There is magic in the side hustle. If you're on the path to FI like most of us are, and you're not already making six figures with three rental properties
I think it's no secret that many people in the FIRE (Financial Independence Retire Early) movement have a hankering to quit their 9-5 job.
However, there are some of us who want the choices that Financial Independence (FI) will bring but don't necessarily plan on the RE part. I fall in this latter camp.
Whatever your flavor, make sure to love the journey. Life is too short to be miserable now in order to be happy later. Which, to be honest, may never come. We are not promised longevity on this earth.
Wikipedia will tell you that delayed gratification is the process where a subject resists the temptation of an immediate reward in preference for a larger later reward. I can agree with that.
What I'm about to propose is that delayed gratification can create more room for joy. And that joy can include a purposeful career. You just need to be really intentional about what truly matters to you.
Unfortunately, in my younger years, I was the poster child for instant gratification. This thrill-seeking lifestyle ultimately led me to a dark bottom when I was in my 30's. The good news is that I've come out stronger and quite amazingly am now on a path to FI.
Recovering from addiction and debt has taught me a great many things. I've learned to embrace delayed gratification and in the process, I discovered what truly matters to me. Turns out the things that bring me joy, don't really cost money. A lot of things which bring instant gratification are fleeting. I desire for a more lasting gratification in my life. So let's come up with a more appropriate name for that.
I've found a better life in being intentional about what brings me true satisfaction while factoring in my long-term goals. Embracing this intentionality is producing fruit in both the short and long term.
Since the things I value don't necessarily cost money, I'm able to sustain a fairly high savings rate. A high savings rate allows me to invest in the goal of achieving FI which will, in turn, allow me more freedom to spend time on the things I value. It's a beautiful cycle! However, I'm not waiting till later to take the time for these things:
- Health and Fitness
- Helping Others
None of the above truly cost money or, at least, don't have to. The glaringly obvious one that can cost money is health and fitness. I'm a fan of group fitness as I like the accountability. This costs money. Fortunately, my boss pays for my gym membership. That's certainly a top reason I love my job!
If I had to fund my own fitness, a membership would still be something I value. But, I know if I have to cut costs, I can still maintain my fitness for free in the beautiful world we live in. The following activities are free:
Check out this podcast episode to learn about seven easy ways to workout for free.
However I do it, it remains a top priority for me. I heard a great quote from the late Dr. Wayne Dyer, “if you don't take the time to exercise when you are young, you'll have to take the time to be sick when you are old.” #Motivation
Enjoying The Journey
I love my job but that was not always the case. I've worked in some crappy environments, had abusive bosses, worked nights and weekends, and was paid little. I've worked really hard to get to the place I'm in with my current career. It's good.
I would like to explain what I love about my job in hopes that it'll inspire you to make the most of your current career or maybe even change careers. Find your passion!
Firstly, it's called work for a reason. Some people loathe hard work. I personally find it gratifying and no doubt, in retirement I'll still work really hard on my hobbies. It's just ingrained in me. Even when I was caught in addiction, I worked really hard. I was high functioning. The difference is now, I work smarter.
What I Love About My Job
My Awesome Boss
Bosses can really make or break a job. I endured cruel treatment from bosses in my past. I'm not sure why but I have this loyalty thing in my bones. When I start something I see it through. That can be a great trait but obviously in the case of staying at a crappy job for too long, not always.
My boss is a genius. He started his company with a great idea and has grown it from there. I get to participate in that growth.
He personally values health and fitness, and in turn, provides health insurance and foots the bill. Additionally, he offers a membership to a fitness club. I take full advantage of both.
He values his employees and tells them. I love affirmation. No, actually I crave it and that is probably due to the lack of affirmation I received as a child. My boss gives it, but we have to work for it. He recognizes hard work, efficient processes, talents, and skill. He tells me often that my stock at our company is high. It makes me want to work harder and smarter.
I work with a bunch of team players who strive to get better both professionally and personally. Sure there can be the occasional drama but I'll tell you what, my boss doesn't tolerate it. If there is a relational issue in the office, my boss will get to the root and make us work it out.
Most of the people in my office care about their fitness. That in and of itself creates a healthy environment. It seems to me that people who work out, also eat healthily. When others are making healthy choices, I'm inspired to also make healthy choices.
In the past, I didn't know my worth. I lived below the line and accepted whatever pay I could get. During the last seven years at my current job, I have undergone a lot of financial transformation. Namely, I dug my way out of debt.
An amazing thing occurred as I started to pay attention to my money. Actually, several amazing things occurred with this level of intentionality:
- I found #CareerHacking and started to work smarter.
- I found my voice professionally.
- As I started to pay attention to my personal finances, I learned to pay attention to my company's finances.
- I discovered my professional worth.
Let me tell you what has happened to my income over these past seven years. Within four years my salary had jumped by 25%. During the intensity of my debt pay off phase, I began employing career hacking and received another 20% raise. This year, I received an 8.3% raise. Additionally, I have received quarterly bonuses.
When I got back from Ramsey Studios where I was able to share my testimony, my boss talked to me about my future financial goals. I am happy to report we are on the same page with the next level of pay increase I'm striving towards.
I know that recovering from addiction is a gift and I use that gift to help others find the same freedom. My career doesn't involve helping recovering addicts or alcoholics but it does involve helping others. I'm a fan of helping all kinds of people.
I manage accounts and we have a unique model for helping small business provide health insurance for their employees. Part of my job involves cost-benefit analysis. I find it gratifying to work the numbers to find the optimal solution for our clients.
Another part of my job involves teaching the employees of our clients about their benefits. I'm a teacher at heart as I used to teach high school mathematics. Teaching falls in line with helping others.
Related: Talent Stacking to Fast Track FI
We have a diverse set of clients and some require hard hats during visits. I always enjoy seeing how companies run and employ different efficiencies. Not to mention I get to meet a lot of interesting people and hear a great many stories along the way.
Enjoying the journey and living a life of purpose is what it's all about. If you don't yet know your purpose, I suggest you spend some time figuring it out. It's well worth the time!
Now I'd love to hear from you. What have you learned on this journey? What do you value in life? How do you live your purpose?
Want to read more from Ms. Fiology? Check out the rest of her articles here.
The concept of “talent stacking” was originally coined by the creator of the Dilbert comics, Scott Adams, who touted the value of taking a set of connected (or even some unconnected, but relevant), ordinary talents and combining them to create one extraordinary person.
