LPL Drops 401(k) Match and merit increases
Any other firms out their cutting benefits?
Jones has enhanced some benefits recently, but have not dropped anything I am aware of. I am sure the profit sharing contribution will be reduced for 2008, but it’s generally always the same % of profit of the firm. Last year it was 5.8% of your income (dollar for dollar, no cap), but I am guessing that it will be more like half that this year (similar to 2001/2002 time period). They also added additional bonuses for branch admin staff this year, which I am sure they will not take away.
B24-
You are omitting the most influential tool the GP's have. The bonus brackets are at 0. Yesterday LPL announced a 10% reduction in staffing. I am not suprised that they would drop the match. LPL emphasizes fees and with the market drop they must have figured that 2-300M less in income warrants moves like this. From a service standpoint it wasn't the best, now it probably will get worse. In the indy world there probably is no better than LPL, so we will become multi-taskers while we wait on the phone...[quote=footsoldier]B24-
You are omitting the most influential tool the GP's have. The bonus brackets are at 0. Yesterday LPL announced a 10% reduction in staffing. I am not suprised that they would drop the match. LPL emphasizes fees and with the market drop they must have figured that 2-300M less in income warrants moves like this. From a service standpoint it wasn't the best, now it probably will get worse. In the indy world there probably is no better than LPL, so we will become multi-taskers while we wait on the phone...[/quote] Very true. Big producers get penalized for falling profits of the firm. Not sure the GP's really "control" the bonus bracket, as it is more a function of the firm profit overall. But I think it's an incentive to keep costs low in STL.Wow,
Here’s what a rube I am, I got conned into coming on board as an LPL FC (and OSJ) for just a 92% payout (and a small transition check). I’ve never even participated in “LPL’s 401(k) Plan” (for FCs), much less never received a matching contribution from LPL. I feel so used.
I’m sure some of the non-indy’s here were made to feel better, if briefly, about their own, real, shitty situation by reading that headline, though.
Considering I only talk to LPL maybe 5x's per week, I doubt I will even notice the cutbacks... I see this trimming as part of the overall market conditions. I guess I could use this to ask my assistant to forgo her raise this year and put more in my pocket...Hmmm...Use this seemingly dire time to cut costs, trim fat, and enhance my bottom line..I like it.
I assume we are talking about LPL’s 401k for home office employees, as there is no 401K for advisors (that I’m aware of). We are independent, which is why we can start our own 401k, SEP, Simple, etc.
Hey B24-
Do they still charge you the same for the T1 as the satellite? They manipulate the shit out of the expenses and absolutely control 100% of the bonus pool. Cmon dude...I think it's funny when I read statements like some of the ones about that refer to "the GP's" that control everything. Which ones would it be that control everything? Would it be the one in charge of the Mutual Fund department? Or maybe the one in charge of the Peoplesoft team? Or maybe it's one of the ones in the field that pull those strings. Now, are there GPs in charge of the financial data? Yep. Do I believe that he is capable of manipulating the expenses? Yep. Do I believe he does? Nope. Perhaps though, my glasses are a little greener today than usual.
Oh yeah, the old "communications" line item on the P&L has been reduced by $100. It's now titled "equipment and access" and they break it down farther than before. It's now shows as data charge, terminal and software charge, voice and video charge, quotes and other market data, and other equipment charge. All of that for the low, low price of only $1250 a month.[quote=now_indy]I assume we are talking about LPL’s 401k for home office employees, as there is no 401K for advisors (that I’m aware of). We are independent, which is why we can start our own 401k, SEP, Simple, etc.[/quote]
That is exactly right…the cuts in headcount, comp, and 401k match were for home office staff. LPL has NOT cut payouts to advisors.
In fact, when they announced that they were canceling incentive trips for next year, they replaced it with stock options for those advisors who qualified for the canceled trips.
Furthermore, I would rather be an LPL employee who had a job with no 401k match than to be a Bear, Lehman, or WachAGEdwards home office employee who was left waiting in the unemployment line.
Finally, it should be noted that they specifically stated that they cut bonuses at the top levels of the firm before they ever started talking about cutting back overall headcount.
They are far from perfect, and I’m concerned about deterioration in service due to the cutbacks, but they do think and act and communicate differently than the big Wall Street firms in my first hand experience.
Edward Jones has not reduced any benefits to employees, and may be enhancing some?
gulp gulp gulp, up to your eyeballs the kool-aid flows. Health insurance had basically been stripped away from FAs back in 2004, high deductible plans only please can I have another? GPs control everything, especially the Home Office GPs. A sketchy angry bunch when I was there, I don't know if Weddle has calmed them down any.Good Times.
Any time you meet a payment.
Good Times.
Any time you need a friend.
Good Times.
Any time you’re out from under.
Not getting hastled, not getting hustled.
