16.200 | The great thing about insurance and investments as a business is you don't have to stock the

00:18:21.680 | shelves.

00:18:25.640 | You can have world-class companies that keep the inventory.

00:18:28.160 | You can have world-class insurance companies and they're responsible to make sure that

00:18:32.920 | the policies work as advertised.

00:18:34.860 | World-class investment managers and they're responsible to make sure the funds work as

00:18:38.720 | advertised.

00:18:39.720 | That's awesome.

00:18:40.720 | It's really, really awesome.

00:18:43.600 | Another great pro of the business is you can be in business with a minimal financial investment.

00:18:51.080 | If I were going to go and open a storefront in my hometown here, some kind of brick and

00:18:56.900 | mortar business, I would need to have a significant amount of capital ready to spend in the initial

00:19:02.680 | opening stages of that business.

00:19:06.400 | Buying the space, adjusting the decorations, buying inventory, hiring employees, there's

00:19:11.800 | a lot of money that's needed for that.

00:19:14.640 | Well, when opening a financial advisory practice, there's really no money.

00:19:21.320 | You don't have to pay anything out of pocket.

00:19:23.400 | Usually the companies that are recruiting you, they'll cover most of your initial expenses.

00:19:26.840 | Your initial expenses are low.

00:19:28.320 | The only real financial risk is that you need to be able to cover your personal expenses

00:19:34.040 | during the startup period.

00:19:35.840 | If your personal expenses are low and minimal, then that could be a very reasonable sum.

00:19:40.440 | If you're trying to cover $15,000 a month for the first year, that's a less reasonable

00:19:45.920 | sum.

00:19:46.920 | But you can control those things.

00:19:48.600 | Your financial risk is minimal.

00:19:51.120 | That's a powerful, powerful strategy to be able to – it's powerful.

00:19:58.680 | I am to this day convinced for somebody who was starting with few advantages, this world,

00:20:06.480 | being a financial advisor, selling insurance, selling investments, helping people with their

00:20:10.920 | financial planning, this is one of the best opportunities to establish a business with

00:20:16.640 | huge upside potential with very little financial risk.

00:20:22.280 | So it's a powerful, powerful opportunity.

00:20:25.680 | The pro of the business is that it's very, very established.

00:20:30.660 | For example, the company I was with, I mean, they've been in business for – since what,

00:20:34.320 | 1857?

00:20:35.320 | So 160-ish years basically.

00:20:37.680 | They know how to do their business.

00:20:40.000 | It's established.

00:20:41.760 | You almost can't ask a new question.

00:20:43.320 | You almost can't come up with a new system.

00:20:45.640 | The system has been proven again and again and again and again.

00:20:51.120 | So all you got to do is just do what you're told.

00:20:54.360 | In the years that I was working in the business, I never saw a single person who did what they

00:21:00.000 | were told fail.

00:21:02.480 | That's powerful.

00:21:05.000 | It's like the benefits of opening a franchise as compared to the benefits of opening your

00:21:09.400 | own business.

00:21:10.400 | If I were going to open a restaurant, man, I would seriously, seriously consider opening

00:21:16.520 | a franchise if I could afford the franchise fee.

00:21:18.680 | In the most valuable thing of a franchise is somebody gives you, yes, the brand, but

00:21:23.080 | they give you the operations manuals.

00:21:25.320 | They tell you how to run the business.

00:21:28.920 | A good franchise, they've got all kinds of – they've worked it all out for you.

00:21:36.360 | That's powerful.

00:21:38.840 | Personal story, I delivered pizzas for a week in a Papa John's store.

00:21:42.480 | I did it because I thought that delivering pizzas might make enough money for me to be

00:21:46.560 | a Segway job.

00:21:48.160 | But it's not.

00:21:49.600 | It's not a profitable use of time.

00:21:51.920 | But I also was excited to do it because I thought it would be fun to work in a franchise

00:21:55.600 | model.

00:21:56.600 | This wasn't the major reason I did it, but I knew there would be some ancillary benefits

00:21:59.520 | which is why I was willing to do it for a week.

00:22:01.720 | I'll tell you, the biggest thing that I – one of the biggest things I learned, it

00:22:04.560 | was a cool experience.

00:22:05.680 | I had never previously worked in a minimum wage type of job.

00:22:09.840 | I had never previously worked with people who were just kind of just applying for a

00:22:13.360 | job.

00:22:14.360 | I'd always worked in mostly skilled jobs.

00:22:16.960 | By the way, there's a lot of skill in spinning pizza dough.

00:22:19.040 | I never figured that one out.

00:22:20.560 | I tried.

00:22:21.560 | They tried to teach me, but I wasn't there long enough to learn that.

00:22:24.400 | But I never – so I had – it was a cool opportunity for me.

00:22:27.180 | But one of the things I noticed was how different the training of the employees was in that

00:22:32.240 | venue as compared to what the employees actually did.

00:22:35.760 | Simple example, the thing I learned in studying the Papa John's training – I'm not a

00:22:40.240 | lot.

00:22:41.240 | I didn't get the franchise or books.

00:22:43.080 | I just noticed that just what the initial training videos I went through is as a delivery

00:22:49.040 | driver and that's what I was doing, as a delivery driver, something as simple as you're

00:22:52.560 | supposed to call out as you walk out the door the order, what's in it, and whether or

00:22:57.680 | not you have – whether or not you have drinks or sides or desserts.

00:23:02.600 | In the restaurant business, most of the margin that they make is not in the food.

00:23:06.880 | The margin is in the drinks or the sides or the extra stuff.

00:23:11.880 | And so for pizza franchise, it's no different.

00:23:14.000 | Yes, there's going to be some margin in the pizza.

00:23:16.360 | But if you can buy a two-liter bottle of soda and a dessert and some chicken wings on the

00:23:20.680 | side, the margins go up substantially.

00:23:23.480 | So there's an important focus on upsell and you've got to do it professionally and

00:23:28.320 | do it politely.

00:23:29.320 | But the upsell will make a huge difference in the profit margins.

00:23:32.240 | So the manual is written to encourage an atmosphere of professional upselling.

00:23:37.400 | As a delivery driver, you're supposed to go out the door and say, "Two pizzas, one

00:23:40.880 | two-liter soda," et cetera, and everyone calls out.

00:23:43.640 | In that way, the team knows how we're doing as a group.

00:23:47.640 | So Joshua, I'm a rule follower.

00:23:49.680 | Okay, here's the training manual.

00:23:51.600 | This is what I'll do.

00:23:52.800 | And immediately the first night, I find out that nobody follows the rules.

00:23:57.400 | Next, I go on a trip with a delivery driver for a trainee and all the rules that were

00:24:05.400 | told in the manual in the training video, I find out they're breaking all the rules.

00:24:08.480 | They're not doing what they're told to do in the training.

00:24:11.000 | I became convinced after a couple of days, man, all I would have to do to have a pretty

00:24:15.920 | good business would be to buy these franchises and actually just replace all the management

00:24:21.120 | with people who are actually going to follow the rules because the systems have all been

00:24:24.720 | worked out but the people are lazy and the management doesn't require and the managers

00:24:29.200 | don't have any financial incentive to make things work and the whole system is broken

00:24:33.360 | simply because the rules aren't followed.

00:24:35.960 | So I draw that as a parallel to the same thing in the financial advisory business.

00:24:40.000 | The pros are that you're given the playbook.

00:24:42.760 | You're given the scripts.

00:24:44.680 | You're given all the solutions.

00:24:46.560 | All you got to do is do it.

00:24:49.400 | A lot of pros.

00:24:52.040 | Other quick pros, it's a flexible business.

00:24:54.480 | You can have control over your time.

00:24:56.520 | I always found that to be valuable.

00:24:58.280 | One of my highest priorities is freedom, freedom and flexibility.

00:25:02.240 | I don't like to say no to things because I don't have the time.

00:25:04.680 | I don't like to go and ask a boss for, you know, can I have this day off or can I have

00:25:08.280 | five days off?

00:25:09.480 | That's a higher value for me than money.

00:25:12.560 | I'll take less pay and more flexibility every time if I have to choose one over the other.

00:25:17.720 | So those are some pros.

00:25:18.720 | Now, as far as the cons, there are many.

00:25:22.080 | There are many cons.

00:25:24.920 | You know, a con for you personally, you're going to go from a fairly respected position

00:25:32.080 | and status in society to a fairly disrespected status and position in society.

00:25:38.020 | You got to be emotionally okay with that.

