I’ve always valued multitasking over everything else. In my mind; if you are productive; do as many things as possible. As long as it is still effective; simply go for it! But I noticed that sometimes, focusing on one single thing is the best way to make it happen.
I’ve had this dream of having a membership website as part of my online empire for some time now. A membership site is awesome since it enables our ability to build a “real” company. By “real”, I mean that I have a product, something to sell; something that nobody can take away from me. On top of this, once you have a product, you have clients. And these clients can stick around for a while and there are no Google updates to take them away from you. You can build a relationship and be in direct contact with your customer. This is why I call it a “real” business.
I’m sure I’m not the first one to daydream about the number of potential subscribers multiplied by a monthly fee to see how much I could rack-up in a month. Imagine that you have 1,000 clients paying $15/month for your product. That’s $15,000 each month coming into your pocket. Your cost of goods sold is close to nothing since you have no building and no inventory to maintain. Even if you hire a VA to manage customer service, you will still net $13,000 per month out of the 15K…. wow!
As I just wrote, this is called daydreaming. I might reach that point with my product one day, but it’s not going to happen overnight… especially since I don’t have a product launched yet! Many people come up with an idea, fund thousands of dollars to create their product and keep it wrapped up in their basement on the shelf of the broken dreams.
It’s definitely not easy to offer something original, something that is not being offered a thousand times over already. Finding the right product, the right audience at the right price is an art all by itself. This is why I’ve brought my expectations to a much lower level. My goal is to reach the mark of 100 subscribers within the first three months and adding 200 subscribers each year. With such a plan, I will be making that $13K net in 5-6 years. I guess this is more realistic.
I have spent more than year thinking about my future product. About how I would offer added value to what is being offered on the market right now. Now that I’ve clearly defined my idea, I needed a lot of time to build the structure around it.
I started to work seriously on my special project about 6 months ago but it wasn’t going fast enough. I was working hard, sending tons of emails to my partner, doing research, etc. But, the results weren’t not coming my way. After 5 months, I had a very good idea of what my product is, but the structure wasn’t anywhere close to being in place in order to offer it.
When I came back from vacation, I decided to put almost all my attention towards this project. This is why I haven’t been writing much over the past week and why I’ve been delaying most other projects in my workflow. I kind of stopped my empire to focus on one thing.
This is how I was able build a structure and determine a deadline: I want to launch my project for December 2013!
By spending numerous hours in a row working on the same project day after day, I was able to think about all the “little things” that would make my product successful. I was also able to drive my partner crazy because I was sending 5 emails a day about this project, hahahaha! I was working on it mostly by night so he wakes up with a bunch of emails to answer. This caused a bit of confusion since I had the bad habit of sending more info each time without waiting for him to answer the first email… but this is the hype of brainstorming!
The fact that I was 100% focused on 1 project helped me to brainstorm to another level. Each day, I had a better idea than the previous day. The focus mode built a bubble around my mind where the only thing I thought of was this project. I have gotten more done over the past three weeks that I’ve done over the last 5 months! This is why sometimes focusing is better than multitasking!
Are you getting curious? Hehehe! You can register here if you want to be the first to know about it!
TFBGoogle+ Comments: 2 Read More
#1 I sold my RX-8 and am getting used to having one car
#2 I reduced my monthly spending on wine and food
#3 I delayed most of my other unnecessary expenses (read everything not related to my children).
To be honest, I wasn’t excited about these changes; I wasn’t thrilled about reducing my lifestyle. But I had no choice for now. Since we are focusing on a healthier corporate situation, we have stopped all “benefits” derived from our online company. This has forced me to run on a smaller budget. As I recently wrote on this blog, making money in the PF online world is not as easy as it used to. This is why we have to concentrate on what we do best and also have to stop spending carelessly.
I was a bit quick to sell my car. After all, I can slow down on wine and good food and still hit a few bottles per month. But I can’t sell my sports car and hope to drive it again. This was more than a car, it was a symbol of wealth, power and speed. OMG… that’s so BS when you think about it!
This is exactly what I realized once I sold it; driving a cool car is not the end of the world. In fact, after a few weeks, it’s more liberating than anything else; no car issues, no expensive gas bills. In other words; I’m less cool, but richer! Hahaha!
