Insight and advice requested

At Morgan Stanley you will truly be a "full service" broker--literally anything that could ever be wanted will be available.

At NYLife you're going to be expected to sell insurance, variable annuities, and mutual funds.  They will encourage you to get a Series 6 license--although with your background you should be able to tell them that you want to get the Series 7 and they'll agree to sponsor you for it.

The reality is that most of the people you encounter are going to need insurance and very few of them are going to need investments--that tilts in favor of NYLife.

You're fifty.  If you've read much of what I've had to say you'll know that I do everything I can to discourage people under thirty five from even trying at a place like Morgan Stanley--the odds are so long that it just doesn't make sense to waste several years only to fail.  Instead they should start at NYLife and move to Morgan Stanley when they're in their late thirties or forties.

The reality is that you're going to be discouraged from becoming a clone of your formerself--staring at flickering lights in a Morgan Stanley office instead of in your home office.

If I were you I'd go with NYLife--life insurance is not a luxury.  Being a middleman between the investor and a money manager is a fad that is going to pass sooner rather than later.

He failed, don’t listen to him. Do you want to be an investment guy or an insurance guy? I believe it is that simple, I will tell you insurance commissions blow what you’ll make as an advisor charging 1% away. You probably can make 100K your 2nd year at NY Life, but don’t expect 100K until you’ve put in 4 or 5 years at MS. I find my average commission % seems to fall every year I have been in this business. However assets increase so all is well!

Thank you for your reply.

I have no intention of trading anymore, but I was surprised to learn that FAs don’t actually manage the portfolios.  When did FAs become contractors and sub-contract out the actual portfolio management?   It seems that the industry has changed from “stockbrokers” pushing and selling stocks, to FAs pushing and selling money managers.  Although, my mom uses a guy at ML in South Florida, and he DOES manage her portfolio.  He isn’t a middleman.  He doesn’t sub-contract out the work…except for some international mutual funds that he has her in.  (He also put her in a managed futures fund at one point, but I convinced her to get out of that because there was way too much volatility and absolutely zero transparency.) Maybe it’s because he’s been there for such a long time?  Or maybe it’s the size of the account? (it’s pretty big)

What sets one FA apart from another, if they are all selling the same product? The BOM told me that I would never lose an account because of performance (return on investment,) but that I could lose lots of accounts if the service was bad.  Of course I realize how important service (hand holding) is, but how can investment firms tell their clients that they shouldn’t be concerned about their return on investment?  When did THAT come about?

What I’m still trying to figure out is why you suggest people start at NYLife and THEN move to a wirehouse?  Is it just because of more products to sell? 

Actually, at this point in my life, I’m mostly concerned with MY income and the work I need to do to attain the income I desire.  Do you have any insight on the differences between MS and NYLife in that regard?

MS offered me a salary to start of with, and while it is a tiny salary, it’s a least something to count on.  I have no idea what the deal with NYLife will be.

Again, thank you for your help.

[quote=bankrep1]Do you want to be an investment guy or an insurance guy? [/quote]

Actually, it seems to me that they’re both just sales guys.  What difference does it make what a guy is selling?  Sales is sales.

I’m trying to compare the compensation and the daily life between the two.

If insurance guys make so much more than FAs, then why are they looked at as 2nd class citizens?  Selling insurance isn’t sexy…but making money is…right?

Then go sell something else… This business is not easy there are many other places to make good money with less effort.

[quote=mktsystms] [quote=bankrep1]Do you want to be an investment guy or an insurance guy? [/quote]

Actually, it seems to me that they're both just sales guys.  What difference does it make what a guy is selling?  Sales is sales.

I'm trying to compare the compensation and the daily life between the two.

If insurance guys make so much more than FAs, then why are they looked at as 2nd class citizens?  Selling insurance isn't sexy...but making money is...right?

[/quote]

That is exactly right.  The child you're talking to called Bankrep is late 20s, perhaps early thirties and he is afraid to be in sales so he sits in a bank lobby and smiles at people making deposits hoping to get a signal from a teller that the customer just deposited a check indicating they are an investor.

It is the investment world's minor leagues.

You are focused on making some money in the last ten or fifteen years of your career--even the child has said that you may make $100 grand in your first year at NYLife where you would not hit that for several years at a brokerage firm.

How do the day-to-day lives differ?  At NYLife you'll spend more time doing business and less time prospecting--at Morgan Stanley it will be 180 degrees the other way.

The reality is that there is a bit of a caste system in the financial services industry and insurance is not at the top of the heap.

It really depends on who you see as your "natural market."  If you envision yourself opening accounts with people who want to be investors in things beyond insurance, variable annuities and mutual funds you should go with Morgan Stanley.

However, since 90% of the population--or even more--are best served with insurance and mutual funds there is no reason to bother with the potential for failure at Morgan Stanley when the chances for success are so much greater at NYLife.

Seeing as the child chose to advise you to not listen to me because I "failed" we should address the fact that I became a Senior Vice President in charge of branch operations for one of the top six wirehouses--perhaps Morgan Stanley, before retiriing earlier this year after thirty five years in the industry.

If that is failure I'll take it all day long.

[quote=mktsystms]I have no intention of trading anymore, but I was surprised to learn that FAs don't actually manage the portfolios.  When did FAs become contractors and sub-contract out the actual portfolio management?  [/quote]

You can do either. It all boils down to what you think your job is. We have some of our best debates here about that very subject.

[quote=mktsystms]
What sets one FA apart from another, if they are all selling the same product?[/quote]

They aren't.

[quote=mktsystms] The BOM told me that I would never lose an account because of performance (return on investment,) but that I could lose lots of accounts if the service was bad.  Of course I realize how important service (hand holding) is, but how can investment firms tell their clients that they shouldn't be concerned about their return on investment?  When did THAT come about?[/quote]

It isn't that firms tell clients not to care, it's clients who have told firms what matters to them most. Go ahead and sell yourself as the hottest dot out there, you'll probably attract those sorts of clients who will leave you when the next "hot dot" comes along and resells your now former clients.  BTW, service is much more than hand holding.

[quote=Soon 2 B Gone][/quote]
The reality is that there is a bit of a caste system in the financial services industry and insurance is not at the top of the heap.

…

Seeing as the child chose to advise you to not listen to me because I "failed" we should address the fact that I became a Senior Vice President in charge of branch operations for one of the top six wirehouses--perhaps Morgan Stanley, before retiriing earlier this year after thirty five years in the industry.

If that is failure I'll take it all day long.

This really is a matter of how you want to spend the next part of your career. My view is that the mortality rate for both businesses is about the same. Both businesses are damn hard to get started in, which is why MS is offering two years of salary. I don't know what NY life will offer, but many insurance companies offer little or no salary. Also many insurance companies force the trainee to pick up the costs of testing etc. On the FA side, all the costs are covered.

FAs don't subcontract the management of the assets. Most firms still give their FAs a wide latitude on how to build their business. That said, some firms are starting to steer their FA trainees in one direction, and that is fee business. Fee biz, the FA's job is to find the money and then recommend a fee program for the money. Professional managers do the actual day to day security selection, buying and selling, while the FA oversees the acct to make sure it is meeting the client's needs. The pro watches the money, the FA watches the pro and the client watches everyone. Freed from the day to day portfolio management duties the FA can concentrate on finding more money. At my firm FAs don't have to go the Fee route exclusively. They can go other directions or mix and match. Politically, howver, it's smart to go however the Branch manager wants you to go. If you end up anywhere near the cut line being a team player will buy you more time. One of my friends, a million dollar producer today, absolutely sucked nine months in, then he took off. So time can be your friend.

As far as money goes, I've never met an insurance salesman who makes over $200,000. I'm the piker of my small group of broker friends and I make substancially more than that. One of my broker friends makes over a million dollars a year. That is over a million dollars of income net before taxes. I helped train him. Apparently I did a good job (picture me patting self on back). I constantly remind him that he his a product of his training. Point is, if you are really motivated, in practical terms there is no top end in this business.

