WB FINET Program
Anyone have any experience with the WB FINET program? I am thinking about taking the plunge and would appreciate any input, + or -, that anyone can share…
What is it your are hoping to achieve? What is most important to you?
I feel like a business owner now with all of the responsibilities of keeping the business going and growing only I have someone else taking the lions share of the profits before I see the check each month. It’s not simply about a higher payout by goin indy, but you are being compensated better for doing the same work with a few added responsibilities i.e. rent, staff, expenses all being paid on time. I feel anyone in this business is truly an entrepreneur because it takes that just to survive in this business with a smaller part of the benefit, why not be FINET indy and have the bigger bulk of the benefit while being the same entrepreneur that I am now? I already work the hours I want, come and go as I please, service my clients as I feel necessary. None of that would change going FINET. I look at all of the takeaways that have occurred to us legacy AGE brokers since the WB merger/takeover i.e. 401k match & bonuses, I would be better off indy wth a SEP or an owner only 401k combined with a DB plan socking away some serious cash and then expensing it all to the IRS. These would be a few of the bennys, I am sure there are a million more…
Agreed. As a former AGE FC and now independent, I agree wholeheartedly with your premise.
What I’m confused about is your focus on FINET instead of more truly independent options. Have you considered other independent options and found something appealing about FINET? Are you even ELIGIBLE to go to FINET yet? My recollection is Legacy AGE FCs had to wait something like 5 years post-merger before being allowed to go FINET. Has this changed?
Finally, approximately what % of your current production is fee based vs. traditional commission based?
You should broaden your horizons beyond FiNet, as Morphius says. From what I’m reading there are many on this board who can help you, and you sound like you’re of the right mindset to take the leap.
Hey Morph,
When did you go indy and was it directly from AGE? What was your retention level regarding clients following you? I can go FINET by DEC but will probably wait until FEB 08 due to systems conversion to WB. No 5 year wait period. I will probably do FINET for about 1 year and then hire another B/D. You only have a 30 day window when going FINET to get your clients to return the authorization form to the branch and after 30 days, the clients are open game for the sharks to try to grab. I think going FINET would be easier and more of a seamless transition for the clients than switching B/D's at first. Work under FINET for a year or so and then change B/D's and I should have nobody trying to hack my clients . My infrasructure will be in place and then it will be a tech change for the computers at that time. Sounds easy, I am sure problems will arise. I am simply trying to take a simple path that another person took that went indy from WB a couple of years ago. I hate WB at this point (actually since 5/31/08) of the game. They are the biggest bunch of liars and are thieves to us legacy AGE guys. The bank mentality of trying to run the brokerage side stinks to high HELL !!! I think I would rather be with BAC or JPM at this point since I am serving a BANK PUPPETEER anyway. At least their bad news seems to be pretty much behind us .[quote=Bud Fox]Hey Morph,
When did you go indy and was it directly from AGE? What was your retention level regarding clients following you? I can go FINET by DEC but will probably wait until FEB 08 due to systems conversion to WB. No 5 year wait period. I will probably do FINET for about 1 year and then hire another B/D. You only have a 30 day window when going FINET to get your clients to return the authorization form to the branch and after 30 days, the clients are open game for the sharks to try to grab. I think going FINET would be easier and more of a seamless transition for the clients than switching B/D's at first. Work under FINET for a year or so and then change B/D's and I should have nobody trying to hack my clients . My infrasructure will be in place and then it will be a tech change for the computers at that time. Sounds easy, I am sure problems will arise. I am simply trying to take a simple path that another person took that went indy from WB a couple of years ago. I hate WB at this point (actually since 5/31/08) of the game. They are the biggest bunch of liars and are thieves to us legacy AGE guys. The bank mentality of trying to run the brokerage side stinks to high HELL !!! I think I would rather be with BAC or JPM at this point since I am serving a BANK PUPPETEER anyway. At least their bad news seems to be pretty much behind us .[/quote]That certainly sounds like one way to minimize the risk of poaching, as it apparently buys you 30 days hands-off time. That couldn't hurt.