The other thing I realized this year is that one never has enough stuff. Now that I’m making good money, I want more. I want more money, more stuff, more of everything. That’s completely stupid. I’ve got into a cycle of always wanting to make a bigger bonus to live a bigger life. I call it ambition and I’m proud of being ambitious. However, I’ve realized that it’s better to put my ambitions elsewhere than in a bigger bonus.
The myth of corporate performance never ends. The more you bring the numbers in, the more you want to bring in. In the end, it all resets on Day #1 of your fiscal year and you start the wheel all over again. That’s enough to give you a headache!
Since my last son was born (about 20 months ago), I’ve taken life lightly. I didn’t push too much on my online company (no matter how motivated I was) and didn’t push as hard on my day job either. In the end, I still did more than most people would do anyway, but in my inner self, I know I wasn’t working at full speed. The funny part is that nobody noticed; I was still ahead since I’m highly productive. I guess that I could continue to “cruise” my way for a few years and nobody would ever realize that there was something wrong.
I’ve spent a lot of time trying to find what was wrong with me. I was happy, I am happy! I like my job, I like having my sideline but still, I wasn’t sure why I wasn’t running full speed. To be honest, I’m not sure that I have found the real answer of why I feel this way. I just feel that I need to slow down for a while and enjoy what I have.
I’ve never been as close to my family, to my kids as I am right now. I spend a lot of time with my three kids and can see my toddler evolving day after day. I didn’t do that for my two first kids. I guess a part of the answer why I’ve slowed down is there; I want to enjoy the small things in life.
This is why I’ve decided to live my life differently; with less stuff and more savings. My guess is that I’m rebooting and preparing my system to start on another rush eventually. After all, I’m expecting to go to Hawaii in 2014… so I better rack-up a few more dollars to pay for this trip!
How are you living your life? Are you expecting to make more money to spend it? Or are you enjoying the small things?Google+ Comments: 8 Read More
A few weeks ago, I read a great article from Joe @ Retire at 40 talking about whether retirement planning is a sprint or a marathon. I’ve been giving it some thought lately about how we should approach retirement planning and I really liked the running analogy. There are several ways to retire just as there are several ways to train for a run. Let’s revisit how you can retire depending on your “workout”:
In my opinion, you can’t really sprint your way to retirement. Unless you have the ability to make a lot of money in a very short period of time, the sprinting method will not happen. In order to build a solid nest egg, no matter how good you are at saving, you will need at least ten years to build it.
Unfortunately, we see too many people waiting until they hit their late forty’s before thinking about retirement planning. This is when you wish you make a lot of money and that you have finished paying off most of your debts. If you are not in this situation, the sprint to retirement will be harder than you think.
For example, someone at 45 saving $10,000 per year at 5% will gather only $330K before he retires à 65. At the same rate of investment, the 330K can generate $26.5K per year as a pension and the payment will stop at the age of 85. This calculation doesn’t take in consideration inflation so you can guess that 26.5K in 40 years in not much to live comfortably! If we increase this amount to $20,000 per year, the retirement nest egg grows up to $661K and will generate $53K per year for 20 years. So if you are thinking that sprinting is a good option; you’ll have to save $1,666 per month if you start at the age of 45!
If you ever have the chance to do a Spartan Race, Prison Break or a Tough Mudder race, DO IT! I did one myself this summer and I truly enjoyed this mix of hiking, running and military training. It truly demands all your body’s abilities.
You can take the Spartan Race way to plan your retirement. It will be harder than a regular race. Instead of focusing solely on saving money, you will need to work on all your personal finance abilities. This may include saving more, creating a business, paying off your debts very quickly, etc.
My plan to retire looks like a Spartan Race: I work more hours than a normal job since I work at both my job and online business. By doing both at the same time, I make sure that I have my “normal” retirement plan on line while I try to reach early retirement.
My normal retirement plan includes investing $5,000 per year in my savings account + my pension plan. This plan ensures that I’ll be making roughly $100K per year starting at 65 and ending at 90. This should be enough to cover for both my wife and I.
Now that I’ve secured this option, I can start my Spartan Race and look for early retirement. For example, if my online business generates over $20,000/month in ten years, I might be able to stop working in my early 40’s.
