Financial Planning Career: Which company?

I am thinking of becoming a financial planner and got replies back from all the big companies I applied to. Do you guys think it will make a big difference in who I start out with? Which company would you recommend to work for?

proverbs, i totally think that if you can pick the best out the chute, you are ahead of the power curve. i started somewhere else and moved to a company and then found a home.

some "humble" advice:

1. focus more on long term compensation packages. don't let them talk you into some shiny fool's gold.
2. ask them about your 5 yr training plan for a new rep. if they encourage training, do they pay for it (like certifications (CLU, CFP, etc)). do they have an ON SITE training manager?
3. do their supervisory personnel maintain a book of business (meaning they have their own clients)? if they do, you may have a conflict of interest when you have a big close but the manager has a BIGGER close. you should always come first with no conflict of interest.
4. check out their disciplinary history. if they have been fined by the NASD or SEC (and almost all have) has it been for serious infractions or just stupid admin stuff.
5. strongly consider a privately held firm - one that CANNOT be bought or sold by stockholders. a stock company may not be bad, but a mutual company should crush them for strength and stability.
6. ask (and have them PROVE to you) how many new advisory personnel started last year and what their retention is. industry averages are pretty low, but since you are comparing between a couple of companies the averages don't matter that much. and, in fairness, people leave for all kinds of reasons (moved to take care of parents) that have nothing to do with the company per se. however, if one is exceptionally low, there may be management problems.

how is this for a start?

i would be curious what you decide. also, if you are going small town or big city - that can have a difference. where are you looking at doing this career? if its a big city, tell us where it is.

1MO

Well, my options include all the top companies like Northwestern, New York Life, and MassMutual. I like the people at all 3, and most of them offer very similiar benefits. One unique characteristic about MassMutual is that they use products from other companies. I don't know exactly how it works, but this is what I heard.

My sister is planning on getting an advisor soon so I created a post in the Financial Services earlier to rate these 3 companies.

two things, first i wanted to disclose that i am a senior manager at a financial services company. i didnt want my post to appear too unbiased when i am actually part of the industry.

as for "outside products" i believe you would find that all three of the companies offer both proprietary and non-proprietary products (meaning other than their own).

i think if you look deeper (remember, for the LONG term) you will find that there are significant differences between the three on their benefits. compensation, paying for professional education, renewals, pension, bonus structure, and the like.

but this is only ONE area. even a company with the best benefit package isnt worth as much as one with a very good one but that does so much more (training, mentoring, advanced consulting) which helps you be successful faster AND longer.

1MO

proverbs, you might want to read "So You Want to Be a Financial Planner", by Nancy Langdon Jones. There is a great deal of valuable insight into the process you're considering undertaking...

Best wishes -

Looks like a great recommendation. I've been in the business for years and I think I'll pick it up. I never heard of it before, so I went to amazon and read the sample excerpts and it really seems to have some great insight!

Thanks Blankenship...you can always teach an old(er) dog new tricks. Looks like a great read. I'll hit the library this week. Proverbs should really get alot out of it.

Glad to be of service, price. We old(er) dogs have to stick together... So, I guess I can go home for the day now.

The aforementioned book is great - I haven't read the latest edition, mine was from back in the days when it was download only, but still a very valuable read from a very insightful lady.

Thanks for your advice Opai. I will definitley bring those up next time I meet with them.

And thanks for the book recommendation Blankenship. I am planning to go to Borders tonight to check it out.

So just to sum up the advice - You guys think that getting started at any of these 3 companies will be a good start, correct? But it really depends on their benefits and if they offer a solid training program.

If I may add my 2 cents...
Those companies are fine companies - no question. If you have the chance, really try to talk to a few advisors from each one, one on one. Find out what's really going on, on a local level. For example, Mass Mutual may have a great agency with great management in one town, however Northwestern Mutual may be run better in a different city. It has a lot to do with the local agency and how it is run by the general agent or managing partner, regardless of how well it is run from a corporate standpoint. 1 more opai makes a good point: watch out for conflicts of interest, especially with the insurance companies. Ideally, there are managers who are dedicated trainers, with no other obligations or quotas for their own production. I have seen first hand how producers take on a dual role as sales managers, and royally screw up (or over) rookies. The point is, take your time. Honestly, just about anyone can be hired. But only a fraction succeed. It is in your best interest to take your time researching how this all works.

proverbs,

I recommended the book above for the purpose of expanding your horizons - including your choices. You have listed three insurance companies - but there are other alternatives to look at, and reading the book I mentioned will give you some insights into what those alternatives are (among a lot of other insights), including pros and cons with those alternatives.