I'm sure there are insurance guys doing better than 200K, I've just never seen one.

MS is about as good as it gets.

One concern, is that cloistering yourself for all these years could lead to a culture shock. Your trading experience,while able to give you market knowledge and common sense, will be of little value here during your first several years as building a business is primarily a sales task. You've got to be a people person and make LOTS OF CONTACTS. Once made, you've got to ask these contacts to buy something. You need to be honest with yourself, can you do that?

Lastly, while some believe the insurance industry offers the best prep school for this business I believe it to be the local Ford Dealership. I am dead serious. If you don't know how to sell, that's something you need to learn. As good as MS is, I'll tell you up front that noone in their training department can teach you how to sell. Same goes for UBS, SB, ML, AGE. Just the way it is.

oops…I need to learn how to do the “quote” thing correctly.  Sorry for the last message

Soon 2 be Gone said:



Seeing as the child chose to advise you to not listen to me because I “failed” we should address the fact that I became a Senior Vice President in charge of branch operations for one of the top six wirehouses–perhaps Morgan Stanley, before retiriing earlier this year after thirty five years in the industry.



If that is failure I’ll take it all day long.





Or was it two small insurance companies? That is what you said the last time we discussed your career did you forget what you did for 35 years?



I am not a kid anymore, maybe a young man, but in my 30’s I doubt the word kid is used by anyone except of course those jealous of my early success.

OH yeah Newbie, see where we are with the 12K probably coming soon.

[quote=Soon 2 B Gone]Seeing as the child chose to advise you to not listen to me because
I “failed” we should address the fact that I became a Senior Vice
President in charge of branch operations for one of the top six
wirehouses–perhaps Morgan Stanley, before retiriing earlier this year
after thirty five years in the industry.

If that is failure I'll take it all day long.[/quote]

You don't need to give your qualifications to me.  On internet forums, the content of what people write usually says a lot more about who they are than if they post their resumes.  I appreciate your words of wisdom in this and other threads.

NYL does not offer a salary but "marketing money" that is a loan.  At least that was thier offer to me about 18 months ago.

This loan is to be used only for marketing and not a salary.

Ask the NYL manager to explain this 60k+ a year in detail.

The manager I interviewed with (SE MI) used the following example-

We loan you 3k to send out a mass mailing or hire telemarket firm, you sell 5-6k worth in commish.  Rinse and repeat.

Now one thing to remember is this 5-6k in commish is spread out over a couple years and includes bonus money.  Of course that bonus money is dependent on hitting your goals and the policies staying in place.

Also ask what expense's are covered or should say not?

Getting hired at NYL is not a big deal.  The feeling I got was if you had a pulse and any kind of warm market your in.

No matter good luck.

Read the one where he says he worked for two small insurance companies, then read this one where he says he worked for two large wirehouses. Then read the post where he says he failed as a broker and blew up clients by selling bonds, then they promoted him to VP. Now use common sense and think about why anyone would promote someone who failed not once but twice.

[quote=mktsystms] The BOM told me that I would never lose an account because of performance (return on investment,) but that I could lose lots of accounts if the service was bad.  Of course I realize how important service (hand holding) is, but how can investment firms tell their clients that they shouldn’t be concerned about their return on investment?  When did THAT come about?

It isn't that firms tell clients not to care, it's clients who have told firms what matters to them most. Go ahead and sell yourself as the hottest dot out there, you'll probably attract those sorts of clients who will leave you when the next "hot dot" comes along and resells your now former clients.  BTW, service is much more than hand holding.[/quote]

I hope that I haven't come across as a hot shot. Can you explain more about what constitutes the service that clients want?  Thank you.

[quote=bankrep1]Read the one where he says he worked for two small insurance companies, then read this one where he says he worked for two large wirehouses. Then read the post where he says he failed as a broker and blew up clients by selling bonds, then they promoted him to VP. Now use common sense and think about why anyone would promote someone who failed not once but twice.[/quote]

You're the only person who can't figure out what I've said.  Why do you suppose everybody but you can do it?

No. I could pull up the thread where everyone bashed you and asked you to explain yourself, but I won’t waste my time, it is precious. I have a big day tommorrow, lots of people to see at the bank.

[quote=bankrep1]No. I could pull up the thread where everyone bashed you and asked you to explain yourself, but I won't waste my time, it is precious. I have a big day tommorrow, lots of people to see at the bank.[/quote]

Liar.

[quote=Soon 2 B Gone]It really depends on who you see as your “natural market.”  If you envision yourself opening accounts with people who want to be investors in things beyond insurance, variable annuities and mutual funds you should go with Morgan Stanley.

However, since 90% of the population--or even more--are best served with insurance and mutual funds there is no reason to bother with the potential for failure at Morgan Stanley when the chances for success are so much greater at NYLife.[/quote]

[quote=mktsystms] [quote=Soon 2 B Gone]It really depends on who you see as your “natural market.”  If you envision yourself opening accounts with people who want to be investors in things beyond insurance, variable annuities and mutual funds you should go with Morgan Stanley.

However, since 90% of the population--or even more--are best served with insurance and mutual funds there is no reason to bother with the potential for failure at Morgan Stanley when the chances for success are so much greater at NYLife.[/quote]

Let's suppose that all of my clients would only want insurance, variable annuities and mutual funds.

Why would that equal success at NYLife, but failure at MS?

Are the fees and payouts structured differently?
[/quote]

Absolutely.  At an insurance company the salesman keeps far more of the commissions than a broker at Morgan Stanley would keep--especially on the insurance business.

I'll leave it to others to fill in the details--the guy who did that all the time indicated that he was too busy to bother with this forum, but maybe he's one of these other names floating around.

If your going to go the insurance route why not go indy?

At NYL your going to pay most if not all of your expenses.  If I remember correctly they did let you make local calls from an assigned cube.

No salary.

The NYL name does not stir clients like it used as lets face it people are jaded towards any insurance company.

Going to have push whole life as its the only way to hit your goals.  All of the goals are based on Life sales.

Are you prepared to sell a 100k WL policy to someone who really needs a 500k term policy?  Why?  Well your going to only get like 40% on the term and 55-60 on the WL.  Not to mention the prem. is going to be more.

Also be ready to sell WL as an "investment" of course this is done with a /wink. 

They will frown on you getting appointed with any other companies. 

You will for the most part be a one trick pony.

The above is an example of something that could be valuable, except that it's written by a functional illiterate and as such the entire message becomes questionable.

As a customer of NYLife myself I can tell you that it is true that they will do every thing they can to "force" you to sell what they refer to as "permanent" insurance--I find myself constantly having to fend off my guy who contacts me several times a year suggesting that I should convert my $2 million term policy to something else.

I disagree that the NYLife name does not carry the panache it once had.  Among the more sophisticated there is still brand appeal.  We are constantly being innundated with near subliminal messages about not trusting finanical types unless they are household names--NYLife is a household name.

But be clear, if you sign on with NYLife they're going to expect you to sell their policies and (I suppose) a relatively short menu of funds.

Much is made of the limited product line many people have to offer.  I've used the concept in talking with both potential hires and potential clients--but the reality is that almost 100% of the retail investors don't need anything  other than some more life insurance and a some decent mutual funds.

Soon 2 b gone-

"As a customer of NYLife myself "

Sucks to be you!

You over paid for a name.  Oh well if it makes you feel better.

mktsystms,

I know I will probably get blasted for this on the forum, but if you are looking for a firm with good sales training, you should consider EDJ.  I work for them, but was a former accountant.  I have great technical skills, understand the investment world very well (I studied it for many years), but was not a natural salesman.  EDJ's training helped quite a bit.  Yes, it does not have the panache, etc. of a MS, ML, ....but they do hold your hand along the way.  It's great having my own office, I like the culture, and there are certainly other benefits.  Yes, everyone else is going to chime in about all the drawbacks of our firm, but I should tell you, they just increased the New Investment Rep compensation again this week for the 2nd time this year.  It is pretty lucrative.  Keeps you going for close to 3 years (4 years for Health Ins.).