00:25:40.160 | Now, I'm not saying that being a financial advisor is disrespected, but in the initial

00:25:45.360 | stages where you're just learning, it's a pretty low status occupation.

00:25:51.200 | Why is it?

00:25:52.200 | I don't know.

00:25:53.200 | Should it be?

00:25:54.200 | I don't think so.

00:25:55.200 | Cons, you got to work a lot.

00:25:58.040 | It is a tough, tough, tough business to get to.

00:26:03.640 | You have to work a lot.

00:26:06.120 | And some of the cons, especially of the business structure, there are a couple that are important.

00:26:12.000 | First, although you're in business for yourself, and that's a good thing, it also means you're

00:26:20.800 | in business for yourself.

00:26:23.000 | So once you get things established, you've got to go on and generally you've got to hire

00:26:27.240 | your own staff.

00:26:28.240 | You got to rent your own office space.

00:26:30.360 | You've got to build your own little business.

00:26:33.420 | And one of the biggest cons though is that doesn't come with all the freedom that you

00:26:37.480 | would get if you were truly in business for yourself.

00:26:41.040 | Not only is the financial advisory business itself highly regulated, just like the practice

00:26:46.560 | of medicine, highly regulated at a federal and a state level, lots and lots of rules

00:26:51.560 | about what you can and can't do, but in working with a big company, they are extremely inflexible.

00:27:01.280 | Extremely inflexible.

00:27:02.280 | Now, do I fault them for that?

00:27:04.980 | I don't, because if I were running one of these huge companies, I have a responsibility

00:27:09.920 | to my policy owners to make sure that things are – that our affairs are conducted circumspectly.

00:27:17.980 | And how do you do that?

00:27:19.180 | Well, you keep lots of rules in force and you enforce them.

00:27:22.100 | You can't open yourself up to unnecessary threats of litigation.

00:27:27.880 | But that also means that there's going to be a lot of control from the top.

00:27:32.180 | So yes, you get the flexibility of come and go as you like to a certain extent, but you

00:27:37.820 | don't get any flexibility of being able to be creative with your approaches to marketing

00:27:42.960 | your product.

00:27:44.300 | You don't get any flexibility to be able to build any kind of meaningful media.

00:27:47.940 | That was the straw that broke my back was I said – and I still believe this, that

00:27:53.620 | in many ways, the traditional financial services business, they are – they're shooting

00:27:59.280 | themselves in the foot.

00:28:00.780 | There's no meaningful marketing that's actually bringing people in the door.

00:28:06.460 | The years that I worked in the industry, I never got any meaningfully useful leads and

00:28:12.100 | the leads that I did get I grew to despise.

00:28:14.420 | And by – despise is not – forgive me for that.

00:28:18.020 | I don't mean to despise the person, but I grew to see that the leads were not valuable

00:28:22.580 | leads.

00:28:23.580 | Usually when someone would call into the local insurance office and say, "Hey, I'm shopping

00:28:26.520 | for life insurance," what they're doing is they're calling around for quotes and

00:28:30.860 | quotes are a very poor way of selling.

00:28:33.900 | Personally, I don't generally ever want to be in the low-cost business.

00:28:37.540 | I want to be in the high-value business.

00:28:39.900 | And the company that I was with, he never had the cheapest insurance, never.

00:28:42.580 | Now, I don't think necessarily that everyone should want to have the cheapest insurance.

00:28:46.940 | So I always had to try to – I always had to quote the cheap ones because people are

00:28:51.940 | price-sensitive to try to figure out what is the opportunity and is the more expensive

00:28:55.580 | models of policy, are they appropriate?

00:28:59.140 | And by cheap, I'm not talking about policy design.

00:29:01.140 | You got to figure out what policy design is appropriate.

00:29:03.480 | But I am talking about just the specific company.

00:29:06.540 | In some things, you get what you pay for.

00:29:08.100 | In most things in life.

00:29:09.600 | And the differences are small, but it goes – but it does remain – the fact remains

00:29:13.180 | that we were never the cheapest.

00:29:15.460 | So when I get a call, I get a lead, somebody is shopping around, I mean I would call them

00:29:19.400 | back to try to do a good job.

00:29:20.900 | But I can't remember – I remember selling a couple of policies to inbound leads, but

00:29:26.540 | generally those policies would fall off the books and that's even more destructive to

00:29:31.020 | your compensation.

00:29:32.020 | So I grew to dislike that.

00:29:33.380 | That was very different than me going out and finding a client, establishing the value,

00:29:37.860 | establishing the process and everything up front.

00:29:40.660 | So just like the franchise model where you get a lot of good things about it, you get

00:29:46.980 | the subway sign, you get the subway manual, you get the subway forms and documents and

00:29:52.940 | standard procedures.

00:29:55.940 | But you can't all of a sudden take the green sign and turn it blue.

00:30:01.540 | And you might reach a point at which you want to do that.

00:30:03.940 | That's very frustrating.

00:30:06.060 | That's probably the biggest con of the business.

00:30:10.540 | What kind of income can I expect and within how long?

00:30:13.940 | These numbers range significantly depending on your background and experience.

00:30:23.440 | You can get these actual numbers from the company that you're recruiting with.

00:30:26.900 | They'll give you the actual numbers.

00:30:29.300 | I believe in my first year I made something like $40,000 in my first year.

00:30:36.780 | The challenge is that everything about the financial advisor business, everything is

00:30:42.260 | deferred.

00:30:43.260 | And it's simply deferred due to the length of the sales cycle, also the wholesale's process,

00:30:51.580 | the challenge of finding new customers.

00:30:53.420 | If I were to start with the simplest thing, let's go with the simplest, easiest sale of

00:31:00.160 | all time, a simple life insurance policy.

00:31:04.340 | You're 31 years old.

00:31:06.060 | You're working with a fellow physician.

00:31:08.780 | This physician decides that they need some term life insurance or you talk with them.

00:31:13.420 | They need some term life insurance and some disability insurance.

00:31:16.500 | Here is the basic sales cycle of that process.

00:31:22.620 | You call up your buddy.

00:31:23.620 | You say, "Hey, listen.

00:31:24.620 | I just got into the financial planning business.

00:31:26.420 | I'd like to sit down with you and talk to you about finances."

00:31:28.900 | He says, "All right.

00:31:29.900 | Well, it takes you a week to get him on the phone because he's busy.

00:31:33.340 | He's working from 8 a.m. to 8 p.m. too."

00:31:36.140 | He says, "Okay.

00:31:37.140 | That'd be fine.

00:31:38.140 | It takes you a week to get him on the phone."

00:31:39.140 | So there's one week.

00:31:40.140 | Then you set an appointment for the following week.

00:31:41.580 | There's two weeks.

00:31:43.100 | You go out for that appointment.

00:31:44.100 | You do what we would call a fact-finding appointment, which is you find out about his goals.

00:31:48.620 | You find out about his needs.

00:31:49.660 | You find out about his assets.

00:31:50.660 | You find out everything that he has so that you can make a professional suggestion or

00:31:54.900 | recommendation of what he needs.

00:31:56.460 | That takes a week.

00:31:57.620 | You tell him you're going to get back with him the following week.

00:32:01.100 | Let's assume that he keeps that appointment the following week.

00:32:03.580 | That's now your three weeks.

00:32:04.580 | You come back together with him.

00:32:06.060 | You put together a simple basic financial plan, which you present to him.

00:32:09.860 | You also go ahead and present to him a simple recommendation for some life insurance.

00:32:15.120 | You cannot – generally, you're going to have to be stretched out because most people

00:32:19.180 | have an attention span of a few minutes.

00:32:22.300 | But if you get beyond 45 minutes or an hour as far as one of these types of meetings,

00:32:26.780 | you're too much.

00:32:28.900 | And so if you're going to present a financial plan, that's going to take the whole meeting

00:32:32.460 | and you might barely get to talk about term life insurance.

00:32:35.180 | Pretty simple.

00:32:36.180 | You're not going to get to life insurance and disability insurance.

00:32:38.460 | So let's say you're at three weeks now.

00:32:39.820 | You present the financial plan.

00:32:41.140 | The next week, you come back and you go over how a simple term life insurance policy would

00:32:48.540 | work.

00:32:49.540 | You make some recommendations.

00:32:50.540 | "Hey, I think you need 2 million.

00:32:51.540 | I think you need 2 million for your wife."

00:32:53.420 | He goes ahead and says yes.

00:32:55.540 | You're at four weeks now.

