How They Earn Their Daily Bread - stock brokers, real estate agents, and other sales professionals - Statistical Data Included

Kiplinger's Personal Finance Magazine, June, 2001

It can take dozens of meetings over the course of a year or more before Elman sells a policy, especially when it comes to estate planning. So be wary of agents who rush you into buying a policy. They could be racing to meet a sales-quota deadline or trying to qualify for a trip or some other sales perk.

One annuities brokerage, whose policies carry five- to 15-year surrender charges, recently ran ads in the trade press offering top sellers a European vacation, a Dell notebook computer or a trip to Mexico. Elman's reward for being Northwestern Mutual's top-selling group-disability agent: "a ribbon for my name tag."

After 15 years in the business, Elman no longer makes cold calls. Nor does he make up for lower commissions by tacking on an hourly fee for insurance planning, as some agents do if they're permitted. He earns more than $250,000 per year, after paying his office expenses and his assistant's salary, largely by selling group health and disability insurance to employers. Group policies often pay much lower commissions (5% on each year's premium is common) but provide more income because they cover many employees--and often generate additional business for Elman if the company's top brass come to him for their personal insurance.

"The advice I give has to be of the highest integrity," he says. "My reputation is the only thing I have to sell." --KIMBERLY LANKFORD

Advice on demand

SHERYL GARRETT calls herself an "as-needed" financial planner, meaning you consult her when you need advice. Call on Garrett in her suburban Kansas City, Kan., office and she will assess your retirement plans, evaluate your investment strategy and portfolio, or analyze your life insurance needs. What she won't do is sell you any financial products, nor will she manage your money.

Garrett charges a flat $150 an hour that's non-negotiable, and most jobs take anywhere from two to ten hours. For 40 weeks of the year she works regular business hours, turning away clients because she refuses to work nights and weekends. She devotes the remaining three months to professional education and personal R&R, hiking and camping. After her overhead, Garrett earns $80,000 a year.

That's modest for a certified financial planner with 14 years of experience. On average, the owner or partner in a fee-only practice takes home $125,000, which Garrett, 39, could easily exceed. But she gave up the chance to earn more when she converted to as-needed status in 1998 so she could serve a wider variety of clients and have more personal time. She resigned as a partner in a wealth-management firm where the minimum annual client fee was $4,000, plus money-management charges. Trusted to watch over small fortunes, "I never really felt relaxed," she says.

While a growing number of financial planners no longer take commissions for selling mutual funds, annuities or life insurance, Garrett's narrow focus on consulting remains rare. The leading revenue source for most financial planners, including those who call themselves "fee-only" or "fee-based," is money management. For planners like Garrett who don't manage investments, the median fee in a metropolitan area is $154 an hour.