Interview Part 3 - Guide to Interview the Interviewer

You now know the harsh realties of the financial advisor's career and you are fully prepared.

The amount of hard knocks and work one has to go through at the beginning is worthwhile if this career is meant for the long run.

Lets take it to the next level by finding a suitable place that is nestable for a potential lifelong career.

Whether you are an advisor-to-be or an advisor switching firms, the series of interviews at FA firms and insurance agencies can put you in a whirl of excitement, happiness, confusion and leave you with many questions about the future.

The people are so nice, so friendly and so kind. The firm seems to take advisors' professional development very seriously. They meet you up so often that they are getting familiar. They want you. You are not quite sure who to join.

By the time you get to this confusion stage, your emotions run high.

At a time when emotions are high, intelligence is low.

Not exactly a good time to be making decisions.

The next thing you know it, you sign with the friendliest agency/firm to avoid further procrastination. They will fill you with guilt about procrastination anyway. 
Its part of the career sales tactic.

Before you even get to the interview stage, you have to realize something very important.

You are not going for the interviews to get a job.

You are going for the interviews to interview the interviewer.

During the interview, the interviewer will tell you every single impressive thing that the agency/firm has done and will do for the advisor. Expect to hear a lot of repeats.

DO NOT count on mere words for your future, it is a HUGE gamble.

It is very easy for the salesman to glorify every single thing and promise things to you which don't have to be delivered today.

Once you have signed with the firm and gathered a pool of clients, it is going to be a pain to break away.

Imagine the opportunity cost :

You have to hunt for a new firm to join, go through tedious administrative procedures to leave the current firm, explain to every single one of your client reasons for joining the new one, apply for FAR license again at the new firm and wait for approval, go back to every single client to sign transfer forms to let you be their servicing advisor again…

Even if you want to stay in the same firm but change to another manager, FA workplace politics make it too complicated to do that. In some FA firms, it may actually be easier to leave the firm entirely than change to another manager within the same firm. 
It is dumb, but that is reality. 


During the interview stage you need to consider both the firm and the manager. 
It is okay to go for interviews again at the same firm with different managers. 
Every manager is different. 
Your environment and learning path can be shaped differently under different managers in the same firm.

With so much at stake, the person who has to take interviews most seriously, is YOU.

Words from a group of salesmen (recruiting managers, directors, testimonials taken from some advisors) can build the FA workplace to be quite a beautiful facade.

Fortunately, you don't have to wait till you've gone on board to find out about whats really going on in there.

You can ask specific fact-finding questions at the interview.

We've compiled a list of interview questions for you to ask about your future financial advisory work environment.

These are the questions we would have asked.

            

Company-wide Features:

1. Are you offered the benefits of Client Ownership and Vesting?

Having Client Ownership supposedly means you are given the right to port your clients over to another firm in the industry when you leave.

Having Vesting means commissions follow you even when you transfer to another FA firm. 

These are the most important benefits to ask about during the interview.

Life insurance agencies generally don't give advisors Client Ownership and Vesting, so you can strike those out in your interview notes when you go for the interview at a insurance firm.

Not all Financial Adviser firms offer both benefits, so do ask. 

If the FA firm offers Client Ownership, check if it will be stated in the contract and how it gets activated when an advisor leaves to join another:

Will the firm assign the servicing back to the advisor when he has transited to the new firm?

Or will the advisor have to go back to every client to sign a transfer of servicing form?

If it is the latter, this Client Ownership thing is just a hoax. 
Cross it out and move on to the next question.

2. Compensation Model: How does this agency or firm pay you?

Predominantly there are 2 types of Compensation Model in the financial advisory sector in Singapore.

One is Basic Commission and the other is the Gross Revenue. 

They are not the simplest things to understand but you have to understand them before you go for the interview, to ask clear questions.

Life Insurance agencies in Singapore presently work on the Basic Commission model. 

Some FA Firms in Singapore work on the Gross Revenue model.

Each financial product essentially has 2 parts to its commission:

Basic Commission and Overriding Commission.