An example of a talent stacker would be an insurance broker with a podcast and a knack for public speaking, or a school teacher who knows how to create helpful lesson plan print-outs and uploads them to a website she created to sell to other teachers.
Adams, himself, is a perfect example of what it means to be extraordinary simply by accumulating a unique set of ordinary talents. He is not a groundbreaking artist, or a prolific writer, but he artfully combines his wit and basic drawing skills for a 1-2 punch of uniqueness.
He’s also valued at over $75 million dollars. Not bad for a cartoonist!
Most of us have regular 9-5 jobs before we reach FI, and often, even with years of experience, our resumes closely resemble that of our colleagues. While you might have racked up awards, job titles and prestige within your field, one way to fast-track your earnings is to mark yourself with a differentiator–namely, a talent stack of skills that set you apart from others in your field.
Developing an array of interrelated skills makes you stand out and valuable. Not only valuable in helping you have a competitive edge for your next job interview, as the accountant who is also great at social media marketing for whatever office they work for–but it can also be a completely different talent that sets you apart and helps you earn more instead of being passed over.
How To Identify Talents You Should Stack
You may be working as an accountant for a mid-sized company. While you are very skilled at what you do, you start to recognize that there are needs in the types of companies you work for that go unfulfilled, and talents within the existing workforce that go undeveloped.
For you, you might be able to set yourself apart by developing public speaking, website coding, online content writing, or online marketing skills to add to your talent stack.
Being able to be an accountant that can also help your small company run their Facebook page is a great skill to have–and likely a rare one. Additionally, there is huge value in being able to speak confidently at the local Chamber of Commerce meetings since you can eloquently craft and deliver a presentation that fits the needs of the local community to attract new clients.
No matter what your current career field, you can likely identify things that would make you stand out–perhaps certification or training in emerging technologies, relevant volunteer experience, or even some sales experience.
Some Examples of Talent To Stack:
- Social Media Marketing
- Website development
- Photography or graphic design
- Public speaking
- Event planning
- Search engine optimization
- Basic accounting or organizational skills
- Entrepreneurship/running small businesses
- Unique personality traits (like humor or leadership)
Developing A Talent Stack For Yourself
While it’s helpful to rack up talents that can help you get noticed if you’re applying for a new, better paying job, it can also be useful to diversify your talent set if you’re thinking of developing a side hustle to earn extra income.
Again, if you’re an accountant who is looking for more work on the side–you could learn more about online course/product creation, blogging, podcasting, or even online coaching to earn money in your spare time.
Learning how to put together an e-book that draws on your years of experience as an accountant, but solves a problem for someone with a small business, is another way to diversify your talents and your income by developing your own sellable product based on your work experience.
It simply takes learning a few new things outside of your existing skill set; like how to create a digital product, build a basic website, or create listings on Amazon. Often you can learn these skills for free to talent stack extra income.
You Don’t Even Have To Be Good
The fabulous part about developing a talent stack is that you don’t have to master a set of skills to an expert level. Simply acquiring an additional array of skills will help you:
- get noticed in a crowded marketplace
- earn more pay for what you do
- take your regular skills and market them in new ways to earn money on the side
Most of us are told that we should strive to be the very top of our field–but as we age, we start to see that getting to the top of the specialty pyramid, as a truly world-class expert, can be challenging.
While we should always strive to develop our crafts to the level of Michael Jordan, we may realize it’s a challenge to simply be that talented. And competition for being specifically “the best” is tough. Where we can truly shine is by accumulating a unique set of talents that help us market ourselves as an outlier and differentiate our skill sets.
But Does Talent Stacking Pay Off?
It did for me! I originally got into social media marketing as a hobby. However, over time I began to see needs and other skills to develope beyond using the Facebook ad platform or scheduling tweets to stand out. When I left graduate school, the sheer volume of people applying for entry level social media marketing jobs was staggering, and I didn’t have any sexy internships or apprenticeships to speak of.
So, of my own volition, I took several courses on photography, learned basic Photoshop skills, and built a blog that would help me understand a new aspect of social media that hadn’t been widely developed. This niche was influencer marketing. This area of expertise allowed me to stand out from the crowd.
I worked with brands as an influencer on my blog and saw what brands were doing with other influencers and how they were building their successful, and sometimes, less successful marketing campaigns. Eventually those skills and unique perspectives landed me a hefty pay increase at a new, highly respected company.
Since I became a “Jill of all (well, many) trades” and developed a unique set of skills, I was able to cut through the cluttered applicant pool and land a highly advantageous offer. Truly, I’m not the best social media maven out there, but I saw holes in the workforce and went after them to learn more. That insight and hard work paid off.
You’d be surprised what a few additional, non-exceptional skills can do to help you get exceptional results–much of which can be learned for free online, or through reading a few books at your local library.
Achieving financial independence quickly requires saving the largest percentage of your income possible. While you could cut your spending back to the bare bones minimum, it’s often easier and more productive to focus on earning more income. After all, it’s easier to save a large percentage of your income if your job pays you well.
Unfortunately, many of the highest paying jobs require advanced college degrees. Sadly, obtaining a four year college degree means taking out tens of thousands of dollars of student loan debt in many cases. For most people that student loan debt, combined with the time it takes to earn the degree, would push back your financial independence date by years if not a decade or more.
Whether you’re in high school and want to achieve financial independence as fast as possible or you’re stuck in a low paying job and don’t want to take on student loan debt to get a degree, there are jobs out there that could pay you over $100,000 per year without a college degree. Keep in mind, you likely won’t earn $100,000 in these jobs immediately. Instead, you must work up to these jobs within each career field either through on the job training or an apprenticeship.
Power Plant Operators (Median Salary – $77,180 | 90th Percentile Salary – $103,880)
Power plant operators are in charge of controlling, operating and maintaining the necessary equipment to generate electricity. They monitor control boards and instruments to distribute power and maintain proper energy levels for their system. While there are power plant operator jobs at traditional power plants, don’t forget to explore options like power plants at industrial facilities such as paper mills. The Bureau of Labor Statistics (BLS) says long-term on the job training is required for this position.
Power Distributors or Dispatchers (Median Salary – $82,510 | 90th Percentile Salary – $111,250)
Power distributors or dispatches are also commonly called systems operators. They control the flow of electricity after it leaves the power plant on its way to the substations and eventual end user customers. Their job requires them to monitor and operate a wide range of equipment to distribute electricity and avoid issues such as transformer or transmission line failures. The BLS says long-term on the job training is required for this position.
