Why I Decided NOT to Become a Financial Advisor

For those of you that have followed this journey of mine, you may remember the post where I discussed my thought process on becoming a financial advisor.  At that time, I was registered for the Series 65 exam, studied for a month, and was doing quite well on the practice exams.  All signs were pointing to a passing score.

It might surprise some of you that I did not pass the exam.  And not for the reason you’d think.  I never took it.  Did I chicken out?  Or was there more lurking beneath the surface?

Today’s post will chronicle why I decided against becoming an investment advisor representative.

Some Doctors Simply Need an Advisor

I’ve written before that I think most people break pretty neatly into three groups when it comes to personal finances:

  1. The DIY group learns all of this stuff on their own and focuses on minimizing fees, which often includes avoiding financial advisors.
  2. The group that knows quite a bit about personal finance topics, but wants a professional to “dot the i’s and cross the t’s“.
  3. People who want nothing to do with their finances and simply want to outsource this part of their life just like their lawn care, car maintenance, or child care.

The last two groups could certainly benefit from an advisor.  The problem is that finding an advisor that is worth a lick of salt is a challenging feat.

The vast majority simply don’t meet the gold standard.

As far as I know, in my town of 245,000 people there is only one. Given that my hospital alone employs just over 13,000 people – I am pretty sure that one advisor cannot even serve all of the people in my hospital that probably need help.

Hence, my original thought on teaching as many people as possible to become part of Group number 1 and wanting to help those found in groups 2 and 3 by becoming a financial advisor myself.

The Gold Standard Financial Advisor

What exactly is the gold standard for financial advising? Well, for physicians the best kind of advisor would check the following four boxes with ease:

  • Fee-only advisor  = an advisor who does not sell commissioned products (i.e. insurance products).
  • Fiduciary = signs a contractual agreement stating that they will do what is best for you regardless of whether it makes them more or less money.
  • Flat-fee = an advisor who charges for the work that they perform as they do it.  In other words, it is not based on your net-worth or assets under management.  This typically ranges from $99-$500 per month.  Some charge hourly, monthly, or quarterly.
  • Experienced = have a vast amount of experience working with someone like you (i.e. a physician if that fits your description)

For the record, the first two points above are non-negotiable.  Fee-only and fiduciary are a must for anyone from which you’d ever consider receiving financial advice.  That’s where the discussion should start. Period.

As stated above, the number of advisors that tick all four of the gold standard items is frighteningly low.  So, why did I decide against increasing that number?  Three words…

Conflict of Interest

I spend a lot of time teaching other people about how to avoid conflicts of interest.

It might not surprise you then that this was the largest reason that I decided not to pursue becoming an advisor myself.

My work on this website is only half (or less than half) of the work that I am trying to do to increase financial literacy in the medical community.  At my main gig as an academic anesthesiologist – I am conducting studies, teaching lectures, and even working to create a curriculum for the students and residents.

A good friend of mine brought it to my attention that when I speak to this group, it might pose a problem if I mentioned that I was a financial advisor of sorts.  They might perceive this as a conflict.  In other words, they might view my conversation with them as simply trying to create a pathway to a relationship where I would then advise them on their money.

This is the last thing that I want.

When I give advice to a vulnerable group of learners who have a giant target on their back, I want it to be as free from conflict as possible.

There was one other major reason I decided against becoming a financial advisor.

Regulation

I decided to unregister for the Series 65, because I didn’t want to place myself under the authority of the Financial Industry Regulatory Authority (FINRA).

See, if you have a website and also operate as a financial advisor, you must run all of your posts past a compliance officer in order to make sure that FINRA won’t get upset with what you are doing.  Now, this can be yourself if you are operating a solo-advisory service… but it’s still regulated.

The problem (if you can call a good thing a problem) is that I am not bashful, and I am certainly not silent about the massive problems that run rampant in the financial industry.

