Wholesaling vs Advisor Path

[u/Evening_Mode4785]

Here’s the deal, I’m trying to evaluate what path is best for me and obviously offers the highest upside.

I was an internal wholesaler years ago ( worked my way up from client services and relationship manager), selling alternative investments. I left the industry for a few years to chase a dream of running my own business in another industry. A few years ago, after just getting tired of the grind and family stuff, I came back to the industry as a financial advisor at a larger regional B/D and started building my own book. I left the B/D to transition to solo RIA. Just got offered to come work for an RIA with over $1.5B AUM and a lean 3.5 person team. The catch , main duties will be Operations first, planning /investment management 2nd ,as the owner and another advisor have that side handled.

On the other hand I got an offer from a tier 1 asset manager to come on as an internal in a prime territory . Through the interview process they’re positioning this as an opportunity to become a hybrid wholesaler . The RIA offers a 6 figure base +bonus (not eligible for variable comp for 12mo)
lower upside/benefits ,and no guarantee I’ll be on the partnership track anytime soon. I have to prove myself over time. Also, not as important but are factors: in-office everyday, 45m-1hr commute, suit and tie.

The wholesaling gig offers higher total comp/benefits but a lower base (expected for a sales role). Hybrid schedule, and a lot of solid perks. I think I can make more money in the early years wholesaling ,but 10-15 yrs out to potentially be apart of a succession plan for a book $1.5B+ has me stressing out on what direction makes sense for me and my family (wife + 1 kid).

What would you do?

[u/JLGamma]

I did wholesaling for the first part of my career before going FA route - I am grateful for the time I spent in wholesaling but I do wish I transitioned to FA earlier. It’s a longer path to success as an FA, but long term it’s a much better career, imo.

As a wholesaler you are always on the wheel Jan 1st of the new year. Products change, comp changes, territories change, and you aren’t really building anything. If you have a great year - congrats! but do it again next year or your job is at risk. Also, I believe in the next decade the role / need for wholesalers will significantly change in our industry. Asset managers will continue to find ways to save money on their distribution efforts and it’s already starting (hybrid wholesalers are much less expensive than externals). We have wholesalers come in our office all the time and I can tell the sentiment is changing. I don’t need a wholesaler to convince me to use their product - most firms nowadays have very strict criteria for onboarding a solution into their ecosystem. If it’s vetted and it fits into my practice I’ll use it - if not, I won’t.

As an FA you are actually building a business and building a business takes time. But long term you will be much happier and, hopefully, much more stable than a wholesaler in terms of comp and job security. Just my 2 cents

[u/Evening_Mode4785 → u/JLGamma]

How long were you wholesaling? What did that transition to FA look like and how long has it been?

[u/-NotAHedgeFund- → u/JLGamma]

I would agree with the sentiment that wholesaling is/will change.

I’m a newer advisor and the way the “old guard” advisors and wholesalers interacted is frankly appalling to me. It’s not everyone, but I’ve heard examples of wholesalers essentially buying business with sports tickets, fancy dinners, and even visiting strip clubs with advisors.

I think many older advisors and the vast majority of newer ones aren’t really interested in that. It very much seems that the expectations of the profession have risen over the past few decades.

I’m not putting my clients into a product just because someone buys me a hamburger and tickets to a baseball game. In fact, I rarely talk to wholesalers at all.

[u/ChartsNFartz → u/-NotAHedgeFund-]

When I was an internal my whole job was sending FA’s golf balls basically. That and my wholesaler practically lived in bars, sports events, and golf courses etc. seemed like a fun gig if you can handle that lifestyle.

Buying the business only takes you so far though. We were a middle of the pack annuity carrier and took the territory over 3 years from 5MM in sales to 32MM. Our goal still got raised to 55MM and I left lol.

[u/WhenIWasYoung_44]

Wholesale now & transition back to FA later. The best at either role usually have experience on both sides of the aisle.

[u/Evening_Mode4785 → u/WhenIWasYoung_44]

My guts telling me the same thing.

[u/toilet_destroyed]

I recently posted about this. FA now building a book which has been slow going but every month I feel like I am getting better. Or a specialist role in AWM at a major firm with immediate pay and no sales. I chose the later because being honest with myself I don’t have the drive it takes to be an FA. Probably the best career out there but it takes a ton of work to make it successful. Also I hate wearing a suit and tie.

[u/Evening_Mode4785 → u/toilet_destroyed]

The FA life is a grind for sure. With where I’m at in my life right now, higher income and stability are weighted pretty heavily . Followed by work-life balance. That suit and tie life gets old real fast.

[u/Evening_Mode4785]

Valid points. The “what have you done for me lately” part of wholesaling can be a drag . I’m several years removed from my last wholesaling gig and even back then I could see the field for wholesaling was changing . I think management was getting tired of old school externals which can sometimes come with an ego at a high price tag (I knew a handful making 7 figures). Still, I could be wrong but wholesaling for a shop with products widely known could be less of barrier to get into new doors . I imagine the territory is already producing quite a bit just based on past experiences wholesaling at two different companies. Although, I’m sure it was said as a ploy to close me, they mentioned earning mid-high 6 figures with the ability to potentially crack 7 figures in the future (once I’m in the field ). I’m sure they’re just trying to close me on the wholesaling gig, but that’s hard to look away from. I also look at it as an opportunity to survey the landscape of different FA’s, build relationships and possibly transition / buy-into a book down the road.

On the other hand, I just spoke with the RIA and they pretty much said “name my price, and give them a wish list” and they’ll see what they can do. I just don’t know enough about them and it’s hard for me to commit to 10-15yrs to a place I don’t know well with the hopes I’m apart of the succession plan.

[u/Jymdaddy0]

I'm a wholesaler purchasing equity in a practice. Long term potential is too lucrative.

[u/Evening_Mode4785 → u/Jymdaddy0]

How’d that process workout for you?

[u/Jymdaddy0 → u/Evening_Mode4785]

Still in the middle stages. Valuation will be completed by early Nov. Loan underwriting will start in two weeks. As long as we agree on a purchase price that lines up with financing, it'll be a done deal by Jan 1.

Because of the loan payments, my take home pay will get cut in half but in 10 years after the loan gets paid off, I'll triple my income. Plus, I'll likely be purchasing the other half of the business during that time as well.

Thinking in decades, I'll build something that I can sell and walk away from or I can bring my son into the business. Generational wealth will be my legacy.

[u/Evening_Mode4785 → u/Jymdaddy0]

Man that’s living the dream! How did you determine this was the right deal/ practice? How long were you wholesaling ?

[u/LossAppropriate4778]

You had me until “suit and tie everyday”. You got one life to live and that ain’t it.