Acat's to Gross

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Jun 4, 2007 5:57 pm

Just a question from a newbie finishing up my first year.  I've had a lot of success doing ACAT's and pulling in assets from other firms, but haven't yet seen that portion of my business take off in terms of Gross production.  I have no intention of churning these clients accounts by automatically liquidating transfered assets, so I don't expect to earn a commission on every dollar transfered.  But what is reasonable to expect in terms of the amount of money transferred in vs the production on that money.  Per million of transferred money (multiple clients), should I look at 2-3% range in production per year? What's your opinion or experience?

Jun 4, 2007 6:31 pm

2-3% is probably a little high based on both industry averages for velocity and your own self-described philosophy(which I think is good, btw)

Jun 4, 2007 6:32 pm
BteamBomber:

Just a question from a newbie finishing up my first year. I've had a lot of success doing ACAT's and pulling in assets from other firms, but haven't yet seen that portion of my business take off in terms of Gross production. I have no intention of churning these clients accounts by automatically liquidating transfered assets, so I don't expect to earn a commission on every dollar transfered. But what is reasonable to expect in terms of the amount of money transferred in vs the production on that money. Per million of transferred money (multiple clients), should I look at 2-3% range in production per year? What's your opinion or experience?





It should be a bit higher than 2-3%, but not much higher than 5-7%. That's turnover & new money. So $10MM AUM should mean $50-70K gross. $20MM AUM should mean $100-$140K gross, etc. If this money isn't investment money - it's mmkt or brokerage cd's or dead money in fixed annuities then it's less, of course!



Do you set up systematics for people? $100/month means a lot if done 100 times (all of you Jonesees can do the math for us!). Do you do Principia evaluations, or the equivalent, on portfolios & knock stuff that has underperformed off? How do you decide what asset allocation people should have and when it should be changed? If you systematize some of the above you'll 1 - Have an easier business to run. 2 - Generate more revenue because you'll have a process by which money moves & you can show you're doing the right thing by moving it. 3 - You'll earn more of a client's assets.

Jun 4, 2007 7:59 pm
Ashland:
BteamBomber:

Just a question from a newbie finishing up my first year.  I've had a lot of success doing ACAT's and pulling in assets from other firms, but haven't yet seen that portion of my business take off in terms of Gross production.  I have no intention of churning these clients accounts by automatically liquidating transfered assets, so I don't expect to earn a commission on every dollar transfered.  But what is reasonable to expect in terms of the amount of money transferred in vs the production on that money.  Per million of transferred money (multiple clients), should I look at 2-3% range in production per year? What's your opinion or experience?





It should be a bit higher than 2-3%, but not much higher than 5-7%. That's turnover & new money. So $10MM AUM should mean $50-70K gross. $20MM AUM should mean $100-$140K gross, etc. If this money isn't investment money - it's mmkt or brokerage cd's or dead money in fixed annuities then it's less, of course!



Do you set up systematics for people? $100/month means a lot if done 100 times (all of you Jonesees can do the math for us!). Do you do Principia evaluations, or the equivalent, on portfolios & knock stuff that has underperformed off? How do you decide what asset allocation people should have and when it should be changed? If you systematize some of the above you'll 1 - Have an easier business to run. 2 - Generate more revenue because you'll have a process by which money moves & you can show you're doing the right thing by moving it. 3 - You'll earn more of a client's assets.



Dude are you kidding?

$100 x 100 is $10,000 per month.  Put into A-shares that's not even $500/month.

That's a lot of paperwork and service issues for lunch money.

Jun 4, 2007 8:15 pm
BteamBomber:

Just a question from a newbie finishing up my first year.  I've had a lot of success doing ACAT's and pulling in assets from other firms, but haven't yet seen that portion of my business take off in terms of Gross production.  I have no intention of churning these clients accounts by automatically liquidating transfered assets, so I don't expect to earn a commission on every dollar transfered.  But what is reasonable to expect in terms of the amount of money transferred in vs the production on that money.  Per million of transferred money (multiple clients), should I look at 2-3% range in production per year? What's your opinion or experience?


Let me get this straight...you don't liquidate the assets? Why would someone move an account to you if you don't even do anything for them? What's so great about you?

Jun 4, 2007 10:09 pm

[/quote]Dude are you kidding?$100 x 100 is $10,000 per month. Put into A-shares that's not even $500/month.That's a lot of paperwork and service issues for lunch money.[/quote]



Nope... not kidding. You don't go scouting for this, but like insurance, it's an addition to. You do a $50,000 trade or b/d transfer & then say - and now we're going to put in $1000 / month into this. Let them talk you down to a place where they feel comfortable. How long does it take when you're already signing paperwork? 1 1/2 minutes to print out one extra piece of paper?



You're right, $10,000 / month is not a big deal. $120,000 is 10% of a month though. Do this for 2 - 3 yrs and you'll be at $20 - 30K / month. That's still throw away money still, right? An extra hr of work, each month will get us that sized ticket. $240K / yr = 1 week's paid vacation. $360K = a nicer vacation every year. After 5 yrs of doing it's pretty hard not be at $50 - 75K per month. $600K - $900K / yr is nothing to sneeze at. Trouble is we don't get started at it because it's no big deal.



