Like thousands of advisors before her, paula Wilimek is discovering the ins and outs of the financial planning business from scratch. With just six months under her belt as a first-time advisor at Freedom 55 Financial in Toronto, Wilimek, 29, has built up a modest book of 90 clients and approximately $100,000 in assets under management. Referrals are starting to trickle in, and she hopes to develop a niche market in the coming year.

Yet industry statistics indicate the odds are stacked against her. According to figures provided by Toronto-based industry association Advocis, only 10%-15% of rookies will survive their first five years as financial advisors. Experts point to a combination of forces that are making the entry of new advisors into the business more difficult than ever: fierce competition — particularly from bank-owned firms — and an emerging breed of smarter, product-savvy consumers.

What is more, many newcomers don’t know what they are up against. The factors that are most appealing about the industry are often the factors that drive new advisors away from it. The freedom that comes from owning a business, for instance, also brings with it the financial pressure of making a living on one’s own; helping clients meet their financial goals involves identifying and then pursuing the right market; a flexible, make-your-own schedule can quickly turn into an exhausting round of early mornings and late evenings.

“This is probably the most difficult environment for new people entering the business that we’ve seen since the long bear market in the early ’70s,” says Dan Richards, president of advisor consulting firm Strategic Imperatives Ltd. in Toronto. “More experienced, better qualified individuals are coming into the industry every day, yet the survival rate hasn’t been lower in recent memory. Competition is fierce.”

Wilimek admits the pressure to acquire enough clients to survive financially and the pressure to keep up with the growing amount of information about new products and regulation is daunting. “One of my biggest challenges is getting in front of enough people and having them want to do business with me,” she says. “My other concern is making sure I’m serving each and every client properly.

“I want to ensure that I’m doing the right thing for the client. But there is so much to know, and it is so easy to be overwhelmed with information,” she adds.

According to Rick Johnson, director of practice advisory services at Advocis, Wilimek’s situation is common. “The single biggest problem facing new advisors, whether they’re entering the industry straight out of school or it’s their second career, is diffusion — advisors have far too much information coming at them, and they don’t know what’s important and what’s not,” he says. “When they start out as advisors, they’re inundated with everything the industry could possibly offer them, and they have no idea how to choose. They think every path will take them where they want to go.

“In order to make it in this industry, new advisors need to have a clear understanding of who they are, they need to be aware of their strengths and weaknesses, and they need to recognize it’s their character that’s going to allow them to survive,” he adds.

But, as the veterans will tell you, there is reason to be hopeful. “New advisors need to understand that time will become their friend,” says Charlie Spiring, a former advisor who is now chairman and CEO of Winnipeg-based brokerage Wellington West Capital Inc. “With time, they’ll get the new clients, they’ll become credible, they’ll get better at what they do. In the meantime, they need to do everything they can to make it through the first couple of years.”

So, what does it take to survive those first rocky years of launching an advisory practice? Advisors who have made it through that period offer this advice.

> Find a niche and stick to it. Like most advisors, Wilimek targeted her family and friends as immediate sources of business. She would like to pursue young couples and first-time homeowners as a niche market. But for now, she says, “I’ll take anyone I can get.”

It’s not uncommon for new advisors to start building their books with friends, family, neighbours. Nor is it uncommon to burn through their “warm market” within the first few months of launching a business. Nor is the next step uncommon. Rookies turn to the “AWAP” method — anyone with a pulse — in their search for new clients. But, say the pros, the trick is to avoid resorting to a sloppy, undefined mass market in search of assets.

@page_break@“The biggest mistake advisors make when they go into business is they think they have the answers for everybody and everyone is a prospect,” says Johnson. “That couldn’t be further from the truth. Trying to deliver real value to the wrong person will just bring rejection. Instead, identify where you can find real value and then have the discipline to ignore everything else.”

That may be easier said than done, particularly when income is tied to assets under management.

“We’re all pretty hungry when we start out in this business, and it often feels like you have to take on just about anyone to survive,” says Nora Dunn, a 29-year-old advisor with Investors Group Inc. in Toronto. “But I’ve found the most successful advisors are ambassadors for their target markets, We would all do well to choose a group of people with whom we enjoy working, with whom we identify and with whom we have connections.”

Dunn found her target niche serendipitously when she volunteered to present a seminar to a group of young professionals at a technology company — a group with whom she shared goals and financial concerns.

“I realized my personal style spoke well to these people, and I had a natural rapport with them,” says Dunn, who has been an advisor for five years. She also tapped into a group of owners and managers in the construction trades industry, a market available to her through a previous career in property management.

Finding a niche is a process, Dunn says: “My target market evolved into what it is today. Eventually, I focused in on the group of people with whom I had the best rapport and whom I could help the most.”

Finding that kind of rapport may mean getting rid of clients who don’t fit your profile, Spiring says: “You can’t afford to spend 40 minutes talking to someone without doing a trade, and that will become a reality when you look at your bottom line.”

Spiring found his own niche by targeting small-business owners in northern Manitoba — a market then ignored by other advisors. As a rookie at now-defunct Midland Doherty Ltd. in Winnipeg, he drove to remote cities such as Flin Flon, Man., to introduce himself. These people didn’t run glamorous businesses, but Spiring made them his specialty.

“I went up there and told them what I could do for them and how I could help their businesses, and they loved it,” he says. “And when I came back for the second and third and fourth time, I gained credibility because I didn’t just go up once and never come back. To this day, they are the best source of referrals I have had in my career.”