If you are interested let me know and I will get you my e-mail address (ignore all the bashing from people that either never worked here, or have not worked here in years).

[quote=Broker24]

mktsystms,

I know I will probably get blasted for this on the forum, but if you are looking for a firm with good sales training, you should consider EDJ.  I work for them, but was a former accountant.  I have great technical skills, understand the investment world very well (I studied it for many years), but was not a natural salesman.  EDJ's training helped quite a bit.  Yes, it does not have the panache, etc. of a MS, ML, ....but they do hold your hand along the way.  It's great having my own office, I like the culture, and there are certainly other benefits.  Yes, everyone else is going to chime in about all the drawbacks of our firm, but I should tell you, they just increased the New Investment Rep compensation again this week for the 2nd time this year.  It is pretty lucrative.  Keeps you going for close to 3 years (4 years for Health Ins.).

If you are interested let me know and I will get you my e-mail address (ignore all the bashing from people that either never worked here, or have not worked here in years).

[/quote]

I agree with this advice.  Jones is what you make of it--if you're a chronic bitchoid they will give you plenty of grist for your problem, but there are thousands of very successful people there who do not suffer from the tendency to whine.

[quote=BondGuy]One concern, is that cloistering yourself for all these years could lead to a culture shock. Your trading experience,while able to give you market knowledge and common sense, will be of little value here during your first several years as building a business is primarily a sales task. You’ve got to be a people person and make LOTS OF CONTACTS. Once made, you’ve got to ask these contacts to buy something. You need to be honest with yourself, can you do that?

Lastly, while some believe the insurance industry offers the best prep school for this business I believe it to be the local Ford Dealership. I am dead serious. If you don't know how to sell, that's something you need to learn. As good as MS is, I'll tell you up front that noone in their training department can teach you how to sell. Same goes for UBS, SB, ML, AGE. Just the way it is.[/quote]

I realize that the early part of this business is all about making contacts and networking.  I also realize that it is the exact opposite of what I have been doing for the last 18 years...but... they wouldn't call it a "career change" if it wasn't different from what a person had been doing previously.  Actually, this will be my 2nd career change, as I was a professional musician and performer on stage for 16 years in my "first" life. 

[quote=mktsystms] [quote=mikebutler222]

It isn't that firms tell clients not to care, it's clients who have told firms what matters to them most. Go ahead and sell yourself as the hottest dot out there, you'll probably attract those sorts of clients who will leave you when the next "hot dot" comes along and resells your now former clients.  BTW, service is much more than hand holding.[/quote]

I hope that I haven't come across as a hot shot.[/quote]

No, you've been fine, I was referring to the "hot dot". That's last years big money maker. IMHO, if you sell yourself not as someone who can help clients formulate and achieve financial goals, you'll be selling yourself only on performance. You'll end up attracting people who are always willing to move to the next guy with a better short-term record or pitch.

[quote=mktsystms]

 Can you explain more about what constitutes the service that clients want?  Thank you.

[/quote]

It's been my experience that few, if any, clients worth having are cases where their only desire is "make this pile as big as you can". Most need to do things with their money, preserve it, make income with it, grow it for 20 years down the road (retirement), help them minimize taxes on it or help them get it to their heirs without getting bashed on taxes. Those are just a few of the services I'm talking about.

Insurance v.s. Brokerage business.  

You will make more money in the insurance business than the brokerage business, and as Soon (Put et al) says more  people need or are suited for mutual funds, annuities and insurance products.  However, it takes some time to learn how to sell and how to appropriately use insurance products.  You will NOT get much training or support in that area from any broker dealer. 

Having never been contracted as a captive agent by NY Life, I couldn't say how much support they have for you on the investment side, but I would assume that they would have some quality insurance training.

Either way, it is a sales and contact job.  You have a leg up in your advanced age (I'm advanced too, so I can say that).  People who are our age, the Boomers, are more likely to trust you than if you were in your 20's.  People who are younger are more likely to trust you as a voice of experience and you are old enough to be able to relate to the really geriatric types like Soon 2 B Gone    You also have a leg up in that you are a past performer and probably will enjoy doing seminars and being in the spotlight.  (I too, used to be a professional singer.....long long ago in a city by the bay...but I digress.)

Don't go to EDJ if your goal is to make any real money.  If you want to get a 2 to 4 year education in running a small office and some rudimentary investment training, they are adequate.   After quite a few years in this business I have found the perfect niche for me as an Independent in a wealthy retirement community.  I can offer any types of investments I feel suitable and use any strategies on the investment side that are available to the wire-houses.  On the insurance side I am independently contracted and that business is not subject to overrides by the broker dealer.  That being said, I would not recommend you jump head first into the indy end of the pool without some experience either at a wire-house or insurance brokerage.

Best of luck.

I am currerntly talking with a few NYLife guys about my firm.  Their investment support is shockingly rudimentary at best, and the local guys are limited to doing proprietary products until they have done a certain level of business with NY Life-a very significant level.  I do not know if this policy extends beyond the local branch.

[quote=mktsystms]

I realize that the early part of this business is all about making contacts and networking.  I also realize that it is the exact opposite of what I have been doing for the last 18 years...but... they wouldn't call it a "career change" if it wasn't different from what a person had been doing previously.  Actually, this will be my 2nd career change, as I was a professional musician and performer on stage for 16 years in my "first" life. 

Rather than asking people to buy something, I hope to be able to make presentations that educate and inspire people to want to buy.  I'm a soft-sell kind of guy.
[/quote]

The music experience may help you in that with this business the show must still go on regardless of what's happening in your life or how you feel.

As for the soft sell, that's how it's done here, no arm twisting. Yet, once you've "inspired" people to buy you still have to close. This you will learn quickly. Learning how to do it with finesse is the art form not taught by most of the majors.

For example, you've done a great job of working with a prosepect to show them the road to a successful retirement, their stated goal. This process has taken months and a bond has developed between you and the prospect. And, at this final meeting you were on and good. All systems are go. Yet, the client says they want to think about it. You think, this is a done deal, You've laid it out perfectly, there is nothing left out, the prospect agrees with everything as presented. There is nothing to think about. What are you going to do? Welcome to our world!

A consensus close would be like Christmas in July for us. Unforunately, for the most part, it doesn't go that way.

The success rate for new FAs throughout the industry is about 20%.

The success rate among wirehouse training programs is just under 50%.  Note that this number is probably much lower at MS right now, since they have made some serious cuts in their training program over the past two years.  You may want ask some questions about the recent cuts before you make a decision.

If you have a good network of HNW individuals (such as retirees, executives or small business owners) then the wirehouse route may be best.  However, if most of your network only needs insurance, then insurance may be better.

I’m not sure about the earlier claim that you will make more selling insurance than you will at MS.  The average FA at MS makes over $200K.

Full disclosure:  I recruit experienced FAs for wirehouses.  I do a lot of work with experienced trainees, but do not place people with insurance firms.  That makes me biased, so I suggest you take my comments in context.


Good luck and let us know what you decide!

[quote=babbling looney]You have a leg up in your advanced age (I’m advanced too, so I can say that).[/quote]

Wait a sec…

advanced age?  not me.

I converted when I was 40…to celsius…now I’m 18 again.

[quote=babbling looney]You also have a leg up in that you are a past performer and probably will enjoy doing seminars and being in the spotlight.  (I too, used to be a professional singer…long long ago in a city by the bay…but I digress.)[/quote]

I was musical director for several artists, and we used to go to San Fran and play at the Fairmont a couple of weeks each year. 

