Minimum Requirements

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Borker Boy's picture
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Folks like to joke about Jones's regular hiring of ex-car salesmen, but a big part of that is true.
I just met a new FA who has spent the past ten years selling tractors. He has nothing more than a high school diploma, but he's passed the 7 and 66 and is now permitted to present himself as a bona fide financial advisor. 
 
The attorneys and CPAs around here know his background and won't give him a minute of their time, because they're aware of his lack of real credentials; he's simply passed what they view to be a few easy exams--especially compared to what they've taken.
Although I'll never contend that a person without a college degree is less intelligent than a person with a degree, I will say that we'll never be viewed in the same light as attorneys, doctors, CPAs, etc.--or become well-respected by this group of professionals--until we establish some minimum education requirements that must be met prior to joining the industry.
What do you guys think?
 
 

troll's picture
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Amen!
I know a lot of FA's WITH a college degree, who are no more qualified to give Financial Advice, than the New York Jets (my team, i can say it) is qualified to go to the Super Bowl.
 
However, seems to me that  4 year college degree should be a minimum requirement to get an interview. I dont think any Branch Manager who would hire or even spend time interviewing someone without a college degree, has respect for the profession - in fact, by doing so, they lose their right to refer to their FA's as "professionals"
 
I'm sure this thread will draw some interesting responses.

troll's picture
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I think there's a difference between "scholastic" education and training through MENTORSHIP.
 
First disclosure:  I am NOT a college graduate.  I do not have a BA, AA or anything else.
 
My first 3 years in this industry have been under MENTORS who do financial advising and planning very well.  I have learned from them while taking and passing 7 out of 8 of the ChFC courses (1 left to go!), joined NAIFA and Society of Financial Service Professionals and reading the Wall Street Journal.
 
The guy you mention selling tractors for 10 years... he has a "label".  He will forever be identified as the "tractor-guy". 
 
If he did JOINT FIELD WORK with an experienced mentor for a couple of years and had the MENTOR introduce him to the attorneys he works with, I think it would be a completely different story.
 
He will also need to be very humble when talking to those attorneys by saying and admitting that he's new to this industry, BUT that he works with an experienced mentor to help him design and work with his client's cases.

Borker Boy's picture
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You make a great point, Skippy.
I'm sure there are a thousand different ways to learn how to do this job effectively.  There is no doubt in my mind that there are tens of thousands of top producers who don't have college degrees and have learned how to do this job very, very well through the guidance of mentors, etc.
 
I'm just suggesting that we need to have minimum entrance standards in place in order to command the respect we desire.
 
Again, I don't think a degree makes a person smarter, but since I've "been there, done that," I have a higher level of respect for a person who has finished college because I know that they have accomplished a goal that most folks will not--and I know that other professionals consider a degree to be a "rite of passage" also.
 
I don't consider a person who sells home, auto and life insurance to be a professional by any means, and a lot of folks look at us the same way since there are no minimum qualifications in place to enter this industry.

Gaddock's picture
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pratoman wrote:Amen!
I know a lot of FA's WITH a college degree, who are no more qualified to give Financial Advice, than the New York Jets (my team, i can say it) is qualified to go to the Super Bowl.
 
However, seems to me that  4 year college degree should be a minimum requirement to get an interview. I dont think any Branch Manager who would hire or even spend time interviewing someone without a college degree, has respect for the profession - in fact, by doing so, they lose their right to refer to their FA's as "professionals"
 
I'm sure this thread will draw some interesting responses.
 

I THINK THAT GUY WILL OUTPRODUCE ALL OF YOU THAT AGREE WITH SUCH ELITIST CRAP!
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I’ve seen cases from people with MBA’s that's the worst kind of crap beyond my imagination. There are far more MBA’s in this game than the guy you describe and what rep. does this business have?
 
The fact that you would post such about another speaks much more about you than him.
 
I’ll bet you find the idea that there are far more plumbers making over $100K than physicians unacceptable … sigh.
 I feel sorry for you and I wish you the best.

Gaddock's picture
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Sorry Prato I meant to quote Borker Boy.
Been a long blurry day.
I'll bet the tractor guy is juist getting home as well.

troll's picture
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Borker Boy wrote:
I'm just suggesting that we need to have minimum entrance standards in place in order to command the respect we desire.
Again, I don't think a degree makes a person smarter, but since I've "been there, done that," I have a higher level of respect for a person who has finished college because I know that they have accomplished a goal that most folks will not--and I know that other professionals consider a degree to be a "rite of passage" also.
 
Well, let's brainstorm on this for a moment.
 
The first thing I think about is the fact that the LICENSING process is basically an IQ test.  It's a joke.  Can someone listen well in a class or read a book well enough to answer some questions on an exam?  That's the system we have.  Once you pass, you forget everything the next day.  Score too high?  Probably a sign that you should be an analyst and not in sales.
 
I don't remember any training on retirement plans, income taxation, estate planning or other strategies in the licensing process.  Basically, THE CURRENT LICENSING PROCESS IS TOO EASY - THEREFORE IT'S TOO EASY FOR CERTAIN FIRMS TO HIRE IN QUANTITY INSTEAD OF QUALITY.
 