Elevator Installers and Repairers (Median Salary – $79,480 | 90th Percentile Salary – $115,880)
Elevator installers and repairers don’t just work on elevators. Typically, they work on elevators, escalators, chairlifts, moving walkways and other similar people moving equipment. Most workers will specialize in one of three areas: installation, repair or maintenance. Depending on the area where the job is located, a worker’s territory may be spread out or concentrated depending on the number of pieces of equipment in the area. For instance, a technician in New York City would have a much smaller service area than a technician in the rural south. The BLS says you’ll need to complete an apprenticeship to obtain this position.
Detectives and Criminal Investigators (Median Salary – $79,970 | 90th Percentile Salary – $135,530)
Detectives and criminal investigators can be uniformed or plainclothes depending on the position and ongoing investigation. These professionals work to gather the facts in criminal cases through interviewing suspects and witnesses as well as observing crime scenes and other information. While detectives and investigators could investigate a wide array of cases, typically a person will specialize in a certain area such as fraud or violent crimes. The BLS says moderate-term on the job training is required for this position.
First-Line Supervisors of Police and Detectives (Median Salary $87,910 | 90th Percentile Salary – $140,320)
First-line supervisors of police and detectives typically train their subordinates, make sure their work is up to the standards required and offer guidance to make sure investigations are conducted according to the law. They’re also responsible for dealing with conflicts between personnel and any staff misconduct that may occur. Typical job titles include Chief of Police, Lieutenant, Police Captain or Shift Supervisor. The BLS says moderate-term on the job training is required for this position.
Commercial Pilots (Median Salary – $78,740 | 90th Percentile Salary – $152,180)
Pilots are responsible for a lot more than flying the plane from destination to destination. Pilots must check the condition of the aircraft they fly before and after every flight to make sure the plane is safe to use. They must also make sure the plane’s weight is under the maximum limit and is distributed properly as well as verify they have enough fuel to reach their destination. Pilots must communicate with air traffic control and manage the plane’s operation while in the air. What seems like a simple job requires a lot more concentration and effort than most people would think. The BLS says moderate-term on the job training is required for this position.
Transportation, Storage and Distribution Managers (Median Salary – $92,460 | 90th Percentile Salary – $156,710)
Transportation, storage and distribution managers are responsible for moving, storing and distributing their respective products while making sure to follow any laws or company policies that may apply to their specific products. This job category also includes logistics managers. These jobs can get hectic in fast paced environments and require a person to be very aware of safety concerns that may exist if heavy equipment is used to transport, store or distribute a product. The BLS says no on the job training is required for this position.
While some of the above jobs may offer a standard 8am to 5pm Monday through Friday work schedule, most require shift work or working odd hours to meet the demands of the job. That said, you won’t have to spend four or more years earning a bachelor’s degree for the opportunity to start a career that will eventually allow you to move up into one of these positions.
Related: Talent Stacking to Fast-Track FI
In the end, you have to balance your desire for an ideal job with the desire to achieve financial independence as early as possible to come up with a solution that will make you happiest both before and after achieving financial independence.
Do you want to find even more high paying jobs that don’t require a college degree or a high paying career path that interests you more than the above options? Check out the Bureau of Labor Statistics’ Occupation Finder.
Want to read more from Lance? Check out the rest of his articles here.
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- Career Hacking As A FIRE Power
- 023 | Career Hacking with ESI Money
One of my highest priority 2018 goals is to start down the path towards becoming a financial advisor. I’ve always said that I wanted to help people with money once I was financially independent. After I started my blog Winning Personal Finance, I realized that it would be a mistake to delay this goal (that I’ve already had for 12 years) much longer.
If I was still a student, becoming an advisor would be an easy path to follow. Take the courses. Pass the test. Get an entry level job and grow from there.
As a “Mid-Career” professional, I’m finding the path more challenging. I’m already earning a healthy income in another field. I use that income to support my wife and two kids. While we have a well above average savings rate today, moving back to an entry level job seems a bit crazy.
Fellow ChooseFI blogger FI-nancial Planner, as heard on the CFP Roundtable episode, was gracious enough to answer a few of my questions. I know there are many others in the financial independence community that are interested in becoming financial planners, so we turned the discussion into an article for you below. My questions are in bold titles and the FI-nancial Planner’s answers are in normal text.
Questions focused on becoming a financial advisor
What CFP educational program did you take? How well did the program prepare you to be an advisor? Was additional education and experience outside of the program necessary for you to feel like an expert?
I was able to do the challenge status due to my CPA background so I can't speak personally to the educational program. I do work with quite a few graduates of CFP programs including VA Tech, TX Tech and UGA. We've had interns from Utah Valley University and I have talked with Kansas State graduate students. All are great programs with excellent graduates. These programs provide technical knowledge and a limited amount of human knowledge or soft skills, most of which you pick up on the job.
Once in the industry, it's possible to gain experience through programs offered by industry organizations like the FPA Residency which I attended. My firm strongly encourages new CFPs to attend residency and I would encourage others to attend, even if not covered by your employer.
I'm not sure that I would call myself an expert, I think that comes with loads of time and experience in the industry. I think it is easy to focus on the technical side of planning and doing fancy work with stock options and the like, but the good financial planners are able to connect with clients. People skills are what really sets great planners apart. This part of the talent stack comes from experience and time in front of clients, there’s no free lunch for this part.
For somebody eligible to skip most of the coursework with Challenge Status, do you suggest doing so or taking the full course anyway?
I did the challenge status and didn’t do the coursework. Depending on your background, I don’t think it’s necessary to get a handle on the concepts and technical knowledge. Also, the firm I joined was able to help me grow and learn on the job. If I didn’t have that opportunity, taking the coursework would have provided more background knowledge.
What program did you use for your capstone course? Do you recommend it?
I used the Zahn review course and they were linked with Tallahassee Community College. The capstone course was OK, I don’t remember much of it except that when I delivered my plan the instructor stopped me halfway through and said “Clearly, you know what you are doing, you did a great job”, and ended the call. I did not learn anything doing this course, it operated more like a basic check of competency.
Do you have any advice for somebody preparing for the CFP exam?
There are several reputable companies out there that offer study materials and guides. I would definitely recommend using one of these and putting in the time.