Keepin’ your head above water,
Making a wave when you can.
Temporary lay offs.
Good Times.
Easy credit rip offs.
Good Times.
Scratchin’ and surviving.
Good Times.
Hangin in a chow line
Good Times.
Ain’t we lucky we got 'em
Good Times.
Spiff-
It's been a long time since we had dialogue. Happy New Year. My communication costs; ATT 200 Comcast 95 Software 350 645 per month. I keep 100% of my profit. What about you? You don't control anything other than revenue. Not because you can't, because they won't let you. Economies of scale don't help you, I wonder why...Foot, you also bought your computer, printer, fax, phone, etc. You have to pay someone to fix your PC, fix your phone, fax, printer, whatever. That’s all included in our monthly cost.
Foot, I know what goes into it. They now break out all the tech costs line by line. Yes, it's a lot, but it's all accounted for. There's also software in there like the Quote monitor, financial planning software, etc. I'm not saying they couldn't do it cheaper or better. The problem is, when a B/D has to provide for over 10,000 advisors, some of the stuff is necessary for some but not all. It's not perfect. But it is what it is. It's no different at SB or Merrill or another captive broker. It's just that we get to see the details in our P&L, so we get annoyed with it. Foot, I think you need to stop acting all self-riotious and understand that many of us understand that we pay for stuff in our P&L. We know that there are owners getting paid a lot of money at our firm. But we KNOW that. We're big boys and can handle our own. If we don't like it enough, we can leave.B-
Sorry if you feel I was self-rightous (proper spelling) I do apologize if it came off that way. My intent was to illustrate that as good as you guys are ( I was with Jones for 9 years) in the field they are taking much too much, disguised in many ways like overcharging for communications/software.,etc. In 2008 my revenues were higher than at Jones and my net is 70%. If I had stayed I am sure the revenues would be higher than independent but my net would have been at least 25% lower. So where do those hard-earned dollars go? To the people who deserve it the least. And since you are a big boy (your words) I guess you have figured out why that is OK with you. It just never ever passed the smell test for me.[quote=footsoldier] B-
Sorry if you feel I was self-rightous (proper spelling).[/quote]
Um, I think it is self-righteous (proper spelling, but at least you were much closer).
Yeah, I was about as far off as you can get.
Maybe, unless you really meant riotious…and those ex-Jones guys do tend to seem ready to riot at times!
Makers mark and coke. As soon as I hit return on the ol keyboard I realized how stupid I am…sometimes!
I guess ex-Jonesers can't spell either. Maybe my five year old can hep me!10% of bad employees being trimmed sounds good in theory, but the reality is that there will be good ee's leaving too as the benefits have all but disappeared (no merit increase, no bonus, no tuition reimbursement, and most visibly: no 401k match). I'm very concerned with the level of support we'll be receiving going forward.
My assistant and I have resigned ourselves to multi-tasking while on hold for support. I can’t imagine it will get better unless enough of us bitch and moan…again. See Spiffy, I can rag on my current firm too! LPL ain’t perfect, but going in I realized there would have to be something that was sacrificed to get the appropriate payout.
I was talking to a buddy at Jones yesterday and we were comparing numbers. His gross 347 mine 302. His net was 121, mine 210. I can buy alot of software, computers, etc for the 89K NET difference. Maybe throw in a trip to Hawaii too.Good for you.
Did you take things like your assistant's salary, her benefits, payroll taxes, rent, electricity, trash removal, paper, postage, etc out of your $89K? I'm sure you're still on the positive side compared to your buddy, but it's probably not as much to the positive as you suggest. Perhaps I'm reading your paragraph incorrectly and you meant that your net after expenses is $89K higher.[quote=Spaceman Spiff]
Good for you.
Did you take things like your assistant's salary, her benefits, payroll taxes, rent, electricity, trash removal, paper, postage, etc out of your $89K? I'm sure you're still on the positive side compared to your buddy, but it's probably not as much to the positive as you suggest. Perhaps I'm reading your paragraph incorrectly and you meant that your net after expenses is $89K higher. [/quote]Do you know what "net" means?
Spiff, I think he was talking about his net AFTER expenses. The net is a big difference in the lower-production tiers, because your overhead is not that high as an independant. Once you get into the 500K+ range, then msot indies start hiring more staff, have bigger office, etc., and Jones/wire reps start earning higher bonuses, etc. But at the lower gross levels, indies can net/net/net FAR more than we do at Jones.
