How To Make Six Figures As A Financial Advisor
NOTE: If you’re a new financial advisor, make sure you check out Your First Year As A Financial Advisor, where I reveal several things every new financial advisor ought to know.
I decided to write this article because I get asked this question (or some variation thereof) all time…
“How can I make six figures as a financial advisor?”
It typically comes from newer advisors who are interested in mapping out a path to their desired goal.
So, if you ask me that question don’t be surprised if I send you this article, where I’ll try my best to explain everything here.
First, let’s get one thing straight…
I am NOT saying you’ll make six figures if you follow my advice. Your income is dependent on you, your situation, and your own personal effort. I can only give you ideas and a step-by-step path to follow: it’s up to you to actually follow it.
Six Figures Varies A LOT...
Technically, someone making $100,000 is making “six figures” and so is someone making $999,999, even though their lifestyles have the potential to be drastically different.
Also, someone living in states like Mississippi and Alabama will have much greater purchasing power with $100,000 than someone living in New Jersey or New York. Someone living in the heart of Manhattan would be “poor” with only $100,000 while someone in rural Mississippi would be “rich”.
Like a lot of things in life, it’s relative.
Got it? Good. Onward…
How To Make $100,000 Per Year As A Financial Advisor...
According to the U.S. Bureau of Labor Statistics, the average yearly income for a financial advisor is slightly more than $90,000.
Which means if you’re drop-dead average, you’re already close.
If you’re nowhere near the $90K per year income level, it means you’re below average. It may be a hard pill to swallow but it’s necessary if you want to get to the six-figure range.
In order to make more money, you’re going to have to do something different. Remember this quote:
“What got you here won’t get you there.” - Marshall Goldsmith
Which means it’s important for you to pay attention to the behaviors of six-figure earners and start replicating them yourself.
When it comes to financial advisors, some of those behaviors include:
1. Consistent Prospecting
One of the biggest reasons financial advisors fail to earn the amount of money they want is because they don’t prospect enough.
As a financial advisor, your income is largely dependent on the number of people who know you. How many people did you contact today? How many conversations did you have with potential clients? Those two metrics matter more to your income than almost anything else, so if you aren’t making the amount of money you want to make, focus on those.
ALSO READ: 15 Prospecting Tips for Financial Advisors
2. Following Up With Prospects
This is closely related to consistent prospecting. Low-earning financial advisors will usually reach out to a prospect one time and then move on.
According to the National Sales Executive Association, 48% of people NEVER follow up with a prospect and only 10% of people make more than three contacts. Yet, 80% of all sales are made after the fifth contact.
Even though these numbers are specific to salespeople, I’ve seen them hold true for financial advisors as well. Because in nearly every single financial advisor I’ve ever encountered, adding five follow-up attempts has had a positive impact on income.
3. Having A Sense Of Control
Six-figure earners know that they’re the captains of their own ships. This is especially true for financial advisors because they don’t have a “boss” in the traditional sense. They make their own hours and set their own vacation schedule.
While it’s nice to have a career with that much freedom, it’s a disadvantage for people without self-control. High-earning financial advisors are self-starters. They realize nobody is going to save them and if they want to make the “big bucks”, they’re going to have to create a plan and get to work.
4. Investing In Themselves
The more I work with financial advisors, the more I realize how true this is.
Investing in yourself is a surefire way to shorten your learning curve and put yourself on the fast-track to success. It blows my mind how many financial advisors insist on banging their heads against the wall and reinventing the wheel when a proven path has already been created for them.
It’s sad but it seems like people have no problem going tens of thousands of dollars in student loan debt (which doesn’t come with a money-back guarantee, either) yet can’t stomach the thought of investing a thousand bucks or even a hundred bucks into something directly related to their careers.
I know people reading this may think “He’s trying to sell stuff!” but the financial advisors who fail are the ones who don’t invest in themselves. Period. You can believe me or not, but it doesn’t change reality.
Making Six Figures Comes Down To Knowing Your Numbers
If you’re a financial advisor, you’re in an enviable position.
Because once you know a few simple metrics, you can increase (or decrease) your income accordingly. Watch this…
As a financial advisor, you’re essentially trying to take someone down this funnel:
Lead → Prospect → Client
And that process tends to look like this:
Outreach → Qualification → Appointment
Which means your mission in life should be to figure out the answers to the following questions:
Of course, I’ve simplified the process for this example but once you know the answers to those three questions, you’ll gain a sense of clarity like you’ve never had before.
Let’s say you start with 100 leads, and from those leads, only 30 of them are qualified to do business with you.
Then, out of those 30 prospects, only 10 of them actually set an appointment with you.
Then, once you have those 10 appointments, 3 of them become clients.
