WealthManagement Magazine

The Battle at Home

The war in Iraq has cost Elton Johnson just about everything. Johnson, owner and operator of Amerivet Securities, a small broker/dealer in Inglewood, Calif., is a major in the U.S. Army Reserve who has been on active duty since Dec. 2001. He served in Iraq virtually all of 2004, and he is headed back for a second tour in Sept. Prior to being activated, Johnson ran a business with $750,000 in revenue;

The war in Iraq has cost Elton Johnson just about everything.

Johnson, owner and operator of Amerivet Securities, a small broker/dealer in Inglewood, Calif., is a major in the U.S. Army Reserve who has been on active duty since Dec. 2001. He served in Iraq virtually all of 2004, and he is headed back for a second tour in Sept. Prior to being activated, Johnson ran a business with $750,000 in revenue; that number has dwindled to $50,000 (which comes from a pair of California pension clients that are required to give him business because of his b/d's status as a Disabled Veteran's Business Enterprise.)

“I couldn't take care of my retail business,” says Johnson, “so I lost it all.”

If Johnson were to work at a larger firm, his plight might not be so dire. Merrill Lynch, for instance, gives its 35 active-duty reps full benefits and 85 percent of trailing 12-months production. Wachovia Securities, which has 10 active-duty reps, offers full pay for a year, and will continue pay even longer in some circumstances.

A NASD proposal currently under review at the SEC would let reps and principals freeze their Series 7s while on duty, while sharing commissions with whomever takes care of their clients in their absence. One rep at a regional firm called this a “huge deal. That was my biggest fear — leaving my family high-and-dry if I got the call.”

But for many small b/ds, the NASD proposal, if enacted, will not help much. One- or two-man shops rarely have the redundancies necessary to service clients effectively if a rep is absent. In today's competitive environment, it doesn't take long for a soldier/rep's book to fall prey to poachers.

“In this business there are people capable of doing that,” says a regional rep.

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