Raymond James vs. LPL

Both are solid firms.  Maybe it'll boil down to your business model and business plan moving forward.  My bias is to LPL however.  In terms of bond inventory - that's a non issue.  LPL shops the street v holding inventory.  They have a very solid bond department that will build portfolios for you if needed or make recommendations.  The reason for not having inventory is simple; the margins are so narrow in the bond arena that you don't need to hold any, go to the street makes much more sense.  RJFS holds inventory because they are trying to make some profit there; they'll mark up that bond more than LPL would which limits you a bit more in pricing and yield (as well as net to you).  Same goes with investment banking.  It boils down to this, I believe, RJFS holds the traditional wirehouse model.  That is, you have the advisors (including all their different channels), product manufacturing, investment banking, bond desk etc.. all competing for corportate support and dollars.  LPL has none of that, the only people competing for LPL corportate support and dollars then are LPL Advisors.  And the only way LPL makes those dollars is by ensuring they are providing that support to it's advisors.  So when there's $80m to spend on the business - at RJFS all those competing centers get a portion of that, and guess what, more money goes to the centers that are more profitable; and the independent advisors are least profitable than all the others.  AT LPL, $80m gets reinvested back into what drives the advisors business, alllows them to service their clients better, run their business more efficiently etc.  To me, this is above all else what is different between the two. 

CM

CM, thanks for your insight & good point on the bond inventory issue.  I hope I can get several good posts from both sides so perhaps this forum could be of value to anyone trying to choose a BD for an independent operation.

Any other opinions/rebuttals?

Indyone, from the RJFS perspective the only things I'd clearly agree with from csmelnix is that both firms are solid and your business objectives will be an important factor in making a decision.  Other than that, I'll offer a contra opinion.

I'll strongly disagree with his bond commentary, both factually and theoretically.  RJFS does not hold bond inventories just to make a profit.  Their traders build inventories to meet demand, both on the buy and sell side.  They get to know the reps who do a lot of bond business.  They know what types of paper these reps are always looking for, and when they come across an attractive price for this paper they'll buy it and place it in inventory for these reps to work against.  On the sell side, they'll take product into inventory from reps (assuming it's paper that's suitable for the inventory), typically at a better price to the client than if it were just shopped on the street.  This is particularly important with smaller lots where you'd get killed selling to the street. 

But, the vast majority of RJ's bond business is not done through its inventories.  They buy on the street like LPL (actually through their system any rep can buy from the street from our desktops if they don't need to access the desk for special needs).  BUT, and a big BUT -- anything that's bought that way is NOT marked up by RJ.  These are considered "riskless transactions" by RJ (i.e., no firm capital is at risk), so whatever the street price is is what you're buying it for.  LPL, on the other hand, marks up all their bonds, and at a hefty amount.  (One of RJ's bond traders used to be on LPL's desk and that's how we learned all this.)  But, the best way to test this is to submit a list of bonds to each firm and get their prices before your mark-up (the recruiter you're working with at each firm can do this for you).  You'll find RJFS prices will beat them consistently.

RJ's bond area is also much deeper than LPL's, giving considerably greater service & support.  They've got 14 taxable fixed income traders and I believe slightly more on the muni side.  I don't know LPL's #, but I can guarantee it pales in comparison.

Re the comment about RJ having to use corporate dollars to support areas not directly affecting its indy reps, that's strongly debatable. RJ is a very entrepreneurial firm and each business unit is a business unto itself.  Investment Banking, for example, is funded by investment banking revenues, not from corporate dollars that are directed from other areas.  In fact, since IB is a highly profitable business, that area is generating revenues that add to the RJ corporate coffers (which can then be used to support other areas of the firm, like technology, etc.) -- it's a contributor to resources supporting the RJFS reps, not taking away from it.  And, the LPL guys' position that most corporate dollars go to areas that are more profitable than the indy side because that's not a profitable area, is hogwash.  Hogwash not only for what I said just before, but also because RJFS is the biggest contributor to revenues and profits to RJ.  RJFS is the tale that's wagging the RJ dog.  It's no accident that Chet Helck, the President & COO of RJF (the parent company), came from the RJFS management team and was formerly a retail producer (at Jones).

Having said all this, make a list of all those things that are important to your practice and your clients.  Also make a list of any other things you'd like to access to grow your business.  Then have your recruiters have you visit their respective corporate headquarters to meet with every area of the firm on your list that's important to you.  That's the best way to make an evaluation, both of how each firm can meet your needs and to better understand their culture.  Also, get a list of reps at each firm that came from your current firm and talk with them.  Also, get a list from each firm of reps that left either LPL or RJFS and went to the competitor and talk with them re their reasons why they left and what their experiences are like now.

BTW, I'd have to take issue with your comment that LPL's fee business is superior to RJFS.  But, I'll leave that to you once you have a chance to visit each firm.

Again, both firms are good choices and your decision will be based on their applicable resources and respective cultures.  If you're coming from a full-service firm, I think you'll find RJFS comes out ahead.  It's no accident that around 70% of it's reps come from full-service firms.  They are attracted to RJFS in great measure because it can better replicate all the things that both the rep and their clients have become used to.  If you're primarily doing packaged products and just need a solid fee-based platform, then either firm should work well for you.

Another great piece of feedback, which I really appreciate, Duke…thanks.  Some feedback related to your reply…both recruiters have been onsite already and I am in the process of looking at the technology platform right now.  I’m trying to avoid making two due diligence trips as that is just more time out of the office than I want to take right now.  Interesting enough, I have asked for a list of referrals from each of them and I in fact used the criteria that you described (people who have been associated with both firms).  Having seen the fee-based platforms, and especially given RJ’s problems with their fee in lieu of commission piece, I still believe that LPL has them beat there.  That being said, my mind is far from made up yet.  I have a gut feel for which way I’ll end up going, but in the interest of giving both sides an equal shot, I’ll keep that part to myself for now.  Besides, the rest of my due diligence (and what CREDIBLE evidence I see in the forum) may very well swing me the other direction.  Odds are, there will still be plenty that I find out after joining one of the two firms.  My hope is that I eliminate most of the surprises beforehand and in that regard, I appreciate the opinions in both posts thus far.  Thankfully, the debate is staying on the intellectual side, but I’d also be very interested in seeing some posts from indys who’ve been affiliated with both firms.  Thanks again for your insight.

IndyOne- where are you currently at? What level of production, service, etc??

Bank channel about $375 annual gross w/40% of that fee-based.  Don’t want to say much more in case the boss surfs these forums.  Looking to exit sometime this summer…

$375K…sorry for the typo

Not to get into a back and forth with this on RJ V LPL.  The bond info on the reply to me was wrong.  LPL absolutely doesn’t mark up their bonds - your info is wrong and the person who came to RJ from LPL is feeding you bull.  The ability to buy bonds at LPL is from the desk top straight from the street.  On the fee based comments indyone - you are dead nuts.  No other b/d out there has the sales support, platforms, and openness to their platforms as LPL.  LPL also has just lowered ticket charges in their SAM platform; again, one profit center allows them to do that; RJFS can’t do that.  Also, it is a well known fact that independent models margins are extraordinarily slim; RJFS is the least profitable of all the businesses they operate compared to the bank channell and RJ advisors.  And from a profitability stand point, is ahead of only the bond desk and investment banking (due to the decrease of that business over the last 3 yrs).  Even if the other argument was correct, there is no getting around the other centers still competing for the corporate dollars v the LPL model.  Which will lead me to my last point; indyone, when you go independent, do you wish to be known as Raymond James Financial or do wish to brand your name as who your clients are doing business with?

CM, Thanks for the post, although I think you misread me.  I still view LPL’s fee-based platform as superior…Duke is on the other side of your argument.  I’m glad to have a couple of posters who are very sold on their business model…it’s helpful in differentiating between the two firms.  As long as Put-trader stays away, I’ll be satisfied.

I couldn't agree with you more.  At the end of the day it should be comforting to you that there are a couple people out there standing by their model.  As I said first, both are solid firms.  As for misreading you, I actually was saying I thought you were 100% correct and was agreeing with your comments on LPL's fee based business.   One bit of advice, if you can do it, visit both firms; you owe it to yourself to insure you see the operations of both so that you can make the most informed decision.  I can tell you from experience, I have dealt with an advisor or two than all but made up their mind up to a visit.  So if you can, you really should try to see both.

 Hello indyone its indytwo.  Im enjoying the conversation you’ve started.  I would like to know the production level of the other people that are chatting.  So csmelnix what do you do per year in commissions.  AUM? etc thanks for the info

I’m not a large producer; more avg than anything I guess.  I do about $400 GDC w/ almost $50m aum. 

thanks csmelnix.  Your info is very helpful.  Any other advice you have for someone going independent would be helpful.

thanks

[quote=csmelnix]Not to get into a back and forth with this on RJ V LPL.  The bond info on the reply to me was wrong.  LPL absolutely doesn't mark up their bonds - your info is wrong and the person who came to RJ from LPL is feeding you bull.  The ability to buy bonds at LPL is from the desk top straight from the street.  On the fee based comments indyone - you are dead nuts.  No other b/d out there has the sales support, platforms, and openness to their platforms as LPL.  LPL also has just lowered ticket charges in their SAM platform; again, one profit center allows them to do that; RJFS can't do that.  Also, it is a well known fact that independent models margins are extraordinarily slim; RJFS is the least profitable of all the businesses they operate compared to the bank channell and RJ advisors.  And from a profitability stand point, is ahead of only the bond desk and investment banking (due to the decrease of that business over the last 3 yrs).  Even if the other argument was correct, there is no getting around the other centers still competing for the corporate dollars v the LPL model.  Which will lead me to my last point; indyone, when you go independent, do you wish to be known as Raymond James Financial or do wish to brand your name as who your clients are doing business with?[/quote]

Sorry to belabor this, but I can't ignore the innacuracies and/or false impressions of this post. 

Unless LPL has changed the way they do bond business within the last few months, they DO mark up their bonds.  I got this direct from an LPL rep who approached me about joining my firm.  But, as I suggested before, let the proof be in getting bond prices from both firms at the same time.

Re fee business, we obviously have different opinions. Again, visit the respective firms and delve into the depth and breadth of what they're each providing.  RJ has over 120 people supporting their fee business alone, and that's without including the research analysts that design the model portfolios for RJ's asset allocation programs. 

Re profitability of RJFS versus other areas in the firm, I don't know the bank channel profitability, but contrary to what was stated, historically RJFS has produced higher bottom line margins than their NYSE sister company (RJ&A).  It is clearly not the "least profitable of all businesses they operate".  But, while I totally agree that all independents run on fairly thin margins, if someone was concerned about the available financial resources of a company,  would you want one that was totally dependent on the thin margins of independent contractors (LPL) or one that also had other profitably business units that contribute to the bottom line (RJFS)?

cs, what in the world do you mean by your final point question about who do want to branded as???  You seem to be implying that at RJFS I can't use my own business name; that's totally wrong. RJFS is no different from LPL.  At both firms you can brand with LPL, RJ, or your own business name.  While I'd guess more LPL reps brand with their own name than at RJFS (because the LPL name has no public awareness value), whatever you choose is up to you at either firm.  Having said that, if anything I'd rather be with a broker-dealer (even though I use my own business name) that has name recognition (RJ) than a b/d that has no public visibility (LPL).  It's a marketing truism that, all things being equal, a consumer (investor in this case) will pick the company they've heard of.  Having the RJ name, the national RJ advertising, RJ Stadium, RJ analysts regularly appearing on CNBC, etc., and it's public company stature behind me has been an invaluable asset to building my business.  That is a clear weakness of LPL for those who care about such things.  If you've been with LPL for any period of time you know that is a competitive concern of theirs.  They even had an aborted national ad campaign (full page WSJ ads, etc.) several years ago to try to get some name recognition.  That irritated LPL reps tremendously, in great measure because LPL ran that ad program and they directly charged all their reps with the cost of it.

Indyone, re your comment about not wanting to take the time to visit both firms --  You're making a decision over what you should view as the last b/d change of your career.  To not invest the time to do thorough due diligence and visit both firms doesn't seem the wisest thing, for either you or your clients.  Just relying on a recruiter visit to you is not enough to give you what you should need for that decision.  Recruiters are salesmen.  If one of those just happens to be a better salesman than the other (or less candid or more missleading than the other), you may end up making the wrong decision. 

Looks like everyone is recommending two due diligence trips, which I know is the correct answer.  I do intend to only do this once so I want he decision to be right.  Duke, you counter with some valid points, although I continue to remind myself that both you and CM are naturally biased toward the BD you are with.  Good point on name recognition...Raymond James definitely wins on that point, although to me, name recognition of the BD is waaaaaay down the list.  I can't think of a single instance in competing with other advisors where "all other things have been equal".  Either I didn't have a chance or they didn't, depending on the situation.  It's rarely close, and even when it is, my experience is that it's usually the rep rather than the firm that breaks the tie.  Sure, name recognition could win me an account, but I really think those opportunities will be very few, particularly given the set-up I am looking at.  Also on the flip side, if your firm screws up like many of the bigs have recently, name recognition can be a real negative.  Bottom line, I'll use my name anyway, so I'm pretty indifferent about the name recognition issue.

Thanks for another informative post...now I need to try and schedule two trips out of the office (sigh)...

Indy, I don't disagree with your name recognition points at all, and understand that may not mean much to a lot of people.  So, only speaking from my personal experience, I've found it has helped in a number of situations.  It may be entirely different with you and others.

It's been valuable on a number of occasions to more quickly establish initial credibility with a prospect.  Ultimately I may still have gotten the opportunity to prove myself to be able to successfully compete for their business, but I clearly have felt the RJ name got me to that point quicker.  I felt the name was also invaluable in making my ACAT transition to RJ quicker ten years ago (even when the name wasn't so nearly as visible as it is today).  When I told my clients I had left the well known wirehouse to establish my own independent practice, they all were naturally inquisitive about who I'd be with and who'd be holding their assets.  Even if some didn't know the RJ name at the time, I was able to confirm the substance of RJ with annual reports, etc. since it's a public company.  Ultimately, I'm sure I'd have gotten my ACATs over, but based on how often the question came up about my new b/d, the ease with which I was able to overcome any potential objections was readily apparent.

At this stage the vast majority of my new assets are through referrals, so actually the RJ name is probably not as important as it once was for me.  But, I still get a kick out of talking with clients who say, "hey, on TV on Sunday I watched the game at "our" stadium".  I also get some mileage in emailing my clients when an RJ analyst is scheduled to appear on CNBC, etc. so they can see what they have to say.

Now, get busy clearing your calendar for those two visits!

Duke

Thanks for the insight. How long have you been with RJ? (ten years?) What level of production are you at and how does your production break down.  Thanks

 does anyone else have a good or bad experience to share about either firm???

[quote=Indyone]

I am deep into the due diligence process of trying to decide which way to go as an independent.  Thus far, I have seen a lot of good things from both BDs, but am curious what posters with experience (or research) with both firms found out for themselves.  As near as I can tell, LPL looks to have the superior fee-based platform and a better payout (84.4% vs. 81.2% on our hypothetical production run)while Raymond James has a nice mid-cap research team and a broader range of services, such as investment banking and a bond inventory.

Any insight into this comparison would appreciated.

[/quote]

Indyone,

Is Raymond James even able to hire anyone right now?

Take a look:

http://www.bizjournals.com/tampabay/stories/2005/05/02/daily 38.html

Part of the article says:

"In addition, the division of enforcement has asked the judge to appoint an independent consultant to review Raymond James' compliance polices and procedures, and to suspend the company from hiring new financial advisors and opening new offices until the recommendations of the independent consultant have been implemented."

Oracle

I think RJFS is open to the indy channel, BPD.

That’s what I think.  Apparently they can still set up independents, as they are recruiting several of us who are looking, and even offering up-front money and other perks.  I’m a little surprised about offering independents up-front money when there are essentially no strings attached.  Obviously, it’s not anywhere near the levels offered to captive brokers, but I didn’t expect anything in that area, so it’s a nice plus.  It’s apparent that I’ve been out of the loop as to what was available, but until I got fed up with the bs from my current employer, I had no interest in seeing what was available…

oracle

thanks for the insight.  Had no idea that Rj may not be able to hire.  If anything this could help in my negotiations. I do not like the fact that this would be the first things my customers would have to deal with after they transfered.  What b/d's are you looking at?  where are you currently wirehouse, bank etc

Indytwo,

Try:

http://www.edwardjonesopportunity.com/ir/en_US/index.html

You must have misunderstood, BPD.

Indyone is trying to advance his career.

Starka,





So what’s your recommendation?



BPD

wow i would never work for ed (sell what we tell you to)Jones. 

In no way, shape or manner would I consider EDJ at this point.  Too many restrictions, tech stinks, all the reps arund here sell the same stuff.  When someone brings me a Jones statement to review, I know what's going to be in the portfolio before I open it up.

Starka, you're dead on...I want to ADVANCE...

Indyone and two,



Why don’t you try Starka’s firm?



BPD

hey candybar can you buzz off you have no knowledge of indy you drank the coolaid and your brain must be warped to stay at edj

Indytwo,



Who do you work for now?



BPD

BPD,

I'm glad you're happy with EDJ.  From my research and desire for independence, I know it's not for me.  If Starka is with RJ or LPL, there is a very good chance I'll try Starka's firm.  I really don't want to turn this into another "debate the merits of EDJ" forum, so I'll ask politely for everyone to keep this on topic discussing the merits of LPL & RJ.

and yes, I realize that I already violated this by telling y'all why I wouldn't work for Jones...sorry...won't happen again...

Hey Starka...who's your BD?

Indyone,



Starka is so proud of his BD he won’t tell you or anyone who it is.



If you’re going independent make sure to read the article in the April 05 On Wall Street. See page 41. It has a good break down of the true costs of going independent. Their break down showed a 55% payout from 90% after all costs.



It was an eye opener.



What don’t you like about your current firm?



BPD

pretty much everything...and no one will listen to me, so I decided that the only way to run a business my way is to run my own business.

...and not that money matters, but 55% would be a dramatic improvement over what I'm looking at now...and I'm pretty confident that mine will be a much lower overhead office than that...

What kind of business mix do you have? How many assets?



BPD

see my post on page 1…already answered that one.

Indyone,

Are you looking to do fee based?

http://sev.prnewswire.com/banking-financial-services/2005042 8/DCW03427042005-1.html

You undoubtably have seen this but just in case you hadn't.

And LPL has some challenges with revenue sharing on their annuities:

http://www.kglg.com/case/case.asp?lngCaseId=4231

Not a big deal, but may effect your success of your clients following you.

Oracle

Oracle, yes I do a fair amount of fee-based.  Good posts and good information.  I’m glad to see some others getting involved in the discussion and tell us some things that the recruiters don’t.  I was aware of RJ’s fee-based issues and I think they’ll get them resolved in a satisfactory manner so I’m not overly concerned with that.  I hadn’t heard about this issue with LPL, although I’m not terribly surprised.  I would be more surprised if there was a BD that hadn’t tried to pull any funny stuff in the past.  That brings me back to an earlier point…I will private label my business…it won’t be called LPL or RJ.  I don’t want anyone’s negative press bringing down my reputation, so the further they are in the background, the better…

That's VERY interesting about LPL, considering the fact that LPL is not a publicly traded company to the best of my knowledge.  How, I wonder, can nonexistent shareholders sue?

Sounds like ambulance chasers to me.

[quote=BigPayDay]Starka,


So what's your recommendation?

BPD
[/quote]

I don't know anything about Indyone, other than what was posted, so how can I make a recommendation?  The one thing I can say for certain is that if Indyone has an indy mindset, as his name would imply, the one place he DOESN'T belong is Edward Jones.

Oracle, re your post about RJ being able to hire.  That is just a proposal from the SEC to the court in dealing with the Herula case (a rogue RJFS broker in Rhode Island).  It does apply to RJFS (no other part of RJF), but is only the SEC recommendation.  It is not in effect, and may never be depending upon how the judge ultimately rules on the case (which I think is expected sometime in July). RJ is obviously vigorously defending the whole matter in court.

Also, Oracle, re the fee-based issue at RJ -- this only dealt with a fee-based brokerage account that RJ began offering in 2001.  That's a straight "fee in lieu of transaction" account that RJ chose to offer to complement all its other fee-basd biz.  It's not an advisory account (i.e., where both transactions and advice are being rendered).  Regulators have taken the position that these brokerage accounts (not advisory accounts) are to be viewed as straight transaction accounts, and if a client would have been better off paying commissions than paying a fee, they were innappropriate (regardless of whatever other value the rep was bringing to the table).  So, RJ decided to reimburse the affected clients $138,000 and just stop offering the brokerage account entirely.  Clients in these accounts are being given the option of going to a regular commission account or convert to RJ's existing advisory accounts.  The vast majority are now in the advisory accounts. The point to all this, is that RJ is still very much in the fee-based biz as always.  RJ was the first b/d to be hit with this issue, and several other firms (including the wirehouses that started these "fee-based brokerage accounts") are being investigated as well.  

Here's a good article from "On Wall Street" mag that addresses the regulator vs broker-dealer issues with fee-based brokerage accounts:   http://www.onwallstreet.com/detail.cfm?page=/pubs/ows/200506 01002.html

[quote=indytwo]

Duke

Thanks for the insight. How long have you been with RJ? (ten years?) What level of production are you at and how does your production break down.  Thanks

[/quote]

Yep, 10 yrs -- actually will have my 11th anniversary this summer.  Most is annuitized -- 25% trails, 45% fee-based (SMAs mainly, plus mutual fund/ETF wraps, & some managed futures accounts).  Rest is about 10% ins/annuities, 5% alternative investments, & balance is mostly stocks & bonds on commission.  Would rather not give specific gross, as someone at RJFS could come close to identifying me & I want to preserve anonimity.  But, I'm above $500k & below $1mm.

For those of you at either firm, I would appreciate your honesty and candor in this regard...what is the one thing that you'd really like to have that you don't have?  Don't worry about shooting your firm in the foot...think of it as providing a public service to those of us trying to make a decision.

Now be honest...I know neither firm has everything, OK?!!!

[quote=Oracle]

Indyone,

Are you looking to do fee based?

http://sev.prnewswire.com/banking-financial-services/2005042 8/DCW03427042005-1.html

You undoubtably have seen this but just in case you hadn't.

And LPL has some challenges with revenue sharing on their annuities:

http://www.kglg.com/case/case.asp?lngCaseId=4231

Not a big deal, but may effect your success of your clients following you.

Oracle

[/quote]

Clearly the attorneys in the case cited above re LPL are a bunch of MORONS!  They've attempted to solicit participation in a shareholder lawsuit against LPL.....but....errr.....LPL isn't publicly traded!  It's privately held.  How do you file a class action lawsuit by 'recent purchases of LPL securities' when the thing isn't traded?  Help me out here???

Thankfully somebody else mentioned this but I have to add in.  LPL is not publicly traded so no shareholders are suing LPL.  In terms of the VA suit - LPL was dropped from the suit approximately one month ago. 

New news that's accurate however is RJ has dropped it's fee in lieu of commission platform due to continued abuses by it's advisors and their inability to properly supervise.  Not my words but those of the regulators. 

The one thing we don't have that I wish we did?  Hmmmm.....; From a technology standpoint, we can do block trading but it's a bit labor intensive to trade across multiple accounts.  For example, if I had say 30 accounts that were in a specific risk/model category and all held say 8% GE stock.  Then the value shot up or down and I want to trade it/buy it to bring it back in line to the 8% it's not a matter of point and click to do it across mulitple accounts.  From a ticket charge cost stand point and time stand point it's not as efficient as it could be.  My understanding is there is an initiative at LPL now to build this out for release by mid-2006.  Hopefully it will. 

On a side note indyone - you mentioned you would be moving from a bank, correct.  One thing to really research is to identify your top production clients.  That is where you should focus on for moving assets.  A goal should be to move 80% of your production not your book.  Hey, one other comment too, on the 55% payout after expenses; that figure is so B/D dependent but more importantly, under the indy model - you control that costs.  There are fixed costs obviously, but beyond that, you get to determine how you spend the money, in areas that benefit you v a firm.  So for the wirehouse and jones people to point that out is a joke.  No indy b/d takes 60 cents on the dollar and spends as they determine, we take 10 cents on the dollar and let you spend the rest as you determine.  Like you said pretty much in your reply to that, the fact that you have the freedom to make those choices is the attraction to being independent.

CM, I've seen a tech demo on LPL...and will soon see one on RJ also.  The LPL tech was awesome...much better than what I am used to. Thanks for the honest feedback on the platform.  Switching gears, I posted the following on the legal forum, but thought I might get more feedback here since the traffic is better...anyone out there...feel free to comment, and thanks in advance for any constructive opinion/advice...

I know that much of this post is a re-hash of information that has been posted on these forums in the past, but it is a summary of what I have found during my due diligence, along with some of my questions that I would appreciate some feedback on.

I started in the bank channel a bit over five years ago, and on the third day of my employment, I basically had a non-compete thrust in front of me that I was asked to sign.  While I had slight misgivings about the general nature of the document, I was grateful for the job opportunity, never dreamed of the day when I would be dissatisfied, and was fearful of the possible consequences if I refused to sign the document.  Of course, like almost all naive rookies, I signed the non-compete.  Where I retained the intelligence to keep a copy, I have no clue.

Now that I am very unhappy due to several adverse changes in the compensation schedule, and a bunch of mandatory UNPAID training days, I am looking at this stupid document and cursing myself for ever signing it.  Not only is there a one-year nonsolicitation clause, the firm went one step further and put a non-compete clause in that essentially completely bars me from being in the business in my current geographical area.  So unless I want to either move away or completely change careers, I feel helplessly locked in with my current employer.  I can understand the non-solicitation clause to a degree and I have no intention of sending out a form letter to all my clients saying dear clients, I have moved out.  Please come in and see me if you want to move your accounts to my new firm.  On the other hand, I am struggling with the fairness of a company telling me that I cannot make a living unless I move away or change careers.

After spending some time doing due diligence, I have reached several conclusions based on feedback from the firms I am looking at.  First of all, most everybody is in agreement that the clause barring me from being in the business in the same town is pretty much non-enforceable.  The comment I keep getting is that the firm cannot tell me that I cannot earn a living.  Apparently, the courts in the past have taken a pretty dim view of these clauses and elected to bar enforcement.

The second opinion that I keep hearing is that while I cannot solicit former clients for one year, my current (soon to be former) firm cannot prevent clients from coming to me and requesting the move.  Neither can my current firm prevent me from advertising in the local newspaper, or having an open house, either of which can certainly generate requests from former clients to move to my new firm.

Finally, and probably most obviously, my current firm cannot prevent me from chasing after new prospects that were not customers when I leave. So, if nothing else, it appears that these folks are fair game from day one.

Some questions I still have that I'd like for posters to address are 1.  What are my actions limited to if my previous firm files a TRO?  Does that completely stop me from all business or just transferring clients over from the old firm?  2.  Given my overall situation, if I follow the advice I've received thus far, what is the probable outcome of any action brought by my old employer?

Naturally, I am concerned about being able to make a living during the first year and yes, before you even ask, I will be consulting a securities attorney before I effect this change.  I am intersted in your opinions and if I am mistaken, your corrections, and of course, all constructive advice is appreciated.

Did you know about the "noncompete" contract before you started with the bank? If not, you might have an out.

In my situation, I beat back some New York lawyers who wanted me to fork over training expenses. I interviewed with Dean Witter 3 times in the early '90's, and was hired. I quit my bank job as Assistant Bank VP, sold my house, and moved across state. My first day of employment at DW, they shoved a "noncompete and reimbursement of training expenses" contract in front of me for me to sign. No one had ever mentioned such a contract during the 3 interviews. I had never worked where an employment contract was required. I had to sign, what else could I do?

I left DW a couple of years later and one of their NY lawyers called me to say they wanted $25,000. I let them have it. I explained what happened and said that I was considering suing them for not mentioning the existence of an employment contract during any of my 3 interviews and that such a contract was a condition of employment. 

When the lawyer replied, "Well, you didn't have to sign it.", I told them that I had quit my bank job, sold my house, and moved across state, what the hell else was I supposed to do? The lawyer got quiet for a minute, then said thank you and hung up. That was 10 years ago.

You don't mention it, but if the bank did not mention the existence of an employment contract, during your interview(s), you might have a case of "having to sign the contract under duress". The "duress" being you had already quit your previous job and had no other choice but to sign the contract. Also, you might charge that the bank negligently or fraudulently omitted telling you of the requirement of a noncompete contract, prior to your employment.

Thus, if you weren't aware of the contract prior to employment, you might have a good case for getting out of it. (It worked for me in getting DW's attorneys off my back!) Consult a lawyer, in any event.

LPL’s technology is pretty impressive so far, although my experience is limited.



I never looked at RJ too closely because I found their recruiter to be
rather arrogant, and wasn’t entirely comfortable with the fact that
they had a decent sized investment banking business.

Doberman, I had a couple of interviews prior to taking the position and no, I'm confident that a non-compete was never mentioned prior to my employment, although we could get into a he-said-she-said argument on that one.  At one point in my thinking process I thought about the possibility of arguing this point, but I wasn't sure how much weight it would carry.  All I know is that I really didn't feel like I had any choice when the request was made for me to sign the non-compete as I didn't have any other job to go to.  I'll bet in practice that unless the prospect has a non-compete at his/her current firm, many prospective employers fail to mention the infamous non-compete in the interview process...it's not exactly an enticement to join.

I also thought about the fact that I never received anything (other than my continued employment) in exchange for signing the non-compete, so you could argue that there was no real consideration given to me.  Worse yet, the grid has changed since I started with the payout getting thinner.  That too, seems like a reason that the non-com shouldn't stand, but perhaps I'm just getting emotional.

Joe, thanks for the post.  I'm curious who your RJ recruiter was...maybe you could PM me on that?

[quote=Indyone]

Doberman, I had a couple of interviews prior to
taking the position and no, I’m confident that a non-compete was never
mentioned prior to my employment, although we could get into a
he-said-she-said argument on that one.  At one point in my
thinking process I thought about the possibility of arguing this point,
but I wasn’t sure how much weight it would carry.  All I know is
that I really didn’t feel like I had any choice when the request was
made for me to sign the non-compete as I didn’t have any other job to
go to.  I’ll bet in practice that unless the prospect has a
non-compete at his/her current firm, many prospective
employers fail to mention the infamous non-compete in the
interview process…it’s not exactly an enticement to join.

I also thought about the fact that I never received anything (other than my continued employment) in exchange for signing the non-compete, so you could argue that there was no real consideration given to me.  Worse yet, the grid has changed since I started with the payout getting thinner.  That too, seems like a reason that the non-com shouldn't stand, but perhaps I'm just getting emotional.

Joe, thanks for the post.  I'm curious who your RJ recruiter was...maybe you could PM me on that?

Trying to answer on the TRO question.  Indy Onel; whoever you are talking to as a recruiter for LPL have them get you in touch w/ LPL’s legal team to review your contract.  They will give you a very detailed approach to take with your transition and transferring of clients that will keep your firm from getting a TRO and also avoiding the non-solicitation and non-compete portions of your contract.  If you follow their approach you will be fine.  Not saying it won’t be bumpy because it may, but from a legal stand point; your bank will have no recourse to pursue you, let alone get the TRO.  Also note, just because those documents are signed, they just may not even decide to pursue you at all anyway - doubtful??? but maybe.  Bottom line is, for a period of 3 months it may be a pain, but the life time satisfaction you’ll have of running/owning your own business will far exceed that pain and make it all worth while. 

 I know I shared this on another post. But I am with LPL and am very satisfied with everything they do! I am moving the majority of my clients to fee base as most of you are to, but I also use Dimensional (DFA's) I do not think RJFS can use these?

 I would also consider going the RIA route? If things changed at LPL! 

I've now visited RJ and have an LPL visit in the works.  For anyone curious, RJ was very impressive...excellent technology, great research, excellent financial planning department, very nice bond desk and hospitality that will be hard to beat.  About the only negative I could come away with was my meeting with the regional sales manager.  I felt like he had some doubts about whether or not I had enough revenue and AUM to make it with RJ.  While my numbers now are more than sufficient for their indy platform ($375K/year), I almost got the impression that he felt like as a bank channel rep, I wouldn't be able to bring enough of my assets with me to cover their $200K minimum production target.

I'm pretty confident that I'll be fine, but I didn't like being challenged (just my ego I guess) and that was a negative in an otherwise solid visit.  Assuming the visit with LPL goes very well also, this is shaping up to be a very difficult decision...stay tuned...

Great discussion here. I am considering RJ, LPL and Commonwealth. Can anyone compare Commonwealth with the first two b/ds? Thanks.

[quote=Indyone]

I've now visited RJ and have an LPL visit in the works.  For anyone curious, RJ was very impressive...excellent technology, great research, excellent financial planning department, very nice bond desk and hospitality that will be hard to beat.  About the only negative I could come away with was my meeting with the regional sales manager.  I felt like he had some doubts about whether or not I had enough revenue and AUM to make it with RJ.  While my numbers now are more than sufficient for their indy platform ($375K/year), I almost got the impression that he felt like as a bank channel rep, I wouldn't be able to bring enough of my assets with me to cover their $200K minimum production target.

I'm pretty confident that I'll be fine, but I didn't like being challenged (just my ego I guess) and that was a negative in an otherwise solid visit.  Assuming the visit with LPL goes very well also, this is shaping up to be a very difficult decision...stay tuned...

[/quote]

Indyone, don't be too concerned about the RJ mgmt guy's discussion with you, altho I can understand why you were a little turned off by him questioning your ability to successfully transistion your book. 

RJFS tends to take a very "consultative" approach to recruiting.  They're not trying to be all things to all people, or push to "sell" someone on coming there, or being independent when that may not be what's best for the rep.  They've enjoyed a really high retention rate &, in part, that comes from making sure that reps will find the appropriate fit.

The fact is that bank reps CAN have difficulty in bringing over assets depending on how the rep does business.  If the rep is primarily an "order taker" and hasn't established sound client relationships, those clients are staying with the bank for the most part.  But if the bank rep has a relationship-based business, knows his clients, etc. then the rep should be no less successful than a rep coming from Merrill, etc.

So, while I can see why the mgmt guy may have irritated you, by questioning you about your business, etc. he was actually probably trying to do you a favor.  Bank reps in particular should carefully evaluate how their business will transition.  I could be wrong, but I think this guy was just trying to make sure sure you had done that.

[quote=fargo]Great discussion here. I am considering RJ, LPL and Commonwealth. Can anyone compare Commonwealth with the first two b/ds? Thanks. [/quote]

I don't know much detail about Commonwealth, but everything I've ever heard is that it is a high quality firm like RJFS & LPL.  Joe Dietch (sp?), its chairman, is apparently a visionary type of guy and has instilled a pretty strong supportive culture.  It's obviously much smaller than either RJFS or LPL, so can't have all the resources -- but it may have everything you need.  It's not self-clearing like RJFS or LPL, which is not that big of a deal for some, but clearly doesn't give the hand's-on operational efficiencies of having a b/d that clears for itself.  Reps seem to be happy there (or at least the few I've run across at various meetings).

I'd certainly put them on my short list if I were looking.

Fargo, my guess, based on the research that I have done, is that RJ and LPL are the most robust firms available for Indys.  If you don’t need the broadest product offering and a firm with the most muscle and/or biggest legal departments, Commonwealth is probably fine, although I’ll admit my research on CW is pretty limited, as I knew right away that I wanted the biggest and the best.  Every wholesaler I asked told me that LPL and RJ appeared to be the 800 lb. gorillas of the independent rep B/D industry.

Duke,

I understand the issues with client retention among bank channel reps, and I've heard all the insults about bank reps being lazy, poor producers, people that couldn't make it in the wirehouse, etc., etc., etc.  I'll freely admit that I probably wouldn't have made it in the wirehouse arena, as I just don't enjoy the cold-calling sales part of the business.  I much prefer the financial planning side of the business and that style works well for me.

I'm now to the point where I can pick and choose who I work with and I don't view clients as transactions.  I intend to prune my book as I leave and it will shrink further as a few clients will choose to stay with the bank for one reason or another.  I'm certainly looking forward to getting rid of the short-term CD rate shoppers, clients who are rapidly depleting their retirement accounts, people (I can't even call them clients) who ask how much the commission is on every transaction, and those who freak out every time the Dow drops 50 points.

The pipeline looks very promising and I'm OK with the RJ sales manager playing devil's advocate here, but I think the tide is changing, at least in my market.  Banks are wising up and hiring better reps instead of promoting people ill-suited to the industry as they have in the past.  Who knows, the sales manager at LPL may be an ___hole too...I'll certainly leave RJ in the mix...

Indyone, my comments didn't mean to deminish you as a bank broker, if you took it that way.  So, sorry about that if that's the way it came across.

There are many very professional, competent, high-end reps at banks who run their businesses no different from if there were at a wirehouse, etc.  My thoughts were just to zero in on those platform bank reps who do operate primarily as order-takers.  They are the ones who are fooling themselves if they think they're taking much of their book with them.

By the way, I don't know if LPL has changed its HQ visit agenda recently, but in many ways it was/is much "slicker" than RJ's.  It was a very packaged sort of dog & pony show with formal presentations, while RJ's was one of multiple informal meetings with various departments running all around the firm.  I mention this only because the "packaging" of the LPL visit is impressive, but seemed like more of a sales pitch.  RJ's allowed for more getting into the nitty-gritty of the firm's various departments.  I mention this only to be careful in evaluating form versus substance when you compare your two visits. 

In particular, LPL's tech presentation was really slick, but as with most formal presentations it glossed over much of the reality.  I know RJ's tech presentation is pretty informal, but it shows you the actual tech as you might be using it.  So, if LPL's tech presentation is still more of a prepared semi-canned presentation, I'd suggest you have them launch and navigate their various modules from scratch, just as if you were doing that, and ask them a lot of "how do I do this?" questions.  That'll give you a much better realistic appreciation for how the two tech platforms may be different.

Duke,

I appreciate your feedback amd no, I didn't take your commentary personally.  I do believe that there are bank reps who can't for a variety of reasons, make the transition, and obviously, I don't include myself in that group.  The only point I was trying to make was that I feel like the industry (not necessarily you) has unfairly lumped most bank brokers into a stereotyped group of lazy order takers.  I honestly do feel like the at least several banks have learned from earlier mistakes and do a much better job of recruiting quality now then they did when I came into the industry (I like to consider my bank one of the lucky ones).

Also appreciate the feedback on insight on the office visits.  With your comments in mind, I feel like I can separate the hype from the actual platform and come away with a pretty good real life comparison.  Thanks again...

Have now completed both visits and have some interesting takeaways.  It appears that Raymond James' compliance is a bit stricter than LPL's.  I don't know if that's good or bad to be honest, but it seems a bit tough in places, probably due to the Herula mess.  Also, the technology in many areas seems remarkably similar (and in both cases, very solid), probably due to some personnel migration between the two firms.

I'm in teh process of listing all of the pros & cons of both firms and trying to come to a conclusion.  Next step is calling references...I asked both firms for three references that have come over from the other side.  I'm hoping that these conversations are enlightening and can prove decisive. 

The transition package seems to give RJ a slight advantage with RJ paying out unrestricted cash and LPL providing benefits with some strings attached, such as blotter credits and start-up expense reimbursements.  On the other hand, LPL looks to have a slightly higher payout and lower E&O cost.  Both firms offer start-up loans equal to 10% of trailing 12 production.

Bottom line is, despite three months of research and two very nice due diligence trips (take 'em if you get a chance), there is still no clear-cut winner.  The good news is, it looks like I could succeed regardless of which partner I choose...stay tuned...

[quote=Indyone]

Have now completed both visits and have some interesting takeaways.  It appears that Raymond James' compliance is a bit stricter than LPL's.  I don't know if that's good or bad to be honest, but it seems a bit tough in places, probably due to the Herula mess.  Also, the technology in many areas seems remarkably similar (and in both cases, very solid), probably due to some personnel migration between the two firms.

I'm in teh process of listing all of the pros & cons of both firms and trying to come to a conclusion.  Next step is calling references...I asked both firms for three references that have come over from the other side.  I'm hoping that these conversations are enlightening and can prove decisive. 

The transition package seems to give RJ a slight advantage with RJ paying out unrestricted cash and LPL providing benefits with some strings attached, such as blotter credits and start-up expense reimbursements.  On the other hand, LPL looks to have a slightly higher payout and lower E&O cost.  Both firms offer start-up loans equal to 10% of trailing 12 production.

Bottom line is, despite three months of research and two very nice due diligence trips (take 'em if you get a chance), there is still no clear-cut winner.  The good news is, it looks like I could succeed regardless of which partner I choose...stay tuned...

indyone

I recently made the move to lpl and i can tell you that it has been a great experience so far.  I have ready your posts and i think its time for you to make a decsion.  Flip a quater,  pick a number, you've researched this to death now make the call and run to freedom

Take a look at Century Securities

www.centurysecurities.com

Kusamba, you have three posts…all the same.  I’m not personally interested in another due diligence run, but I’d like to know your affiliation…are you employed by Century?  If so, you need to disclose that.  This is not a thread for spamming us with your employer’s ads…this discussion is supposed to be about a comparison between Raymond James and LPL.  If you want to go another direction, please start your own thread and quit hijacking mine!

Indyone, you said that Raymond James offered unrestricted cash. Is that a small upfront bonus to transfer?

DT,

Yes, it's an upfront bonus.  I was told 3% of trailing 12, but that's their first offer and I've heard of 5% offers...probably for higher production than my level though.  At any level, up-front money for an independent is a pretty good deal, in my opinion.  It certainly wasn't a factor in my decision to leave, but at the same time, it's a nice bonus.

IndyOne, I'm glad you eventually decided to do both due diligence trips.

There's probably not too much bottom-line difference in economics between the two firms by the time you factor in everything.  Payout at LPL is a bit higher on packaged products, but RJ is a bit higher on general securities.  As I recall, LPL is higher on tech costs (only $50/mo at RJ plus costs for Reuter's if you need it).  They also seem to do more nickle & diming on costs than RJ.  RJ's monthly fee of $250 covers e&o and most other stuff, while LPL has separate E&O, monthly fee, etc.  I don't know if they still do, but LPL hit reps with about 35 bps per month covering NASD and SIPC fees.  The point is, by the time you look at everything they're probably reasonably close, with the primary determining factor being your product mix (which may well change in the future).

Great idea on references.  Try to make sure they each give you names of reps who had been OSJs at the other firm, and not just a rep.  Also, if any of the former RJ references now with LPL are lower producers (say, under $200k) you might take their opinions about RJ with a grain of salt.  As you probably know, RJFS has spent the past couple years "counseling out" lower producers and closing branches that don't meet current minimums ($200k).   I'm sure many of them went to LPL, where the branch minimum is only $125k.  So, they may have some hard feelings about getting canned by RJ for low production.

As I've said before, you probably won't be unhappy with either choice, so this may end being a gut decision unless your pro/con list based on your particular needs/objectives is clear-cut.  As a part of your decision process you might check the temperature with a few of your "A" clients (e.g., do any of them have any preference on which firm is handling their securities; give them an RJF annual report and the LPL financials.) 

Whatever the final decision you'll sure be happier as an independent.  Thanks for sharing your process.  

Duke,

The references were very helpful and insightful.  One even talked to me from his cell phone on the putting green!  The bottom line is, while they gave me some small insights that I hadn't previously heard, none of them really bashed his/her previous firm.  I got the impression that the transitions from one firm to the other were, for the most part, amicable.

In the end, I made a very difficult decision to select one firm over the other.  Factors that decided it for me in the end were more related to the fit for my business rather than bells & whistles.  I chose based on technology that I was very attracted to.  I chose because of the conversations that I had with my prospective sales managers at each firm (this one was not even close...and my recruiter at the losing firm comfirmed that I was not the first candidate that cited the sales manager as a deciding factor).  I chose because of a major difference in compliance for my business model (working with local CPAs and revenue sharing in some instances).  I also chose because of perceived better assistance working through the non-compete (one firm told me that I would need to hire my own atty, the other indicated that we could speak to in-house counsel for some advice.  They also indicated that they would hire an atty to defend both the firm and me if necessary, and we could share atty fees, at least to a point).  Finally, I chose my firm because a friend who lives nearby was already there.  Naturally, this makes it easier to compare notes, cover for each other's vacations, etc.

In return, I realize that I am giving up some advantages by selecting one firm over the other, and I certainly don't believe that the firm I selected is the best fit for everyone, and it's obvious from this forum, that many people have selected to partner with Raymond James and likewise, many have chosen to partner with LPL.  If I ended up unhappy with the firm that I chose, I'd go to the other without hesitation (I can overcome the sales manager...I'd just ignore him).

Anyone figure out which way I've gone yet? (the guy I PM'd is ineligible to guess...and you know who you are)  Just for fun, I'll let you guess for a day before I come back and reveal the decision.

Now I just have to get about a million things done before my transition date...stay tuned...

Based on your comment about the "sales manager" and your earlier post that you didn't hit it off with the RJ guy, I'd say you're going to  LPL. 

But, if I'm right on that, some of your other comments confused me.  For example you say you'll do a lot of CPA referral biz and that was a plus for the firm you chose.  If you didn't choose RJFS, then you may be missing something.  RJ was one of the first firms in the industry to establish a formal program to share revenues with CPAs, lawyers, etc. (called their "Professional Partners Program").  I can't imagine what advantage, if any, LPL would have in this area.  If you have doubts, you might ask your RJ recruiter to put you in touch with one their OSJs in the Dallas area who's primary focus is the CPA referral program (and coincidentally he came to RJ from LPL about 5 or 6 years ago).

Also, if I understood you correctly, your firm of choice apparently gave you greater comfort on the legal support if you faced issues with your non-compete.  But, what you describe certainly seems to apply to RJ (and may to LPL also).  Neither firm can have their counsel directly represent you, because you're an independent contractor.  (If one of the firms told you you didn't need your own counsel, they lied and I'd reconsider that firm.) So, for each firm, you should get your own counsel if needed. RJ does make their in-house counsel available to review your contract, give you advice, etc. (and will work with your counsel), but they can't represent you.  Whoever told you that you could share outside counsel (and share the costs) is at best giving you bad advice, and at worse is lying to you.  If you're legally attacked for violating your contract (and the b/d is named as well, which normally isn't the case), you should still get your own counsel, because your interests are different from those of the b/d.  To help with outside counsel, RJ has a list of experienced securities attornies around the country that they've negotiated a great fee arrangement for their indy reps.  And, as a part of their transition assistance they'll help with legal fees.  My point is, if you picked LPL for better legal support, I think you either didn't get a clear picture of what RJ does or the LPL recruiter puffed a bit.

Re technology, that's very much a personal decision.  RJ's is superior to LPL in terms of sophistication and the bells & whistles, but LPL's is very good, and for what you need it may well have come across as being more comfortable. 

IndyOne, based on the above, if LPL was your choice I'd guess your decision was based more on subjective feelings (you didn't get along with the sales guy, your local friend at LPL gives you some comfort, etc.) than objective analysis, and that's obviously fine.  But, I have to admit that my great positive experience at RJ gets me riled up when someone doesn't come here, particularly when they cite some elements/perceptions about RJ that aren't entirely accurate.  One of the reasons I'm here is that I caught my LPL recruiter in at least one lie about RJ, and I couldn't be with a firm that started out the relationship that way.  But, that's my issue.  As I've said before, you can end up being happy at either firm, and you'll never look back with any regret on having made the decision to go indy.  Best of luck with your transition!!

Duke,

You guessed it right...and obviously it didn't take a lot of effort given the clues I left behind.  I'll start addressing your comments by telling you that yes, a lot of my decision process was somewhat subjective.  It was necessarily so given the fact that most of the objective comparisons (such as payout) were very close in measurement and did not really indicate a clear winner for me, so yes, company feel had a lot to do with it.  As far as recruiters went, both companies had excellent recruiters and I really didn't come across a lot of bad-mouthing about either firm.  Both recruiters did a good job differentiating their B/Ds, and lined up excellent visits.

I'll have to tell you, the professional partners program is under some serious scrutiny at RJ.  Their compliance people sat right across the table at my RJ visit and absolutely told me that this was the case, as there is a concern that RJ could potentially be liable for other areas of their professional partners' practices.  I'm confident that I heard that correctly as I asked several followup questions to verify what I'd been told.  I'm not sure what the change in view is coming from, but the compliance environment in this particular area seemed to be getting stricter.

On the legal assistance front, I can't say a lot about that at the moment, but I'll try to address it later once the dust settles a bit.  I have no doubt that RJ would do what they feel they can do, but again, there are some assurances that have been made by LPL that give me a greater comfort level.  RJ may be just as strong in legal support, but they did not articulate that in my visits, so I am only going on what I have been told and the assurances that have been made, so of course, the end result could be different than I expect.  Hopefully, this area will be pretty much a moot point as I am doing all I can to keep my litigation profile low.

On tech, there were pros and cons on both sides and frankly, the differences were not great...it was more of a fit issue with my practice.

Bottom line, other than what I just discussed, there wasn't a nickel's worth of difference relating to my practice, but unless the folks at RJ said things that were inaccurate, I think I painted about as factual a picture as I possibly could, other than things that are by necessity, subjective.  Both are great firms and had my business plan and customer book been a bit different, there is a very solid chance that I could have just as easily gone the other way with this decision.  RJ certainly has nothing to be ashamed of (although they may want to reconsider their sales mgr for my region, or at least fine-tune his presentation), as they are a very fine firm.  I would have no problem recommending either firm as a great place to go indy...

...and frankly, I'm looking forward to the transition...stay tuned...

Am now operating as an independent.  What a difference.  I have an office setup that I only dreamed about in my bank...CNBC piped right into my office, excellent equipment and excellent furniture...a beautiful setup.  Frankly, it makes my old office at the bank look pitiful.

The clients are finding me even before the ads hit the paper...$7mm in asset already committed and that's just the tip of the iceberg.  Life is good...even when you have to do paperwork...

Indy,

How long were you with the bank, and how did you do moving your book.i.e. what % of book ended up transferring? What bank were you with. Were you given a hard time with the non-compete you signed?

[quote=Indyone]

Am now operating as an independent.  What a
difference.  I have an office setup that I only dreamed about in
my bank…CNBC piped right into my office, excellent equipment and
excellent furniture…a beautiful setup.  Frankly, it makes my old
office at the bank look pitiful.

The clients are finding me even before the ads hit the paper...$7mm in asset already committed and that's just the tip of the iceberg.  Life is good...even when you have to do paperwork...

[quote=ezmoney]

Indy,

How long were you with the bank, and how did you do moving your book.i.e. what % of book ended up transferring? What bank were you with. Were you given a hard time with the non-compete you signed?

[/quote]

By necessity, I have to keep my answers somewhat vague here since this is a public forum, and frankly, it remains to be seen as to how hard a time my former employer will give me about making the move and transferring customers.  Thus far, customers are finding me through newpaper ads and word of mouth.

I am attempting to keep the possibility of a suit low by following some advice I've received, some of it obvious, like don't send any letters to your old customer base, and don't take ANYTHING with you when you go.  Some is less obvious, such as what you should and should not say when customers call you.  Some pretty innocent comments can be taken as solicitation, so it pays to be careful.

As far as how long, let's just say at least five years, and as for how much will ultimately transfer, it's anybody's guess.  I would ultimately expect to get 75-80% of the accounts that I want.  Some will stay where they are out of loyalty to the bank or pure apathy and that's fine.  I'll take what comes, but I think I'll focus on new stuff for awhile or at least until the non-solicit runs out.

The bottom line is, if you're unhappy, the money really doesn't matter as long as you can make enough tp pay the bills.  If you were successful with your old employer, you'll eventually do fine as an independent, provided you have at least some ability to run your own business.

Indy,

I have just started thinking about changing my b/d. I may go independent.

What can I do to let my clients know where I am, without getting hit with a TRO?

I have been with my present firm for a long time and do not believe I have anything to worry about in the area of a non-compete clause.

I have been told it's ok to call your clients AFTER you have made the change. Just make sure you do not mail or e-mail anything to them.

Someone else said you can not even call them. They have to find you.

Which is right?

Thanks,

Double Trouble

Double trouble, this is far too important a move to solicit advice on an internet forum.  When I went, I got out my copy of the employment contract that I signed, and spoke with a labor attorney that Bill Singer recommended to me.  I did what I was told, and never had so much as a whiff of trouble. 

The best advice I can offer, for what it's worth, is to consult an attorney.

[quote=Starka]

Double trouble, this is far too important a move to
solicit advice on an internet forum.  When I went, I got out my
copy of the employment contract that I signed, and spoke with
a labor attorney that Bill Singer recommended to me.  I did
what I was told, and never had so much as a whiff of trouble. 

The best advice I can offer, for what it's worth, is to consult an attorney.

DT, don't assume that because you've been with your firm a long time that you don't have anything to worry about.   I've never heard of a rep contract that freed someone due to tenure (except for trainee contracts relating to the repayment terms of training costs).  So, you're right to be sensitive to the issue.

While a securities attorney probably will be necessary (at a minimum for initial consultation & strategizing), you're at the infancy stage of considering independence.  So, I'd first take advantage of talking with in-house counsel at a couple of the major indy firms. They can't ultimately represent you, but they can offer some good overview of the good, bad & ugly of your potential contractual problems.  Once you've gotten reasonably serious with an indy firm (and they're interested in you) your recruiter there can set up a conference call with one of their lawyers.  When you've decided to make a move, they can then refer you to competent counsel & may have even negotiated some favorably fee arrangements.

DT,

If you never signed any non-compete/non-solicit, then yes, I'd say you are OK, but if you ever did, I'd listen to the advice you've been given and have the agreement reviewed by a good labor attorney...it will be money well spent.

About the only thing I'm pretty confident about is that my newspaper ads don't violate a non-solicit.  They DO violate my non-compete, but that's something that can't be helped (I have to make a living, man!).  You'll not get much advice from any indy firm counsel until you commit to the firm.  At that point, they can be pretty helpful for you.

Good luck...

Indy

Hello there. I've been reading for a while (lurking) but never posted. I have been at 2 major wirehouses forever and am thinking of indy. I heard from one old colleage that LPL offered a trasition package. I have never heard that before from any indy. channel (except the Wachovia "psudo" indy).  Any info is greatly appreciated.

[quote=OldTimer]

Hello there. I've been reading for a while (lurking) but never posted. I have been at 2 major wirehouses forever and am thinking of indy. I heard from one old colleage that LPL offered a trasition package. I have never heard that before from any indy. channel (except the Wachovia "psudo" indy).  Any info is greatly appreciated.

[/quote]

Old Timer,

From my due diligence, I can tell you that both Raymond James and LPL offer transition packages, although they are modest in comparison to those offered to captive brokers.  Both offer interest-free loans in the vicinity of 10% of trailing 12.  LPL is interest-free for six months, RJ for 90 days.  In addition, RJ offered me 3% of trailing 12 as a bonus and LPL offered 2% blotter credit.  There are some small extras beyond that such as covering the training materials for the 24 and the first order of cards, letterhead, etc.  Some legal assistance may also be available if you get in a non-compete fight, but I can tell you that they don't promise this.

Bottom line is, the transition package is relatively modest, but considering the fact that you can move your book anytime as an independent, I'm frankly still surprised that anything is offered.

I'm new as an indy, but I can tell you that from my standpoint, I feel like I've been paroled.  If I were in your shoes, I'd visit (at their expense) both of these indy firms and see what they had to offer.  My guess is that if you make the trips, it won't be long until you go indy with one firm or the other.  If you go back to the beginning of this thread and read it forward, there's a lot of good information.  Good luck with your search!

[quote=Indyone][quote=OldTimer]

Hello there. I've been reading for a while (lurking) but never posted. I have been at 2 major wirehouses forever and am thinking of indy. I heard from one old colleage that LPL offered a trasition package. I have never heard that before from any indy. channel (except the Wachovia "psudo" indy).  Any info is greatly appreciated.

[/quote]

Old Timer,

From my due diligence, I can tell you that both Raymond James and LPL offer transition packages, although they are modest in comparison to those offered to captive brokers.  Both offer interest-free loans in the vicinity of 10% of trailing 12.  LPL is interest-free for six months, RJ for 90 days.  In addition, RJ offered me 3% of trailing 12 as a bonus and LPL offered 2% blotter credit.  There are some small extras beyond that such as covering the training materials for the 24 and the first order of cards, letterhead, etc.  Some legal assistance may also be available if you get in a non-compete fight, but I can tell you that they don't promise this.

Bottom line is, the transition package is relatively modest, but considering the fact that you can move your book anytime as an independent, I'm frankly still surprised that anything is offered.

I'm new as an indy, but I can tell you that from my standpoint, I feel like I've been paroled.  If I were in your shoes, I'd visit (at their expense) both of these indy firms and see what they had to offer.  My guess is that if you make the trips, it won't be long until you go indy with one firm or the other.  If you go back to the beginning of this thread and read it forward, there's a lot of good information.  Good luck with your search!

[/quote]

Yep Yep....it is soooooo good to be FREE AT LAST!

To all that have been following this forum.  I have recently made the move to indy.  I choose LPL as my b/d over Raymond James.  Both firms are great and it was a tough call.  So for those of you looking for a clear cut answer you may not find it. 

Im started my firm six weeks ago.  LPL has delivered on everything they promised.  The transition has been smooth accept for the legal issues with my old firm.  LPL's legal counsel has been great through that process.  Without them i would have been in some serious trouble.  There tech is as advertised and there internal service is very good.  The only problem (minor) I have run into is that im having a hard time reaching my transition manager.  They are so busy with all the reps they are adding its hard to get the manager on the phone.  However in there defense they have been relatively quick returning phone calls. 

In a few weeks I will share more as my legal issue get resolved.  Good luck to all and trust me that INDY beats working for someone else.

Indytwo

[quote=indytwo]

To all that have been following this forum.  I have recently made the move to indy.  I choose LPL as my b/d over Raymond James.  Both firms are great and it was a tough call.  So for those of you looking for a clear cut answer you may not find it. 

Im started my firm six weeks ago.  LPL has delivered on everything they promised.  The transition has been smooth accept for the legal issues with my old firm.  LPL's legal counsel has been great through that process.  Without them i would have been in some serious trouble.  There tech is as advertised and there internal service is very good.  The only problem (minor) I have run into is that im having a hard time reaching my transition manager.  They are so busy with all the reps they are adding its hard to get the manager on the phone.  However in there defense they have been relatively quick returning phone calls. 

In a few weeks I will share more as my legal issue get resolved.  Good luck to all and trust me that INDY beats working for someone else.

Indytwo

[/quote]

It can be very tough getting through to the transition team members......but they are some sharp folks!

I agree.  Look at BOTH firms in detail.  Also look at your business and your clients.  I went with RJFS and am quite happy.  I visted both Tampa and San Diego and after doing my own due diligence and looking at my business the choice was an easy one.  I just spent a lot of time looking at the firms (Wachovia too) and asked many questions and read much of the material and talked to reps etc...

Good luck.

[quote=zacko]

I agree.  Look at BOTH firms in detail.  Also look at your business and your clients.  I went with RJFS and am quite happy.  I visted both Tampa and San Diego and after doing my own due diligence and looking at my business the choice was an easy one.  I just spent a lot of time looking at the firms (Wachovia too) and asked many questions and read much of the material and talked to reps etc...

Good luck.

[/quote]

I thought wachovia was pretty lame.  'psuedo-indy'

I agree.  They draw a few guys with a dog and pony show and promises for the future.  They also pay front money to the effect of 25% of your trailing 12 if memory serves.  All things equal–who would goto Wachovia?  They have to pay the front money to get any draw at all.

Thank You for all the imput. I don't know if you are very fee based Indy2, but if so, how is the LPL platform working for you. I.E. do you have the outside managers at your disposal?  What is the payback to the firm (at the wirehouse, I give back 45bp and everything else charged goes to my grid (which SUCKS).  Finally, are there "ticket charges" with regard to outside managed accounts?  Thanks for all your help. I am really starting to consider this.

OT, I'll not speak for I2, but in my opinion, LPL pays very well and has a very nice platform for fee-based.  PM me with an email address and I'll see if I can find a PDF that I can send you detailing all the SAM payout and charge info.  From what I can tell at this early stage in the game, LPL pays you 80%+ on the gross after ticket charges, but that varies a lot, depending on size and makeup of the account.  and yes, outside managers are available...

Whan I left, I was close to halp fee-based...my goal as an Indy is 85% in 5 years...

Ot

Pay close attention to the Pdf indy1 sends you.  I think it will open your eyes.  He covered the SAM accounts pretty well

Indy One & Two, OT is asking about separate account management, not the SAM account.  So, get him LPL’s stuff on your “Manager Select” program.

Duke, I noticed that, but referenced SAM due to a slip of the keyboard (probably since I am using SAM so much these days).

BTW, two weeks in and just over $8 mil in transit with about $5 mil in fee-based thus far.  I am busy, but loving it.  I'll keep you posted on my progress...

Another observation for anyone contemplating moving…do it in the summer!!!  If I waited to the end of the year and tried to do this in my busy season, I don’t think I’d survive!  It’s August and I’m swamped…and loving it!!!

Indy1,

Can't tell you how appreciative I am to have found this thread.  I'm standing on the ledge about to jump--heading to SD soon.

How much start-up capital is needed?  Rent here is approx 1,900/mo, f/t asst is 2,300/mo.  LPL showing me #'s next week, but I am chomping at the bit!

Thx for your insight--truly a blessing!

[quote=ExNIRSS]

Indy1,

Can't tell you how appreciative I am to have found this thread.  I'm standing on the ledge about to jump--heading to SD soon.

How much start-up capital is needed?  Rent here is approx 1,900/mo, f/t asst is 2,300/mo.  LPL showing me #'s next week, but I am chomping at the bit!

Thx for your insight--truly a blessing!

[/quote]

Get out while you can.  I think it will only become harder to leave a wire and keep your clients in the future.

I have been with LPL since May and am loving it.  Technology is great, and their culture is excellent!

[quote=ExNIRSS]

Indy1,

Can't tell you how appreciative I am to have found this thread.  I'm standing on the ledge about to jump--heading to SD soon.

How much start-up capital is needed?  Rent here is approx 1,900/mo, f/t asst is 2,300/mo.  LPL showing me #'s next week, but I am chomping at the bit!

Thx for your insight--truly a blessing!

[/quote]

ExNIRSS,

Glad to hear this is a useful thread.  It has truly been a journey with a lot of twists and turns, but is thus far, a very rewarding shift in my career.  As for start-up costs, I can give you some insight based on expenses I encountered when setting up.

As near as I can see, start-up costs are very, very low in this industry.  For one rep and an assistant, you are talking about $5,000 for state of the art computer equipment.  Oddly enough, with Dell's quality reputation, I ended up with a wide-screen Gateway notebook.  I liked it because the numeric keypad is built right into the keyboard and it's the only model I found like that.  If you enter a lot of numbers, this is VERY nice.  Nicer yet, I sprung for a docking station (or port replicator), a 19" thin screen monitor, and a wireless keyboard and mouse.  Now, my powerful notebook is a powerful desktop that can be unplugged and packed for taking with me in a few short seconds.

I spent some bucks on furniture, particularly in my office, due to wanting to present a class operation.  My office alone ran about $11,000, but is very classy.  I also put a medium-size flat-screen TV in the corner so I can run CNBC and Bloomberg on mute during the day (despite what we teach our clients, when they come in the office, they like to see how the market is doing and what the current price of a barrell of oil is) $200 should do it here...you don't need a big TV in your office.

Your rent is higher than my area, but your FT assistant number is in line.  I think renting is definitely the way to go initially.  The last headache you need when you're knee-deep in ACAT forms, is dealing with contractors and repairmen!  Down the road when things have settles down a bit, then maybe consider your own location, depending on cost/benefit.

Overall, my best guesstimate for your situation is that start-up could run $30,000-40,000 to get everything set up and cover overhead for three months or so.  My expenses were considerably less, but I had some cost-sharing advantages.  I'd be interested to hear some other estimates from people who have done the move recently.

Enjoy the trip and good luck with your jump...

Here's my overhead in Southwest Georgia:

Bought an acre of land out in the middle of nowhere: $1,500. I figure anyone who drives this far to see me is going to open an account!

Bought a used, single-wide trailer and parked it on the acre of land: $5,000. (I use this for an office.) Don't want to let-on how much money I make. A double-wide would've been puttin' on airs.

Three mounted deer heads for the office: $450. Gotta let my clients know I share their interests.

Framed GED to hang on the wall: $25. Academic accomplishments are important to my clients.

Five different colored clip-on ties: $15. Gotta look professional!

Hank Williams songs playing in the background, stereo, & speakers: $150. Settin' the mood.

King-size bed sheet to cover my used sofa, in the reception area: $25. Nothin's too good for my clients!

Throw rug to cover the hole in the floor: $25. I was showin' off my new huntin' rifle and it fired.

Case of beer: $15. For when clients get thirsty.

My cousin's old Apple II computer: $10. Nah, it doesn't run. I just keep it on my desk to look state of the art.

Three graphite fly swatters: $15. If you lived here, you'd know why.

Used tv, used vcr, and a tape of CNBC from June 6, 2003: $75. I can't get cable out here and the local stations are fuzzy, using my antenna. So, I replay the CNBC tape (muted) when clients are here.

Yep, I got a pretty sweet deal out here. My clients? They love it! Why, I wish you could see this big wad of money orders I took in just today! And it's all going in a mutual fund with front-end & back-end charges! Sure beats sellin' used cars!     Eat your heart out!!

Man, I didn't know Jeff Foxworthy was a moonlight rep...

Dob, you crack me up...I take it you drive an old Lincoln with a couple of hubcaps missing and the headliner hangin' down and flappin' in the breeze...

 Dob

Wow! That was  awesome!

Indyone:

Man, I didn't know Jeff Foxworthy was a moonlight rep...

Dob, you crack me up...I take it you drive an old Lincoln with a couple of hubcaps missing and the headliner hangin' down and flappin' in the breeze...

---------------------------------------------

Nah, that's my wife's car. She's got a rust stain on the driver's side door that looks like Elvis. Considerin' puttin' it on Ebay and seein' what I can get for it.

I drive the company vehicle, a 1972 4-wheel drive Ford pick-up with balloon tires. No matter how far back in the woods my clients live, I can get to them. I giv'em service with a snaggle tooth smile. 

Ooooh.. I think we have the same clients.  I just bought a '72 k5 Blazer to impress the guys.**

Actually, I did buy one last week.  And I am really excited! No rust, 148K original miles, the top has never even been off. I'm the 2nd owner. I'm going to restore it and upgrade the interior, fix the A/C, add a good sound system. Probably need to install some stepsides because I'm short and its hard to climb in wearing a skirt.   Then, I'm taking it to the show and shine next year, that our hot rod club hosts.

Here's a little advertising tip that got me out of a single-wide home and into a double-wide "El Presidente" model in 18 months:

Make up a 3-page flyer about your business, what you do, how you help people, copy of your GED, etc. Be sure to have tear-off tabs at the bottom of the flyers giving your phone number and CB handle. Stick it on the inside door of a bathroom stall. They might as well read while they're taking care of business, right? (I got Lorene, my wife, to post them in the ladies bathroom.)

I also stuck a 1-page flyer above the urinals. No one's going to stand there for 3 pages. Besides they won't have any hands free to turn the page; at least, not anyone born here in the South.

Then just sit by the phone and wait for it to ring.

doberman

what a great marketing idea.  Im going to produce a ton of those flyers with the local EDJ rep's infor on it.  He will love the extra calls

[quote=doberman]

Here's my overhead in Southwest Georgia:

Bought an acre of land out in the middle of nowhere: $1,500. I figure anyone who drives this far to see me is going to open an account!

Bought a used, single-wide trailer and parked it on the acre of land: $5,000. (I use this for an office.) Don't want to let-on how much money I make. A double-wide would've been puttin' on airs.

Three mounted deer heads for the office: $450. Gotta let my clients know I share their interests.

Framed GED to hang on the wall: $25. Academic accomplishments are important to my clients.

Five different colored clip-on ties: $15. Gotta look professional!

Hank Williams songs playing in the background, stereo, & speakers: $150. Settin' the mood.

King-size bed sheet to cover my used sofa, in the reception area: $25. Nothin's too good for my clients!

Throw rug to cover the hole in the floor: $25. I was showin' off my new huntin' rifle and it fired.

Case of beer: $15. For when clients get thirsty.

My cousin's old Apple II computer: $10. Nah, it doesn't run. I just keep it on my desk to look state of the art.

Three graphite fly swatters: $15. If you lived here, you'd know why.

Used tv, used vcr, and a tape of CNBC from June 6, 2003: $75. I can't get cable out here and the local stations are fuzzy, using my antenna. So, I replay the CNBC tape (muted) when clients are here.

Yep, I got a pretty sweet deal out here. My clients? They love it! Why, I wish you could see this big wad of money orders I took in just today! And it's all going in a mutual fund with front-end & back-end charges! Sure beats sellin' used cars!     Eat your heart out!!

[/quote]

So yer' with Primerica then?  How's the recruitin' goin' out thar?

ok lets get serious again!  I have finally made it through the legal/arbitration process.  Man was it an up hill battle.  The only real winner in this whole thing are the attorneys. 

LpL was the cornerstone of my defense.  With out there help I would have been sunk.  Keep that in mind if you are looking at both firms (LPL & RJ).  I know during my research LPL was willing to help on the legal front whereas RJ would only offer advice. 

If you do have an employment agreement have a atty look at it way before you leave.  They can save your a_s! 

For those of you  looking to make the move to indy do not hesitate.  I was scared to death of making the the jump.  However in the end this was the best leap of faith I have ever made.  IF you have the drive to be your own boss and make the big $$$$ go for it!

Sounds like it was rough…what would you have done different re legal/arb?

[quote=doberman]

Here's my overhead in Southwest Georgia:

Bought an acre of land out in the middle of nowhere: $1,500. I figure anyone who drives this far to see me is going to open an account!

Bought a used, single-wide trailer and parked it on the acre of land: $5,000. (I use this for an office.) Don't want to let-on how much money I make. A double-wide would've been puttin' on airs.

Three mounted deer heads for the office: $450. Gotta let my clients know I share their interests.

Framed GED to hang on the wall: $25. Academic accomplishments are important to my clients.

Five different colored clip-on ties: $15. Gotta look professional!

Hank Williams songs playing in the background, stereo, & speakers: $150. Settin' the mood.

King-size bed sheet to cover my used sofa, in the reception area: $25. Nothin's too good for my clients!

Throw rug to cover the hole in the floor: $25. I was showin' off my new huntin' rifle and it fired.

Case of beer: $15. For when clients get thirsty.

My cousin's old Apple II computer: $10. Nah, it doesn't run. I just keep it on my desk to look state of the art.

Three graphite fly swatters: $15. If you lived here, you'd know why.

Used tv, used vcr, and a tape of CNBC from June 6, 2003: $75. I can't get cable out here and the local stations are fuzzy, using my antenna. So, I replay the CNBC tape (muted) when clients are here.

Yep, I got a pretty sweet deal out here. My clients? They love it! Why, I wish you could see this big wad of money orders I took in just today! And it's all going in a mutual fund with front-end & back-end charges! Sure beats sellin' used cars!     Eat your heart out!!

Bravo!  I think you might have posted the funniest thing ever said on this board.

Nah, that's my wife's car. She's got a rust stain on the driver's side door that looks like Elvis. Considerin' puttin' it on Ebay and seein' what I can get for it.

I drive the company vehicle, a 1972 4-wheel drive Ford pick-up with balloon tires. No matter how far back in the woods my clients live, I can get to them. I giv'em service with a snaggle tooth smile. 

[/quote]

OMG it's my old boss! Please no more bluegrass music!!

ExNIRSS

Well i wouldn't do to much different.  The only thing i can think of is being ready for the TRO.  Have all of my documents from my previous employer ready to defend myself.  Othe than that the only other I would do is take more time to get organized before i left.  I cant go into more detail for obvious reasons. 

Im sure glad that LPL held my hand through this process and even they were caugth off guard by the TRO. 

Are you looking to make a change?

Looking strongly @ LPL--mentally, I've already checked out...they offered to take me to SD, but from everything I've read here as well as comments from other brokers who have moved, I don't see where I would benefit.  Solid company, good history, good technology.

Did you get the TRO the following Monday or did they just send the nasty-grams for a while beforehand?  I don't have a copy of my noncom, but I do have a copy of one from someone who started the same week I did...

I've met with an LPL recruiter and we reviewed a business projection which included charges for tech/software, but I'm a little fuzzy on the contact management software they have--or do they have any at all?  I've looked at ACT for financial advisors and it looks good.  Should I purchase this, or does the LPL web system already include something like this?  Appreciate your insight....

Ex, you still here? Go already. LPL is a GREAT place for you.

[quote=ExNIRSS]

Looking strongly @ LPL--mentally, I've already checked out...they offered to take me to SD, but from everything I've read here as well as comments from other brokers who have moved, I don't see where I would benefit.  Solid company, good history, good technology.

Did you get the TRO the following Monday or did they just send the nasty-grams for a while beforehand?  I don't have a copy of my noncom, but I do have a copy of one from someone who started the same week I did...

I've met with an LPL recruiter and we reviewed a business projection which included charges for tech/software, but I'm a little fuzzy on the contact management software they have--or do they have any at all?  I've looked at ACT for financial advisors and it looks good.  Should I purchase this, or does the LPL web system already include something like this?  Appreciate your insight....

[/quote]

Go to SD...it will be well worth your time and it's on their dime.  It's hard to describe, but until you see the setup, you don't know what you're missing.  Our posts on these boards don't do it justice...there's so much more to see and learn about.

Use Act for contact mgt...can be bought cheaply (got mine on eBay for less than $50) and it does a very nice job.  If LPL has a contact mgt system, I haven't found it yet, and I doubt if it would be any better than Act.

On the non-compete, I don't think it's a given that you'll get a lot of problems.  I've compared notes and found that I had a similar arrangement to Indytwo and my firm hasn't given me problem one at this point.  In my opinion, the key point is, and they know it, that I signed well after I started with no advance warning, and no additional consideration.  As a result, I don't see them trying to press the issue here, particularly if I stay fairly low profile about things.  I don't send unsolicited letters to former clients, but rather rely on newpaper advertising to get the word across.  I also have several clients who have made the jump across and I know that they are telling other clients about where I went, etc.

The point is, your clients will find you eventually and my opinion is, the ones who won't go to the trouble to move their assets over, probably weren't strong relationships anyway.  Service, service, service your A list before you go, and advertise, advertise, advertise after you leave.  They'll appreciate the service now and will make the effort to find you later.  In between ACAT forms, learn the system well so you will be ready to prospect hard for new clients when the ACATs from your old firm slow up.

...and yes, Guest, if EX wants better product availability, better technology and higher payout, LPL beats the hell out of his current firm...and he should jump.

...and you should go drink some more Koolaid and sell a few more 30-year corporates.

ExNIRSS

Glad to hear your looking @ lpl.  I agree with INDYONE go to SD.  I was unable to go due to the nature of my departure.  I missed a lot by not going to SD. 

Make sure an atty looks at your noncompete.  He/she could give you some thought as to what your up against.  Also ask to speak to lpl legal team.  Dont be affraid to ask for assistance from there  legal team.  They saved my butt that for sure.  Go back on your calendar and get all your dates set.  When did you sign the agreement?  What date did you start with current firm?  Did you get a copy of the agreement before you accepted the job?  Did you have to take a blood test? When?  When did you resign from your previous job?  Do you have a copy of the resignation letter?  Did you get additional consideration for signing the agreement? 

Those are the things you need to know and the docs you need to have before you leave. 

No matter what do not let your current firm back you in the corner.  If they are putting pressure on you because they think your leaving dont give in.   Leave when your ready.  Just remeber this is a war and the want to get the upperhand and you do not want to give that to them.  Go out on your terms you will have a better transition.

Guest1,

At what point do you intend to add value to any of these threads?  Enlighten us with your insights...you must have something worthy to say, or do you sit on your Rams beanbag (purchased with your 38% payout) naked in the dark eating Cheetos scouring the broker forums for an opportunity to spill your koolaid?

Just try it....speak intelligently about a topic....any topic.....start a topic...otherwise, stick to tickling your RL's a*s with your nose.

[quote=ExNIRSS]

Looking strongly @ LPL--mentally, I've already checked out...they offered to take me to SD, but from everything I've read here as well as comments from other brokers who have moved, I don't see where I would benefit.  Solid company, good history, good technology.

Did you get the TRO the following Monday or did they just send the nasty-grams for a while beforehand?  I don't have a copy of my noncom, but I do have a copy of one from someone who started the same week I did...

I've met with an LPL recruiter and we reviewed a business projection which included charges for tech/software, but I'm a little fuzzy on the contact management software they have--or do they have any at all?  I've looked at ACT for financial advisors and it looks good.  Should I purchase this, or does the LPL web system already include something like this?  Appreciate your insight....

[/quote]

They don't have a contact manager.

Make sure you are in contact with their legal team before you pull the trigger.

It's good over here.  Come on in! ;-)

Prepare, prepare, prepare!

ExNIRSS

GO TO SD!  THAT WILL TIE UP A LOT OF LOOSE ENDS FOR YA!

BE VERY CAREFUL ABOUT CHECKING OUT TO EARLY I MADE THAT MISTAKE AND IT COST ME A LITTLE.  TAKE YOUR TIME AND DO THIS RIGHT.  YOU DONT WANT TO BE CAUGHT WITH YOUR PANTS DOWN.  I WAS BLOWN OUT OF THE WATER BY MY OLD FIRM BEFORE I WAS  READY.  I LOST A FEW CLIENTS BECAUSE THEY BEAT ME TO THE PUNCH.  I WAS TO BUSY SETTING UP MY OFFICE WHEN I SHOULD HAVE BEEN IN FRONT OF CLIENTS.

6 weeks in and very busy...millions on the books so far, with more to come.  I understand my old firm has hired my replacement...twenty-something and no series seven.

As Cramer would say...back up the truck...

Three calls this morning from former clients totalling $1.8 million.  All coming over.  Sounds like my old firm sent a letter out extolling the virtues of their new hire.  I should probably put my former 24 on my Christmas card list…

Update for the curious...halfway through my third month...assets at about $16 million...last four weeks commissions...gross about $20K...net of $17K...$13K after expenses.  That's roughly 65% of gross.

Grossing less than I was at the bank, but making more...and it's early in this game.  Best yet, I actually look forward to going to work in the morning...can't put a price on that...

Indy,

What % assets did you take from the bank? What was your AUM at the bank? How many years in the biz? Are you paying for an assistant? How about posting your expenses for the curious?

EZ,

I left with about $47 million AUM.  Of that, about $22 million is either "sticky" (bank named as trustee, etc.), small unprofitable accounts or short-term CD rate whores that I don't have any interest in moving over, so if you look at what I consider in play (about $25 million), I've moved or received committments to move about $14 million thus far.  The rest is completely new business.  In short, I've moved a little over half of what I'm interested in thus far, and I could easily see 80-90% of what I am interested in before the dust settles.

Being free of all the unprofitable/time-consuming accounts that in hindsight I should have never opened, has freed up time to prospect new relationships and my pipeline is literally larger than my book at this point.  My goal is to be at $30 million by next summer (12 months in) and have a much more profitable book of business.

I've been in the biz approx 6 years.  I have a part-time assistant that costs me about $1,500/month.  All other expenses including office rent averages about $2,300/month.

freedom to run your own business the way it should be...priceless...

As an update to anyone curious how things are going, I crossed 18 million AUM today, less than five months in.  Sent out Christmas cards earlier this week with a note of appreciation for past support to some clients that I haven't touched and the phone is ringing off the hook today with promises to come by and bring statements...

Merry Christmas to me...

bump.  Interested in current thought about rj vs. lpl

Well, I'll speak to half of that issue...the half I have some understanding on.  One of the bigger questions I have right now on LPL is how possibly going public may affect my business.  LPL recently sold a substantial share of the company to a couple of VC firms, and the story was all about how the influx of cash would improve the technology platform, etc, etc, etc.  My concern as a relatively new producer with LPL is that productions minimums to maintain your own OSJ will increase substantiallty in an effort to improve profitability.  While my production is certainly going the right direction and I don't think I'll have any problem hitting their current bogey ($125K), I hope they'll be patient with me if I'm a little short of the raised bar.  My guess is that if your trend is moving the right direction, they will.  Other than that, I think the technology and product offerings are good, and compliance (thus far) has been reasonable (unless you're trying to replace a VA...the compliance form to get that done is pretty nasty).

Other than that and a few glitches that are to be expected, my experience has been pretty good and I'm well satisfied.  I am at about 22 million in assets now and as of today, have only 11 clients that I have any level of interest in that have not made the move with me.  If they come, fine, but I'm putting my efforts into taking care of the clients that followed and several good referral prospects.  I think purging my book of a lot of dead wood was a good move and after hearing some successful producers recommend it, I'm in the process of implementing a substantial (for me at least) account minimum...probably $250,000.

That's all I have at the moment...perhaps someone in the due diligence process and/or someone at RJ can complete the picture for you.

[quote=Indyone]

Update for the curious...halfway through my third month...assets at about $16 million...last four weeks commissions...gross about $20K...net of $17K...$13K after expenses.  That's roughly 65% of gross.

Grossing less than I was at the bank, but making more...and it's early in this game.  Best yet, I actually look forward to going to work in the morning...can't put a price on that...

[/quote]

Very good info.  Please keep us posted.

can you give a general idea of your biggest expenses?  are you sharing with anyone?  thanks.

Overall, my expenses are running about $5,000/month.  This is with a shared office with an unrelated professional, and shared assistant.  My half of the assistant runs $1,500-$1,800/month and is my largest expense. Rent/utilities/phone runs about $1,300/month, advertising, about $500.  I keep the overhead low by design.  As production ramps up, that will probably change, but for now, it works well for me.

Indy,



Did you consider going into the type of office in which you would be paid a flat 60% with no overhead. I am looking at LPL and think thats the route I will go. Im at 275-300k at BAC and do not want the risk and expenses of starting my own office. The broker at that office says I will have my own number and the clients are mine he just takes 40%. What are your thoughts

[quote=bankfa10]Indy,

Did you consider going into the type of office in which you would be paid a flat 60% with no overhead. I am looking at LPL and think thats the route I will go. Im at 275-300k at BAC and do not want the risk and expenses of starting my own office. The broker at that office says I will have my own number and the clients are mine he just takes 40%. What are your thoughts[/quote]

I didn't consider that, mostly because it wasn't an option locally.  I'm running right at 70% of my gross thus far this year, so a no-risk set-up at 60% sounds reasonable to me, particularly when you are just starting out as an indy.  The devil is in the details...make sure that the termination clause in your agreement is user-friendly if you decide that things aren't working out like you'd hoped.  You might also run a worst-case scenario that your production is half of what it is today and consider that you may go awhile without any paycheck (I went about six weeks), particularly if you leave in the summer (which is what I recommend).  Build up your cash reserves, and learn to live a little leaner for a few months and you should be fine.

Assuming you have a good rapport with the indy advisor, that sounds like a set-up that you will be much happier with, but as you ramp up your production, that 40% may start to look pretty expensive...

Indyone,  Any updates to share about how it’s going at LPL?

OK, here's your update...at 11 months in, things are going about as well as I could expect.  I have just under $25 million in assets under management, and am on pace to get to $30 million by my year end 2006 goal, and probably before then.  I am on pace to do about $180-$200K gross this year, and my average net through the first six months after everything except income taxes, is right at $10K/month.  I'm still moving accounts on a regular basis, which is a bit of a surprise, as I expected the asset migration to be pretty much done by now.  For a variety of reasons, I took this opportunity to purge my book of less desireable clients and ultimately targeted just over half of my book, and the last time I looked, there wasn't much left that I was even interested in moving, so the expiration of my non-solicit (assuming that it is enforceable) next month looks to be a non-event.  There are perhaps 2-3 accounts that I'll make contact with in an effort to move them.  Otherwise, I find my time much more productively spent working new business prospects.

Overall, my transition to indy included some long hours last summer, but thus far, it's been a very satisfying move and I only see it getting better going forward.  For anyone considering a transition to independence, read "Starting Your Own Practice" by Robert Fragasso, and make your move in the summer...it's difficult enough when things are supposedly slow...I can only imagine what a nightmare my move would have been if I'd done it in January or February...yuck.

Indyone--great post.

Expiration of which non solicit?  The one at your old firm?  Can you tell a bit more about it?  Was there any "training costs" they came after you for?

Congratulations on a job well done.  Best wishes for continued success.  AND may the account fairy bring you a HUGE account this month.

Our non-solicit didn’t have any provision for training costs, but if it had, I think being there for more than five years would have covered that.  Yes, the non-solicit was for my old firm, and even included a non-compete for my territory.  From what my legal advisor told me, it would have proven to be a bigger problem had it been signed prior to my employment, or signed after my employment began, but with an inducement (such as stock options).  Since neither happened, it was his opinion that it wasn’y any good.  Even so, he advised me to at least honor the non-solicit part of the agreement just to be on the safe side.  I did newspaper ads and radio and signed up clients as they came and it worked out just fine.  Most of what I wanted found me without being aggressive about their business.

Indyone-

I know you are fairly new with LPL..do you have plans to expand your business?  Does LPL encourage, pressure or incentive you to add new RRs under your OSJ (w/ or w/o book)?

Just curious, as I'm looking at approaching an Indy/LPL to start off with.

Thanks,

Rugby

The only encouragement/pressure, etc. that I'm aware of is the $125,000 minimum annual production for maintaining your own OSJ office.  I think there is a small payout bonus over the standard 90% once some higher production hurdles are hit.

As far as staffing goes, as near as I can tell, that is left up to the OSJ, providing that there are no compliance problems.

Just back from LPL's national conference and aside from some serious jet lag today, I'm feeling pretty good about things.  For a newbie to LPL, the national sales conference can be a bit intimidating at first, but by the end, I was pretty blown away by the quality of the conference.  I spoke with another guy I'd previously met during due diligence and he was similarly blown away.  He'd been with Raymond James and indicated that their national conference was nice, but nothing like he was seeing in San Diego.  Aside from the huge number of vendors, I had some good tech sessions (although it was 70% review of what I'd managed to figure out for myself during the year), and targeted some product sessions to replace some of the tech sessions when I realized that they were a bit basic if you were already familiar with the system.  For things I hadn't used (securities tracker), I found them to be beneficial.

LPL did an excellent job of helping us run our business while we were at the conference.  Just about anywhere I looked, there were internet kiosks that allowed one to easily access LPL email and the LPL system.  I placed trades between classes and it worked beautifully.

Announced enhancements such as increased payouts (which don't affect me all that much at my current production level), and the potential elimination of the branch trade report for direct business were welcome news.  I found the increased payouts refreshing at a time when I'm hearing about competitors cutting payouts on VA's, etc.

The entertainment and food was excellent.  In between Kool & the Gang on Monday night and Kenny Loggins on Wednesday, several of us took in the Padres-Astros game on Tuesday night and had an excellent time.  Wednesday afternoon was spent on the decommissioned Midway aircraft carrier...complete with F-14, F/A-18, and many other planes and helicopters...very cool...I recommend seeing it if you're ever in the SD area.

All in all, a high quality experience that left me feeling pretty pumped up about things (jet lag notwithstanding).  LPL has a good understanding fo how to balance education and entertainment, and approximately one year in, I still feel like they are a great place to affiliate with.

I’m not an Indy but after reading your post, I would like to attend the next LPL conference. Sounds like allot of fun & education. Is it always held on the west coast near the corp. HQ or do they rotate it around different regions?

From what I understand, the main sales conference that I attended (for all LPL reps) is always close to headquarters in San Diego.  They have a separate trip in the spring for higher production levels, and that is rotated around to various islands, etc.

[quote=Registered Rep]I’m not an Indy but after reading your post, I would like to attend the next LPL conference. Sounds like allot of fun & education. Is it always held on the west coast near the corp. HQ or do they rotate it around different regions?[/quote]

First you have to join LPL!!
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It’s on my radar Joe but my b/d hasn’t P.M.O enough yet.

[quote=Registered Rep]It’s on my radar Joe but my b/d hasn’t P.M.O enough yet.[/quote]

lol…give 'em time!
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Just read this thread straight through. I have to say how much I respect

those of you who have buckled down and moved out to start your own

business. I really respect that.



What I am looking for is a little different advice. I am about to start my

career in a wirehouse. I am young <25, but what would you say to me if

my “final goal” is to leave the wirehouse (after establishing a quality book)

to go indy. I know I would love running my own shop one day. I also know

that I am thinking way ahead of myself, but you have to have a game

plan. Right?



Advice I am looking for after reading this thread: (plus you general

thoughts)



-what do I do if I am asked to sign a non-compete or any other document

-how would you go about your wirehouse career if you knew you wanted

to eventually leave to run your own shop?

-any other thoughts on my situation in general

[quote=Boomer]

Just read this thread straight through. I have to say how much I respect
those of you who have buckled down and moved out to start your own
business. I really respect that.

[/quote]

They were not making a living where they were, so they toss all the "unnecessary" things overboard in a last gasp effort to stay afloat.

There is very little to "respect" about those who become independent brokers.

It's like a lawyer in a law firm who is not offered a partnership--he's going nowhere fast so he leaves and forms his own firm.

You're not tuned into reality if you think he did that because he was doing so well at the larger firm.

[quote=Boomer]

What I am looking for is a little different advice. I am about to start my career in a wirehouse. I am young <25, but what would you say to me if my "final goal" is to leave the wirehouse (after establishing a quality book) to go indy. I know I would love running my own shop one day. I also know that I am thinking way ahead of myself, but you have to have a game plan. Right?

[/quote]

What about a job that you have not even started do you find to be so unattractive that you want to leave before you even walk in?

What you should do is not even start--you're too young to have much of a chance of building a book worth moving.

[quote=boomer]

Advice I am looking for after reading this thread: (plus you general
thoughts)
-what do I do if I am asked to sign a non-compete or any other document
-how would you go about your wirehouse career if you knew you wanted to eventually leave to run your own shop?
-any other thoughts on my situation in general

[/quote]

Sign the non-compete agreement if you want the job

One should not start a career planning to fail and leave.  If that's your mindset don't even start.

"They were not making a living where they were, so they toss all the "unnecessary" things overboard in a last gasp effort to stay afloat.

There is very little to "respect" about those who become independent brokers.

It's like a lawyer in a law firm who is not offered a partnership--he's going nowhere fast so he leaves and forms his own firm.

You're not tuned into reality if you think he did that because he was doing so well at the larger firm."

-----NASD Newbie

How do you think Morgan Stanley got started?  AG Edwards?  Merrill?  Edward Jones?  Were they all failures at their former firms?

You're still a moron.

Boomer, I was doing just fine financially where I was before I made the decision to open an independent office.  In fact, I was #2 overall in our group of 10 and #1 fee-based, so I was hardly on the bottom in production.  Moreover, since I've left, I've taken almost 85% of what I targeted without violating my non-solicitation clause.  Now that I'm a year out and the non-compete agreement has expired, I'm still not chasing my old clients, and despite that, they are still transferring over.

Nasty Newbie knows a lot about the industry, but with all due respect, he knows nothing very little about being independent other than what he reads here, and the propaganda he was fed by his former employer.  I met many million dollar producers at the LPL national sales conference earlier this month, so I know for a fact that going indy is far from the last gasp effort to stay in this business that Nasty paints it as.  I'm sure there are some that go indy because they couln't cut the production requirements, but that's far from the truth for many of us.  I've enumerated many times on these forums why I went independent and failure with my former employer was never in the equation.  More money wasn't a factor either, but my disgust with my former employer's greed and the obvious jealousy of senior management sure was.  Nasty often refers to the "siren song" of increased payout at independent B/Ds as the primary motivator, but again, he speaks from no personal knowledge on this matter, and that was not even in my top three.  For me, it was, and always will be about freedom.  Freedom from employer politics.  Freedom to work flexible hours.  Freedom from stupid, meaningless pep sessions.  Freedom to use the investment alternatives you feel are best for your clients.  Sure, there's still compliance, and client demands will always dictate some of what you do, but as I've said before, I feel like I've been paroled.

You've asked elsewhere about joining a young, successful independent producer and if the chemistry is good, that may not be a bad idea.  You should have an agreement in place to protect each of you in the event that it becomes necessary to separate later.  If your eventual goal in this industry is independence, working a junior position in an indepent office sounds like a pretty natural place to be.

[quote=indyone]

More money wasn't a factor either, but my disgust with my former employer's greed and the obvious jealousy of senior management sure was.

[/quote]

What in the world does that mean?  What is "greed?"  Define it.

As for senior managment's obvious jealousy--what in the world are you talking about?

[quote=indyone]

For me, it was, and always will be about freedom.  Freedom from employer politics.  Freedom to work flexible hours.  Freedom from stupid, meaningless pep sessions.  Freedom to use the investment alternatives you feel are best for your clients.

[/quote]

If you met "a lot of million dollar producers in San Diego" why is it that the top 20 LPL producers don't have an average production exceeding, or even approaching, a million?

Have you ever worked for a wirehouse?  If I understand what you've said you are a Jonesie who went to LPL--you didn't have what it takes to get on with Merrill or one of their peers and as a result you have virtually no knowledge of the world from which I come.

Perhaps it would do you well to listen to me.

Starting with this truth.  Big hitters at the wirehouses do not go Independent, because it doesn't make good sense.

Those who were about to be fired often go independent, because they are making their last stand.  They're on the way out of the industry but 90% plus sounds very attractive--who needs a lot of support anyway--the business is actually very very easy.

[quote=NASD Newbie][quote=indyone]More money wasn’t a factor either, but my disgust with my former employer’s greed and the obvious jealousy of senior management sure was.[/quote]What in the world does that mean?  What is “greed?”  Define it.

As for senior managment's obvious jealousy--what in the world are you talking about?[/quote]

Greed is reducing the payout grid three years running.

Jealousy is being told that they couldn't give us stock options because..."that's the only thing the bankers have that you don't."

[quote=Indyone][quote=NASD Newbie][quote=indyone]More money wasn’t a factor either, but my disgust with my former employer’s greed and the obvious jealousy of senior management sure was.[/quote]What in the world does that mean?  What is “greed?”  Define it.

As for senior managment's obvious jealousy--what in the world are you talking about?[/quote]

Greed is reducing the payout grid three years running.

Jealousy is being told that they couldn't give us stock options because..."that's the only thing the bankers have that you don't."

[/quote]

If you have to take a small hit on the grid in order for your firm to remain profitable is that too much to ask?  Could you not make up for it by increasing your production?

If you really were told that options were given to bankers but not to producers to separate them from the producers--which I doubt you were told--it would make you the jealous one, not the management.

It does not follow that management is jealous of the producers so they withhold from the producers.

I have never felt jealous regarding a producer--in fact I feel sorry for them, doing entry level work for an entire lifetime cannot make the image in the mirror very impressive.

[quote=indyone]For me, it was, and always will be about freedom.  Freedom from employer politics.  Freedom to work flexible hours.  Freedom from stupid, meaningless pep sessions.  Freedom to use the investment alternatives you feel are best for your clients.

If you met "a lot of million dollar producers in San Diego" why is it that the top 20 LPL producers don't have an average production exceeding, or even approaching, a million?  Uh, I'm calling you on that one.  Post your proof.  I've spoken with one at about 6 million and one at about 3 mil.  That's just two and we're already at an aggregate of 9 mil.  Advisors need $1.1 million in gross production just to attend the Master's Conference.  I don't know where you've gotten your information. but you're way off here...all I can assume is that your numbers are really old or you're just making things up to get me excited.

Have you ever worked for a wirehouse?  If I understand what you've said you are a Jonesie who went to LPL--you didn't have what it takes to get on with Merrill or one of their peers and as a result you have virtually no knowledge of the world from which I come.  I'm no former jonsie...came out of the bank channel.  I'll freely admit that I don't believe I would flourish in a wirehouse channel, probably more for lack of compatibility rather than lack of talent.  It's arrogant for you to assume that I can't be successful in this business since the wirehouse environment is not well suited for me.  Yes, my knowledge of your world is limited to outside observation...no different than your knowledge of life as an independent.

Perhaps it would do you well to listen to me.  When you speak from experience, I will.

Starting with this truth.  Big hitters at the wirehouses do not go Independent, because it doesn't make good sense.  That's your opinion and it's far from universal.

Those who were about to be fired often go independent, because they are making their last stand.  They're on the way out of the industry but 90% plus sounds very attractive--who needs a lot of support anyway--the business is actually very very easy.[/quote]

Nasty, I don't want to litter this thread with a food fight, so I'll not respond anymore here.  If you want to ruin another thread with this debate, fine, but I won't discuss it any further here.

I also have no desire to engage in a food fight.

I am curious to what you mean when you say that the wirehouse environment is not for you?

Could you not walk through a luxurious office to your own private office against a back wall with windows facing the most specatular scenery in your part of the country.  Sitting outside is a sales assistant or more--there is everything you could possibly want in the way of research at the tips of your fingers.  Your every wish is catered to by a branch manager who is there to help when you need it, but stay out of your way when you don't.

If you were a lawyer would you not want to be a partner in the premier law firm in town rather than chasing ambulances from some seedy office above a barber shop?

I don't care how nice you think your office is--it pales by comparison to the palaces where wirehouse brokers work.

There are tens of thousands of people out here who don't trust their money with anybody except the firms who are members of the NYSE who operate out of fancy offices with brokers who they assume have college degrees and are well trained.

The further you drift from that image the fewer prospects you have.

If you're able to do a quarter of a million on your own you'd probably do a million if you had the mystical power of a business card that introduced you as coming from the legendary firms.

Again, the only people who leave the wirehouses are those who were going to be fired in the next year or so.  It's just the way it is--with a handful of exceptions.

So, if you have what it takes to catch on with a wirehouse GRAB IT.  If you don't try the regionals in your area.  If you can't get on there try the banks and credit uinons.

Then, when you're not making a living wherever you are do the Alamo--take your last stand as an independent.

dino boy a.k.a NASD Newbie

go get a colonoscopy as you seem to sound as if have had the matching lobotomy

My version of scrim's update for the curious...as of today, a little over $26 million AUM.  September's commission pipeline is about $50K gross (although I'm certainly not averaging that...running about $15-20K in a normal month).  Asset growth over the summer was slow, but I've got $700K in the transfer/new assets pipeline and more indications of interest, so $30 million by December is looking like a very realistic goal.  I'm starting to do my first round of annual reviews and I had a successful client appreciation event earlier this month that drew just over 100 people (which Nasty would say was too many...oh well).

I'm in the process of helping another former colleage make the jump to LPL in a neighboring town.  I'm well pleased with the transition and well pleased with LPL.

[quote=NASD Newbie]

I also have no desire to engage in a food fight.

I am curious to what you mean when you say that the wirehouse environment is not for you?

Could you not walk through a luxurious office to your own private office against a back wall with windows facing the most specatular scenery in your part of the country.  Sitting outside is a sales assistant or more--there is everything you could possibly want in the way of research at the tips of your fingers.  Your every wish is catered to by a branch manager who is there to help when you need it, but stay out of your way when you don't.

If you were a lawyer would you not want to be a partner in the premier law firm in town rather than chasing ambulances from some seedy office above a barber shop?

I don't care how nice you think your office is--it pales by comparison to the palaces where wirehouse brokers work.

There are tens of thousands of people out here who don't trust their money with anybody except the firms who are members of the NYSE who operate out of fancy offices with brokers who they assume have college degrees and are well trained.

The further you drift from that image the fewer prospects you have.

If you're able to do a quarter of a million on your own you'd probably do a million if you had the mystical power of a business card that introduced you as coming from the legendary firms.

Again, the only people who leave the wirehouses are those who were going to be fired in the next year or so.  It's just the way it is--with a handful of exceptions.

So, if you have what it takes to catch on with a wirehouse GRAB IT.  If you don't try the regionals in your area.  If you can't get on there try the banks and credit uinons.

Then, when you're not making a living wherever you are do the Alamo--take your last stand as an independent.

Congrat's Indy...

Keep the struggle alive!

Newbie wrote:

If you met "a lot of million dollar producers in San Diego" why is it that the top 20 LPL producers don't have an average production exceeding, or even approaching, a million? 

Just because I love pointing out when Newbie is wrong - frankly that gets old due to the frequency. 

LPL has over 96 advisors that are producing north of $1 million.  Also, roughly another 250 advisors are doing north of $750k in production - does this qualify as "even approaching" newbie?

[quote=NASD Newbie]

I also have no desire to engage in a food fight.

I am curious to what you mean when you say that the wirehouse environment is not for you?

Could you not walk through a luxurious office to your own private office against a back wall with windows facing the most specatular scenery in your part of the country.  Sitting outside is a sales assistant or more--there is everything you could possibly want in the way of research at the tips of your fingers.  Your every wish is catered to by a branch manager who is there to help when you need it, but stay out of your way when you don't.

If you were a lawyer would you not want to be a partner in the premier law firm in town rather than chasing ambulances from some seedy office above a barber shop?

I don't care how nice you think your office is--it pales by comparison to the palaces where wirehouse brokers work.

There are tens of thousands of people out here who don't trust their money with anybody except the firms who are members of the NYSE who operate out of fancy offices with brokers who they assume have college degrees and are well trained.

The further you drift from that image the fewer prospects you have.

If you're able to do a quarter of a million on your own you'd probably do a million if you had the mystical power of a business card that introduced you as coming from the legendary firms.

Again, the only people who leave the wirehouses are those who were going to be fired in the next year or so.  It's just the way it is--with a handful of exceptions.

So, if you have what it takes to catch on with a wirehouse GRAB IT.  If you don't try the regionals in your area.  If you can't get on there try the banks and credit uinons.

Then, when you're not making a living wherever you are do the Alamo--take your last stand as an independent.

Isn’t it funny when Newbie is proven wrong he simply retreats and stops posting?

NASD Newbie - are you communicating via a time machine from the year 1985? 

I have worked in many environments in my 20 years in financial services.  I have friends in the wirehouses, in the banks, regionals, you name it.  I had lunch yesterday with another friend who, like me, is now with LPL.  We met at his new building (brand new development in the Western Suburbs of Minneapolis) and he gave me a tour.  Brand new everything - plasma screens, walnut and granite receptionist desk, large board room.  Not only was it some of the nicest space I've ever seen, HE OWNS IT!

It is the height of arrogance and denial to think independence is only for wash-outs from the wirehouses.  Large producers are jumping too, and they're only jumping one way.  It's not about failing somewhere else - that may have been true in many cases 20 years ago but no longer.  It's about wanting 100% control with NO branch manager overhead/meddling and absolutely no research or product bias.  This is what folks like you don't get - it about the advice model, not just the economics.  

You're right that it's not for everyone.  You need to have an entreprenurial gene in your body, you need to be OK with being a business owner and managing the phone bills, etc.  (Or find a colleague who will do this and partner with them.)  However, you are as wrong as a person can be about independence being the Alamo.  It's more like leaving home and finally living your own dreams.  I'll never go back.       

Great stuff, mplsindy...

On a separate note, below is most of a reply PM I did today from someone looking to take the plunge.  Although it's somewhat repetitive, since I made lots of keystrokes and took about a half hour out of my day, I thought I'd share since some may find it useful...

“What did you do to prepare and what would you do differently if you had to do it again?”<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

What I would have done differently is kept a better lid on my departure.  I got called out two days before I planned on leaving...I suspect from an employee at the office furniture place.  If I'd had my head on straight, I would have insisted on meeting with the owner only, after hours and done business in my corporate name only.  In the end, the two days wasn't a big deal, but it made for an uncomfortable confrontation that wouldn't have been necessary.  Bob Fragasso has a great book that if you haven't read, you should...ASAP.  Three months seems like an eternity, but it will come faster than you think.

“I have been looking at offices at LPL. One option is join an office of 2 brokers and be my own OSJ. The other is to join a large producer at LPL and get a 60% payout (my only expenses would be health ins, E&O ins and platform fees.  If I choose the 60% payout option he will raise my payout based on production (up to 80%).”

To be honest, the 60% doesn't sound bad to me, particularly if you can structure the set-up to allow for a peaceful exit down the road if you get to the point that you want to be your own OSJ.  Assuming 60% of gross, that's 15% less than LPL would charge you if they were your OSJ and they would expect at least 125K in annual production, although they'd give you time to get there, and based on your info, I don't see this as a difficult hurdle for you.  That 15% covers your telephone, rent, utilities, office supplies, use of copier and fax, etc.  Not a bad deal if you have a decent exit clause.  It also allows you to focus on moving clients, rather than setting up an office, which helps keep a lid on your plans.  I would be up front with the OSJ and tell him that you would like to structure the agreement so that a few years hence, you can move out to your own shop and seamlessly move your clients also.  You may decide never to do this, but you need the option.  Also, the 70 & 80% payouts seem very fair, particularly if they apply to all revenue rather than just what is over those thresholds.

“…how are you getting new clients?”

My new clients are coming from some unexpected sources (i.e., the bank president), but I would say mainly the following places: (1) client referrals - these have increased quite a bit since I left the bank.  I've made it a practice to tell clients that I can really use their help since the bank is no longer spoon feeding me (although like you, I made most of my own success...the referrals at the bank were 90% junk).  I think many clients take a sense of pride in helping me succeed.  I always reward the extra good referrals with a note of thanks and a $25 gift certificate to a favorite restaurant. (2) Referrals from my accountant friends.  Not as valuable as client referrals, but I've received several good fee-based referrals (since we can revenue share with them on that - I'd offer 10% of the first five year's worth of fees) (3) Business received from visibility in the community.  I do a mid-day and closing market report on the local radio station ($250/month with 12 second spots 3X/day with the local weather) and a business card-size ad on the weekly local stock page ($20/week).  I'm also chairing the local <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />United Way campaign this fall, am treasurer of their board, and am a past president of the local Kiwanis club.  I make it a point to attend chamber meetings and eat lunch a places that other community leaders frequent.  (4) Consolidation/new investments from current clients.  I have several clients that have either added to their holdings or took this opportunity to make me their exclusive advisor.

Looking back over the past year, these are some examples of new business I've booked; 1.5 mil in fee-based trust accounts I was working on before I left, 1.3 million from a guy I worked with on the United Way board, 600K from an out-of-state son who inherited an was told repeatedly by his parents what a good job I did for them, $500K from a client referral, $400K from a client referral, $270K from the accountant referral,$350K from a client referral, $220K from accountant referral,  160K client referral, and many other smaller accounts from various sources.  All in all, I probably had about $6-7 million in new business (most of it fee-based and L-share annuities), and brought probably $17 mil from my old book (book was $47 mil, but I only targeted about half of that...some was immoveable due to irrevocable trusts, and some was just garbage...fee too low, CD whores, etc.).  I figure to have more new business going forward since the transfer rush has slowed to a trickle (although some is still coming more than a year after I left...I'm only targeting half a dozen clients I left behind at this point, but others are coming unasked).

“…how good a relationship did you have with your clients?”

I would say that my relationship was pretty good.  Some had known me since I was a child, a few were family, but many have only worked with me for 4-5 years.  I noticed that clients who were newer tended to be more hesitant to move.  My contact with them was similar to yours and I did very similar stuff before I left (taking fee-based clients to lunch, etc.).  If I was your inspiration on the contact ramp-up, you've made my day<?:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" /> . Some you expect to come with you will surprise you and stay.  Some whom you expect to stay will surprise you and leave.  Life is an emotional roller coaster for awhile, but you won't believe how refreshed and invigorated you'll feel after you make the move.  I'm happier than I've been in years.

Last, but not least, have an attorney advise you on permissible activity/contact with former clients once you make the transition.  LPL has a staff of attorneys that will give you some unofficial advice based on how your non-compete reads.  If it is a particularly messy contract, you may want to spend the extra dough an have your own attorney advise you.

That's quite a rant, but hopefully I got through all your questions.  If you need clarification, please feel free to PM me.  I feel blessed in this career, and blessed in my particular situation and I get a lot of satisfaction helping others navigate the same waters I did in 2005 (thus, the numerous posts...).

If you find all this helpful and want to express thanks to those who've been helpful along your journey, consider posting about your transition experiences for the benefit of others who are considering taking the plunge.  Good Luck...

Cool post Indy.  You’ve clearly done a great job, and are an inspiration to the rest of us!

[quote=mplsindy]

NASD Newbie - are you communicating via a time machine from the year 1985? 

I have worked in many environments in my 20 years in financial services.  I have friends in the wirehouses, in the banks, regionals, you name it.  I had lunch yesterday with another friend who, like me, is now with LPL.  We met at his new building (brand new development in the Western Suburbs of Minneapolis) and he gave me a tour.  Brand new everything - plasma screens, walnut and granite receptionist desk, large board room.  Not only was it some of the nicest space I've ever seen, HE OWNS IT!

It is the height of arrogance and denial to think independence is only for wash-outs from the wirehouses.  Large producers are jumping too, and they're only jumping one way.  It's not about failing somewhere else - that may have been true in many cases 20 years ago but no longer.  It's about wanting 100% control with NO branch manager overhead/meddling and absolutely no research or product bias.  This is what folks like you don't get - it about the advice model, not just the economics.  

You're right that it's not for everyone.  You need to have an entreprenurial gene in your body, you need to be OK with being a business owner and managing the phone bills, etc.  (Or find a colleague who will do this and partner with them.)  However, you are as wrong as a person can be about independence being the Alamo.  It's more like leaving home and finally living your own dreams.  I'll never go back.       

Monthly "scrim" update...just under $28 million at the end of September.  I think I can get to that $30 million goal by the end of the year if a couple of things hit.  There's a lot in the pipeline...not as much got pushed through in September as I'd hoped...just over 20K for the month, but the beauty of this business is, most of it comes out eventually so October is looking like a very good month by my standards.

Once I hit the end of the year, I'll have to sit down and try to develop some reasonable goals for next year.  I'll probably put my AUM goal at around $40 mil, and production of at least $275K, which is what it will take to get back to national conference on LPL's check.

A lot can happen to derail a plan, but at least I control what the budget and my goals look like.

If you are looking at them and not looking at Wachovia FINET, you are sellling yourself out my friend. Just my opinion and I’ve talked to all 3.

Wachovia didn’t look like a true indy broker to me…others have called it pseudo-indy.  What did you like so well about them?

I am hearing good things about brokersxpress. www.brokersxpress.com. I think it is worth a look. High payouts, good platform.

This thread was doing so well until these two clowns chimed in with their advertisments…

Fine Freedom, I will let that go. I am still at a wire house and was looking for feed back.



Is LPL the way to go?

1970, I have no idea which firm is the best for you.  There are a lot of people on here who'll tell you this firm is better than that, or indy is better than wire (or vice versa).  Ultimately, I know guys who are financial advisors with all these different types of firms, are all making good money, are perfectly happy and have happy clients.

Beyond that, what really matters?  Talk to any firm you're interested in, compare the things that are important to you, and make the jump.  Or decide you're better off where you are.

[quote=indy1970]Fine Freedom, I will let that go. I am still at a wire house and was looking for feed back.

Is LPL the way to go?[/quote]

If you need someone else to tell you where to go, you are "dependent" and shouldn't even think about going "independent."

What is amusing is people who appear to be making life changing decisions based on what complete strangers tell them on an Internet message board.

This is for you, five bucks, but at long as I'm here, I'll provide my periodic "Scrim" update...

As of yesterday, AUM is $30.9 million and YTD production $211K.  I'm a little disappointed where my production ended as a few things I expected didn't hit, but I've got a lot in the hopper for next year, I guess.

What is your net payout % after expenses?

68%

I just saw Scrim's update which inspired me to dust this thread off and share how the first third of 2007 has gone.  AUM is now $35.5 million, aided somewhat from a good four pretty good months and some rollover/transfer/new money activity.  Every time I think there are no more former clients coming, another one calls for an appointment.  To his credit, my successor has been classy about the defections and we continue to get along well for competitors.  Gross for the first four months was just over $84K, although that number is really starting to pick up as I'm already pending just over $26K for May.  I should be able to hit goal of $300K this year, which still isn't where I was when I left the bank channel in summer '05, but I've been more focused on building recurring revs than hitting big numbers this year.

If I do hit my numbers this year, I'll net over $200K for the first time in my career, which is well beyond my expectations for this stage of my independence.  The only goal I've set is to be at $50 million by the end of 2008 and have a velocity of at least 70 bps.  Without a major market setback, these shouldn't be all that difficult to attain.  In a world of million dollar producers, I'm just a small fish, but I'm a happy fish.

IndyOne -

Just a short to let you know how much I appreciate your efforts on this board.  I just read this entire thread from start to finish.  It has been extremely insightful and helpful.

I am at a wirehouse firm and considering the indy route.  I have narrowed my consideration down to LPL, RJ and Wachovia.  I know several posters were negative to Wachovia, but they have made very impressive strides in the last couple of years and are worthy of consideration.

I must admit, LPL was #3 on my list until I read your posts here.  As I dig into this a bit more, I will most likely PM you for more insight.  Your time and efforts are greatly appreciated.  Keep up the good work and GOOD LUCK!

[quote=gateway]

IndyOne -

Just a short to let you know how much I appreciate your efforts on this board.  I just read this entire thread from start to finish.  It has been extremely insightful and helpful.

I am at a wirehouse firm and considering the indy route.  I have narrowed my consideration down to LPL, RJ and Wachovia.  I know several posters were negative to Wachovia, but they have made very impressive strides in the last couple of years and are worthy of consideration.

I must admit, LPL was #3 on my list until I read your posts here.  As I dig into this a bit more, I will most likely PM you for more insight.  Your time and efforts are greatly appreciated.  Keep up the good work and GOOD LUCK!

Joe,

UVEST, our B/D, has been acquired by LPL last year.  We have been integrated into the LPL platform.  They are no longer focused strictly on the indy adviser.

Gateway - thanks for the kind words and you're welcome.  It has been an interesting and rewarding trip thus far.  While there are moments of aggravation (I had a compliance email the other day accuse me of not completing a VA form, which I had to waste time responding to even though it was already signed and in the file), I've yet to regret any aspect of my decision.  Aside from the B/D's you've referenced, I'd take a look at Commonwealth...they seem to get pretty good press.  Take your time and carefully plan your move.  Keep the circle as small as you possibly can.

BFC - I know nothing about the UVEST platform, but I'm curious what you think of LPL's thus far, and if you are using the same platform as us indies (or did they modify it for your channel?)

[quote=BankFC]

Joe,

UVEST, our B/D, has been acquired by LPL last year.  We have been integrated into the LPL platform.  They are no longer focused strictly on the indy adviser.

LPL is great, end of story. RJ indy think you work for them. Any questions.

I thought UVest was still clearing through pershing and using their platforms?

Bump (for advisor5)

I’m reading this interested in both RJ and LPL. Don’t do bond business directly, leave that to SMA and mutual fund managers. Do $1,2mm in production with another Jr. partner. We have created our own logo and look so don’t want to lose that, current clients and communities in which we work know us that way.

95% is fee advisory business. Do financail and estate planning along with investment advisory within the context of those.

Thoughts on either of these firms for us?

The use of your own logo and name is a complex matter these days if you wnat to stay out of trouble. We have i the past accomodated this sort of business properly. call me at 218-681-7344.
Mike Jordan

LPL, allows you to own and run your own business; including using your own logo!

Worked three years at RJA and about 3 years at RJFS. IMPORTANT unless you are large enough to be your own Branch Manager, stay away from RJFS. I worked for two who seemed nice at the start, but turned out to be certified nuts. And at RJFS that branch manager owns you, your book and your clients. And you will get -0- help from people at headquarters like Matt R, who will always side with the Branch manager. It is a shame because RayJay is a great firm to work for, a company I was proud to work for. If you have a family and need benefits, look seriously at the RJA side. And ask yourself why so many very large producers do NOT go indy. There is a huge benefit and overhead tied up in being independent. I was very happy at the Branch, and I have nothing negative to say about the RJA side.

Can anyone provide color on the $30 bond ticket charge referenced in the April 20th, 2012 RJFS firm brochure? Is this charge only for clients enrolled in an advisory program or do transactional clients get whacked w/ this as well? I can’t imagine any client being happy to pay a $30 service fee when they buy a bond.

any updates? Obviously Wachovia isn’t an option any more. How do you guys feel about LPL versus RJ at this point? Thanks for the info!