As is the case with real Spartan Race, I’ve faced a few obstacles with my retirement plan. Having three kids has slowed me down since I have more expenses and less time to work on my company. I don’t regret my choices at all, and I just came to the conclusion that the Race was harder than I thought in the first place and that retiring early is quite challenging. I also failed to resist spending more in previous years. This had a big impact on my early retirement plan.
At least, my “marathon” plan is on pace and I know that in the worst case scenario, I will retire at 65 with a solid pension.
I’ve never run a marathon… yet. The biggest race I’ve done was 16.5km and that was this summer. In order to reach that level, I started by running 5km 3-4 times a week this spring and ran 10km once a week. I started slow and increased as I think my body can support it. I expect to be able to do my first half-marathon next year. In fact, I could probably take the step this year but I’m not sure I’ll have enough time .
Retirement planning way ahead is like training for a marathon; there is nothing exciting about it! When you make a habit of saving money on each pay check, you ensure a safe retirement. At the same time, you don’t have to starve for years or stay on your couch for your vacation. Actually, if you save $1,000 per month toward retirement for 35 years, you will be a millionaire (this makes $1,083K at a 5% investment return). Since you don’t need that much money to retire, you can drop your monthly retirement plan to $600 per month and still gather $650K in 35 years.
No matter how you run your race, the end is always a finish line. The only thing that is different is how you feel once you have crossed the line! Are you going to be proud, exhausted or feel ashamed because you haven’t trained enough for your race?Google+ Comments: 11 Read More
Exactly 20 days ago, my wife started a daycare at home. For most mothers who would like to stay at home a little longer with their kids, opening a home daycare seems logical. While you can stick around with your toddler, you are also bringing a few bucks home. No more rushing to the daycare; YOU are the daycare!
Well…it’s not that easy. While there are several steps you must follow before you open your daycare, there are several things to consider when you truly start as well. We took it on together as we realized we needed a little bit more of income if we wanted to reach financial freedom before the “normal age of retirement”. My wife also felt that our toddler started to run in around the house and get bored when she had to do household chores.
After 20 days living this new life, I’m ready to tell you what life looks like we have a daycare at home.
You know by now that I’m fairly organized in all aspects of my life. This is why we looked at the “process” of having a daycare at home and see how we can maximize our time and not burn out. Opening this side business meant more work for my wife and more work for me too. Since she was at home, I used to not be so implicated in the household chores. It was somewhat part of “her job” to keep the house clean.
This is why I find myself participating more than I was before… and this is also why we ended-up hiring a cleaning lady! Hahaha! NO, seriously, cleaning the house over the weekend meant that we couldn’t spend quality family time and this was non-negotiable for us. It’s important that our children can do their activities and that we keep up with a social life.
The daycare is opened starting at 7am. This means I take care of my kids from 7 am to 7:30 (the time the two oldest go to school and the toddler goes “into the daycare”). Prior to 7 am, this time is mine. It’s why I wake up at 5 am, eat breakfast alone, do my workout, wake up the kids, take my shower and then it’s 7 am and time to make breakfast for the family.
The daycare is opened until 5 pm but my wife is lucky and most of her kids leave before that. My two oldest stay at school until 4:15 pm and then walk home. Homework is done when I come home around 5 pm.
My wife didn’t want to offer just a place where kids can play safely and eat during the day. She is providing a very high quality daycare including weekly themes, homemade, healthy food with several different play areas inside and outside the house. This requires more hours for planning and designing activities where kids will not only have fun but will learn and grow.
Funny enough, simple things get complicated: how do you prepare lunch when you need to head the kitchen while you have 5 kids in the daycare? Or where will they will sleep for their afternoon nap? How to you go outside thinking they have to use the stairs when you have 3 kids around 18 months of age? These are all questions you have to find answers for before you open your daycare at home.
Gross revenues are quite easy to calculate: $25 per kid per day, 5 days per week. She has 5 kids (plus our toddler) so it adds up to $125 per day or $625 per week. My wife takes 5 weeks vacations that are not charged to the parents so the total annual income is roughly $29,375. It doesn’t look so bad when you think that she stays home, huh? Well… again… it’s a little bit more complicated than this. There is more on this later, but let’s go to the expenses first to see the net income.
