November 08 Production Numbers
How are your production numbers for November?
Speaking for myself and my firm - they are HORRIBLEbad.thank god for fee based.
Good. Thank God for Indexed Annuities.
[quote=Vin Diesel]
How are your production numbers for November?
Speaking for myself and my firm - they are HORRIBLE [/quote] AWFUL..Never seen so many ACAT's going according to Front Desk help..myself included unfortunately. The managed money guys will probably not see the big hit until jan when new fees go out, but from what can gather the guys who were at 1 MM will do less than 400 next year, 50% drop from assets drop and another 10-20% from people who closed their accounts, and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. But its so bad you just have to ask yourself if you have any skills to switch careers, I have asked myself and not come up with a good answer yet.This may well be the cycle that tests the real validity of the fee-based advisory approach that has been aggressively “suggested” to all of us over the past decade or so. I have never been a believer nor practitioner of, but my T12 is taking it on the chin, none the less ( I never doubted that it was better for brokers (and especially their firms), I’ve just never thought it was better for clients). I am and have been targeting currently fee-based prospects with advertising asking whether those fees are really a good value or not and encouraging readers to look closely at fee costs now, more than ever. Let the pot-shots begin!
Production remains stable, though I am re-amping my business after splitting with my partner. Finding a lot of accounts $250-450K range at wirehouses that are neglected.
YHWY, I came from a EDJ, home of the longterm investor, only problem is after 5-6 years they reup that sales charge by changing to another fund company.. My favorite is when they split between Franklin and American Funds, and tell them it was diversification, but the real reason was increased commission on less breakpoints...Anyways won't argue fee based vs commission, but I think if I can add stocks, alternative assets, uits, mutual funds, etfs, indexes and not have to charge the client for every single item, and beat a asset allocation of index funds by at least my fee, then it is better for my clients than them being on their own...at 400k for year, less than 15k in for November…ugleeeeee. Goal was 450-500 for the year, going to be tough. More importantly not a whole lot in the pipe either.
Least one honest person on the board. I know its pretty important to stay positive, but my pipeline is so empty could see to russia on a clear day. I barely have the energy to go in and can not imagine trying to get more clients now..Attitude going to have to change Jan or could be rough, already told the wife to quit spending money. HOPE I am wrong but think this bear market going to a long painful event. Seeing retail stock like Nordstrom, Macys, Saks, Ann Taylor all looking like BK is a real threat. Dozens of restaurants look like BK also, could not look someone in the face now with a clear conscience and say" I am so excited about this economy and you should be too" 20% of S&P 500 stocks under 10.00 today, after crash 1987 it was only 30 names, this is serious stuff.at 400k for year, less than 15k in for November…ugleeeeee. Goal was 450-500 for the year, going to be tough. More importantly not a whole lot in the pipe either.
Lots of cuts coming at all firms on many parts of a branch P&L. If a branch had 4 billion in assets at .75 roa they where doing 30 million. same roa on 2-3 billion means branch now doing under 20 million!!
not to mention the errors and legal line are killing branch offices.
Support staff cuts, marketing budgets, real estate, manager cuts, and low performing FA cuts will be coming very soon.
last month was great and im looking to end the year strong. i will admit my business has changed though. mostly fixed income business buying intermediate muni's and short term corporates. dont think i have done this much fixed income business in my life. also did some fixed annuity business. my revenue is up year over year. these are the markets where the strong survive.
My business is up slightly, and new assets are starting to come in.
[quote=fritz]… and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. [/quote]
We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997. It may be ugly, and it may be a long time since we were below that level, but there’s nothing magical about 8000.
Least one honest person on the board. I know its pretty important to stay positive, but my pipeline is so empty could see to russia on a clear day. I barely have the energy to go in and can not imagine trying to get more clients now..Attitude going to have to change Jan or could be rough, already told the wife to quit spending money. HOPE I am wrong but think this bear market going to a long painful event. Seeing retail stock like Nordstrom, Macys, Saks, Ann Taylor all looking like BK is a real threat. Dozens of restaurants look like BK also, could not look someone in the face now with a clear conscience and say" I am so excited about this economy and you should be too" 20% of S&P 500 stocks under 10.00 today, after crash 1987 it was only 30 names, this is serious stuff.[/quote][quote=badmove?]at 400k for year, less than 15k in for November…ugleeeeee. Goal was 450-500 for the year, going to be tough. More importantly not a whole lot in the pipe either.