[quote=BondGuy]As for the soft sell, that’s how it’s done here, no arm twisting. Yet, once you’ve “inspired” people to buy you still have to close. This you will learn quickly. Learning how to do it with finesse is the art form not taught by most of the majors.

For example, you've done a great job of working with a prosepect to show them the road to a successful retirement, their stated goal. This process has taken months and a bond has developed between you and the prospect. And, at this final meeting you were on and good. All systems are go. Yet, the client says they want to think about it. You think, this is a done deal, You've laid it out perfectly, there is nothing left out, the prospect agrees with everything as presented. There is nothing to think about. What are you going to do? Welcome to our world!

A consensus close would be like Christmas in July for us. Unforunately, for the most part, it doesn't go that way.[/quote]

[quote=JCadieux]The average FA at MS makes over $200K.[/quote]

I read an article that said the avergae FA production at ML was almost $750k, while the average at MS was about $475k.

The BOM at MS told me that the FAs get anywhere from 33% to 50% of their production.  How is that range determined?  Is it based on account size, or AUM, or LOS, or that some products pay more than others?

[quote=babbling looney]

Insurance v.s. Brokerage business.  

You will make more money in the insurance business than the brokerage business, and as Soon (Put et al) says more  people need or are suited for mutual funds, annuities and insurance products.  However, it takes some time to learn how to sell and how to appropriately use insurance products.  You will NOT get much training or support in that area from any broker dealer. 

Having never been contracted as a captive agent by NY Life, I couldn't say how much support they have for you on the investment side, but I would assume that they would have some quality insurance training.

Either way, it is a sales and contact job.  You have a leg up in your advanced age (I'm advanced too, so I can say that).  People who are our age, the Boomers, are more likely to trust you than if you were in your 20's.  People who are younger are more likely to trust you as a voice of experience and you are old enough to be able to relate to the really geriatric types like Soon 2 B Gone    You also have a leg up in that you are a past performer and probably will enjoy doing seminars and being in the spotlight.  (I too, used to be a professional singer.....long long ago in a city by the bay...but I digress.)

Don't go to EDJ if your goal is to make any real money.  If you want to get a 2 to 4 year education in running a small office and some rudimentary investment training, they are adequate.   After quite a few years in this business I have found the perfect niche for me as an Independent in a wealthy retirement community.  I can offer any types of investments I feel suitable and use any strategies on the investment side that are available to the wire-houses.  On the insurance side I am independently contracted and that business is not subject to overrides by the broker dealer.  That being said, I would not recommend you jump head first into the indy end of the pool without some experience either at a wire-house or insurance brokerage.

Best of luck.[/quote]

Being an old fart does have its advantages.  If you're in your 20s you can make it selling high commission life insurance/ Var annuities.  I find it is easiest for me to sell to those under 40. 

[quote=mktsystms]

[quote=JCadieux]The average FA at MS makes over $200K.[/quote]

I read an article that said the avergae FA production at ML was almost $750k, while the average at MS was about $475k.

The BOM at MS told me that the FAs get anywhere from 33% to 50% of their production.  How is that range determined?  Is it based on account size, or AUM, or LOS, or that some products pay more than others?


[/quote]

Payouts are determined by a lot of factors.  I can’t post the link here.  If you send me a PM I’ll point you towards a resource that lists the payout grids for all of the major firms.

[quote=mktsystms] [quote=JCadieux]The average FA at MS makes over $200K.[/quote]

I read an article that said the avergae FA production at ML was almost $750k, while the average at MS was about $475k.

The BOM at MS told me that the FAs get anywhere from 33% to 50% of their production.  How is that range determined?  Is it based on account size, or AUM, or LOS, or that some products pay more than others?


[/quote]

I'll jump in here. Payout is determined by two factors, production level and length of service(LOS). As time goes on you must increase your production or at least maintain a certain level to maintain your payout level. Higher payouts are only achievable through higher production. The payouts are laid out on a production versus LOS  grid. Thus the system is known as 'The Grid." The grid shows what your cut, so to speak, will be of every dollar of production you do. Each firm has its own grid , LOS and production requirements. Not part of most grids are deferred comp and other soft dollar payments.

The BOM is giving you a payout range. This is of little concern to a trainee early on as most of your income will come from the salary. negotiate the best salary that you can. One word about a common mistake, that is agreeing to a salary that won't work. Ok, it's a new career, so sacrifices must be made. Yet, they must be weighed against the practical considerations of your personal situation. Too many trainees enter with to little salary figuring comissions will soon fill any gaps. For slow starters this plan is an iceberg on a cold dark night. It definately cuts the voyage short.

Concur that average income at MS tops $200K. However, averages are not a good indicator of how much the majority of the salesforce is making. One broker could be pulling a million dollars and five could be making $100K. Average would be $250k. Very misleading, add another million dollar guy and the average pops to $357K. There are too many variables in averages to put much weight in them. A better measure is median income. Better yet, ask what the second and third year trainees in the branch are making. That should give you a clearer picture.

My bids are back, back to work!

[quote=mktsystms] [quote=JCadieux]The average FA at MS makes over $200K.[/quote]

I read an article that said the avergae FA production at ML was almost $750k, while the average at MS was about $475k.[/quote]

That average MS figure sounds like it's from before last year's cuts. The average now is second among wirehouses at $653k.

[quote=mktsystms]
The BOM at MS told me that the FAs get anywhere from 33% to 50% of their production.  How is that range determined?  Is it based on account size, or AUM, or LOS, or that some products pay more than others?


[/quote]

The grid runs 33% to 42% (without bonuses, etc) and is based on production level and product type, with "tier 1" (assets based, mostly) paying slightly more.

[quote=JCadieux]The success rate for new FAs throughout the industry is about 20%.

The success rate among wirehouse training programs is just under 50%.  Note that this number is probably much lower at MS right now, since they have made some serious cuts in their training program over the past two years.  You may want ask some questions about the recent cuts before you make a decision.

If you have a good network of HNW individuals (such as retirees, executives or small business owners) then the wirehouse route may be best.  However, if most of your network only needs insurance, then insurance may be better.

I’m not sure about the earlier claim that you will make more selling insurance than you will at MS.  The average FA at MS makes over $200K.

Full disclosure:  I recruit experienced FAs for wirehouses.  I do a lot of work with experienced trainees, but do not place people with insurance firms.  That makes me biased, so I suggest you take my comments in context.


Good luck and let us know what you decide!






[/quote]

Jeff-is the wirehouse success rate really that high?  From what I observed when I was at UBS the failure rate in my branch was much higher.

[quote=joedabrkr]

[quote=JCadieux]The success rate for new FAs throughout the industry is about 20%.

The success rate among wirehouse training programs is just under 50%.  Note that this number is probably much lower at MS right now, since they have made some serious cuts in their training program over the past two years.  You may want ask some questions about the recent cuts before you make a decision.

If you have a good network of HNW individuals (such as retirees, executives or small business owners) then the wirehouse route may be best.  However, if most of your network only needs insurance, then insurance may be better.

I’m not sure about the earlier claim that you will make more selling insurance than you will at MS.  The average FA at MS makes over $200K.

Full disclosure:  I recruit experienced FAs for wirehouses.  I do a lot of work with experienced trainees, but do not place people with insurance firms.  That makes me biased, so I suggest you take my comments in context.


Good luck and let us know what you decide!






[/quote]

Jeff-is the wirehouse success rate really that high?  From what I observed when I was at UBS the failure rate in my branch was much higher.
[/quote]

Some of the wirehouses do better than 50%, and some do not.  50% is an average. Additionally, it’s possible that your branch is not representative of UBS as a whole.  Some branches tend to hire more people than others, so your office may have a lower than average success rate.

However,  I have been told directly by BOMs and training managers at several firms that the industry average success rate is 50%.  I have been told that the success rate of individual firms clusters between 50% and 65%.  This number has been reaffirmed by brokers who have been through the program.

These numbers are also about a year old, so I’m not sure how recent cuts by MS impacts the numbers.

