Salary vs self-employed Financial Advisor

[skandalouz_08]

I'm currently graduating in April with my Degree and a major in Finance and am looking for a job. I am just curious as to beyond's response to a Financial Advisor that is salary vs self-employed (commissions) and how you would look at it from my point of view.

A little background first. I have 3 years of investment experience as a salaried employee and quit in Sept to finish my degree full time over the past 8 months. As a result I'm in the job hunt like many other people.

I've been offerred a job by two independent brokerages which are both 100% commission. While I love the independence of working on my own and the opportunity to make more money than a salaried position I also understand the downfalls if I don't succeed and that I can't rely on a steady income.

So beyond, if you were me, what would you do? I've weighed both pro's and cons of this for a while and am pretty sure which way I want to go but any advice is appreciated.

[pf0sh0]

Salary sounds good, because of the stability but if you like to make your own money.. I'd say commision pay. Plus it generally keeps you mroe motivated. good luck

[e36bmw///]

nm

[skandalouz_08]

Some jobs start you off with salary for the first 3-6 months with the intent that after that time period you are 100% commission.

The jobs that pay salary + commission together are typically jobs located at branches with set hours and very little work flexibility. The commission part normally kicks in once you reach a certain goal set by them, so sometimes you may not even qualify for commissions if you're having a bad year.

[TYMSMNY]

Rookie broker at independent brokerages = extremely hard. You dont have the connections to WEALTHY people (assuming) and even if you did, why would someone trust your name and brokerage over someone at a branch?

Also, what kinds of clients are you targeting? whats your investment philosophy? equity trading or deal flow?

Salary = steady but never high. Brokers will always be commissioned. FA at banks and firms will most likely be salaried w/ trailers. Think about your lifestyle... do you need a steady income? loans, etc.

[dezmarez]

Do you have a mortgage? or massive student debt? or a child/family to provide for?
If not, why not go the commission route? No obligations, so if you don't do well you aren't going to send your self into bankruptcy or anything like that.
Like you said you already have 3 years expereince so I'm sure you are confident in your abilities.

[A790]

I'm in a position where I COULD have had commission and I wish I had gone the commission route. If you're good at what you do you'll generate more than base salary would.

Don't take the easy way out just for the sake of it being easy.

[bubbley]

hmmm, one of my tenants ran into this issue. He moved from Ontario to Calgary and immediately landed a job at RBC. Everything was going great for the guy, he then decided to work for I believe it was Clarica or some other independent company. Lets just say that I was close to kicking him out 5 months in a row for late rent. After not succeeding independently he went back to a salary position and everything went back to a good situation.

I personally think he did not know enough people, he didn't have a large enough circle of friends/family/acquaintances/connections and I do think that was his ultimate downfall. I had another friend who was in and independent brokerage where he milked it through his large network that he had. Currently, his business has slowed down due to him exhausting his network but word of mouth does spread. It's hard to find new clients these days, it's pretty stressful working on commission.

Overall, personally I would exhaust my network if I had one in an indpendent brokerage setting because you will make more money this way. If I didn't or have reached the pinnacle of my networking and business slows down, I would then seek out a salaried position and eliminate the uncertainty of making your next dollar and of course the stress.

[A790]

Originally posted by bubbley
hmmm, one of my tenants ran into this issue. He moved from Ontario to Calgary and immediately landed a job at RBC. Everything was going great for the guy, he then decided to work for I believe it was Clarica or some other independent company. Lets just say that I was close to kicking him out 5 months in a row for late rent. After not succeeding independently he went back to a salary position and everything went back to a good situation.

I personally think he did not know enough people, he didn't have a large enough circle of friends/family/acquaintances/connections and I do think that was his ultimate downfall. I had another friend who was in and independent brokerage where he milked it through his large network that he had. Currently, his business has slowed down due to him exhausting his network but word of mouth does spread. It's hard to find new clients these days, it's pretty stressful working on commission.

Overall, personally I would exhaust my network if I had one in an indpendent brokerage setting because you will make more money this way. If I didn't or have reached the pinnacle of my networking and business slows down, I would then seek out a salaried position and eliminate the uncertainty of making your next dollar and of course the stress.

Don't forget: the internet is wonderfully good at generating qualified leads.

[TYMSMNY]

Being on commission really takes everything out of you. Stress of finding new clients, streess of making enough money for your rent, meal, etc, etc etc etc.

If you're at an independent brokerage working by yourself, the firm isn't going to provide you a stream of clients like a bank financial advisor would. You will need to generate your own leads, hash through all the tire kickers, and work your networks. Even then, are you going to approach every single one of them right from the get-go and give them your 30 second elevator speech? What are you "selling" them? What's your approach? Working with a new "bank" client and working with a new "brokerage" client will be different, you tend to get more sophisticated clients at a brokerage firm. Commission is rough... I've been there.

Big thing, salary vs. commission. DO YOU NEED A STABLE INCOME? if you plan on going the commission route, make sure you have some money saved up prior to starting. You'll need to dig into it down the line.

[HRD2PLZ]

I've been in commissioned sales for just about 7 years now. The first couple years were pretty tough, so much up and down. You have no idea what to expect to budget for income. I've had salaried positions in the past and yes, being commissioned; there is the potential to make more money, but there is a great deal to be said about the comfort of a salaried position.

Its a hard call to say when you're at the start of a new career. I'd almost like to say go salaried, but certain types of people need that extra push just to get out there and get things done. That's the difference between salary and commission. That extra bit of drive.

[skandalouz_08]

Thanks to all for the advice.

I've decided to go down the road of a commissioned Financial Advisor with Sunlife.

I figured I have experience in the salaried position and prefer the self-motivation, working my own hours and building my own customer base.

[Mys73ri0]

Originally posted by HRD2PLZ
Its a hard call to say when you're at the start of a new career. I'd almost like to say go salaried, but certain types of people need that extra push just to get out there and get things done. That's the difference between salary and commission. That extra bit of drive.

Originally posted by skandalouz_08
I figured I have experience in the salaried position and prefer the self-motivation, working my own hours and building my own customer base.

I'm curious why both of you and a few others in this thread have said that working commission (presumably) for the greater salary is a 'big' self-motivator? I believe there are quite a few theories out there that have proven money isn't a leading motivator amongst employees.

I'm not sure what sort of pension and benefits working as commission has, but I know that at the big banks it's pretty good which could play a big factor.

[TYMSMNY]

money isn't a leading motivator for someone who's 40... but assuming OP is part of a younger generation.. it is. The harder you work, the more money you get paid. Very simple and proven fact.

If you're working with Sunlife, all you're doing is peddling their products for the most part. Best of luck to you. I've been in both salaried and commissioned financial positions, don't stress out because it will get to you down the road. Just be innovative when it comes to marketing yourself.

[skandalouz_08]

Originally posted by Mys73ri0



I'm curious why both of you and a few others in this thread have said that working commission (presumably) for the greater salary is a 'big' self-motivator? I believe there are quite a few theories out there that have proven money isn't a leading motivator amongst employees.

I'm not sure what sort of pension and benefits working as commission has, but I know that at the big banks it's pretty good which could play a big factor.

I am part of the younger generation and have worked at a big bank for the past 3 years. While it is great pay and benefits it tends to get boring knowing that you are going in everyday and no matter how hard you work you will still earn the same amount of money. The ability to move up within the bank for me was limited as I didn't want to be a manager, which was the next step within the bank other than going to the Wealth Management side, which is also commission...

Working commission, from what I've learned so far, is that benefits will be similar to what I've had before (plus get the tax write-off), as well as the opportunity to make more money based on how hard I work.