How to achieve success early

On Andrew Johns’ second day in the industry, a fund rep gave him a tip.

“He said, ‘Be prepared to live like no one is willing to for five years, so you can spend the rest of your life living like no one else can.’ ”

Sure enough, it was about five years before Johns, now a lead advisor with Raymond James in Vancouver, could live off his earnings.

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“Up until [the middle of my] fourth year, I was still refereeing men’s hockey at night and working labour jobs on the weekends,” he says. This added 20 hours to the 60 a week he was spending on his practice.

“My first summer in Vancouver, I didn’t go to the beach. I was so stressed.”

The sacrifice was worth it. Now 38, he has $2.2 billion in AUM, and pulls in $4.75 million in annual revenue.

Johns comes from humble beginnings—his LinkedIn profile mentions a teenage stint at McDonald’s. As a University of Victoria student, he worked as a gofer at Global Securities. Upon graduation, the firm hired him on commission only. To survive, he moved into his grandparents’ basement.

He amassed a half-million-dollar book within six months, but left for Canadian Western Capital (now Raymond James) after deciding to become a fee-based advisor.

In short order, the firm “gave me the option to move to Vancouver Island to take over a retiring advisor’s book,” he says. “I was 26 and single. They needed someone willing to live there, so I didn’t have to put up capital.”

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He was skeptical, but his manager told him it would be a career changer. And it was, despite initial bumps. “I was told [the book size] was $5 million, but when I got there it was $2 million. The rest I’ve built myself.”

And while it’s possible to craft a book from scratch, having a good mentor speeds up the process.

Cindy David, vice-president of estate planning at Vancouver’s Dupuis Langen Group, agrees. By her estimate, she compressed 10 years of work experience into five by becoming the assistant to a successful advisor.

“He let me do everything from lick the stamps to sit in on client meetings,” and paid $10,000 for coaching and training her first year.

She wasn’t the only one who benefited. “We tripled production the five years I was there.” But she was working 12-to-14 hour weekdays and studying on weekends.

“If you want to punch the clock, expect to have a cap on your salary,” she adds.

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Another salary capper, says David, who’s now 38, is staying in one place too long.

“Learn as much as you can, and then strive to be more independent,” she warns. “We tripled production in three years,” but then it stagnated. David was 25 and making $60,000 per year. But she’d set herself a goal of $100,000 by that age, so she knew it was time to leave.

“If I’d stayed, everyone would still see me as the assistant. To be an advisor, you have to clock hours as one.”

Fred Bruun, an advisor with Macquarie Private Wealth in Toronto, has put in those hours. About 10 years ago, at age 27, he left a bank-owned dealer where he’d been working with a senior advisor for five years.

While he’d learned a lot, “To be on top of the industry I had to be on my own,” he says, and joined an independent boutique.

It wasn’t easy. “My first year I took an 80% pay cut. It took me three and a half years to return to the income I was earning,” building a new book from zero.

“I joined several networking groups; I went through databases of lawyers and accountants to use them [to gain] referrals.”

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By the middle of his fourth year at the boutique, he was doing about $1 million in production; since moving to Macquarie almost five years ago, he’s upped that 50% to $1.5 million. His AUM is $125 million.

The independent model isn’t the only answer. Jolene Laing, a ScotiaMcLeod advisor in White Rock, B.C., took over her branch at age 31.

At 19, she entered the business as a $10-an-hour cold caller. “I worked with three advisors. I drove to Parksville, B.C. in the morning, Nanaimo in the afternoon and Duncan in the evenings.” (The three locations are separated by about 90 kilometres.)

After that, she worked as an assistant and in inside sales at Fidelity. She joined ScotiaMcLeod as an associate at age 26, but became an advisor in less than two years. Laing’s now 33 and manages $60 million and 11 advisors.

The path to success

At CWC, Johns earned $30,000 in salary his first year, but only $18,000 his second—he had to to fill the shortfall with fee revenue.

ScotiaMcLeod offers a similar gradual structure: every rookie gets a salary for the first 18 months, and then it’s all commission or fee.

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Laing says the expectation is $9 million in production after 18 months. But that’s not enough to live on. “At 1%, that’s $90,000 gross. At a 35% payout, that’s $31,000,” she says, but adds much of that’s spent hosting seminars, hiring cold callers, and sending mass mailouts.

“This job doesn’t become profitable until you’ve hit $350,000 in gross revenue,” she says. “Anybody working hard should be able to get that from $35 million-to-$40 million in assets.” According to Scotia’s grid (see “Mininum thresholds,” this page), that usually occurs between years four and five.

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That’s not to say early success is impossible. One of Laing’s advisors will hit $20 million before the end of his second year. But, “He [worked] at a forestry company before. He came in knowing he had to support himself for three years.”

Interviewees agree that’s an important milestone. “If you haven’t made a living by then, you’re either not working hard enough, or you’re doing something unsuccessful,” says Laing.

She’s seen rookies focus solely on asset accumulation, “but then they have 30 clients, $10 million in assets, and can’t tell you when they contacted their first client.” So she stresses the importance of establishing both investment and client management strategies early on.

And exponential growth is possible, says David. “You can spend years acquiring knowledge, and then it clicks. I felt like a rookie until my ninth year.”

Book-building strategies

Untapped markets are the key to growth. “My office is in White Rock, but I didn’t build my business there because the market is overbrokered,” says Laing.

To find areas that weren’t, “I bought a map of the Lower Mainland. I put a dot on every brokerage firm, colour-coding it for each investment house. Then I looked at the wealthy communities without a bank-owned brokerage.”

Where she found gaps, she called prospects, saying, “I work with clients in your neighbourhood and I’ll be in your area next week. I wanted to offer a second opinion.”

Read: How to segment your clients

When Johns started prospecting in the early 2000s, he used email to reach people.

“I never did pamphlets or brochures—too expensive,” he says. “Email had immediate impact. People who were early adopters were primarily successful businesspeople. It was a filter.”

Today, he runs seven newsletters, each keyed to a specific topic such as energy or technology investing.

He also credits his success to hiring an assistant early, which he did at the behest of his mentors. He chose someone just out of school because he could mold him. That assistant, Michael Assouline, has since become one of his associates.

What it takes to succeed

• Three-to-five years’ living expenses in the bank
• Work at least 80 hours a week for the first three-to-five years
• Don’t go after over-prospected client segments
• Find a mentor to compress your learning curve
• Set explicit earnings-related goals so you know when to move on

Jolene Laing, branch manager, ScotiaMcLeod, applies this grid to determine success for her advisors. Expected AUM is:

• $5 million at 18-month anniversary
• $11 million at 2 years
• $18 million at 3 years
• $26 million at 4 years
• $35 million at 5 years

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.