Ground up: what it’s like to be a newcomer to the financial advice business

Max Affatati travelled a well-worn path to his advisor role with independent services dealer Sterling Mutuals Inc. The former HSBC bank teller moved over to Sun Life in 2012, where he later earned a spot as an account manager. Those early roles gave him an opportunity to develop his product knowledge and gain an insider’s view of what profitable financial advice practices look like.

“Having all this experience [in] the advisory channel, knowing all the success that you could have as an advisor, I figured let’s give it a go,” he said.

Affatati first joined Sterling in 2017 as a branch manager and financial advisor. After going back to HSBC for a couple of years, he returned to Sterling in 2021. He balances his time there with accounting work, but he struggled to build his practice in the early days.

“The costs are astronomical for someone just trying to start a business,” Affatati said. “There’s telecommunication expenses, dealer fees, insurance fees. There are all kinds of field fees, mounting and putting pressure on the advisor.”

Affatati is in Mississauga, Ont., a crowded, competitive market. He’s grateful for the support that Sterling provides. “They give us newbies ideas, such as where to prospect,” he said. But it’s still tough.

Rocky Ieraci, Sterling’s senior vice-president and head of business development and marketing, said his firm will lend a hand if an advisor needs one. “We try to work with them as much as there’s a desire to advance,” he said.

But it’s difficult for young advisors to gain traction in the independent channel. “It’s almost insurmountable for someone new coming in,” Ieraci said.

It’s an industry-wide challenge. Firms want growth, but few can afford to carry underperforming advisors. That balance is being struck in a variety of ways.

Carte Wealth Management offers back-office systems at no cost to advisors, in part to help new advisors get on their feet.

“We try as much as possible to maintain those fees to the lowest end,” said Maria Jose Flores Suarez, president of Carte Wealth Management Inc. “We know that more and more advisors are coming into the business. Some of them are not coming with a book. They’re starting from the ground up.”

Regulatory changes have made it more difficult to get a practice off the ground too.

“With the absence of [deferred sales charge and low-load] options, new advisors face greater challenges when entering the industry,” she said. “Now, more than ever, advisors must recognize their value and remain competitive by offering a holistic approach, staying ahead of industry changes and continuously enhancing their expertise.” 

IA Private Wealth offers advisors one-on-one support, training and coaching. It’s “customizable and individualized,” said Liz Lepore, vice-president of advisor and client experience, practice management and digital transformation.

Advisors who switch firms can have vastly different experiences, said J. Lynne Stewart, a strategic business coach and consultant. “Independent platforms are going to let you exist for the long term with modest success,” she said. “If you go to a bank, they’re not going to let you survive and exist beyond the three-, five-, seven-year mark without significant success.”

Under pressure

Chantelle Clarke moved over to Edward Jones in Cobourg, Ont., two years ago, after a 15-year career at CIBC. She earned her PFP and CFP designations in 2020 and 2023 respectively.

“At the bank, I was asked to do too many things,” she said. “I was asked to be everything to every client and take on other roles and responsibilities beyond just providing financial planning services to clients.”

Edward Jones offered more tools and support, leaving her more capacity to focus on financial planning. Her onboarding experience came as a relief.

“There’s no pressure to become profitable instantly,” she said. “[And] there’s not a big chunk coming off your paycheque that you’re having to send to home office for their support.”

That kind of patience can pay off, for both advisors and the firms they work with. Affatati says his assets under management have “grown substantially over the last three years.” His ground-level experience paid off, even if the building process took a bit of grinding.