Commonwealth vs. LPL

I know very little about Commonwealth except what I've heard third-hand and it's generally positive.  I believe their minimum production requirements are a bit higher and the payouts a bit lower.  It could very well be that they are more geared toward fee-based and that may push their average payout lower...I don't know.  What I think I can say with some confidence is that you've selected two very capable B/D's and I'd be surprised if you didn't find an excellent match with at least one of them.

From an educational standpoint, do us a favor (as I did on Raymond James vs. LPL) and let us know what you ultimately decide and why you decided it.  My guess is that while you'll find information on here to be very helpful, the due diligence trips will be the deciding factor.  I was most impressed with both RJ & LPL, but it was obvious at the end of both trips that LPL fit my practice just a bit better than did RJ.

Good luck with your due diligence and keep us posted...

One big thing I liked about LPL that I did NOT like about Commonwealth is that LPL is self clearing.  From what I recall Commonwealth is not.  I felt there was less confusion for clients and less likelihood for operational problems when my custodian and my b/d were one in the same.

I am not familiar with eMoney.  Sounds like I’ll have to take some time to look into it!

Every other yr. or so, I tend to reach out to a few indy b/ds for my own due dilligence and Commonwealth is one I tend to inquire with often.  Some things you point out, I have felt as well; they are certainly on top of the service side as much as they can, very responsive and advisor focused when/where they can be.  Their technology in some areas is as good and better than LPL but in others it's worse - I found it dependent on the type of business where it may or may not matter comparitively speaking.  One thing I don't agree on however is that they have a better wealth management platform...I just don't think they are even close for a variety of reasons.  Their 3rd party mgr platform is horrible from a choice perspective and cost standpoint, last time I checked with them, they had maybe one all cap manager to choose.  They seem to offer much more in 3rd party FBAM platforms but after seeing that, I came to find that LPL pretty much offers the same options.

I would also ask, given you are a wealth manager, my assumption therefore is you are dealing at times with HNW clients; what is their flexibility and choice on alternative investments?  I just never gained a sense that they were very robust there but if they are please let us know.  And what I am talking about there is what is available hedge fund, LP, REIT, Oil and Gas, 1031, managed futures etc... that can help service the HNW clients?  Having Advent as their performance reporting package is good and bad - great tech, but a pain to work with in terms of interfacing capability which can add to the workload and additional technology you may have to add to your business.

My $.02!

All good points and questions I myself have. I do believe LPL has a much better alternative investment platform. 80% of my business is advisory business and I outsource all of it to 3rd party managers. Beyond that I use Russell Lifepoints as my fund of choice for smaller accounts and I don't do any transactional business so not sue the self-clearing issue is a concern to me. One other area LPL seems to have a leg up on CW is mortgages. Not sure how important this is but it's nice to have. The payouts at CW are lower but for higher producers and especially for advisors w/ a lot of assets in advisory services (like me) the payouts fall in the 90%. I also don't mind taking a lower payout as long as I feel I'm getting value. Two areas that really impress me with CW is a) their platform is centered around wealth management and their marketing materials and brochures are very impressive. They really do a great job in explaining to clients/prospects the whole wealth management process (not just investments). Since I focus on wealth management I find this a very attractive benefit. I've been granted access to LPL's branchnet website and I have yet to find any client-approved materials that show anything like Commonwealth's. I know I could create my own but having a lot of this marketing materials ready to go from day 1 is attractive. The 2nd area that's very interesting is their Practice Development Group. This seems to be an internal consulting group that is available to reps who want help in building and growing their business and want advice on issues such as hiring, compensation, moving to fee based, structuring your practice, etc... Again CW positions itself as the Harvard of IBD's and the story of being selective of who they bring in makes sense to me since that's the approach I take w/ clients (the fewer the better). In terms of technology I see that CRM (customer relationship management) is built in to CW system whereas LPL does not have their own. I know they are working on this and expect to roll something out next year.

And bottom line, the informational packet (box more like it) I received from Commonwealth was VERY impressive and VERY well organized which gave me the impression that they know exactly who they are, who they cater to, and focus their attention on that and that only. Again it looked "high end" when compared to LPL's info. On that matter RJFS also looked a lot better than LPL. I'm not going to choose a BD based on how "cool" their marketing material stuff looks but you now what they say about first impressions!

Gotcha - word of caution on the business development group at CW - it's staffed with I believe one person and the key question to ask is; how many of "them" have been in production?  Frankly, LPL is trying to add this too, not been to impressed and not many if any were producers either.  Marketing wise, I don't know what to tell you...I design my own investment policy statements, do financial plans, I do use LPL's wealth management proposal and often their PRT to present things to clients.  I focus exclusively on my process and how I work with clients and their money so brochures and that tend not to come into play for me.

What do you consider wealth management - since you call yourself as such?

csmelnix

Point well taken. I'm in a big firm now that has a biz dev. group and all of them are nothing but washouts who could never make it in the industry so add 0 value to me. One thing I've heard is that LPL let's the reps brand themselves a lot more vs. RJFS and maybe even CW so maybe that's why they keep so little marketing material since any rep who wants to create something may be better off customizing it to exactly their type of work and process so I also think your point is a very good one.

In terms of what I consider wealth management... Of course this means different things to different people but for me it boils down to acting as the quarterback for an internal and external team of professionals who in a sense act as a personal CFO to individual clients and service the clients in the following areas: investment management, risk management, tax planning, retirement, estate planning, and business planning. As an example because of my background, one of my areas of expertise is helping business owners design and execute business succession/exit plans to either third parties, employees or family. Like I said, to me WM is being able to act as the client's CFO and although the investments ARE CRITICAL to this role they are merely one aspect of the whole picture. At LPL for example, I've seen their wealth management proposals and to me they don't get it because it's nothing more than an investment proposal with the title Wealth Management on the cover.

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that's where I tend to use on the investment proposal side v others.  That's why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

You also said you outsource all advisory to 3rd party managers…is that managers themselves or is it 3rd party platforms like assetmark or SEI?

[quote=csmelnix]

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that’s where I tend to use on the investment proposal side v others.  That’s why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

Let me see if I can answer some of these... 1) [quote=csmelnix]

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients?  I do some tax planning (not tax preparation) as part of my financial planning process BUT I know my knowledge limits so I have no problem bringing in a CPA with complicated issues. I am not a CPA and don't pretend to be but I do have my CFP along with an MBA in Finance along w/ 15 years of management consulting and running my own business (prior to being an employee now) so I am up to speed in a lot tax related issues. My role here is to identify a problem or area of improvement, educate the client on the issue and bring in the expert to drill down into the details. 2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself? Very similar to the tax planning answer. Know enough about the problems and solutions and tax and legal concerns but bring in the estate planning attorneys to validate or improve our recommendations and certainly to draft documents. The attorney then runs their thoughts and recommendations by me first prior to delivering final results to clients. I have established 2 strong relationships w/ local attorneys in this area. 3. How do you do your insurance business or plan to do it as an independent? Currently I address life, disability and LTC insurance needs as part of my process and if the need is large enough we'll provide the insurance for the client through the insurance co. approved by my BD. In the area of P&C, Commercial, Umbrella, & Health I do not sell it myself but again if I discover a concern I tell the client to speak w/ their insurance person about the concerns or in some instances (A clients) we'll discuss it directly w/ the insurance person and try to releive the client of that work. As an independent I would expect to continue to run it this way unless I developed a STRONG relationship with an insurance broker whom I would trust and who would help us grow our business as we help them grow theirs.

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent? I have a process that I've created that let's me address all these areas w/ clients over the course of the first year of the relationship. I have a system to track the issues and recommendations so when we meet w/ the client we can refer back to it and make sure all the To-Do's are getting done as time goes by. I do not have anything like eMoney Advisors but this tool is something that WOULD GREATLY elevate the type of service I can provide and at the same time reduce the time it takes on my team's side to keep our client's financial picture updated and integrated. One key reason for going on my own is that at my current firm we do all this (granted for a handful of affluent and HNW clients) but we are prohibited from charging for our time and/or plans so it all has to be included in the asset management fees we charge. To me that' s ridiculous and leaves A LOT on the table. So I would continue to do things the way we do them now but better via better technology and access to tools that are not allowed at my current BD.