The reason I say this is because of your first line in the original post:
I am thinking of becoming a financial planner...

Now, if your forays with these three companies fit your requirement and your definition of a financial planning career, great. I would just make sure you're considering all of your options. And please, don't interpret this as a condemnation of your list of choices. Those would not be among my choices, but I also don't care for Dr. Pepper, which will get you shot in some parts of Texas...

Hope this helps -

Blankenship makes a very accurate point I'd like to quickly comment on.
Many life insurance companies market themselves as "financial planning" organizations. Internally however, whereas you thought you were going to become an "advisor" or "planner", you are actually a glorified life insurance salesman, with a directive to push variable life and variable annuities and call it financial planning. I do have experience with two of the companies mentioned -- I interviewed with them a few years back. Good life insurance? Yes. Financial planning? Not exactly. One was vastly superior than the other in terms of what an agent/rep/advisor is able/allowed/directed to do. As I mentioned earlier, look at the local management and talk to their advisors. Find out what their model truly is in terms of actual financial planning.

yep, gotta agree with points by sadale and blankenship. look into your choices DEEPLY. there is the possibility that you may select wrong no matter how deeply you look into the company. but with you looking into as well as you did, you will spot if you made a mistake much sooner rather than later. you can always hop somewhere else (though you don't want to make a habit of this for reasons that should be obvious).

i will disagree with an implication that sadale may not have made (but that i perceived). while many life insurance companies market themselves as "financial planning" organizations ... you are actually a glorified insurance salesman. in my experience this CAN be true but is more the exception than the rule.

again for reasons i won't go into ask your POC at the firms if they have a subsidiary that is a registered investment advisor. ask them what a client financial plan looks like. ask them to explain when you may or when you must charge for planning services. for example, i BELIEVE ameriprise mandates the sale of a financial plan to every new client. you want to have the option to do what is best for your client, not follow some arbitrary rule.

additionally, don't be surprised or disheartened to find that you wont be doing any "planning" when you first start. if they bring you on as a reg rep or during a training period, you will be "controlled" to a much greater degree. at NY Life for example, you can only broker their life insurance products while you are in training. after that, you can broker ANYONE elses insurance! i dont know how many life insurance related products they have - i think about 60! so honestly, you would have plenty to work with and learn just starting with that number.

however, that was a mighty powerful statement about their policies - "sell whomever's insurance you want, we are confident that you will find ours best in almost every circumstance".

one final point - be very careful with annuities and VULs. they are great products but only for a very small percentage of your clients. sadale is right that too many in financial services hawk these things when they shouldnt - and doing so when not appropriate will only make you another hundred dollars or so. there will never be a time to sell your integrity and if there ever were such a time, it wouldnt be for a few hundred dollars!

great posts sadale and blankenship!

1MO

oops, one more point. why not ask your sister to help you decide?! have her make appointments with EACH of your top companies to have them prepare a strategy or plan for her. you sit in and you can both see what you would be doing and see if you would truly enjoy the profession. when complete, she can pick who she liked the best and you pick whom you liked the best. i would insist on someone working in the business for under 18 months. then ask your advisor how much he made last year. wow! how powerful would that information be?

advisor A from company A sucked when meeting with you but made $150K last year.

advisor B from company B was phenomenal but made 75K last year.

now, that would melt your brain!

1MO

Wow. Thanks for all the great advice. I wish I came here before I started interviewing though. Although I came to a conclusion on which company to work for, I will definitely be doing some extra research this weekend.

blank - i went to borders and barnes and noble and both places did not have it in stock. i wanted to take a sneak peak before i bought the book, but i think i will just buy it on amazon. are there any other 'must read' books for new financial planners?

1mo - i actually told my sister to hold off on getting any planning since i have decided to become a financial planner. otherwise, it would have been a great opportunity to see the 3 companies at work.

1 mo -

on your first reply on point 3 you said, "do their supervisory personnel maintain a book of business (meaning they have their own clients)? if they do, you may have a conflict of interest when you have a big close but the manager has a BIGGER close. you should always come first with no conflict of interest."
what does this mean exactly??

for point 4 you said find out about their disciplinary history - do you think it will be rude if i ask them straight up? if so, how can i sneak around and find this kind of information.

for point 6 you said to ask them for the retention. what would you think is a reasonable percentage or number?

SADALE - when you are talking about the manager "screwing over" the rookie agent, you are essentially saying that he steals your customers? how would i go about making sure that i don't get screwed over.