I was happily surprised to discover that the daycare expenses weren’t as high as expected. We had to disburse a lump sum payment to open it (furniture, painting, materials, etc). After that, it becomes more affordable. So far, we show an increase of our grocery bill of roughly $50 to $75 per week. It’s hard to determine what is used by us or the daycare but this is probably within the ball range. Then, we decided to have a cleaning lady once a week to spare us the burnout. She charges $75/week.
Besides that, there will not be many additional expenses considering we have three kids and already have tons of toys . So far, I can see a monthly expense of $600 at most. This is why I forecast to net $1,900 with the daycare.
When you think about it, the daycare is opened from 7am to 5pm. This makes 10 hours where my wife must remain accessible to kids. While there are breaks (the kids nap is roughly 1h30), there are no real and official break during the 10 hours. If one child doesn’t want to sleep one day (trust me, it happens often), the 1h30 pause just disappears! So working 50 hours per week to earn $625 makes an hourly wage of $12.50. But it’s more than 50 hours because you have to count time for planning, cooking, cleaning that is not within the 50 hours. So it’s more like 60 hours of work or $10.42/hours… and I didn’t count expenses and taxes. Gulp! If I take the net income ($1,900), it comes down to $7.92 per hour minus taxes.
Taxes won’t be much so we can almost consider the $1,900 to be net income. Still, it’s not the Klondike when you look at all the hours worked.
As you can see, life with a home daycare is far from being perfect. What truly sucks with this job is the incredibly repetitive routine you have to follow:
#1 Wake up at the same hour
#2 Prepare everything before the children arrive
#3 Welcome the kids – free play
#4 Activity #1
#5 Eat some fruit
#6 Go outside
#7 Activity #2
#8 Prepare lunch – free play
#9 Eat lunch
#10 Nap time
#11 Activity #3 – free play
#12 Kids leave
#13 You Clean up / prepare supper
#14 Our kids’ homework
#16 Wash the dishes, prepare things for the next morning
#17 free time… HAHAHA!
I’m well aware that this routine looks like a lot like any other job (just change the word Activity by client or another task and the word “outside and nap time” by taking a coffee ). The thing is that you can’t really skip it as we were able to before. We can’t skip the dishes as the children will be around the next morning so it can’t be done later. Same thing with everything else. This is also why my wife takes 5 weeks off!
Having a daycare at home is definitely a lot of work, but it brings a whole package of great things too:
#1 No transportation costs to get to work
#2 We eat healthier than ever
#3 5 weeks vacation
#4 Easy to find clients (it took my wife less than a week!)
#5 Stable income over time
And the most important: My toddler can stay at home with his mommy AND play with friends all day. Honestly, he just loves it! When we compare the other alternatives (finding a job elsewhere), we wouldn’t enjoy any of these advantages. When you consider the daycare cost, transportation and obviously more clothes, working outside the house wasn’t a good idea for her.
We will not buy a new BMW with this money but we will surely pay our debts pretty fast. Considering this additional income, I don’t need my year-end bonus to close my budget in the black. We will now be able to use the extra monthly cash flow to pay our debts along with my year-end bonus. So if I’m lucky, I will take less than three years to pay all my consumer debts other than my mortgage. If I only have my mortgage by the age of 35 to pay off, life will be great!Google+ Comments: 14 Read More
Ever since I wrote about my day job and told you the difference between a CFP vs a CFA, I receive emails on a continuous basis from readers about becoming a financial planner. Today, I’ll try to answer most of these questions with some kind of “reference” for all students who love personal finance as well for all those thinking of a career change… that will pay the bills big time!
A while ago (back in 2008!), I wrote a quick piece about how to become a financial planner. The article was short and sweet and today I think there is more to add now that I’ve been one for the past 6 years.
I’m pretty sure school requirements differ from one country to another but generally, you need a bachelor’s degree. If you have one in finance or at least a certificate in financial planning, that would be ideal! If not, I think the certificate in financial planning is enough to pass the CFP exam in most places.