00:32:56.660 | You go ahead and fill out applications.

00:32:58.340 | You submit those applications to the home office.

00:33:01.100 | The home office is going to take three or four weeks to get the policy done.

00:33:04.260 | They got to get the medical records in.

00:33:05.780 | They got to get all the information in.

00:33:07.300 | So now we go from four weeks to seven weeks.

00:33:12.120 | Then you go ahead and call your buddy for a delivery appointment eight weeks and you

00:33:15.540 | get paid sometime around the time that you deliver the policy depending on how it's

00:33:19.660 | structured.

00:33:20.660 | So there's about an eight-week process there.

00:33:22.900 | Now could it happen that fast?

00:33:24.900 | Well, in theory, does it happen that fast?

00:33:28.220 | Almost never because what happens?

00:33:29.700 | It takes you a week to get your buddy on the phone and you schedule an appointment.

00:33:33.060 | But that week, he gets called in late because he's the junior guy and he's got to cancel

00:33:36.380 | that appointment or his wife had a tough day and so they canceled the appointment.

00:33:39.380 | So the next week, he comes in.

00:33:41.220 | You come in for that meeting.

00:33:42.500 | You have a good meeting.

00:33:43.500 | You have a financial planning meeting.

00:33:45.140 | You go and present the financial plan.

00:33:46.380 | You're supposed to get together the following week to talk about life insurance, but he's

00:33:49.560 | busy that week.

00:33:50.560 | Okay, can't do it.

00:33:51.920 | Another week goes by, busy that week.

00:33:53.620 | Okay, you go ahead and finally get back together with him and say, "Okay, this is really good.

00:33:57.820 | We need to think about it," as he should.

00:33:59.460 | Okay, it takes a week, two weeks.

00:34:01.380 | Finally you call him up and say, "Listen, buddy, are you going to get together?

00:34:03.460 | Yeah, yeah, yeah.

00:34:04.460 | We really want to get some term life insurance."

00:34:05.620 | Okay, you go ahead and get together with him.

00:34:07.380 | You fill out applications.

00:34:08.740 | The doctor doesn't return the medical records in time.

00:34:11.500 | He's got to all of a sudden, they're reading through one thing and he's got some kind of

00:34:14.060 | weird heart things.

00:34:15.060 | They got to track down the cardiologist to get this and it just, the point goes on and

00:34:18.980 | on and on.

00:34:20.220 | Now the challenge of that, that's a perfect situation.

00:34:23.340 | So you can see the challenge of getting a business going.

00:34:25.380 | It's going to take you eight, 10, 12, 15 weeks from the beginning.

00:34:29.780 | But the next big challenge is the ratio, the number of people that you will talk to as

00:34:35.100 | compared to the number of people that will actually buy something from you.

00:34:39.220 | Here I'm just talking about insurance because the insurance is the fast sales.

00:34:42.780 | Investments are very slow, whether that's a sale of a mutual fund or whether that's

00:34:48.360 | the management transfer of accounts.

00:34:52.060 | It takes much longer generally for someone to say, "Hey, let me transfer to you a million

00:34:56.080 | dollar account," than it does to say, "Let me buy a couple million bucks of term life

00:35:00.420 | insurance.

00:35:01.420 | I know I need it.

00:35:02.420 | They've been bugging me about it.

00:35:03.420 | I'll go ahead and get it."

00:35:04.420 | So you should stick with insurance.

00:35:06.380 | The numbers of people that you are going to reach out to, we always talk about it, is

00:35:11.940 | with the company I was with, it was built upon the work of a man named Al Granum who

00:35:15.820 | was an incredible life insurance agent out of Chicago.

00:35:18.620 | He built something they call the Granum system, G-R-A-N-U-M, an incredible book called Building

00:35:24.540 | a Financial Services Clientele, which was the manual that I used from.

00:35:27.900 | It's the franchise model that I built everything in my business from.

00:35:30.780 | But he would talk about a ratio of what we affectionately called 10-3-1, which means

00:35:36.060 | that for every 10 referrals that I would get, I'll cover that in a little bit, every 10

00:35:40.420 | referrals that you get, I call those 10 people for an appointment.

00:35:43.340 | Of those 10 people that I would call, remember it takes time to get people on the phone,

00:35:47.980 | which is the biggest issue I think that's happening right now in the financial services

00:35:51.980 | business.

00:35:52.980 | Very few people want to answer their phone anymore, so it takes time to get people on

00:35:55.540 | the phone.

00:35:57.060 | And especially the better people, it's even harder to get people on the phone.

00:36:00.060 | Just consider yourself.

00:36:01.420 | How much do you answer the phone between 8 a.m. and 8 p.m.?

00:36:03.780 | The answer is you don't.

00:36:05.300 | Not a bit.

00:36:08.220 | Not a bit.

00:36:10.580 | But call 10 people.

00:36:11.820 | You reach 10 people on the phone and you ask them for an appointment.

00:36:15.180 | Of those 10 people, if you're good, 5 of them will meet with you, take an appointment of

00:36:21.380 | some kind.

00:36:22.380 | The 5 that meet with you, 3 of them will share all the information about their financial

00:36:26.860 | lives with you and they'll have some kind of need, something that they're trying to

00:36:31.020 | figure out and the financial need is broad, some area of input that you can help them

00:36:36.100 | on.

00:36:37.100 | Of those 3 that share all that information with you, 1 of them will buy from you at some

00:36:43.860 | point over a 3-year period.

00:36:47.220 | And that's what's so startling.

00:36:49.360 | They know because they've tracked it.

00:36:50.880 | What they find out is you need to follow up with people for about 3 years because 60%

00:36:55.500 | of your actual sales will come in the first 12 months of meeting somebody, 30% will come

00:37:01.260 | in the 12 months, 12 through 24, and 10% will come in months 24 through 36.

00:37:07.060 | So if we were to talk with actual numbers, let's just stick with 1,000, you're going

00:37:11.020 | to reach out to 1,000 people in your first year.

00:37:14.140 | You actually need to do it higher to be at the proper numbers.

00:37:17.500 | It's going to be about 1,200 to 1,600 people depending on how hardcore you are.

00:37:22.220 | 1,200 to 1,400 is about 120 a month in the first year.

00:37:25.380 | But you're going to reach 1,000 people.

00:37:27.380 | Of those 1,000 people, you're going to have 500 appointments.

00:37:31.060 | Of those 500 appointments, 300 people are going to share with you all the details of

00:37:35.340 | their lives.

00:37:36.380 | Of those 300, only 100 are going to buy, 60 of them are going to buy in the first year,

00:37:40.820 | 30 of them in the second year, and 10 in the third year.

00:37:45.980 | This ratio is both your enemy and your friend.

00:37:49.640 | It's your enemy in the beginning, which is why it's so difficult to get started in the

00:37:53.940 | financial services business.

00:37:56.960 | It takes so much work to get things established and many people aren't willing to put in the

00:38:04.300 | work.

00:38:05.920 | So it takes a lot of work in the beginning.

00:38:08.420 | You're very underpaid in the beginning, overworked and underpaid.

00:38:13.780 | But it's your friend because once you build this system and you're talking to thousands

00:38:17.900 | and thousands of people and you build a system for following up with them, they respect you,

00:38:22.540 | they appreciate you, what happens is that when the time is right and people feel like

00:38:28.180 | they're in a position where they can go ahead and make significant financial decisions,

00:38:32.160 | to go ahead and do the financial plan, to go ahead and open the college account, to

00:38:35.980 | go ahead and buy the life insurance policy, to go ahead and transfer the old IRA or whatever

00:38:40.380 | it is, once you have built that, then there can be a steady supply of new business.

00:38:47.720 | So as far as the income that you can expect and within how long, you can expect it to

00:38:52.220 | be very low for a long period of time.

00:38:55.740 | But on the back end, it can be very profitable.

00:39:00.340 | So again, I think I made $40,000 my first year.

00:39:02.920 | That was top quartile.

00:39:05.720 | The other thing you've got to remember is – so that was top quartile, about $40,000.

00:39:10.780 | Then it can grow from there.

00:39:11.900 | I forget the numbers now as far as what the top quartile number is for after three or

00:39:18.300 | four or five years.

00:39:19.300 | But it gets into the $150,000, $100,000, $150,000.

00:39:23.100 | However, how you've got to read through those numbers is you have to recognize that

00:39:29.200 | that's gross income for your practice.

00:39:31.300 | It's not your net profit.