1mo - who are POCs exactly?

and lastly, what kind of LONG TERM compensation is considered decent at these types of companies?

again, thanks for all the help. i can't tell you guys how extremely glad i am that i found this forum.

1 more opai and I are basically talking about the same thing. Often, when "trainers" also have personal production goals to meet, you may end up either not getting the attention you need, or ending up in a commission split situation that is simply more beneficial to the trainer. Since you, as a rookie, will more thank likely be required to run joint appointments with your trainer/manager, you may find yourself having to do most of the work on the case, only to have to share a portion of the commission with your "trainer" that is not necessarily comensurate with the amount of work he or she actually did since they have goals to meet to. Additionally, if you find yourself in a situation where you feel you need your trainer/manager in on an appointment with you at a particular time, and they one of their own appointments scheduled, what do you think is going to happen? They're going to worry about their own case, and leave you to handle your own, possibly ill-equipped and to lose any potential sale. In offices where there are dedicated training persons with no production goals of their own, and only team based incentives, you'll find them a little more eager to help out the new folks since their income is dependent upon your success.

proverbs, at most companies managers (your direct supervisor) also meets with and provides advice, services, and products to his or her own personal client base (also called in our industry: a book of business). as a result, they also produce. this is a secondary stream of income for them on top of what they are paid to mentor YOU, the new and developing agent or advisor.

ergo, if they have a client that wants to meet with them to do business and you want to meet with them to learn something new or to help you make a sale, there is a conflict of interest. if you both have closes scheduled on any given day, he or she is conflicted as to do their close or to cancel it to be with you. even if they cancel theirs (unlikely) they still have to make that decision.

I prefer a company where the managers are PROHIBITED from working with clients and may NOT earn commissions or fees based on any sale. it is just my preference because there is NO conflict.

also, though you asked Sadale and he should address what he meant, if a manager can SPLIT commissions and fees with you "for helping you out" i think that is robbing from you.

a POC is (sorry for the acronym) your Point of Contact with the firm. it may be a manager at some level who would supervise you or the recruiter who is introducing you to the company. i would hope it would be a manager cause then you know whom would be mentoring you. if it is a recruiter and the guy rocks your world, but you get "assigned" to a crappy manager - that would suck.

As for disciplinary history, try here: http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_OrgSearch.aspx

now remember, everyone is likely to have hits on their disciplinary record. but if you discover a systemic issue or really huge fines, do you really want to be employed by a company that can't keep itself out of major trouble? as a GENERAL rule of thumb, if they have been fined more than $30 million in the last 5 years, i might personally feel kinda uncomfortable. there are many who have been fined in the hundreds of millions in just the last year!!!

retention is tricky, but i would still want to know the numbers. people leave for all kinds of reasons unrelated to the company itself or the local management team. however, the INDUSTRY average is about 12ish percent for a 5 year period. if they had 50% at 12 months and 35% at 24 months i would think they had their game straight.

as for compensation, ask them each to provide you with a projected compensation sheet over 20 or 30 years. they should each be able to provide this easily. here is the formula you might use with each!

lets say i make $100K in annual first year commissions....
and i increase that production level by 2.5% per year for each of 30 years.

show me my total yearly compensation in each year.
show me my total pension benefits at the end of my 30 year career.
do not include any investment advisory or planning fees.

a couple of other notes: 1. when do i vest in my pension (assuming they have one of course). 2. how much to you contribute to my 401(k) (ie match). 3. what are the costs for your health and dental and whatnot (this is nice to know stuff, but is very hard to compare between companies - because different benefits are provided by a myriad of benefit companies. 4. what type of employee will i be? ok, this is very important. you do not want to be a straight employee. you want to be either a statutory employee or essentially a contractor. you can determine this with these simple questions:

a. how are my earnings reported to me and the IRS - by 1099 or by W2. (either is fine - a 1099 means you are a "contractor" and fully self employed. in this method, you will pay ALL your federal taxes and witholding out of your own pocket. the W2 is fine and means you are a straight or statutory employee). b. if it be by W-2 then ask "do i pay all my Social Security and other witholdings or does the company match?" if they pay the "company" portion for you, this rocks because you essentially just got an 8% pay raise before you even started!!!). however, as a "statutory employee" you can easily claim off your expenses on your profit loss (schedule C) on your taxes. if you are a straight employee, you will not be able to claim all your business expenses and will have to get mother may i permission to claim the ones you can.

hope this helps!
1MO

blank - i went to borders and barnes and noble and both places did not have it in stock. i wanted to take a sneak peak before i bought the book, but i think i will just buy it on amazon. are there any other 'must read' books for new financial planners?

