Should I stay or should I go?

You're doing fine- good for you.

I'd recommend staying where you're at.  You WILL lose a # of accounts by moving, and 100k over 9 years is nothing much when you're currently making 100k.  Yes, SB likely has a better platform.  Still, it will not "magically" attract clients/prospects whatsoever.  The partnership is another matter.  Unless they offer to pay you a hefty salary from the start, you'll simply work the C, D & F book which is something in year 5 you don't want to be doing.

Stay put and keep doing more of what you're doing.

What are you basing it on when you say he/she will lose accounts? Doesn’t

seem to the be the case for most transfer brokers, regardless of where they

are coming from.

Judge - I don't get where your coming up with 100K, or are you saying after tax? 

Rockstar - My take is you didn't give us enough info, are you happy at Jones?  What kind of book do you have, 2000 clients or 200?  What about the other guy, does he have a minimum account size?  Does it apply to his entire book.  His D client might be your B clients, is he all fee based?  Ask yourself if the money is not on the table what reasons do I have to switch firms?

Just curious does anyone at Jones have a team?  I have never seen one.

Bankrep-

Yes I am relatively happy with Jones. There are things I would fix if it were up to me, but every firm has its oddities I am sure and Jones is no exception. I have 350 households. I beileve he tries to take only $100k plus accounts. He's 55% fee based. The reasons to switch (besides the money) are:

1. Better platform (Judge, I got an overview last week and all I can say is I had to pick my jaw up off the floor)which means more solutions for my clients. 

2. Fee based appeals to me. Jones has MAP, but from what I have seen they have 4 or 5 platforms over there. I would like to go fee based for the people it makes sense for. Jones does everything but discourage it.

3. Health Insurance. Believe it or not, this as a huge deal. Jones has crappy coverage and I have $6000 in medical bills I am STILL paying off to prove it.

4. Long term team prospects. According to the propoganda, teams are 30-40% more prodictive than individual advisors. One day I wake up and I am the lead team mamber of a HUGE book if I play my cards right. This is if it the team works, but he has said he wants to slow down before too long and is looking for someone like me- young (I'm 30) and has demonstrated success in this business.

I don't think I'd lose a ton of accounts. I would lose some I am sure, but thses client are with Jones because of me. I hunted 'em, signed 'em up, and I sold ME, not Jones.  

Bankrep, teams are a no-no at Jones unless you're sunsetting your business through the retirement deal or have some type of special family arrangement. Father/Son. Husband/wife. Mother/Daughter. Those are the only teams I have ever seen at Jones.

Hope that helps.

Rock!

And the deal is about $220k cash. 1/9 forgiven every year for nine years.

Rockstar, I wouldn't do anything just for the money.  (I'm not suggesting you are, but hear me out.)

Lots of things can go wrong between now and year 9, many of them not of your doing with the team concept that you describe.  Before I jumped, I looked at a lot of deals, and that forgivable loan always made me nervous.  So when I left, I went indy. 

Staying at Jones might be the thing for you now.  But if you're set on going, I think the smart play might be to go with another firm, be it a wire or indy, then look into partnering up.  Remember, the partners are not going to do anything for you unless it's to their benefit.

By the way....I like your tagline!

I don't trust anyone. 

Take a look at it this way and see if it helps. 

They are giving you ~25,000  year for the next 9 years, before taxes.  Seems like they are giving you a $2000 a month forgivable draw. I would ask for a higher upfront and a shorter time period.

You are reasonably successful and they want you for a reason...make them work.

Here's my 2 cents.  My team is looking at possibly making a jump as well.

#1 - I think you have the right idea about leaving Jones.  The firm doesn't have the capabilities you are looking for with regard to teams and managed money.

#2 - If you hit your goal, the deal is 75% of trailing 12, and that is low.  I would not settle for less than 90 -100%.  Some firms are offering a lot more.

#3 - 9 years is way too long.  I wouldn't go longer than 5 or 6.

#4 - Don't put all your hopes into SB, check out ML or MS, they have great managed account platforms as well.

#5 - Partnering is a great idea, but be cautious of partnering with someone that you don't know very well.  Partnerships can be very profitable for all involved, but they are a lot of work.  Maybe make the jump, and then gradually work into the partnership.