Spiff, think about it, look at your expenses - rent, BOA, utilities, etc. I am in a very expensive area, and have a very large office. If I took all my expenses, excluding the fat check to Jones, it's about $84,000. And that assumes that I would pay for EVERYTHING that hits my P&L at Jones. I would trim back some stuff (i.e. technology), but then other stuff would be more expensive (stuff that Jones gets better deals on than "local prices" due to size). And Jones pays for some out-of-pocket stuff (marketing, seminars, etc.). So by-and-large, my expenses, if I kept the same space and the same BOA, would be about the same (these numbers include a depreciation number over 5 years for the buildout and furniture as well). Yeah, I might have to pay someone to troubleshoot laptop or printer problems or whatever that gets picked up through our Tech allocation, but it's likely small in comparison to the total number. So, the first few years, I am making money off Jones - not a deficit, but could not stay in business at my production level as an Indy. The few years after that, Jones is making money off me - my expenses have stayed the same, while my production has grown significantly (and they are taking 60% of it). Once I hit big numbers and the bonuses start to kick in, then my payout starts to increase again. Over $1mm gross, if you organize your business right, your payout can be very high at Jones (well over 50%). One of my closer friends in the region does about 800K and nets about 50%. But he only has 1.5 BOA's and a very small office that is paid for (i.e. no depreciation), he does no marketing, etc. But then there are $1mm producers with 3 BOA's and big offices and lots of activity. Their bonuses are much smaller due to overhead. I just think it is very hard to ever compare apples-to-apples when comparing indy shops. You have to look at all the details of the specific operation and compare to your own situation. In other words, nobodfy can say "you will net X as an indy in all cases".B24, I think you are off base. If your profit is skyrocketing at Jones when your production goes up, it means you are keeping overhead low. If you do the same at Indy, Jones can’t compete on payout. I really believe that with the greater flexibility to invest in technology as an Indy (if the advisor is inclined) we can be more productive with a smaller staff (all things being equal).
If I keep expenses relatively fixed, and continue to get 90% of my top line, profit really moves upward quickly in the higher gross revenue brackets.I am afraid Sir Spiffy others are correct. The NET is the difference between income less expenses. I run 70% utilizing one person half time. And that person is my wife. So it comes back home. I don’t include her in my calculation other than expense. If I did it would be close to 80%. Everything is factored in, except the additional tax savings that I get every year as a self employed individual versus employee.
The numbers are right on and if you would like to see them PM me. In California, the reps out here are not at the same % you are.Luv, as I also said, there are wide variations among indies, and that you cannot compare apples-to-apples across the board. I think I also made the point that you WOULD make more as an indy, but that at higher production levels, the % payout gap closes (but I did not say “meets”). But you’re right, generally better technology can help you leverage your operation better.
[quote=Hank Moody] [quote=Spaceman Spiff]
Good for you.
Did you take things like your assistant's salary, her benefits, payroll taxes, rent, electricity, trash removal, paper, postage, etc out of your $89K? I'm sure you're still on the positive side compared to your buddy, but it's probably not as much to the positive as you suggest. Perhaps I'm reading your paragraph incorrectly and you meant that your net after expenses is $89K higher. [/quote]Do you know what "net" means?
[/quote] Thus the "Perhaps I'm reading your paragraph incorrectly" statement. I knew that I may be reading it one way and foot was meaning it another. Either way, good for you. You folks will notice that I'm not the Jones is better than indy guy. I like being at Jones and I don't believe it is the evil place most of you people make it out to be. That's my perception. If I were indy, I'd probably like that too. I'm not, so I don't know that for sure. So, if you are trying to goad me into a spitting match about Jones vs. Indy, you're wasting your time.
That's why I said "all things being equal". To get into nit-picking, though, I don't know that you can accurately say the gap does close, because in order for it to close Jones would need to be distributing 90% out -- 40% through the net, and another 50% in bonuses, LP, and profit sharing? If you can explain why the gap closes, I'm truly interested in hearing it, but I just think it continues to widen-again- ALL THINGS BEING EQUAL. ETA: RJ does pay a premium over 90% into a deferred comp type plan for anyone grossing around 500k-600k and up also (up to 100% at around 2million+ I think-less ticket charges). This too makes them very tough to beat.Luv, as I also said, there are wide variations among indies, and that you cannot compare apples-to-apples across the board. I think I also made the point that you WOULD make more as an indy, but that at higher production levels, the % payout gap closes (but I did not say “meets”). But you’re right, generally better technology can help you leverage your operation better.
Spiff-
Go home and tell your wife that you have decided to give EDJ 1,283,712.32 more than you have to. That is what 89K at 7% over 10 years means. You are paying a tremendous premium to start this business. Get profitable and consider your options.Sorry if you feel that it is goading. It’s real world and its out there for you if you want it.
[quote=footsoldier]Spiff-
Go home and tell your wife that you have decided to give EDJ 1,283,712.32 more than you have to. That is what 89K at 7% over 10 years means. You are paying a tremendous premium to start this business. Get profitable and consider your options.[/quote]Beautiful.
Source URL:https://www.wealthmanagement.com/forums/whats-firms/lpl-drops-401k-match-and-merit-increases