Why can't you change your attitude on November 20, 2008?
"Why can’t you change your attitude on November 20, 2008? "
Early in my career, I learned an important lesson about attitude. It's very, very difficult to have a positive attitude without a full pipeline. The negativity feeds on itself. Anyway, what I learned is that activity comes before attitude. If you wait to get a good attitude to do the things that are needed to fill your pipeline, you're screwed. If you do the things that are needed to do to succeed despite your attitude, your attitude will immediately improve.Disappointing results. Three years in, I need to bring in at least 300k investable per month to survive and it’s not happening.
But have had good conversations with prospects lately. Dropped the EDJ 'sun will come up tomorrow/if you diversify everything will be OK/we didn't see any of this coming but believe what we're saying now' spin and have been leveling with people. It's bad and it's going to be bad for a while. Here's what we can do. Have not lost any clients and only two have liquidated. Having their confidence feels good.Interesting topic.
Thank God I am indy. My numbers are down and I am thankful for fee based and C-shares.I hired a marketing professional to go after the wire house accounts in my area. I will see how that goes going forward into the first quarter of 08. I do not need that many more fee-based accounts and my practice will be at full capacity for me.
Ice–
Since you're 100% fees, I assume you're charging fees on a wide variety of account sizes. At Jones, there's a $100K minimum for our fee-based account. Can an indy charge fees on any sized account?bad bad production month, started to pick up this week finally but I need more new assets.
Thanks for the information. It’s very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
I was just wondering if an indy can charge fees on any account size.Dang it!
[quote=Borker Boy]Thanks for the information. It’s very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
I was just wondering if an indy can charge fees on any account size.[/quote] Our firm's minimum for fee based is $25k. But I personally do C shares up to $100k.[quote=Borker Boy]Thanks for the information. It’s very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
I was just wondering if an indy can charge fees on any account size.[/quote] Borker, I use C-shares for most accounts under 100K, and any DCA money. I don't do it to annuitize my business - I really feel it's better for the client. It will take 10 years in some cases for the breakeven point, and many people have time horizons of less than 10 years. It's also a huge dis-incentive for a client to pay 4.5-5.75% upfront. So I find C-shares very useful. But you will make far less upfront, and it will take 3-5 years for your income to break even versus an A-share under 100K. Over 100K, I am trying to use Advisory on new money. But I usually stagger it with other things (fixed annuities, CD's, MMKT for short-term income).I am thanking god each day that I went indy 1 1/2 ago. With my payout and fee based I can weather this storm. But my income has been cut in half.
We (Wachovia) bill quarterly, but are paid monthly. So we’re being paid on account values a/o September. First quarter '09 will not be pretty
Jones pays monthy and clients are charged monthly. Most of us don’t do enough fee based for it to matter.
So, how does a fee only advisor survive when his income just got cut in half over the last two months? You can't possibly bring in that many new assets quickly enough. Isn't an environment like this one where a commission based advisor may not even feel the pinch? I know I haven't so far. In fact I had my best month of the year in Oct, followed by a marginal Nov, and the transfer paperwork calls for a stellar Dec. But, if I had a fee only biz with $20MM that is $10MM now, even bringing in $1MM a month won't get me back to even for the next year.< ="-" =“text/; =utf-8”>< name=“ProgId” =“Word.”>< name=“Generator” =“Microsoft Word 12”>< name=“Originator” =“Microsoft Word 12”><>
A little perspective re: Wirehouse v. Indy & fee-based v. commission. I left WB for LPL one year ago (today, in fact) and my business is 100% "traditional" commission-based. My 2008 income is already right about 80% of my 2007 full year income. Consider that this includes the actual transition (one never takes 100% of desired clientele, followed by the worst year (especially last @2 mo.) in most of our memories), not to even bring up the state WB is in and the proprietary effect that's had on WB brokers specifically. All things considered, I am happy as hell to be smoking a cigar poolside right now, having control over my business and branch (as OSJ) and having my income hold up so well, given the state of the markets. Couldn't be happier!
Sorry about the annoying font up there.
Thank God for a a few rich guys I make cash hand over fist with my strategy my stuff is onm track, month 15 and I hope to do $20k. Getting some good accounts with their friends.
