From the August 2014 issue of Research Magazine • Subscribe!

How a Rookie Advisor Can Make It, Part 1

Here's what it takes to survive your first three years in the advisory business

© John Fedele/Blend Images/Corbis © John Fedele/Blend Images/Corbis

This article is the first in a two-part series. Both together will lay out what it takes to survive your first three years. It is not an idle boast when I tell you that I have coached more rookies than anyone in this business. I do know what it takes.

These articles are for you, a rookie. It's also for your manager and possibly for senior team members, but mostly for you.

Despite the enormous resources your national or regional firms deploy, survival in this business at this time is almost entirely up to you.

Surviving the first three years is tougher than it was five years ago, 10 years ago, 20 years ago. It's never been easy. Given the asset goals you must achieve, you cannot miss a step.

Some—a few—obviously make it. Sadly, too many do not. Some who could survive don't make it probably because they underestimated the sheer amount of work necessary to hit your firm's asset goal. By the time they figure it out, it's too late. For you, this is a wake-up call.

Yes, I know you may be on a team. That helps IF you get real help from the other team members. But if “team” means, “I can split my good prospects with senior team members,” you are better off on your own. Some of those senior team members hope you fail so they can get your accounts. Be careful.

Let's take a close look at what it takes to survive those first three years. As you read, ask yourself, “Do I have what it takes?”

Hard Work

Make no mistake. If anyone told you this is a 9–5 job, they lied. Not only are the hours brutal, you have to stay focused, intense and on the phone. Plan on working nights and weekends.

Initially, you don't have any clients. Every waking moment is prospecting and selling.

The first several weeks back from training you call all day, every day. Sooner or later, you will pop your first appointment. Now you are devoting a tiny amount of time to selling. At night it's list development, sending info to new leads and later, as you develop clients, it's being your own service assistant.

You get a break weekends, right? Forget it. Plan on spending two hours Saturday morning cold calling. Spend the rest of the weekend studying for your CFP.

A decent week is 80 hours.

Social life with your friends or spouse? Family life? Forget it. The brutal hard work is the price you pay for the possibility of a million-dollar annual income.

Brains help. Persuasive skills help. An engaging personality is important. But none of these is more important than the grinding, oppressive, energy-depleting hard work. To make it worse, day in day out you are upbeat, positive, energetic.

Sounds fun, right? Can't or won't do it? Quit now.

New Accounts

New account opening is 100% of what you do initially. By the end of year 3, it's probably 50%. For years 3 and 4, it should remain at least 50%.

Obviously, prospecting is the most important skill. By using managers, you get help on investing. No one is going to prospect for you. To clarify: By prospecting, I mean cold calling. Unless you are blessed with extraordinary connections who cannot wait for you to become an FA so you can manage their trust funds, you can forget about networking as anything other than a distraction, at least for your first year or two.

Yes, do some networking. But figure out how to network with rich people, not poor people such as yourself. Networking is not going to keep the wolf from the door, at least not in year 1 or year 2. Effective cold calling will.

It's not just hours on the phone that count. It's effective hours on the phone. This means only one thing: The numbers work. Within a few weeks of starting, you MUST average around three leads/hour cold calling. If not, you are doing something wrong and unless you are an extraordinary sales person, there are not enough hours in the day.

In this article, I am not going further into cold calling. I have collected all of the cold calling articles I have written since 2000. They are on my “Cold Calling Resource Page” here: www.billgood.com/coldcalling. There you will also find my “Cold Call Calculator” and other resources.

Plug in your stats. You might discover, to your dismay, that your stats require 97 hours/week just prospecting and selling. You cannot get there from here. Total prospecting and selling hours have to be less than 40, preferably less than 30. As you build your call back file, they should fall below 20 by year 3.

Appointment Setting

The first objective for account opening is appointments.

Let's just say your firm says, “Bring in $5 million in year 1 and we will let you stay.”

You are averaging $150,000 per new client. It takes three first appointments to get a close. Guess what, you need 34 new clients. That's 102 first appointments. That's two a week assuming you get two a week out of the gate. You know that's not realistic. You might get 10 appointments in Q1, and one close for $30,000 (and that's your brother-in-law.) By the time you begin to hit your stride by month 6, you need four solid first appointments a week.

Too many rookies just talk and talk and talk and talk. You build up a huge list of people who will talk. Soon the list is so big you quit prospecting.

Here's the rule: When the prospect asks a question or two, ask for the appointment. You will lose some, maybe half. But you will have appointments, a foot in the door, your snout under the tent.

I can remember my first appointment. I was terrified, but somehow I knew I had to ask a lot of questions. How else could I know if my prospect needed, wanted and could afford my product?

I created a questionnaire. It was at least 50 questions. I mercilessly plowed that first prospect through it. Sold it. Immediately after the appointment, I went to a restaurant, got a cup of coffee and reviewed the questionnaire plus everything else that went right or wrong. For months, same drill. Lots of coffee. Kept working on questionnaire. Still lots of questions but with teeth. With that questionnaire, I could find the pain. And make the sale more often than not.

Yes, you can start with a questionnaire your firm has produced. But which questions work? The only way I know to find out is ask too many, ask them all, throw out the ones that don't bite, add new ones, weed down, rewrite, weed down, hone, polish. After 100 or so presentations, you will see your closing rate ratchet up just on the strength of your profiling skills.

While there are other things that should happen on the first appointment, asking questions will get you to the second appointment.

Here's my “homework close.”

“Beulah, thank you for all this information. Obviously, I have a lot of homework to prepare some recommendations for you. I can have that done by Wednesday. (Checking calendar.) Why don't we reconvene, say, at 2 p.m. Does that work for you?”

We’ll continue next month with “What It Takes.” Meantime, get to work, OK?

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