Owen Caterer
Designation

What no-one tells new financial advisers

Most articles on here are for potential clients, but not this one.  This is for people who have just joined, or thinking of becoming a financial adviser.  There isn’t much genuine unvarnished guidance for those considering joining the industry, but there should be.  So what do you need to know before you start or in your early days as an adviser?   We discuss how the industry is developing, picking a mentor, and most of all avoiding the traps so you can achieve success in what can be a very rewarding industry.  So what do you need to know?

1. The industry is changing.

Parts of the financial advice industry, particularly those that work on upfront commissions are dying.  It can seem slow at times, but the trends are real.  Witness the ban on indemnified commissions in Hong Kong and Singapore.  There is also the move by the UK and Australia to push the industry to fee based operations and away from hidden commissions.  Yes, many markets will remain open, but from talking to industry players even these bolt holes are shrinking.  Most potential clients now research products online and there are many vicious reviews of those products/companies that fail to deliver on their promises due to excessive fees and restrictions on exit.  More clients these days are learning what exchange traded funds (ETFs) and why they are far better than a restrictive insurance based investment from a small island near England somewhere.

On the other side there are companies out of the US and Hong Kong that are changing the dynamic and aligning their interests with their clients.  A management fee on the investment with no investment lock-in helps make sure your adviser is working in your best interests, rather than just doing what it takes to get a deal.  Understand however that this new model is going to make it harder for new advisers in the future since you won’t get an instant $20,000 USD pay day for signing a deal.  Those days are gone in many places and fading fast elsewhere.  The future is stable management fee based income.  It is harder to achieve but more rewarding for you and the client in the long-term.

2. Join because you like helping people.

Too many people still join the industry with dreams of building wealth – their wealth, not their clients.  Of course all advisory companies mouth the words of “working for their clients best interests always” but the reality often measures up poorly.  Does your company hold the right values?  Ask yourself the following questions.  What achievements do they celebrate when they present awards for at the company annual or quarterly meetings?  Do they award excellence in client returns and service results or do they focus on who generated the firm the biggest amount of sales commissions?  Do they even review portfolios regularly and benchmark advisers to see what returns they are generating for clients?

This isn’t to say that all advisers should be sandal wearing Ghandi devotees of personal sacrifice.  Being a financial adviser can be rewarding but the key is to do it in partnership with your clients. You should understand that you are building a long term client base for potentially several generations.  If you are in the industry for the first year commission target, then it is best you try your luck in investment banking or car sales and leave our industry well alone.

3. If you don’t like people, this isn’t the industry for you.

After the aggressive salesmen, the second most often applicants are from the opposite end of the spectrum.  The spreadsheet gurus who have deep personal relationships with Excel.  That’s great, but being a financial adviser is a probably 70% about people skills with the rest being financial knowledge, planning and numeracy skills.  It is an art to discuss with a client their situation and get all their hopes and dreams as well as uncover their unspoken fears.  Can you gently but firmly point out holes in their needs without a client taking offence?  It isn’t easy.  If you don’t love people, the stories, their never ending differences in perspective, then you should just look elsewhere.  Finance and in particular accounting, has plenty of demand for people who find beauty in a carefully crafted spreadsheet formula.  Go there.

4. You have to find clients.

When you start out, you may be lucky to work helping an experienced adviser manage their book of clients for salary in the beginning.  If you can, this is a fantastic way to start.  You’ll need considerable luck however to find such a role.  For most advisers you are going to have to find your own clients, and the fastest/best way is the way most people would rather avoid.  Picking up the phone.  because I’ve worked on referrals for several years now I haven’t called anyone in several years, but you will need to find your first group of clients any way you can.  Your boss should help with strategy, training and advice, but ultimately it will be up to you and your drive.  Do you have what it takes to overcome all obstacles and build a group of clients?

5. Pick your mentors carefully.

Finding the right mentor in any industry is a challenge yet a vital one.  A flashy watch and a slick suit with a well developed taste for fine wine shouldn’t be on your list.  They should be pushing you to hone your presentation skills AS WELL as your financial knowledge yet still have high ethical standards and really know their trade.

Do they respect the CFA or CFP qualifications that take 500-1000 hours of study?  Or do they recommend a little insurance “planner” certificate from a body funded by the same insurance companies who later want you to sell their wares?  If it only has a handful of multiple choice questions and require a dozen hours of study or less, that’s probably it.  But back to your mentor.  Can they tell you the difference between Alpha and risk adjusted returns?  Can they explain why a bond might trade above par value?  Do they even care?