Attrition; Of my class in the 70’s there are only 28 left. Of them I’m 3rd. My paycheck is just getting my over the hump. I can’t imagine how the other rookies are paying the bills. I’m LUCKY LUCKY LUCK. I’m not bragging and not really proud. Hard biz newbies. But I’m having fun doing it and think I’ll be here in the long run.
live within your means and when your fee based is cut in half you can manage. Live like a king and you’re dead. I doubt very much that comission brokers a barely feeling the pinch spaceman! They’ll be the first to fall. Trust me on that.
ez, if you think that the fee-based model is your salvation, then I believe you are misguided. Unless, of course, it is your contention that it is by far (and provable, beyond argument) best for your clients. Good luck with that argument.
I don’t think any fee-based advisors have had their incomes cut in half. If their book is fairly balanced, they are probably down 25%-30%. Let’s remember, most balanced portfolios will include bonds, govies, some cash, etc. If you are a pure equities advisor, yeah, you maybe down 40%+.
B24
I’d like to ask any fee-based former AGE Advisors doing under about $400-450k how their income has been and will be effected. I suspect that with the Dow down over 45% from last years’ high and the new Wach Sec hurdle grid going into effect, I suspect declines in income of 40%+ are likely. (For you wirehouse guys who want to scoff at $400-$450k, save it. Your @35-42% of whatever your “gross” is doesn’t impress me anymore)
maybe down 40% ARE you joking? Brandes, Lazard which have a few people in are down over 60% YTD. Do not believe any managed account unless counting cash and GOVT stuff is down less than 40%.. I am not a big believer in Managed Money, in fact I think it is bordering on criminal have a book of all clients in this stuff, but from the guys I see who have most/all their book in Managed Accounts they have pretty much had about 1/4 of the people close their account in the last 3/4 weeks. Think this business, if the market does not rebound will be very different in 12-24 months. The last stage of a true bear market is client despair, thats when people realize they are not getting even and paying 1.5-2% to watch you account go nowhere, tough sell.I don’t think any fee-based advisors have had their incomes cut in half. If their book is fairly balanced, they are probably down 25%-30%. Let’s remember, most balanced portfolios will include bonds, govies, some cash, etc. If you are a pure equities advisor, yeah, you maybe down 40%+.
Nothing Magical about 8000? That was new closing low on the DOW, after weeks of bouncing off 8000. That will usually create a lot technical selling, and psycological damage. Looks like it happened. Just a number yes, but it matters, just like it will if we dont hold 5000.[quote=fritz]… and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. [/quote]
We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997. It may be ugly, and it may be a long time since we were below that level, but there’s nothing magical about 8000.
If you are still adding to your fee based assets, the pay cut is minimal. Another flaw in this thread is fee based accounts being down 40%. Not all accounts are down 40% just because the market is. This month has been my biggest month since May with a week to go.
not 8000 but 7800 the previous intraday low
icecold1d,
You can compare your business model to the dregs (MUCH more that half of mutual funds have ridiculous expense ratios and are complete rip-offs) and feel good about it. What you can’t do is try to compare total expenses to the best mutual funds (which any advisor worth his salt uses to the exclusion of those “dregs”). I just don’t want to have to re-sell my entire business model every quarter in a down market, but to each his own.
[quote=iceco1d]You sound like a bit of a toolbox fritz.
I'm nearly 100% fee-based (barring a few 529 plans), and my portfolios have lower avg. expense ratios than more than half of the mutual funds out there @ NAV - when INCLUDING my fee. [/quote] Sounds good, how are you doing this year for your clients? Let me guess if someone called you end of Sept you told them to stay in for "long term"? Right? that way your could continue to get your fee. Guess at what point would you get them out so they would not have to continue to lose sleep over their losses and put them in a CD or something to that effect? Pretty sure that type of thing not in your bag of tricks.ice, I am not challenging your business plan or model, but I thought that your quoted total expense to clients (including your .9%) of roughly 1.25% seemed off-kilter. I’m not a fee-based guy, but .35 bps internal expenses seems odd (i.e., not funds, nor discretionary EFT portfolios, nor private money management nor any other structure I can think of). My main concern has been to ask if a percentage fee is always in clients’ best interest as well as having to defend that line detail on statements every quarter during a down market.
ice, I respect your decisions, make no bones about it. Always interested in other points of view.
Ice, come over to the dark side. I can mail you a Terrible Towel!
