The Wall Street Journal
Tuesday, September 20, 2005

Financial Advisor Careers
Jobs Are Aplenty for Those Who Can Help People Manage Their Money
By Julie Bennett

The economic recovery has turned helping people manage their finances into a popular, lucrative and surprisingly satisfying career.

Ever since the Financial Services Modernization Act of 1999 – which allows brokerage firms, banks and insurance companies to sell many of the same financial products – the role of financial advisers has broadened. Firms like Merrill Lynch and American Express dropped the term stockbroker altogether. Because their former brokers now do more than just sell stocks, such as helping clients with estate and retirement planning, they now call them financial advisers. A second type of financial helper, the financial planner who works alone or with a small firm, is also called a financial adviser.

The Federal Bureau of Labor Statistics (BLS) reports that increased investment by businesses and individuals will drive “faster-than-average employment growth” for independent personal financial advisers through 2012. In addition, many of the nation’s brokerage houses are also recruiting financial advisers to staff branch offices right down the street or in your local shopping mall.

This makes it difficult to get a handle on just how many financial advisers are working today, says Grace Toto, vice president and director of statistics for the Securities Industry Association (SIA) in New York. To sell stocks or options, you must hold the Series 7 License, which you can only obtain through a brokerage firm sanctioned by the National Association of Securities Dealers. In its latest tally, at the end of the first quarter of 2005, the NASD counted 190,468 income-producing personnel working in 5,191 brokerage firms.

Personal financial advisers are not required to have Series 7 Licenses, or any certification at all. According to the BLS, in 2002 the country had 119,200 such individuals. But neither census counts the financial advisers now working in banks and insurance companies, helping customers of those institutions plan their financial futures.

By any count, the overall number of financial advisers is increasing. Steve Testerman, president of the niche job board, BrokerHunter.com in Atlanta, says he has 2,100 job postings on his site for financial advisers who work for brokerage firms. “Fifteen years ago,” Mr. Testerman says, “to sell stocks, you needed a mahogany office in an ivory tower, equipped with a big Quotron machine. Today, the personal computer, and the Internet allow offices to be anywhere, and firms are opening up branches in every neighborhood.” According to the NASD, between 2001 and 2004, the number of branch offices jumped 15% to 103,307 from 88,168.

San Francisco-based Charles Schwab Corp. is “very aggressively recruiting” to fill slots in its 290 branch offices, says Mike Brown, the firm’s vice president of recruiting. Schwab, which now calls its sales people financial consultants, added 179 staffers through mid-August, and new hires should total 275 by year-end, Mr. Brown says. To snag one of those jobs, however, you must already be an NASD-registered broker, with several years experience. “We’d like you to carry over a book of business, but we have more clients who need coverage than we have people,” Mr. Brown says.

Staying Competitive

To stay competitive, Schwab offers a base salary of $55,000 to $90,000, plus commissions, and expects all its financial consultants to make at least $150,000 a year. The top 10% earn $250,000 to $300,000, says Carla Foster, vice president of staffing and diversity. If that sounds attractive, you can get your foot in the door by applying for a customer service or other entry-level job at one of their branches. Once you prove you have the right combination of communication and math skills, Schwab will sponsor you through the course work and tests required for your Series 7 license.

Phil Sieg, managing head of strategic leadership and business development for Merrill Lynch, says the firm plans to add 650 people this year to its roster of 14,420 financial advisers in 600 U.S. offices. While salespeople lured from other firms will fill most positions, Mr. Sieg says Merrill Lynch is also seeking accountants, attorneys, financial planners and other professionals interested in switching careers. All trainee hiring takes place in Merrill Lynch’s branch offices and you must pass an industry aptitude and basic economic test before you’ll even be interviewed.

“We have no age targets,” says Sieg, “and people come in after spending 20, 30, 40 years doing something else.” Newcomers must spend several months studying for their Series 7 licenses and learning about Merrill Lynch products before developing their own clients.

Latecomers are at a disadvantage in economic downturns, however, because firms tend to lay off their lowest producers. Cash-strapped Morgan Stanley, for example, recently announced a formula for reducing its staff of 10,438 salespeople (brokers) at 10% and those bringing in the least income will go first.

Job insecurity is only one reason why financial advisers are leaving brokerage firms. Another has to do with the Modernization Act of 1999. Since then, brokerage firms have been allowed to create their own investment products, including mutual funds. American Express Financial Advisors (which changes its name to Ameriprise this month), for example, offers four proprietary AX mutual funds. Because brokerage firms earn higher fees when they sell clients their own products, they urge their sales force to try to sell them first.

More than 500,000 former AX clients, in fact, are seeking to file a class action lawsuit, claiming that financial advisers there cared more about AX profits than their clients’ financial futures.

Faron Daugs says he opened Harrison Wallace Financial Group Ltd. in Libertyville, Ill., five years ago, because “I got tired of having to push my employer’s proprietary products.”

You can open a financial adviser office yourself, without any training or credentials, but Mr. Daugs says most people today take courses and get board-certified first. Applications are up at the College for Financial Planning in Denver, says Holly Skarda, senior director of business development and marketing. That college is one of 300 institutions that provide online and on the ground courses in subjects such as insurance, retirement, investments, tax and estate planning and award continuing education certificates in financial planning. The course work takes most people six months to two years to complete, she says.

Experience is Required

Getting certified takes longer, because the major accreditation organizations – the Certified Financial Planner (CFP) Board of Standards in Denver, the National Association of Personal Financial Advisors (NAPFA) in Arlington Heights, Ill. And the American College in Bryn Mawr, Pa., administrator of the Chartered Financial Consultant (ChFC) designation – require you to have three years of experience in the field before you can take their exams. To gain that experience, you can work as an intern or assistant in the office of an established financial adviser or open your own business and hope to attract clients anyway.

Besides setting industry standards, the accreditation agencies act as matchmakers, referring people looking for financial advisers to members in their communities. As of August, the CFP Board had certified 48,754 people. Over 40,000 were ChFCs and NAPFA had 943 members.

Independent financial advisers charge for their services by the hour ($100 to $300 is common); by the plan ($700 to $5,000); or by an annual percentage of the assets they manage. Some also earn commissions from products they sell their customers. The College for Financial Planning’s “2005 Survey of Trends in the Financial Planning Industry” reports that the 2005 median gross income for the financial advisers they surveyed was $277,800 and net income was $153,000.

While 82% of independent financial advisers are between the ages of 30 and 60, a small number continue working into their 70s. The survey does not list what careers the respondents left to become financial advisers, but does report that 38% of them have graduate degrees. Most important, the Survey says that 99% of those responding were satisfied or very satisfied with their profession.

Merrill Lynch’s Mr. Sieg says: “Being a financial adviser today is a much better job than being a broker was 20 years ago. Today we’re taking a holistic look at a client’s financial future an we hav access to so many more investment tools to help them.”

Says Mr. Daugs of Harrison Wallace: “I want my clients to think of me as their first resource whenever they are faced with a financial decision. If one of them calls from a showroom and asks, ‘Should I buy or lease this car?’ it makes me feel good.”

BrokerHunter Facts: BrokerHunter.com is an employment website for jobs within the Securities Industry segment of the Financial Services Industry.

In summary, this is the place for you to find employment, jobs, careers, opportunities, new jobs, permanent jobs, job placement information or a new position within the Securities Industry segment of the Financial Services Industry.

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