[/quote]

Yes that is managers themselves. All I do is decide on the overall asset allocation and manager(s) and turn over the portfolio to them. My job is then to make sure the investments returns are generating the PRR (personal rate of return) that I've calculated based on the financial analysis and that the risk/reward/MPT figures of the managers are fair. If not then my job is to make a decision about the manager and communicate that to the client. I don't even rebalance. I also outsource the overlay portfolio management because in my opinion that's also very time consuming.

[quote=csmelnix]You also said you outsource all advisory to 3rd party managers...is that managers themselves or is it 3rd party platforms like assetmark or SEI?[/quote]

One BIG concern for me w/ going indy is the lack of Wealth Management resournces like the ones found in the big firms. Although seldom, I do sometimes have to pickup the phone and talk to attorneys, CPA's, etc... in our private client group and that's key to my type of business. Can you expand on your experience w/ LPL in this area? Also by establishing that relationship w/ a local General Agent how are you compensated via LPL for that business?

[quote=joedabrkr] [quote=csmelnix]

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that's where I tend to use on the investment proposal side v others.  That's why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

[quote=indywanab]

One BIG concern for me w/ going indy is the lack of Wealth Management resournces like the ones found in the big firms. Although seldom, I do sometimes have to pickup the phone and talk to attorneys, CPA’s, etc… in our private client group and that’s key to my type of business. Can you expand on your experience w/ LPL in this area? Also by establishing that relationship w/ a local General Agent how are you compensated via LPL for that business?

[quote=joedabrkr] [quote=csmelnix]

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that's where I tend to use on the investment proposal side v others.  That's why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

I would second Joe's experience with the LPL Insurance Associates. They are trying to get it together, and claim that they will be rolling out VUL products in the 4th quarter of this year.

For simple term, I use Hartford's online system. I can get instant quotes for the client online, and then submit the app electronically through Hartford. For policies over $1M, they are pretty competitive. They payout for LPL is 85% of the 1st year premium. Other than submitting the app, and having the client sign the policy receipt, you don't have to do much of anything.

Our wealth management/private client group is actually all professionals (CFA's, CPA's, Attorneys, CFP's) not failed brokers. They actually are REALLY good but of course limited in the type of advice they are willing to provide due to the limits compliance places on them/us. Still when talking w/ HNW and UHNW prospects the ability to show them those resources goes a LONG way in impressing them and making them feel like we have all they need (whether is true or not). That's the biggest concern I have w/ going indy. As a matter of fact I ran into an old friend of mine this weekend who is the managing director at a mid-tier investment bank in Chicago. He wants me to call him once I'm set up w/ my own shop because he said they run into situations where their clients come into $20MM - $30MM after the sale of their business and they are often asked for a referral. My friend's question was "What kind of resources/experts will you have onboard to trully give high end advice to clients like these?" His comment is he'd rather refer a client to us since he & I have known each other for 10+ years and he said he can trust me but the question about high end resources in the area of wealth management came up and this is something I have to figure out before I launch my practice.

Check out the demos on eMoney Advisors at

http://www.emoneyadvisor.com/emacorp/advmarketing_demos.htm

This will give you a good idea of the tool. If you like this tool and are w/ LPL you'll be very happy knowing that LPL is rolling this out to their reps for a VERY, VERY DISCOUNTED price!

Indyw - appreciate the responses; we may have some similar things in eachother's practices.  As you do your due dilligence my suggestion or point of emphasis would be that ask the questions I asked of you and make sure the explanations fit the answers you gave me.  Commonwealth is a great firm for many reasons but my time spent looking at them every so often, they really lack the resources to service my business in the areas you are looking at.  There is a lack of tax and attorney professionals there to help with case design or estate planning etc... compared to what I have had here at LPL.  LPL having their own trust company is a huge benefit from that standpoint, though, I don't often use them for trust administration the people available to address questions, help with planning etc. have been strong.  In terms of tax planning, estate attorneys and all that...being indy has helped me build a wealth management platform for my practice; it's not complete but is filling - I do have 3 in house CPAs, they are licensed and do their own business, I would love to bring in an attorney but too many ego's in one office have made it difficult.  One of things that certainly would keep me from going to CW at this time is none of the CPAs in house is responsible for doing $100k in GDC and as it was explained to me, CW wouldn't let them join as a result.  Kind of p'd me off given that it's my business not theirs.

Also, really dig down with Commonwealth on their 3rd party managers, as I said before, they are lacking in choice on the individual managers but have a great selection of vendors to choose from that do overlay management and combine managers (like SEI, brinker, pac fin. group etc).  On the insurance side, I have worked with a few GAs, as well as the FMOs and it's hit or miss.  I don't have a great liking to the LPL Ins. associates platform either; the beauty with the local GA is I get far greater service on the underwriting side for multiple product than I get anywhere else and that is a great benefit for the client. 

Now my disclaimer...LPL has been great to and for me, my business is better than I ever imagined.  But....LPL is not what they were when I first came here 5 plus year ago either.  Their service has slipped both in time to answer but most importantly in accuracy of information.  I never had to question the info I received from the service center until about 12 months or so ago...now I do.  I don't like the aggressive growth they are on right now either, particularly given my business model.  As they continue to grow, they are building this box that we all are going to have to play in or compliance won't be happy.  I am seeing the changes already, I am seeing where they were once flexible they no longer are or they are making it very difficult to do things related to my business model that I once could do.  I don't foresee that getting better.  Yet, they offer more options than what I have seen with other b/ds I have looked at to include commonwealth... Their technology makes or helps my practice stay efficient more than what others appear to do too.  A time may come though were the trade off with flexibility/independence will win v the efficiency and technology though.  We shall see.

csmelnix and indywanab:  Have either of you taken a look at the RIA route?  If so, why did you rule that out?

Malcolm,

I have very limited knowledge of the only-RIA option. As far as I understand setting up your own RIA is a) more work - no BD there to help with the backoffice systems, tools, etc... b) more costly - you'll have to do your own compliance and c) RIA's can only charge fees so anything relating to commissions (insurance, annuities, mutual funds for small accounts, is not doable as an RIA). These are all guesses at this point so if I'm wrong please enlighten me. What I do see most people do is to associate w/ an IBD and set up their own RIA AS WELL to allow for more flexibility. Any comments?

I haven’t really looked at the RIA.  Biggest reason, I still have some commission business but also, needing a CCO in my model is not what I want to add to my overhead at this point.

Update: Just had a conference call w/ biz dev. mgr at Commonwealth. Liked what he had to say. Basically they approach things similarly to the way I approach my business (be selective of the clients you take in and give them better service). He was honest in saying that the only thing that works against them in terms of their size compared to LPL is their ability to contract w/ SMA managers due to the asset requirements the managers want before signing on w/ a BD but from what I heard they have plenty. Heck they have more than what's available at AGE (my current firm) so this may not be an issue. They do seem to understand the wealth management approach and the fact that the industry is changing and relying ONLY on investment management fees could be a dangerous business model as fees/commissions continue to face compression due to people thinking portfolio management is being commoditized.

I did find out that they in fact have alternative investments (hedge funds, private equity, managed futures, REITS, 1031 LP, oil & gas and leasing LP's). I got access to their website and looked for the programs available and the only downside is the quantity of managers available in each class is thin in the area of hedge funds, private equity and managed futures. Of course the managed futures funds that I use were NOT on the list!

Their technology seems good but at first glance not as good as LPL. My impression is that they probably react to what LPL does due to advisor request/demands. The do have a robust advisory platform and I really like the idea of increased payouts once you have $25MM or more in their advisory platform (payout goes up to 90%) and the fact that the administrative fees also go down as your AUM in advisory programs increase. This makes A LOT of sense if you ask me.

Their marketing materials seem very good although they do have the Commonwealth Financial name on them but not sure if that's too big an issue.

I will continue to "play" around w/ their technology and report as new developments occur. Boy is there a lot to learn here. Almost makes me want to take Merrill up on their offer to go with them so I don't have to worry about all this BUT I know indy is the best option for me in the long run so I won't be tempted!