<SPAN id=userPro115317 =msgSidePro title=“View Drop Down” =“showDropDown’userPro115317’, ‘proMenu115317’, 160, 0;”>YHWY,
The bottom line is this. If I want to charge 3% and fully dislose this to my clients and they agree, then it's a deal. Who can say the client is being wronged? Hell he agreed to it. There is nothing wrong with a 2% overall fee (including fund expenses). I am in business to make money. Profit is the name of the game. My services are not free. As long as all my merhcandise is priced, and fully disclosed, and the client buys my services. I'm o.k. with my pricing structure. Disclosure is the key. The only one disagreeing with this is your self rightous transaction broker who is about to starv for the next 6 mths.90% fee based, but down 20-30% for the month.
20% on client market value (I have a LOT of balanced managed accounts) and perhaps another 10% on clients who I have lost or whom have pulled money out against my advise to wait it out. Thank God for this type of business though. The commission guys here are on suicide watch.I have a nice base of income because of Advisory and C share mf's and L Share annuities. New to Fee business so my hit on the values are minimal as far as income is concerned. All L shares go in on 12 month DCA, which has been somewhat a savior. I'm doing more in tax free's to build on the base recently. However, the transfers are picking up as the prospects I've been calling on since 2001 are wanting a change. Not proud of that, but will not turn anyone away who wants to change advisor's-- and they go directly into Advisory. I have a tremendous $ sitting in mmkts and cd's and as they come due, like this AM, I can put into other revenue generators. 50k 12 month cd came due and put into a 7yr tax free at 5.5% paying 20 per 1000. Several more coming due in the next several months...
I’m 99% transactional and my GDC is up 21% from last year. I have a ton of VA contracts paying me 1% a year.
L shares, c shares, wrap and managed $$ I count as fee based, and I’m damn glad I have them. Makes you lazy though!
fair statement
Judging by how the 'money managers" have performed I can't see paying them for something I can do myself, why punch their meal ticket with my clients $$$ I would rather keep the cash in their account.
Nolt talking about anybody but myself … AGE training wants you to be a non thinking managed money drone my trust in them blew up when they pushed the FNM. S & T series out as the greatest thing since sliced bread. Two months later Grannies acount goes POOF! I dont need a CFA to destroy an account. I can do that myself.
Nothing Magical about 8000? That was new closing low on the DOW, after weeks of bouncing off 8000. That will usually create a lot technical selling, and psycological damage. Looks like it happened. Just a number yes, but it matters, just like it will if we dont hold 5000.[/quote][quote=Morphius] [quote=fritz]… and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. [/quote]
We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997. It may be ugly, and it may be a long time since we were below that level, but there’s nothing magical about 8000.
All that technical selling and psychological damage really plagued the market today, which probably explains why it jumped 6.5% to close back over that magical number again!
I have no idea what the short term will bring in this market, but the number on one artificially created index isn't nearly the market driver that the technicians would have us believe it to be.
Nothing Magical about 8000? That was new closing low on the DOW, after weeks of bouncing off 8000. That will usually create a lot technical selling, and psycological damage. Looks like it happened. Just a number yes, but it matters, just like it will if we dont hold 5000.[/quote][quote=fritz][quote=Morphius] [quote=fritz]… and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. [/quote]
We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997. It may be ugly, and it may be a long time since we were below that level, but there’s nothing magical about 8000.
All that technical selling and psychological damage really plagued the market today, which probably explains why it jumped 6.5% to close back over that magical number again!
I have no idea what the short term will bring in this market, but I the number on one artificially created index isn't nearly the market driver that the technicians would have us believe it to be.
Agreed..is is upsurd to put any or much impact on the DOW, or maybe even the S&P 500. The couple points which have came recently tell the story....25% of S&P stocks under 10.00 per share (day after crash in '87 only 37 stocks, even with DOW at 4000+ then) and 40% of the S&P 500 stocks do not even qualify to be in the index on a market cap basis. DOW is not telling the story of whats going on. Saw Fid Magellan fund was down 60%+ as of 11-20-08..That is brutal, 50% worst than the so called market (DOW)..only two sets of back to back up days since Sept is a nice side note.
[/quote]
When we do recover, wouldn’t a day like today tell you what will really move - commodities, reits, international - the stuff that has gotten brutalized really seems to pop on the few up days we’ve had. I hear “Buy US” more and more but you have to wonder if that will be where it’s at.
