Taking over a book

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Feb 18, 2009 1:06 pm

Trying to figure out the appx. gross commission on a book of $15mm. Prior advisor gone for 6 mo's (left the business). I know it will vary widely, but even a range would be helpful. Thanks!

Feb 18, 2009 1:15 pm

The average turn is about 64 basis points.  However, this depends on the maturity of the book - if it's somewhat new, you might be looking at 120 basis points.

Feb 18, 2009 1:16 pm

SometimesNowhere:



What book. Those assets have already left the building. If the advisor left the business six months ago their broker dealer would have reassigned those assets.  I hope you did not pay any thing for that “book”<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />


Feb 18, 2009 1:28 pm
JackBlack:

SometimesNowhere:



What book. Those assets have already left the building. If the advisor left the business six months ago their broker dealer would have reassigned those assets.  I hope you did not pay any thing for that “book”<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 
Apprentice - Perfect, exactly what I'm looking for...
 
Jack - Did not pay for the book, opportunity opened up. Assets are kind of just sitting there (not reassigned).
Feb 18, 2009 1:51 pm

SometimesNowhere:

That is great. Happy to eat crow when I am wrong. Good job.
Feb 18, 2009 2:20 pm

Depends on the assets.  If it's a-share funds, then 25 bips, if it's c-shares, then 100 bips, stocks and bonds, then, well nothing unless you move them around.  If it's wrapped up, then whatever the wrap fees are.  Most likely, it's some combination of the above.  But I doubt it's a lot of c shares and wrap, or the person would not have left.

I bet it's a-shares and stocks & bonds.  If so, you're looking at like 15-20bips.
Feb 18, 2009 2:48 pm

B24 - I don't think the question was around re-occuring revenue, but more about typical commissions generated from a book of $15 mil.

 
Man can't live by trails alone
 
Feb 18, 2009 4:24 pm

SometimesNowhere,

 
Aren't you a Jones guy?  If you are then listen to B24.  A share mutual funds and bonds would be my guess.  Try and find out the asset mix, find out how much is in funds, if A shares you'll get .25%.  $10mm in A shares then trails should be 25m per year or around $2m per month.
 
Good Luck!
Feb 18, 2009 5:05 pm
apprentice:

B24 - I don't think the question was around re-occuring revenue, but more about typical commissions generated from a book of $15 mil.

 
Man can't live by trails alone
 
 
I know what you're saying.  But my point was that if it was all in a-share funds and stocks/bonds, there's not much opportunity for commissions.  Yes, there are existing clients that you can pull new money from, but unless the accounts are wrapped/SMA's, or it's an "actively managed" portfolio of securities, $15mm is not gonna generate much income on it's own.
 
And chances are there is some CD's, cash, money market etc. all mixed in there. 
Feb 18, 2009 10:31 pm
SometimesNowhere:

Trying to figure out the appx. gross commission on a book of $15mm. Prior advisor gone for 6 mo's (left the business). I know it will vary widely, but even a range would be helpful. Thanks!

 
You can't tell by just the amount alone.  What is the average account size?  Are the assets in manged money (recurring revenues), stocks, mutual funds, etc, etc.  How long was the previous advisor in the business and what kind of business did he do? 
Feb 19, 2009 10:32 am
B24:
apprentice:

B24 - I don't think the question was around re-occuring revenue, but more about typical commissions generated from a book of $15 mil.

 
Man can't live by trails alone
 
 
I know what you're saying.  But my point was that if it was all in a-share funds and stocks/bonds, there's not much opportunity for commissions.  Yes, there are existing clients that you can pull new money from, but unless the accounts are wrapped/SMA's, or it's an "actively managed" portfolio of securities, $15mm is not gonna generate much income on it's own.
 
And chances are there is some CD's, cash, money market etc. all mixed in there. 
 
I suspect that from I know, this is the case. I am early enough in my career that I don't really consider trails as a 'countable' part of my commission, so I guess I am looking at what kind of turnover/additional assets/etc. I can expect. Again, I know that the numbers can vary very widely, but approximations help.
 
I suspect that a lot of the business is sitting in MF's, with some VA's and bonds. Doubtful that there are is anything actively managed or wrapped.
 
Just to put a period on my thoughts, after listening to the response on the forum, in the great big world of the RR, $16mm is not worth significantly uprooting my life for when I am already gaining some traction in my existing community.
Mar 20, 2009 4:03 am

Having a business is a good investment for your future.
____________________________________________
Get leather envelope for your office or home office.

Mar 20, 2009 10:03 am

1% is a good rule of thumb for assets.  When you figure in people adding money, trails, bond calls and other money the clients have.