It’s difficult to get an apples-to-apples comparison.  I understand that some firms exclude new-hires who never pass their Series 7 from the success numbers.  Other firms to not.

However, the 50% number is consistent and comes from multiple sources.

I have seen the same thing JoeDa. 

Most branch managers and senior broker's I've taked with indicate a 10% to 20% success rate after about 3 years.  Maybe 50% within the first couple years.

This seems congruent with the fact that about 90% of all new businesses fail.  There's not much difference between being a broker and a new business owner (other than the upfront costs etc...) from a 'creating clients and revenue' standpoint. 

I don't personally feel that a big brand name is always a benefit though...although it will help in opening doors for those who don't have age, contacts, experience and/or sex appeal.

[quote=babbling looney] (I too, used to be a professional singer…long long ago in a city by the bay…but I digress.)

[/quote]

Are you Grace Slick?

[quote=Mike Damone][quote=babbling looney] (I too, used to be a professional singer…long long ago in a city by the bay…but I digress.)

[/quote]

Are you Grace Slick?

[/quote]

Ho ho.  I'm not THAT old.  

Steve Perry?

I named my cat Steve Perry (although I am sorry to say I’m not a Journey fan).  Just seemed like a good fit.

[quote=JCadieux] [quote=joedabrkr] [quote=JCadieux]The success rate for new FAs throughout the industry is about 20%.

The success rate among wirehouse training programs is just under 50%.  Note that this number is probably much lower at MS right now, since they have made some serious cuts in their training program over the past two years.  You may want ask some questions about the recent cuts before you make a decision.

If you have a good network of HNW individuals (such as retirees, executives or small business owners) then the wirehouse route may be best.  However, if most of your network only needs insurance, then insurance may be better.

I'm not sure about the earlier claim that you will make more selling insurance than you will at MS.  The average FA at MS makes over $200K.

Full disclosure:  I recruit experienced FAs for wirehouses.  I do a lot of work with experienced trainees, but do not place people with insurance firms.  That makes me biased, so I suggest you take my comments in context.


Good luck and let us know what you decide!





[/quote]

Jeff-is the wirehouse success rate really that high?  From what I observed when I was at UBS the failure rate in my branch was much higher.
[/quote]

Some of the wirehouses do better than 50%, and some do not.  50% is an average. Additionally, it's possible that your branch is not representative of UBS as a whole.  Some branches tend to hire more people than others, so your office may have a lower than average success rate.

However,  I have been told directly by BOMs and training managers at several firms that the industry average success rate is 50%.  I have been told that the success rate of individual firms clusters between 50% and 65%.  This number has been reaffirmed by brokers who have been through the program.

These numbers are also about a year old, so I'm not sure how recent cuts by MS impacts the numbers.

It's difficult to get an apples-to-apples comparison.  I understand that some firms exclude new-hires who never pass their Series 7 from the success numbers.  Other firms to not.

However, the 50% number is consistent and comes from multiple sources.
[/quote]

I worked at UBS for along time, even in the good years when it was just plain old Paine Webber. The 50% number doesn't come close to the failure rate I witnessed at two large metropolitan UBS branches. Closer to 80%. My wife's SB branch did somewhat better, but her training class had a failure rate approaching that of my UBS branch. Three years in, only 21 of 72 trainees remained. From the trainees flowing through my current office, looks to be about the same.

Jeff, I'll give you the benefit of a doubt based on your reputation as an excellent resource. My view is limited to a very small sample. On the other hand, maybe the numbers being given are at some early benchmark, one year for example.

[quote=BondGuy]

Jeff, I’ll give you the benefit of a doubt based on your reputation as an excellent resource. My view is limited to a very small sample. On the other hand, maybe the numbers being given are at some early benchmark, one year for example.

[quote=BrokerRecruit]I named my cat Steve Perry (although I am sorry to say I'm not a Journey fan).  Just seemed like a good fit.[/quote]

...must have been one ugly cat...

Nah, he just had a nice mullett...

I would tend to agree with all of the assessments.  It seems that, at an early stage, the fall-off of trainees is going to be hovering around that 50% mark. 

When you break it down and look 3/5/10 years in, that fall-off and success rate drops dramatically, and does so for a variety of reasons:

- they were not successful in hitting the various benchmarks after the first year
- it was a career that they thought they would love, but actually found out that it's more difficult than Hollywood leads on
- it was a difficult transition (financially speaking) that they didn't expect (many think that you can/should make $100k in year one)
- training at their respective firm was poor and they grow frustrated and jaded with the industry overall

Again, just some scenarios I have seen, but it is interesting to see the various success rates as they compare to other firms (SB vs. AMP, for an extreme example).

[quote=BrokerRecruit]

Nah, he just had a nice mullett...

I would tend to agree with all of the assessments.  It seems that, at an early stage, the fall-off of trainees is going to be hovering around that 50% mark. 

When you break it down and look 3/5/10 years in, that fall-off and success rate drops dramatically, and does so for a variety of reasons:

- they were not successful in hitting the various benchmarks after the first year
- it was a career that they thought they would love, but actually found out that it's more difficult than Hollywood leads on
- it was a difficult transition (financially speaking) that they didn't expect (many think that you can/should make $100k in year one)
- training at their respective firm was poor and they grow frustrated and jaded with the industry overall

Again, just some scenarios I have seen, but it is interesting to see the various success rates as they compare to other firms (SB vs. AMP, for an extreme example).

[/quote]

Your cat has a mullet?  That's an interesting image...

He doesn't, but it would be interesting, nonetheless.

[quote=JCadieux]

[quote=BondGuy]

Jeff, I’ll give you the benefit of a doubt based on your reputation as an excellent resource. My view is limited to a very small sample. On the other hand, maybe the numbers being given are at some early benchmark, one year for example.

[quote=joedabrkr]
They all claim 50% success rate, because if they didn't the folks in the training departments would have to admit to how ineffective they are.....
[/quote]

I have no idea what the real success rate (as measured by stilling being in the biz 5 years later) but I wonder if it isn't the case that the training programs do as well as is possible, since the job is just plan hard. There's no perfect way to teach people the different skills required to handle client money well AND GET client money.

Give how important new talent is to every kind of firm in this business, I’d be quicker to be critical of wirehouse training programs if someone else in the industry had a better success rate with their trainees.

[quote=mikebutler222]

I have no idea what the real success rate (as measured by stilling being in the biz 5 years later) but I wonder if it isn't the case that the training programs do as well as is possible, since the job is just plan hard. There's no perfect way to teach people the different skills required to handle client money well AND GET client money.[/quote]

mktsystms- No offense but your posts are getting weaker by the....post.

Actually, you can have a "partner" w/out having an actual business partner.  It's called a good mutual fund(s) and SMA's.  Gets' the job done. 

[quote=The Judge]

mktsystms- No offense but your posts are getting weaker by the…post.

Actually, you can have a "partner" w/out having an actual business partner.  It's called a good mutual fund(s) and SMA's.  Gets' the job done. 

There is no "brand".  If you want one- start a hedge fund.

Most FA's sell (roughly) the same thing.  It is what it is.  Besides- you are on the outside looking in.  Talk to me when you have a billion AUM and are producing well into 7 figures.  Like I said, it is what it is.

[quote=mktsystms] [quote=The Judge]

mktsystms- No offense but your posts are getting weaker by the....post.

Actually, you can have a "partner" w/out having an actual business partner.  It's called a good mutual fund(s) and SMA's.  Gets' the job done. 

[/quote]her

Then you don't have your own brand.  You're just another salesman, selling the same thing that tens of thousands of other FAs are selling.  What makes your business different, if you're sellling the same product that everyone else is selling?
[/quote]

First, not everyone has the same SMAs or other tools. Second, even if every craftsman had identical tools, they can differ in skill and style.