[quote=csmelnix]

Indyw - appreciate the responses; we may have some similar things in eachother's practices.  As you do your due dilligence my suggestion or point of emphasis would be that ask the questions I asked of you and make sure the explanations fit the answers you gave me.  Commonwealth is a great firm for many reasons but my time spent looking at them every so often, they really lack the resources to service my business in the areas you are looking at.  There is a lack of tax and attorney professionals there to help with case design or estate planning etc... compared to what I have had here at LPL.  LPL having their own trust company is a huge benefit from that standpoint, though, I don't often use them for trust administration the people available to address questions, help with planning etc. have been strong.  In terms of tax planning, estate attorneys and all that...being indy has helped me build a wealth management platform for my practice; it's not complete but is filling - I do have 3 in house CPAs, they are licensed and do their own business, I would love to bring in an attorney but too many ego's in one office have made it difficult.  One of things that certainly would keep me from going to CW at this time is none of the CPAs in house is responsible for doing $100k in GDC and as it was explained to me, CW wouldn't let them join as a result.  Kind of p'd me off given that it's my business not theirs. These are all very good points and examples of exactly things that I would need to feel comfortable with. The lack of experts in the home office that I could call on when needed is a red flag for me. One thing I had forgotten about was LPL's Trust Co. which does help and add a level of credibility that CW does not have. Not only that but I envision LPL will eventually add lending capabilities at the rate they're going. Finally I don't know how I would feel if I was told I can't bring someone doing less than $100K in GDC if I felt it was the right move for my practice.

Also, really dig down with Commonwealth on their 3rd party managers, as I said before, they are lacking in choice on the individual managers but have a great selection of vendors to choose from that do overlay management and combine managers (like SEI, brinker, pac fin. group etc).  On the insurance side, I have worked with a few GAs, as well as the FMOs and it's hit or miss.  I don't have a great liking to the LPL Ins. associates platform either; the beauty with the local GA is I get far greater service on the underwriting side for multiple product than I get anywhere else and that is a great benefit for the client. 

Now my disclaimer...LPL has been great to and for me, my business is better than I ever imagined.  But....LPL is not what they were when I first came here 5 plus year ago either.  Their service has slipped both in time to answer but most importantly in accuracy of information.  I never had to question the info I received from the service center until about 12 months or so ago...now I do.  I don't like the aggressive growth they are on right now either, particularly given my business model.  As they continue to grow, they are building this box that we all are going to have to play in or compliance won't be happy.  I am seeing the changes already, I am seeing where they were once flexible they no longer are or they are making it very difficult to do things related to my business model that I once could do.  I don't foresee that getting better.  Yet, they offer more options than what I have seen with other b/ds I have looked at to include commonwealth... Their technology makes or helps my practice stay efficient more than what others appear to do too.  A time may come though were the trade off with flexibility/independence will win v the efficiency and technology though.  We shall see. This "high growth" trend concerns me too. I know service has been a key benefit of LPL in the past but seeing how the speed and more importantly quality of service decreased at AGE during the last few years as they were growing makes me VERY sensitive to this issue. I too believe they will have to "lock" things down in order to manage their compliance liability as they continue to grow. My concern is that they are just taking anyone in who wants to join LPL and this scares me a bit. I know they say that because of technology they can be profitable w/ $125K OSJ but I don't know how they will be able to service everyone and continue to allow the customization they allowed for in the past. Any specific examples you can share w/ me regarding the changes you're seeing in LPL over the last few years?

Just the one's I mentioned.  Time and accuracy to answer in the service center is poor.  They are much less accomadating on certain things like trying to add a vendor or manager to the platform...it's more of a run around with lack of answers than before.  I also believe that with their growth and the addition of proprietary platforms...they have subtly begun to push their platforms more by making it difficult to use other platforms like Assetmark.  I like the idea of using ETFs for parts of some portfolios, by I don't want to be the overlay manager rebalancing 2x or whatever a year...I know some platform vendors offer that capability but it's just difficult to do that biz. with LPL from getting the deal done to getting the data in the perf. reporting tech. etc...These platforms of theirs are additional revenue sources and the margins are much higher for them than our business and I think we are seeing more examples of this with their new clearing deals too.  It's just a different mentality than what it was going back 5 years and I believe that is where CW has a potential advantage; but I get a sense they are a bit arrogant as well.

It might be worth you while to check in with First Allied too, I thought they had some decent things going and they tend to be quite flexible with things...

Had another meeting w/ LPL recruiter & director yesterday. Very good meeting. We discussed the pros & cons of LPL vs. Commonwealth. Made sense. Basically their is strength and economies of scale in being large like LPL. They have more resournces & $$ to do things to help advisors. Good example is the eMoney Advisors pricing they were able to negotiate. Sounds like they really try to listen to their reps and built that additional service center staff up for the larger size of their advisor force. I did bring up the issues I've heard w/ service not being the same and they said that the problem is coming from the fact that they hired a lot of new folks and they are still "green" so they are making more mistakes but expect this to work itself out w/ time. Sounded like an honest answer. They also said that as more and more of their reps are coming from the wirehouse ranks, that they realize and are making progress towards providing the same level of sophisticated investment platforms and wealth management resources because they know that LPL needs to make that available if they have any hope of attracting people like me. Again, could be "recruiter" talk but I hope not.

I'm back to thinking LPL is a stronger candidate compared to CW. My team and I will be flying to SD soon enough and I'm also asking that we are allowed to go the national conference. I will be visiting w/ RJFS and CW too.

...I went through the same thing...talk to one firm, move that direction...talk to another, move THAT direction.  Once you are through with all of them, you'll know which one works best for you.

If you go to the national conference, I think you'll find that a strength of LPL.  I've spoke with other indy advisors and compared notes on the national.  I've yet to find an indy firm that compares in this regard.

For those of you w/ LPL, what do you consider to be their strongest points and what would you consider to be their weaker points? Also, I hear that a typical net payout % to OSJ after all expenses is in the sixties (assuming you work out of an office & have 1 full time assistant). I know this is different for everyone but in general would you agree with this?

[quote=Indyone]

...I went through the same thing...talk to one firm, move that direction...talk to another, move THAT direction.  Once you are through with all of them, you'll know which one works best for you.

If you go to the national conference, I think you'll find that a strength of LPL.  I've spoke with other indy advisors and compared notes on the national.  I've yet to find an indy firm that compares in this regard.

[/quote]

Me too.  What I did was create a grid on paper with the various firms that I was considering.  (I know... too analytical.  I did the same thing when I was considering kicking my first husband to the curb.  The cost benefit analysis indicated that I was better off without him )

Make categories of what is most important to you and would be important to your clients and the negatives that might arise if you went with a firm.  Costs of operating the business, product selection, costs for client trades, levels of production required and fees for not making the grid, freedom to chose outside product vendors like fixed and life insurance, supervision, ability to transition clients based on firm reputation or if that would be a consideration. etc etc.  Make columns for each firm and check of which firm satisfies more of the items you requires. 

Then go with your gut feelings.

Dust Bunny,

Yeah good strategy. I guess I'm not used to the indy mentallity of me hiring the BD to provide what I need. I like your idea of determining what is MOST important to me and my style of business to determine which one of the 2 is the best fit. On the one side I "feel" Commonwealth is better geared for my type of business (fee based, wealth management and higher end clients) but have it in my mind that LPL's size is a strength yet I really dislike their proposal system and their rapid rep growth. I hated the service issues and loss of personal touch that plagued AGE so this is another area of concern w/ LPL for me.

I think/hope my due dilligence trips will help me figure things out.

I guess I'm not used to the indy mentallity of me hiring the BD to provide what I need

This is most important. You are not going to be an employee. You will be in business for yourself and need to consider all costs you might incur, the tax advantages and disadvantages.  I don't know about LP, but in most indy situations you are responsible for your own tax withholding and maximizing deductions.  

The B/D is hired by you and the overrides that are taken from your production is what provides all those "support" people their jobs.  Don't you forget that.  Sometimes they do; but the reality is they work for you so you need to be sure you get the best bang for your buck.

You are in business for yourself and need to be a smart business owner who creates value in your company and hopefully someday has something of value to sell to some one else when you retire.

Not concerned w/ the fact that I will be a business owner. I’ve been there and LOVED it. Probably the point in my professional career when I felt the best and in most control so I’m really looking forward to that again. I’m just finding it hard to see BIG differences between LPL & Commonwealth and don’t want to make a bad decision that will impact my business because of lack of knowledge about what BD would be best for me and my type of business. I guess I’m torn because my gut is stearing me towards Commonwealth but my brain tells me that being w/ the biggest (LPL) is probably smarter eventhough there are some biggies that I don’t like about LPL!

Indyw - frankly, I don't think either will hurt you.  CW may cause a bit more leg work to get your "total" wealth management set up but once there, you won't look back.  LPL won't hurt you either.

You raised concerns with each, consider where the larger disruption may come from either b/d affiliation.  Where does each sit v where is each going in the future; is what I am getting at.

Indyw, you've mentioned a lot about the size of a broker/dealer being a concern, so you really want to compare apples to apples.

