What can you make?

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Apr 12, 2006 6:39 pm

What is a reasonable metric to use for my income at a major wirehouse? I am just about to start.



EX. If I accumulate 50 million in the next five years where will I be if my ROA is pretty good. I am used to making very good money. I need realistic expectations about what the next five years will look like.

Apr 12, 2006 7:12 pm

you will not make very good money for years 1-5. Besides what the heck is very good money????

Apr 12, 2006 7:15 pm

I did not say I would make very good money in five years. I asked what is a good metric.



I made between 150k and 700K depending on the year. And don't ask why I left. It is too long a story. Suffice it to say it was commission and I am starting over in life when it comes to money.

Apr 12, 2006 7:23 pm

Oh metric!!! Who the hell knows.

Apr 12, 2006 7:24 pm

Shouldn't you have a pretty good idea of that before you jump in?? Ever heard of due diligence Mr. Metric??

Apr 12, 2006 7:34 pm

Yes I have done the homework. And I still am. Furthermore I have not jumped...yet, but getting ready. You seem to have a lot of time and little info. Asking here is an efficient way to get a variety of informed opinions. That is due diligence. I have heard a very wide spread of numbers and I know better than to just rely on the pitch from the guys that want to hire me. I want to hear from actual FA's as long as they aren't complete smarta..ses. (Unless of course they are funny. )



I wonder what to expect in terms of ROA since it is a blend of commision and wrap money, experience and efficiency, so I want to know what you all have experienced in the trenches.

Apr 12, 2006 7:35 pm

Here's a formula you can use that gives a very rough estimate of what your annual income could be, at a certain asset level:


Total Assets Under Management (AUM) x 1%40% = Your Annual Income


AUM is self-explanatory 


.01 or 1% is the rough average percentage gross commission/fee that is charged your clients. Of course, this number varies, depending on the type of business you do. However, much above 2.0% and firms will become suspicious you're churning accounts.


40% is your payout, give or take 5%, depending on the firm.


So, at $50 million in assets, your income will come in around $200,000.

Apr 12, 2006 7:46 pm

Doberman,



That is a useful rough number. I appreciate it. Now I have to go get it. Kind of a drag that the independents do up to 20% better (net) as far as I can see but simply cannot go that route since I need excellent training and a salary for this transition.



Many thanks,



OTV

Apr 12, 2006 8:20 pm
ontheverge:

Doberman,

That is a useful rough number. I appreciate it. Now I have to go get it. Kind of a drag that the independents do up to 20% better (net) as far as I can see but simply cannot go that route since I need excellent training and a salary for this transition.

Many thanks,

OTV



Up to 20% better? A lot more than that. My payout is 90% on securities and annyities. It is 100% on fixed and index annuities. I don't get a haircut like ALL the big firms give before you get your 35-40%. A haircut is the amount they scalp from the commission, off the top, before they pay you your payout. For example, if I put $100,000 into an annuity, I get paid 90% of the whole commission of 7.5%, making my gross income $6,750. The same transaction might leave you with 5% (after 2.5% haircut) paid at 40%, leaving you with gross income of $2,000 on the EXACT same transaction. You make two grand and the firm makes $4,750. So, you can see, we get paid MORE than 20% on our business at indy firms.


If you made $700mm in commission sales, you don't need training and a salary. You need a phone, a bottle of water, and throat lozenges.

Apr 12, 2006 8:42 pm

remotecontrol...thanks for the math lesson.  Obviously an indy keeps more even NET, but you left out those pesky expenses.


OTV--I concur w/doberman's above rundown...that's a great synopsis.

Apr 12, 2006 8:49 pm

Go to Marie Calendars and buy yourself a pie.  Then cut it in as many pieces as possible until the crust starts crumbling.  That is how your 150K in gross will look by the time you get your "slice"  Good Luck!!!

Apr 12, 2006 9:40 pm
Cowboy93:

remotecontrol...thanks for the math lesson.  Obviously an indy keeps more even NET, but you left out those pesky expenses.