OTOH, my experience (direct from AGE to RIA) was such that I don't think 30 days hands-off time would have made much difference. I brought over in excess of 95% of my targeted clients (didn't even ask some that I didn't want to bother with anymore) despite the best efforts of the sharks. So I didn't find the efforts of the sharks to be particularly effective. Annoying, sure, but not effective.
I agree that getting your infrastructre in place would be a nice bonus. Office space, staff, systems, equipment ... it all takes some time and effort to make choices, no question.
My question is this: how much patience/trust will your clients have to go through two changes in roughly a year? If they must sign the raft of paperwork to authorize the change to FINET, and then go through that again 12 months later, I would guess you may well lose some on the second change. It's a hassle and a bit unsettling, since clients by and large don't fully understand what is involved. Generally the safest way across a chasm is with one large leap instead of two smaller ones.
So my suggestion would be to seriously investigate what would be involved in one move to where you want to be. It probably isn't anywhere near as bad as you fear.
Good luck. The dream awaits you.
The only paperwork the clients need to sign is the FiNet authorization form (for EACH account). You do not have to repaper any of the accounts. I have heard that you also get an additional 30 days (60 total). You will work on a "reduced" payout, approx 75% for the first year if you go from PCG to FiNet but you get to keep the retention bonus. You will also need to have both your Regional and BOM sign off on the FiNet request. Then go to St Louis to meet with the FiNet gang and have them analyze your current business breakdown. If you are a go from there, it is a matter of getting into the "que" to go indy. They only release 3-4 FC/teams per month so you might want to at least get the process going. If they get back to you sooner than you are ready, you can postpone the date. All in all it should be relatively painless but I agree w/ Morphius, I might want to wait a little longer than a yr before changing BD's.
Shredder, You are right on the money with all of that. You have obviously talked with one of our FINET boys. I am going to have Robbie run the pro-forma here in a short time for me. Do get to keep the retenton, but will lose the deferred comp (six figures). The only thing I did not know about was the extra 30 days. Not sure what that is for, but 60 days cool off is better than just 30. I am certain my key households will follow me with no hesitation, but just to be able to not have the other sharks in my branch calling my clients and trying to plant bad seeds will be helpful. I come from a pretty lazy office and the brokers constantly expect these kind of hand outs and applaude when a broker leaves or is terminated so they can finally call someone. Average production in my office ex the million dollar producer is only about a buck and a half, maybe 2 tops. I am sure most of these guys will be pushed out before long. The word is that WB does not want anyone less than crest with 5 or more years in the biz…That being directly from the Reg Mgr. I will have to figure out where things stand a year or so after going FINET and pick the best B/D at the time. I simply cannot stay with WB, they suck and so do their philosophies. They have a lot to learn about how to treat people that they take over…especially the AGE branch managers.
[quote=Bud Fox] I simply cannot stay with WB, they suck and so do their philosophies[/quote]
And so your plan is to go with WB Finet?!?!
Well, Its like this. I am looking for the easiest transition to go indy for myself and my clients. I have been told that the FINET brokers are hands off because you are on your own except for a pop compliance visit. I am really sick of our local complex mgr and reg mgr throwing their weight around. I guess I just ultimately don’t have the balls to break away completely and go indy just yet and that is why I am feeling FINET could be a smoother transition into the indy form. Maybe I am way out in left field on this. AGE is the only firm I have ever been with and even though it is now WB, I have never had to leave a firm and try to take clients with me.
Ah, thanks for the clarification, Bud. That changes the advice I would offer.
If your priority is what is easiest and least scary, why not just stay where you are and put up with the crap?
More seriously, Bud, I understand the fear factor - the unknown is always more scary than the known. I, too, had never left a firm and taken clients with me. That describes a good percentage of the people. But to make an important decision such as this through fear is beneath you. That’s like the client who refuses to invest in equities because they have never done it before and are afraid.
If you want to go to FINET, go ahead. But your stated reasoning for doing so does not lead me to believe you will be much happier than you are now.
Going indpendent isn’t nearly as difficult and scary as we tend to make it out beforehand. Most everyone says - after the fact - that the move to independence was nowhere near as bad as they had thought beforehand. You simply need to do your homework, talk to the right people and get the help you need to gain confidence. Plenty of people have done that very thing - and so can you … if you make the effort.
