Financial Advisors - The Primer Part 5

Part 4 is Here


A quick word about titles. It is no secret that some companies make all of their marketing salespeople "Vice Presidents" even though no employees report to them and they have nothing to do with corporate strategy.  The reason is that in the business world some people won't meet with anyone whose title is "littler" than theirs.  Thus, a Senior Director won't meet with a Manager or whatever.  So, by making the guy you want having the meetings into a Vice President, you don't have to worry about that problem. 

In the world of finance, Vice President means that the advisor produces more than a certain amount of revenue for the company, not that they are a high ranking company executive.

The most basic title is Registered Representative.  This is actually the technically and legally correct title of anyone who works for (represents) a Broker/Dealer in the sale of registered securities.  The title seems pretty vague to the general public, so the next step is Financial Representative which still maintains the keyword "representative".

Then, comes the title Financial Advisor.  You cannot use the word "Advisor" in your title unless you have passed either the Series 65 or Series 66 exams. 

Despite what it looks like, it is pretty much the same person doing the same job regardless of what their title is. 

Tehcnically, the title Financial Planner should refer to someone who engages primarily in financial planning.  That is, the main product is the financial plan, and the sub-product is the investments.  You could take the financial plan and implement it yourself or with another professional.   However, it is very common for Financial Planners to also be licensed to buy and sell securities so you can also implement the financial plan with them.  (This is what I do.  I also know from experience that if you walk out with the plan without implementing it there is a 99% chance it will never get done.)

Firms and Companies

This won't be about which companies or firms are the best.  Why?  Because, to paraphrase Marissa Tomei in My Cousin Vinny, that's a <bad> question.

You see, while each company does have its own resources and specialties and so on, that really doesn't matter.  You will be working with a person.  That person could be the greatest advisor, or the worst, no matter which company they work for.  Yes, the people at Merrill Lynch might have a better system for one thing than the folks over at Morgan Stanley, but Morgan Stanley probably has something else that isbetter than Merrill Lynch.  What you need is a person that you can trust and who has all the knowledge and experience necessary to make sure the choices you make are the right ones for you. It has nothing to do with the logo on the door.

Unlike other industries where there is sometimes a clear hierarchy of companies, great financial professionals work for giant Wall Street firms, tiny small town firms, and everything in between.  In fact, those small firms are sometimes filled with the people who were the top dogs at the big firms.  They were so good and their clients liked them so much that they could leave the giant brand name and start their own firm and make all the rules and be their own boss and take their clients with them.  So, don't assume that where someone works tells you how good they are.


A trend in the financial planning industry is for planners and advisors to work in teams.  This is a good thing if you have a collection of good advisors who can cover for each other.  This isn't such a good thing if a senior advisor has a "team" of junior advisors that are really there to handle all the small fish.  To avoid this scenario, make sure you understand who you will be working with.  Ask the question directly, "So, will my next meeting be with you?"  "When I come in for my annual review will I be meeting with you?"  If you don't get the answer you like, it is better to know now rather than later.


I do feel compelled to mention something about one firm.  Primerica is a financial services company owned by Citigroup.  It is also a multi-level marketing company.  If you aren't familiar with the concept, it is similar to Amway.

You meet with a financial advisor.  That person helps with your finances and sells you whatever you need (and collects the commission on your investments).  Then, by the way, if you are interested, you can go to work for Primerica as financial advisor too!  When you get clients you do their finances and you sell them whatever they need.  The person who hired you gets a cut of the money you generate.  Then if your clients become associates then you get a cut of their money (and the person who hired you gets a cut of your money, so he gets a cut of their money too) and so on and so on.

This model creates two red flags.  First, is that even more so than other firms, anyone regardless of education, knowledge, or ability is deemed "an advisor".  Go here: Primerica's Website and look half way down the page to see "No business experience or training needed."  Also notice where it says that you can do this whole "advisor thing" part-time, presumably while you work your "real" job.  You should probably wonder how committed to your finances a person will be when they are part-time.  Also, 99% of the value of a financial advisor is experience.  It takes twice as long to build up that experience if you are working half the time.

The second flag, is that this model also creates a lot of people who just "try out" being an advisor, and then decide for whatever reason (usually because they can't get enough clients fast enough) that it isn't for them and the leave the company.  This creates orphan clients.  The orphans are then assigned to someone else who may also leave the company and so on and so on.  So, the trusted advisor that you knew and interviewed and checked out so carefully is no longer your advisor and the person who is now your advisor is the fifth one you've had in three years and you have no idea who he or she is.  See the problem?  Check and see how long your advisor has been around.   It might just be two months, and they might already have one foot out the door.

Financial Advisors Primer Part 6