The key is to keep it simple but focused, Johnson says. For instance, a perfectly legitimate target market might be married couples between the ages of 24 and 35 with no children, who own a house within 20 kilometres of the advisor’s office and who don’t own a business. It’s simple but to the point.

“The profile doesn’t have to be sophisticated; it just has to be clear,” Johnson says. It also sends a message of exclusivity to potential clients: “Anybody the advisor approaches will understand that they fit a particular description and that the advisor will only work with people who fit it. So, by definition, the clients feel special.”

> Focus on your strengths but don’t ignore your weaknesses. For Dunn, figuring out what skills she excelled in meant taking a closer look at what she felt comfortable with. Cold calling was not her strong point. But she wanted to get in front of as many people as she possibly could. She thought back to her years performing as a professional dancer in another previous career, and she recalled how comfortable she was in front of crowds. She offered to present a “lunch and learn” seminar at a large corporation, and found this tactic suited her perfectly.

“I performed most of my life on stage in one capacity or another, and so getting in front of a group of people and showing them what I could do came naturally,” she says. “I just developed a natural rapport with my audience.”

But what works for Dunn might not work for others, says Richards. He recommends coming up with an arsenal of three or four strategies for attracting new clients before deciding which is most suitable for you. Whether it is networking through associations, presenting seminars or even cold calling, make sure your approach is a good fit for your own personal style.

The same theory applies to developing a skill set: attempting to specialize in every investment product and strategy will only backfire. “It’s like taking the shotgun approach vs the machine-gun approach: if you’re focused, it’s easier,” says Esther Bast, senior vice president of the financial services division at Investors Group in Winnipeg.

Investors Group has a six-week training program for new advisors that covers everything from business plans and sales processes to personal career development. It also helps new advisors find an area of expertise. And if they need extra training on topics such as tax and estate planning, for instance, they can seek advice from an in-house specialist.

Still, that’s not a licence to ignore areas that need improvement, Bast says. In her own career as an advisor, she recognized that her sales skills were lagging, so she took additional sales training courses and read books on selling.

“If you don’t have the training, be honest with yourself and then find it,” she says. “Whether it’s taking outside courses, shadowing other advisors or reading books — find out what it is you need in order to become successful and then do it, instead of finding a reason not to make it.”

> Get connected — for the right reasons. Joining a club or committee to gain exposure to a target market is a topic that has sparked vigorous debate among advisors and industry professionals. Proponents of the idea say getting involved in an organization whose patrons or members are ideal clients is the perfect way to gain exposure to target markets. Others, such as Johnson, are wary of the idea.

“An advisor who joins an association with the expectation of gaining business leads will find very quickly that it will blow up in his or her face,” he says. “It’s manipulative, and people will see it a mile away.”

The key is to join and participate with pure intentions. For Wilimek, that has meant attending monthly meetings of Women In Networking Growing Strong (WINGS), a networking organization based in Angus, Ont., that brings together women in business. She also volunteered to do a RRSP seminar at a Toronto-based marketing firm, through which she hoped to tap into her target market — young professionals — by providing a service.

“If you’re honest and sincere with yourself and with the people you’re spending time with, the business will come from that,” says Dunn. “You don’t want to be the person who walks into a room and everybody mutters, ‘Oh, here comes the financial planner — hide your wallets’,” she says. “Some of my most rewarding clients have come from the social circles I’ve travelled in, in which everyone knows what I do although I haven’t approached anyone for business.”

Another good way to tap into valuable resources is through industry associations, such as Advocis or the Canadian Institute of Financial Planners, both of which hold regular meetings and conferences that offer practice-building tools.

> Create a support network. Not every new advisor has the advantage of a built-in support network from his or her firm.

If that’s the case, create one, says Richards: “Try to establish a network of two or three other advisors who are in similar situations. But instead of getting together to depress yourselves with how hard this business is, help one another to stay motivated and encouraged. Focus on the little wins.”

A little healthy competition never hurts, he adds. Seeing people who are a little more successful can create the impetus to work harder. “This may lead an advisor to think, ‘Hey, if this person can do it, I can do it, too. It can be done’,” Richards says.

Johnson agrees: “Peer support allows advisors to share ideas and thoughts and explore the validity or the flaws of [a particular] way of thinking.”

To that end, Advocis is spearheading a development program for new advisors called RAMS (recruiting, apprenticeship, mentorship and succession planning) that next fall will begin to pair new advisors with seasoned professionals. One of the problems with mentorship, Johnson says, is that quite often the mentor strives to teach new advisors things that they’re not yet equipped to handle.

“It’s important that the mentor and the mentee are on the same page,” Johnson says. “The intent of the program is to give advisors a road map to work on the issues with which advisors grapple, and to make sure that the mentor has a good understanding of the mentee’s skills and knows what that mentee needs to do at this stage in his or her career.”

> Have a backup. It is no secret that a first-year advisor’s salary is nothing to write home about. Johnson suggests having at least six months’ worth of living expenses saved up before launching an advisory practice, both for your own well-being and to send the right message to potential clients.

“The one thing that will guarantee failure is sitting in front of a client and thinking, ‘If I don’t make this sale, I’m not going to be able to pay my rent this month’,” says Richards. “That kind of pressure inevitably translates to your behaviour, and it is unlikely to send the kind of signals clients will find reassuring.”

Bast had a $10,000 slush fund to back her up when she launched her business, but she managed to avoid tapping into it. Still, it was good to have, she says.

“We recommend that all our consultants have a backup plan. They need a financial reserve,” she says. “It’s just a sound financial plan.” IE