I would estimate my study time at 150 hours of studying for this exam. Comparing it to the CPA exam, I would say it was like taking two exams at once in regards to the amount of content. Putting in the time is required to do well on the exam.
Based on your experience, it seems like those eligible for the capstone can still succeed as financial advisors and save some time and money. Do you feel like you missed out on anything by skipping the other courses? Do you think the other courses are necessary to prepare for the exam or is taking a review course enough?
I think taking the review course is plenty to help you pass the exam. Working as an advisor is another thing entirely. I think the apprenticeship model is really helpful in getting you up and running as an advisor. There are so many other elements to financial planning beyond the technical numbers and book learning side. I don’t think I missed a single thing on the technical side by skipping other coursework. Seeing our new hires coming out of school, I think I had more technical knowledge than most of them, after a few years as a public accountant.
It seems that many financial advisory jobs end up very sales focused. Do you have any suggestions for somebody wanting to get financial advisory experience without working as a salesperson? I’m looking to get into this line of work to help people, not sell them the “financial product of the week.”
Yes, there are tons of sales oriented positions in this industry. It’s important to note that product sales and business development (BD) are different. To thrive in this business, you will need to bring on new clients, what I call BD. Many young advisors are nervous about this, but if you approach it from providing help to people that need it, it is more palatable.
There are lots of firms in the Registered Investment Advisor (RIA) space who don't seem as sales/BD oriented, and I am working at one of those firms. I have zero BD requirements until my next promotion (level five of seven in our firm). With that said, I think I lack BD skills and I expect a tough transition to that role. If you're at the right firm, they'll provide the training and support to make you successful in that type of position.
By following the fiduciary route of getting your CFP and working at an RIA, there will be very little product sales as a part of your job, if any at all. We are really in the business of selling our services, as we can’t be paid by product sales as fiduciary fee-only advisors.
To find the firms that are fee-only, you can look on NAPFA’s website or ask the compensation model of any firm you speak with.
I’m a high earner in a career outside of personal financial planning, If I wanted to change to a financial planning career path without realizing a significant drop in income, what advice would you give me?
If you're going to work at a firm instead of for yourself, you will likely take a drop in income since you are inexperienced. However, if you are able to bring in business, there are usually rewards tied to that new business. It will be tough to move sideways with respect to income as you’re essentially on the same skill and knowledge level as a new college graduate.
With that said, you're more likely to get back to your old salary faster by going this route than creating your own firm. I would really encourage career switchers to work inside a firm rather than go it alone and try to build a business while learning about financial planning along the way. This seems like a disservice to clients to me.
Would it be possible to start getting experience as a financial advisor as a side hustle outside of working hours? If so, what is the best way to go about doing so?
There are tons of opportunities to do this if you can get connected to the right people. There are lots of jobs where they need a paraplanner (a back office planning associate) to just prepare financial plans. I have a friend that does this on the side while he is building his own planning business. I think the hard part here is that you may not have the skills or background to engender trust to work as someone’s planning associate on the side.
How much can I expect to make as an advisor starting out (assuming no book of business to start). What is the income growth potential?
I can only speak for my firm and give broad ranges. We are in the DC metro area. A first year associate out of school makes between 50-60k and raises for high performers over the past five years have been in the 7-15% range. Career switchers will likely come in as senior associates and make 65-75k starting out and expect similar raises. Bonuses are in the 5-10% range. Of course, keep in mind that the past five years have been a ridiculous bull market that helps the firm’s bottom line dramatically.
After listening to lots of XYPN podcasts focusing on advisors building their own firms, a reasonable growth rate seems to be two clients per month. If you figure out what you expect to make from each client, you can work out your earnings potential.
Questions focused on the business of financial advising
What type of fee arrangements and services do you have with your clients (hourly, charge per plan, retainer, assets under management)?
Speaking just of my firm, we charge per plan (fee based on complexity) and assets under management. However, I know of many in the industry that work on an hourly or retainer basis. My firm has not implemented those models although I think they are the future for younger clients.
Index fund investing is all the rage these days. Do you agree that investing in low cost index funds is best? Why/Why not?
Yes, the statistics are hard to argue with here. Active managers, as a group, underperform or match their indices. There are a number of factors here, beyond the fees there are two main reasons. The first is risk aversion (what if your large cap value fund underperformed by 5% one year, how likely would you keep your money there?) and the second is size related (it’s hard to invest $50 billion in a way that doesn’t mimic an index).
I believe in less efficient markets (where information isn’t as readily available as the US market, for example) there is opportunity to add value by using active management. Emerging market equities and debt are great examples, when you have managers who are on the ground doing the hard work of gathering information, there can be an edge gained by paying a higher fee to these folks.
My personal goal is not to manage investments for people but to provide fee only financial plans and not be associated with selling specific investments or insurance products. Do you think there is a market for this type of service?
Yes, I do think there is a market for this and I hope to pursue it myself one day (likely after reaching FI). The problem with this is that you constantly need to be bringing on new clients to make a living doing it this way. The AUM/investment management model generates recurring revenue whereas a financial plan doesn’t go stale each year and need an update. There is a lot of value to help a client reorganize their financial life, and even if that takes a year to do, what value will you provide the next year?
I think there is value to providing ongoing investment management services, but I don’t think the 1% AUM fee is really a reasonable charge to do so, especially if you're using passive investment vehicles. A more reasonable fee may be in the 0.25%-0.5% range, and the value would be more behavioral, keeping clients in the market or evaluating valuations and reallocating investments accordingly.
In an ideal world, I think providing ongoing financial planning services will be my main model, but investment advice will be the recurring money maker. For example, maybe a $250 per month financial planning retainer and 0.5% of assets under management. A $1,000,000 client, would be paying $8,000 per year. For a $250,000 client, the fee would be $4,250. Obviously, this client would need to have strong cash flow to pay this fee.
Another fee model that interests me is a fee tied to net worth and income. Say 2% of income and 1% of net worth. This would be the upper bounds on the fee based on what I’ve heard in the industry about where clients see the value of the services they receive.
I know many in the FI community would have a heart attack at this fee, but imagine how much people pay for other services in their life, often to receive much less in return. A client can always decide to not pay the fee, so they are finding value in the services that we provide.