Perhaps the Series 65/66 licensing process needs to be more stringent and broad in content.  My guess is that you might like what the CFP board would like - make the CFP or equivalent coursework completion a requirement before entering the industry to advise the public.  (Of course, the CFP Board now requires a 4-year degree before being eligible to have the CFP designation.)
 
This would:
1)  Raise the bar
2)  Weed out other people who don't have the time, talent or disposition to take the courses
3)  Slow the recruiting process (good and bad)
4)  Lower the amount of "client experiments gone bad"
 
I, myself, didn't leave my training to chance with my current firm.  This was why I chose to enroll in the ChFC cirriculum of The American College.  But I also know that I'm only 1 out of a few hundred that might even bother with such coursework during their first few years in this business.
 
If going into this line of thinking, the next question is:  What is the reputation of those who hold the CFP credential?  Does that help or hinder us?
 
We know that the FIRM ITSELF doesn't matter.
We know that the PRINCIPAL of the firm only checks for "suitability".
We know that the public has NO IDEA about credentials (except for CPA).
We know that the public can't recognize good advice from bad advice thanks to people like Orman, Bach, Clark, etc.
 
So, how do YOU show credibility?  I show it by listening to my clients, understanding their situation and mindset, make recommendations that they're comfortable with and monitor the plan as we move forward.  This is how I move large accounts from other advisors who have great degrees and designations, but they may talk over people's heads.
 
It's more about PSYCHOLOGY than TECHNICAL knowledge.  You gotta have technical knowledge, but you can always look things up, contact a specialist, etc.
 
You gotta get into people's minds that you are a professional that cares and understands people.  You gotta speak in common-sense terms and leave out the hype.  Don't have an over-inflated ego.  Put yourself down SO THAT OTHERS CAN BE RIGHT!
 
I guess the problem is that you can be a poor advisor, but a great listener and still do well (income wise) in this industry.  Then you meet an attorney or CPA and they realize that you just make a whole lot of money (that they WISH they made) and you don't have near the technical expertise that their jobs require.

troll's picture
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pratoman wrote:Amen!
I know a lot of FA's WITH a college degree, who are no more qualified to give Financial Advice, than the New York Jets (my team, i can say it) is qualified to go to the Super Bowl.
 
However, seems to me that  4 year college degree should be a minimum requirement to get an interview. I dont think any Branch Manager who would hire or even spend time interviewing someone without a college degree, has respect for the profession - in fact, by doing so, they lose their right to refer to their FA's as "professionals"
 
I'm sure this thread will draw some interesting responses.Oh stop picking on Tractor Guy....you sound like one of them there failed planners....

newnew's picture
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How 'bout this: start over with 1930's regulation. Simplify to this: you cannot call yourself an ADVISOR unless you are a fiduciary. If it is only about "suitability", then you cannot have ADVISOR on your biz card.
 
Firms would have a legal incentive to have the ADVISORS be the best field force, while everyone else would be an RR.
 
Only ADVISORS can do anything discretionary.
 
Then the industry can market this because it is less confusing: if you want PLANNING and not TRADING the hire a fiduciary (ADVISOR).

troll's picture
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newnew wrote:How 'bout this: start over with 1930's regulation. Simplify to this: you cannot call yourself an ADVISOR unless you are a fiduciary. If it is only about "suitability", then you cannot have ADVISOR on your biz card.
 
Firms would have a legal incentive to have the ADVISORS be the best field force, while everyone else would be an RR.
 
Only ADVISORS can do anything discretionary.
 
Then the industry can market this because it is less confusing: if you want PLANNING and not TRADING the hire a fiduciary (ADVISOR).
 
Probably not a bad idea at its core.
The reality is, at least in the wirehouses, that we are encouraged to offer "holistic planning services" and get deep with our clients, become their "family CFO". At the same time, we cant be fiduciaries, blah blah blah. The whole thing is full of conflicts.
 
To stay on topic, I guess there are two camps: those who sell product, and those who sell advice. Those who sell product, are concerned about selling, period. Nothing wrong with that. Those who sell advice, will only succeed (IMHO) if they can market themselves as professionals. I just dont see how you can do that without a college degree. I'm not saying that non college grads are not as smart, I'm just saying that in our world PERCEPTION IS REALITY, whether we like it or not.
Call it elitist if you want, I call it realistic.
No disrespect meant to Tractor Guy, or any other non grads trying to make an honest living giving financial advice to the public.

newnew's picture
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this industry is a mess. half the people in it cannot define the difference b/t "fee-only/fee-based/fee-in-lieu/RIA/AIR/fiduciary/wrap/SMA/MAP/UMA/advisory account" -- how can the industry market itself on a higher ("non-product-peddler") level with such total confusion? needs regulation written in the current century--will NOT regulate itself because the firms want to be your family's CFO but WITHOUT a solid legal threshold of advice.

Roadhard's picture
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I've been in this business 15 years now!  I've seen college grads with MBA's (Which I have one) who couldn't wipe there own butt (according to their mentors).  I was at Jones 14 years and I recrutied 17 people in those years.  Three did not have a degree and they are all doing well in this business.  Fifty percent of the rest have left the business.
 