00:39:33.060 | That's gross income for your business.

00:39:35.580 | And so that's where you've got to take those filters and ask – if you're working

00:39:39.000 | with a recruiter, ask the recruiter for those sales figures.

00:39:41.140 | But then you have to filter that through the actual expenses of the business.

00:39:45.180 | That's the other thing that most people miss.

00:39:47.580 | Because as you're building this business, if you think about the challenge of reaching

00:39:50.360 | out and speaking to a thousand people, then it takes quite a lot of work.

00:39:57.780 | And so you've got to build the business behind it.

00:40:00.720 | Not only do you have the expenses for renting your office space, you have to start to build

00:40:04.400 | up your staff.

00:40:05.720 | And so now all of a sudden in the third year, you're going to add on staff salaries of

00:40:09.540 | say $30,000 plus all the other expenses or $40,000 or however you structure it.

00:40:15.240 | And now you've got to take expenses out.

00:40:16.720 | And when you're going through this traditional systematic process of building a business,

00:40:21.760 | when you hire an employee, you're always overstaffed right away.

00:40:26.000 | And then at some point, you're properly staffed.

00:40:28.240 | And then at some point, you're understaffed and you've got to hire again.

00:40:31.160 | But you're usually at a period of overcapacity.

00:40:33.480 | And figuring out how to deal with that overcapacity is challenging.

00:40:37.620 | So what kind of income can you expect and without how long?

00:40:41.120 | That is largely determined based upon how much you work and how effective you are.

00:40:48.420 | The number of people that you connect with, the financial capacity of those people, and

00:40:53.440 | how effective you are at working with those people.

00:40:57.020 | Those are the ratios.

00:40:58.740 | So I'm not avoiding the question.

00:41:00.040 | I'm just simply telling you that the majority of people don't make it at all and they go

00:41:04.720 | out of the business without ever building it themselves without ever making it, which

00:41:09.040 | we'll come to in a moment, why don't people make it.

00:41:12.960 | But then some people can make six figures in their first couple of years.

00:41:16.580 | Some people can make multiple six figures.

00:41:18.800 | Usually, however, the people that can make multiple six figures in the first few years

00:41:24.000 | are people with some other background, experience, connections, network, some unique characteristic

00:41:32.360 | that helps them to be successful.

00:41:35.520 | There's no doubt in my mind that if I were to go back and start from scratch, I didn't

00:41:39.840 | have access to any of my former clients, friends, anything like that.

00:41:43.240 | I just went back to the company I was with and I started completely from scratch.

00:41:47.240 | From what I know now, I mean, I don't want to be overly optimistic, but no doubt I could

00:41:54.680 | do six figures in the first year and I would say multiple six figures, but that's because

00:41:58.880 | I'm not a newbie anymore.

00:42:00.880 | And that's what's so challenging about the start of it is imagine if you were thrown

00:42:05.680 | into the practice of medicine without years of medical school and without years of residency.

00:42:13.600 | That's challenging enough to be a new physician with medical school and with residency, right?

00:42:18.640 | Now imagine you were thrown right into business on day one without all those years of experience

00:42:23.240 | because it doesn't take much to get started in the financial advisor business.

00:42:26.840 | All you need is a couple of licenses.

00:42:28.480 | You need an insurance license.

00:42:30.320 | That's a week of class and pass a test and you need an investments license and that's

00:42:35.320 | a week of class and pass a test depending on how good you are as a student, how familiar

00:42:39.920 | you are with financial terms.

00:42:42.280 | Just a couple of tests, series seven, 63, series six, series 65, depending on the structure

00:42:48.280 | that you're going in.

00:42:49.480 | So those things are, they're minimal requirements.

00:42:52.720 | I mean, it's laughable with regard to the experience and expertise is laughable compared

00:42:57.960 | to what a professional physician has to do to even to get a license.

00:43:03.360 | And this is one of the things that people are trying to change, but you don't really

00:43:07.000 | need that much to hang yourself out as a financial advisor.

00:43:11.040 | But as far as your actual experience, you hardly know anything.

00:43:13.640 | So you've got to learn how to run a business.

00:43:15.240 | You've got to learn how to use sales language.

00:43:17.320 | You've got to learn how to effectively gather facts.

00:43:19.400 | You've got to learn financial planning.

00:43:20.740 | All those things take years and years.

00:43:24.000 | So if I were to go back and do it today, it's not the system that's the problem.

00:43:28.760 | It's the fact of having the knowledge, knowing how it works, having good sales language,

00:43:32.360 | knowing how to connect with people, having all the soft skills and the hard financial

00:43:38.320 | planning skills and the discipline and the work ethic and all those other things.

00:43:43.280 | So some people come into that very prepared for it.

00:43:45.960 | Some people come into it very unprepared for it.

00:43:48.280 | So that's the real story is that it's largely in many ways up to you.

00:43:52.920 | Now as far as the long-term income potential, the long-term income potential of being a

00:43:56.800 | financial advisor is tremendous.

00:43:59.540 | And after you build that foundation, after you build that large practice, after you've

00:44:03.920 | found your specialty, after you've found your platform, you can dramatically pull back

00:44:09.700 | on the work.

00:44:10.840 | You can dramatically pull back on the effort.

00:44:13.400 | But you can keep the very profitable business there.

00:44:16.800 | Because once somebody buys from you once, they'll go on to buy from you throughout a

00:44:20.800 | lifetime.

00:44:21.980 | And if you think about the number of financial products and the amount of financial advice

00:44:26.440 | that somebody like you, an attorney – excuse me, a physician is going to need throughout

00:44:30.560 | their lifetime, it's huge.

00:44:33.520 | It's massive.

00:44:35.240 | And so if you can become a trusted advisor for a number of people, that can be really,

00:44:41.400 | really valuable.

00:44:42.640 | The business model that I latched onto was I knew when I was 23 years old, I didn't

00:44:48.160 | have the interest or the experience that I felt like somebody was at 23 years old going

00:44:52.920 | to write over their million-dollar portfolio to me.

00:44:56.320 | I didn't know what I was doing.

00:44:58.920 | But I knew I could sell insurance.

00:45:01.440 | And I knew I could do that effectively.

00:45:02.800 | I could learn it.

00:45:03.800 | I could feel confident with it.

00:45:04.880 | I could help people.

00:45:06.160 | And so the model that I grasped that worked for me was – and the other thing, I didn't

00:45:10.160 | want to be a junior advisor.

00:45:11.920 | I didn't want to have a job.

00:45:13.080 | I wanted a business.

00:45:14.600 | So I knew if I build an insurance, that allows me to meet hundreds, even thousands of people.

00:45:20.320 | I'll build a strong client base with hundreds and hundreds of clients.

00:45:24.180 | And then I can go through that client base and I can keep the choice clients, the clients

00:45:28.740 | that have big potential for the long term, big financial potential.

00:45:33.040 | I can keep those clients very close to me.

00:45:34.960 | And little by little, the other clients will just drift away.

00:45:37.400 | And then I'll build this very, very solid practice of that base of clients that's

00:45:41.840 | really strong.

00:45:45.320 | My target for me, the sweet spot that I decided, I wanted 100 households that were middle 40s

00:45:52.560 | to 60s, retirement planning, a million bucks a household.

00:45:56.960 | That was the plan that I was working on.

00:45:59.900 | So you can adjust.

00:46:00.900 | Now, there's lots of other ways to run the business, but you can adjust.

00:46:03.780 | Next question you asked, what was a day like for you?

00:46:05.900 | Well, in the beginning, I started at 7 a.m. usually, 7, 7.30.

00:46:12.700 | And usually, I would come into the office at work for an hour, a couple hours, doing

00:46:19.100 | case preparation, doing studying, doing those things early in the morning.

00:46:22.640 | We had a thing that we used in our business called golden hours.

00:46:26.260 | And the idea was basically from about 9 a.m. to 5 p.m., those were golden hours.

00:46:31.700 | And so the rule, if you wanted to be successful and make it in the early years, those golden

00:46:36.740 | hours, you do not do office work during those golden hours.

00:46:40.100 | I use the word working to refer to either sitting face to face with clients or prospective

00:46:48.860 | clients, or as my managing director said, the words ringing in my ears, fighting to

00:46:55.340 | get face to face with clients or prospective clients, which means picking up the phone

00:46:59.780 | and calling people.

00:47:01.180 | And so generally, I would schedule appointments.

00:47:05.500 | And I tried to work from a specific calendar.