It's got another benefit. Now you're in your client's budget. Mortgage, utilities, Bobby's day care, send money to my finance guy...



One of my written goals is to add $2000 every month in systematics. I can do it easily enough in the bank. Hey, if you don't like it, don't do it!

Jun 5, 2007 2:26 am
joedabrkr:

2-3% is probably a little high based on both industry
averages for velocity and your own self-described philosophy(which I
think is good, btw)





The best thing at this point is to do a portfolio
reassesment/rebalancing That may create some opportunities for trading
and bring the portfolio's risk level down.



If people have money locked up in a bond fund, you can rescue it into a good muni bond(s).



That said, this is yet another reason why fee based is so awesome.

Jun 5, 2007 10:01 am

I agree with a lot of the information you gave me, thank you!  Many of my incoming clients have good investments mixed in with bad ones.  Many times they have a lot of overlap with multiple funds all trying to accomplish the same task, some very well and some badly.  In those cases I get them out of the bad funds and reallocate according to our plan.  I was just wondering what sort of long term payout should be expected in doing that? Thanks


I completely agree in the idea of creating systematic investors.  Being that I am in my 20's and have a long term window, each 30 and 40 year old client that I sign up to DCA into funds or stock will become both my steady, consistently rising paycheck as well as two or more big payouts later on (rollovers, inheritance, house sale, so on).  It would be ideal to have 24 clients and their spouses at every age level from 64 down to 39.  Then I could do two rollovers a month on average and build trails by them systematically investing until they retire.  25 years later, after the last of that group retires, I can retire at 53 and visit Bobby H at the zoo every day.  Bobby, do you like your banana's green or yellow?

Jun 5, 2007 10:26 am
BteamBomber:

I agree with a lot of the information you gave me, thank you!  Many of my incoming clients have good investments mixed in with bad ones.  Many times they have a lot of overlap with multiple funds all trying to accomplish the same task, some very well and some badly.  In those cases I get them out of the bad funds and reallocate according to our plan.  I was just wondering what sort of long term payout should be expected in doing that? Thanks


I completely agree in the idea of creating systematic investors.  Being that I am in my 20's and have a long term window, each 30 and 40 year old client that I sign up to DCA into funds or stock will become both my steady, consistently rising paycheck as well as two or more big payouts later on (rollovers, inheritance, house sale, so on).  It would be ideal to have 24 clients and their spouses at every age level from 64 down to 39.  Then I could do two rollovers a month on average and build trails by them systematically investing until they retire.  25 years later, after the last of that group retires, I can retire at 53 and visit Bobby H at the zoo every day.  Bobby, do you like your banana's green or yellow?



As old as I am, it doesn't make sense to buy green bananas.

Jun 5, 2007 10:28 am
BteamBomber:

I agree with a lot of the information you gave me, thank you!  Many of my incoming clients have good investments mixed in with bad ones.  Many times they have a lot of overlap with multiple funds all trying to accomplish the same task, some very well and some badly.  In those cases I get them out of the bad funds and reallocate according to our plan.  I was just wondering what sort of long term payout should be expected in doing that? Thanks


I completely agree in the idea of creating systematic investors.  Being that I am in my 20's and have a long term window, each 30 and 40 year old client that I sign up to DCA into funds or stock will become both my steady, consistently rising paycheck as well as two or more big payouts later on (rollovers, inheritance, house sale, so on).  It would be ideal to have 24 clients and their spouses at every age level from 64 down to 39.  Then I could do two rollovers a month on average and build trails by them systematically investing until they retire.  25 years later, after the last of that group retires, I can retire at 53 and visit Bobby H at the zoo every day.  Bobby, do you like your banana's green or yellow?



Sounds like you have a good grasp of your job.  By doing portfolio reviews and "fine tuning" (not churning) the portfolio you will instill confidence in your clients.  You can then ask for more investments.  Most people have more money available than they tell you.  You can ask for systematic investments.


Insurance business should be your next focus.

Jun 5, 2007 10:40 am
Bobby Hull:
BteamBomber:

I agree with a lot of the information you gave me, thank you!  Many of my incoming clients have good investments mixed in with bad ones.  Many times they have a lot of overlap with multiple funds all trying to accomplish the same task, some very well and some badly.  In those cases I get them out of the bad funds and reallocate according to our plan.  I was just wondering what sort of long term payout should be expected in doing that? Thanks


I completely agree in the idea of creating systematic investors.  Being that I am in my 20's and have a long term window, each 30 and 40 year old client that I sign up to DCA into funds or stock will become both my steady, consistently rising paycheck as well as two or more big payouts later on (rollovers, inheritance, house sale, so on).  It would be ideal to have 24 clients and their spouses at every age level from 64 down to 39.  Then I could do two rollovers a month on average and build trails by them systematically investing until they retire.  25 years later, after the last of that group retires, I can retire at 53 and visit Bobby H at the zoo every day.  Bobby, do you like your banana's green or yellow?



As old as I am, it doesn't make sense to buy green bananas.