A financial planner usually deals with wealthy clients; therefore, it’s kind of stupid to think you will be able to impress your clients with a simple certificate in financial planning. This is why I strongly suggest getting a bachelor’s degree. I personally decided to complete an MBA to add more letters to my business card but that’s a choice . If you are going for a master’s degree and you are not afraid of working, a master in taxation could be even better (most people hate paying taxes and they would love someone who can manage to save a few bucks through tax optimization).
Once you have your certificate in financial planning, you are not done yet. You need a professional title called the CFP (Certified Financial Planner). You can read more about the certification process at the CFP Board (US), Canadian Securities Institute (Canadian, duh!) and IQPF (Quebec). This certification make sure you know the basics in all the financial planning fields:
1. Estate Planning
2. Personal Finance
5. Legal Aspects
6. Retirement Planning
You don’t need to be a pro in all fields. Your role as a financial planner is like a family doctor; you look at your clients’ financial situation and deliver a diagnostic on all 7 fields. Then, if there is a need for a professional to step in (like a lawyer, accountant, insurance rep, etc), you can refer your client to the specialist.
It is good that you have your own specialization. If you are very strong in one or two aspects of financial planning, this will give you an edge against your competitors and will also help you with sales. On my side, I’ve decided to focus on investments, credit (personal finance) as well as retirement planning. I also have good knowledge of taxation and insurance. But my USP (Unique Selling Proposition) is based on Honesty, Efficiency and Proactivity.
Now that you have a certificate in financial planning and your CFP title, there is another big decision to make: Investments or Insurance?
Ideally, you will need an investment license or life insurance license. If you want to be self-employed, you can even get both! But to start, I suggest you get one or the other and start with one specialization. This is a lot of stuff to learn and doing everything at the same time is not always a good option. If you plan to start your career in a bank, you will need the investment license and won’t be able to use a life insurance license (this is the case in Canada, I’m not sure about the US).
In addition to the following, I suggest:
#1 a Bachelor’s degree
#2 a Specialization in at least 2 fields
#3 a Master’s degree
If you have read everything above and are still with me, that’s a good sign. Advising people about their personal finance should not be taken lightly and this is why it is important to study hard and acquire as much financial knowledge as possible. Now…. Is a Financial Planner a used car salesman or a professional advisor?
Like it or not, sales is a part of the job when you are a financial planner. But you are not selling what you think. The point is not to sell a financial product. The point is to sell your vision, your knowledge, your trustworthiness. If you can sell yourself as a professional advisor, your clients will want to do business with you.
It has nothing to do with products, nothing to do with your best rate. It’s all about trust.
If you are capable of selling yourself, the sales part will be done. So if you hate selling stuff, don’t worry, good financial planners are not salesmen.
That’s a tricky question in this field since you can be self-employed or work for a firm. And you can be 100% commissions, 50/50 (or any other kind of mix between commission and base salary), base salary only or fee based (independent financial planner specialized in writing financial plans where you pay for the plan only).
According to the US Bureau of Labor Statistic, a CFP makes anywhere between $100,000 and $168,000, bonuses and commissions included (I got the stats here).
From my own experience, a CFP can start with a base salary of roughly $50,000 to $60,000 depending on his background (and level of commissions). If you have a high commission payout, your base salary will be lower (duh!). At the end of our first year, you should bring in around $60,000 to $80,000 if you are good at your job. Here’s how much I made from this job per year:
2008: $64,000 (worked 9 months as financial planner)
2013 (estimated): $100,000
*if you have followed my blog for a while, you probably remember the article about the chronology of my income. The amounts differ since the previous article included my employee benefits along with my online income.
As you can see, I had built my portfolio from 2008 to 2011 then I moved to another job closer to where I live. I had to start a new book of clients and this is why my income in 2012 and 2013 has decreased to roughly $100K. Still, it’s a pretty good income as you can see and it is fairly stable over time. I expect to see the numbers growing in the upcoming years. Since I work with a base income structure, I don’t expect to make more than $150K per year.
If you go the self-employed route, you can go anywhere from $20,000 to $1,000,000 per year and even more. This is not BS or a sales pitch, I’ve seen notices of assessment (Gov’t verified revenue) showing over $1M from a top adviser. But the guy was bringing in between $25M and $50M per year in his book.