OTV--I concur w/doberman's above rundown...that's a great synopsis.



My nut is about $25,000 per year. Immaterial. With Index annuities paid at 100% and everything else at 90%, and backing out my nut, my average payout is over 90%. If you add back my expense reimbursement at 25 bps, it gets closer to 95%. I will admit, though, that my situation is much better than even most indies.


Not quite what you hoped I would say, is it, brokeback cowboy?

Apr 12, 2006 10:41 pm

Wow, these are some good numbers and ideas..


Seems the overall expenses once established are nothing compared to the additional income of 50%.....  Then one writes off the expenses. 



HI HO, HI HO, its off to INDY I GO!!!       I KNOW, I KNOW, I SAID BEFORE I GO....  HI HO, HI HO, THIS TIME I WILL GO!!



Man you made up to 750k (contacts?) and you are worried about a salary.. What the hell did you do with all that money? Bad asset management or a evil wife drained ya? Either way good luck...

Apr 12, 2006 11:34 pm
ontheverge:

Doberman,

That is a useful rough number. I appreciate it. Now I have to go get it. Kind of a drag that the independents do up to 20% better (net) as far as I can see but simply cannot go that route since I need excellent training and a salary for this transition.

Many thanks,

OTV


OTV...not meaning to discourage you but there is a reason 85% fail in this business.  THAT REASON?  There is NO worthwhile training offered by ANY of the majors...except for the occasional excellent  mentor in "who knows where" America.


There are some, like Rightway at Merrill, who is the coach for the newbies in his branch...but at the next office...who knows?


As was posted a few days ago...if your marketing plan is to cold call...get a new plan immediately!


Good Luck!

Apr 13, 2006 10:14 am

Cold call... Get a new job/career.

Apr 13, 2006 10:51 am

remote--I couldn't give a tiny rat's behind what you said, all I was stating is that a "normal" indy actually has expenses.  Your situation is irrevelant or worse to a guy brand new to the industry.


The "drag" that OTV mentions about indy's doing 20%+ net better is because they actually know what they're doing and actually have a client or two.

Apr 13, 2006 11:22 am

Three answers -



7God63 - yes, in a nutshell it was the wife as well as some aggresive investing on my part. Those who claim to be blameless in their failures are fools.

All in all some big lessons. They will not be lost on me. As for cold calls. I will do them. Not above that but they are however not the foundation of my business.



Financial pl pro - I appreciate your skepticism but do note I said for personal reasons I MUST have a salary while I start this career. I am convinced SB will not get in my way. They may even train but I will be driving my education no matter where I am. Mentoring is the only way to really learn anything. The other stuff (tests, group meetings, bs hoops) are like anything in life - necessary annoyances for the most part.



Your comments, for the most part, are appreciated. Oh and remote, lighten up on cowboy.I am sure you did not start where you are now. You got there from somewhere.



Apr 14, 2006 2:54 pm

Ontheeverge... Hay man so now you are FREE (no bs from the wife) give em hell!! Go for it.. With out her just live on rice and beans and commit everything you have to selling and brining in the assets!

Apr 15, 2006 12:43 pm
Cowboy93:

remote--I couldn't give a tiny rat's behind what you said, all I was stating is that a "normal" indy actually has expenses.  Your situation is irrevelant or worse to a guy brand new to the industry.


The "drag" that OTV mentions about indy's doing 20%+ net better is because they actually know what they're doing and actually have a client or two.




Wow! I think you have me confused with someone who cares about what you think.

Apr 17, 2006 10:45 pm
remotecontrol:
Cowboy93:

remote--I couldn't give a tiny rat's behind what you said, all I was stating is that a "normal" indy actually has expenses.  Your situation is irrevelant or worse to a guy brand new to the industry.


The "drag" that OTV mentions about indy's doing 20%+ net better is because they actually know what they're doing and actually have a client or two.



Then why did you post a response to him, moron....



Wow! I think you have me confused with someone who cares about what you think.