I think Amazon has a "preview" option before you purchase, where you can see the table of contents, and a few selected pages. When I purchased it a few years back it was available as a download.

Other books you might consider include:

Getting Started as a Financial Planner - Jeffrey Ratiner
Winning Clients in a Wired World - Kip Gregory
Garrett's Guide to Financial Planning - Sheryl Garrett
Deena Katz on Practice Management - Deena Katz

Jeff Ratiner, Mary Rowland, Deena Katz, and Harold Evensky have written or co-authored several books each with valuable "startup" insights.

Here's the sample from Amazon:

http://www.amazon.com/gp/reader/0971443653/ref=sib_dp_top_ex/102-4277500-9536126?ie=UTF8&p=S00G#reader-link

Nothing in Life is Free.

proverbs, i speak for EVERYONE (if i might be presumptuous) when i state that all the time we took to provide you this advice comes at a cost. you can pay us in full by taking the time to let us know with whom you decided to begin this career and why you made the decision.

best wishes.
1MO

Thanks for clearing all that up guys.

Blank - i'm actually reading one of the books on your list - "Getting Started" by Rattiner. only read a few chapters so far, but i really like it.

price - thanks for the preview. that sneak peak got me all hyped up. i'm going to order it tonight.

1mo - you guys will be one of the first to know who i choose and why. it is the least i can do. i will probably make my decision by the begining of September.

This website will help anyone looking to have a career as a Financial Planner - [url="http://ad_deleted[/url]

To your success,
Cynthia

It depends on what you want from a company. Do you want to be able to only sell your clients a handful of the company's products, or would you like to be able to sell any product from any company out there. I am a firm believer that the second way is the best approach for the clients. Companies like Northwestern Mutual and Ameriprise sell their own companies products because there is more money in doing that. I would recommend staying away from any company that doesn't sell a variety of products from different companies. Also look into how you will be compensated, 401K matching, profit sharing, pension plans. All of these different things make a company more desirable to work for.

This post is summarily wrong. Established reps from any company are able to broker across the board. For example, everyone I know in the industry is able to sell AXA products. However, brokers from outside of the major mutual companies such as Northwestern, NYLife, etc. can NEVER have access to their products. So, I would conclude that your post is exactly the opposite of what you are implying.

I do not have a relationship with NW, but I do understand how the industry woirks. I broker AXA, Met, and Prudential, but I can never even think of placing a Northwestern product. And for the record, I have dissected their polices ad nauseum and the mutual companies are vastly superior in most cases.

So you are saying that NW Mutual does not sell their own proprietary products to make more money? Why are NW Mutual compensated so heavily for pushing whole life. BECAUSE IT MAKES THE COMPANY MORE MONEY!! It doesn't take a rocket scientist to figure that one out. Ameriprise, NW Mutual, etc. have access to all of the different companies out there, but the fact is they don't sell them because they sell their own proprietary product to make more money. Why do you keep bringing up AXA, who cares about that company. The only reason I have mentioned them a few times is because they are one of the largest financial firms in the world, and I have discovered them to have some decent prodcuts. NY Life, NW Mutual, etc. have inferior products to many other firms in the industry. I worked for NW Mutual for 6 years before I realized that the products that I was putting my clients in were not good, and so I left to do research to prove which companies have good products and which ones don't.

I worked for NW Mutual for 6 years before I realized that the products that I was putting my clients in were not good, and so I left to do research to prove which companies have good products and which ones don't.
Why did you have to leave NW to do this? You're the broker, do what you want. You have this freedom no matter where you go.

drew, the more i read of your dozen posts the more i am wondering. are you really a 13 year old posing as an adult and trying to "screw with the adults"?

for you to state that NY LIfe and NW Mutual have inferior products is beyond ignorant. why then are they the LEADERS in strength (major independent rating agencies), the LEADERS in compliance (NAIC), and LEADERS in client retention?

then you state you worked at NWM for 6 years but you have no understanding about proprietary products. as price points out, advisors at NY Life and NWM can sell AIG, AXA, Met, etc etc etc. however, no one has access to NYL or NWM other than their career advisors (ie. a NWM agent).

then you go on to state that the commission rates are higher for the sale of proprietary insurance (meaning a NY Life agent gets a higher commission for selling a NY Life insurance product). this is also asinine. you are WRONG! advisors actually get paid less in commission for their sale of their own products. again, since you do not know this it really brings into question everything you claim "expertise" on.

GOOD ONE!!! Why don't you go worship NW Mutual!! I'm just curious what you guys actually do for a living because you are IDIOTS!! I'm OUT!!

yikes carumba ... that is a witty retort!