And remember the old definition of courage - it is not the lack of fear, but doing what you need to do DESPITE the fear.
Good luck, Bud!
Bud Fox,
I've been with Finet for almost 4 years and came from EDJ. If I were you, I think you first need to clarify whether you want to be want to be a rep affiliated with an Independent B/D (FiNet, LPL, RayJay, etc) or if you want to go the RIA route. If you want to eventually go the RIA route, maybe you should just do it now. You have some timely talking points given the merger, industry, etc., to reason with your clients to move to your new RIA. From what I can tell, you should probably have over $100 Million in AUM to justify the RIA model. There will also be more admin/office hassel with RIA. If you are satisfied with being going the independent b/d route, then by all means go with FiNet. You'll own your book and be left alone. I shopped around and the payout is about the same as with LPL, RayJay, etc. The advantages are that you will have WAY more fee-based platforms, alt investments, and up-scale products and services with FiNet due to their Wachovia's sheer size and their cutting edge rollouts of things. You also have a big time name, Wachovia, if you want to use it to market. Or, you can completely customize your name like an RIA. The only downside, in my opinion, is that even though FiNet is a seperate company with a seperate b/d and staff, there is still a little bit of a bank/wirehouse feel.Great points Morph & Indy… I am thinking that if I like the FINET side, if they leave me alone, if the product selection/availability, e.g. syndicate items, bonds, is still as good, I may just stay with FINET. I do a ton of biz with muni’s, synd pfd’s, so the access to this is important to me. That is if WB does not implode by then… Indy, how much bank/wirehouse feel is there if you could measure it? I want to get away from the majority of it, but if it is just a small % of what we got know, I can stomach it. The only thing I wonder about regarding going INDY other than FINET is the fact that I have a lot of HNW clients that like the affiliation of being with a big name firm. I really had to sell them on WB when the merger/takeover occurred because in our area, WB did not really exist and my clients that did know the name knew them only as a bank in Florida & Georgia. Now they see all the bad news about WB, almost daily, and it is gettin kinda hard to keep some of them calm, as if it is not hard enough to keep clients calm in this kinda market. Thanks guys for all of the awesome insights…
[quote=Morphius]
Going indpendent isn’t nearly as difficult and scary as we tend to make it out beforehand. Most everyone says - after the fact - that the move to independence was nowhere near as bad as they had thought beforehand.
And remember the old definition of courage - it is not the lack of fear, but doing what you need to do DESPITE the fear.
Good luck, Bud!
[/quote]
Exactly!
[quote=Bud Fox] The only thing I wonder about regarding going INDY other than FINET is the fact that I have a lot of HNW clients that like the affiliation of being with a big name firm. I really had to sell them on WB when the merger/takeover occurred because in our area, WB did not really exist and my clients that did know the name knew them only as a bank in Florida & Georgia. Now they see all the bad news about WB, almost daily, and it is gettin kinda hard to keep some of them calm, as if it is not hard enough to keep clients calm in this kinda market. Thanks guys for all of the awesome insights…[/quote]
What specifically makes you think that a lot of your clients like the affiliation of a big name firm, especially since you say you had to “really sell them” on WB?
Frankly, it is almost always US who THINK our clients value the big brand name, which is why on average 80% + of client follow an FA when they leave a firm. Most clients are doing business with YOU, not the firm. This is even truer in your case where AGE was bought out - perhaps they felt a tie to AGE, but few feel any tie to WB for quite a while.
That worry is likely almost all in your head, not your clients’.