The tractor salesman must live near farms.  I would bet that he could go out on farms and talk turkey with the farmers and gain their trust.  Let him get under the equipment and turn a wrench with one and he has a client for life.
 
Another thing this tractor salesman has--is life experience.  You can hire a FA with no life experience but college and you get a koolaid drinking know nothing about sales or Financial Advice.
 
It takes years of experience to be a good at this--some learn fast.  As a branch manager which I am--I would ask about your education and that does give you some points.  But I would ask about sales experience, other studies, and recommendations.  Is this person going to rip off his or her clients?  Remember, there are people with MBA's who are ripping off old clients!
 
Borker Boy and Pratoman--did you know that 27% of all officers in the Navy receive direct commissions as officers--most DO NOT have college degrees...99% of those officers serve 20 or more years and are the best officers.  Their sailors will follow them into any battle.
Many college graduates go on to be great officers too---but sailors respect those who come from their ranks...so what does this have to do with being a good financial advisor?  It means clients respect gray hair and life lessons.  I think you will find that the best FA's in our industry came from other walks of life and many of them did not come here with a degree--but got it later.
 
All that degree says is that you have the ability to complete a very long project and can find reference material.
 
By the way, I never graduated from High School--I only went to the 8th grade!  Today I have a MBA and I have taught evening business college classes for several years.  I got a High School GED at age 28.  What I bring to the table is empathy for that mechanic that just got laid off and has to rollover his 401k plan.  Why, because my first 6 years in the Navy I was a mechanic too--oil and grease all over you with the smell of fuel you can never get out of your skin.
 
I think Gaddock was a little tough on you about that elitist crap--but his thoughts were right on.  If you are a good Financial Advisor--that's great.  But don't let that class ring on your finger make you think you are a better FA than the other guy/gal just because they don't have a degree. 
 
Have a great weekend everyone!

troll's picture
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Roadhard - 
First of all, I sent you a PM, on another subject, so check your inbox when you get a moment.
Regarding your post:
I dont disagree with most of what you are saying. Life experience trumps all, most of the time. And as I think I said in my post, i've seen plenty of College Grads, who have been really bad FA's not just from the perspective of production level, but most important, from the perspective of doing right by clients. And as a manager, which I am as well, I look for sales experience, as well as life experience.
 
But I think there are a few different conversations going on within this thread, One is whether or not a degree is a pre-requisite for being a good FA, at one level or another, and to that point, I agree with you that the answer is not necessarily.
 
The other conversation, and what I am referring to, is the fact that we try to present ourselves as professionals, We tell prospects things like "i get paid a fee for my advice, just as your attorney does", or just as a doctor gets paid whether he cures you or not, I get paid for advice, not for what the market does", etc, etc. So we are comparing ourselves to proessionals, which by definition means we claim to BE professionals. And since PERCEPTION IS REALITY, in our industry, I dont see how someone without a college degree would be considered a professional, IN THE EYES OF A PROSPECT OR CLIENT or a center of influence.
 
I am ONLY talking about the perception of our industry by the public. Thats it. Nothing to do with being a good advisor. It may not seem just, but its the reality we deal with every day, as we netowrk with CPA's , Estate and Trust Attorneys, and other centers of influence.
 
JMHO.

Borker Boy's picture
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I'll not argue with a thing you said, Roadhard. I, too, vehemently agree that a degee is NO INDICATION OF A WHETHER A PERSON WILL BE SUCCESSFUL IN THIS INDUSTRY. Unfortunately, your passionate dissertation fell on deaf ears, since that's not even the issue we're discussing.
Thanks, pratoman, for getting us back on topic. You understand that this thread has nothing to do with what those of us in this industry think about each other.
 
 
 

DJRoss's picture
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I have to pipe in here.Regarding whether a college degree should be a requisite for a professional title such as CFP.I have to side with those that agree that this should be the case. I am also one of those that went to school a bit later in life. At 33 I went back to college and began the tough road of student life which in my case included a wife and five kids. This was a tough decision to make, but one that I felt was necessary. I had worked for several different companies in several sectors. I had run several businesses of which some were miserable failures and others were adequate successes.I knew that I had the potential to fly so to speak, but I also was aware that there were holes in my knowledge base that my 15 years of work and life experience at that time had not filled. Initially the transition was harder than I thought it would be. Not because of the course curriculum, but because of how set in my ways I had become regarding the how to's in various aspects of business.I had to eat humble pie on more than one occasion when dealing with the matierals. Learning is organic, and any business school worth their salt do their best to keep abreast of new theories, models, applied concepts, etc. Having gone through that fire, I can say it has made a world of difference. Not replacing my experience, but revealing to me what my experience has taught me, as well as learning new things that would allow me to become a more dynamic resource in business regardless of where I might end up career wise.A degree is a must for one to be considered a professional. I do offer a caveat to that statement. Not all schools are created equal. I think that a degree is only worth the value of the education received combined with the individual abilities of those who received said education. With that in mind, I think that the certification for CFP or any other professional designation should be a combination of factors:

  • College Degree from accredited school, preferably a graduate degree.
  • A minimum of five years work experience, preferably career associated (running your own business with proof of revenues generated during that time, management, executive and the like).
  • Passing the applicable exams.
  • Finally clearing a comprehensive background check.