When you're working with a b/d you're REALLY working with the company they clear through.  LPL is self clearing and clears for 2 b/d's, LPL & AXA (maybe 10,000 advisors, total?  12,000?).  CW clears through NFS, which means you're really 1 of 86,000 advisors.  I think the self-clearing is really one of the most important things to consider.  RJ is also self clearing, but I'm not sure how many advisors they clear for.  I believe it's about 40 different b/d's, though.

Just my $.02.

I totally agree with FreedomLvr on the self-clearing difference between the two firms.  Although Comm. will stress that it is a smaller firm with more personal attention, in reality they have to outsource their back office service and support.  LPL used to clear through Pershing approx. 7 years ago and found that it is wasn’t as cost efficient and had no accountability in servicing their advisors.

I've spoken w/ a few CW reps that moved their business from LPL over the last 2-4 years and they LOVE Commonwealth. They say the service is truly outstanding and their attitude towards the reps is great. They really understand what true wealth management is and have great materials and proposal generation systems that center around the role of a wealth manager vs. an investment advisor only. That's very appealing to me. I asked about the lack of self-clearing and none of them said it has been an issue w/ them. The basic message I heard was that LPL had gotten so large and impersonal that they no longer felt like it was the best BD for them.

I guess I don't understand the potential problem with self-clearance so can anyone explain how this creates problems?

Indyw - the potential benefits for self clearing are many but true benefits are being lost as LPL continues to grow.  I know lots of other LPL reps or recruiters will argue that they are great, I am not saying they aren’t; I am simply saying they are not what they were a few years ago.  Where’s the cost benefit that you talk about PGH?  Costs are rising and many firms charge the same or similar ticket charges to what we are hit with here?  The one area that I found a benefit to continue though is availability of the funds.  Local bank depository is very sweet since you can get your clients funds working for them right away.  Not all 3rd party clearing set ups have this.    Beyond that, I am beginning to see the benefits go by the way side more and more.

Well as time goes by I can start seeing some of the pros & cons of both firms. Although I'm really liking the size and feel of Commonwealth, I'm also finding that they have some key areas of concern for me. I'll list them out for those of you following this thread:

Research - CW seems to have a limited amount of research information in house. Yes you can buy a research package that includes Argus, Valueline, S&P, Morningstar & Forefield but compared to LPL, who has an actual Economist & Market Strategist along w/ a lot more research analysts, the difference is noticeable. For example if I do a search for CW's opinion or educational info on floating rate securities I come up w/ nothing. In LPL's system I find info on the current opinions of floating rate securities. With LPL there is quite a lot of internal (LPL) research on everything from asset allocation to alternative investment products PLUS they have a Strategist's Corner where outside research is made available on a variety of topics as well (for free) plus you can add research services such as S&P, CSFB, Zack's, Forefield. In this category LPL wins in my opinion. Add to that the fact that LPL's chief economist is seen on CNBC & other media and I would have to say LPL is the WINNER in this area.

Portfolio Analysis Software - I think CW only has Morningstar (part of the research bundle) which is nice but can't handle fixed income or alternative investments and the info provided is limited from a portfolio perspective. LPL has their PRT which granted is not institutional quality but does do a heck of a better job in allowing an advisor to ANALYZE a current portfolio. The PRT does not handle SMA but they now have a tool advisors can get (for a fee) to analyze SMA managers if needed. Granted CW has Advent but that doesn't really analyze a portfolio it just gives you some really cool reporting options. Again LPL is the Winner.

Wealth Management Materials - CW has got this down! They have  great client approved material that does a phenomenal job of explaining what a true wealth manager does and they have client and advisor specific educational pieces on everything from retirement planning to income tax planning. They also have questionnaires advisors can use during their review meetings w/ clients that help advisors talk about the various aspects of wealth management. LPL really lags in this area although I was just informed they will be rolling out something called Advice for Life which sounds like a wealth management program that may have similar things as CW's. CW also has a GREAT proposal generator that kicks the pants off the one LPL has. It's just well written and designed. LPL is rolling out their eMoney Advisor program which could completely turn things upside down in this area especially with their goal of completely integrating eMoney w/ BranchNet and client account info to automate a lot of the financial planning we do for clients but for now I have to give the gold to Commonwealth in this area.

Products & Services - Both firms are very similar in this area except for a few notable areas: LPL has a Trust Co. which is a biggie if you play in the HNW segment. Anything I can do to keep competitors (trust companies) away from clients the better. Because of this you can also leverage the trust co. experts for complex case issues which is a bonus. Beside the Trust Co. both firms offer pretty much the same but I just get the impression that LPL just has more options. An example is the relationship LPL has w/ local banks so reps can deposit client's money locally. Another example is Alternative Investments where LPL's list is significantly larger than CW's. And, although the newly formed LPL Insurance Assoc. sounds like it's been more trouble than help, I'm sure they will get their stuff together and prove to be an asset for reps in terms of helping them be more efficient. Winner here LPL.

Culture - Time and time again I hear that reps w/ CW are VERY happy with the attention and service they get. The fact that there is a high ratio of support staff/reps sure helps and you get that small business feel where you feel important because you are. With LPL growing as fast as they have and will continue to I'm certain this will become an issue at some point. The recruiters say that it wont but I just can't believe that. Granted, I haven't yet spoken with anyone who is currently with LPL who says service is a problem but the people at CW and the reps there that came from LPL said culture and service was changing and that's why they left LPL. They felt the firm was catering to the top producers and they felt less important. So in the area of culture I have to say Commonwealth has the edge.

Payout - Finally we get to $$$. No doubt that at first glance you will see that LPL's payouts and bonuses are simply higher than CW. CW starts at 87% and moves up to 95% whereas LPL starts at 90% and moves up to 98%. The transition packages are also better at LPL. CW says they don't want to pay anyone to come over but when you're starting a business startup financing and cash flow are KING so something to keep in mind. CW says that LPL's charges reps for every little thing they do and so they say LPL's 90% is not quite true. I'll have to explore this for myself a bit more but for now I'll have to say LPL is ahead here as well.

This is the latest. I will have more to report in the coming days/weeks. If anyone out there is/was with either of these firms and you have some direct experience w/ what I just wrote about please feel free to chime in and write about your experience or opinion.

Great post.  I'll add that while the local bank depository is nice, at one point last year I was told that a device to scan checks (similar to what some gas stations use) so that funds are electronically moved immediately, was in the works.  While it's possible that this project has since gotten derailed, I think it would be outstanding if I could deposit client checks without ever leaving the comfort of my office.

Also, Commonwealth is correct in stating that LPL has numerous charges that offset the full effect of the better payout.  Here's an idea of what to expect...

Ticket/fee-based admin charges: my actual numbers: 2006 - 4.65%, 2007 - 3.39% (apparently, I'm getting smarter at playing the game) Note: The fee-based admin charges are partially offset by some sharing (50-60%) of non-retirement account 12b-1 fees.

NASD/SIPC Fees:  0.23% and 0.1875% respectively

Branchnet: $75/month

Portfolio Review Tool: $25/month (going to $35/month)

Monthly Contract Fee: $125 (this one somehow escaped me on due diligence...didn't see it until it hit my commission statement...)

Monthly Bonding Fee (for assistant): $10

S&P & CSFB Research Charges: $45 & $70/month respectively

Annual Outside Brokerage account fee: $100 (for me to maintain a cheap online brokerage account)

Quarterly E&O charge: $512.50 + $25.00 surcharge for doing insurance direct.

Obviously NASD branch and state licensing fees are passed through, but other than that, I can't think of anything I've missed (other LPL reps feel free to correct me if I have).

Offsetting those are production bonuses...1% when you hit $100K and 2% when you hit $200K (after that, I don't remember the scale...just remembered thinking that it would probably be awhile before I had to worry about hitting additional tiers...

Initially, all these little charges irritated me, but as production grows, I tend to care less and less about them.  I suppose that LPL would rather itemize all the services they provide to show the value that they bring to the table, rather than absorb them and show a lower payout.  Every once in awhile, a charge will come through that irritates me all over again, but for the most part, I've decided that it's not worth raising my blood pressure.  My guess is that even with the nuisance charges, LPL's net payout is still stronger than Commonwealth's, although the gap may not be as large as it initially appears.

Commonwealth has some of those fees you listed Indyone so the 87% is not w/o reductions. Some of the ones I'm aware of are:

The ones that CW said were an extra fee at LPL and not at CW are things like:

I got the impression that LPL charges for a lot of things CW doesn't but this is what I WAS TOLD. Not what I know for a fact but I will investigate.