00:47:09.860 | Our rules when I was starting was that you had to have – going into a week, you had

00:47:15.740 | to have a minimum of 25 appointments scheduled.

00:47:18.300 | And if you had 25 appointments scheduled, you would wind up keeping about 15 of them.

00:47:23.540 | When you actually have physical face to face appointments scheduled, almost in the first

00:47:27.740 | couple of years, about 50% of them cancel.

00:47:30.660 | In later years, it drops down below that as you have to start to work with clients who

00:47:34.340 | are more established.

00:47:35.820 | Your keep ratio changes significantly.

00:47:38.820 | So I would have appointments scheduled at 10 a.m., 11.30 a.m., 1 o'clock p.m., 2.30

00:47:45.380 | and 4 o'clock p.m.

00:47:46.980 | That would give me a total of five opportunities to meet with people.

00:47:50.560 | And I would do that five days a week, so that would give me 25 slots.

00:47:54.760 | So if I was in the office from 7 till 9, I'd pick up the phone, 8.30 or 9, phone for an

00:47:59.840 | hour.

00:48:00.840 | Often we'd have a sales meeting once a week or other training things in the morning.

00:48:05.960 | But then after those, starting at 9, you'd phone from 9 till 10 or 8.30 to 9.30, something

00:48:11.000 | like that, and go to your first appointment at 10 o'clock.

00:48:14.160 | Once you start to get effective, what you actually learn to do is usually double book.

00:48:17.680 | So you try to double book a few of those appointments, which means you have two appointments scheduled

00:48:21.320 | at 10, two appointments scheduled at 11.30, or two appointments scheduled at 1.

00:48:25.120 | You don't have usually all of them scheduled, but you wind up to really be effective.

00:48:30.500 | Often I've seen for a while I was there myself, and then sometimes I would taper off, which

00:48:36.780 | is my biggest weakness.

00:48:39.160 | But you wind up with 30 to 35 appointments, basically about 30 appointments scheduled

00:48:44.600 | during those times.

00:48:45.600 | And you definitely try to constrict them to a certain number of days.

00:48:47.520 | So you know that two appointments and one of them almost always cancels.

00:48:51.200 | So that way you can actually keep appointments at those times.

00:48:53.680 | And so from 9 a.m. till 5 p.m., you're either face-to-face with somebody, driving to get

00:48:59.000 | face-to-face with them, or you are on the phone calling more people, calling, scheduling

00:49:04.720 | appointments, rescheduling appointments.

00:49:06.200 | You're scrambling.

00:49:07.200 | Then you get back to the office, 5 o'clock on.

00:49:10.180 | This one you do your case preparation.

00:49:11.600 | You work to build your financial plans.

00:49:12.960 | You build your proposals, do all of those things.

00:49:15.320 | And then also don't forget you've got to study.

00:49:17.800 | So you wind up studying at night.

00:49:19.880 | You wind up working on your CFP classes or your CLU classes and doing all of that.

00:49:25.040 | So I mean there were many times you're learning software.

00:49:27.880 | You're learning how your financial planning program works.

00:49:30.120 | It was standard for me.

00:49:31.120 | I would leave the office more than once or twice a week, leave the office at 10, 11 o'clock.

00:49:36.800 | A lot of reps go home.

00:49:38.240 | If you have family, it's very challenging to go home, spend time with your family over

00:49:41.600 | dinner and then after you put the kids to bed, then you're working for two, three more

00:49:44.440 | hours doing all your prep for the next day.

00:49:46.580 | It's an exhausting business.

00:49:48.680 | It's an exhausting business.

00:49:51.360 | It's a lot of work.

00:49:52.640 | And so that's an average day.

00:49:54.560 | Now you compare that and that's a day in the first couple of years.

00:49:58.020 | On the backside, what's an average day once you've been in the business 15 years and you've

00:50:01.840 | got several tens of thousands of dollars of monthly revenue that's coming in regardless

00:50:07.520 | and you've got staff that runs all your financial plans and all you've got to do is show up

00:50:10.860 | for your meetings and you've got highly qualified clients and prospective clients who all have

00:50:15.880 | relationships with you.

00:50:17.000 | So your keep ratio is very high.

00:50:19.600 | You can do everything in three days a week, three or four days a week.

00:50:24.160 | So you can get there and that's where it's hard to describe an average day unless you

00:50:27.760 | look at both ends.

00:50:29.340 | So you do all the work up front for the backside.

00:50:33.000 | When did you really start taking off with your career there?

00:50:37.400 | So first, I would say about three years.

00:50:39.920 | After about three years, everything started to click.

00:50:43.040 | I actually quit after three years to go and do something else.

00:50:47.760 | Quit for about two months and then I went back and continued.

00:50:50.280 | And then after about four or five years, everything started to change.

00:50:53.320 | Because what happens is you start to go and make a transition from being that new person

00:51:00.080 | who's doing a new thing that no one really knows about to being an established, respected

00:51:04.760 | financial advisor where people start to call you instead of you having to call everyone

00:51:08.560 | else.

00:51:09.560 | So three, four, five years was kind of the real change and then I remember I left after

00:51:15.240 | six.

00:51:16.240 | I really pulled back substantially.

00:51:18.200 | I didn't really work much my last year.

00:51:20.600 | I just kind of kept things going because I knew I was going to be making a transition

00:51:26.040 | and I took plenty of time off in there.

00:51:28.120 | I was a top quartile rep my first couple of years and then I drifted back further in the

00:51:32.360 | pack because I take too much time off.

00:51:36.200 | Do a lot of people not make it?

00:51:38.160 | Correct.

00:51:39.400 | I think if memory is right, about 80% of the people who sign up to become a new financial

00:51:46.560 | services person, financial rep, financial advisor, about 80% are gone after five years.

00:51:52.440 | Some companies it's 10% are still there.

00:51:54.040 | Some companies it's 20% but around those numbers.

00:51:56.880 | And this really hurts the industry because so many people come in and so many people

00:52:02.280 | leave that it leaves people with an impression that advisors are very flighty.

00:52:08.040 | And that's really, really I think it's a bad thing that happens.

00:52:11.000 | They work really hard.

00:52:12.480 | All these companies work really hard to try to recruit good people.

00:52:15.480 | But what happens is it's hard without actually being in the business to know whether or not

00:52:20.600 | it's a business that's for you.

00:52:22.480 | So some of those people leave because they don't want to be in the business.

00:52:25.840 | Some of them leave just simply for a different practice structure.

00:52:28.520 | So I described the practice model that I've done.

00:52:30.920 | But you don't have to do that practice model.

00:52:33.160 | There are other ways.

00:52:35.320 | For example, you could become – I've tried to interview other financial advisors who

00:52:39.560 | started.

00:52:41.680 | And if you were to talk with Alan Moore and all the people at XY Planning Network, none

00:52:46.840 | of those advisors who are pursuing that system, none of them are doing what I did, talking

00:52:52.120 | to a thousand people.

00:52:53.400 | They're focused on establishing themselves as well-marketed in a specific niche.

00:52:59.960 | So they have a very different view of it.

00:53:02.560 | They have a very different experience.

00:53:04.380 | You may have advisors who come in and who are able to focus on years of education where

00:53:10.220 | they can transition in at a very high level.

00:53:12.560 | There are as many different practice styles and models as there are companies and people.

00:53:18.360 | So I'm just describing my experience, which is what you specifically asked for in your

00:53:22.440 | note.

00:53:23.760 | But it all depends on having the right fit for the right person.

00:53:29.040 | The company that you're with matters, but the office that you're in matters far more.

00:53:34.940 | So what can happen, especially in the insurance-focused companies, is you can have some companies

00:53:39.620 | that take the holistic financial planning approach.

00:53:43.140 | My office did.

00:53:44.140 | I had worked under two managing directors that took a comprehensive approach.

00:53:47.940 | We didn't have this hardcore – what's that?

00:53:51.580 | Glenn Gary, Glenn Ross thing.

00:53:53.140 | We didn't have the boilerplate sales room.

00:53:55.060 | You know, "Get the policies.

00:53:57.180 | Get sling the policies."

00:53:58.260 | We had a financial planning culture.

00:53:59.620 | I never realized really how unique that was until much later in my career and all of a

00:54:03.900 | sudden I found out that not all offices were that way.

00:54:07.300 | And so you'll have – for example, I know that Michael Kitsis has been on the show,

00:54:11.060 | one of the leading pundits on the financial advisor business.

00:54:14.340 | He started in an insurance office and he just – he failed out of it.

