The new “Gimme Some Truth” is live on iTunes and SoundCloud! This week, Clint & Nate talk about the financial services industry as a whole and what it’s like getting started within it. Be sure to listen and subscribe!
“Getting Into Financial Services” Transcript[00:00:00] Welcome to gimme some truth I’m Kevin Castro your podcast producer and your co-hosts are Clint Walkner and Nate Condon the co owners and financial advisors at Walkner Condon financial advisors in Madison Wisconsin. This is a podcast series dedicated to eliminate some of the darkness around fees Conflicts of interest and the motivation behind recommendations in the financial planning industry. Here are your hosts. (Intro Music).
[00:00:51] Welcome back to Gimme some truth might commonly get a lot of questions based around the industry and how to get into the financial services industry and some of the pitfalls that we’ve seen over the course of our careers. So Nate collectively been doing it I don’t know what about like 25 years or so. And so we’re going to do this and give a little insight as far as what we’ve seen and how we’ve seen the industry evolve. And for the young people out there what they may want to look at as they’re trying to enter the financial services twenty five and a half years if you count me there.
[00:01:23] There you go. There you go.
[00:01:25] That was Kevin by the way would have been there.
[00:01:30] You did kind of a short sell in there you just the cut out has six months. My apologies. My apologies.
[00:01:36] Well 25 plus years for may not be registered and is not yet registered but potentially may aspire to be registered at some point its history which means he can give advice and have all the regulators look over him so he could actually receive compensation to have really nice cars. As far as from the fees on investment products because currently he just gets paid a normal everyday salary which is great right. It’s consistent. Consistent exactly consistent.
[00:02:05] The other design of the podcast is really to help investors kind of understand within the industry why certain things might have happened to them over their career and investing. So for example how as an investor how have I seen you know four different investment advisors get assigned to my account over say a 10 year period of time when I’ve been with the same company for 10 years so we can talk a lot about how the industry works just to be able to shed some light on the nuances of the kind of the career arc of an advisor how companies look at hiring and advisors and and how they in some ways in our opinion do a disservice to the firm’s clients with how they hire and how they handle advisers coming through their doors.
[00:02:52] Yeah when I first started in the industry I mean there was no such thing as like a CFP program through a college or anything like that. I mean we went out and we took a test after we graduated college and you literally don’t even have to graduate college to be a financial adviser and so that’s one of the problems of the industry is kind of a lack of you know lack of training that’s required and then I wish that there was a little bit more stringent requirement because literally you could be 18 years old and be a financial adviser. He passed a couple of tests so high I got in the industry was that I started with one of the larger firms out there and they ended up learning I end up having to take a test. They paid me while I was taking series seven test and then I had to take the series Sixty-Six exam and then once I passed those two as well as the Wisconsin state let’s see it was life and health at the time.
[00:03:47] And then I grabbed my list of friends and family and I was supposed to go in and pitch the 17 page script that they had taught me and just make phone calls and get them in for appointments and sell them financial plans and financial planning advice and I was 22 years old and that was how it was done and that’s how it’s done. Still today with a lot of a lot of companies out there but it’s a wonder that any of them are able to succeed and I think the the rate of success is under 10 percent at this point. So it’s it’s pretty amazing that where industry has gone it’s that kind of scattershot approach and I think they’ve moved a little bit more to a shotgun approach. But if you’re new and trying to get in this industry I think it benefits you to get into some sort of program through college in finance and you know kind of hone in on what you want to try to do there.
[00:04:41] Unfortunately the industry is set up in such a way where it does provide some inherent roadblocks for younger advisors trying to get into the business. So it’s actually creating a non-issue. Frankly there are not enough financial advisors in the industry because as the older advisors are retiring and moving out of the industry there’s not enough newer advisers coming into the industry to backfill for those losses and so we’re actually seeing you know the numbers within the you know financial planning sector starting to go down and there’s less professionals available to help people that really need the help.
[00:05:22] So we’re going to kind of explain why that is and kind of how we got to where we’re at. We get the question more than people would maybe think in terms of how Clinton got to this point and how the industry kind of got to the point where it is now.