Good news about bear markets - you get paid the same for forced sales of stock relative to the buys. Unfortunately I had more of the former than the latter today. And unfortunately, no clue if that cash wil re-enter the market.Speaking in terms of “November 2008 Production Numbers”, it’s a good thing no one here is compensated on the basis of technical chart analysis.
[quote=Gordon Gekko]When we do recover, wouldn’t a day like today tell you what will really move - commodities, reits, international - the stuff that has gotten brutalized really seems to pop on the few up days we’ve had. I hear “Buy US” more and more but you have to wonder if that will be where it’s at.
Good news about bear markets - you get paid the same for forced sales of stock relative to the buys. Unfortunately I had more of the former than the latter today. And unfortunately, no clue if that cash wil re-enter the market. [/quote] I am always suspicious of late move like this on options expiration. There were 4 times as many puts as calls outstanding going into today, which can lead to artificially rallies in which stocks "need" to move higher to avoid market makers taking it up the a*s. Next week thanksgiving so maybe we can hold onto gains, but think this was a fluke today. Time will tell. Buddie of mine has had 11MM Acat out from a 26 MM book since mid october, some were 50%+ in cash and they still left with no phone calls..He was pissed after the first 5MM or so, now pretty much laughing. He says the brightside is less phone calls going forward.fritz,
Sounds like your Buddie might be living at your house soon. That is worth a laugh.
The phone that will need to ringing is on the other end of the cold call he will need to make. Him and me both! ACATs not a problem, just this 50% market retrenchment thing. I sold my few shares of dxd yesterday and bought BAC. That can only go down another $11, where's the risk? (You can't see it but I am winking)
I think a lot of folks dont realize the impact that depreciation of assets will have on fee based next year. A lot of us are smoothed, in other words, while the client is billed quarterly we are credited monthly. So right now we are getting most of our fees based on August/September values. In January, when we start getting fees based on Oct Nov Dec values, it is going to be devastating.
There is a lot of rebuilding to be done, and an awful lot of guys are going to shake out.
I about 50/50 fee based// transactional..for the most part almost all of my clients have the attitude of "on the next rally" I want out of the market. If it ever comes some will probably change their tune, but if most do it I am going to starting at a huge hole. Almost laughing at the thought of meeting the manager for my business plan for 2009. Think they always have a nack for making you feel like you are the only one not really ramping it up, but this time I know he is full of sh*t, but still have to put food on the table and think it is going to be brutal next year. Is anyone cold calling out there?, couple trainees only at our place that call all day (allegedly), and they are getting ripped a new one from what they tell me. Guess I am saying what do you do to rebuild the $$$ damage and the psychological damage people have suffered??I think a lot of folks dont realize the impact that depreciation of assets will have on fee based next year. A lot of us are smoothed, in other words, while the client is billed quarterly we are credited monthly. So right now we are getting most of our fees based on August/September values. In January, when we start getting fees based on Oct Nov Dec values, it is going to be devastating.
There is a lot of rebuilding to be done, and an awful lot of guys are going to shake out.
for the most part almost all of my clients have the attitude of “on the next rally” I want out of the market.
This is what i fear the most. For this reason, i think we could see a cap on the market for years. There will be selling into every decent rally. Thats why i am getting totally away from money managers - i have been moving away from them for a few years now, but now i definately want some control over the money.
Back to the topic, I hope fritz is right and when the rally comes, investors will see it as an opportunity to make their money back, rather than an opportunity to get out. But i fear that will not be the case, for at least a long while.
Just a 30,000 ft overview here. This level of pessimism both in the markets and in our profession has historically marked serious, long-term bottoms. We’re at an 11.5 year low on the Dow (as of yesterday). Keep proactively talking to your clients about your (legitimate) reasons to do the right thing (as you believe it to be) and keep seeking out quality new clients the same way and we’re all still in the best business on earth. Have a great weekend everybody!