Board- Pardon my "direct" comments this evening.  It's just that I am so freakin' tired of these new posters;. Asking questions that could well be answered by the "Search" function.  No bona fide candidates here, IMO. Sometimes us vets' just need to put it out there, as it really stands.  As I've stated, it is what is it is.

TJ

[quote=mktsystms] [quote=mikebutler222]

I have no idea what the real success rate (as measured by stilling being in the biz 5 years later) but I wonder if it isn't the case that the training programs do as well as is possible, since the job is just plan hard. There's no perfect way to teach people the different skills required to handle client money well AND GET client money.[/quote]

Getting client money and managing client money are obviously two completely different sets of disciplines and skills.  What's surprising to me, is that the "team" system, or a "partner" system are so rare in the industry. If it was any other business, you would have a guy outfront doing the sales, and a different guy in the backroom doing the management of the assests. Trying to be a one-man-show almost never works in any business, and I think that's why most FAs fail. 
[/quote]

Their are teams within the business. These are as you describe. We call them hunter/skinner partnerships. It's a business model that can be quite successful. However, with it comes its own set of problems. Most of these are of the marriage variety. When it ain't workin it gets ugly. That said, most of the partnerships I know of are quite successful with the workload divided by individual strengths. In fact I am part of the most danerous of these types of partnerships, I'm married to my partner. This is  definately not recommended as it brings with it its own set of challenges. Least of which can be switching into business mode after a frosty night on the couch. Luckily, that doesn't happen too often.

Still, the standing business model, individual FA, has very little to do with the high washout rate. Simply put, this is a tough business. If it was easy we'd be making one tenth of what we make. There are so many variables present, determining success and failure, that there is no single reason for either. These variables range from timing to expectations to financial to ability to work ethic. And to purposely sound like a broken record, sales ability. If you can't sell, don't apply. Much of the problem, in my opinion, is the destressing of the business as a sales process. This is more true today than ever before. Images of working together to find wealth management solutions just don't gel with the words sell, pitch and close. Yet pitching something is no more than presenting a solution, simple or complex to a problem. Closing is presenting that solution as the answer to the problem and asking for the client's agreement to implement that solution. Selling is the entire process of deconstructing a client's financial situation, analyzing the situation to find the coverage gaps, presenting the solution and asking for permission to move forward. Yet mention selling to the suits in NY and they'll tell you they don't sell. And they don't support selling as a process. To me it's a fundemental disconnect that leads to a higher than necessary failure rate.

I think Mike makes a good point about the training departments. I never really looked at it that way before.

For an outsider looking in you seem to have very good insight into the core business issues facing an FA trainee. This makes you either very bright, or not who you present yourself to be. Either way, use what you gain here, if anything, to make this work for you.

[quote=mktsystms] [quote=The Judge]

mktsystms- No offense but your posts are getting weaker by the....post.

Actually, you can have a "partner" w/out having an actual business partner.  It's called a good mutual fund(s) and SMA's.  Gets' the job done. 

[/quote]her

Then you don't have your own brand.  You're just another salesman, selling the same thing that tens of thousands of other FAs are selling.  What makes your business different, if you're sellling the same product that everyone else is selling?
[/quote]

These guys will get very angry when you ask questions such as "Why should a customer allow you to dip your hand into their pocket for a fee to do nothing?"

In their mind they are managing money because they are telling you to stay with the Smegma fund for another year as if you were not bright enough to grasp that yourself.

I see it as a fad that will fail with the first winds of a protracted bear market.  It's been twenty-five years since the market experienced anything that is a true test of investor's willingness to accept losses quarter after quarter after quarter with smiles on their faces.

The business has thousands of Alfred E Neuman types pretending that they are financial advisors because their clients are not losing money at a time when nobody is losing money.

[quote=BondGuy]Much of the problem, in my opinion, is the destressing of the business as a sales process. This is more true today than ever before. Images of working together to find wealth management solutions just don’t gel with the words sell, pitch and close. Yet pitching something is no more than presenting a solution, simple or complex to a problem. Closing is presenting that solution as the answer to the problem and asking for the client’s agreement to implement that solution. Selling is the entire process of deconstructing a client’s financial situation, analyzing the situation to find the coverage gaps, presenting the solution and asking for permission to move forward.[/quote]

Wow, that’s really great stuff.  I really like the way you explained that.

However, the one thing I see missing is what I think is probably the biggest obstacle that I will face if I sign on to MS.  That obstacle is finding qualified people who will allow me to go through that “process” with them in the first place.  I have no doubt in my abilities to do what you just explained (because I’ve done that sort of thing all my life in one form or another,) but I do have a lot of doubt in my ability to find enough prospects. (because I have never ever done anything like that at all.)

[quote=BondGuy]

For an outsider looking in you seem to have very good insight into the core business issues facing an FA trainee. This makes you either very bright, or not who you present yourself to be. Either way, use what you gain here, if anything, to make this work for you.[/quote]

[quote=Soon 2 B Gone]These guys will get very angry when you ask questions such as “Why should a customer allow you to dip your hand into their pocket for a fee to do nothing?”[/quote]

Even if they have selected someone else to do the day to day managing of the portfolio, they are not simply doing nothing. I liken it to a contractor who is hired to build or remodel a house.  Most people don’t have the knowledge, connections, time, or patience to find all the sub-contractors to do the worked required.  It’s the same thing when it comes to building or remodeling their financial house.

[quote=Soon 2 B Gone]

In their mind they are managing money because they are telling you to stay with the Smegma fund for another year as if you were not bright enough to grasp that yourself.[/quote]

I see it as a fad that will fail with the first winds of a protracted bear market.  It's been twenty-five years since the market experienced anything that is a true test of investor's willingness to accept losses quarter after quarter after quarter with smiles on their faces.[/quote]

[quote=Soon 2 B Gone]

The business has thousands of Alfred E Neuman types pretending that they are financial advisors because their clients are not losing money at a time when nobody is losing money.[/quote]

[quote=mktsystms]

The decline from 2000 to 2003 was nasty.  While it may not have lasted as long as what happened in the 70s, it sure was more severe as far as percentage decline. 

[/quote]

The decline from 2000 to 2003 was significant, but investors did not blame their advisors because much of it was linked to the 9/11 attacks.

Those who lost money in the tech bubble were hearing that they would have a very difficult time convincing anybody that they should not have known that it was as crazy as the Tulip craze of the 1600s.

No doubt things like, "Let's put some lipstick on this pig and sell it" were capable of laying the groundwork for significant arbitration claims--BUT the events of September 11th made the idea of suing because some broker misled you seem shallow, dare I say greedy.

The decline in the large cap stocks that followed 9/11 was "just one of those things" and most of us just rode it out.

My point is valid.  The last time financial advisors were held personally responsible for what was going on in client's portfolios was the 1968 to 1982 bear market.

Since September, 1982 the market has gone straight up with a couple of toe stubs along the way.

The mini-crash from 2000 to 2003 was a combination of not unexpected and collateral damage from an act of war.

The true test of the fad of stealing money from your client every quarter because you had the good fortune of having turned in a mutual fund order years ago will not sit well with investors in the long run.

It's easy to swallow the fee when the market is going up--but when your 12% loss is coverted to a 13% loss because your "advisor" steals 1% for their "advice" it will irritate the hell out of anybody with an iota of common sense.

Had Wall Street dreamed up this boondoggle idea in 1968 instead of 1998 there would be no brokerage houses left.

If I sell you a mutual fund I am entitled to a commission for having made the sale.  It is obscene to suggest that I am entitled to a percentage of what you have in your account forever more simply because of that action so long ago.

You can see the handwriting on the wall when you pay attention to the Schwab ads that are being run--the woman reading her statement and asking "Do they think we're too dumb to know we're being nickeled and dimed?"

If you're a real financial advisor you will attempt to look five, ten, twenty years down the road--I spent my entire career trying to do that--and what you'll see is exceptionally user friendly on-line sites that will be able to offer advice that is impartial and as professional as the most professional advisors can offer today.