Bud,
You need to do the Finet thing for now. Despite what some people on the board will say, many HNW clients like to be affiliated with a major Wall Street firm. Yes, I know the headlines aren't good now... but it will pass. FiNet gives you access to hedge funds, alt investments, etc., that the small Indy firms may not. What is nice about the concept is that you can market it however you want depending on your situation. If you think your HNW clients want the name than you can market WS. However, if I were you, I would custom brand the practice (eg: Fox Financial Group). Your custom brand will appeal to other clients and give you a clear feeling of ownership. I guess the only reason I say there is a little bit of a wirehouse/bank feel is only because the back office operations are all centralized and since FiNet is such a small portion (yet the fastest growing) of WS they tend to assume we are "employees" of one of the other channels... but this is improving. You'll have all the same access to syndicate, etc. If you custom brand your practice, and market YOU and YOUR practice for the next few years, then maybe down the road a move to RIA may not be that hard.I’m impressed that you know enough about Bud’s situation to know that he “needs” to do the Finet thing for now. RIA is absolutely not for everyone, but what intrigues me is the common misconceptions that people accept about that route without doing any first hand research themselves. For example:
[quote=Indy4Life] Bud,
And many prefer not to be. So what? All that really matters to a given FA is if the majority of HIS best clients follow him wherever he goes. There is overwhelming evidence that clients do business with the advisor, not the firm, which is why numerous studies have found that about 80-85%+ of clients follow an FA when he moves. So, what specifically leads you to think "many HNW clients" like to be affiliated with a major Wall Street firm? Your gut?
[quote=Indy4Life]FiNet gives you access to hedge funds, alt investments, etc., that the small Indy firms may not. [/quote]
Another misconception perpetuated by those with a vested interest in people not knowing better. When I left AGE/WS I had access to far more choice in Alternative Investments than I did before, as I am not limited to only what is available on the inhouse platform - I can access options on virtually any non-captive platform.
[quote=Indy4Life]What is nice about the concept is that you can market it however you want depending on your situation. If you think your HNW clients want the name than you can market WS. [/quote]
How exactly are you going to know which HNW clients "want the name" and which don't? What if you guess wrong?
[quote=Indy4Life]However, if I were you, I would custom brand the practice (eg: Fox Financial Group). Your custom brand will appeal to other clients and give you a clear feeling of ownership. [/quote]
Or you could have the same custom brand appeal and actually HAVE true ownership of your firm instead of a "clear feeling of ownership."
[quote=Indy4Life]I guess the only reason I say there is a little bit of a wirehouse/bank feel is only because the back office operations are all centralized and since FiNet is such a small portion (yet the fastest growing) of WS they tend to assume we are "employees" of one of the other channels... but this is improving. You'll have all the same access to syndicate, etc. [/quote]
If having a "little bit" of a wirehouse/bank feel satisfies your desire to get away from a wirehouse/bank, I guess this ould be a step in the right direction. Apparently. I guess.
[quote=Indy4Life]If you custom brand your practice, and market YOU and YOUR practice for the next few years, then maybe down the road a move to RIA may not be that hard.[/quote]
And it may not be that hard now, or any harder now, but unless you do the due diligence you'll never know. "Maybe ... next few years ... down the road ... may not be too hard."
If it's an importat decision, Bud, isn't it worth being a bit more certain than that?
Morph,
No need to jump down my throat here. Bud asked for the boards opinion and I gave him mine. I don't know the size of his book, nature of client relationships, etc. but I'm trying to help him out. I could care less what he does. A move to an Independend B/D can be an appropriate place for the long haul or just a stepping stone to your own RIA. You are right, most FA's, including myself, take over 80% of clients with them. But not all FA's have the same relationships with clients as others and not all FA's have the same comfort level (i.e. balls) of moving somewhere without a recognizable name. Bud knows that better than us. And you are right, he should do the diligence and he doesn't NEED to do the FiNet thing... that was just my opinion from what I could gather from his situation.Lots of great input here guys. I guess anyone can make an argument either way about going either FINET or RIA. Its all about ones own experience and attitude that gets him through and allows him to share these ideas down the road. When I say there are HNW clients that like firm affiliation, I am talking about all of the Madison Avenue bullshit like the people that think cuz they drive a Lexus, they are better than the guy next door driving the Toyota, when it is really the same frickin car. My offfice is in the 3rd or 4th wealthiest county in the country and I see this crap all the time. You and I know that these people will probably get good planning whether they are with LPL or Morgan Stanley. And that planning is probably better if it comes from a CFP, which I am. But, these types of clients just like to be able to tout to their friends, "Yeah, you should call our guy over at Merrill or something like “Were with Smith Barney”. Its all about huge brand recognition and affiliation that these people like to throw around even though you and I know that you can do as well with your money at LPL or RayJay as you can with Merrill. I have the feeling if I go FINET for a year or two with my name being “John Doe Financial”, I can always change to another B/D down the road and my name will stay the same and my clients will feel the same. I think going FINET will be an easy transition with the clients having to sign 1 FINET authorization form per household rather than having to sign an ACAT for each account to switch firms and then have ACAT fees on top of that…Like most of you guys, my average household has 5 accounts which will make one form to sign nice…
Why is it that you are so unwilling to consider the informed opinions of those who actually have experience with going indy?
