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This is for all you career-switchers, and those considering a career change move into financial advisory services:
Don’t listen to the nay-sayers and the haters: You absolutely can become a successful financial advisor as a second career. In fact, as a career-switcher, you’ll have many advantages over your younger peers in your training classes.
Here are some of the many pros of becoming a financial advisor mid-career – and a few of the obstacles you may encounter.
Career-Switcher Advantages
#1. Maturity.
The first advantage you have comes with age: You’re simply going to have more maturity and experience than your 20-something cohorts. People are more willing to trust someone with a few gray hairs with their money. And you’re going to have more wisdom in advising them what to do with it.
Your additional years and maturity come with powerful advantages:
You have already experienced a couple of market cycles – including a boom and a bust. You were an adult when the housing bubble popped. You remember the Dot Com boom. You know what can go wrong, and you’re going to have an edge when it comes to remaining humble in the face of the market, and in spotting danger signals the young whippersnappers are likely to miss.
You may already know the basics of selling. Chances are good you were recruited because you already had some sales experience, and (hopefully) a track record of success. Any good branch manager is going to help you build on those skills as you transition to being a financial advisor. But if your prior sales experience was any good, you already know how to prospect, qualify and close. You also know how to keep going after you experience some failures.
#2. Better natural market.
As a new 40-something financial advisor, you have another significant advantage: Your natural market will consist of people with money.
Think about it: Your best market is going to be people your own age, plus or minus five to ten years. Becoming a financial advisor at age 40 is optimal, because your bread-and-butter market is in or just about to enter their peak earning years. They’re young enough that you will reap the benefits of their high earnings, but not so young that you’re going to go broke waiting for them to make it.
At 40, chances are you already know a few very highly successful people, and you can talk to them as an equal. That’s a lot harder for a 20 something hired right out of college to do.
You’re also going to have an edge when it comes to bringing on pre-retirees and retired Baby Boomers: It’s going to be a lot easier for them to trust someone who’s been around the block a few times than a youngster just out of college. And this is a much more lucrative market than most.
In some cases, your former colleagues – and referrals from former colleagues – will form the basis of a very successful practice. I’ve seen people become tremendously successful transitioning from previous careers as lawyers, military officers, school teachers and even physicians. Some have done it very quickly. But not without a massive amount of hard work.
#3. More developed soft skills.
Another advantage that frequently comes with age is the development of ‘soft skills.’ These are the non-technical, interpersonal skills that are critical to financial sales, like establishing rapport and trust, becoming an effective communicator and becoming a better listener, to name a few.
These soft skills are going to go a long way to help you justify your fees and avoid the commoditization trap.
#4. Savings/Capital.
By age 40, you should have accumulated some money in the bank. At least enough to see you through your required training, and through some lean months and years ahead of you as you get established.
Those savings are going to help keep you in business, prospecting and meeting with potential clients long after younger and less stable peers quit.
Obstacles career-switchers may face
#1. Excess risk aversion.
When Steve Jobs and Steve Wozniak started Apple, they didn’t care if it failed. What was the risk? They’d lose a car and have to start all over again in their 20s? They figured their risk was almost nil: Even if the company failed, at that point in their lives, they figured the learning experience would pay for whatever capital they lost, 10 to 1.
That attitude gave them an incredible amount of freedom. It allowed them to swing for the fences to create a truly remarkable product. It allowed them to say ‘no’ to early lowball buyout offers. It allowed them to commit totally to Apple and to its then signature product, the Macintosh.
But that’s easier to do when you’re in your early 20s and running a company out of your parents’ garage than it is when you’re 40 and have a family to feed.
It’s natural to want to hedge your bets. To start part-time. To “give it a shot” for a couple of years (not long enough!).
#2. Family resistance.
Most peoples’ families will be supportive, most of the time. But if your spouse is accustomed to you having a civilized 9-to-5 schedule, it’s going to take some getting used to when you’re off on evening appointments, you’re meeting with business owners after business hours, you’re attending networking events, and you’re burning the midnight oil building your practice.
In some cases, the hours you need to put in may represent more of a lifestyle change than the money in the early months and years of your new career.
There’s another trap, too – and it’s an insidious one: If you and your spouse are used to you having the structure of a 9 to 5 job, and all of a sudden you complete training and have complete freedom to set your own schedule, your spouse may start asking you to run errands during the day.
They’ll start small. But if you aren’t careful, your list of ‘Honey-do’s’ will quickly expand to fill half your day. And because the natural human tendency is to procrastinate, and engage in avoidance behavior to avoid the unpleasant but necessary work of prospecting, it’s too easy to go with the flow and allow it to happen.
That’s a business killer.
If you’re starting in your 20s, it’s not so much of a problem. Your spouse/significant other wouldn’t be used to anything else. But coming into a new career after ten or fifteen years of marriage? It’s another story altogether.
Don’t be surprised if you do encounter a little resistance or resentment – spoken or unspoken – when you make a career transition from employee to financial advisor and business owner, and you start putting in the hours of focused work that it requires to be successful.
#3. Higher income needs.
When you’re 26, nobody minds that you’re living on lawn furniture and canned ravioli. But when you’re 43, and you and your family are already accustomed to a higher standard of living, it’s another story altogether. Doubly so if you have debts, and triply so if you have a mortgage.
Things are typically tight in the first few years. Unless you’re an outlier, your income is going to meager in the early days. Much of what successes you have will be and should be reinvested in your financial advisory practice. Training, seminars, technology and marketing all cost money.
Many people come into this business undercapitalized. Yes, there are many supports available from your broker-dealer and general manager. Chances are you’ll have no lack of mentorship. But at the end of the day, you’re starting a business. It’s going to help to have a cash cushion while you build up your client list.
Look, it’s not going to be a walk in the park. You recent career-switchers know that very well. But talk to the people who’ve stuck with it a decade or more: They’ll tell you it’s worth it.
Keep your eyes on the prize.
Related: 8 Things Veteran Financial Advisors Wish They Knew When They First Started Out