Quite possibly at no cost--paid for by advertisers who will want you to consider their fund, their ETF, their annuity, their whatever.

[quote=Soon 2 B Gone]

In their mind they are managing money because they are telling you to stay with the Smegma fund for another year as if you were not bright enough to grasp that yourself.[/quote]

'Ol Putsy longs for the "good old days" when brokers were "real managers" (wink, wink) with a list of 5 stocks every client had to own, and then sell (or the broker starved to death). No thought of tax consequences, why should they, they didn’t even provide clients with cost basis info.

The funny part is every time we start down this road he fixates on the FA charging a fee to run mutual funds (the least efficient model) and ignores that even in that model while paying a fee, the client avoids numerous others, like loads, 12b-1s and even has access to institutional funds to lessen their total fee structure.

He's willfully ignorant and those are the worst form of stupid.

Along with this long term bull market… How old would one have to be to remember the last big decline in real estate. Can you say about 45!!! Think about it.



In the late 80’s the buyer would have been maybe 25 so that is 18 years ago. So they would be 43, most more then 43.



So after a .com bubble we have a real estate bubble. Amazingly after one month of good readings with inflation we are in the clear, BS! Today inflation was up so that makes a trend of 20 of the past 22 months. Is the government analysis in on this? How about these wonderful big boys on wall street who could never say sell during .com.



I suppose all of the real estate money will now be dumped into the market. It is like a cyclical market of .com/merges, housing, oil/gold, stocks… Money just gets passed around and dumped as average Joe moves in. Now the big problem is avg Joe can’t refinance an over valued home or file bankruptcy.

[quote=Soon 2 B Gone]

The decline from 2000 to 2003 was significant, but investors did not blame their advisors because much of it was linked to the 9/11 attacks. [/quote]

Only someone who hasn't had to face clients can say something that stupid. I guess, the issue of "blame" aside, Putsy can't imagine people wanting to go 100% to cash...

[quote=Soon 2 B Gone]BUT the events of September 11th made the idea of suing because some broker misled you seem shallow, dare I say greedy.[/quote]

And, of course, no one (and no lawyer, surely) has even appeared "greedy"...

[quote=Soon 2 B Gone]Since September, 1982 the market has gone straight up with a couple of toe stubs along the way.[/quote]

"A couple of toe stubs" in retrospect, those of us who actually deal with people know the trauma really involved when there's no 20/20 hindsight available, yet.

[quote=Soon 2 B Gone]

The true test of the fad of stealing money from your client every quarter because you had the good fortune of having turned in a mutual fund order years ago will not sit well with investors in the long run. [/quote]

I guess Putsy doesn't know how long funds have been paying trails AND for some reason, thinks people would prefer massive front loads. Yeah, that's the ticket.

[quote=Soon 2 B Gone]It's easy to swallow the fee when the market is going up--but when your 12% loss is coverted to a 13% loss because your "advisor" steals 1% for their "advice" it will irritate the hell out of anybody with an iota of common sense.[/quote]

Ahhh, Putsy, somehow he just doesn't know how the fee structure works. Even before fee business began clients were paying ongoing fees. I guess if he wasn't told, he was happy...

[quote=Soon 2 B Gone]If I sell you a mutual fund I am entitled to a commission for having made the sale.  It is obscene to suggest that I am entitled to a percentage of what you have in your account forever more simply because of that action so long ago.[/quote]

Who says there should be a commission? Why should you be stuck in a single fund family? Why should you pay a 12b-1? Why should you not have access to the cheapest (institutional version) of that fund? Why shouldn't you be able to avoid all the fees I mentioned AND walk away from an FA you think isn't doing a good job?

[quote=Soon 2 B Gone]You can see the handwriting on the wall when you pay attention to the Schwab ads that are being run--the woman reading her statement and asking "Do they think we're too dumb to know we're being nickeled and dimed?"[quote]

Didn't Schwab (actually they're dead on their feet, just haven't fallen, but that's another story) and the deep-discounters put us out of business 15 or more years ago? Seems to me I heard Putsy's "Why pay" stream way back when, when $8 trades were going to run us out of business. Didn't happen, did it?

[quote=Soon 2 B Gone]If you're a real financial advisor you will attempt to look five, ten, twenty years down the road--I spent my entire career trying to do that--[/quote]

You spent your entire career sucking revenue off of people who succeeded at being an FA. Something you had already failed at. Given how little you seem to understand of client's the trauma of market downturns and current pricing structure, I'd say you were pushed out to pasture a long, long time ago.

[quote=Soon 2 B Gone]..

and what you'll see is exceptionally user friendly on-line sites that will be able to offer advice that is impartial and as professional as the most professional advisors can offer today.

Quite possibly at no cost--paid for by advertisers who will want you to consider their fund, their ETF, their annuity, their whatever.

[/quote]

Right "impartial" and run by advertisers. Aside form that bit of fantasy (and the nonsense of "professional" from a website or an 800 number)what you've described is a discounter website or Vanguard.

Now, how long have they been around?

[quote=AirForce]

So after a .com bubble we have a real estate bubble. Amazingly after one month of good readings with inflation we are in the clear, BS! .[/quote]

We don't have a real estate bubble and we don't have real inflation worries. Want to worry? Consider the strong possibility of a recession next year.

[quote=Soon 2 B Gone]

[quote=mktsystms]

The decline from 2000 to 2003 was nasty.  While it may not have lasted as long as what happened in the 70s, it sure was more severe as far as percentage decline. 

[/quote]

The decline from 2000 to 2003 was significant, but investors did not blame their advisors because much of it was linked to the 9/11 attacks.

Those who lost money in the tech bubble were hearing that they would have a very difficult time convincing anybody that they should not have known that it was as crazy as the Tulip craze of the 1600s.

No doubt things like, "Let's put some lipstick on this pig and sell it" were capable of laying the groundwork for significant arbitration claims--BUT the events of September 11th made the idea of suing because some broker misled you seem shallow, dare I say greedy.

The decline in the large cap stocks that followed 9/11 was "just one of those things" and most of us just rode it out.

My point is valid.  The last time financial advisors were held personally responsible for what was going on in client's portfolios was the 1968 to 1982 bear market.

Since September, 1982 the market has gone straight up with a couple of toe stubs along the way.

The mini-crash from 2000 to 2003 was a combination of not unexpected and collateral damage from an act of war.

The true test of the fad of stealing money from your client every quarter because you had the good fortune of having turned in a mutual fund order years ago will not sit well with investors in the long run.

It's easy to swallow the fee when the market is going up--but when your 12% loss is coverted to a 13% loss because your "advisor" steals 1% for their "advice" it will irritate the hell out of anybody with an iota of common sense.

Had Wall Street dreamed up this boondoggle idea in 1968 instead of 1998 there would be no brokerage houses left.

If I sell you a mutual fund I am entitled to a commission for having made the sale.  It is obscene to suggest that I am entitled to a percentage of what you have in your account forever more simply because of that action so long ago.

You can see the handwriting on the wall when you pay attention to the Schwab ads that are being run--the woman reading her statement and asking "Do they think we're too dumb to know we're being nickeled and dimed?"

If you're a real financial advisor you will attempt to look five, ten, twenty years down the road--I spent my entire career trying to do that--and what you'll see is exceptionally user friendly on-line sites that will be able to offer advice that is impartial and as professional as the most professional advisors can offer today.

Quite possibly at no cost--paid for by advertisers who will want you to consider their fund, their ETF, their annuity, their whatever.

[quote=Soon 2 B Gone]The decline from 2000 to 2003 was significant, but investors did not blame their advisors because much of it was linked to the 9/11 attacks.[/quote]

Wow, is this ever a tired argument.  How many times are you going to say this, without anything but anecdotal evidence to back it up?  Trust me...there were plenty of people who didn't feel the least bit patriotic about their losses.  I spent many months doing little but having the same conversation again and again with fearful and angry clients...and I was using a balanced/value strategy for all but the most aggressive clients...imagine how tough it was for someone who sold the crap out of Putnam Voyager?!!

