What can I do with 40 Million UM?

or Register to post new content in the forum

16 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Aug 17, 2009 7:15 pm

I'm about to go back into retail and take over a book of about 40. It's mostly funds, bonds with very little VA and No managed money. A lot of these clients could benefit from access to private money managers. I used to have a rule of thumb that you should be able to generate 50-75 bps from your book each year. Does that still hold true these days?

Aug 17, 2009 7:32 pm

I would say 50 bps is on the low side, but 75-85 bps is normal especially once you start annuitizing the book.

Aug 17, 2009 11:25 pm

here is what i would do with the 40mill.  take over the 40mill flip it at an avg of 2% (transactional for small accounts and make the top 25 portable) then go to merrill for the big paycheck.

Aug 18, 2009 10:09 am

nice to see my fellow brokers have morals... There would be no reason to move from this firm. It's a solid firm with a 45-50% payout.

Aug 18, 2009 12:57 pm
notbostrom:

nice to see my fellow brokers have morals... There would be no reason to move from this firm. It's a solid firm with a 45-50% payout.

 
What if you could get 80-85%?  Then it makes a $40MM book look more like $80MM.
Aug 18, 2009 1:00 pm

If he's just taking it over from someone else, he may have a tough time taking much of it with him if he left.

Aug 18, 2009 1:19 pm
notbostrom:

I'm about to go back into retail and take over a book of about 40. It's mostly funds, bonds with very little VA and No managed money. A lot of these clients could benefit from access to private money managers. I used to have a rule of thumb that you should be able to generate 50-75 bps from your book each year. Does that still hold true these days?

 
If I was in your position, here's what I would do:  First, assess your relationship with these people, and your relationship with the leaving advisor.  I would want the strongest possible relationship with the client in the first meeting.  That might mean your first meeting is the old advisor introducing you.  It depends on the relationship, so I don't know your situation.
 
Second, I would sit down with them and gather as much information about each person as possible.  There are forms that rank their objectives in order of importance, find out about work, children, grandchildren, who their CPA is, who their estate atty is, etc.  Find out everything you can.
 
Third, assess what they like about their portfolio and what they don't like.  You have the chance to wipe the slate clean with them.  You will find opportunities for tax-free income, alternatives, this and that...
 
Fourth, offer to introduce them to new retirement planning strategies.  Here's the analogy I use.  "Mr. Client, when was the last time you bought a roll of film in a gold box that came in one of those black tubes with a gray lid?"  They laugh, and say, "It's been years".  I say, "Well 10 or 15 years ago that's where Kodak made 98% of their revenues, more or less.  Now, 98% of their revenues comes from digital camera sales.  They had to completely change their business model.  It is just the same in retirement planning.  Our clients have opportunities to protect a portion of their retirement income, would you like to learn more?"
 
Fifth, appreciate them as clients by recognizing them individually.  Small things matter.  You aren't entitled to referrals, you have to earn and deserve them. 
 
I would also look at it this way:  If you walked into a $40MM book, and connected with half of the people, your new $20MM book should propel you to much more in assets with a lot less work. 
 
Just my opinion.
Aug 18, 2009 7:15 pm

Thanks Snagg, your comments are thoughtful and on point.

Aug 18, 2009 7:27 pm

Am I the only one wondering how it is possible you inherit a $40MM book?

Aug 18, 2009 8:15 pm

Be in the biz 18yrs, develope a good reputation keep your U4 clean and network. Older Reps do retire....

Aug 18, 2009 8:56 pm

Turn it into $240k in 4 years then  kick back

Aug 19, 2009 12:35 pm
notbostrom:

Thanks Snagg, your comments are thoughtful and on point.

 
One other thing I just thought about.  If it was me, I wouldn't look at the situation and see myself as just taking over as captain of this ship.
 
I'm reminded of what Lexus did years ago.  They sold a ton of cars, then had a huge recall.  No one could ever find a real reason for the recall, but Lexus created the opportunity to show immediately their value to their customers through excellent service.
 
I'd figure out a way to make myself indispensable.
Aug 20, 2009 6:48 pm

If I can find the answer to that one I'll do 500k next year

Aug 27, 2009 1:37 pm

Listen.....40mm in todays business on the low side.  Without putting you clients into bogus backend charge products your going to avg. .50 to .75 on the whole book.  So your are on target. 

 
The opportunity is that it sounds like a dinosaur book to start with!  So quarterly meetings for the top 20 to 30 clients and in the introduction to new fee based ideas will probably be a welcome change.  Those that want to keep what they and not listen to new idea you should form a joint number and find a dinosaur to split with.
 
good luck
Sep 26, 2009 3:45 pm

Churn em and burn em baby! JK, meet with the A prospects and put together a full plan for them. Implement a managed acct. and then you'll just have to manage the relationship while the book is "turn key". Meanwhile use the b & c clients for a managed portfolio using mutual funds and possibly use some annuities when it suits the clients situation. Don't forget to keep some assets liquid to trade around, just to bump up your cash flow  

Sep 26, 2009 6:06 pm

I like wrap with ETFs. 1.5% under 100k, 1.25% to 250k, 1% to 1m, and .75 over 1m.

 
Should hit your net GDC goal, no big exit purchase problems from A shares since you're going to ETFs. ETFs a good story now, in a more difficult world, maybe harder to hit historical returns, so we're lowering the internal fees on funds (and raising my fee, so I can focus on you) - should be a little less overall fees for clients and a raise for you the advisor.
 
http://www.milyunair.com/