life book 2

DO WELL BY DOING GOOD
Isn’t working on commission risky?
Many consider commission-driven or performance-based compensation
risky. It certainly can sometimes be “feast or famine” and it isn’t for
everyone.
Another way how to view risk, however, is the risk associated with how
many people pay you. For example, if you are a business owner with 40
accounts and two of those accounts make up 80 percent of your revenue,
there’s a very real risk that your business would not survive if one of those
accounts is lost. Advisors have hundreds of clients compensating them.
They do lose clients from time to time but there is little risk several
hundred clients paying them.
When considering risk, you should also consider investment and return. As
an advisor, your financial investment is low—perhaps the cost of
licensing. Business owners and other professionals, physicians and
attorneys, for example, make them higher initial investments, especially
when the cost of tuition is factored in.
The chart below illustrates this concept. A career as an advisor requires
minimal investment and offers low risk with a very high rate of return.
Advisors are often earning six-figure incomes in three to five years,
sometimes sooner.
CAREER INVESTMENT-RISK-RETURN MATRIX
Investment Risk Return
Advisor/Representative Low Low_Med High
Small Business High High High
Franchise High Med-High Med-High
Professional High Low-Med Med-High
Employee Low Low-Med Low-Med
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