[00:05:36] Yeah and Kevin Do they have a program over it. Kevin Smith University of Wisconsin-Madison. They have a program in financial planning.
[00:05:42] You’re aware of. Not that I’m aware of but that also wasn’t really my field of study so I’m sure someone who studied finance would have a better handle on if that exists or not.
[00:05:54] There are a lot of them have certificate programs some of them that majors now.
[00:05:57] That list is not vast It’s not like he can go to every school and they have a financial planning program now or you can get a you know a bachelors or a masters in that. But there are a few out there and behavioral finance has been an interesting field this well that a lot have gone into. But I think most people in the financial services end up taking econ classes and then they just move into financial services because they know somebody or know it’s a reasonably good path to take. But you know there’s not a lot of training out there there’s not a lot of a roadmap for them right now.
[00:06:28] Yes it’s definitely different than that another discipline within the financial planning world of accounting for example. So if you get an accounting degree you know right out of college you are going to do accounting work. I mean it’s it’s a pretty smooth transition for the most part for people that have accounting degrees.
[00:06:46] Same for people that say engineering degrees are going to get a job in the engineering field and you’re going to start to do engineer the stuff next.
[00:06:55] I think if you do your interview gradually with a finance degree or a different business degree and you try to get to the world of financial planning there’s a wide breadth of of what the first say six to 12 months of your experience to the industry is going to be like if you join on with an insurance company that’s different than if you join on with what’s known as a warehouse which would be you know Morgan Stanley Maryland shooby us which is going to be different than if you join on with a bank or credit union financial planning program which you will also be different than if you join an independent financial planning office like like we have here walking kind and financial advisors so that were you landed your first job out of college. And this is unfortunate for a lot of people get into this industry is where you can have a huge huge impact on whether or not you’re still in this industry. Five years later.
[00:07:45] That’s right. I mean it really depends on whether there is a active book a business that you can call on and cultivate whether or not you have to do it your own because you know this might be a surprise to people listening to as podcast but when you’re 21 22 years old leaving college and you’re calling and your friends your friends don’t tend to have a lot of money and you don’t know and a lot of millionaires too. So you know marketing to the high net worth when you’re 20 years old is a little tough. You know this right.
[00:08:11] Kevin how many honey millionaires do you hang out with. I need to find some better friends. That’s right. Maybe not a MasterCard millionaire. Right yeah. Right.
[00:08:21] But no true millionaires or even you know even middle class networth people they just haven’t built up the assets yet they’re trying to get other college they’re trying to pay down their debts. You know they’re thinking about houses they’re not thinking about amassing large amounts of wealth at this point. I’m
[00:08:37] going to go out on a way out on a limb here and say that the majority of people under the age of 25 have probably higher student loan debt numbers than they do. Network numbers.
[00:08:50] That’s probably a fair assessment is that not Kevin. Oh that’s a very wild take there that I had.
[00:08:55] But I think that’s probably a version of that.
[00:08:58] Yes the majority will have five or even six digit student loan debt figures and net worth is not necessarily in that same ballpark and they’re close.
[00:09:09] Yeah exactly. And that’s why some of the recruiting for some of these companies has focused on finding mid-career people that aren’t necessarily happy and then kind of turning them into financial advisors. In some case it can be a natural fit if you found somebody in a bank or credit union that’s been doing lending for example maybe mortgage loans. You know I’d give you credit you like somebody I know. Yeah exactly.
[00:09:33] Kind of the path that you know Nate was kind of mid-career and made a change and he had a lot of axemen still in finance. And so he was able to transition into that career. But sometimes they take people with just good natural networks and try to cultivate them in their financial advisers and obviously sometimes that successful and sometimes it’s not. But a feather flock together so if somebody is forty five years old and they’re off of a career selling let’s say pharmaceuticals you know they were working for Pfizer or something like that and they’ve got a lot of doctors in their network perhaps they can transition that financial advisory roles so that’s another successful way that I’ve seen some of these for cultivate some talent. So you know it kind of depends on how you’re going to enter the industry. But you know some firms target the young some firms target mid-career and other firms just go out and buy books a business and really don’t do any sort of training at all and they just they don’t worry about financial advisers starting because they’d rather acquire and use that strategy.