As I’ve mentioned before, this is up to you to become a car salesman or not. Some people like more money than their clients and this is obviously an easy job to make tons of money if you keep on selling. I’ve met true salesmen during my career and they are making a lot of money. While compliance has become very important in this field, it doesn’t mean that some people prefer to push highly paid financial products down their clients’ throats while following the rules.
The good news is that you don’t need to be like that to make a good living. If you advise your clients and truly work for them, the money will come. The only difference is that you may not be a shooting star the first year, but income will gradually increase year after year. The best part is that the job becomes a lot easier once your portfolio is established and your clients trust you. Even better, at one point, they will refer their friends and family to you and the cold call sessions will become history!
Therefore, I suggest you become a personal finance superhero for your clients instead of another car salesman. It will pay over time!
If you want to have an idea of my day at work, I’ve already covered what a financial planner does, but it goes beyond that. I’m not ready to tell you that it’s one of the toughest jobs on earth (far from it) but it’s not as easy and glamorous as you think.
#1 There are tons of paperwork
#2 You will be told “no” by prospects almost everyday
#3 You will have fight to get new clients, and fight again to keep them away from competition
#4 You will have to comfort your clients during market volatility
#5 You will have to face angry people when it doesn’t go well and there is nothing you can do about it
#6 You will face the pressure of “selling” while you need to advise clients
Going to the latest point, the pressure of selling will come regardless if you are self-employed or if you work for a firm. For self-employed financial planners, the pressure comes from their commission statement. As self-employed, you will probably be 100% commission base. Therefore, no sales means no pay check. If you are not sitting on a comfy emergency fund, you might find this situation uncomfortable.
If you work for a firm, you will get monthly (I’ve even seen weekly) performance reports of everybody on your team. You don’t want to fall into the last spots. Your boss may ask you how many calls, meetings, plans you have done in your week. What is coming next and how your “pipeline” (list of potential deals to be closed shortly) looks.
Overall, the financial industry is not made for the faint of heart. If you bring the numbers in, you are a superstar. If you don’t, well, maybe it’s time for you to look for another job.
Some places are more edgy than others, I can only advise you to meet with a few branch manager so you can gauge which one prefers to serve their clients well vs the one who prefers to see the money first. You can usually tell which one is which after your 1hr interview.
As a final note on this exhaustive article, I thought of sharing a few CFP fast track tips. I believe I’ve accomplished some serious achievements during my career as a CFP and I should share them with you.
If you are not ready to make the big jump towards a 100% commission job, I suggest you start out working for a bank. You will get a great base income, employee benefits and additional commissions if you are a good financial planner. I’ve learned a lot by working for a bank. The best part is that you have the time to learn even if you don’t bring in the money the first month, you still receive a pay check!
Regardless if you are going self-employed or for a bank, it is important to choose a reputable firm. Clients are more likely to trust you if you work for a known institution then if you work for John Doe investing Inc. It makes your first approach easier (remember my Primerica reviews)….
I’ll be honest; there are tons of competitors out there. What makes you a better CFP than the guy with the same suit and the same tie next door? Your USP will make the difference. Find out what you are truly good at, prepare your speech and be interesting. This is why it is so important to be strong in a few fields of financial planning where your clients will see you as an expert. You have to become #1 on their list for anything related to money.
Asking for references from your clients is never easy. But when you do something awesome and truly help your clients, it’s easy to only suggest: “Do you like what I’ve done for you? Don’t you think you can let your friends benefit from it too?”. People tend to hang around with the other individuals in the same social demographic situation. Therefore, if you hit someone with $500,000 to invest, chances are that this guy has a few friends in a similar situation. Don’t ask for referrals, ask your client how you can help his friends as you helped him.
I remember when I started my career; my assistant was complaining that I was doing too much for my clients. That it was up to them to do this or that and not me or… her! But this is exactly the point: going the extra mile will make you a superhero for your client. People refer their contacts to someone who provided a wow experience, not to someone who did an okay or a good experience. If you can flabbergast your client, you will have more money coming in!
Don’t think you do too much for your clients, you can always do more!
All right! I’m pretty much done with all I have to share with you about becoming a financial planner. I can tell you that it’s the perfect job for me and that I truly like it. If you have any questions, it’s the time to share them with your commentsGoogle+ Comments: 9 Read More
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