As much as work experience can teach you many things, an academic environment makes all the difference in the world. I never thought it would have as much an effect on me as it did, but it really did.

Roadhard's picture
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I can see that all of you believe in your position--that I respect!  But in the end there are several things that really matter in this business as a branch manager:
 
1.  Gathering Clients
2.  Taking care of those clients
3.  Profitabilty
4.  Production
5.  Complaints
6.  Compliance
 
Some of you are in large cities and some of us are in rural farming communities.  I really believe that tractor salesman would do well in his environment.  If he is at Edward Jones he would be in a one person office in a rural area (Maybe).  The CPA's and Lawyers he works with might even own a farm operation too.  It is just a different mindset. 
 
I do work with a very large estate attorney and I have received some very hugh referrals from him--not once did he ever ask me what college or school I attended.  He started working with me when I called him in advance of our client's death and recommended we sell losses in his account to keep from losing those losses on his death.  That impressed him--not my degree.
 
Now I understand where all of you are comming from as to having a basic requirement to qualify to work in this business...Why not require no DUI's, a FICO score of 600 or better,
a much harder series 7 or 66 test (one where only 50% or less pass the first time) and they can only take that test twice in any 5 year period to pass.  That would clean up our industry.   Like I said, I respect your position and making the requirement to have a degree to get into the business in the future might help with the cleanup--but I think some of those million dollar producing 30 year vets just might not see it your way.
 
Have a great weekend folks!  Monday's around the bend!
 
 

troll's picture
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I have the utmost respect for anyone who builds a successful practice in our industry, while taking proper care of their clients, whether that person has a degree or not. It is a hard business to build, and anyone who can meet the challenge is focused, disciplined and reasonably intelligent. Nuff said on that!
 
The CFP is a different issue. I agree with the board that a college degree should be a requirement. This points to their effort to market the CFP designation as a professional designation, which is the whole point of this discussion I guess.
 
I also like Roadhards suggestions on making the s7 more difficult, etc.
 
My firm has a managed money platform where the portfolio manager is teh FA. In order to utilize that platform and obtain the Portfolio Manager (internal designation), I had to do self study and take an exam which, unlike some of the other internal designation exams, is really no joke. It was effectively the exam on the Investment Planning module of the CFP exam. It would be a great idea to incorporate something like that into the S7.

xbanker's picture
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To start: I have a masters degree in a non-related field and in NO WAY consider this to be a qualification for this industry. Like anyone involved, my entry has been through mentorship, informal training and licensing. I have learned quite a bit from two individuals, one in his mid-30s who still has courswork to complete and the other has over ten years of experience as well but no degree.
 
I actually find it detrimental to the industry to have people hold out to the public degrees which have no relevance to the field as if this were not the case. MBA and JD holders are the biggest culprits here.  Were your management courses finance related or are you similar to one MBA-client who asked me what a hedge fund is? Are you actually GIVING legal advice? 
 
I am in favor of making a rep's background (including education, financial disclosures and arbitrations) fully available to the public in an easily accessed format. Let the client decide if the credentials warrant business.

Ashland's picture
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xbanker - while I agree that a degree in something other than finance or economics doesn't lead to someone walking in with qualifications, I don't think that's the whole story. What makes people truly qualified is: 1 - How well do you think & what is your process? Advanced schooling gives people a better chance at learning critical thinking skills. 2 - How well do you keep up with current topics? Continuing education & skill refinement I think is critical as our clients needs change quickly as does the world & markets we live in.

Indyone's picture
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xbanker wrote:To start: I have a masters degree in a non-related field and in NO WAY consider this to be a qualification for this industry.
 
Agreed.  Those of you who think that years of academia give you a leg up in this industry are just kidding yourselves. You MAY get a leg up in credibility from SOME prospects, but unless your studies are fairly closely related to what you'll be doing, they are of little value to you in this field.
 
xbanker wrote:I am in favor of making a rep's background (including education, financial disclosures and arbitrations) fully available to the public in an easily accessed format. Let the client decide if the credentials warrant business.
 
Now THERE'S an idea.  The sad thing is, even if that were the case, most clients wouldn't bother.  Maybe we should hand them out with the account opening documentation and tell our clients and prospects that advisors who don't disclose credentials and education, fail to for good reason...
 
Count me among those who believe that the pathetically low entry barriers are the reason for the high failure rate in this industry.  However, if we are going to require more education, let's at least make it relevant.

xbanker's picture
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Just a quick addition: My recommendation that a rep's record of financial disclosures and arbitrations (not education except for licensing) IS available to the public at finra.org by using the broker check function. I have directed clients to this site when asked about my background and recommended that they use it for any registered rep they consider doing business with. Usually the recommendation alone is enough to silence doubt. The industry is just so saturated with credentials (over 100 "designations...") that none of them have any branding or value.

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i think you guys fail to realize that Jones recruits brokers to be successful in their model.  Jones knows a good broker simply needs the ability to put his/her head down and run into the wall a thousand times and not ask questions on the 1001st attempt.  this business is not about measurable intelligence for the most part.  it is getting people to like you, trust you, and in the end, do business with you.  an undergraduate degree, mba, cpa, cfp etc etc is not going to make or break you, prospecting is.  those willing to prospect harder than the guy next door will likely win.  not picking on Jones, but they are not building a wealth management/wealth transfer business where advanced level panning is needed.  from day 1 all that matters is "How hard are you gonna work?"