What is the avg LOS for most advisors on this sight? We all understand how bad it is, but
we're sounding no different than the clients we're trying to keep off the ledge. This is not the enviroment we want to be focusing on for the next year or two. If the markets stay like this for the next year or two...no one will be left standing. Even if you have a large enough practice to sustain the downside...you'll be phyiscally and emotionally drained and never last, not without strong anti depressants(I recommend Lexapro). My partner and I run a 2.3mm $ practice, 85% annuitized...LOS 20yrs+ for both. We will not allow ourselves to think out to far...it's too scary. We're taking it 1 month at a time and being flexible in our business mix. We never did annuities, now guess what...we're doing some annuities. One thing about all of us on this side of the business(indy's, wirehouse FA's etc). We've always known who we are...we're the blue collar , scrappy, street smart guys in a wing tip white collar world. Yes, It's tough and we're all scared(yeah even the guys in the business for 20 yrs). But, we've all figured out a way to make it in this business and thrive...I think most of us will figure out how to survive. Stay in touch with your clients...get active(I started seminars again about the crisis)....try to get some rest(all I keep hearing from fellow FA's "I'm exhausted")...Enjoy you family during the Holiday...Keep the faith.[quote=ML for Life]What is the avg LOS for most advisors on this sight? We all understand how bad it is, but
we're sounding no different than the clients we're trying to keep off the ledge. This is not the enviroment we want to be focusing on for the next year or two. If the markets stay like this for the next year or two...no one will be left standing. Even if you have a large enough practice to sustain the downside...you'll be phyiscally and emotionally drained and never last, not without strong anti depressants(I recommend Lexapro). My partner and I run a 2.3mm $ practice, 85% annuitized...LOS 20yrs+ for both. We will not allow ourselves to think out to far...it's too scary. We're taking it 1 month at a time and being flexible in our business mix. We never did annuities, now guess what...we're doing some annuities. One thing about all of us on this side of the business(indy's, wirehouse FA's etc). We've always known who we are...we're the blue collar , scrappy, street smart guys in a wing tip white collar world. Yes, It's tough and we're all scared(yeah even the guys in the business for 20 yrs). But, we've all figured out a way to make it in this business and thrive...I think most of us will figure out how to survive. Stay in touch with your clients...get active(I started seminars again about the crisis)....try to get some rest(all I keep hearing from fellow FA's "I'm exhausted")...Enjoy you family during the Holiday...Keep the faith. [/quote] Good post, ML. Nine years in production for me, built from the ground up with seminars, a few gimme accounts that the vets in the office tossed to me, lots of cold walking to businesses, and back to more seminars on tons of different topics. Production's a fraction of yours, but it's back to the moving up trend, since the move from AGE to RJ. Caught the tail of the Tech Boom at the beginning, and then we all know the rest. This feels scarier than '00-'02, for some reason. I remember after 9/11, we all had a common foe to blame everything on, and that seemed to really turn my clients around, even though we still had another 18 mos. of crap to slog through. This is tougher for some reason. Maybe it's the speed with which this has happened, or the way that even the conservative things have gotten smacked.To answer ML’s question, coming up on 10 LOS.
It is definitely gut-check time. Time to take a good hard look at our beliefs and business models. For me, the questions were, Do I still have confidence in the US economy to recommend buying corporate, muni and govt. assets? Do I have the expertise and communications skills to really help investors? and, Is my business set up efficiently with a capability to remaining profitable (i.e., can I generate and KEEP enough revenue). My answers were, yes, yes and yes. This is a great business and investors NEED OUR HELP now, more than ever. Work your asses off to get it to them and we can all still thrive.
YHWY & 2WHEELED...That's what I wanted to hear guys!!! These are the types of sentiments we need to be posting. Let's leave the end of the free world stuff to main stream media. We don't have the luxury to be doom and gloom, we've got familes to take care of and businesses to run.
We built our business on a high end concierge service model...we never positioned ourselves as market outperformers...we can't control performance... we can control their service experience with our team. We are now trying to show them what we're made of...we always try to be upbeat(not delusional), always proactive(we have weekly contact lists so we're always reaching out even to the lower end clients) and we always return calls promptly(even if we know it's going to be a brutal call). I know we feel like we've got nothing new to say....but as 2WHEELED will attest to "Sometimes nothing can be a real "COOL HAND" (one of my favorite movies!!!) Keep the good stuff coming we could use the good energy.I am detecting a little trend forming where clients are pissed at the market, dissapointed with funds that historically are good but short term puked, and are receptive to buying stocks in companies they feel will not go out of biz -BAC, WMT, DUK, etc. I would put GE in there but who’s to say about them. Don’t listen to Cramer much but he has been pushing sustainable (he thinks) yield hogs. If only we could charge a 1% wrap on a CD ladder!
[quote=Gordon Gekko] If only we could charge a 1% wrap on a CD ladder![/quote]
As an RIA, you can certainly charge an advisory fee for a CD ladder, just as you would for any assets under management. It wouldn’t typically be a wrap fee, but I presume you’re using that term in the generic sense rather than the legal sense.
