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The Key to Making it in Wealth Management: Who’s Your Daddy?

Analytical skills, business savvy and a great work ethic: these are not the things that will get a job in wealth management as a twenty-something. Rather, you need to know a host of rich people – family and friends, mostly – who are willing to do you a personal favor. Succeeding as an entry-level financial advisor takes an impressive personal network along with an understanding that, for the first two to five years on the job, you’re nothing but a salesperson.

Yin and Yang

Two people in their mid-twenties, each who asked to remain nameless, took a job as a financial adviser a few years back, right around the time of the financial crisis. One at Wachovia Securities, now Wells Fargo Advisors, and the other at Merrill Lynch. They were both college-educated, but the latter had the network: family and friends of family who had money. The former didn’t have a relationship with any high-net-worth families.

One made warm calls, the other cold. One is still in the business while the other is in a whole new line of work. You can guess which one is which.

“In the interview, nearly all the questions are about who your parents are, who their friends are,” said the former Merrill Lynch adviser, who has since moved on to another firm. “Money is a funny thing. Understandably people want to know the person they hired is trustworthy.” In five years on the job, he’s never made a cold call.

“The advice used to be that family and friends are the last people you want to do business when you’re new and prone to make mistakes,” said Paul Werlin, president of Human Capital Resources, a Florida-based financial services recruiting firm. “Now, it’s part of the overall strategy.”

The Wachovia broker’s work-life was quite a bit different. He paid for a list of names and numbers from a service and began pounding out cold calls, offering people on the other end of the line a free financial review in an effort to get in front of them. “Most of the time I’d get my name out and then hear a click,” he said. His greatest opponent was a Griffin system, preventing him from contacting those on the do-not-call list.

“Everyone who has succeeded in the business will tell you that they made it by cold-calling,” he said. “It’s a crock.” His former boss told him the same thing: he made cold call 10 hours a day until he made it. “I later found out his top 10 clients were family,” he said.

The attrition rate for entry-level financial advisers is lofty; experts speculate that only 10% to 20% stick. The former Merrill Lynch adviser came in with a class of 30 recruits. Before he left three years later, he was the only one remaining.

“From my view, I represent the last generation of kids who are hired blind,” said the former Wachovia adviser. “With no network of rich friends, no business-to-business background.”

In fact, Werlin said that some banks are now targeting older entry-level professionals, people who worked in completely different industries but who are looking to make a move into finance. “There are a large number of people in their 30s or 40s making career changes. They have better, more trusting networks.”

How to Make It In Wealth Management

Even with a strong network, growing into a successful financial adviser is no walk in the park, hence the propensity for wirehouses to poach experienced talent from rival firms by offering huge signing bonuses.

“Even family members can be tough,” said the former Merrill adviser. “You naturally think they’ll hand it to you. Really, you need to get a little bit lucky.”

His best piece of advice to newbies: know that it’s a 100% sales job. “If you want to find out who’s not going to make it, walk the bullpen and look for the guys sitting at their desk analyzing charts or looking for the next great stock pick” he said. “It’s a complete waste of time. You should spend every minute growing your book.”

Having a lot of hobbies is helpful to networking and growing your business. Golf, horseback riding, mountain biking and squash are great ways to meet people, he said. Getting on boards of clubs and non-profits is another great networking tool. One woman he works with found clients through a book club.

“Ask everyone what they do for a living, then they’ll ask you back,” he said.

If you found work at a large bank, network within the company, Werlin said. Retail operations can offer great leads. “Tellers see dividend checks and have access to lists of expiring CDs,” he said. “It’s a great way to talk to bank customers about investment options.”

But perhaps the best way to make it as an entry-level financial adviser: joining a team. Goldman Sachs brings new private wealth management hires under the wing of experienced advisers, for example. But those jobs are much harder to get.

AUTHORBeecher Tuttle US Editor
  • ex
    12 June 2014

    As an ex wirehouse broker I have to agree with all of the comments here. One thing that isn't mentioned is the fact that at these major wirehouses, the new FA doesn't even manage the money! They have it set up so that your only job is to gather assets. The client fills out a risk profile and the wirehouse plugs this into an algo and pops out a "investment plan". It isn't until much later in your career after acquiring various certifications that you are "allowed" to manage the funds on your own.

  • it
    it's all true
    16 May 2014

    what they say is true. The ex-private banker might sound jaded, but he is not, he is just telling you like it is. Unfortunately, the idots running the financial industry are just simply greedy. I would say it's part of the reason for the growing income divide. First, the investment advisor shops only want large accounts but before the clients can generate a large account the insurance brokers run after everyone that has a baby and ruins the first opportunity to treat the human like a valuable income earner. The insurance man sells whole life if he is lucky or term to satisify the need. Then time passes and the client has built up some money but the insurance experience sucked so they don't want to repeat that and they end up just spending the money instead of seeking out qualified help. As the ex-private banker said the big income earners will find someone to help with the tax burden. Otherwise, middle class (60k-400k) earners find it impossible to find qualified help in the financial world because the idiots that run the investment houses hire young inexperienced people with "a network" or they hire career changers "with a network". Either way the income earner can't find a qualified advisor because they are mostly forced to make the best of a bad decision by going with their young unexperienced advisor or the career changing peer/friend. Again, it's mostly the fault of the Investment Management corporations that want to cram financial services down the throats of solution is if we could hold off on force feeding everyone then we could create demand for financial services whereas the income earner would actually go out of their way to find a (qualified) financial advior. Much like we all go find a qualified hair cutter or CPA. And the industry could stop hiring football quaterbacks and cheerleaders to do the most important job in the world!

  • Ju
    Just Another Genius
    26 August 2013

    Many of the comments I read above are true and that is a very sad reality. Have been put through the puppy mill myself I agree based on personal experience. I am an older man in my mid-50s with years of sales experience and contacts. Working as a financial advisor and then as an Insurance agent has caused me to lose friends and tested my relationship with family members.
    It is a very difficult industry and trying to make it based on cold calls is bascially impossible. Even with a warm network those contacts soon run out as the corporate quotas continue to rise. That is when the position becomes more and more stressful. In the end the company let's you go , they keep the majority of your clientele and you become lost in the unemployment twilight zone. When you apply to other industry jobs hiring managers put you on the defensive asking you to explain why you left or was let go. This makes finding another job rather difficult. If I could do it all over again I never would have entered in to this revolving door type job environment. Recently a friend of mine that works at a major wirehouse told me that a young financial advisor (28 yrs.old) had a heart attack and died due to the continuous stress of the job.

  • Ex
    Ex-Private Banker
    30 May 2013

    @ Lost in Transation

    They will promise to take you to paradise but you will end up in HELL.

    I respect your decision to attend the event, it is difficult to resist these 'opportunities' when you are looking for a position in this awful job market. Save my comments and read them again in a few years' time if you end up working in this sector.

    Take care.

  • Lo
    Lost In Transition
    30 May 2013

    @ Ex-Private Banker

    Thanks a lot for your input. I will go ahead and attend the event anyway since it's not gonna cost me anything. See what they have to say and then make a sound/reasonable decision.

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