Finally I was told that LPL reps waste A LOT of time with service issues such as tracking status of ACATs, fixing processing errors, and that this is all due to their support staff not being as well trained as CW and basically being stretched to thinly. Funny thing is that I have not heard one LPL rep say they face these type of issues!

Indywanab - I would check on those 3 things CW are telling you that reps are being charged at LPL - I have not heard that it costs anything to call tech support.  Why would they charge you for assisting in opening up an account?  Getting advise from the Private Client Group should not cost anything as well.

My advise to you is to take a home office visit to both companies.  Until you kick the tires of both firms up close, don't make your decision.  This amount of due diligence is what you need to do before making a decision one way or another. 

I have a trip to CW tentatively scheduled for next Friday and am working on the one for LPL. I'm also hoping I am allowed to go to the LPL National Conference. That would be a great place to talk to a lot of LPL reps.

[quote=indywanab]

Commonwealth has some of those fees you listed Indyone so the 87% is not w/o reductions. Some of the ones I’m aware of are:

The ones that CW said were an extra fee at LPL and not at CW are things like:

I got the impression that LPL charges for a lot of things CW doesn't but this is what I WAS TOLD. Not what I know for a fact but I will investigate.

Finally I was told that LPL reps waste A LOT of time with service issues such as tracking status of ACATs, fixing processing errors, and that this is all due to their support staff not being as well trained as CW and basically being stretched to thinly. Funny thing is that I have not heard one LPL rep say they face these type of issues!

I'd second what Joe said...I've never been charged for any of those things and I've done them all.  I likewise haven't faced much in the way of processing problems.  I had a few issues back when I was moving the bulk of my book, but LPL always assigned an incident number and nothing fell through the cracks once I raised the issue.

I also found tech support EXCELLENT in resolving issues, even when they weren't LPL's technology.  I've been assisted with Internet Explorer, Adobe Acrobat, etc. and never once have I been charged, even though they spent a lot of time helping my assistant with a pretty thorny program compatibility issue that took multiple calls to resolve.  Considering the issue wasn't their doing, I was impressed to say the least.

The National Sales Conference is a great idea, but due to cost, I'm not sure if they'd float it all for you or not (never hurts to ask, I guess).  If not, perhaps they'd float an overnighter for part fo the conference anyway.  You're right...you'd run into a bunch of LPL advisors, and for the most part, these folks would be $275K & up producers (due to limited reimbursement for smaller producers), so if they'll spring for it, I certainly wouldn't turn them down.

Glad to hear all these extra charges are not “acurate”. That was beginning to concern me! The other big concern I have is the stories I’m reading and hearing about regarding the service levels. I’m hearing that reps are experiencing more and more problems with things like phone hold time, CSR’s who don’t give them the correct information, home office staff not following up on things like issuing checks to clients so resps have to call the home office to make sure things were done in time and accurately. This scares the daylights out of me because this is exactly what my assistant and I have experienced at AGE over the last 4 years and honestly we’re looking to move away from that. Any comments on this area?

[quote=indywanab]Glad to hear all these extra charges are not “acurate”. That was beginning to concern me! The other big concern I have is the stories I’m reading and hearing about regarding the service levels. I’m hearing that reps are experiencing more and more problems with things like phone hold time, CSR’s who don’t give them the correct information, home office staff not following up on things like issuing checks to clients so resps have to call the home office to make sure things were done in time and accurately. This scares the daylights out of me because this is exactly what my assistant and I have experienced at AGE over the last 4 years and honestly we’re looking to move away from that. Any comments on this area?[/quote]

I have rec’d inaccurate information at the call center on only a couple of isolated occasions when they were bringing new people on board.

There was a period year before last during tax time when hold times at the service center were high, and LPL addressed it very quickly.

I’ve never had problems with checks not being cut.  Every request is assigned an incident number and is trackable.  Execution on service requests is fantastic, far better than I received at UBS.

because this is exactly what my assistant and I have experienced at AGE over the last 4 years and honestly we're looking to move away from that. Any comments on this area?

Good luck with that.  Every firm I have ever been at, including the bank where I worked for years, has crap back office support.  Get used to doing most of the follow up yourself.  At Jones the joke between my BOA and me was: if we get the same answer 2 out of 3 times from the back office....go with that.

Back office people are like the guys we get for support for our computers sitting in some crummy cubicle in Bombay at midnight their time. They don't give a rip about their jobs and really don't care so much about us either.   The best thing is to just be efficent yourself, since you can't count on anyone else.

I can fourth those comments about CW giving bad info - they may be confused w/ RJ or someone else but not LPL.  Frankly, that would be a huge turn off to me if a firm was feeding me with BS - think they got their own story straight, or will they BS you when you are there when you need their back office to help?

I know lpl, and I know NFS, the backoffice for CW because NFS was also the back office for BAC Investments. NFS made some huge mistakes while I was there. I don’t mean with just my clients, I mean making huge billing errors with all the BAC accounts. I wouldn’t touch CW because of who they clear through (NFS).

[quote=csmelnix]I can fourth those comments about CW giving bad info - they may be confused w/ RJ or someone else but not LPL.  Frankly, that would be a huge turn off to me if a firm was feeding me with BS - think they got their own story straight, or will they BS you when you are there when you need their back office to help?[/quote]

Precisely my concern!  I’ll think twice before ever giving CW the time of day after this!

Indy B-D's ranked by reps:

http://www.investmentnews.com/assets/docs/CI16801423.PDF

Have trips to CW & LPL scheduled for the coming weeks BUT I also decided to meet w/ recruiter from RJFS and was actually impressed w/ what I heard SO I guess I"m adding them to the list as well. I guess I should change the thread topic name to CW vs. LPL vs. RJFS now! My assistant and I will be flying to visit them as well.

Seems like they have are the closest to a full service firm (retail, trust, insurance, banking, cashless stock option svs., investment banking, top-rated research, strong brand name, etc...) so I can see why they would be appealing for reps coming out of the wirehouse/regional firms. I've read almost all the threads in these forums so I have some insight but I'm sure I'll learn more. Feel free to chime in if you have any thoughts/suggestions about them.

You’ve got 'em all…if you can’t find what you want there, you’re not looking very hard.  A little more pressure to produce at RJ (200K for OSJ when I looked…higher now?) and management has taken some actions to exert more control than I care to see in an indy B/D (the VA mess).  Their tech wasn’t as good and they appeared more focused on transactional business than fee-based.  Still, overall, a pretty good firm…they would have been my 2nd choice.

They DID have some pretty good mid-cap research if I recall correctly.  That was the one area I liked better.

I wouldn’t touch them with a ten foot pole after their annuity fiasco. You should have read the terms letter they sent me, telling me they think I would be a good fit. It was like I was applying for a job as opposed to me scrutinizing them to see if they would make a good back office. My visit seemed like a job interview to me. not good.

I got access to RJFS RJNet site to play around prior to our visit to FL. Seems like the site is nowhere as intuitive and easy to use as LPL's and CW's and it seems like it's VERY slow!

For those of you w/ LPL, do they have resources that can help w/ advanced planning issues (e.g. tax or estate planning related questions/casses)?

Yes.  Have them arrange for you to meet with one of the people from their Estate & Financial Planning dept. when you visit the home office.

I second that about the LPL visit.  It's a long day of just sitting and doing a lot of talking, but you can meet with whomever you want that fits your business.  Line them up and start taking notes.

I think when I went I had something like 12 different sessions in the day, ranging from bond trading to trustco to mortgates to financial planning.  Notes are key.

How about LPLs RIA platform for fee based financial planning?  Any of you use that?      

Malcolm,

Are you thinking of going indy from smith barney?

This is a great thread.  I appreciate the input from all on this board.  I just wish that FiNet would have been included in the discussion.  But apparantly those currently with AGE can not go the FiNet route just yet.

Keep up the good discussion.

How do you consider Raymond James any more of an independent than FiNet?

[quote=indywanab]

I got access to RJFS RJNet site to play around prior to our visit to FL. Seems like the site is nowhere as intuitive and easy to use as LPL's and CW's and it seems like it's VERY slow!

[/quote]

I was also concerned about the technology "fit". They will customize your visit with deparment heads that will address your specific questions.  During my visit, a geek from their technology division sat in with his laptop and gave a presentation on all the different software capabilities.  You're right about it not being blazing fast but it's not exactly slow either....adequate I would say.

