I admit I have alot to learn

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Mar 27, 2007 9:20 pm

I am looking for some background info from all of you who have moved
from being "captive" to being Indy.  What am I looking at in terms
of expenses that I probably have never even thought of?  I do not
have enough assets, but will have in 1-2 years (or so I think) and have
an extensive background in Life/DI/LTC and am also curious as to what
you people think is the breakpoint where one can afford to go out on
their own.  I am not trying to fool anyone as I realize I have
quite a bit to learn, but I SO want to leave big brother and become an
"owner."  Any advice will be greatly appreciated.

Mar 27, 2007 9:25 pm

 You must be a insurance person!  Indy do you mean insurance agent or securities?

Mar 27, 2007 9:34 pm

Roadhard-no, I am not an insurance person anymore.  I was for 3
years before leaving to concentrate on actual investments instead of
VA/VUL products.  Now I have been with an investment place for
awhile and feel I may be ready to open my own place.

Mar 27, 2007 9:40 pm

How much AUM is a difficult question: and the answer is it depends. If you do a lot in the insurance field (life/DI/LTC) and you seem to be doing more insurance orientated, the AUM in investment accounts needed to sustain a business may be less. 


It also depends on how much money you require or would be happy to live on.   Most people here have expressed that you should have 20M, however I have heard others say less.  Many of us (speaking for myself) don't do as much in the insurance arena which is a big mistake (that I am trying to correct) because the return on insurance to the agent is much larger than investing.....generally


The main thing you need is a good cushion of savings that you can live on for a year or so.... and expect to spend it all.  If things work out well, you may not have to spend everything.  You don't want to go indy, or jump ship on a dime and give the impression that you have stepped 'down'.  You also need to have your spouse or S.O. to be supportive of the amount of time and stress you will be incurring to go indy.


All that being said.....it is sooooo worth it.

Mar 27, 2007 9:52 pm

A huge factor in how much you need depends on whether you go it alone or join forces with others to share expenses.  Going Indy alone I would say you need at least 20m that will follow you.  If you are joining forces it could be significantly less. 


As smartly noted above, lots of insurance in your business could lower those figures.

Mar 28, 2007 1:50 am

I am not sure how your practice is set up and what % of your business is insurance and what % is variable, however if the bulk of your business is insurance then you might want to consider the RIA route.


Going the RIA route your would no be subject to the haircut you experience by running your fixed insurance business through a B/D and you would still retain your ability to do variable products as an IAR.


If you are not in a high cost of living area you could make the transition on as little as 100k gross if most of your business is fixed insurance.

Mar 28, 2007 6:00 am

It all depends, 10 mill aum making 1.25% is a pretty darn good start vs 20 mill aum at .25 bps.

Mar 28, 2007 10:10 am

Either RayJay or LPL has a calculator on their website that goes through the expenses, I remember a thread (probably about a year ago) discussing whether it was accurate, and I believe that the consensus is that it wasn't perfect but was a pretty good starting point. 


Maybe someone who has checked this more recently than me can direct you to where to find the calculator.

Mar 28, 2007 10:48 am

Going the RIA route your would no be subject to the haircut you experience by running your fixed insurance business through a B/D and you would still retain your ability to do variable products as an IAR.


I'm not an IAR... yet.  However, my fixed insurance business is completely outside the B/D with no haircut or any oversight.  The exception is the new requirement that any EIA's be reviewed by the B/D first and that we use a selection of companies for that type of fixed annuity.  Even so there is still no haircut on those products (as of now anyway).   Fixed Life/DI/LTC and Health insurance is completly to my discression on who I do business with.  Variable insurance is under the oversight of the B/D with reduced payout.


I assume that is the same at other Indy firms?