Morphius's picture
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theironhorse wrote:i think you guys fail to realize that Jones recruits brokers to be successful in their model.  Jones knows a good broker simply needs the ability to put his/her head down and run into the wall a thousand times and not ask questions on the 1001st attempt.  this business is not about measurable intelligence for the most part.  it is getting people to like you, trust you, and in the end, do business with you.  an undergraduate degree, mba, cpa, cfp etc etc is not going to make or break you, prospecting is.  those willing to prospect harder than the guy next door will likely win.  not picking on Jones, but they are not building a wealth management/wealth transfer business where advanced level panning is needed.  from day 1 all that matters is "How hard are you gonna work?"What he said.  Double.

Gaddock's picture
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I think this industry’s image is a result of a lack of product knowledge and forced ethical issues, not a lack of education. Everybody pays lip service to doing the right thing for the client. The manner in which a rookie (not to include those that are lucky enough to come from money) has to survive can put him/her in direct conflict with “do the right thing” With a 90% attrition rate, huge pressure to produce commissions and the amount of time required for prospecting I think the vast majority are clueless out of the gate and must learn along the way. You take a guy a few months intro production that’s been prospecting 12 hours a day and he gets a good lead with $100k that needs fixed income. This guy has a family and a quota that’s based on production, it’s toward the end of the month and he has little or no production this month.
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What’s the first product that pops into his thoughts?  A CD? I think not.
 
I’m thinking if you truly wanted to improve the image and professionalism of this industry some sort of minimum salary that’s above the financial edge of disaster and a required mentoring period of time that’s measured in years not months that requires and holds responsible the mentor for the actions of the rookie. Something like a new physician must go through. That would also reduce the toss as much mud on the wall recruiting practices most firms use to compensate for the nine of ten that ultimately wash out.

  

Morphius's picture
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Gaddock wrote:
I’m thinking if you truly wanted to improve the image and professionalism of this industry some sort of minimum salary that’s above the financial edge of disaster and a required mentoring period of time that’s measured in years not months that requires and holds responsible the mentor for the actions of the rookie. Something like a new physician must go through. That would also reduce the toss as much mud on the wall recruiting practices most firms use to compensate for the nine of ten that ultimately wash out.

  Interesting thoughts, Gad.  I understand your very valid concern with the current state of affairs, but how could there possibly be a minimum salary without moving to, say, Russia?  That sounds both utopian and socialistic.  Not the sort of path I'm interested in.Perhaps some sort of required mentoring period as you suggest would get you pretty close, though, together with improved & more selective recruiting/hiring.  If firms knew they would be on the hook for some salary for a substantial period of time - absent malfeasance, etc. - they might have a financial incentive to actually help more rookies survive.  Let's face it: 90% attrition rates are a pretty clear indication something ain't working now.

Gaddock's picture
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"but how could there possibly be a minimum salary without moving to, say, Russia?"
 
The vast majority of occupations are not 100% commission and come with a decent salary. Not saying I have the anwers either. Just a couple thoughts.

Borker Boy's picture
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I agree with the minimum salary. It doesn't have to be much, but I've seen how paralyzing working on straight commission can be for folks when they've had a few bad months in a row.
 
Many are often doing the work, and will probably eventually be successful, but they panic and quit before they are around long enough to build a book.

Borker Boy's picture
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I just re-read my post, and, duh, who in this business would like a guaranteed salary? Anyway, I think it would make a difference in the attrition rates. However, would our production drop as a result?
 
I've heard of a "draw" being used in brokerage firms. How does that work?

Brian1960's picture
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I have an MBA and feel it means very little. In all my years in the business I have discovered the person with the politician personality does great and knowledge means very little to the clients. Even when we elect the President for the country it has become a popularity contest.
I have a RL that does about 3 times the business as me and had no background in finance but the people love him so it doesn't matter. 

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iceco1d wrote:Brian1960 wrote:I have an MBA and feel it means very little. In all my years in the business I have discovered the person with the politician personality does great and knowledge means very little to the clients. Even when we elect the President for the country it has become a popularity contest.
I have a RL that does about 3 times the business as me and had no background in finance but the people love him so it doesn't matter. 
 
Exactly.  Don't you find that to be wrong?  You don't go to a financial advisor because you need a laugh, or to flirt, or because they are attractive or not...You pick your doctor based on their ability to cure you.  You pick your lawyer based on whether or not they can fix your legal problems.  But the guy coming up with your retirement plan was picked based on his personality?  Seriously...if I (god forbid) ever get cancer, I couldn't care less if my doctor is a prick.  And if I'm every on trial for murder, I don't care if my lawyer has jokes, nor do I care if he sends me a birthday card.Agreed, but that's oversimplifying.  The more pertinent issue is how does a consumer DETERMINE who is the best doctor, lawyer or financial advisor?If it were easy to know this one is really good, and that one is just a snake-oil salesman, there would be no problem.The truth is it is not so easy to know this.  As a result, people are left to make judgments themselves, when often they don't understand enough to even ask the right questions.   That's when they 'go with their gut' and make decisions based on subjective impressions, and why that guy in the next office with a great smile but little upstairs sometimes does much better than the guy with tons of knowledge but no ability to make prospects want to hire him.It ain't right, it ain't pretty, but it is what it is.