Ditto all of the above; you should be able to land 100% for 5 yrs (AND a partnership if you want).  A move would probably be a non-event for your trajectory after a period of several months of getting reestablished.  However, you need to be adequately compensated for taking the risk of moving…if nothing else, the risk that 3, 4, or 5 yrs down the road you won’t like what you’ve got.  If you’re paid for that risk, it may be worth taking, but it doesn’t sound like you’re getting a sufficient “risk premium.”  I’ve been there, done this (from EJ to wirehouse), but got much better compensation (upfront and potential beyond) with not as impressive stats as yours.  Remember, you are playing with a silver bullet–once you move, you can’t do it again any time soon (nor would you want to…it IS a pain).

[quote=Starka]Rockstar, I wouldn’t do anything just for the money.  (I’m not suggesting you are, but hear me out.)

Lots of things can go wrong between now and year 9, many of them not of your doing with the team concept that you describe.  Before I jumped, I looked at a lot of deals, and that forgivable loan always made me nervous.  So when I left, I went indy. 

Staying at Jones might be the thing for you now.  But if you're set on going, I think the smart play might be to go with another firm, be it a wire or indy, then look into partnering up.  Remember, the partners are not going to do anything for you unless it's to their benefit.

By the way....I like your tagline![/quote]

Ditto me on the tagline...catchy.

I'm also going to ditto pretty much everything else that Starka said and tell you that I had a similar mindset when I left a bank last summer.  There was no deal out there that was going to buy my freedom for any timeframe, so I likewise foresook the big check and went independent.  When you do the math and look at the difference in payout, I don't believe that there is any deal out there that's not designed for the company to get it back at least twice over.  At the level they've offered you, they'll get that bonus back several times over.  They've essentially offered to increase your payout by about 7% over the next nine years (although I haven't considered the add-on for getting it all up front), and IMO, that's not much in exchange for giving up your freedom.

I'm also very skeptical of partnerships in general, as the majority I've observed end up blowing up over a variety of real and perceived inequities.  Partnerships also make it difficult to move accounts if you later decide the firm you've chosen is not a good fit for you.  The arrangement you've described sounds like a better than typical deal if the senior partner actually follows through as planned, although I am again, skeptical of any promises not reduced to writing.

You're asking the right questions, and it's apparent that your chances of success are high regardless of platform.  No doubt a better platform can do nothing but help, but the best advice you'll get is to guard your freedom carefully...I can't think of any price I'd accept for mine.

RS, The deal and arrangement as you've presented it exposes you to considerable risk. Why, after bootstrapping yourself up from zero, would you settle for being a second banana? Or is it third banana? Obviously you have the talent, drive and will to build a successful business. Why not build your own team?

There is much that can go wrong with your deal at SB. If it goes wrong getting your book out of there won't be easy. Wirehouse brokers are experts at converting your book to their pocketbook. Most likely, if things don't work out you'll be left with too little to continue in the biz. Then it's off to that failed broker graveyard with you, the used car sales lot.

Most teams are born out of synergy. Two or more brokers already working in the same office decide to launch a joint marketing effort. It grows from there and they team up. They get a free no obligation look see into how they work with their potential partner. If the marriage works they can make it official. As for you, if you know the broker you are considering teaming with go for it. If not and if this is something concocted by the SB folks then pass. Obviously it works for them. They have only upside. It doesn't work for you. You're carrying all the weight.

Work for another five years on your own and then offer the $600k guy a position as your assistant.

And, the front end of the deal, NOT NEARLY ENOUGH!

[quote=rockstar1]

1) Reading this forum, it seems like a crappy
offer on the financial end of the deal. What should I ask for
considering LOS and considering the fact that I built my book from
scratch? How do I ask without seeming greedy? Any feedback would be
greatly appreciated.

[quote=rockstar1]
2) Anybody here have any experience working
with teams? Anybody in the same kind of situation teaming with a senior
advisor? What are advantages/pitfalls/things I have not thought about?
[/quote]

Have you ever been involved in putting together a prenuptual agreement?  This is the same kind of delicate negotiation that MUST be put in writing WITHOUT violating the trust relationship.  Be sure that all promises to you are in writing.  Hopefully you’ll work together well and never have to quote the contract to get your due, but it’s important to have that fallback position.


[quote=rockstar1]

3)finally, going to a wirehouse from the folksy place Jones is makes me nervous. How bad is the culture shock going to be?

why dont you go independent instead?

This is some great stuff, eveyone. Thanks so much for the input! A couple more details.

The team is not to begin immediately. I am to go over as a standalone advisor. Getting as many people to go with me as possible is job one. The team is to be formed down the road, perhaps with new clients only on a seperate book from his and my clients. I understand that everything will need to be in writing and I will NOT form a team if it doesn't feel right,

Going independent really appeals to me, but I don't think my business is there yet. My eyes are opening to the way Jones does business and while it is a great place to build a business, I am not sure it's where I want to end up long term.