00:54:17.860 | He did not work in that high-volume business.

00:54:21.220 | He worked well in the very intense, very complicated, in-depth business and he had to find a way

00:54:28.220 | to the right fit for him.

00:54:29.860 | That was also the same thing that was my issue.

00:54:32.860 | The people who are the most effective in the scenario that I described are those who have

00:54:38.340 | the ability to keep their head down and just to focus on finding one type of business and

00:54:44.600 | one consistent thing over time.

00:54:47.620 | My issue, what really dogged me as far as being able to be a star in that type of system

00:54:53.340 | was that I get too bored.

00:54:55.220 | I get utterly bored with that sameness over and over and over again.

00:54:59.060 | So instead of being able to go out and enthusiastically keep focusing on the same thing, I'm like,

00:55:03.100 | "Well, I've been there, done this.

00:55:04.100 | I don't really want to do this again."

00:55:05.540 | So I want to go on to the next thing.

00:55:06.980 | So I would transition from being the young person specialist to the disability insurance

00:55:11.460 | expert to – now I want to go and conquer the Spanish-speaking market.

00:55:15.380 | Now I want to move to retirement planning or I want to become an estate planning extraordinaire

00:55:20.020 | and move to group benefits or whatever.

00:55:22.260 | I love to learn.

00:55:23.260 | And so my personality type does not fit well in that doing the same thing every day, each

00:55:28.580 | and every day.

00:55:29.580 | So it wasn't a great fit for my personality and I learned that now and I've learned how

00:55:34.300 | to find something that's a fit for my personality where I like to learn new and different things.

00:55:40.520 | So that's why a lot of people don't make it.

00:55:41.900 | It's just tough.

00:55:42.900 | A lot of people are not going to put in the time.

00:55:44.260 | A lot of people can't make it financially because of that transition.

00:55:47.580 | If you don't have six months or a year's worth of – six months of expenses to cover

00:55:52.100 | you during those first six to 12 months, it's tough to make the transition.

00:55:56.980 | How do you actually make money as an advisor?

00:55:58.720 | Is it based upon consulting fees, ongoing commissions, upfront fees for selling something?

00:56:03.420 | Depends on the practice but it also depends on the specific opportunity.

00:56:08.060 | So the simplest one is with insurance policies.

00:56:11.780 | So life insurance, disability insurance, long-term care insurance, those are the big three that

00:56:16.260 | are done by life insurance companies.

00:56:18.460 | You can also do health insurance.

00:56:19.460 | I had a health insurance license for many years.

00:56:21.220 | I did a little bit of health insurance here and there until the Affordable Care Act was

00:56:25.180 | passed and that destroyed the market and I just pulled out completely.

00:56:28.980 | I just got sick and tired of everybody being angry at me because their insurance costs

00:56:32.060 | were going up all over the place.

00:56:33.700 | So I focus mainly on life insurance, disability insurance, and long-term care insurance.

00:56:38.700 | The way the compensation models work in those types of insurance policies is there is a

00:56:42.780 | large upfront commission that's based upon the percentage of the first year's worth

00:56:47.020 | of premium.

00:56:48.300 | That varies depending on the product, depending on the company.

00:56:52.340 | So if it's termed life insurance, depending on the company, it might be 50 percent of

00:56:58.140 | the first year commission.

00:56:59.620 | If it's other companies, it might go up higher.

00:57:02.180 | Some companies will offer 100 percent, 110 percent of the first year commission.

00:57:07.740 | In some ways, although this is not true across the board, in some ways you can almost judge

00:57:12.100 | the quality of an insurance product based upon the percentage of the commission simply

00:57:18.620 | because it's more cost and that cost has to come from somewhere.

00:57:22.940 | So the commission rates are different with life insurance, term life insurance versus

00:57:26.660 | whole life insurance versus universal life insurance.

00:57:29.060 | It's different for disability insurance and long-term care insurance.

00:57:32.480 | So all those types of policies usually are paid out with a larger upfront commission

00:57:36.500 | and that's what keeps you in the business in the first place.

00:57:39.620 | Then they come with smaller renewals or renewal commissions.

00:57:44.180 | So depending on the company, so for example the company that I was worth, it was 10 years

00:57:48.140 | of renewal commissions and then 10 years of what they would call persistency fees, so

00:57:52.180 | an ongoing base.

00:57:53.500 | So after a few years, that's why the business gets so much better after a few years.

00:57:57.260 | You can get to the point where you have a few thousand dollars of monthly revenue simply

00:58:02.160 | coming in from your renewals.

00:58:04.320 | So you want to do as much upfront business as possible.

00:58:07.920 | The upfront commissions keep you in the business and keep your bills paid while you're building

00:58:11.940 | up that renewal base and that renewal base is so valuable because it gives you the financial

00:58:16.000 | standing to be able to hire staff.

00:58:18.780 | You know you can pay them no matter what, to be able to expand, to be able to adjust

00:58:21.980 | things and it gives you that more passive type of income.

00:58:25.900 | For investment products, it's different.

00:58:27.460 | So for investment products, you have to look to see am I selling a commission-based product

00:58:31.620 | or am I selling a product that's going to pay me a management fee?

00:58:35.860 | Depending on that, depending on where you are, that's going to adjust it.

00:58:41.300 | In some companies, you can sell commission products.

00:58:43.620 | Commission products are very much the – I don't know if they're – you need to be

00:58:48.060 | careful because I don't know if they're the minority now, but very few people want

00:58:51.920 | to buy commission products anymore because there's a loaded mutual funds.

00:58:57.660 | There's such a vast array of high-quality, no-load mutual funds available out there that

00:59:03.260 | when you're going to sell loaded mutual funds, they're not popular and I'm not

00:59:08.700 | making here a claim of whether they should or shouldn't be, anything like that.

00:59:13.180 | I never really did much with that.

00:59:15.660 | You can work with managing accounts where you are going to be paid a percentage of the

00:59:21.260 | assets under management and that was the business model that I wanted.

00:59:25.100 | Now, some major change is happening right now with the prospect of a new fiduciary rule.

00:59:31.340 | Under the management by fee, you become a fiduciary of the client and you have a much

00:59:36.040 | higher standard of care as far as working with the clients on an ongoing basis and you

00:59:40.900 | need to be compensated for that.

00:59:42.700 | So that works out well.

00:59:45.140 | At some firms, you can go ahead and charge an upfront fee.

00:59:49.060 | Now whether you should or shouldn't as far as charging an upfront financial planning

00:59:52.140 | fee is a matter of debate.

00:59:54.500 | Some people like to do their financial planning for free and then make their compensation

00:59:58.700 | in the products.

00:59:59.860 | Some people can charge the fees upfront.

01:00:01.820 | I never got to the point where I was not doing the majority of the financial planning "for

01:00:07.020 | free."

01:00:08.020 | There's nothing for free but where I was just simply doing it without charging for it and

01:00:12.620 | my compensation was on the back end with products.

01:00:15.260 | I always tried to work that – I never got to the point where people were willing to

01:00:18.860 | pay me at that stage and I – where I had enough people coming and they were going to

01:00:22.460 | pay me $3,000 or $4,000 or $5,000 to do a financial plan for them.

01:00:26.620 | The reason was I didn't have a media platform.

01:00:28.420 | I didn't have the ability to shop before they buy.

01:00:30.740 | I didn't have the experience to where I could do that yet.

01:00:33.140 | Today I could do it but at that point, I didn't.

01:00:36.980 | So I was working to get it there because I firmly believe that people should pay for

01:00:42.660 | a financial plan almost every time simply because I would pour hours, hours into carefully

01:00:49.580 | analyzing and researching somebody's situation, trying to present really, really world-class

01:00:53.580 | solutions to them and they just treat it like nothing because they didn't have any skin

01:00:58.100 | in the game.

01:00:59.100 | I grew so sick and tired of doing that.

01:01:02.220 | I became convinced that the best plan was every client pays for a financial plan upfront,

01:01:08.140 | period.

01:01:09.140 | Now, whether they want to implement it with products or whatever, that's totally up

01:01:11.340 | to them.

01:01:12.340 | But they're going to pay for it because I got sick and tired of working for free and

01:01:15.140 | I got sick and tired of people not perceiving my advice as valuable because they hadn't

01:01:20.620 | paid for it.

01:01:21.860 | So your mileage may vary.

01:01:23.600 | Those are the major approaches and so usually the products – usually the compensation

01:01:29.680 | is going to be based upon the products.