It’s a shame that you and I both think we need to reach FI before we can run this type of business model. A financial advisor can bring tremendous value to clients with tax planning, investment advice, and asset protection advice. Even without managing somebody’s investments. Today, I’d guess that most consumers go it alone because either they can’t find an advisor they trust (it seems that all advisors are selling them something) or the fees charged are high enough to dissuade them. For the record, I fall into the second boat where paying 1% of my invested assets that are currently self-managed in index funds seems way too expensive for a second opinion on my personal financial situation. Do you think the big hurdle to run this type of model is a marketing funnel that will bring in enough new clients to avoid the need for recurring revenue from clients?
I think it’s likely that you and I are just risk averse. Whether we were starting a toothbrush manufacturing facility or a financial planning business, we would be scared to take the plunge without a backup plan (in our case, FI). The marketing funnel is absolutely a solution to this problem, as it will work to limit the risk of not having enough revenue to make a profit and live at our accustomed standard of living.
I understand the reasons why potential clients shy away from financial advisors and I think that the general population is more likely to go without an advisor because of the lack of trust rather than due to the fee. I would venture to guess that those two camps make up less than half of the population however. The other half either doesn’t know they need financial help or are afraid to bare their financial lives to another person.
What types of clients would benefit from hiring a financial advisor (age/income/net worth/goals)?
I think everyone needs a financial plan, but may not need an ongoing relationship with a financial planner. Pretty much everyone would gain from engaging a planner. Newlyweds, new parents, and soon to be retirees are obvious. How about a college student or recent graduate needing help with student loans or starting a new job and understanding benefits? The industry leans towards those who have accumulated money because they are profitable and fairly easy to work with. However, that’s somewhat like teaching editing skills to a college student, whereas some folks need to learn how to read.
How can we bridge the gap between those that would benefit from a financial plan and those that are getting them? Many advisors with an AUM minimum won’t accept clients without significant assets such as most newlyweds or college graduates. I dream of providing a valuable financial plan for those that need them at a fair price. Do you think offering this type of service to those who have not accumulated great wealth is a viable business? I’ve looked into “financial coaching” as an alternative but that would mean not providing investment advice at all. It seems a bit crazy to be a “financial coach” and not be able to talk about investments.
I don’t know much about financial coaching but that doesn’t seem like a viable alternative to me. It seems like that would be limited to budgeting and cash flow issues.
There are models out there that work for clients who do not have a large net worth or investable assets, but I think the problem comes back to perceived value. I am very confident that I could provide more than $250 a month of value to a client, but I don’t think there are many out there who are willing to pay that fee. With that said, my annual revenue from that client would only be $3,000. I would need 25 clients at that price to cover my costs of a firm (I think ongoing costs would be in the 10-20k range) and take home a reasonable amount. To match my current salary, I would need at least 40 clients. At a rate of one to two clients a month, it would take me two to three years to break even, let alone the massively increased work hours to get there.
I have heard of joint sessions similar to group therapy that work for some advisors. If you and a few of your really close friends (close enough to share all your financial details!) come together and pay $50 per hour, an advisor could make $200 per hour for a consulting session. That might be viable. But, there are a lot of variables here like finding 4x the clients and overcoming the taboos.
How can your clients expect to benefit from spending their money on the services of a financial advisor? (The more analytical the better i.e. many clients find tax savings, investing fee savings, etc. that far exceed the cost they pay.)
I can think of several clients where a cursory review of their tax returns more than paid for our fee. One client wasn’t contributing the maximum to their HSA but had more than enough medical expenses to contribute and withdraw the entire balance. That discussion saved him probably $3,000 in taxes.
Another client wasn’t gifting appreciated stock, but rather tens of thousands in cash to charitable organizations. Imagine the tax savings on a $30,000 contribution when using appreciated stock in the height of a bull market! That’s an easy $6,000-7,500 savings right there.
We have another client who is looking to get married for a second time. How much value will working with him on an estate plan and prenuptial documents provide? Hopefully zero value, but potentially tons of money.
There are numerous studies showing the value that financial advisors provide. The two I have read most closely come in around 3-4% per year.
- Michael Kitces–This is a subscriber only report but indicates savings from a financial advisor:
- Tax–$1,000s-100,000s (these $ figures aren’t quantifiable not sure if it’s even relatable)
- Investment planning–low estimate 1%, high estimate 4.11%
- Estate–$10,000s-millions (properly handling estate taxation, implementation of the estate plan etc.)
- Retirement Planning–$1,000s-100,000s (Deferral/withdrawal strategies, social security planning)
- Insurance–$100s-1000s (correct coverage type and amount)
Hi, it’s Jason again. First and foremost, I want to thank the FI-nancial Planner for sharing his wisdom. I’m probably not going to figure out my situation with one conversation. It’s going to take the aggregation of marginal gains to get where I want to go. Still, I think this discussion took me a couple of steps closer to my goal. Hopefully, it did the same for you.
I dream that one day everybody will have access to an affordable financial plan. I also can imagine a world where financial planners are able to make a living by providing advice rather than managing assets or selling products. Does anybody else out there have the same vision?
ESI was kind enough to give me some career advice specific to my situation. This article is a reflection of that advice and the action I took.
It shouldn’t surprise you that Ms. Fiology has a colorful career history. Here are some of the jobs I've had through the years:
- Golf course pine cone eliminator
- Nursing home wheelchair washer
- Wine sommelier
- High school math teacher
- Account Manager (current gig, which I enjoy)
The advantage of having a wide range of experience is recognizing patterns and common themes in any industry. For the manual labor jobs, it was really about showing up on time and giving it my all while on duty. For other jobs such as lifeguarding, being a wine sommelier, or teaching there was preparation, education, and certification required to even get into that playing field.
Related: Talent Stacking to Fast Track FI
Once I got into the game, it was about preparation, showing up on time, and giving it my all. For the restaurant work, I needed to shine in my customer service skills and efficiency to make the money, but ultimately it was about showing up on time and giving it my all.
We’ll focus on my current career for the sake of building this FIRE. I currently manage client accounts for a broker/third-party administrator.
I spend a good portion of my day doing cost/benefit analysis for clients. But, that's balanced with client interactions and focusing on ways to grow our book of business. Yep, and you guessed it, I ultimately need to show up on time and give it my best!
ESI's advice is money
ESI gave me some sound advice to apply to my career so I can meet and beat expectations:
- Have a conversation with my boss and get his retention expectations in writing.
- Discuss what is included in that number.