How do you consider Raymond James any more of an independent than

FiNet?

-------

If you’ll note the title of the thread, it wasn’t started to include RJ either…

Broker Fee,

Sounds like you're still w/ RJFS. I wonder if you could share what made you go w/ them vs. other indy BD's and also wonder if you would write what you like best about RJFS and what you hate the most! Thanks!

[quote=Broker Fee][quote=indywanab]

I got access to RJFS RJNet site to play around prior to our visit to FL. Seems like the site is nowhere as intuitive and easy to use as LPL's and CW's and it seems like it's VERY slow!

[/quote]

I was also concerned about the technology "fit". They will customize your visit with deparment heads that will address your specific questions.  During my visit, a geek from their technology division sat in with his laptop and gave a presentation on all the different software capabilities.  You're right about it not being blazing fast but it's not exactly slow either....adequate I would say.

Had my home office visit w/ RJFS yesterday and WOW! Very impressive. I went down there thinking that LPL was in the lead by a long shot and of course after the meeting yesterday I am back to being 50/50. I'll summarize my points:

I will be making the trip to LPL next week so I will have a better basis of comparison after that but RJFS really did impress me. I hope LPL's visit is as good and that I feel like they have the same level of resources that are important to me because that's where I'm leaning.

Good post.  You have a similar take on RJ as I did.  My guess is, you'll be similarly impressed with LPL and appreciate the freedom they will give you.

I expect similar detail after your trip to SD...

good post wanab.  enjoy the ride in the pimped out suv in SD. 

[/quote]

How are you travelling so much without it being obvious to the people in your branch that there is something going on?
[/quote]

People at my branch know what I'm doing but then again, everyone in our branch (and throughout AG Edwards) is looking and meeting w/ other firms so I'm not worried about it.

Had my Commonwealth visit today. Here's my impression:

All in all very impressed w/ them but if I had to choose between RJFS & CW, I think I would forgo some of the high touch, high service, and personal attention from CW for the breadth and depth of products, services and resources of RJFS. I just think that's more important to me in the long run.

We're off to SD to visit LPL next week so I'll have more to report. I've heard that I will be very impressed w/ the LPL visit and I'm really hoping that's the case.

Indywanab good stuff...keep those updates coming.

fyi Ray Jay does sponser an annual conference for your Financial Assistants & staff along the very same themes that you outlined at CW.  They are on taught advanced software issues, proactive compliance procedures, office operational procedures, how to position themselves to help grow your practice...etc...

I'll be looking for your spin on LPL to compare it with my visit.

[quote=Indyone]

Good post.  You have a similar take on RJ as I did.  My guess is, you'll be similarly impressed with LPL and appreciate the freedom they will give you.

I expect similar detail after your trip to SD...

[/quote]

Yes, I read your posts when you were comparing RJFS & LPL and I'm hoping I end up with the same conclusion you did but I really was impressed w/ some of the things I saw at RJFS and hope to be equally or more impressed w/ LPL because I would rather have what I saw at RJFS along w/ the extra freedom LPL seems to provide when compared to RJFS.

How happy have you been w/ your move and what if anything would you change at this point?

[quote=Broker Fee]

Indywanab good stuff...keep those updates coming.

fyi Ray Jay does sponser an annual conference for your Financial Assistants & staff along the very same themes that you outlined at CW.  They are on taught advanced software issues, proactive compliance procedures, office operational procedures, how to position themselves to help grow your practice...etc...

I'll be looking for your spin on LPL to compare it with my visit.

[/quote]

Sounds like you're w/ RJFS and that you are an ex-AGE guy. If you are in fact w/ RJFS, how have you liked it and why did you choose them vs. LPL after your visits?

[quote=indywanab][quote=Broker Fee]

Indywanab good stuff...keep those updates coming.

fyi Ray Jay does sponser an annual conference for your Financial Assistants & staff along the very same themes that you outlined at CW.  They are on taught advanced software issues, proactive compliance procedures, office operational procedures, how to position themselves to help grow your practice...etc...

I'll be looking for your spin on LPL to compare it with my visit.

[/quote]

Sounds like you're w/ RJFS and that you are an ex-AGE guy. If you are in fact w/ RJFS, how have you liked it and why did you choose them vs. LPL after your visits?

[/quote]

When all said & done you will choose the org that fits your business model most comfortably.  Like yourself I did careful due diligence & only recently made the decision to shift my practice to RJFS.  I will be making that shift over the coming weeks.  When I look back on my experience the similarities between LPL & Ray Jay were incredible. Even their top people provide only praise to the other, which is quite remarkable. Again, do your homework but once you remove the emotion & weigh out the pro's & cons between the two, you will find they are both worthy but one will stand out as being the better fit for your clients and for your career.

.

[quote=indywanab][quote=Indyone]

Good post.  You have a similar take on RJ as I did.  My guess is, you'll be similarly impressed with LPL and appreciate the freedom they will give you.

I expect similar detail after your trip to SD...

[/quote]

Yes, I read your posts when you were comparing RJFS & LPL and I'm hoping I end up with the same conclusion you did but I really was impressed w/ some of the things I saw at RJFS and hope to be equally or more impressed w/ LPL because I would rather have what I saw at RJFS along w/ the extra freedom LPL seems to provide when compared to RJFS.

How happy have you been w/ your move and what if anything would you change at this point?[/quote]

I've been very happy as an LPL indy.  In 2006, I netted about 10% more than my best year at the bank on about 70% of the production.  This year, I'm looking at about a 50% raise over last year, so my trajectory is keeping me happy and busy.  I didn't produce quite enough to go to the national in Boston, but I'm ahead of the pace needed to go back to SD next year pretty much on LPL's dime.

What would I change?  Not much.  I would have gone direct on a lot more accounts.  LPL doesn't look at the whole relationship and tends to nickel and dime smaller accounts, even if the overall relationship is relatively large.  I've also been busy converting client mmkt funds to direct mmkts.  The insured cash account is great for large clients, but medium and small client accounts get screwed with the tiered rate structure and potential dormant fees (plus I make nothing on it).  I've made myself some extra work by not being fully aware of all the minutae (sp?) of various accounts/products.  Other than SAM accounts, an account has to be fairly large and/or active before I'll use LPL vs. a direct account.  To their credit, LPL offers sufficient flexibility to beat the system, but you need to do your homework before you have to go and change a bunch of accounts.

Joe makes a good point about the assistant...I had a part-time assistant from day one and I don't think you can afford to be without one unless your book is very small.

Overall, there's very little not to like...life is pretty doggoned good.

Indyone,

You mentioned small accounts get nickel and dimed at LPL. Çan you be

more specific on the size of account where direct accounts make sense?

And did I understand you that they do not look at the household for the

purposes of the account fees? I am interested in the experiences of others

who have moved to the indy channel. Is there anything else that you wish

you would have done different going in?



I still plan to give Wachovia a chance to prove themselves, but LPL is on the

short list of alternatives if they do not work out. Thank you for the insights.

[quote=joedabrkr] [quote=illinoisrep]Indyone,You mentioned small accounts get nickel and dimed at LPL. Çan you be more specific on the size of account where direct accounts make sense? [/quote]Indy I would also like to see you elaborate on this a bit. I have opened every account w/LPL except when it is not possible(such as 529’s). I did this largely for my convenience-i.e ease of administration-and also quite likely because of my wirehouse background.Tell us more…[/quote] I got a notification in early June regarding a $30 dormant charge for accounts that didn’t generate a minimum amount of commissions. I don’t have it in front of me, but it seems that if you have at least a couple hundred dollars of commissions or trails per year, you should be OK. Most accounts of at least 80-100K would fit this criteria. I do some larger accounts to avoid ticket and confirmation charges and keep my payout high. As I said before, at least I have the freedom to work around the charges.

[/quote]

When all said & done you will choose the org that fits your business model most comfortably.  Like yourself I did careful due diligence & only recently made the decision to shift my practice to RJFS.  I will be making that shift over the coming weeks.  When I look back on my experience the similarities between LPL & Ray Jay were incredible. Even their top people provide only praise to the other, which is quite remarkable. Again, do your homework but once you remove the emotion & weigh out the pro's & cons between the two, you will find they are both worthy but one will stand out as being the better fit for your clients and for your career.

[/quote]

I agree both firms are very similar. Do you mind sharing on why you're transfering your practice to RJFS? Are you moving it from LPL? Thanks!