After that, you just need to figure out your average income per client and then reverse-engineer everything. If you make an average of $2,500 per client (again, keeping things simple) then you need 40 clients.
Which means you need 4,000 leads, and your sole focus should be finding those 4,000 people and qualifying them.
Seem daunting? It’s not.
If you work five days per week and take two weeks off for vacation, it means you work 250 days per year.
If you work 250 days per year, it means you need to go through 16 leads per day to reach 4,000 in a year.
Literally 16 leads… PER DAY.
And another cool thing about being a financial advisor is that your income can be recurring, which means as long as you keep your clients, you keep making money.
That brings me to my next point…
Huge Mistake = Not Knowing Your Client's Lifetime Value
I want you to imagine that for every dollar bill you gave me, I gave you five dollars in return.
How many dollars would you give me? As many as you could, right?
Well, that’s how a business is supposed to operate. You spend a dollar on marketing with the hopes of getting at least a dollar back. Good marketing returns more than a dollar, while bad marketing doesn’t give you a return. It’s that simple.
Successful financial advisors understand that they can spend up to their client’s lifetime value to acquire them. Fortunately, most financial advisors don’t have to come anywhere NEAR that amount because the average client’s lifetime value is so high.
Let’s assume that your client’s lifetime value is $7,500. This means you can spend UP TO $7,500 (including your time and operating expenses) to acquire that client.
Even if we cut that number in half, you still have $3,750.
You could literally send 3,750 direct mail pieces (assuming they cost a dollar each) with that much money. Don’t you think you would get at least one client if you sent that many pieces to a targeted audience?
ALSO READ: 5 Direct Mail Tips for Financial Advisors
Two Secrets To Breeze Past Six Figures...
Financial advisors who sail past low six figures and enter high six figures (and sometimes seven figures) tend to have mastered two things…
Leverage and scale.
Leverage is all about having things work separately from your time. For example, using your website is a great form of leverage because it works for you whether you’re working, asleep, or on vacation. It’s always talking to prospects.
ALSO READ: 7 Reasons Why Most Financial Advisor Websites Are Terrible
Another form of leverage financial advisors can use is any content they create. Take this article - all I had to do was create it one time and it will continue to work for me for years. After I’ve written it, it’s completely separate from my time. One way I can get this article to work harder for me is to get more readers. In order to get more readers, I need to scale.
ALSO READ: 9 Awesome Content Marketing Tips for Financial Advisors
When a business is able to scale its operations, it means the business is able to handle its amount of work or sales in a capable, cost-effective manner. When it comes to financial advisors, scale means reaching 1,000 prospects just as easily as 10.
One reason why I love showing financial advisors how to get clients with LinkedIn is because LinkedIn has scale built in. It takes the same amount of time and energy to post a status update or share a piece of content no matter if you have 10 people connected with you or 1,000. However, if you have a large network of people and they’re all in your niche, it becomes very easy to build a book of business.
Imagine you’re a financial advisor who specializes in working with dentists and you’ve got 4,000 dentists who follow you on LinkedIn. Continuing with our example from earlier, we established that you only need 40 clients to make six figures as a financial advisor.
If that’s the case, do you know what percentage of your LinkedIn following you need to convert into clients?
Yes, that’s right. A mere ONE out of every HUNDRED of your connections.
If all of them are dentists and you’re a financial advisor who works specifically with dentists, do you think this will be difficult?
Your website also has the ability to scale, providing you get enough traffic to it. So, let’s keep going with our example, where we assumed you got one client for every three appointments you set.
If that’s the case, it means you need 120 appointments throughout the course of a year.
Okay, now make sure you’re following along…
Because according to Wordstream (an online advertising firm), the average landing page conversion rate is 2.35%. This means for every 100 visits to your landing page, 2.35 people will make an appointment with you.
When you reverse-engineer everything, you find out that you only need 5,107 visits to your landing page to set 120 appointments.
And that’s assuming you’re drop-dead AVERAGE. If you’re better than average, you need even less traffic.
Over the course of a year, that works out to be about 14 visitors to your landing page per day.
Are you starting to see all the different ways you can make six figures as a financial advisor?
Because all you really have to do is know your numbers and reverse-engineer the process.
What’s really cool is when you start getting better at everything. Meaning your landing page will convert 5% of people… or you’ll start building your social networks… or your website will get a huge spike in traffic… or you’ll increase your client’s lifetime value… or you’ll convert more than one-third of appointments into clients…
When that happens, your income can soar.
There are many ways to get to six figures (and beyond) as a financial advisor and I’ve only scratched the surface with this article. I go into much more detail in my products and Inner Circle newsletter. After all, there’s only so much I can cover with one article.
Again, I’m not claiming you’ll make anything - all of these are for example purposes only - but hopefully, I’ve got the gears spinning in your mind.