[00:10:36] So if you’re working with an advisor and you’ve never asked that question or if you’re interviewing advisers and you’re wondering what a question is ask one you definitely definitely want to ask is about the background of the adviser. Again you’re either working with or that you’re interviewing ask things like how we’ve been in the industry just because somebody is at middle age don’t assume that they’ve been in the industry for 20 years. They could easily be in the industry for six months and have had a completely different career before that and it doesn’t make that adviser a bad adviser. But just be aware that you may be working with somebody that you know doesn’t quite have the experience that you assume that they have or they don’t necessarily have the experience within the overall finance industry that you might assume that they had that was one thing that really surprised me when I got into the industry as I thought where this is going to be difficult because every person that I sit in front of is going to ask me how long I’ve been in the industry and I’m going to have to say a month or two months or six months or whatever it was at that time I literally got that question maybe two or three times in the first couple of years that I worked in the industry.
[00:11:40] So for them what you’re saying.
[00:11:43] I wouldn’t say fool them necessarily.
[00:11:48] No it was surprising to me and it’s a subject that I think a lot of people are almost kind of afraid to ask because they don’t want to insult somebody or they don’t want to look like they are. They’re kind of digging into their past. But you definitely need to ask about you know the path that the advisor took to get to the point where they’re out.
[00:12:07] Yes. If he boarded a great commercial on this where they had somebody he had a deejay. Yeah. Yeah. That ended up you know they dressed him in a suit and tie and they call him a financial adviser and you know there seemed to be a trust in that.
[00:12:18] So you put some of in a nice office with a nice suit and immediately they they garner that trust and you know unfortunately our society that’s how it is you know Nate and I probably couldn’t maybe now but you know certainly 10 years ago we couldn’t do our jobs and t shirts and jeans. Now he they could but you know at that point we certainly could not get it.
[00:12:37] It’s almost bad in a way because the end is the advertisement.
[00:12:43] So definitely points out the assumption that just because somebody has a suit on and they have a you know they look quite clean cut. Well they must be trustworthy. They must have you know shops within the industry. Well if we’re not asking those questions we need to be we do need to be asking those because you need to understand who’s running your money and who’s guiding you through these points.
[00:13:06] And if you’re somebody that’s looking at the financial services industry I think the issue for those people is trying to get married up with somebody that’s going to help them be successful. And you know to do that it used to be where you’d try to look for a good job where you can cultivate some people and get commissions and it would really help you out. But now there’s been that huge shift from commission based to fee based investment advising and being fiduciaries for our clients. And the problem with that is that it is a true builder type of situation once you have your revenue. It’s generally very sustainable and it’s a lot more predictable than a commission based advisor but it takes a lot longer to build up. So you know if Kevin was joining this industry for example and then wanted to do it on his own and didn’t have a salary to build up a book of business that would generate income for himself would probably take two three four years to do that and he literally be eating Ramen noodles for a long time so you know if you like ramen noodles can more of an easy Mac guy eat easy Mac at all.
[00:14:14] You get your kid spends 12 minutes. Boil your own water and put it in her eyes.
[00:14:20] No no although I would say way macaroni and cheese is delicious with the fake cheese and everything like that. But you have to take the time you can’t do easy Mac like. And it’s so hot when it comes out like it like that.
[00:14:34] Here is the deal. Yes.
[00:14:36] Don’t you microwave food too you know.
[00:14:37] You know my whole thing is that maybe maybe easier I can sponsor this podcast. Yeah probably. Not after are not bashing it. Give me regular macaroni and cheese and I don’t like the shape stuff either because you see the shapes there again now that they don’t taste good. The shades don’t taste as good. I don’t want minions an access in season.
[00:14:57] You know it’s that the traditional don’t know they’ll eat anything again. Yeah. They love macaroni cheese. I mean that Kevin’s taking us off on a tangent here. Let’s get back on track.
[00:15:07] So you asked me a question. So.