My inclination now is to stay, keep building my business and think indy when I hit $50 mil or Jones gets old.

I am going to tell SB the deal stinks as it stands and ask for $100% and see what happens.

At the end of the day, I don't really want to leave, but it seems like an interesting proposition. We'll see what happens. I'll let you know.

Thanks and more input is welcome if you want to put in your .02. I'm all ears.

Thanks again!

RS   

and BTW, I adapted the tagline from a Don Connelly story I read:

A barber had been in town for twenty years. He charged $14 for a haircut. One day he came to work to see that a new barber shop had opened across the street, sporting a HUGE sign that said, in big red letters: "$6.99 HAIRCUTS".

The old barber stopped, frowned, and thought for a moment. Then he grinned, went inside to made a quick phone call.

The next morning the old barber's first customer was greeted by a sign, that said, in huge red letters:

"I FIX $6.99 HAIRCUTS" 

So I have a sign in my office, in big red letters, that says:

I fix $7.99 trades.

Rock on-

RS

If you don't want to leave, why leave?  Believe me, I understand if you really wanted to (no fee-based, etc.), but if it's not in your heart to leave, why go now?

By the way, congrats on your awesome start entering a tough business.

you shouldnt be scared of going independent. You can still prospect while your an indy

[quote=rockstar1]

Newbie to the forum. Been dissecting it for quite some time for info. Here's my question. I am a five year "vet" that started from scratch with everyone's fav firm on this forum, Edward Jones (it's really not as bad as y'all seem to think-the opportunity is what you make of it and they gave me a shot when NOBODY was hiring in 2001). I am pushing $30 mil in assets and my trailing 12 is $340k. I am being recuited hard by Smith Barney and an offer is on the table. Here's the deal:

65% of trailing 12 upfront cash (forgivable over 9 years)

10% restricted stock award at 14 months if 80% of assets follow me.

In addition, I am being asked to join a team with a 25 year vet with $120 mil in assets who is producing $600k. He's still fairly young, but wants me to be part of his "Franchise Protection Plan", i.e. eventually he wants me to take the lead in the team while he fades into retirement and travels with his wife. He is one of the most respected advisors in my town (he was the branch manager of the Legg office that just got sold to SB).

My questions are.

1) Reading this forum, it seems like a crappy offer on the financial end of the deal. What should I ask for considering LOS and considering the fact that I built my book from scratch? How do I ask without seeming greedy? Any feedback would be greatly appreciated.

2) Anybody here have any experience working with teams? Anybody in the same kind of situation teaming with a senior advisor? What are advantages/pitfalls/things I have not thought about?

3)finally, going to a wirehouse from the folksy place Jones is makes me nervous. How bad is the culture shock going to be?

Any help greatly appreciated.

Thanks for the entertaining forum.

-Rockstar

[/quote]

Best of luck to you in your decision making process.  I am at Ray Jay and we have many EDJ guys coming over here.  don't be afraid to shop your offer around.

Could you explain how you have such a high trailing 12?  I thought you were only able to do A shares.  Don't they pay about .25%?

That is only about $75,000 of recurring revenue.  How do you make up the rest? 

You will be soooooo happy to be at a firm where you can do fee based business.  Retirement is close to 30 years for most people.  Fee based fits best, in my humble opinion.

Good luck and keep us informed.

[quote=maybeeeeeeee]

I am at Ray Jay and we have many EDJ guys coming over here.

[/quote]

How do you know?

Are you in the HR department in St. Pete, or are you in a branch that would not be truly reflective of what is going on company wide?

Do they send out a newsletter that says "A lot of guys from EDJ are coming over here..."?

LPL makes that info available so I would guess RJ does also.  Someone who is considering moving to LPL showed it to me. It shows all the EDJ people in our area who have moved and the date they moved and has this area I live in segmented. 

[quote=Malcolm]LPL makes that info available so I would guess RJ does also.  Someone who is considering moving to LPL showed it to me. It shows all the EDJ people in our area who have moved and the date they moved and has this area I live in segmented. [/quote]

So you figure that Ray Jay sends out a broadly distributed interoffice piece that talks about where they are getting their new brokers--something that is circulated among the branch office brokers and sales assistants?

Is that what you're saying?

[quote=NASD Newbie]

So you figure that Ray Jay sends out a broadly distributed interoffice piece that talks about where they are getting their new brokers--something that is circulated among the branch office brokers and sales assistants?

Is that what you're saying?

