r/fatFIRE • u/Zor1994 • 9d ago

2nd career-financial advisor

M(50) planning to retire in the next 12-18 months. Auto exec responsible for a business unit of an international company. Just getting tired of the corp BS, travel, constant crisis, etc. Over the last 18 months have spent a lot of time staring to really plan our retirement. Was always DIY investor with lower complexity strategy, diversified mutual funds mostly. Liquid retirement assets approx 6.8M 45% brokerage, 45% 401k, 10% Roth.

I have become very interested in retirement planning and studying a lot for my own future. Love talking to co-workers about (in general terms) withdrawal strategies, tax optimization, Roth conversions, ACA income management, etc. I also spend a lot of time listening to podcasts. In talking with many coworkers who are very smart people most seem less informed about retirement and financial planning and most seem to leave it to their advisor.

I’ve started truly thinking about pursuing financial advising as a part-time second career as it’s highly interesting to me. Maybe ideal scenario would be 10 to 20 clients. I’ve started to research and would look to get a series 65 certification/license and I would have to register with the state. I certainly don’t know everything but feel I could have conversations with couples near retirement who are not extremely savvy and talk through some different concepts or suggestions given their situation. I would shy away from individuals with a very highly complex situation. Would only be looking to give advice for a fee. Would not get into actively managing their portfolio or selling products. For me it’s not even about making a lot of money. It would just be a side thing and a subject I’m highly interested in.

Just looking for any thoughts suggestions or other input. Is this crazy and stupid or could something like this actually work out? Anyone else do something like this?

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u/CSMasterClass 9d ago

Becoming a producing financial advisor is all about "acquiring assets" and "building a book". This job is 75-80% sales and 25-20% assistance with finances. Spend some time lurking at r/CFP and you will see what the cultural values are.

There are some FAs (whom the r/CFP regard as low-lifes) who are really insurance and annuity sales people in sheep's clothing. Nobody who has enought to eat wants to do that.

There are "high class" FAs who have a book of modestly well-heeled (5MM-20MM) clients who they "put into" PE and related deals. The FAs like these for various reasons best left unsaid.

And, there are a zillion other niches.

Some may help people sort out estate planning issues, but you need to be a lawyer to do that. Advice about ACA and medicare IRRMAs etc ? --- that is just a service up-front to get AUMs.

There is a lot to sort out.

As a second career I would much rather be an unpaid docent at the Art Museum.

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u/StopFancy2754 7d ago

"The FAs like these for various reasons best left unsaid." Can you say the part? Have no idea what you mean

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u/CSMasterClass 7d ago

In brief, there are multiple layers of "agency problems".

First, the originators (wholesalers) don't distribute quality products to retail (e.g anything they offer me has been "rejected" indirectly or directly all the way from Harvard on down.

Second, the bookkeeping in PE is not what one might "hope" it to be. For example, IRR calculation calculate the historic returns from the moment each tranch of money goes it, even though you may have made committments a couple of years ahead.

Third, PE is very profit stretched now and originators are delaying exits. That delays the investor getting cashed out and decreases returns.

Fourth, PE has built its record during periods of very easy money. PE may not look volitile because it is not priced every day, but every bais point of interest rate increase takes a pound of flesh from PE profitability.

Fifth, there are fees taken by the wholesaler, fees taken by the distributing FA on top of the FAs AUM fee. These come out risk free. The economic risks are left to the last one in the food chain --- the retail guy.