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A prospective doctor must do extremely well in college, gain acceptance into medical school, graduate, complete a residency and then pass the boards.
 
A prospective lawyer must do extremely well in college, gain acceptance into law school, graduate and then pass the bar.
 
A prospective financial advisor must...have a pulse, and then study some material at his house and pass a few relatively easy exams.
 
So, if you have medical or legal needs, you can pretty much pick up a phone book and rest assured that the doctor or lawyer you choose will have expertise in their respective fields and can competently assist you with your situation.
 
The same cannot be said for a financial advisor. He could have been selling tractors last week, and this week be experimenting with your financial future!
 
I'm really not concerned about how much those of you feel you've benefited from a college education. The fact is, you did. And regardless of what those on this forum argue, if we want to be seen in the same light as other professionals, we must establish minimum educational requirements before folks are allowed to enter this field.

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The reason behind this is due to the high level of regulation due to culpability that exits regarding Doctors and Lawyers.The key to improving the quality of financial service provided by FA's would be following the same direction as Doctors, Lawyers and CPA's. IMO I feel it is imperative that the CFP designation require as much accountability as a Juris Doctorate (LSAT, BAR EXAM) or CPA which requires a minimum of a BA,BS and passing the UCPA exam.Our Agency requires all new candidates to have a Bachelors Degree (minimum), and steps are being taken to limit those degrees that have a direct relationship with the financial services industry (Business, Finance, Accounting). Yes the nubes start off with getting their insurance exams, 7 and 66, however the road to CFP takes 3 years in the business as well as taking the specified courses and passing the required exams.The older reps at the agency have been given the push to become CFP's are find another job.

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So in short you are advocating increased regulation as a remedy for what you perceive to be a failing of the free market system?  Be careful of what you ask for, as the cure may be much worse than the disease.Reminds me of one of the Gipper's many great quotes:  "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"Government, FINRA, SEC, whoever ...

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No, I am advocating a self regulation to ensure a higher standard of quality. The 1999 consolidation party created the opportunity for companies to show up and pay lip service to fiduciary responsibility. If the industry heavyweights begin to enforce their own standards at these levels, than others will follow until the level of service provided improves.However these standards need to be advertised as well. Instead of focusing on how much better one house is vs other, or how well XYZ fund performs over others, the need is to create customer awareness through recognition activities geared to educate the public in regards to choosing a Financial Advisor.The CPA designation has had over 100 years to meld into consumer consciousness, which allows for an automatic sense of credibility. If someone is a CPA they have a lower branding threshhold due to implied credibility.However if a Primerica/WFG/Ameriprise "wannabe" goes out implying that they are doing exactly what Merryl Lynch/Morgan Stanley/Lehman Bros are, than it creates industry confusion. Most customers have little to know understanding of what transpires beyond the walls of any of these companies. They may fathom the basics of what their financial vehicles do, but they are mostly relying on their FA to provide them the best ethical service possible.Amerprise evangelists want to explain how great they are and they are on the same level in service quality as any of the established names in the industry, but this is simply not true. If you examine the number of actions taken against companies like Primerica,Ameriprise,WFG vs the Stalwarts, it isn't even close. The answer to this is simple. 1. Recruiting Standards2. Education requirements after entry3. Proprietary Product Sales vs Needs Based business platformSure Ameriprise among others may boast the largest number of Reps in the business, but what does that really say about the company? I mean Walmart may have hundreds of thousands of more employees than Neiman Marcus, but what are you really getting at Walmart?The more our business self regulates the better service we can provide for our clients. I never want to have to explain to a client why their former FA was either a crook or even worse an ignorant product pusher (crooks reflect bad on the individual and maybe the firm, ignorant product pushers reflect badly on the entire industry)

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DJRoss wrote:However if a Primerica/WFG/Ameriprise "wannabe" goes out implying that they are doing exactly what Merryl Lynch/Morgan Stanley/Lehman Bros are, than it creates industry confusion. Most customers have little to know understanding of what transpires beyond the walls of any of these companies. They may fathom the basics of what their financial vehicles do, but they are mostly relying on their FA to provide them the best ethical service possible.Amerprise evangelists want to explain how great they are and they are on the same level in service quality as any of the established names in the industry, but this is simply not true. If you examine the number of actions taken against companies like Primerica,Ameriprise,WFG vs the Stalwarts, it isn't even close. The answer to this is simple. 1. Recruiting Standards2. Education requirements after entry3. Proprietary Product Sales vs Needs Based business platformSure Ameriprise among others may boast the largest number of Reps in the business, but what does that really say about the company? I mean Walmart may have hundreds of thousands of more employees than Neiman Marcus, but what are you really getting at Walmart?
Exactly- The problem I have with the firms you cite is that even if the rep has good intentions(and frankly I think often they don't) I am concerned that management's one and only concern is making a profit, regardless of the impact on clients.  As well, even when their reps have good intentions, they don't give them the tools(product, software, education) to be able to do the right thing for many folks...