WSJ: Ignore the market til February
Ignore the Stock Market Until February The current volatility is less about fundamentals than forced selling. By ANDY KESSLERDown in the morning, up in the afternoon. Or is it the other way around? The topsy-turvy stock market is tough to read.
In the last year, the Dow Jones Industrial Average has briefly been over 13,000 and below 8,000. The past month has felt like the Cyclone roller coaster on Brooklyn's Coney Island -- lots of ups and downs, the whole rickety thing feeling like it's going to crash at any minute.
David KleinGreat investors are taught to listen to the market. Each tick of the tape has something to say about expectations for growth, inflation, policy changes and looming recessions. The stock market is like a giant mass of pulsing plasma doing price discovery and a game of hot potato, getting stocks into the correct hands with the right risk profile. It's way too big for any one person to manipulate, let alone touch directly. Instead, millions of us provide input with our buying and selling decisions.
When it's at its most efficient, with buyers and sellers neatly matched up at the right price, it's a pretty good predictor. The Crash of 1929 announced a recession, and the wake-up call unheeded might have caused many of the bad policies leading to the Great Depression. The Crash of 1987? Not so much.
You see, the market is a great manipulator. In September, the Dow dropped 700 points intraday after the House of Representatives voted down the Treasury's TARP bank-rescue bill. Spooked, the House passed the bill the next week. Or how about this? The Dow was up 300 points on Election Day applauding an Obama victory and then down 1,600 points since.
The market can also be a bold-faced liar. On Jan. 22, the Fed announced an emergency 75-basis-point rate cut in response to huge drops in European markets. A few days later, it came out that a rogue trader at Société Générale lost them $7 billion and the bank was unwinding his positions. Oops.
So which is it now: an efficient mechanism or a manipulating liar? Should you listen to it warning of doom or anticipating renewal? I'd say stick wax in your ears and don't listen to the market until February.
Don't get me wrong. The freezing of the credit markets is wreaking havoc on the world economy. Corporate profits are dropping. Central banks are fighting off deflation and may not turn off the spigots fast enough -- which could ignite runaway inflation. But because of the credit mess, I am convinced the stock market is at its least efficient today. Don't read too much into any move. Here are the five biggest dislocations taking place:
- Tax-loss selling: Whenever you have a loss in a stock -- and who doesn't -- it's always tax smart to sell it, take a tax loss and either buy something similar or wait 30 days and buy the original one back. December can be an ugly month of indiscriminate selling. The December effect will be huge this year.
- Mutual-fund redemptions: Mutual funds are also dumped for tax losses. When the stock market is down in the morning, it's usually because of mutual-fund redemptions.
Fidelity's giant Magellan fund, down 56%, is one of many in the $6 trillion stock-fund business having an awful year. As investors call or click to get out of these funds, Fidelity and the others have to unload shares the next morning to raise cash. This forced-selling overwhelms the system. New York Stock Exchange specialists, who are supposed to maintain an orderly market, stop buying and back away. You get huge drops, which can unnerve even more investors and cause them to redeem.
- Mutual fund cap-gain distributions: To make matters worse, in December mutual funds do capital-gains distributions. In a down year like 2008, you would think there are no taxes to pay. Think again. Legg Mason's Value Trust, run by Bill Miller, outperformed the market for 15 years by buying many "unvalue" names like Amazon. As investors redeem, he is forced to sell many of these stocks originally purchased at very low prices, triggering huge capital gains in a year his fund is down 62%. You can almost guarantee investors also will sell more of these funds to pay their unexpected tax bill.
- Hedge-fund redemptions: Instead of overnight selling like mutual funds, hedge funds typically require 45 days' notice for investors to get out of a fund. They've been furiously selling since September to raise cash to pay investors. This usually shows up as a set of stocks that just go down and down and down with no obvious explanation.
Rubbing salt in hedge-fund wounds is the fact that Lehman Brothers was a prime broker to many hedge funds, holding their shares. While Lehman's bankruptcy was not a problem in the U.S., in England the policy is to freeze accounts until the mess can be sorted out. There are billions in assets locked in this bankruptcy, and hedge funds are forced to sell positions in the U.S. and elsewhere to raise cash, exacerbating the downside here.