Under the Basic Commission Model, regardless of the amount of total commissions you bring in, you get the Basic Commission as your share. Your manager and the firm takes the Overriding Commission.

Under the Gross Revenue Model, Gross Revenue simply means the total amount of commissions you've brought in for you and the company.

Gross Revenue = Basic Commission + Overriding Commission

In the Gross Revenue Table, your banding shows the percentage of the total commissions i.e. Gross Revenue you've brought in that you get to keep during the banding year.

For e.g. if you've brought in $80,000 of total Gross Revenue for the year:

60% X $80,000 = $48,000 -> Your Share of Commission.

40% X $80,000 = $32,000 ->  Manager's + Company's Share of Commission

Usually when newcomers enter the company, they are placed at the 60% banding level.

At 60%, the amount of commissions an advisor receives is around the same as under the Basic Commissions Model.

To draw veteran advisors from other agencies and firms, some FA firms have given these advisors a 1st year 80% banding incentive for joining the firm. Of course, this special offer is not available to newbie advisors. 

If the FA firm operates on a Gross Revenue compensation model, remember to get from the interviewer the Gross Revenue Table figures and copy them down in your notes.


Some FA firms give you a higher percentage of commission (i.e. higher banding percentage) for the same amount of Gross Revenue you bring in. 


That means more money for the same amount of work that you do! So this is definitely an area to keep a lookout for.

There are pros and cons for both the Basic Commission and Gross Revenue compensation.


The good thing about the Gross Revenue compensation is the more you produce, the higher the percentage you get to keep. 


The downside is you must produce that amount and more every year, for the rest of your life. If not, your banding will drop. 


For Basic Commission compensation, you will always get your fixed share, banding never drops nor increases.

The 3rd kind of compensation is fee based, which isn't as common in Singapore yet. 
These independent financial advisors charge clients fees for advice and return to clients commissions of financial products clients acquire through them.

Manager and training related questions

1. Is your manager hired by the company or is he/she an entrepreneurial manager?

The above might sound like a odd question but it has its relevance.

Before going there, at the beginning of the interview first check with your interviewer, if he/she is going to be your manager when you join. 
If he isn't, skip the 'manager questions' till you meet the actual recruiting manager.

Typically, Life Insurance agencies don't have managers on payroll to manage teams so you can safely strike that out in the interview toolkit if your interview is at the insurance agency.

At FA firms, they have both hired managers and entrepreneurial managers. 


Hired managers take a monthly pay check from the FA firm and entrepreneurial managers take a cut of the total commissions you bring in.

Hired managers have titles like Business Development Manager (BDM) and entrepreneurial managers have titles like Branch Manager (BM) or Branch Director (BD).

I have heard far too many advisors complain about managers who are on payroll.

One of the complaints is that these managers do not spend time to address advisors' concerns if the concerns are not within firm's key performance indicators (KPI).

Aside from spending time with advisors, hired managers have to do many things for the firm like recruitment, event planning, project management, administrative work, trainings etc.

Attention is already divided from day one.

                      Manager Hired By FA Firm

                Manager Not Hired By FA Firm

2. 
i) How many no. of years experience does your manager have in his financial    advisory practice?
ii) Is he still practising financial advisory?
iii) When did he last close a client?

(i) Years of Experience

It is important to find out about the manager's financial advisory sales background. If the manager has very little or poor relevant experience, like maybe 1 or 2 years doing financial advisory work or not successful at being a financial advisor, there isn't much to learn from him/her. 


After you're done learning from him, he will eventually just be an admin person to you, signing your forms and asking you about your production every week. 


If you are looking for a manger who can be your mentor, such a manager is not suitable for you.

Anything less than 3 years of financial advisory work experience is considered little ( for a manager ) in our opinion.

Another common complaint of hired managers is that they have little or poor financial advisory work experience. 
It does make sense, its hard to fathom experienced and high earning advisors and managers wanting to take a salary. That would mean a pay cut.

There are also managers who have been in the industry for many years. 
BUT they could have been in the industry since the 1980s and only practiced for a few years before being a manager. So, always ask specifically the number of years they have done financial advisory.