[00:15:13] So the the light at the end of the tunnel for the change the industry in our opinion or what we hope comes from the DL ruling and the the government trying to institute more of a fiduciary standard for most advisers is if this creates an environment where there is a little bit more kind of teams that are built within the industry teams of advisors or we get a little more consolidation so that there’s there’s not a lot not as many people just out there selling commission products where we have more advising and we have more you know doing what’s in the client’s best interest. Our hope is that it creates a little bit more of a mentor program for younger people to be able to get into the industry hook on with a team so that they’re not trying to do it simply on their own. They’re able to learn more kind of in a junior role and then graduate up into more of a true advisory role and really have more impact to be able to get in the industry. So even though it’s it’s maybe harder from a you know I can’t make you know as much money just you know a bunch of commissioned products he probably shouldn’t be selling anyways right out of the chute.
[00:16:29] It’s a longer arc from that standpoint but in our opinion it’s much more sustainable and in the industry hopefully then gets to be able to create more of a youthful kind of bench if you will through some of these these teams that are forming and what we’re seeing to you is that some of these custodians for example we custody a lot of our assets the vast vast majority of our assets at T.D. Ameritrade and they’ve developed a program for next gen advisors So they’re really doing taking that step to try to cultivate those younger advisers and assimilate them into some of the larger investment firms around. So if we wanted to hire we could look at that and and try to hire some young talent through that.
[00:17:14] So if you’re a young advisor you probably want to look at T.D. Ameritrade and their offerings to next gen next gen advisors and also x y planning network. There’s a lot of blogs on these topics and is kind of positioning themselves to be the financial planning network to help out generation you know kind of the millennial advisors that are coming up or Gen X or Gen Y advisors so I don’t even know why millennial I can’t Weizman.
[00:17:43] Miles Yeah and I. OK got you.
[00:17:45] Kevin’s not really a millennial Kevin this gen z z and frenched events on a flute. That’s right. So basically you should take a look at some of these places like T.D. Ameritrade that may have that.
[00:18:00] And if I can give one piece of advice to people it’s that getting on a team when you get started is the absolute best way in my opinion to become successful because you need to learn and get mentored from someone if you just try to learn it all on yourself. It’s too vast. I mean you’re drinking from a firehose for four to five years before you really have your feet under you. So you know I don’t care how much you you know going in from a textbook when we’re dealing with the art of financial planning. It just takes experience to learn that. And having another person to be able to bounce ideas off of or a team to bounce ideas off of is very important.
[00:18:41] I tackle all of those sentiments.
[00:18:43] Finding your way onto the correct team as opposed to trying to do it on your own is absolutely the way to go if you’re looking at jobs or looking to get into the industry. That’s definitely one thing you want to look at if you are a client and your kind of wondering you know how do I how do I really or how do I apply this information to the relationship of the adviser. First thing is to you if you don’t know their history ask about their history. How did they get into that role. How long have they been in the industry. You know what. What prior work experience they had.
[00:19:17] It’s definitely a cautionary tale in a lot of cases the clients that have felt like they’ve gotten burned in the past.
[00:19:26] A lot of those experiences are related directly to the adviser they were working with and that advisors either lack of knowledge or conflict of interest which created a situation where the client definitely ended up on the short end of the stick. So really make sure you understand who you’re working with and that will help to kind of fill in some of the blanks as to how I had four or five advisers over the last 10 years with my with my firm. Well it’s because they’re burning through advisers and they’re just moving clients from one to the next and the next as they kind of burned people out of the industry. So if you’re in that situation you’re you’re probably not with the correct firm yet.