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I don't agree that because someone attended college and got a degree in law and passed a bar exam that they are a competent attorney. I have found just the opposite. Most attorneys are incompetent and are strugling so hard to make a living that they will take any case where they can make a dollar and couldn't care less about the client.
 
I also realize that many advisors fall into the same pit.

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Brian1960 wrote:I don't agree that because someone attended college and got a degree in law and passed a bar exam that they are a competent attorney. I have found just the opposite. Most attorneys are incompetent and are strugling so hard to make a living that they will take any case where they can make a dollar and couldn't care less about the client.
 
I also realize that many advisors fall into the same pit. That is why there are levels of credibility built into which school you went to, which firm you interned at and which firm hired you.I mean you can be one of the top students at Texas Southern, Whittier or Western New England, and still not get a summer position, while the number of Harvard only law firms in Boston are well represented.It may sound harsh, but reality is that you will more likely find statistically more dynamic professionals who are better prepared to serve their clients at a higher level amongst those who attended a top ranked school and who have been groomed at the best companies, firms, medical facilities, etc. There is a stark reason for their well deserved reputation.We can all bring up examples of this rep and that rep that 1. do not have a college education, and are one of the "best" at your office, and 2. College grad who couldn't hack it and was clueless on everything about the business.We need to remember however, that the examples we bring out to illustrate the exception to the rule are often skewed by our own limitations or lack thereof.What is interesting regarding the college is not necessary crowd, is that the majority of the argument seems to be geared toward just how much money or how well these reps build a book. Of course a reps book size or yearly commissions is not necessarily a reflection on how well they serve their clientèle. It can be an indicator of their ability to serve, but not without clarity as we have seen in the past many savvy individuals use their salesmanship to padding their wallets vs. doing what is right.

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I've lurked in this thread for quiet some time now, mainly because I have more in common with the tractor salesman than the intellecutally elite in here. It seems to me that the majority that are in favor of these absolutey exclusionary requirements fundementally fear a person like myself. You fear that someone of my background will poison the marketplace by committing a legal or ethical faux pas that will tarnish your reputations. I know that you are all well intention, but nothing any of us blue collar Registered Reps could do, could tarnish your reputaion. LOL What most seem to loose sight of is that a Registered Rep like myself isn't going after your cleint. I'm more than likely going after a new market that hasn't even been explored yet. So our paths shall not cross, so relax.
Just for the record, while a degree is an achievement, it's not the only education out there.

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OneCleverCookie wrote:I've lurked in this thread for quiet some time now, mainly because I have more in common with the tractor salesman than the intellecutally elite in here. It seems to me that the majority that are in favor of these absolutey exclusionary requirements fundementally fear a person like myself. You fear that someone of my background will poison the marketplace by committing a legal or ethical faux pas that will tarnish your reputations. I know that you are all well intention, but nothing any of us blue collar Registered Reps could do, could tarnish your reputaion. LOL What most seem to loose sight of is that a Registered Rep like myself isn't going after your cleint. I'm more than likely going after a new market that hasn't even been explored yet. So our paths shall not cross, so relax.
Just for the record, while a degree is an achievement, it's not the only education out there.Before I reply just wanted to give you kudos on your avatar. That looks sharp.Now, to respond to your statement I can assure you that the market place has already been poisoned by years of one scandal after the next. Yet, here we are still able to put food on the table. So I would say that it is not an issue of fearing "blue collar contamination." This is a silly argument.Many of us are concerned however that the industry allows individuals to exercise great stewardship with only a minimum requisite standard. The potential for violating that stewardship through intentional fraud, selfish motives and worst of all ignorance.Fraud and selfish motives can be dealt with and are through regulatory agencies both local and federal. However ignorance is something that can only be handled through an insistence of standards. A collegiate education should be the base for such standards, not the bar, but the base. The bar deals with what is garnered in house through further education as a candidate (like lawyers, doctors and other professionals) gains experience.Auntie Mae is 50 years old and currently has a 3 Million Dollar 20 year Term Life policy. She has had it since she was 35. She has 1 Million in a 401K that is about to rollover since Auntie Mae doesn't want to work anymore. She recently inherited her brother's estate as being his only surviving relative, and that includes a home valued at 1.5 Million dollars with 80% equity, 100K in T-bills, 500K in IBM shares, Roth IRA holding 83K in growth company shares. Auntie Mae also has a spot market trading account where she currently has sold 5K in the USD/EUR contract.Autie Mae wants to eliminate as much tax burden as possible, she wants to begin trading S&P Index Futures but wants to buffer the risk. She doesn't want the home and would like to live off of 2000 a month. This needs to happen by the time she turns 56 because she promised her best friend that they will spend that entire year traveling around the globe visiting over 50 countries. Auntie Mae currently earns 5000K per month.Bob is the major share holder in a small company that employs 200. He is about ready to retire and is looking for an exit strategy. The other partners are aware of this and are on board for having the entire company sold. Bob will not retire for another 3 years. Using a revenue based valuation formula with the companies PE value at 7, the company could fetch a 56 Million price tag if it were on the block today. Certain things have been ignored or not prioritized in this company, and they are having a difficult time in keeping staff. Their rotation is 12 employees per month in and out. They are also a bit worried since one of the major partners has not been himself lately and he is a key cog that makes everything work.Joey and Carol have just finished college. Joey just passed his exams and is now interning at the local hospital. He is looking to go into reconstructive surgery. They have a baby on the way, and Carol wants to stay home. They both know that it will be tight, but Carol has gotten a part time gig writing articles for the local newspaper and Joey's parents were sentient enough to set up an education trust that helps pay the bills while going to school. In spite of all this, the cost of rent in New York is high and Carol's insistence on consuming only organically grown foods means they will have very little extra money to work with until Joey can get contracted.John is looking for work during the winter. He is a cement layer and is great at his job. He is well known throughout the local economy and whenever contractors need a job done, he is usually the first one that gets called. His wife Nancy is a stay at home. They have credit issues because his wife is a spendaholic and they have barely avoided personal bankruptcy twice. Nancy has gone to counciling and things have been stable the past ten months, and all bills have been paid on time. Nancy has actually begun to put away a small amount ($20) every month in savings. It is winter time and John is looking for something to bring in some money during the slow season. Which of these potential clients would not need the skills of a highly qualified professional. To assume that you are not going after my client or vice versa is ludicrous. Regardless of which market you are exploring, assuming that some clients don't need a highly qualified professional and others do is like saying a homeless guy who needs emergency surgery should get the guy who took some online courses through some Caribbean based medical school paper mill to cut into him vs. The guy who got a full ride scholarship at UCLA isn't interested nor can he be bothered by the needs of the indigent.  I don't care who you are or what your financial status is. Everyone who takes a leap of faith and puts their millions or their widows mite into the hands of a FA should get the services of a highly qualified skilled professional. No bones about that.