(ii - iii) Financial Advisory Practice & Last Closed Client

Some managers have many years of experience in insurance sales, but the last time they did sales was 10 years ago. 


Besides staying relevant with financial advisory knowledge, one needs to stay relevant with clients as well. It is a people business after all.

The best manager to have is one who still meets new clients. Even if it shaves off some time for you the advisor, his relevance in the financial advisory field will be immensely valuable to you.

In the whole financial advisory industry, whether you are in a upcoming FA firm or an established insurance agency, it is very common to have managers teaching a lot of things that is based on theory or from books. You will also notice that they spend most of their training on motivational content. 


To be practical, adding motivational content in trainings is a good way to kill training time and it is very easy to prepare. 


Step 1: Go to Kinokuniya grab some books 
Step 2: Go online and surf YouTube videos
Step 3: With content from the books and videos, generate a 2 hour training complete with a group discussion thrown in at the end. 


Even a secondary school student is capable of facilitating such a training.

Will you choose to learn driving from someone who last drove 10 years ago? 
Will you learn from someone who teach you how to drive from the driving theory handbook? 
Do you expect motivational quotes to miraculously transform you into a F1 driver?


If you will not entrust your driving lessons to someone like that, will you entrust your life career to a manager who mentors you the same way?

3. Ask the manager to show you a sales presentation.

Before going to the interview, check out the firm's website and read through their scope of financial planning for the clients.

Pick an area that interests you, for e.g Corporate financial planning : Buy-Sell agreement for the Business Owners.

Politely ask the manager if he/she can show you a role-play of the presentation, with him being the advisor and you as the client.

If after you've seen his presentation, you are enticed to find out much more, you know you will be able to influence many others to feel the same way too.


If the presentation leaves you confused and clueless, it is not a good presentation. 


A good presentation is one that makes complex things simple, not one that makes you feel stupid because its too complex. 


If the presentation is too cheesy or too boring, you can't imagine yourself replicating it, this is not the manager to join either.

It is important to see a live example presentation because it is a sneak preview to how this manager will impart financial advisory work skills to you in future. 


Whatever the manager shows you is likely to be whatever you are taught to show clients. 


If you are not impressed, don't join.

If the manager rejects you because it is not his area of specialty, ask if he can show you another presentation which he specializes in. 


If you are rejected for a reason like 'Its is too advanced for you', there can be 2 possible real reasons. 


1. He is not confident enough to show you the presentation.


2. He might be one of those managers who will always tell you to concentrate on your 'bread and butter' and cap your learning curve because he has already let his learning curve plateau and is unwilling to advance. Even if he sounds like he is very knowledgeable, do not be taken in, people in this industry are very good at projecting a facade. Many times their knowledge comes from repeating other people's client experiences and cleverly passing other's experiences as their own.


Hired managers are often guilty of letting their learning curves plateau. The fact that they gave up on sales to take a salary already speaks volumes.


When you advance quickly and possibly advance ahead of them, it makes them look bad the day they have to say to you these 3 words: "I don't know". In the financial advisory industry many people will never do you the favour of saving your time and tell you "I don't know." Compared to your time, their face is more important.


Whenever you ask an advisor, manager or director a work related question, if they have the answer, they will never hesitate to impress upon you their wealth of knowledge.


However if they are doubtful of their answer, they will never answer you straightaway or just say a plain "I don't know". 


They will always ask you Why you are asking that and ask all kinds of questions to skirt around the topic. After 15 mins you realise you still don't have the answer and have wasted your time and energy.


Also, when will you ever be good enough for something 'advanced'?

There are advisors who have been with their firms for 10 years and they still hear the same thing: "Its too advanced for you, just focus on your bread and butter."

You don't want to commit 10 years of your life to find out you have been fooled. 
Insist that he shows you that presentation, if not just strike this manager out of your list.

4. Ask the manager about the trainings you are interested in and if you can sit in.

Far too many FA firms claim they have world class trainings and are keen on advisor's professional development. 


Yes, they are, that is before you join them.

If the manager tells you about world class trainings that the firm provides and advanced financial advisory work the firm takes interest in educating the advisors on, do one very important thing.