By the way, when hedge funds are down for the year, they work practically for free until they make up the loss. We'll see hedge funds close and stocks liquidated as -- no surprise -- hedge-fund managers like to get paid.
- Margin calls: Whenever stocks go down sharply, you quickly find who owns them with debt. We have seen spectacular margin calls, a requirement for more capital to cover share losses. Chesapeake Energy CEO Aubrey McClendon unloaded 33 million shares to cover losses. Viacom CEO Sumner Redstone had a forced sale of $400 million in Viacom and CBS shares because of a margin call on other stocks. You can bet many not-so-public margin calls are behind many huge price drops. These usually take place in the last 30 minutes of trading.
So won't January be alright once these dislocations weighing on the market are lifted? The January effect is supposed to be positive.
Well, often money managers are fired at the end of disastrous years. A new manager comes in, looks at the existing positions and dumps them all and remakes the portfolio with new stocks that he likes, thus generating more selling. My favorite Wall Street adage suggests that the stock market trades to inflict the maximum amount of pain. Remember, you can only ignore the stock market for so long. Once everyone thinks it can only go down . . . it might go up.
Mr. Kessler, a former hedge-fund manager, is the author of "How We Got Here" (Collins, 2005).
Sorry, GG, I don’t get your intention. There have been MSM (mainstream media) reports on how investing is for suckers for generations. Was your intent to illustrate a contemporary example of this phenomenon, or to warn us that, this time, that idea may be true? If the former, I hear ya. It’s a tough environment but we’ll get through it, as always. If the latter, consider a career change. I honestly don’t mean to try in insult you, I just really don’t get that cut-n-paste job.
gg. Obviously this author has been able sell all of his clients asset when Dow peaked at 14000 and been short since giving his client a 45 percent return in the past year. And I m sure on feb 1st the market will bottom and start to move back to 14g. Did he also give u tomorrows lotto numbers?
Nothing better than getting advice from former hedge fund managers
This is a GREAT month. Never moved money like this.
Liquidating mutual funds to buy CD's and T-Bills. UIT's maturing and client saying "why don't you just send me the money" Money Market balances at all time highs. Wait a minute, I don't get paid on this.[quote=conage]This is a GREAT month. Never moved money like this.
Liquidating mutual funds to buy CD's and T-Bills. UIT's maturing and client saying "why don't you just send me the money" Money Market balances at all time highs. Wait a minute, I don't get paid on this.[/quote]Why aren't you showing these people index annuities?
or fixed
[quote=Hank Moody] [quote=conage]This is a GREAT month. Never moved money like this.
Liquidating mutual funds to buy CD's and T-Bills. UIT's maturing and client saying "why don't you just send me the money" Money Market balances at all time highs. Wait a minute, I don't get paid on this.[/quote]Why aren't you showing these people index annuities?
[/quote] Fixed as an alternative to bonds or cd's, fine. EIA, very worried that they are the next ticking bomb. No way such high-commission products are client friendly.
I think there will be a lot of former hedge fund managers soon.
For what it's worth, I also am sitting on a lot of money market/cds. Anything with an "A" in it - VA, EIA, even Fixed A - I am backing off on for the time being. I have zero faith in the insurance companies right now and that is essentially what you pay for above and beyond mutual funds when you buy them.Iceco1d,
Please don't call them Ratbirds. They prefer to be called Balti-morons. Steelers rule, especially when they're getting points.I would be VERY careful with the EIA’s. Not just for the coming regulation (I belive it is coming), but more for the fact that once you hand your client’s $ over to ABC insurance company, you better hope they stay in business. I know that’s true of FA’s, and VA’s in some instances. However, I’ve seen a lot of EIA’s from small companies that JUST do EIAs.
Twenty years from now, when it's time for the client to get their money back (generally via annuitization to get all those guarantees), you better hope the company still has an address![quote=conage][quote=Hank Moody] [quote=conage]This is a GREAT month. Never moved money like this.
Liquidating mutual funds to buy CD's and T-Bills. UIT's maturing and client saying "why don't you just send me the money" Money Market balances at all time highs. Wait a minute, I don't get paid on this.[/quote]Why aren't you showing these people index annuities?
[/quote] Fixed as an alternative to bonds or cd's, fine. EIA, very worried that they are the next ticking bomb. No way such high-commission products are client friendly.[/quote] I get paid 75% on term insurance and 80% on whole life insurance. Tell me, how are these products are not client-friendly?
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