Should I Take Out a Loan to Start a New Career?

Travis is considering a career change to become a financial adviser. It will mean a 40% cut in his salary during the short term. He will need to take on debt in order to survive this cut. Is this a smart move?

QUESTION: Travis in Colorado is considering a career change to become a financial adviser. It will mean a 40% cut in his salary during the short term. He will need to take on debt in order to survive this cut. Is this a smart move? Dave says no way.

ANSWER: No. It’s not. And I don’t know what kind of financial adviser that you’re becoming, but there are all kinds of people who fall under the heading of “financial adviser” out there, but I’m not sure why you would take a 45% pay cut for three to four years to move into an industry. I’m going to be suspicious and say that sounds like insurance sales. I will tell you if that’s what it is, if it’s life insurance sales, A) you’re not a financial adviser—you’re an insurance salesman—and B) there’s an 80% fallout in that world. Eighty percent of the people who start don’t make it.

I could be wrong. Let’s pretend you were going into another area of financial advising. I still don’t know why your income would be so low for three to four years. Of course, we don’t know what your current income is in this email. It just says you’re going to cut it by 45% for three to four years. Maybe you’re making $200,000 and you’re a doctor. I don’t know.

No, I’m not going to send you into debt for a career change. I’m going to find a way around that, whether it’s delivering pizzas at night or starting the career change as a part-time thing first and getting a pipeline full and getting some of the licensing and learning behind me before I make the jump. I’m going to do this in a different order, a different process, a different speed with some backfill of some kind to avoid the debt. I think you should live your dream and move into the financial world if that’s what you want to do. I have no qualms about you doing that, but no, I’m not going to tell you to go $50,000 in credit card debt to make a move to become a financial adviser. Doesn’t that sound kind of oxymoronic to you? I’m going to go into debt deeply to become a financial adviser. I’m going to do dumb financial things so that I can advise other people with their finances. That just seems wrong.

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