- “As you go through the process, be sure you approach it from the standpoint of ‘I want to be 100% clear what you expect (not like, but expect) me to accomplish in this position so I can be focused on your priorities.’ Then once you have this, you can work to beat it, setting you up for a promotion and/or pay increase down the road.”
- Keep in mind that I may be limited by the small size of my firm (how much they can pay me and how many spots they have to fill above me).
All very thoughtful suggestions by ESI, yes?
I recognized I could take action on the first three and then keep #4 in mind as I go down the road with this firm. My lack of concern on #4 is that I'm on an account management team and we all share a similar goal of scaling our business. We all want to learn, grow, and earn more money! We have a unique product so I strongly believe this is possible.
Applying this advice
Early in the first quarter of 2018, I asked my boss to meet with me to discuss 2018 goals and expectations. He agreed and suggested we focus on five areas during our meeting:
- Professional development
- Team development
- Personal development
Based on his five areas, I prepared an outline. I came prepared with two copies of the outline.
The first thing I wanted to tackle was quantifying the expected retention number. I learned that we have a mission and an expectation and while these are intertwined, they are separate numbers.
Previously I had been confusing our mission with expectation. While our mission is 100% retention, our expectations are more realistic. Together as a team, we're defining exactly what that number is. We have decided the only thing included in this number should be the retention of existing clients.
My boss and I also discussed the other four items with a heavy emphasis on growth. While I'm not in sales nor am I expected to meet a quota, I'm encouraged to participate in growing the company (per my request). My main objective in my role is retention but I specifically asked for direction on how to participate in the growth of the company.
A lovely new concept surrounding growth was introduced to me:
- Top side growth
- Bottom side growth
Here's a little graphic to show some examples of what is included in these two types of growth:
Bottom side is where my boss asked me to focus and focus I will do! I met with the other members of the account management team and we discussed how we can focus on bottom side growth together. In my opinion, this is where things get really exciting! We came up with four areas to focus on:
- Appropriately increased fees to clients
- Creating new products
- Task management efficiency
- Putting business expenses on credit cards with cash back or travel rewards
Fees are something I have taken an initiative on. In my six years with the company, I notice we typically don't raise our fees. I see this as a hole and want to be analyzing if an increase is warranted or not. Sometimes not, sometimes yes, but with my direction we are now, at least, looking at it.
I won't go into the specifics here as I don't want to give our secret sauce away. Let's just say I have seen a common need by many of our clients and so I have an idea of a product we can create, price competitively, and market to our clients.
Task management efficiency
We have been using a task managing program, but are feeling it is a bit antiquated. Each member of the account management team chose a different task management program and researched it. We came together to present our findings and unanimously decided on a program called Smartsheet. The capabilities of this program far exceed what we have been working on and so we are eager to begin training and setting up our whole system of tasks.
We do have a business credit card in which we obtain Marriott points. We have a ton of Marriott points and so it is time to diversify our rewards. We have a substantial amount of monthly expenses that are not currently being charged on credit cards. It is time to start taking advantage of travel rewards and cash back cards! We have a team in Florida and so there is some flying back and forth. Why not develop a strategy and do it for free?
Knowing what to do and aiming for it is a great feeling. The final two pieces of the career hacking puzzle are to track and report. I met with the Director of Operations on setting up some excel tracking reports and so we are off to the races!
Before putting a name to it, I was doing career hacking by just working really hard. I have been rewarded for it. However, having a clear direction, a team to execute it with, and a tracking system sheds a bright light on this road. I am eagerly moving upwards and onwards and always welcome your feedback and/or suggestions.
Want to read more from Ms. Fiology? Check out her other articles here.
Solid middle class jobs can be found in many different fields of study. ChooseFI has featured opportunities for entry into the middle class from being a golf caddy, an air traffic controller, or a Registered Nurse.
Or, you could forego college and find excellent opportunities in trade professions. Workers can start as an apprentice, receive on the job training, and work their way up to journeymen.
Community and tech colleges also produce many financially feasible options, and endless opportunities abound in self-education in our digital age.
Today, I would like to focus on one of these opportunities. Here's one of the best strategies for gaining entry into the middle class and hacking a RN degree.
Getting your degree
Nursing degrees can be obtained in as little as 2-3 years with an Associate's Degree in Nursing (ADN). This degree allows a student to sit for the nursing licensure exam and gain the Registered Nurse title.
ADN RNs work in almost any healthcare setting, including: Hospitals, nursing homes, home care, hospice, school nursing, occupational nursing, and many other settings.
Many community colleges have existing Associate's programs for nursing. But, many hospitals prefer or require a Bachelor's Degree (BSN) in nursing. However, with our aging population and the high demand for nurses, this preference is often foregone. Plus, many hospitals that require a BSN will give the nurse five years to gain their BSN often with tuition assistance.
Here are a few actionable tips:
- Start with an Associate's Degree at a community college.
- Obtain employment in a patient care setting.
- Utilize employer tuition reimbursement to gain Bachelor's Degree.
- Find reasonable RN to BSN online programs.
- Utilize scholarships.
- Investigate grant.
- Utilize loan reimbursements.
Community college degrees can be accessed for a fraction of the cost of regular four-year universities. The average cost of community colleges for the 2017-2018 academic year was $4,868 according to community college review.
In the Midwest, new graduate RNs can find many opportunities for employment. Many of these employers have funds available for tuition reimbursement for RNs looking to gain their BSN. Tuition assistance typically comes with a commitment to continue employment for a set amount of years (typically two years).
Or, a quick search can yield many options for ADNs to gain their BSN online. Searching for reasonably priced institutions will yield the biggest return. Many in-state universities will offer these programs and will be some of the more logically priced colleges.
If you get a BSN, your options as a nurse may increase. Some hospitals, like the Department of Veterans Affairs, will pay more for nurses with a BSN.
The average starting salary for registered nurses nationwide is about $61,000. In my state most registered nurses start around $45,000-$48,000. However, with shift differentials and a few overtime shifts $61,000 stands as an attainable goal.
There are numerous opportunities for PRN (as needed) or even part time travel shifts. All these possibilities can increase your salary without too much effort.
I attended a community college out in Wyoming. The cost was $77 dollars per credit hour approximately eight years ago. Presently, tuition has increased to just over $200 per credit hour. My family and I lived off campus at the time. Therefore, no room and board was required.
We were paying $750 per month for rent and payed around $100 per month for utilities. To save even more money, my in-laws offered their basement and garage for us to live in while I attended nursing school.