Sure it might be easier to go to FiNet, and they are structured to be pretty much like an independent firm. Having said that, you need to consider that you are still owned by a bank, and you are competing with bank-channel advisors and full-service advisors. WB’s “margin” on those other advisors is much higher than on the FiNet advisors. So, if push comes to shove when competing for resources or capital…who do you think will get the nod?
I am willing to consider all opinions, that is what I am doing here. At this point I have really only had QUALITY insights from 2 people, Morph & Indy4life. Who I think is gonna get the nod for starters is the nearly 4000 brokers that WB just picked up that do well below 300k a year. I think I will not even be making a decision for 4-6 months but I am doing my due diligence here and trying to collect as many different ideas as possible. If I have 3 people respond to my initial question all the same, is that what I should take and close the door? You can, but I certainly will not. I have worked too hard and long in this business and I would like to make the upcoming bumps as small as possible. I don't really have a preference at this point which way I go, I just know that I will have to do something within the year.
Bud, As a wirehouse guy who’s doing a lot of due diligence towards going independent in the next 6 months, I think I understand what you may be trying to accomplish.
You're trying to get from point A (wirehouse culture) to point B (independent culture) with as little risk and disruption as possible to your practice into which you've invested a lot of blood, sweat and tears. I get that. There is a lot of static on this post about your potential choice of point B. Everyone has a natural desire to promote and defend their particular choice of point B, when the truth is that the most important decision is likely just to leave point A. Here's how I might view your primary risks if I were you: Reputational Risk. Here Wachovia is both a blessing and a curse. They may initialy be a blessing and make it easier to transition clients, but for all you know in 6 months they get pulled further into the credit abyss and need to be rescued by a bank in Korea. Good ol' American Raymond James would look pretty good then. Wachovia is a wirehouse and will always have the wirehouse genetic disposition to screw up every 5-6 years. Platform Risk. The risk that you move to a b/d or custodian only to find that they simply don't have the platform necessary to service your clients. If you go with finet, and have no qualms with Wachovia's current platform and product offering, there would seem to be little risk to you. However, you should do some tire kicking, because you will find that some other platforms have offerings you may have not even thought of. Finet should be great for replicating your practice, but not so good if you would like it to evolve into a true RIA model. Financial Risk. You will have some risk here no matter where you affiliate with. However, your situation is unique, and it strikes me that the least financial risk to you in making the move independent is to stay within the Wachovia platform. Others will likely disagree on this point, but I wouldn't look a gift horse in the mouth. Cultural Risk. Affiliating with Finet may retain some of the cultural aspects of a wirehouse. Is that ok with you? If not, best to move toward a boutique independent b/d (such as Commonwealth or Cambridge) which are decidedly non-wirehouse in culture or direct to RIA as Morphius suggests. Given the above, if I were in your shoes, I'd be leaning toward Finet as well. Best of luck.North & Ice, Great info & comments. I really appreciate all of the diversity of the input hear. This remains a tough decision and will definitely weigh on my mind for a while yet before a decision is made. I only wish I could get some ideas from some Jonesers…Just kiddin…
Ice, I sold myself to my clients in the beginning to be able to manage their assets, lately I have had to sell them on the firm that we won't have to file for a bankruptcy anytime soon and how their assets are protected, blah,blah,blah... I hope... I am getting kind of burned out on having to sell the firm or soothe fears about the firm. I simply should not have to spend my time doing that. I really would like to get back to selling myself, product, and proper planning. I only hope things smooth out with WB and I can get back to doing what has made me successful up until this point.[quote=Northfield]
There is a lot of static on this post about your potential choice of point B. Everyone has a natural desire to promote and defend their particular choice of point B, when the truth is that the most important decision is likely just to leave point A. [/quote]I think I know what you mean here, northfield, but I'm not sure. If you really literally mean the most important thing is "just to leave point A," I disagree. It's not enough to know what you don't want anymore, you need to know what you DO want. Otherwise you will simply be running away from something without a clear destination instead of running TO something, like the hoards of frequent job changers who know they don't like what they're doing but never take the time to be sure that their next job is a better fit for them.