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(I don't care who you are or what your financial status is. Everyone who takes a leap of faith and puts their millions or their widows mite into the hands of a FA should get the services of a highly qualified skilled professional. No bones about that.) "quote"
I agree completely but it seems to me that in this business the term "highly qualified skilled professional" is the guy that wins the popularity contest and uses his personality to gain trust and then uses that trust to create wealth for himself and over a period of times convince themselves they are doing a great job for their clients. Greed has a way of doing that.

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Sounds just like Suze!

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  Our office has been mentoring or secretary for five years. She gradually learns the business by managing smaller accounts <$100,000. In approximately ten years she will be able to take over for one of us when retirement comes.
 
Granted we are Indy so her production does not matter. But you can teach book smarts but you cannot teach morals and ethics.
Two of the advisors in our office came out of ML and decided that ML way was no way to teach a new rep it is not fair to the rep or the clients.        

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Unfortunately, the backside of this equation is the prevalence of shark mentality. Again the focus instead of on the welfare of the client is on the greed exhibited by the FA. As you state, morals and ethics come from within. They can however be stimulated through proper education.The irony is that the most ethical and most moral in this business tend to also be the ones that are the must successful in the long run. Sure you find ego maniacal types that fleece better than any used car salesmen ever could, but how long do they last? They either burn out due to other aspects of their life are in line with this behavior (drug/alcohol abuse), or they get hauled away in handcuffs. The most common denominator is a walled in washed out effect that eventually occurs. Their abrasive fleece now, worry about it later attitude eventually creates a drought of sustainable business. Sure they may be sitting on a nice book by then, but even this erodes as new reps come in and begin picking at their cadaverous account portfolio. Guys like this are good for maybe 5 years before they take a walk. They are also often struggling with their own finances as they reflect the uber stereotypes of the Nouveau Riche. Very few of the Charismatic Crocodiles are still in the business after ten years. Educating at the collegiate level business ethics and illustrating case by case how those that are really to be admired amongst the financial elite continue to outproduce, outearn their counterparts in their chosen fields due to just that "their impeccable level of ethics and morals".You are right however. ML and the other established firms while possessing without a doubt highly skilled advisers, are suffering from what I call the PT Virus. PT stands for publicly traded. Any company that is listed on the exchanges becomes a slave to analyst projections, and short order window dressing to keep the restless natives (major shareholders) happy. Most Wall Street Firms are publicly traded and therefore during a financial crunch, can easily encourage a little corner cutting in regards to handling their recruits as well as their clients.That is why I love to help my clients with the appropriate risk tolerance get into privately held companies (usually in the form of investment capital). That however is another story for another time.Throwing the baby out with the bathwater is not an ideal way to handle the paradox. I think part of the standards process could be aided by a parallel to the Hippocratic oath. One that deals with ethically dealing with anyone who enlists our help.

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I realize that what I find interesting may be very different from what another may think intriguing, but for my two cents worth I'd say we've beat this proverbial 'minimum requirements' horse to a pulp.  Good points made all around, even on the second and third re-statements.  Reminds me of the old joke where the self-obsessed girl - out on a first date - finally finishes a long, detailed story of her life history, and then says to her semi-comatose date, "But enough of me talking about myself.  Why don't YOU talk about me for a while?"Or maybe I just drank too much eggnog this year ... 

troll's picture
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Morphius, you said what I (and pro bably a lot of others) was thinking. We all made our points. Time to put this thread to rest.

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