There were two good things that came from the 00-02 bear...

1.  Many brokers who should have been, were weeded out, and those of us that survived learned a lot about working with clients to maintain positions/strategies during difficult markets.

2.  Client expectations finally came back to earth and I didn't have to hear how wonderful those Janus/index funds were anymore.

The decline from 2000 to 2003 was significant, but investors did not blame their advisors because much of it was linked to the 9/11 attacks.

Huh?  Most of the decline occurred PRIOR to 9/11.  The market had been going down for over a year BEFORE 9/11. 

[quote=Soon 2 B Gone]

The decline in the large cap stocks that followed 9/11 was "just one of those things" and most of us just rode it out.[/quote]

[quote=Soon 2 B Gone]

My point is valid.  The last time financial advisors were held personally responsible for what was going on in client's portfolios was the 1968 to 1982 bear market.[/quote]

[quote=Soon 2 B Gone]

The mini-crash from 2000 to 2003 was a combination of not unexpected and collateral damage from an act of war.[/quote]

The true test of the fad of stealing money from your client every quarter because you had the good fortune of having turned in a mutual fund order years ago will not sit well with investors in the long run.[/quote]

[quote=Soon 2 B Gone]

You can see the handwriting on the wall when you pay attention to the Schwab ads that are being run--the woman reading her statement and asking "Do they think we're too dumb to know we're being nickeled and dimed?"[/quote]

The 00-03 decline was in two steps.  The tech bubble burst first.  As with any "crash" there is a tendency to hold your breath and hope it will come back--the holding the breath period lasted for six months or so.

Finally people began to come to grips with the reality that the Nasdaq was not going to go back.  Those who are predisposed to blame somebody else began to look for lawyers to take their cases--that was during the summer of 2001.  Lots of lawyer letters were being written--so far demands for arbitration were still not much of a reality.

Then the attacks occured and even lawyers who stood to gain 1/3 of whatever they could recover realized that the entire process was going to play out against their best interests.  Panels couild  not be depended on to be sympathetic to whining investors--and if the attorney doesn't think he can win a contingency case he is very unlikely to take the case.

If any of you had to apologize for the tech bubble you're not worthy of being in the business--only a fool would have fallen for the "It's a whole new economy" nonsense of that era.

Wow, that's really great stuff.  I really like the way you explained that.

However, the one thing I see missing is what I think is probably the biggest obstacle that I will face if I sign on to MS.  That obstacle is finding qualified people who will allow me to go through that "process" with them in the first place.  I have no doubt in my abilities to do what you just explained (because I've done that sort of thing all my life in one form or another,) but I do have a lot of doubt in my ability to find enough prospects. (because I have never ever done anything like that at all.)


[quote=BondGuy]

Finding the money and managing the money are two different tasks. Most advisors utilize a multi-channel prospecting process. The most popular are networking, centers of influence prospecting, and referral promotion. The least popular by far is cold calling and direct mail. Somewhere in the middle is seminar prospecting. Ironically, cold calling is still very effective and if well executed will lead to success.

If I was starting today I would use a combination of cold calling ,direct mail, and seminars. I'm a big believer in networking, relationship selling, and COI prospecting, but believe that the lead time to get traction won't be there for a trainee. While the contract says they'll pay you a salary for two years, the reality is that you'll have to meet benchmark production/AUM goals long before that time.

I wish I could say it's easy, it's not. When it comes to finding the money, I wish I could say there are a thousand ways to skin a cat. There aren't. But there are a couple dozen ways to get this done. You won't be comfortable with any of them. That's Ok, that knot in your stomach is healthy, normal, and one hell of a motivator. Find the channel you'll  be most comfortable with and give it all you've got. Don't be afraid to fail. Ok, the group knows what's coming next; without risking failure and failing you can not possibly find out what will work for you. So, repeat after me "Get out there and fail !"

[quote=BondGuy]

Finding the money and managing the money are two different tasks. Most advisors utilize a multi-channel prospecting process. The most popular are networking, centers of influence prospecting, and referral promotion. The least popular by far is cold calling and direct mail. Somewhere in the middle is seminar prospecting. Ironically, cold calling is still very effective and if well executed will lead to success.[/quote]

[quote=mktsystms][quote=BondGuy]

Finding the money and managing the money are two different tasks. Most advisors utilize a multi-channel prospecting process. The most popular are networking, centers of influence prospecting, and referral promotion. The least popular by far is cold calling and direct mail. Somewhere in the middle is seminar prospecting. Ironically, cold calling is still very effective and if well executed will lead to success.[/quote]

Do FAs have to pay for putting together the direct mail campaign, or do the wirehouses cover that expense?  (I guessing that it's on the FA's nickel, but I had to ask anyway)
[/quote]

Who pays is case by case and detiremined by the BOM. Most managers are willing to help new trainees. This works for the new trainee in several ways. The manager won't support any program they personally don't believe in. This leads the trainee to marketing channels the BOM supports. BOMs are likely to give total financial support to these channels freeing the rookie to supply the human horsepower. Following the BOMs wishes pays huge political divdends. Especially hady when negotiating for funding. And not a bad place to be if you find yourself in a borderline situation. The one downside is whatever the BOM has in mind might not fit with what you want to do. Negotiate.

As for direct mail, think big, 5000 pieces a month, with a response required. A one percent response rate will get the job done. Anything less is a failure, and means it's time to change ONE variable with the next mailing ie, who you are sending it to.

I know in my area, seminars are oversaturated.  Everyone and their mother is offering seminars.  What has been really effective is email introductions.  I have a client who emails a few people saying that I did a good job for them and that I know investments better than anyone.  My client copies me on the email.  Email has been a very non threatening approach that works because it is a very soft approach. 

Introductions(hottest to coldest)

- face to face ("Hey 'prospect' this is my buddy and financial advisor, he's the man to talk to about investments.") - then I call prospect for appointment

- Phone call intro ("Hey 'prospect' my buddy and financial advisor has done really good for me.  Give him some time to see if he's right for you") - then I call the prospect for appointment

- Email intro (like I mentioned above).  If prospect replies back favorably, I'll call him for appointment

If I get 30 of these per week, 7 appointments will be booked.  The hotter the introductions, the easier it is to sell on appontments.  I don't sell myself or service on the phone.  I only sell the appointments.  If they come in, they are ready to "dance" with me.

[quote=JimmytheRocker]

I know in my area, seminars are oversaturated.  Everyone and their mother is offering seminars.  What has been really effective is email introductions.  I have a client who emails a few people saying that I did a good job for them and that I know investments better than anyone.  My client copies me on the email.  Email has been a very non threatening approach that works because it is a very soft approach. 

Introductions(hottest to coldest)

- face to face ("Hey 'prospect' this is my buddy and financial advisor, he's the man to talk to about investments.") - then I call prospect for appointment

- Phone call intro ("Hey 'prospect' my buddy and financial advisor has done really good for me.  Give him some time to see if he's right for you") - then I call the prospect for appointment

- Email intro (like I mentioned above).  If prospect replies back favorably, I'll call him for appointment

If I get 30 of these per week, 7 appointments will be booked.  The hotter the introductions, the easier it is to sell on appontments.  I don't sell myself or service on the phone.  I only sell the appointments.  If they come in, they are ready to "dance" with me.

[/quote]

JimmytheRocker strikes again with more good stuff. A system everyone can clone. Thanks JtR

" I'm a big believer in networking, relationship selling, and COI prospecting, but believe that the lead time to get traction won't be there for a trainee."

Above is definitely true.  I wouldn't get into the biz if I didn't have a working spouse or 5 months living expenses.  I know if I didn't have either, I'd look desperate and be totally broke.