Same situation as the original post LPL vs CW, lots of really good points here. I found the same things about CW.... great people, great service and they come across a company you want to do business with. I have not gone to LPL to "kick the tires" but I think I may. I thought I had made up my mind but I want to feel I have looked at everything.

Size, service ,and the IPO are the things I keep hearing about LPL that concerns me. Their tech seems great but CW's tech is really good.

Noticed there is never any CW reps on here, don't know if that is a good thing

Just back from the visit to LPL. Let me just start out by saying that the pimped out SUV was sweet! Ron (driver) is a great guy. All in all, I must say that we were very impressed with our trip. I was hoping that I would not be dissapointed w/ the visit since I was leaning towards LPL and I was not dissapointed. Here's my comments on a few of the areas we've been comparing across the 3 firms.

So that's my take at this point. At this point I think we're certainly leaning w/ towards LPL. There are some follow up questions/issues that we're working on with all 3 firms but unless we find something big we're probably going w/ LPL. Now it's a matter of us negotiating for more benefits with our transition package and visiting their national conference in a couple of weeks and we may have a winner. Tough call though. I can easily see how someone would go through this process and pick RJFS or CW. It all boils down to what's important to the team. If you are clear on this I think you should be able to figure out what BD brings more to the table for you.

Now our focus will have to shift to actually making this move happen. This will be a lot of work but we're excited to get it over with.

indywannab, these are fine and valuable posts. 

I complement you on your thoroughness and analytical style.   No matter where you eventually land, I think that you will be a good asset to the firm and do a fine job for your clients.  It's refreshing to read sensible and informative postings.

[quote=Dust Bunny]

indywannab, these are fine and valuable posts. 

I complement you on your thoroughness and analytical style.   No matter where you eventually land, I think that you will be a good asset to the firm and do a fine job for your clients.  It's refreshing to read sensible and informative postings.

[/quote]

Appreciate the feedback. I am a pretty analytical kind of guy and wanted to take a non-emotional approach to this process so taking notes and writting the feedback on this thread has helped a lot.

[quote=joedabrkr]I echo DB's comments.

LPL is constantly upgrading their technology.  There was a recent glitch when they moved a massive server farm,  but they were quick to resolve it, and were very good about keeping reps informed as to the status of problems.

There are more product choices and technology options than one could ever use.....plenty of avenues one can take in crafting one's business.
[/quote]

Sounds like you're w/ LPL. I think you will like some of the news you will hear at the National Conference regarding new things coming down the road.

Great stuff, wanab…reminds me of my own trip two summers ago…keep us posted…

Great posts.....actually helping me tremendously with my own choice (LPL & CW). LPL trip is on the books, CW seems like such a great company but I am keeping an open mind.

 I am mostly advisory so that is the most important platform to me, but you have certainly given me some great insight and will help in the focus off my questions.

Did LPL mention training staff? How do the current LPL reps staff feel about them? My assistant is very fustrated where I am now, so anything would be an improvement

LPL has some good training online under fast forward. Your assistant can take these free of charge anytime she wants. I took a few in the days preceding my jump on topics, such as opening new accounts and direct business and found them very helpful. If she prefers live, I noticed several assistants at the last regional meeting I attended. Of course, my assistant has received good help over the phone also…that help you?

[quote=unclesam]

Great posts.....actually helping me tremendously with my own choice (LPL & CW). LPL trip is on the books, CW seems like such a great company but I am keeping an open mind.

 I am mostly advisory so that is the most important platform to me, but you have certainly given me some great insight and will help in the focus off my questions.

Did LPL mention training staff? How do the current LPL reps staff feel about them? My assistant is very fustrated where I am now, so anything would be an improvement

[/quote]

Unclesam,

I know what you mean about liking CW. I was completely leaning towards them in the beginning but after making all the trips I realized that I was willing to give up some of that "high touch" approach to gain more depth & breadth of services and resources. 80% of my business is advisory so that was a HUGE criteria for me and CW is better than RJFS in that aspect but due to their smaller figure in AUM they simply can't get access to as many managers and programs as larger firms. In the area of alternative investments they are severely lacking although they are hoping to improve this but it all comes down to how much $ a BD can commit to those firms. I also started finding some limitations w/ their clearing house (NFS). Some things that NFS can't provide (and have no plans to provide in the near future) that are important to some of my key clients are: download of 1099 data directly to tax planning software for year end tax preparation and allowing clients the option to go paperless with statements, confirms, and proxy & prospectus info. I was told by CW that between them, NFS and third parties (mutual fund companies, etc...) clients get A LOT of mail. Believe me, I went there hoping that they would have everything that I need but it just wasn't the case. I'm sure they woudl do a great job if you choose them though. Just make sure you figure out exactly what's important to you from a BD. This will have much more to do w/ your future plans and practice focus. Once you know that, you'll be able to figure out the right BD for you.

Indywanab,

Those are points well taken. At the end of the day I am looking for someone to help me execute my business ( not a new best friend). I do want to enjoy the relationship with the B/D but have to keep objective. I was (and still am) leaning toward CW but I want to investigate all of the options out there. LPL seems like a quality frim from top to bottom.

I have heard that people have not been happy with CW statements, a  bit confusing.

I will be making the LPL trip soon, looking foward to seeing what they have to offer. Although it sounds like a broken record, I would be lying if I said that the IPO thing does not concern me. I realize the voting rights structure makes sure a lot of powers stay with the employees but it's hard to believe that the company will not change by going public. The growing pains also are a concern but nothing that has not been talked about ad nausem.

Thanks again for all the input , it really has been helpful!

Mainly that the bottom line becomes keeping shareholders happy which in some cases may contradict keeping reps happy. Again, I have heard the reps are what make us who we are speeches from firms that have gone public.

In some cases when going public or takeovers have happpened with banks/Ins companies the 1st thing that they look at is "how much we are paying reps" ( to be fair that is what a few friends have experienced...First Union/Wach, Keybank). This time may be different, but I have thought about it. Don't know if shareholders will want to pay for Bush 41 and the Eagles at the national conference...lol.

I think they are a great firm, my only concern is that some sort of fundamental shift happens when you are owned by shareholders that wan their stock price higher. They may wish for short term results which could be at odds with tech investment,support or other non immediate impact expeditures. All this is very far from a deal breaker, but I would not say that it would not factor into the equation for me.

[quote=unclesam]Mainly that the bottom line becomes keeping shareholders happy which in some cases may contradict keeping reps happy. Again, I have heard the reps are what make us who we are speeches from firms that have gone public.

In some cases when going public or takeovers have happpened with banks/Ins companies the 1st thing that they look at is "how much we are paying reps" ( to be fair that is what a few friends have experienced...First Union/Wach, Keybank). This time may be different, but I have thought about it. Don't know if shareholders will want to pay for Bush 41 and the Eagles at the national conference...lol.

I think they are a great firm, my only concern is that some sort of fundamental shift happens when you are owned by shareholders that wan their stock price higher. They may wish for short term results which could be at odds with tech investment,support or other non immediate impact expeditures. All this is very far from a deal breaker, but I would not say that it would not factor into the equation for me.[/quote]

Frankly, you SHOULD factor it into the equation when you are weighing where to go.  Just recognize that almost any firm you look at has the same potential problem.  They may say they have no intention of going public, but all it takes is waving a fat offer under the right shareholder noses, and you have a potential takeover.

That being said, I think much the same as you do on the potential changes, but since I'm already here, I won't worry about it until there is a reason to worry.  Frankly, some of the crap I've gotten from compliance is more of an irritant than the company trying to please some shareholders.  Don't take it as a strike against LPL...every B/D I've dealt with has at one time or another given me compliance pains over seemingly trivial stuff that has me cursing the bad apples that make things difficult for the vast majority of us honest folk.  Enough of that rant...just understand that you're going to run into both the business prevention unit and shareholders at some point in time almost anywhere you go, so on that front, you're almost choosing between the lesser of two evils when you make a decision based on that factor.

Oh, and you forgot one...Chicago will be at the national conference also...

Very true, and for someone already on the inside they would leave if things started to change. But for someone on the outside looking in it may just cause a small hesitation ( again not huge, just something I have considered).

What do you consider their greatest strength? weakness?

How long have you been with LPL? I assume most here are happy with their choice. I had read some prior posts about the OMP platform, do you use it?

Indyone,

Good point, it is inevitable that growth and success is going to have people looking to cash in. I am not against it, just have read a few posts about LPL changing and concern at the growth rate.