Ask to sit in one of the trainings.

If you can't, do the next most important thing.

Mingle with the firm's advisors and ask if there are such trainings and what exactly do they do in there. If it all sounds really vague and iffy, definitely discount those trainings as part of your reasons to join.

There is no perfect manager or agency/firm but knowing what questions to ask will help you filter the ideal manager and firm to join so that you can have a head start compared to others who join based on blind faith.

However, a head start does not guarantee the financial advisor long term success.

What does it mean to be a successful financial advisor?

Interview Part 2 - Myths and Truths about the Financial Advisor's Career

There are many myths surrounding the career as a financial advisor.

Management people repeat these myths over and over again during recruitment campaigns and company events as if they are true. 

As these myths get so much air time, they have generally been perceived to be true. 

Even advisors have been conditioned to believe its true.

During your interview, the manager will regurgitate to you these common myths as part of his/her sales pitch to you about being a financial advisor.

Myth No. 1 : This is a business. You become a business owner.

This is one of the most overused misconception. A financial advisor is not a business owner. People like to use the word business very loosely.

You are really a self-employed professional.

Even when you become a very highly paid self-employed professional, it doesn't transform you into a business owner.

The advisor's business doesn't run without the advisor.

The advisor has to meet clients and close cases personally. 

He/She has to do all important paperwork personally and a lot of these paperwork involves writing long essays of reasons for recommendations for each financial product that is sold. (More of the financial advisor's job scope is discussed here)

The advisor cannot be removed from the picture and still expect to generate new business.

No work from the advisor = No pay for the advisor.

The advisor has merely given himself a job.

Like the Char Kway Teow man, to run his business he needs to open his stall. If he is not at the stall frying kway teow and selling them, the business doesn't run. Even if he has sold enough kway teow to buy him a Sentosa Cove residence, the stall cannot run without him. He has set up the business to employ himself.

However the Char Kway Teow man still has his advantage over the financial advisor.

He can take a backseat by hiring workers to fry and sell kway teow. Without him in the picture, the kway teow show still goes on and fresh new business comes in daily. 

The same can't be said for the financial advisor, even if he changes course and becomes a manager.

Myth No. 2: You are your own boss.

Myth No. 1 and Myth No. 2 sound similar, but have different points to expand on.

You are your own boss BUT you have to attend regular meetings you didn't call for. 

On top of that you go for mandatory 30 to 36 hours of trainings every year. 

If you are unlucky, you get signed on to a firm that insists advisors step into office by 9am, just like an employee. 

Almost every week there is a team meeting. During the team meetings you answer to your manager about your production figures. Sometimes you even answer to your team mates about your production figures. 

It is extremely illogical that you pay your manager and the directors a part of their salaries yet they make you answer to them about your work. 

Doesn't sound like much 'own boss' benefits.

Myth No 3: Unlike over at the banks, there is no sales quota.

At least the banks are upfront about their quota. You will know about the FA firm / agency's expected performance when you become licensed as its advisor.

Some firms work on creating an environment of peer pressure. Under the environment, you will be compared to your peers and you mind will be framed to compare yourself to your peers. This type of quota has a never ending ceiling.

Myth No 4: You'll be better off than your peers who are working 9 to 5. They are trapped in the rat race.

'You'll be better off than your peers who are working 9 to 5'

It really depends on what one defines as 'better off'.

The better off points I can think of is that the advisor has the potential to make much more money than his/her peers who take a salary and doesn't have to worry about taking leave or taking a MC.

'They are trapped in the rat race'

The advisor is also a rat trapped in the perpetual sales treadmill.

 No matter how well he/she has done in the past, the Management's pursuit of sales accolades for the advisor like MDRT, COT & TOT puts him/her back on the treadmill year after year. Other than these 3 things and some other internal sales awards, the firm doesn't really publicly chart any other career progression for the advisor.

No matter how hard the advisor works, he/she doesn't get out of the rat race. Just becomes a richer rat thats all.

Whether the same advisor is 21, 40 or 50 years old, one thing never changes. 