01:01:32.800 | When you work with a diversity of products, here's where I think it is really valuable

01:01:37.160 | to work with products.

01:01:38.560 | First, clients like to pay with commissions out of products.

01:01:42.120 | People like to do that.

01:01:43.440 | Now, should they or shouldn't they?

01:01:45.560 | Mathematically, they probably shouldn't.

01:01:47.440 | They could probably get cheaper results just simply paying for advice.

01:01:51.180 | But when you work with a diversity of products, you build up all of these different diverse

01:01:55.000 | income streams and that's really powerful.

01:01:57.740 | So you can have – a lot of people have a health insurance business where they get a

01:02:01.580 | couple of thousand dollars a month from health insurance business, some individual health

01:02:04.420 | insurance, some group health insurance.

01:02:06.340 | You can build up each of your lines of revenue.

01:02:08.220 | You have life insurance commissions.

01:02:09.780 | You have disability insurance, long-term care insurance.

01:02:12.240 | You can put in place some group insurance business.

01:02:14.600 | You can have investments that you're managing.

01:02:16.180 | You have maybe a 401(k) business for some employers you're working with.

01:02:19.620 | You have an individual investment business.

01:02:21.640 | You have some financial planning fees that you're doing, straight up financial planning,

01:02:25.380 | etc.

01:02:26.380 | You build these diverse lines of revenue.

01:02:28.980 | That's one of the big pros of the business is it becomes very, very strong on the back

01:02:33.480 | end where you have all these great lines of revenue.

01:02:36.660 | And so from a risk perspective, especially when you're diversified with both insurance

01:02:40.540 | and investments, from a risk perspective, I think you're very, very strong.

01:02:44.980 | That can be a really powerful model for building a great business.

01:02:50.960 | Do you develop a niche or do everything?

01:02:52.780 | Well, in the beginning, I did everything and I think most people do everything in the beginning.

01:02:57.420 | Now, could you develop a niche?

01:03:00.580 | Well, maybe.

01:03:01.980 | So it's possible that your experience as a physician could lead you to a natural fit

01:03:05.900 | of working with physicians.

01:03:08.980 | For me, I would be very slow to do that.

01:03:11.340 | I never particularly liked working with physicians or attorneys or engineers.

01:03:15.980 | I don't speak engineer.

01:03:18.060 | I don't speak that detailed, very careful, like $32.67.

01:03:22.300 | I just say $30 a month.

01:03:24.920 | So it doesn't work well with my personality.

01:03:27.380 | And I didn't like working with physicians because I didn't like feeling like people

01:03:30.200 | wouldn't give me the time of day and not offended at you guys or intending to be offensive.

01:03:35.540 | But I didn't like being treated like just a commodity, just sit here in my office and

01:03:38.700 | wait.

01:03:39.700 | So some of that was probably circumstantial.

01:03:42.580 | If I had the pressure on me that you guys have on you, I would probably do the same

01:03:45.660 | thing.

01:03:49.000 | But also some of it was based upon not just personality.

01:03:53.940 | So I never liked working with physicians and I never particularly liked working with attorneys.

01:03:58.540 | The other thing is these are the most highly prospected areas.

01:04:01.780 | So I didn't like going where there's competition.

01:04:03.460 | I liked working with blue-collar business people.

01:04:05.740 | I liked working with just simple people.

01:04:09.680 | That works for me.

01:04:10.820 | I think the future is most definitely that you want to have a niche.

01:04:15.020 | Now getting there can be a challenge.

01:04:17.380 | So in the beginning, you don't know what that niche is.

01:04:19.020 | The niche can be based upon working with a certain type of people.

01:04:22.940 | I work with blue-collar business owners in the trades and I work with them at every stage

01:04:28.340 | of their life.

01:04:29.340 | Or it can be working with a certain type of product or situation.

01:04:33.460 | I do estate planning for high net worth individuals or I do long retirement planning, things like

01:04:39.580 | that.

01:04:40.580 | So you've got to find what type of niche.

01:04:42.860 | But the future is in the niche, especially when it comes to marketing.

01:04:45.780 | Again, the biggest con of working with large companies, they don't allow you to establish

01:04:49.780 | your own separate branded presence.

01:04:52.820 | More than anything else, that would be the reason why it would be very difficult for

01:04:56.260 | me, knowing what I now know, to go back into that structure.

01:05:00.020 | I think that these companies are losing the game.

01:05:04.300 | Playing this game the old way of making phone calls is – hey, you can still reach people

01:05:11.600 | on the phone.

01:05:12.820 | But when you can take a phone call and you can buttress that with being a known specialist

01:05:17.880 | in an area, with the access of information, with good high value content, man, it's

01:05:28.460 | hard for me to think that I would ever lose my voice or surrender my voice.

01:05:32.580 | It was hard for me to ever think I would ever surrender my platform again knowing what I

01:05:35.980 | now know.

01:05:36.980 | Now, if I were brand new again, didn't have the opportunity, who knows?

01:05:42.180 | We're dealing in things that are in some ways unknowable.

01:05:45.980 | But the platform is everything.

01:05:52.700 | I always imagine being in a nice clean office, creating a plan for people's finances.

01:05:56.180 | It's a good imagination.

01:05:58.380 | But if you want to do that, you need to be a back office specialist, financial planner

01:06:06.700 | for an established advisory team.

01:06:09.420 | Find a team that you can become a part of and you can become the technical specialist

01:06:12.600 | because that is not the business.

01:06:14.900 | The business is very much go, go, go, go, go.

01:06:18.060 | I mean you drive a lot.

01:06:19.060 | You go in to see people.

01:06:20.300 | I made a couple of transitions.

01:06:21.580 | I successfully transitioned most of my driving stuff to doing web conferencing.

01:06:25.940 | If I were to do it today, I could today knowing what I now know, I could set up a completely

01:06:30.580 | independent virtual web only financial advisory practice.

01:06:35.060 | That wasn't quite as easy in 2008 when I started as it is today.

01:06:40.340 | Is it as effective?

01:06:41.340 | No, it's a lot more work.

01:06:42.760 | But I could have done that.

01:06:44.980 | So in the first few years, it is nothing like you're imagining.

01:06:47.500 | On the back end, is it like that?

01:06:48.980 | Yeah, it really can be.

01:06:50.520 | So by my fifth or sixth year, I got to the point where I spent at least four days a week

01:06:55.880 | in the office and I did very few driving appointments just because I hated it.

01:06:58.920 | I didn't want to drive all over town and be treated like a traveling shoe salesman.

01:07:02.920 | I wanted to just do it in the office.

01:07:06.320 | I also found that because the technology got so much easier that it was much easier and

01:07:11.280 | better to do.

01:07:12.280 | So it can become that way but it's not that way in the beginning.

01:07:16.240 | Is it really difficult finding clients?

01:07:18.280 | Yes, absolutely.

01:07:19.280 | It's very difficult finding clients.

01:07:22.360 | It's the same in every business.

01:07:24.600 | Finding customers and clients is the most challenging thing.

01:07:29.080 | Is it doable?

01:07:30.080 | Yes, but it's certainly difficult.

01:07:33.200 | Nobody has it easy.

01:07:35.840 | But if you have a system that works, you have a prospecting system, you have a marketing

01:07:39.520 | system and you're diligent about it, it's doable.

01:07:43.000 | It's not easy but it's doable and it can be very worth it.

01:07:46.960 | Yes, there are hundreds of thousands of advisors but you know what?

01:07:49.800 | The majority of them are terrible.

01:07:51.320 | So if you're a good advisor, then all you got to do is just not – don't suck.

01:07:55.920 | Be effective and you'll find that people will be drawn to you.

01:08:00.160 | That's where your time duration in the business makes all the difference in the world.

01:08:04.760 | I've emphasized how difficult it is in the first place, in the first beginning years.

01:08:10.520 | But on the back end, as you become established, it can be much, much easier.

01:08:16.480 | Now to your final question, you say, "I was curious to know if the location where

01:08:19.360 | you practice as a financial advisor makes a big difference in the income or quality

01:08:24.160 | of life and if there is a big gap in income between places like West Palm Beach, Florida

01:08:28.400 | versus Dallas, Texas versus Northern Virginia near DC, etc.

01:08:32.360 | Also is it easy to transition from one location to another one once you get started or is

01:08:36.440 | that a huge setback?"

01:08:37.960 | So the answer is yes, the income is going to change depending on how you do it and that's

01:08:41.600 | where the world we live in in 2016 is so special.