I had a Liberal Arts Degree which allowed me to avoid almost all non-nursing classes. This community college was united to the only public university in the state and this permitted studying BSN courses while enrolled in the ADN program.
The state had an investment in a nursing loan forgiveness program. They would loan you a certain amount of money each year, and once graduated the nurse would obtain employment in that state. After two years the state would forgive the debt. I applied and got my first year's tuition paid for through this program.
My college encouraged students who were married and had children to apply to a specific grant program. This grant paid for tuition and helped with living expenses while in school. The grant allowed dental hygiene, nursing, construction, welders, electricians, and a few other majors to join as well.
I was accepted my second year into this program and paid no tuition. Two years later, I graduate with my BSN from the University of Wyoming, and had no debt! I used my current employers expense reimbursement which covered $500 a semester with at least a B average.
Being a registered nurse is not a career for everyone. There tends to be lots of bodily fluids, verbally abusive patients, back breaking tasks, thankless days, and mentally numbing situations. You'll see people at their most vulnerable, and you'll have the opportunity to make a positive impact on their lives.
If a career in healthcare interests you, look for alternative ways to get into nursing without the large upfront cost of an expensive Bachelor's Degree.
Any other nurses out there have other ways to hack an RN degree?
Obviously, I am a big supporter of the skilled trades as a career path. It is the path I have chosen, even after I spent four years getting a bachelor’s degree in General Business Management.
My college education did get me a job working for a fortune 500 company, making around $42k/year. This is somewhere around the average income for the U.S. But in order to achieve the level of wealth I'm looking for, this wasn’t going to cut it.
It wasn’t until I went back to my skilled trade (the one I had left after graduating from college) that I found my financial success and personal fulfillment.
Do we need a degree?
Somehow, as a society, we have decided that the ONLY path to success is to go to college. We have pushed the younger generations towards college as the only option for a successful life.
We have convinced ourselves that spending four years and tens of thousands of dollars on a college degree is better than spending four years learning a specific skill.
The problem is that the college degrees that much of my generation spent four (plus) years and 30 (something) thousand dollars acquiring don’t prove you have the skill to excel at much of anything–besides finishing what you started.
Of course, some professions require a specific education in order to pass the tests required to participate in that field. For example; lawyer, doctor, accountant, etc. I’m focusing on the millions of students that get a bachelor’s degree that sounds fun or is easy.
The degree our parents and society told us we must get or we will not succeed is the ultimate doppelganger. It looks like it will make us successful. But it doesn't guarantee the success adults are promising their teenagers.
What should be considered a necessity is constant continued education, whether that be at college, a trade school, or apprenticeship. And what do you do when you’re done with that? You continue to learn and grow in that particular field and in every facet of life.
“Once you stop learning, you start dying” – Albert Einstein
Why do we go to college?
I believe there are a few reasons we go to college. We go to learn work-related skills, build a network, and grow personally and intellectually. Well, I believe those skills can be achieved while learning a trade and skipping out on the frat parties and late-night dorm room kickbacks.
- Work-related skills–In the real world, learning work-related skills looks a lot like actually working because, well, it is. Yes, actually working in a trade, apprenticeship, or internship, is a better way to learn work-related skills than to sit in a classroom and listen to a teacher. Perfecting skills in real world scenarios for four years will be much more effective than learning a lot of stuff that won’t apply to your particular career choice.
- Building a network–There are a lot of relationships that can form in college. We can meet friends, significant others (I met my wife in college ?), and maybe even some future business connections. Although college may help build a network, I believe networking within your own industry will get you much further along the path of success. Spending more time working in an industry instead of sitting in a classroom is more conducive to building a long-lasting and powerful network.
- Growing personally and intellectually–I will go into more depth on this in another post, but I believe someone that is committed to growth can do a better job educating themselves than to go to a lecture hall for ten hours per week. The amount of free resources on the internet is astounding, from learning languages to legit MIT courses. Combine that with reading books about your industry, business, money, psychology, etc. I think a greater overall education can be achieved with the self-taught method while working full time.
Where did I learn more? College or the real world?
In 2008-09, I was working in a skilled trade job (paintless dent repair) while I was going to college. After college, I set out for the white-collar, college educated work. After years of struggling and not finding satisfaction in my sales jobs, I made my way back to dent repair.
With a new-found passion for using my hands and body instead of my phone and pen, I set out to make this work. While continuing to learn my skill, I consumed audio books and podcasts at a ridiculous rate.
I listened to podcasts about my specific industry, Tim Ferriss Podcast, Impact Theory, BiggerPockets, Freakonomics, Jocko Podcast, Ted talks and so many others. I also consumed financial podcasts such as radical personal finance, Money for the rest of us, Mad Fientist, and of course our beloved ChooseFI Radio Podcast.
Over the last two years, I have listened to over 70 books on Audible. The amount that can be learned from a single audiobook for $10-15 is impressive when compared to an expensive college course.
Because of my consumption of great and worthy content, I believe that my years after college were more educational than my years spent in the classroom. This may be anecdotal, but I have a feeling it isn’t.
Was it worth it?
I believe I could have been in a better position in life had I skipped the college education (except for meeting my wife of course). That time could have been used to continue learning my trade.
I do have a degree in General Business Management. However, I have learned more about business, sales, finance, and dealing with people from listening to books, podcasts, and working in the real world than from my classroom education.
Where we have succeeded as a society is that we have decided that continued education is important for young people and for our society as a whole.
Where we have failed as a society is that we have determined that college is the only option for continued education. We have simultaneously made college more expensive, given out insanely high loans to teenagers, degraded the skilled trades, and created laws that hurt apprenticeship.
By all means, get your college education, but please be smart about the degree you choose. Be aware of how much of your future earnings you are willing to bet on this four-year education. Do not expect to be successful in life just because you got a bachelor’s degree in business management.
Do you think college is necessary for everyone? Why or why not?
Skilled Trades And Financial Independence
Likely not words you hear from someone in their 30s, but that’s what were here to talk about. My name is Cory Kleinfeldt. I am 31, married with three kids, and I believe that you can reach early financial independence without being in IT, in engineering, or going to college. Say what?
Why do I want to talk about the skilled trades and money?
