How To Become a Financial Advisor

The two most common questions that Ben and I get in our Animal Spirits inbox are:

“What do I do with my cash?”


“How do I become a financial advisor?”

I want to talk about the latter one today. Before offering up some advice, I want to briefly share my story of how I got into the industry.

I started my career at an insurance company. The people at this agency held themselves out as financial planners. And some actually were, but the goal for the higher-ups was to have their agents sell as much life insurance as possible.

This is a conversation I had with one of the managers:

“The people I’m talking to don’t have any money?

“Yes, they do. You just have to find it.”

“But they’re 25 years old.”

“Are they contributing to their 401(k)?”

“I dunno, probably.”

“So what do you mean they don’t have any money?”

Imagine advising a young person to redirect money out of their retirement accounts and into a whole life insurance policy?

I stayed in this role for two years without selling a single policy to someone who wasn’t my father. The only reason I stayed that long was that we were still waist-deep in the GFC, and where else was I going to go? My resume didn’t exactly scream, “We should give this kid a shot.”

Eventually, I just couldn’t take it anymore. I had nowhere to go, but I knew I had to leave.

One of the first job interviews I got was for an advisor trainee position at a wirehouse. I remember being so excited at the opportunity and even more let down when the guy interviewing me told me to “grab a pen and write down as many names as I could.” Ugggggh. Here we go again. I was told the exact same thing on my first day at the insurance agency.

I knew this position wasn’t for me. I’m not a natural salesman. The “fake it till you make it” bullshit was the worst advice I ever got.  Yea, okay, just act like you know what you’re talking about, and someone will hand over their life savings. Right.

I spent two years trying to break into the industry. I walked into a Fidelity branch, and I got an introduction to someone at E-Trade. I sent resumes to Vanguard and Pimco. At one point, I considered a potential job opportunity for a call center in San Antonio. Not that they offered me the gig, but I probably would have taken it if my mother wasn’t sick at the time. I desperately wanted to get into the industry. I just didn’t know how to do it.

If it weren’t for a serendipitous meeting with Josh, I’m pretty sure I would never have gotten an opportunity. But I got lucky, so here we are.

If you’re trying to become a financial advisor, you’re going to need a little bit of luck too.

Back in the day, if you wanted to become an FA, you went to a big bank, like UBS or JPM. 95 out of 100 people didn’t make it, but the 5 that did pay for the ones that don’t. That’s not how it works anymore.

Wirehouses had a 40% market share in 2008. Today, it’s below 30%, thanks to the explosive growth in the RIA channel. This pressure has squeezed their trainee programs’ size to a fraction of what it used to be. If you’re a young person just out of college, you can get still get a shot at one of these places if you have the right resume and/or known the right people. But if this is your second or third career change, then you need not apply.

100% of the emails that we get are from people who want to work for an independent RIA, which is what I do for a living at Ritholtz Wealth Management (shameless plug if you need our help). The firms that look like mine don’t have the financial resources to hire 10 people and hope that 1 works out.  Nor do they have the ability or capacity to train an advisor from scratch, generally speaking. So if you’re reading this and you want to break into the industry, what are you supposed to do?

I have a few ideas.

I spoke with an advisor this week who is 38 years old. He got into the industry two years ago without any experience working with clients or managing portfolios. He approached one of the bigger RIAs in his community and brought them a detailed plan about how he could help them with marketing. That was his foot in the door. Now he’s a relationship manager.

What you can learn from this person is to get creative. Think outside the box. Take the initiative. Prove your value.

That’s what I would do if I wanted to get into an RIA if I had no experience.

This is not going to be easy. An alternative route that might offer more success is to get experience elsewhere. A listener emailed us today saying:

Also for folks wanting to get into the industry of financial planning, fidelity is a great place where no experience is needed to get started:

This is a great idea. Fidelity is a gigantic organization with physical branches that serves actual clients. When the economy reopens, I would walk into one and see what roles are available. Try the same thing at TD Ameritrade and Schwab.

Another listener emailed:

As you stated, it is a very tough profession to start new. However, if someone wants to get trained and work hard, you can get a very good start at Edward Jones. Granted, it is your typical brokerage, but if done right, you can stay below the radar, build your business and be a very good source of information and service to your clients.

This is another good idea. Get trained, work hard, and see what you can do. I would argue that the odds are stacked against you as a solo practitioner, but hey, if you really want it, then go get it.

One more idea. When you think of Vanguard, you probably think of index funds. But they employ more financial advisors than any other firm in the country. At least I think they do. You’re not going to build a book of portable clients, but I can think of worse places to work. And having that on your resume might help you land a job at an RIA later on.

I understand why we get so many questions from people looking to make a career change into the financial advice business. It’s rewarding both personally and professionally. We get to build relationships with people and help them achieve their life goals. And this is why it’s so competitive. But if you want it bad enough, then do everything you can to make it happen.