A good deal too many so-called advisers are “All hat and no cattle” as the Texans like to say.  A good mentor will guide your career and ensure its success for years to come.

6. You need to put in the hours before you hit golf course.

If you haven’t read Malcolm Gladwell’s books like Outliers, then you should, because we also believe in the rule of 10,000 hours.  Despite the book smarts you have picked up in college, you will still need to put in the time to succeed.  Time in understanding the world of the markets, what products are available and how they work, in understanding your clients, what they want and how to make them happy.

The first 5 years or so can be a very rough experience and most people aren’t willing to put in the work.  In fact, we’d say perhaps 50% fail in the first year and 90% of people fail within the first 3 years.   That sounds daunting but it shouldn’t be.  It is all in your power to achieve your goals and the job can be awesome.

Once you are successful and have your book of clients, your knowledge and your team to support you, the job can become amazing.  You can for example spend your week, dealing with clients on the golf course, tennis court or over long lunches.  Then it can become a more like a dream job.  This however can take many years of hard work and shouldn’t be expected in the first few years unless you have friends with the right family wealth as walk-up starters for your client pool.  The interesting thing here is that a commission based adviser will never get there – he’ll always be after the next deal.  This is corrosive to an adviser-client relationship in the long term, which is a big part of the reason why it is dying.

7. Become an expert to become a trusted adviser.

Too many financial advisers we see, even experienced ones, settle for being amazing salesmen or women. They seem to  think the gift of the gab can overcome their deficiencies in their knowledge (not that they would ever admit to such a thing).  We believe that advisers should be held to the highest possible standards and being an international adviser is a never ending quest for a better understanding.  The world of taxes and investment options constantly evolves.  The products available to invest in is vast and always expanding.  This combination can keep you busy learning for a lifetime since clients are going to require every more guidance to navigate this maze.  The demand is there, and it is growing, but developing that expertise takes work.

8.  Yes, it can be rewarding.

On review of the previous seven points, I fear I need to restore some balance.  I’ve made the career seem too much of a minefield and a difficult journey.  But it is also wonderful.  It is a true privilege to help clients achieve their goals, dreams and guide them and their families.  To see their children grow and use the financial resources generated for a college education or a first property is a joy.  Yes, the journey isn’t always a parade of victories and you’ll be needed to keep your clients on their plans during times of market corrections like the financial crisis, but it all be worth it.

I couldn’t imagine doing any other job and enjoying it half as much.

About Caterer Goodman Partners

Caterer Goodman Partners is a Shanghai based wealth management firm established with a clear vision to provide a new level of personalized financial planning services for expatriates in Asia. Our financial advisors provide guidance for our clients in all areas of investment, specialising in managed accounts, money-market funds, retirement planning and alternative investments. At Caterer Goodman Partners, we offer our advice and experience to provide low cost, tax-effective and simple solutions to match our clients' interests.

About Owen Caterer

Since graduation Mr Owen Caterer has worked with the Queensland Premier's Department in Trade Facilitation and then as a financial adviser in Shanghai from 2005 until 2010. He then rose to Senior Adviser, then Business Development manager and then to Chief Investment Officer responsible for portfolios to a value of US$280 million across Asia. Following that Mr Caterer left to found his own firm with a partner in the financial advisory and wealth management area.   This focused on developing China and Asia's first fee-based financial advisory (rather than commission-based). This has grown to now have 8 staff and and managing almost US$35 million for clients throughout Asia. This business success was recognized as a finalist in the 2013 ACBA in the Start Up Enterprises category and are one of a small number of foreign managed firms to have a full asset management license in China.  Owen has also been active in the community volunteering for the Australian Chamber of Commerce in Shanghai and acting as the Vice-Chair of the Small Business Working Group (2012-2014) and as the Co-Deputy Chair of the Financial Services since 2013 until the present. They have continued to grow their business and havenow been selected as a small group of companies who are platinum members of the Australian chamber of commerce. The achievement they are most proud of is their efforts to reform the financial planning industry in China and push it away from a hard-sales commission driven model to a more ethical management fee and long term customer service model. Owen has a Graduate Diploma of Applied Finance from the Securities Institute of Australia of which he was a member as a Fellow of Finance for many years and also has an undergraduate degree from Griffith University in International Business.  Owen's interests are tennis, running and his wife and two children.  He speaks fluent Chinese, first arriving in China in 1997.

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