We only want to do this once and probably looking for more answers than it is possible to get. Very educational posts (for me) and extremely helpful.

It's been a long road but we have a winner! After meeting with and researching ML, UBS, SB, BS (Bear Stearns), RJFS, LPL, and CW, we have opted to go with LPL. I must say though, turning down the large 6 figures checks from the wirehouses was TOUGH! I kept telling myself that I would make that up and then some in the long run. Belive it or not, I came to the realization that I have outgrown the wirehouses in terms of our wealth management focus and future direction. In order for me to provide the types of services I want to provide I need the freedom & flexibility afforded to me by being an independent firm.

So, I head down to LPL's National Conference next week for a taste of what's to come and after I return we'll start the real work of transitioning. Our target date is late December. Seems like a long way away but I'm sure it will fly by because there is lots to do. I've already picked a firm name & registered the domain name and incorporated so some of it is in progress. Sorry, can't put the name up here due to privacy issues for now. I'm actually launching a team practice so I have to deal w/ office space, buildouts, furniture, employee benefits, marketing plan, etc... Now that the decision is made we just can't wait to execute and get going but don't want to rush things so we'll see how it goes.

I know setting up an independent private practice is not for everyone but it sure is right for us given everything we've learned over the last 6 weeks.

I'll try to refresh this thread as we progress for those of you who are going through the same process I am and to learn from those of you who've been through this before. Any tips/advice from those of you who've made this move would sure be welcome!

The architecture of setting up a firm is not too fun ( in my state anyway) but I get the feeling you will get through it just fine. Congrats on making the decision

Wanab...I think you made a fine decision, although I'm not an unprejudiced party here.  Have a blast at the National in Boston and keep us posted on your progress.

...and congratulations...

[quote=Indyone]

Wanab...I think you made a fine decision, although I'm not an unprejudiced party here.  Have a blast at the National in Boston and keep us posted on your progress.

...and congratulations...

[/quote]

Thanks Indyone! Looking forward to the conference.

We are SO EXCITED about this move. I think we just found our office space! 1,500 sqft of a very nice newer, proffesional office building in a affluent area in town. We'll actually get signage for our firm right in front of the building! The buildout will be for 4 private offices, 1 conference room & room for operations manager/client service associate. We have a name & hired a marketing firm that will work on logo, branding, website, brochures, etc... so we're on our way! Looks like I'll be spending about $12K in furniture & another $5K in equipment. This reminds me of the last business I started & ran. Feels great!

Got another call from the ML complex manager today. He’s trying to talk me out of going out on my own. Telling me how going out on my own is such a big of a mistake for a rising star. Trying to make me think like I’ll be better off w/ them. What a joke!!

[quote=joedabrkr] [quote=indywanab]Got another call from the ML complex manager today. He's trying to talk me out of going out on my own. Telling me how going out on my own is such a big of a mistake for a rising star. Trying to make me think like I'll be better off w/ them. What a joke!![/quote]

Honestly it's getting close to the point where they're starting to grasp at straws anymore.  I would love to hear how Devil's Advocate/Put Trader responds to this....
[/quote]

I can only speak for me, but I am sure that 999 out of every 1,000 guys and gals at a place like LPL went there because they were mediocre producers in their previous employment and are grasping at the higher payout in hopes that they might be able to survive.

I am not aware of a single resignation that did not benefit the firm the mediocre producer left.  Getting rid of dead wood by any means is beneficial--culling the herd is always good.

It is not happenstance that the annual lists of big hitters are almost universally from the wirehouses.

Major investors don't do business with one man shops or some kid sitting at a little desk in the corner of a bank lobby.

…I’m speechless…

[quote=Devil’sAdvocate]

I can only speak for me, but I am sure that 999 out of every 1,000 guys and gals at a place like LPL went there because they were mediocre producers in their previous employment and are grasping at the higher payout in hopes that they might be able to survive.

I am not aware of a single resignation that did not benefit the firm the mediocre producer left.  Getting rid of dead wood by any means is beneficial--culling the herd is always good.

It is not happenstance that the annual lists of big hitters are almost universally from the wirehouses.

Major investors don't do business with one man shops or some kid sitting at a little desk in the corner of a bank lobby.

[/quote]

999 out of every 1,000, really? I'm sure you've done some intense & thorough statistical analysis to come up w/ your results. Although I wonder why all the industry trade mags keep writting about the steady flow of "heavy hitters" leaving the wirehouses to go independent? And let's not forget about the trend of HNW & institutional investors seeking out and working with independent advisors/RIA's? Ahh, I'm sure the mag. research staff hasn't done nearly as much research as you have so they most have it all wrong. But then again, why did Wachovia  feel the need to launch an independent channel if they were so much better off getting rid of those mediocre producers that no major investor wants to work with? Boy, I'm sure glad you spoke up and enlightened me on this statistical certainty. I think I'll call ML, SB & UBS first thing tomorrow AM to let them know I've made a terrible mistake in going indy! Thanks man!

[quote=joedabrkr] [quote=indywanab]Got another call from the ML complex manager today. He's trying to talk me out of going out on my own. Telling me how going out on my own is such a big of a mistake for a rising star. Trying to make me think like I'll be better off w/ them. What a joke!![/quote]

Honestly it's getting close to the point where they're starting to grasp at straws anymore.  I would love to hear how Devil's Advocate/Put Trader responds to this....
[/quote]

I didn't realize that Put was back of course posing under another identity, but after that response I now know that yup he's back. Put why arn't you posting more?  How's the doggie?

Oh I think he’s just getting wound back up……and honestly, the forum is more interesting with him here as far as I am concerned.  You may not agree with him (and I often don’t), but he definitely brings another angle to the table…

[quote=joedabrkr] [quote=Devil’sAdvocate]

I am not aware of a single resignation that did not benefit the firm the mediocre producer left.

[/quote]

As I've said before, Putsy, the only thing the above statement proves is your ignorance and your arrogance.

It's great really.  I hope the wires continue to be populated by folks who think like you.  Fertile hunting grounds for me!
[/quote]

Joe, you know damn well that when you slouched out of PaineWebber the management was saying, "Don't let the door hit your ass on th way out."

With so many broker dealers out there it can get overwhelming on who run your business through.  I"ve looked at so many different firms and they all have their pros and cons.  I didn’t like commonwealth due to their payout structure and anal compliance standards.  LPL has turned into the FORD of brokerdealers.  They’re all over the place and their service and reliablity isn’t that great.  My buddy recently joined them from a merger with Paclife and it has been a nightmare for him so far.  He’s actually in the process of looking at another broker dealer.  We looked together at Securities America, but all they did was nickel and dime where ever they could, we looked at First Allied, but they seemed like a joke.  We searched everyone and found that Royal Alliance has a pretty good platform for our type advisory business.  They gave us enough money to upgrade our office and systems and so far everything else has exceeded our expectations.  

Just got back from LPL's National Conference. Wow!!! Am I glad I went to this. I had already made my mind about choosing LPL over RJFS & CW but now I really feel great about our choice. What a great bunch of people out there. Really got to see how management & employees feel about serving advisors and boy did they come out with some really good new programs/technology/news.

Can't wait to make the transfer!

Totally off the topic, but:

In case you haven't heard, LPL will no longer take a double dip on UITs .

[quote=now_indy]

Totally off the topic, but:

In case you haven't heard, LPL will no longer take a double dip on UITs .

[/quote]

PLease explain. Did they haircut UIT's?

Yes. When you sold a UIT at LPL, the Fixed Income Dept would take 10% before it hit your commission statement (even with Equity UITs). And then, LPL would take 10% of that number. I consider that double dipping.

So, if you sold $20,000 in a First Trust UIT, First Trust would give LPL $450 (2.25% of $20K), but only $405 would hit your commission statement (90% of $450). You would actually net $364.50 (90% of $405) BEFORE the ticket charge of like $25.

Now, LPL will only take 10% of the original $450, so you will now net $405 minus the ticket charge.   Basically, if you sell UITs at LPL, you just got a 10% raise.

Hey Dinosaur…Put it in SAM…Not that hard…

[quote=FeeBasedCLT]Hey Dinosaur…Put it in SAM…Not that hard…[/quote]

Thanks for the flippant, and truly useful, comment.

First of all, how do you put $20,000 in SAM? I think the SAM minimum is $35,000.

Second, I use SAM, but I have a lot of clients who have primarily A shares (I came from Jones).  So, I still use UITs in brokerage accounts.