[00:20:09] One thing that you can check if you don’t want to ask your adviser directly or in concert with asking her to advise her these questions is to look at the FINRA as broker check Web site because if somebody tells you that they have three years of experience you can actually go on and look on Fenris broker check Web site and see OK they were registered at x y z financial planning firm and you can actually verify what they tell you. It also will go through any sort of legal or financial troubles that they’ve had they have to disclose all that stuff they’ve had a bankruptcy or something like that it’ll show that they had that. So you can check and verify what your adviser tells you and make sure that that person is who you want to work with. So if they say I have 10 years of experience in the industry verify that they indeed do. And then also always take you know always take a look at that report and then verify back with your adviser if you have any questions. Like for example you know I went through a couple of different what I call book broker dealers when we were at you know Ukrainian investment services and somebody might say oh you’re hopping firms. And actually that that wasn’t the case. The financial you know Ukraine financial services ended up changing the company that they custody. Sets through. So we were working for two different companies but we stayed in the same place.
[00:21:29] So you know those are important distinctions of saying OK we had really good longevity there but you know the broker check may not show that you definitely want to get you know look at the broker check report verify back with your prospective adviser or advisor and just clarify what what they said and make sure you have the right person for you.
[00:21:47] A great tool.
[00:21:47] FINRA f i n r a Finner dark Fenner’s is just a governing body within the industry. But that broker check Tula’s is really helpful to be able to kind of at a minimum get some kind of basic information as far as history and any disciplinary or or financial problems that they might have run into. So the the take away really is you know protect yourself by asking the right questions and using the tools that are available to make sure that you fully understand the firm you’re working with the people you’re working with. And you know if you’re if you’re unsure or uncertain or not feeling great about how it’s going there’s probably a reason for that and it probably does track back to the advisor that you’re working with.
[00:22:32] Yeah and you want to do that due diligence. Also if you’re looking to get into the industry or look at who you’re joining check out that firm’s complaints. Check out the people that you’re potentially working around and make sure you have a reputable staff and reputable firm that you’re working for in the financial planning industry. Fortunately a lot of the bad apples you’re going to see because it’s all disclosed and so you want to ask them specific questions on customer complaints and some of their business practices to make sure you’re finding the right fit there.
[00:23:04] The last thing that we recommend from a client perspective is and again this might sound like a dumb question it might sound like an obvious question but make sure you ask your adviser if this is the only occupation they have at the time part time financial advisors or an adviser that’s struggling and has a side job.
[00:23:21] Well not all always a bad thing.
[00:23:24] You want to know that and you want to be a little careful that you know you’re not working with a part time financial adviser or in our opinion this is not the kind of career that you can do on a part time basis unless you are with a team structure and you have somebody backing you up it fits. You know if this is kind of a I’m going to try this out and see how it goes while I’m doing another career. I’d be very skeptical of that as a client.
[00:23:48] Yeah I’m a client I don’t want anyone practicing on me. So you know I want I want them to be getting me their best ideas and best advice and I don’t want them to be trying something out that they heard at a conference or something like that. So you’ve got to be real careful and skeptical there. Most of the outside business activities also are disclosed on the finner broker check as well so if they are doing a couple different things at the same time you have every right to ask them about that and their background.
[00:24:13] We hope you enjoy this information and found it valuable and we look forward to speaking to you soon. (Outro Music).
[00:24:57] Advisory services are offered through Walkner Condon financial advisors LLC a registered investment advisor in the states of Wisconsin and Texas. Clint Walkner and Nate Condon are ivestment adviser representatives of Walkner Condon and Kevin Castros an office manager and marketing specialist for Walker and financial advisors. He’s not registered and anticipation that podcast is limited to unregister activities and will not be providing any advice is investor related nor should any comments he makes be construed as giving investment advice insurance products and services are offered through WC Insurance Services LLC Walkner Condon financial advisors LLC and WC Insurance Services LLC are affiliated companies. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice you should always consult an attorney or tax professional regarding your specific legal or tax situation. Walkner Condon financial advisors LLC is not engaged in the practice of law. Whenever you invest you are at risk of loss of principle as the market does fluctuate. Past performance is not indicative of future results. Purchases are subject to suitability. This requires a review of an investor’s objective risk tolerance and time horizons. Investing always involves risk and possible loss of capital. Long term care estate planning insurance products and tax advice are not offered through Walkner Condon financial advisors LLC Walkner Condon works on a best efforts basis does not promise or guarantee any results. Past performance does not represent future results. Please see Walker in dotcom for additional disclosures.