From the time that GL advisors brought their slime to my medical school (and later had their owner/leader thrown in jail for fraud) to the time that the insurance agent screwed my family by encouraging me to apply for personal disability insurance as a medical student despite my medical history and lack of income (where I was flat-out denied) – my experiences with people “regulated” by FINRA has been less than stellar.

For this reason, I wanted to continue to teach other people about the conflicts that exist in the financial industry, and I had major concerns about writing open and honestly about them should I be under FINRA’s thumb.

Like William Wallace in Braveheart, I chose freedom.  I’ve never liked being told what I can and cannot say.

Take Home

I hope that I didn’t disappoint anyone with my decision, but I think this is the best course for me and my work.  My in-person teaching will continue without major conflicts, and my brutally honest rhetoric on this site will continue unabated.

What do you guys think?  Was I crazy for ever considering financial advising?

Leave a comment below.  And don’t hold back. You know that I wouldn’t.

TPP

 

17 thoughts on “Why I Decided NOT to Become a Financial Advisor

  1. Fascinating that the muzzle of regulation was the ultimate reason you were dissuaded, TPP. Glad to know you’ll remain the frontally disinhibited Phineas Gage type blogger we’ve come to know and love.

    Keep up the crusade,

    CD

  2. Those were good reasons to not become a FA. Did preparing for the series 65 improve your understanding and strategies in personal finance or was it more technical/regulatory than needed?

  3. Sadly, there are few venues left where a professional can truly speak freely without adverse repercussions. It’s a shame you can’t work as a financial advisor and still open your mouth as the founding fathers intended!

  4. I know how much you really wanted to obtain licensure and not for gaining accounts but rather to have more weight to your words as you would be credentialed.

    I did not think of it but the person who suggested that this may be a conflict of interest was incredibly smart and correct. Any talk you give would have a taint of “is this just a marketing ploy to get my business” vibe which I know was not your intent.

    I did not know about running every post by an authority to get approved. That in itself would be a headache that would make me stop my tracks pursuing it.

    Thanks for shedding light on the situation. At least by studying for the exam I’m sure you have picked up some great financial pointers which you can pass along to us so it was not all for loss

    • You are spot on, Xrayvsn.

      I was glad for the advice as it was what I needed to hear at the time. It was a tough decision after putting a decent amount of time into studying, but ultimately the right thing to do.

      Thanks for the support, brother.

  5. Thanks for sharing! I actually came to the opposite conclusion after reading this post. General financial literacy isn’t my forte. I’ve really enjoyed getting to know the people in the personal finance community, but my blog has run its course (7+ years now!) and I don’t need it anymore, so I’m fine with shutting it down. I would rather work with individual people than teach the masses and my blog isn’t such that I would consider using it as a marketing tool to acquire clients.

    • 7 years is a long time! That’s a lot of work, my friend. I think there is a great need for working with individuals. The problem for me is that there would always be a conflict of interest if I pursued that route given that those that I’d want to help would often be my colleagues or trainees. Getting paid to do that would be a big COI.

      Glad that we each have our own path, and wish you nothing but success on yours!

  6. I think you made the right choice. A lot of us toy with the idea of entering that profession. I have had some readers point out that my advice sometimes violates FINRA. I’m not sure they were right about what they said, but it was also liberating to say I don’t really care since they are not the boss of me.

    I give a lot of personal finance talks to doctors. I think a lot of why they are so highly rated is because I’m a practicing doctor and I’m not trying to sell them something.

    That hasn’t been enough to keep me from being a financial advisor. I haven’t done it mainly because I’m not sure I want to run a service business. Also, a lot of doctors can be irrational, demanding, and condescending. If the market crashes and they lose money and want to panic, do I want them calling me at 7PM so I can try to talk them off the ledge? Probably not.

  7. I would recommend you do it! You could simply not accept docs from your program. Just let them know that is one your ground rules. You have the right to only accept clients that you want to accept. The regulations are not as onerous as you think. You are so honest you would pass anything with flying colors. I have been through regulatory audits and the regulators know right away you are about as honest as it gets. You are over thinking it. I believe you would enjoy it. Take the test! Then email me for the next step.

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