[/quote]

Have another cup of coffee grandpa, you seem to be slow on the uptake of new fangled intel.

[quote=NASD Newbie][quote=maybeeeeeeee]

I am at Ray Jay and we have many EDJ guys coming over here.

[/quote]

How do you know?

Are you in the HR department in St. Pete, or are you in a branch that would not be truly reflective of what is going on company wide?

Do they send out a newsletter that says "A lot of guys from EDJ are coming over here..."?

[/quote]

Yes, we get an e mail from St. Pete's welcoming each new advisor.  It tells the advisors name, his new branch.  It also tells us how many years he has been in the business and the name of their former company.

At the end of each quarter, we get a company wide list showing the number of new advisors who came to RayJay and the number of those who left.

Very few advisors leave.

Some make the choice to go to the indy side of RayJay which is called RJFS. 

This is the only company I know of that lets you OWN your book and freely move to indy if you choose to.  You can stay at the same company and fill out a simple Broker Dealer Form Change to move your clients to the indy side.  Honestly, ask anyone who has moved--it can be very difficult to move to another firm.

By the way, if you chose to leave (which few people do) you take your book free and clear.  They will not fight you for it unless you are still under the first couple years of a non compete contract. 

It is what it is.  You can read what I said.  I'm not trying to start an argument. 

[quote=Malcolm]LPL makes that info available so I would guess RJ does also.  Someone who is considering moving to LPL showed it to me. It shows all the EDJ people in our area who have moved and the date they moved and has this area I live in segmented. [/quote]

MS posts this info as well, for the whole country.

It’s all public information that’s available on the NASD’s website anyway, so it isn’t like it’s a big secret…

[quote=FreedomLvr]It's all public information that's available on the NASD's website anyway, so it isn't like it's a big secret...[/quote]

What is available on the NASD website?

Maybeeeee-

$75000 if I my whole book was A-shares, my book didn't grow a dollar last year and all I did was sit back and collect trails.

my revenue breakdown goes something like this trailing 12

$45000 stock trades

$20000 bond trades

$20000 service fees on those A-shares

$15000 on systematic investment/direct investment programs (Simple IRAs, Jones DCA programs, 529 plans, automatic bond reinvestment programs)

$150000 mutual fund sales on new money (A shares AND B shares--GASP!!)

$15000 variable annuity sales on new money

$90000 in Life insurance sales

Life insurance was the big difference for me this year. That $90000 came from 4 cases. Estate planning and tax planning with an attorney and the Hartford guy. Take the life insurance out and the numbers make more sense. If anyone wants more details on what I am doing, PM me later.

I also brought in $9 million over the last 12 months, which doesn't hurt anything.

You probably noticed that all of the above is transaction-based with the exception of the service fees and the automatic stuff I have going on. Which brings me back to the point, which you mentioned, I would LOVE to have fee based in my quiver. It's not for everyone, but a LOT of people, including current clients, would benefit.

Cheers!

RS

P.S. I have a meeting Monday with SB. I am asking for 100%. We'll se what happens.

[quote=NASD Newbie]

[quote=FreedomLvr]It's all public information that's available on the NASD's website anyway, so it isn't like it's a big secret...[/quote]

What is available on the NASD website?

[/quote]

Part of that new fangled intel I was referring to. It is available at www.nasdr.com (you'll have to search the website).  Now gramps it's time to take out your dentures and let them soak over night.

Thanks for the breakdown on your book, and your honesty.  Transaction business in not bad--it is just nice to be able to offer both types of business.

Can you really make a case to sell B shares to a client?  Where does it fit?

Not very many firms that treat transaction brokers with respect. Somehow the industry is telling us that our $1 of trade revenue is second class to $1 of fee revenue. As a matter of fact, there is only one firm I am aware of that flatly states “A dollar of revenue is all the same NO MATTER where it comes from.” In my previous posts, I have stated that the move to fee based is an insidious ploy to get the firm between the adviser and the client. We’ll see if I’m right.

maybeeeeee-

B shares are good for:

Small trades where they will never hit a breakpoint. In the American Funds Advisor Guide they do a breakdown of A, B, and C shares at different investment dollar amount levels: $10k, $25K, $50K, $100k and run net return to client based on average expenses within the American Funds. On a $10,000 invesment, B shares actually outperform A and C shares over a ten year period. At $25,000, it's a wash between A and B shares. Anything above that probably needs to be A shares. 

Also, if you have a client who is taking immediate systematic distributions, B shares make sense (if the client is not eligible for a huge breakpoint). You can pull up to 12 % (depending on the fund company) a year as part of a systematic withdrawal program without triggering the CDSC, and the B share will outperform in most cases over most time frames. This works well for amounts under $100,000. Run some hypos sometime on this, it's fascinating.