I don’t think our society gives the trades the tip of the cap that it deserves. It is looked down upon as a “lesser” job sector in our economy. Why do we think that? Is it because we use our hands instead of a mouse? Or because we wear jeans instead of slacks? Or because our college attendance has convinced us that we are above this type of skilled trade or blue collar work? We will explore all of these questions.
I am here to share my story in hopes that I can inspire others to choose the trades as a career path… and a path to FI. Back in 2009, I actually left my skilled trade job to button up my white collar and slip on my Kohl’s dress shoes to try my hand in the sales world. Let’s just say I have been back at my trades job for five years now and appreciate it much more than ever.
What I do
I am a paintless dent repair technician…no, not the suction cups and dry ice you see on YouTube. There are actually tens of thousands of us PDR (paintless dent repair) technicians all around the world, fixing shopping cart dents, door dents, and hail (hail, like the flying ice balls dropping from the sky) damage to perfection. Our industry lacks highly skilled technicians as do many other industries.
Many of you have likely never heard of the career path I have chosen, but it comes with a flexible work schedule, above average compensation, and geoarbitrage options. Aren’t those things that many of us are looking for? The best part is that there are dozens of other skilled trade jobs that get passed over by the young millennial generation and others while we cry woe is me, complain of there being no jobs and move back home with mommy and daddy to nurse our $35,000 student loan debt. There are high paying jobs out there. You just need to look in the right places!
Benefits of working in the trades
- Schooling is shorter AND cheaper: no $40k in student loan debt. In some case you can actually earn when you learn A.K.A. an apprenticeship.
- Satisfaction of your work: Seeing the fruits of your labor brings a primal satisfaction that can't be achieved by making a spreadsheet.
- There is plenty of money in the trades: If you hone your skills and learn some business tactics, then there is no hard limit on your income. You are not held back by a yearly 2% raise.
- There are plenty of jobs: Most tradespeople are in their 50's and retiring soon. There is definitely a skills gap in this country and those gaps need to be filled.
- Your job can't be sent overseas: When something needs to be built, serviced, or fixed it has to be done on site. It can't be shipped across the world for cheaper labor.
- The skilled trades are in every city in the world: With the internet world of engineers and IT professionals, they tend to congregate in certain cities. Think S.F. Austin, New York, and London. The trades are needed in every city in the world so take your pick!
Drawback of working in the trades
- Working in the elements: A lot of people consider this a drawback. Working in the rain, snow, or 100+ degrees.
- Stigma: People like to answer the question “What do you do?” with answers like Manager, Analyst, or Officer.
- Demanding on your body: It's true that the trades are demanding on your body, but that's why we pursue FI so we don't have to swing a hammer for 45 years.
- The trades can be dangerous: Yes, there are tripping hazards, big machinery, and sharp tools in the skilled trades. These can be much more dangerous than paper cuts.
This is a quick list of the pros and cons about skilled trade and blue collar work.
Look… I know the trades aren’t perfect and its not for everyone
But you know what? Neither is getting a college education to become an engineer. This amazing world we live in takes all kinds of people to make it run, and I want to give a voice to those underappreciated tradesmen/women hustlers out there that help build our buildings, fix the airplanes for our travel-hacked trips, and keep our Uber cars running smoothly.
I will share with you my personal story and my path to FI, how I was performing well in my skilled trade career but felt the societal pressure to go to college to “make something of myself” and then found myself back in the trades. The trades are a perfectly legitimate, something-to-be- proud-of, well-earning job! Sure, most people don’t know what I do, and I don’t have a cool title like Assistant to the Regional Manager, but FI isn’t about taking a normal path. It’s about finding the levers that work for you and pulling them to regain your freedom.
Related Link: Mike Rowe – skilled trades
Do you have a story about working in the trades? If so, I would love to hear it!
ESI from ESI Money is on the podcast today talking about Career Hacking and how you can set yourself up to earn millions more over a working career with seven simple steps.
In Today's Podcast We Cover:
- ESI from ESIMoney.com is here to discuss ways you can increase your earnings through Career Hacking
- ESI retired at 52 and reaching “financial independence” in his early 40s. He lives in Colorado, which is where many FI bloggers live
- Your career is a multi-million dollar asset and it is important to focus on maximizing your earnings
- There are steps you can take to increase your lifetime earnings while in the same job
- Start with a higher beginning pay and how to get there
- Start with a career that has a higher opening pay; negotiate your starting salary; increase your pay through education/degrees
- How we can use this knowledge and apply it to our kids for ‘second generation fire’
- How to get higher than 3% raises per year and how that can lead to millions of dollars of extra income through a career
- Seven actionable steps to earn more money on yearly raises and grow your career
- Step 1: Perform as well as possible in your job
- Sit down with your boss and discuss expectations and make them quantifiable
- Document your success and keep your boss informed, which helps “manage your boss”
- Step 2: Be likeable or ‘more likeable’
- People like to reward and promote people they like, so be nice and considerate
- Step 3: Networking is essential
- You need to help others as much as possible so they will be willing to help you in the future
- ESI’s actionable tips on how to use LinkedIn to create and foster a network of valuable connections
- How ESI reached out to his network when he was looking for a new job and he landed a job in Colorado through the network
- Step 4: Be more attractive
- Dress a little bit nicer and pay a little more attention to your appearance; “date your career”
- Step 5: Continue learning and developing your skills
- How Warren Buffett believes public speaking increases your career value 50%
- Scott Adams’ ‘talent stack’ to create a valuable set of skills for your life and career
- Trying to get better at life skills a little bit at a time every day
- Step 6: Manage Yourself
- Life skills you need to navigate life and your company politics, etc.
- Create a system to getting things done in life for personal motivation and drive
- Find yourself a mentor to guide you
- How ESI uses a system he learned early on in his career to manage himself
- How Brad and ESI both use ToDoIst to manage their lives
- Step 7: Market Yourself
- How you can get huge pay increases when you move to a new job and how to find new options
- Hot Seat Questions
- Favorite life hack: living in low cost cities and communities
- Biggest financial mistake: Waited to start investing until after he got married. Lost 5-7 years of compounded returns
- Advice for your younger self: Start saving and investing earlier and more significantly
Links from the show:
- ESI Money
- How to Manage Your Career to Make Millions More at ESI Money
- The Tim Ferriss Podcast
- Favorite Blogs:
- Favorite Article of all time: ‘I retired’ at ESI Money
- Favorite Purchase on Amazon:
- Connect with ESI on:
Books Mentioned in the Show: