Tick tock tick tock

Wow, I don't think I've ever read so many names misspelled.

What is going to happen is the banks will eventually own all of the legacy brokerage firms--including Mother Merrill which is often considered a target of a major European bank.

I do agree that the business as it has been known is going to die.  There is no reason why people with money to invest should pay more than is necessary to invest it--and it's specious to conclude that "advice" being given by a man or woman who happens to have passed Series 7 is worth a plug nickel.

Wall Street seized on the idea of fee based accounts in an effort to survive--and as I 've been saying since I joined this forum the idea is too new to know for sure if the public will accept having a virtual stranger feel free to steal some of their money every so often simply because they sold the investments in the first place.

We wouldn't stand for a real estate agent who stuck their hand in our pocket every so often just because they sold us our house--there is no logical reason to think that an investor will tolerate it when the market isn't doing very well.

I agree there will be much more consolidation going forward and 2 years from now Mother Merrill and StanLEH Morgan will be wholly owned subsidiaries of some large bank (not necessarily a US based one).

In order to charge a fee or commission you simply must add a value that
is worthy of that amount.  This is performance, protection, piece
of mind, service, and planning.  The need for these things will
ever leave the investing public, but their awareness of these will
increase along with the competition. 



SInce I began I have been hearing the end of what we do and it has only
grown so I do not see the end but continued growth.  The key is
having the right platform, pricing, and service model to capture this
growth. 



Mother Merrill is a target because the world knows they get it, and
have it.  They are a firm that is forward thinking and likes to
act.  It is a joy to see the strategies they are pursuing play
out, despite the pain they sometimes cause (virutal elimination of the
traditional wrap account- its coming). 



For those of you new to the business- there is not better time to be in
it.  More money, more products, more services, more of
everything.  YOU just have to be good, and if YOU are you will win.

How large a piece of mind is offered?

[quote=rightway]In order to charge a fee or commission you simply must add a value that is worthy of that amount.  This is performance, protection, piece of mind, service, and planning.  The need for these things will ever leave the investing public, but their awareness of these will increase along with the competition. 

SInce I began I have been hearing the end of what we do and it has only grown so I do not see the end but continued growth.  The key is having the right platform, pricing, and service model to capture this growth. 

Mother Merrill is a target because the world knows they get it, and have it.  They are a firm that is forward thinking and likes to act.  It is a joy to see the strategies they are pursuing play out, despite the pain they sometimes cause (virutal elimination of the traditional wrap account- its coming). 

For those of you new to the business- there is not better time to be in it.  More money, more products, more services, more of everything.  YOU just have to be good, and if YOU are you will win.
[/quote]

I thought you had to close a sale to recieve a commission.

[quote=Helter Skelter]

I thought you had to close a sale to recieve a commission.

[/quote]

Now you've gone too far.

A month or so back I had a client, errr customer, that called and
demanded to speak with me straight away.  This is unusual, and I
do not take in-bound calls at this time of the day.  I grabbed the
phone and he went on a rant about the fee’s being charged in his mutual
fund account. 



His fee is 1.5% above and beyond the mutual fund management
fees    and his account is valued at $125,000.  His
account was in the          
positive just over 8% for the year, a few points over the averages
at   that time (a month or so ago), and up about 30% since we
took the     account.  This was his entire
retirement asset pool and we did full       
planning for him, despite its gloomy outlook.



He really yelled at me about the amount of money we had taken from his
account.  I listened to his point patiently and told him he was to
find another provider of whatever service he was looking for and he
hung up on me. 



I tell this story here on my day off (going hiking) because this guy,
perhaps like Soo 2 B Gone, does not have the capacity to focus on what
we do well, but instead looks at the other side of the equation. 
This guys portfolio had done just fine, but there was no convincing him
because he focused on the fee. 





Guess What…wealthy people don’t do that. 
Our very best clients and those that that pay the most in fee’s, and
their performance and experience is better right along with it. 
They understand this dynamic.  This is reinforced regularly with
the client satisfaction surveys they complete. 



I charge a fair fee for the service I provide, and that fee is higher
than most…so is what I provide.  I don’t appoligize for it, but
I work very hard to deliver.  Our business is doomed?  I
don’t think so…but I don’t want a business made of up $100K and $200k
clients that can’t see the forest for the trees. 

[quote=Helter Skelter]

[quote=rightway]In order to charge a fee or
commission you simply must add a value that is worthy of that
amount.  This is performance, protection, piece of mind, service,
and planning.  The need for these things will ever leave the
investing public, but their awareness of these will increase along with
the competition. 

SInce I began I have been hearing the
end of what we do and it has only grown so I do not see the end but
continued growth.  The key is having the right platform, pricing,
and service model to capture this growth. 

Mother Merrill
is a target because the world knows they get it, and have it. 
They are a firm that is forward thinking and likes to act.  It is
a joy to see the strategies they are pursuing play out, despite the
pain they sometimes cause (virutal elimination of the traditional wrap
account- its coming). 

For those of you new to the
business- there is not better time to be in it.  More money, more
products, more services, more of everything.  YOU just have to be
good, and if YOU are you will win.
[/quote]

I thought you had to close a sale to recieve a commission.

[quote=rightway]

I tell this story here on my day off (going hiking) because this guy, perhaps like Soo 2 B Gone, does not have the capacity to focus on what we do well, but instead looks at the other side of the equation.  This guys portfolio had done just fine, but there was no convincing him because he focused on the fee. 

[/quote]

If you were his customer and you found out he's taking a day off to go hiking would you feel all warm and fuzzy about the fact that he's robbing your account of 150 basis points, as if it were a challenge to you to question him?

Arrogance has done more than a few goofballs in.

[quote=rightway]A month or so back I had a client, errr customer, that called and demanded to speak with me straight away.  This is unusual, and I do not take in-bound calls at this time of the day.  I grabbed the phone and he went on a rant about the fee's being charged in his mutual fund account. 

His fee is 1.5% above and beyond the mutual fund management fees    and his account is valued at $125,000.  His account was in the           positive just over 8% for the year, a few points over the averages at   that time (a month or so ago), and up about 30% since we took the     account.  This was his entire retirement asset pool and we did full        planning for him, despite its gloomy outlook.

He really yelled at me about the amount of money we had taken from his account.  I listened to his point patiently and told him he was to find another provider of whatever service he was looking for and he hung up on me. 

I tell this story here on my day off (going hiking) because this guy, perhaps like Soo 2 B Gone, does not have the capacity to focus on what we do well, but instead looks at the other side of the equation.  This guys portfolio had done just fine, but there was no convincing him because he focused on the fee. 


Guess What...wealthy people don't do that.  Our very best clients and those that that pay the most in fee's, and their performance and experience is better right along with it.  They understand this dynamic.  This is reinforced regularly with the client satisfaction surveys they complete. 

I charge a fair fee for the service I provide, and that fee is higher than most...so is what I provide.  I don't appoligize for it, but I work very hard to deliver.  Our business is doomed?  I don't think so...but I don't want a business made of up $100K and $200k clients that can't see the forest for the trees. 
[/quote]

The little guys who never made more than $100,000/year are always the worst clients. They don't understand how the world works beyond their cubicles.

[quote=gruntal92]

As earning are reported for the parent companies fo some Refional Firm you might hear the faint taps of death echoing around.  Janney, Steiful, Raymind James, Ryan beck, even A G Edwards could be "dead men walking"  The business is consolidating quickly and critical mass will be key determiners.  Parent companies are not going to stand by and watch these firms hemeroge cash.

If you see your mamangment dealing with market conditions by cutting costs and eliminating positions you'll know rthat they're trying to survive.  If they are "maintaining the status quo:  No cut backs or layoffs is a sign that they are window dressing in hopes of getting a wirehouse to uy them, 

Our business is dying!  We're not needed.  Computers and clerks will handle everything at half the cost!

[/quote]

Your business will  die, If all you do is basic stocks, annuities, mutual funds. If you are just like all the other wire houses down the street  and the client can go online and do what you do you are right you will die!

Good bye!

Good point.  Most people in the world take days off now and again,
I am no different.  I think my clients understand this
notion.  None-the-less I have a team and we have people there from
8am to 7 pm except on Firday, which is 8am to 5 pm.



I am not punching a clock making widgets.  The product I produce
does not sieze in my absence.  Man buddy, do you really not get it
or are you just being combative?

[quote=rightway]Good point.  Most people in the world take days off now and again, I am no different.  I think my clients understand this notion.  None-the-less I have a team and we have people there from 8am to 7 pm except on Firday, which is 8am to 5 pm.

I am not punching a clock making widgets.  The product I produce does not sieze in my absence.  Man buddy, do you really not get it or are you just being combative?
[/quote]

If you're a wage slave you take days off.  If you're an ambitious self employed entrepreneurial type you get your joy from making something happen in your business.

[quote=Soon 2 B Gone]

[quote=rightway]Good point.  Most people in the world take days off now and again, I am no different.  I think my clients understand this notion.  None-the-less I have a team and we have people there from 8am to 7 pm except on Firday, which is 8am to 5 pm.

I am not punching a clock making widgets.  The product I produce does not sieze in my absence.  Man buddy, do you really not get it or are you just being combative?
[/quote]

If you're a wage slave you take days off.  If you're an ambitious self employed entrepreneurial type you get your joy from making something happen in your business.

[/quote]

And if you're really an entrepreneurial type, you don't divide your time up into days. You work hard and you play hard.

I work at a regional and I do not think we are dead. We are profitable and have an incredible balance sheet. If we are bought out, I guess I will cash in my stock, get my retention bonus and leave after my contract for another regional or independent.

 If you look at the stock performance of SF and RJF vs MS and Mer for the last 10 years, they are about the same. AGE has lagged. The only reason you are seeing merrill, ubs buying companies is that the are under pressure to show growth. There have been very few trainees that have made it in the business in the last 5 years. So the big companies are paying crazy money to buy companies. Merrill took a bath on the advest deal. They lost 400 out of the 500 brokers  UBS is paying an average of 1.4 million per broker for macdonald. The legg mason brokers, who have not jumped will jump when the retention deals are over.We, the brokers, are being offered crazy money to go other places because we have made it.

I went regional because they still care about the client.  I was tired of being told who I can deal with and what I should sell them. A small account did not take up much of my time. Everyone out there can chase the 10 million dollars accounts. I have the same chance to get them as a wirehouse. Send me you 100-300k accounts. I have made a good living off 200k accounts. I also have million dollar accounts. I also have 50k accounts. After working at MS for 17 years and interviewing with all the firms, I realized we all have the same type of  accounts. I do not work in NYC or DC and maybe in those markets the accounts are larger. The competition is also larger.

Lastly regarding the complaining client. Some people refuse to pay fees. They are cheap. These people will never deal with us. Some large account, some small accounts think this way. Why do you think the discounters get so much business. We do add value. 20 years in the business is worth 1 or 1.5%. We bring that to the table. There are enough people out there that understand this if you present it right. This is a business not a non profit.

[quote=Helter Skelter][quote=Soon 2 B Gone]

[quote=rightway]Good point.  Most people in the world take days off now and again, I am no different.  I think my clients understand this notion.  None-the-less I have a team and we have people there from 8am to 7 pm except on Firday, which is 8am to 5 pm.

I am not punching a clock making widgets.  The product I produce does not sieze in my absence.  Man buddy, do you really not get it or are you just being combative?
[/quote]

If you're a wage slave you take days off.  If you're an ambitious self employed entrepreneurial type you get your joy from making something happen in your business.

[/quote]

And if you're really an entrepreneurial type, you don't divide your time up into days. You work hard and you play hard.

[quote=aldo63]

Lastly regarding the complaining client. Some people refuse to pay fees. They are cheap. These people will never deal with us. Some large account, some small accounts think this way. Why do you think the discounters get so much business. We do add value. 20 years in the business is worth 1 or 1.5%. We bring that to the table. There are enough people out there that understand this if you present it right. This is a business not a non profit.

[/quote]

It is not a good idea to refer to people who don't want to pay extortion as "cheap."

Twenty years in the business is meaningless since the business can be understood in about six months or a year.

The fact that it is a business is true, but it's the only business I can think of that feels justified to take an ongoing fee for doing very little other than sitting down once or twice a year and suggesting things that are as close to common sense as it comes.

I think you're going to find more and more people who will consider the idea of ongoing fees to be repugnant.

Somebody said something to the effect of, "His portfolio was up 8% so my 1.5% was justified."  My response is, no it's not because your 1.5% was close to 20% of his portfolio's increase--and that's on top of paying fund managers too.

It really is an obscene idea.

It’s funny how these children think that we’re going to turn into dinosaurs. I can close deals. All I have to do is figure out what people are buying and sell it to them. It’s the kids who can’t recognize that when a person doesn’t want what the kid THINKS is best who will wash out. The clients think that what THEY want is what’s BEST for them.

[quote=Soon 2 B Gone][quote=aldo63]

Lastly regarding the complaining client. Some people refuse to pay fees. They are cheap. These people will never deal with us. Some large account, some small accounts think this way. Why do you think the discounters get so much business. We do add value. 20 years in the business is worth 1 or 1.5%. We bring that to the table. There are enough people out there that understand this if you present it right. This is a business not a non profit.

[/quote]

It is not a good idea to refer to people who don't want to pay extortion as "cheap."

Twenty years in the business is meaningless since the business can be understood in about six months or a year.

The fact that it is a business is true, but it's the only business I can think of that feels justified to take an ongoing fee for doing very little other than sitting down once or twice a year and suggesting things that are as close to common sense as it comes.

I think you're going to find more and more people who will consider the idea of ongoing fees to be repugnant.

Somebody said something to the effect of, "His portfolio was up 8% so my 1.5% was justified."  My response is, no it's not because your 1.5% was close to 20% of his portfolio's increase--and that's on top of paying fund managers too.

It really is an obscene idea.

[/quote]

Charging on-going fees isn't to my liking and it's easy to steal clients who are being charged fees. However, recurring fees appeal to a lot of people and if that's what they want to do, so be it. In addition, they should be able to charge whatever the market will bear. If they want to risk having their clients run into someone like me who will turn off the broker meter, that is their choice. I get a kick out of raising assets and closing deals. They get a kick out of looking at midget porn on the internet and collecting their money every quarter. To each his own.

Midget Porn.

Denny Crain, Denny Crain

Your confusng charging fees and seeing fees.  I do not open small
accounts anymore (like our $125k example above) because they typically
require mutual funds.  Do you use mutual funds with your
clients?  Do you use annuities with your clients?  If you do
your clients are paying trading fee’s, management fees and commissions,
they just don’t see it.  You can pack my lunch all day long with
small accounts and I don’t care.  I would submitt, however, that a
larger client that has a pile of mutual funds with a broker that “is
not running the broker meter” is virtually my entire pipeline.  We
typically run our own portfolios and charge a fee.   They see
it, some can deduct a portion of it, the perormance is good, and they
enjoy all of the benefits of a privately managed portfolio.  

What is the profile of your team--gender, ages, education, experience, previous B/Ds, any specific expertise?

What do you figure makes you "better" than a mutual fund?

My team is 4 advisors, 2 assistants and 2 interns.  We have been
in the business between 5 and 15 years.  We have 2 CFP’s, 1 CFA,
and 1 CIMA.  We all have Bachelors and 1 MBA.  2 Men and 2
women, the assistants are women and the interns vary.  We have no
specific expertise, although we do some non-profit work. 



We are not better than mutual funds, there are many really good mutual
funds that have performed far better than us.  We just do a good
job of running the money for clients so they do not have to concern
themselves with it.  We usually beat our benchmark by a few basis
points.  Some of the benefits are that we customize the portfolios
so the clients’ likeness comes through.  Perhaps there are sectors
or positions they favor or refuse to participate in, a characteristic
of many clients once they are asked.  We run the portfolios in
tune with an investment policy they create with us. We are also able to
harvest losses, gift shares, all sorts of neat things traditional
managed accounts or mutual funds cannot accomplish. 



We are not for everyone, and thats OK.  Our typical client is
wealthy Boomers that are busy and sophisticated, but not real
interested in the details.  Usually we manage in excess of $1
million per household but will go as low as $250k. 



The reality is our new clients typically began investing with a broker
or on there own in mutual funds because that was what was best for them
at that time.  Their brokers or discount firm failed to address
some of the items I mentioned above with them, and we do.  We are
coming up on my favorite time of year…capital gain distribution
time.  Our lowest performing strategy is up 6% YTD and we have a
net realized capital loss for tax purposes in that particular
one.  Many mutual fund shareholders are flat or up but will get
the unsolicited capital gain.  We get lots of referrals in the
fall because we market harvesting losses, and this year is especially
juicy due to the rough summer.  We have it down cold and if we get
in front of someone we usually win.  Our practice is planning
based and very very disciplined in terms of process. 

 

Do you short, use margin, use options, futures?

1. It is not a good idea to refer to people who don't want to pay extortion as "cheap."

answer cheap is cheap. I want to be paid for my knowledge.

2. Twenty years in the business is meaningless since the business can be understood in about six months or a year.

answer: how can someone in 6 months know what it is like to experience:

 market up and downs,

 how people, clients react to this,

sector mania

 bubbles

1987 crash

1990 gulf war

1993 bond market

early 1990's s&l crisis

ipo mania and how to trade them

how to understand and play  research reports from corporate finance side. how to use research. how to do your own research

real estate partnerships

international investing

how to not buy the best performing mutual funds before you owned them

value investing

momentum investing

pink sheet stock/stock promoters

there are so many things that a one year broker has never seen or experienced. Would you prefer a new realtor, lawyer, mechanic, chef,doctor ect over someone who has been through it all

The fact that it is a business is true, but it's the only business I can think of that feels justified to take an ongoing fee for doing very little other than sitting down once or twice a year and suggesting things that are as close to common sense as it comes.

answer:I have a friend, who left me in 1997. he was in mutual funds. his IRA was about 100k. He left and went to a discounter, diversified his investments into several tech/net stocks and blew his account down to nothing. The funny thing is now he is making good money and he still will not do business with me. He bought an annuity in his IRA. If he knew the fees he would lose his mind. he did not see them or do his homework. Cheap is Cheap, Stupid is stupid. I will admit I was happy when he blew himself up

I think you're going to find more and more people who will consider the idea of ongoing fees to be repugnant.

Somebody said something to the effect of, "His portfolio was up 8% so my 1.5% was justified."  My response is, no it's not because your 1.5% was close to 20% of his portfolio's increase--and that's on top of paying fund managers too.

It really is an obscene idea

Answer- your right some people will not pay fees and Others will

We write covered calls and buy puts.  No shorting, no margin and no futures.



We use mutual funds or separate managers for Natural Resources, Real
Assets, Manged Futures, International, Emerging Markets, and High
Yield.  We also use ETF’s for sector and other specific
opportunities (we made some good hay in Brazil).

You're not bright enough to know the difference between your and you're.  You've ridden a bull market for twenty years and think you're something special.

One of these days the media will turn its bright lights on this disgusting trend and it will instantly die.

The above is not aimed at Rightway.

[quote=rightway]We write covered calls and buy puts.  No shorting, no margin and no futures.

We use mutual funds or separate managers for Natural Resources, Real Assets, Manged Futures, International, Emerging Markets, and High Yield.  We also use ETF's for sector and other specific opportunities (we made some good hay in Brazil).


[/quote]

Do you write calls and buy puts in the same accounts?

No.  We have a specific covered call strategy we run all on its
own.  We buy the stock, write the call and then give it up or roll
it up.  Not my favorite strategy we run, but its works well in
sideways markets.  We also write calls when clients have very
large positions and are not ready to sell, but would consider at a
higher price. 



We buy puts just to protect positions.  One of our strategies ends
up with equity concentration over time and I get nervous when we have a
position that has increased 6-7 times over.  Our discipline tells
us to keep letting it run but I don’t want the thing to pull back then
have the sell discipline hit.  So, I buy a put to protect it and
if it runs I am still in it…I hate stop losses.

Why not use margin with a put to protect the position since it’s so heavily leveraged?

Cannot do any margin…not allowed in the managed account platform due to the fact I have discretion.

[quote=rightway]Cannot do any margin...not allowed in the managed account platform due to the fact I have discretion. [/quote]

How long have you been registered?

I started in 1993.  Began running my own portfolios in 2001

Dear STBEgone

At least I have done something for 20 years. Leave the business, take your 1000 dollars rollover to etrade and buy an ETF.

[quote=rightway]I started in 1993.  Began running my own portfolios in 2001 [/quote]

Will you be denied the right to use margin forever simply because you have discretion, or is it something that can change over time?

Not sure.  I never really looked into it.  I can see the value in it though.  

Some of the inverse funds are allowed on my discretionary platform.

[quote=rightway]Not sure.  I never really looked into it.  I can see the value in it though.   [/quote]

The way I look at it is if an equity is good enough to buy in a cash account it should be twice as good to buy more of it on margin, just use a put to control the risk.

I'm surprised that you're not given the leeway to do it if the client understands what you're doing.

What surprises you about that Soon 2 B Gone?  For you to be surprised indicates you are either being funny or you are lacking in understanding of risk and compliance.

Stops do not help when a stock gaps down. 

[quote=Soon 2 B Gone]

[quote=rightway]Not sure.  I never really looked into it.  I can see the value in it though.   [/quote]

The way I look at it is if an equity is good enough to buy in a cash account it should be twice as good to buy more of it on margin, just use a put to control the risk.

I'm surprised that you're not given the leeway to do it if the client understands what you're doing.

[quote=Malcolm]

What surprises you about that Soon 2 B Gone?  For you to be surprised indicates you are either being funny or you are lacking in understanding of risk and compliance.

Stops do not help when a stock gaps down. 

[/quote]

Where did I advocate the use of stops?

My mistake.  I read stop when you wrote put.   I forgot, your name is put not stop.  I guess I’m confused.

No, my name is not Put, it’s Maven.

Well good for you.  That’s a nice name.  Now tell me something I don’t already know about managing discretionary portfolios.  I’m here to learn.  

A short term gain will always trump a long term loss.

Well that's real deep.  So lets say you bought a stock last week and since then it is up 7% on average daily volume of 10 million shares.  Today it drops 4% on 2 million shares.  Should I sell and take my 3% gain? 

Or lets say was up only 4% on average daily volume of ten million and today it drops 6% putting me in the hole 2% on 5 million shares.  Should I dump it?    Should I margin myself and buy a put?   

[quote=Malcolm]

Well that's real deep.  So lets say you bought a stock last week and since then it is up 7% on average daily volume of 10 million shares.  Today it drops 4% on 2 million shares.  Should I sell and take my 3% gain? 

Or lets say was up only 4% on average daily volume of ten million and today it drops 6% putting me in the hole 2% on 5 million shares.  Should I dump it?    Should I margin myself and buy a put?   

[/quote]

Down hard on light volume always makes me wonder why the bids are--do others know things I don't?

I step out of the long stock--perhaps buy a near call to hedge being wrong.

Seriously?  Well that’s where we differ.  For me, generally speaking, volume determines real price.    

Have a good weekend.  I’m going to take my kids out to the playground and then have a great evening relaxing on my big cushy sofa watching a movie with the wife. 

[QUOTE]

I think you’re going to find more and more people who will consider

the idea of ongoing fees to be repugnant.

Somebody said something to the effect of, “His portfolio was up 8%

so my 1.5% was justified.” My response is, no it’s not because

your 1.5% was close to 20% of his portfolio’s increase–and that’s on

top of paying fund managers too.

It really is an obscene idea.