CheckMate

Another perfect example of what I’ve been saying about the need to be very, very cautious in buying into any of the predictions floating around now…

Ever since the Bank of America acquisition of Merrill Lynch was announced, the press has been full of stories about how all those Merrill financial advisors were going to leave in droves.

First there was all the speculation that no matter what the retention deal was when it was released, it wouldn’t be enough to keep them there.

Then after the retention deal came out a few weeks ago, the hype continued along the lines of how there was going to be a mass exodus of Merrill advisors because of the way the deal was structured, i.e., it rewarded top performers who produce over $1 million annually far more so than those under that number.

Well, guess what - it didn’t happen. Here are the key numbers from “Merrill reps overwhelmingly go for BofA deal” in Monday’s Investment News:

• 94% of financial advisors who were offered a package signed back on.

• About 6200 of the roughly 6600 financial advisors who were offered the deal took it.

• 99% of financial advisors who produce $1.75 million annually or more accepted the offer.

Read those numbers again - I’d say “overwhelming” pretty much covers it.

Some will likely quibble with that definition because, as Merrill Lynch said, “only about half of the firm’s nearly 17,000 advisors were eligible in the first place”, but, as Merrill also said, those eligible were “responsible for about 75 percent of the firm’s production”. (See “Update: 6,200 Merrill FAs Sign BofA Retention At Deadline” at Registered Rep.)

So why did so many stay? I’m no great pundit, but I think it’s a sign of the times and really pretty simple. With things being so turbulent right now, most of the Merrill advisors saw no great advantage in leaving and thought it was a smarter move to stay put.

Now that’s not to say that I don’t think it’s a smart move for some advisors, especially top producers, to make a move if the timing and situation are right - far from it. Nor do I think that this is a big sign that this is the end of top financial advisors leaving their current firms - that’s always going to go on.

No, my point is just what I said at the beginning and have been saying for some time now. Be very skeptical about any predictions you read, especially right now, and examine them closely, particularly the source of the prediction.

And if you’re someone who’s intent on becoming a financial advisor, I’d also say there are some very good lessons here, not only about the nature of predictions, but, more importantly, about what actually happened at Merrill Lynch.

I ran across this great John Kenneth Galbraith quote the other day, and I will admit I hadn’t heard it before.

He said it back in 1993, but it’s never been more appropriate than right now:

“There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”

- John Kenneth Galbraith, Wall Street Journal, January 22, 1993

Please keep that in mind as you read the seemingly infinite number of words being written about the financial markets, “meltdowns”, recession, depression, and so on.

More specifically, don’t base your future career choices on anybody’s predictions about “what’s hot and what’s not”. I bet you can think of a number of careers that were once considered the “big thing” but don’t look so good right now - I know I can. And if you went into one of those careers not because you loved it, but because you thought you had a sure thing forever, you’re likely to be mighty disappointed right about now.

If becoming a financial advisor is what you have in your heart to do, then do it.

This is definitely not a political post - if you haven’t noticed, we stay away from that area entirely here.

What we do write about is helping you achieve personal success, in particular by becoming a financial advisor. And that’s what this post title refers to - your personal success.

Things have been decided, we now know who has been chosen to be our next President, and many are naturally wondering what the future holds and how that will affect them.

I’m not sure where this quote originates, but I know I’ve heard Dave Ramsey and Dan Miller repeat some variation of it many times for several years now:

“Your chances for success are not determined by what happens in the White House, but by what happens in YOUR house.”

That runs directly counter to many people’s thinking, which is why Dan and Dave repeat it so often. Now, they aren’t living in some fantasyland or saying that decisions made in Washington, DC have no impact. But what they are saying is that ultimately what happens to you is dependent on you, and if you’re counting on Washington to make you successful (or unsuccessful), you’re focusing in the wrong place.

They’ve also said that they will certainly review their businesses and make course corrections as necessary - that’s something they already do all the time, and naturally recommend that you should do the same with your career or business. But the gist of their argument is this - if whatever you were doing before the election is affected that drastically by the outcome of the election, then you were in the wrong business or career to begin with.

No question in my mind that’s the case with being a financial advisor, too. Where you go to work might be different, and how you do business as an advisor might be different, but nothing has changed so much that it should keep you from becoming a financial advisor.

I mean, think about it - have you ever seen a time where people were more in need of sound financial advice than they are right now?

On the other hand, if some outcome of the election has changed your mind about being an advisor…well, maybe it wasn’t the right career for you to begin with. And that’s OK - better to know that now than several years down the road.

So, while the nature of the business will change, the firms with openings might change, and many other factors may change as well, as I’ve said all along - if you truly want to become a financial advisor and have the right skills and aptitude, you can become one.

As a potential financial advisor, you need to have some idea of what clients might ask you.

One good way to do that is to see what financial publications might be telling people that they should ask you, since there’s a good chance your potential customers are reading those magazines.

This short article in the November issue of Kiplinger’s Personal Finance magazine gives you a nice succinct list of questions you could be asked - take a look:

“What to Ask Your Financial Adviser”

Nothing particularly complex there (although the answers to those questions could very well be), but those are all questions you better be prepared to answer.