The company asks the advisor to run the MDRT / COT / TOT treadmill every year. 

Very simply, year after year that is all to work towards to. 

For the typical advisor, career progression is summed up in these 3 sales accolades.

As long as the advisor is still breathing, it never changes, even at age 70.

Financial advisors always compare down to the 9 to 5 workers.

How about the investor and business owner?

Myth No 5: You get to enjoy freedom of time.

You ought to know by reading this far that this cannot be true.

Officially you get to have freedom of time.

Whether or not you'll let yourself enjoy is another matter.

For the advisor, More Work = More Pay.

You could be resting. But if you were working you would get more money. So you compel yourself to work. And if you rest, you would feel at least a little guilty about resting. So that really doesn't count for enjoyment.

Even if you are able to let yourself enjoy the freedom of time, if you haven't met your sales production goal, your manager will remind you. Everytime. Without fail. You will be conditioned to feel guilty.

Even if you have met your sales production goal, MDRT for example, your manager will sell you the idea of striving for the next production level, COT. You get the idea.

With so much sugar-coating removed, what are the real benefits of being a financial advisor? Why are we still here?

It is financially rewarding. The satisfaction of having won over your clients is indescribable. You forget what its like to get a MC. You get to meet all kinds of people and learn from them. Along the way you establish friendships. If your firm agency doesn't force you to step in office by 9am, you get to enjoy driving or public transport during off-peak hours.You get to go to the gym during off-peak hours. You get to have lunch and avoid the lunch crowd. You know how to use a financial calculator. Your social intelligence and emotional intelligence improves. You get to network. You learn how to ask good questions. You learn to present effectively.

If it sounds good enough, lets move on to the 3rd part of the interview.

Interview Part 1 - Job Getting or Job Giving?

The interview at the Financial Adviser (FA) firm or the Life Insurance (LI) firm will be one of the easiest interviews in your life.

When you go there, you won't need to worry at all about making a good impression and selling yourself to the interviewer.

I have seen people turning up for the interview in t-shirt and jeans. The next thing I know they end up as advisors in the firm.

In fact before you've even stepped into their office, you have already nailed the interview.

Why?

As long as you are 21 years old and above, have at least 4 credits in GCE 'O' levels, you're not an undischarged bankrupt, have not committed a criminal offence and MOST importantly, you can breathe, you are guaranteed a place.

Although some places have marketed themselves as highly exclusive, accepting polytechnic and university graduates only, one can guarantee they will not turn you away. 

It is getting harder and harder to recruit new people into financial advisory firms and insurance agencies. 

The only times when financial advisory firms and insurance agencies can see a spike in recruitment is during recession periods when firms from other industries are not hiring and retrenching.

When you arrive at the interview, although you will be asked the usual cheesy interview questions at first, you do not have to take the Q&A as life and death.

Those questions are asked to kill some time first. 

You don't have to sound smart. It wouldn't matter at all. 

In fact the questions are simply a build up for the interviewer to sell you the career.

Truth be told, the interviewer has more reasons to be more nervous than you are. 

He has to close cases too, and you are a case to be closed. 

If he lets you slip away, in the next manager's meeting he has to face the embarassment of explaining to his other fellow managers why you didn't join this career in the end or why you ended up with another firm. 

So when you are going for the interview with the financial advisory firm or insurance agency you can just sit back and relax.

Typically, the interviewer is also the manager who is recruiting you. He/she will be your manager if you join.

The truth is, you're not interviewing for a job.

You are being interviewed to become your recruiter's boss.

When you join, you're going to pay for a part of your manager's salary and a part of the directors' salaries.

This is how it works:

As a financial advisor you meet clients. Close cases. Bring in money.

Company takes a cut. Manager takes a cut. 

You take the leftover of what you brought in.

Without you in the equation, company doesn't get paid, manager doesn't get paid either.

So that explains why they are always so nice and patient and keep wanting you to go for the interview even if you can't make it on certain dates. 

However, the same nice and patient attitude isn't always replicated after you have joined the firm and settled in.

However remember that without an additional you, there is NO increment to their salaries.