[quote=Bud Fox]
Ice, I sold myself to my clients in the beginning to be able to manage their assets, lately I have had to sell them on the firm that we won’t have to file for a bankruptcy anytime soon and how their assets are protected, blah,blah,blah… I hope… I am getting kind of burned out on having to sell the firm or soothe fears about the firm. I simply should not have to spend my time doing that. I really would like to get back to selling myself, product, and proper planning. I only hope things smooth out with WB and I can get back to doing what has made me successful up until this point. [/quote]Bud-
Look at your own words and spend some time contemplating them...if clients are that freaked about WachEdwards current status, do you really think it's wise to choose FiNet just because the paperwork is easier?
"Mr. Client, I made this change for many reasons, not the least of which is that you have the opportunity to custody your assets at a firm which is financially stable. I was getting sick and tired of worrying about what kind of writedowns would show up in each quarters earnings report, and I'm sure you were too. Now, just sign here."
I look at the current status of WACH-AGE and I have to wonder if the worst is behind us or yet to come. Too hard to say and we won’t know until we are beyond it. I am feeling that the worst is probably over and I have already had to deal with the shock & awe of the firm being in the news almost daily. Sure I could leave right now and go to LPL or Commonwealth or RayJay, all of whom have not really had their bad day in the news. And then that hammer could fall for that firm obviously making me wonder what the heck I just did. I will definitely be holding back till the markets, economy, writedowns across the board all improve and I collect more opinions.
Client worries, paperwork, sharks in the office, Wall Street brand names, lousy markets, the economy, credit write downs … boy, the list just never ends, does it?
He who truly wants to do something always finds a way, while others always find an excuse.
Bud,
Keep doing your due diliegence. I'm a little worried about all the AGE guys coming over and swamping the back office and operations. HymanRoth's post is absolutely incorrect that Wachovia Securities two other channels, the bank channel and the Private Client Group channel, are more profitable than the FiNet/Indy channel. It is the opposite. The FiNet offices are more profitable (both to the FA and WS). The average FiNet FA is a large producer and typically is largely fee-based/advisory. The minimum production to be considered for affiliation is $250k but most FA's are significantly beyound this. FiNet pays no overhead (no branch manager, no office, benefits, etc). Even though they may only make 10-15% of our gross, they don't have much in the way of overhead. The higher ups at Wachovia Securities have indicated that the Private Client Group channel is the least profitable and the industry and Wachovia Securites is moving toward the indy model and the bank channel model (if they have bank branches). The other thing you may want to be aware of as far as culture goes is that it is nice to go to the FiNet annual conferences and collaborate with primarily larger, very successfull producers. We've had some guys come over from some of the other indy firms and have indicated they don't like their old culture because there are still lots of smaller, part-time producers, that "work out of their basement" and don't seem as professional. Please realize this is a major generalization and probably not a fair one, but it can be an issue with some of the indy firms. One real nice feature of going RIA that I don't have is the ability to charge hourly fees and flat fees for say, helping somone with their 401k allocation or helping them set up a 529 plan or small IRA direct with a no-load fund company. I wish I could do this as it would be a nice way to accomadate smaller accounts. FiNet is rolling out a hard dollar fee set of services but I don't think it will be everything I want and I can't customize fees and services like I could if I were an independent RIA. Most of my revenue comes from asset based fees and 12b-1s so it is not a huge issue for me, but it may be for others. More food for thought...Your Father did busness with Hyman Roth, your Father respected Hyman Roth, but your Father didn’t trust Hyman Roth.
This is the business we chose.
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