Jones, of course, thinks C shares are the devil.

Transaction business is not bad, but at what point is this going to blow up on me? I know Jones brokers who have 1000 households. Studies have shown that one person can only service 300 effectively. Do I want to be the Jones guy? Or do I want to be more important to less people paying me fees for advice rather than transactions? Do I want to be tied to the office being reactive or do I want to able to cycle through all of my clients on a monthly basis? Transaction based isn't bad, it's just demanding and high maintainance.   

Meeting tomorrow night, I'll let you know what I decide and thanks again everyone on the input. It has been really helpful.

RS   

[quote=rockstar1]

maybeeeeee-

B shares are good for:

Small trades where they will never hit a breakpoint. In the American Funds Advisor Guide they do a breakdown of A, B, and C shares at different investment dollar amount levels: $10k, $25K, $50K, $100k and run net return to client based on average expenses within the American Funds. On a $10,000 invesment, B shares actually outperform A and C shares over a ten year period. At $25,000, it's a wash between A and B shares. Anything above that probably needs to be A shares. 

Also, if you have a client who is taking immediate systematic distributions, B shares make sense (if the client is not eligible for a huge breakpoint). You can pull up to 12 % (depending on the fund company) a year as part of a systematic withdrawal program without triggering the CDSC, and the B share will outperform in most cases over most time frames. This works well for amounts under $100,000. Run some hypos sometime on this, it's fascinating.

Jones, of course, thinks C shares are the devil.

Transaction business is not bad, but at what point is this going to blow up on me? I know Jones brokers who have 1000 households. Studies have shown that one person can only service 300 effectively. Do I want to be the Jones guy? Or do I want to be more important to less people paying me fees for advice rather than transactions? Do I want to be tied to the office being reactive or do I want to able to cycle through all of my clients on a monthly basis? Transaction based isn't bad, it's just demanding and high maintainance.   

Meeting tomorrow night, I'll let you know what I decide and thanks again everyone on the input. It has been really helpful.

RS   

[/quote]

You sir are a gentleman and scholar.

I have not had customers with under $25,000 to invest.  My average account is above $150k.  Not bragging, just stating a fact.

You sound like a quality person who does the best for his customer.  Please keep us informed and best of luck.

They ain't budging on the offer and I ain't leaving. The branch manager's explanation to my wife as to why the offer was so low:

"Well, you know, Smith Barney's offers are never going to be the best on the street. We have to do a P&L analysis because the recruitment bonus is amortized to the branch P&L for nine years."

Gimme a break-

So, $255000/9 equals $28333 a year amortized for my 75% deal.

and $340000/9 is 37777 a year if the deal was 100%.

By then I should be producing in the $700-800k range. Another $740 a month for nine years doesn't seem like a big deal for someone on the trajectory I am on. Apparently it is.

While I realize it's not about the money, it still amounts to someone tapping you on the shoulder and asking you "What do you think you're worth?" It's kind of insulting if the offer is too low.

Their platform is better, but after much consideration, it would really only make a difference for a handful of clients. My clients are middle market-mass affluent $100k-$500k households. Jones has everything they need and they LIKE Jones.

I would also lose my BOA in the deal. Screw that.

I think I will stick around. If I get sick of subsidizing the veteran IR's bonuses, I'll go indy and take my BOA with me.

Much thanks to everyone for the help. Y'all were extremely helpful in helping me make the decision.

Later-

RS

P&L THIS SB!!!

I think you made the right decision.  It’s hard to put a price on your freedom, but what they shot you was pathetically low.

Wow, that place is in Houston.

What other recruiter who prowls these parts is also in Houston?

Who would have thought that there would be two employment agencies specializing in Wall Street so far from Wall Street?

[quote=NASD Newbie]

Wow, that place is in Houston.

What other recruiter who prowls these parts is also in Houston?

Who would have thought that there would be two employment agencies specializing in Wall Street so far from Wall Street?

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[quote=joedabrkr] [quote=NASD Newbie]

Wow, that place is in Houston.

What other recruiter who prowls these parts is also in Houston?

Who would have thought that there would be two employment agencies specializing in Wall Street so far from Wall Street?

[/quote]

News flash-things happen in this business outside the 212 area code all the time!  Why shoot we even have electricity and runnin' water and fancy computers out in these parts!!!
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Yep, but what separates people like you from people like me is that I am bright and curious about things that seem strange to me.