01:08:44.680 | The most productive – I believe he still holds the record, but the most productive

01:08:51.320 | insurance salesman of all time is actually a New York life salesman called – name,

01:08:56.760 | name, name, Ben Feldman.

01:08:59.360 | Ben Feldman was just an amazing guy who sold more life insurance than anybody else.

01:09:06.640 | He sold more life insurance based on every metric at that time.

01:09:10.220 | Now if memory is right, he lived in a little rural town in Ohio, in Ohio River Valley somewhere.

01:09:15.740 | He wasn't in a big city.

01:09:16.740 | He wasn't in a big metropolis.

01:09:18.580 | So you can work effectively in just about any location.

01:09:22.980 | Now is there going to be an easier time in some locations versus others?

01:09:27.420 | Yes, of course.

01:09:29.020 | So the bigger – and your style of practice is going to vary.

01:09:34.220 | If you live in Miami, Florida or Washington, D.C. or New York City, you could build a practice

01:09:42.500 | focusing on very high dollar cases and do relatively few of them.

01:09:49.820 | If you live in a rural town, you can do very, very well but you're probably going to have

01:09:54.580 | lots and lots of little cases, lots and lots of little clients.

01:09:58.300 | When I was in the business, there was always – we would have every year a couple of conventions

01:10:03.860 | and at those conventions, they would give out sales awards.

01:10:06.500 | We had a regional one and a national one.

01:10:08.220 | When I go to the national one, I would always be blown away by the reps up in Minnesota.

01:10:13.860 | There were these reps up in Minnesota and they would do hundreds and hundreds and hundreds

01:10:20.860 | of cases and they did so well financially.

01:10:25.700 | But they were all much smaller average case size than the rep in Miami.

01:10:30.060 | So that's where you would measure production.

01:10:32.940 | So here specifically, I'm referring to insurance production.

01:10:35.300 | You'd measure your insurance production based upon the average – the total volume

01:10:39.780 | of premium.

01:10:41.100 | Total volume of premium is what drives your upfront commissions.

01:10:45.020 | So you can do a million dollars of premium on one life or you can do a million dollars

01:10:48.500 | of premium on 100 lives or a million dollars of premium on 1,000 lives.

01:10:51.820 | Lives means the number of policies, so 1,000 individual policies.

01:10:56.020 | But there's a very big difference of your average case size depending on whether you're

01:11:01.740 | working in a little town in Minnesota versus Miami.

01:11:04.140 | So you can build a practice in any place and especially now with being able to work with

01:11:09.860 | people in other countries – excuse me, other states.

01:11:12.780 | I worked hard to become somewhat proficient on the phone and with video presentations.

01:11:19.100 | You can establish yourself – and there are many practice models to do this.

01:11:22.900 | You can establish yourself as a national expert.

01:11:25.060 | I was licensed in at least a dozen or two states.

01:11:28.820 | Or you just apply for them as you get clients and cases in those states.

01:11:33.080 | So you can build an effective practice with video conferencing in a way that in the past

01:11:37.460 | was much more challenging.

01:11:38.940 | I've done it just on the phone too, phone and just FedEx everything.

01:11:43.060 | That's much cheaper to FedEx everything than to drive around your own city all the

01:11:46.500 | time and show up for appointments that are canceled.

01:11:48.980 | That was the thing I looked at as efficiency.

01:11:50.700 | If I work on the phone, if someone cancels me, I'm right in my office.

01:11:53.260 | I can get right on to the next thing.

01:11:54.420 | I don't have to spend 30 minutes driving out there and 30 minutes driving back to get

01:11:58.380 | stood up.

01:11:59.540 | So you can build it in any place but your practice is going to look different.

01:12:05.020 | If I were working in central Florida, I would be looking for the big farmers, the big money.

01:12:12.060 | I'd be working to work with them.

01:12:13.780 | But I'd also be effectively working with many more people of smaller cases.

01:12:18.380 | And that's the cool thing about financial planning, especially if you can sell insurance.

01:12:23.420 | You can work profitably with people who are not multimillionaires.

01:12:28.900 | So it all depends on what kind of practice structure that you want to work with.

01:12:33.540 | If you have insurance to sell, you don't have to pull the Merrill Lynch, we only work

01:12:37.380 | with people who have $450,000 of assets.

01:12:39.800 | You can work with young families.

01:12:41.020 | You can work with people and you can do it very profitably.

01:12:44.560 | But it all depends on the product mix that you have to sell.

01:12:48.340 | So location matters but you build a practice for the location that you want to live in.

01:12:53.420 | And so what I would choose is in setting things up, I would choose where do I want to live.

01:13:00.260 | Do I want to live in a ski town in Colorado?

01:13:01.980 | Do I want to live in Dallas, Texas?

01:13:03.660 | Do I want to live in Washington, D.C.?

01:13:06.260 | Because your money in rural Kentucky will go farther than your money will in Washington,

01:13:11.020 | D.C.

01:13:12.020 | Your lifestyle will be very different.

01:13:13.380 | So you can choose the lifestyle that you want to live and then you can build a practice

01:13:18.060 | in that area.

01:13:19.380 | There are – I think Edward Jones built their business based upon being able to work in

01:13:26.580 | little towns, right?

01:13:27.580 | Are they the firm that would send the people out knocking on the doors, "Hey, I'm opening

01:13:31.220 | up an Edward Jones office?"

01:13:33.180 | So you can adjust to the location.

01:13:35.580 | Choose the location you want to live in first and then figure out what kind of practice

01:13:38.980 | model will make sense there.

01:13:40.620 | Now can you move after the fact?

01:13:42.740 | Yes, you can.

01:13:43.780 | Is it easy?

01:13:44.780 | No.

01:13:45.780 | You're going to – is it getting easier?

01:13:46.780 | Yes.

01:13:47.780 | You can do it as well with virtual meetings.

01:13:49.420 | You can move and you can maintain clients and a lot of advisors do this.

01:13:53.740 | Here in South Florida, there's lots of advisors that have an office up in the northeast and

01:13:56.540 | an office down here.

01:13:57.540 | They try to do snowbirds and they fly one place, do a couple weeks of meetings and fly

01:14:02.540 | back and forth.

01:14:03.540 | There are lots of people who do that.

01:14:05.060 | You can set it up.

01:14:06.060 | So I know that – I mean those are the ways that – that's the detail that I can share

01:14:11.500 | with you to try to help you make a decision.

01:14:12.900 | I know there's lots of information there, probably for some of you a dry show if you've

01:14:16.700 | made it to here.

01:14:17.700 | But that's my best effort for you.

01:14:20.580 | That's the unfiltered discussion on what the business is actually like.

01:14:26.940 | It is a tough business, Kay.

01:14:28.380 | It's a tough business.

01:14:29.820 | There's a reason why it's a lucrative business.

01:14:32.700 | It's a lucrative business because it's so difficult.

01:14:36.140 | The insurance companies, if they wanted to – if they didn't – if it were easier

01:14:39.020 | to sell insurance or easier to place investments, they wouldn't have to pay as much commission.

01:14:42.660 | You think they just want to send all the money out in commission?

01:14:44.660 | No.

01:14:45.660 | They want to pay it – they want to consent – pay it to get people to be worth – to

01:14:48.780 | do the work.

01:14:49.780 | So it's a very difficult business.

01:14:51.260 | You know what?

01:14:52.260 | I'm going to close – I'm going to kill the music for a second because I don't want

01:14:54.660 | to be brushed on this last thing here.

01:14:58.740 | Every business has difficult things to it.

01:15:04.360 | Every business has good.

01:15:05.860 | Every business has bad.

01:15:07.220 | My business presently has a lot of good.

01:15:09.860 | But it's also got some things that I don't particularly love doing.

01:15:13.380 | No matter the business, it always comes with that.

01:15:16.620 | So my encouragement to you is get very clear on the why and then from there, you can build

01:15:24.340 | all of the things down the road.

01:15:26.780 | Every business has pluses and minuses.

01:15:28.580 | I hope this information – we'll just skip the music here.

01:15:31.580 | I hope this information is useful for you and you can make an educated decision.

01:15:38.260 | So I wish you all the best.

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01:15:44.020 | of the show.

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01:15:46.540 | RadicalPersonalFinance.com/patron is how you do it.

01:15:49.700 | RadicalPersonalFinance.com/patron.

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RPF0312-Whats_the_Financial_Advisor_Career_Actually_Like