As a financial advisor or insurance agent, you are powerful. You pay other people's salaries first before you get paid your own salary. In some financial advisory firms, you are even paying for the office building rental. 

If you are at a firm that practices a top down approach to advisors, remember, the power is really bottom up.

Now on to the next part of the interview.

Financial Advisor vs Insurance Agent

So you've just received a call for an interview for the position of a Financial Consultant / Financial Planner / Management Trainee with a Financial Services / Financial Advisory Firm. Congratulations!

Why so many name variations ? Actually they all mean exactly the same thing.

Recruiting managers from life insurance firms and financial advisers tend to be very creative with names.

They don't want you to miss out on this fascinating career of a Insurance Agent or a Financial Adviser Representative (FAR) just because of your pre-conceived notions.
After all, how can you be interested in something you have not tried?

How did they get your number even though you didn't send in any resume? 
Well, either they have bought leads from a leads seller to cold call you, or you have passed by their booth in NUS /NTU/ SMU career fair and left your number. 
Graduating students are hot favorites of cold-calls by recruiting managers from life insurance agencies and financial advisory firms. 
If Singapore tertiary students need sponsorship for any kind of events and don't mind hounding recruitment calls, approach insurance agencies and financial advisory firms for sponsorship.

Life Insurance Firm vs Financial Adviser

How to tell if you've been called to interview by an insurance firm or an advisory firm?

Financial services / Life insurance firms are like Prudential, Great Eastern, NTUC Income, Aviva etc

Financial Advisers are like IPP, PIAS, Finexis, Providend etc.

Here is a source where you can find a good list of them.

If somebody calls you up from an insurance firm, the person will introduce himself as someone from Michael Tan & Associates or Michael Tan Organization. When you ask the person over the phone what they do, he/she is not be upfront with you and tell you life insurance. Instead, it will be financial services.

And if somebody calls you up for an interview from a financial adviser, the introduction will also involve something like e.g. Michael Tan & Associates or Michael Tan Organization. When you ask  a bit more about what they do, he/she is also not likely to be upfront and tell you life insurance either. 
If you probe a little further, he/she will be quick to add that besides life insurance they also do investments and financial planning for corporations,
work with hundreds of life insurance firms, 
general insurance firms, 
fund managers and offshore investment firms. 
This is what typically most people know as a financial advisory firm.

Insurance Agent vs Financial Advisor

The birth of the Financial Advisers Act (FAA) in Singapore also gave rise to the existence of Financial Advisers Representatives (FAR).

Insurance agents work very hard to be seen on the same level as FARs. 
FARs work very hard at differentiating themselves from insurance agents.

It isn't easy.

Insurance Agent is an easy name to understand, remember and repeat. But it hasn't gained the best reputation over the years.

FAR is such a mouthful. Nobody ever remembers the name, much less repeat it. 
So even though its the only name insurance agents are not able to use, the FAR usually doesn't use the FAR title.

However, the closest title 'Financial Consultant' is used on practically every insurance agent's name card.

What exactly is the real difference between being an Insurance agent and a FAR?

Frankly speaking, not much difference.

That difference is only on the client's end.

The FAR's clients get to benefit from the FA firm's much much much wider range of financial products.

Aside from that, everything else is the same for the FAR and insurance agent.

Both are mostly remunerated by commissions ONLY.

The very few insurance agents who are paid a monthly salary either have a really low basic pay with some compromised commission structure, or are signed on to a program conjured by recruiting managers with too many terms and conditions about the monthly compensation.

There are also the minority independent FARs who don't receive commissions and charge clients fees instead.

Both have to find their own clients.

There are many ways to go about doing that . Approaching friends and family, asking for referrals, going for roadshows, cold callings, cold canvassing on the streets, doing surveys, and for some, getting professional introducers.

Other similarities and differences are minor in comparison.

At the end of the day, their job scope and environment is largely the same. Not one them is more superior than the other.

The question is, can you deal with 
1) constantly having to find clients and 
2) being remunerated  based on commissions only?

If you can't, save yourself the time, save clients the trouble. Pursue something else instead.

If you can, great, simply read on for the interview.


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