Working With Indy's

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Apr 6, 2007 9:32 am

I started working with an Indepentand Rep late last year.  We
refer small business to her, clients we pick up at seminars under
$250k, and she refers large "out of the box" clients to us. 



Example: She had a client who has around $750K with her now in mutual
funds and bonds, and this client just came into about a $2 mllion
dollars from the death of a parent.  The Indy referred them over
to us to do $300,000 in alternitive investments and $100,000 in a
specific stock strategy we run that has been doing well. The rest is
staying with her.  A copy of the statements go to both the client
and the Indy each month, and she reviews the overall picture, and we
review our portion with her and the client together.



We don't comp each other obviously, but just fill the needs of the
clients we run across. We have sent her about a  million dollars
in closed mutual fund and annuity business so far this
year.  



It seems to be working well.  My dilema is that I could be
referring this business to someone in my office (a POA person), but I
enjoy the referals I get from this Indy rep.  Is anyone else doing
this sort of thing?

Apr 6, 2007 9:42 am

Are you making more money with this arrangement or would you be better off not doing it?

Apr 6, 2007 11:31 am

Right now we are loosing financially.  Clearly the referrals we
have made produce far more than the referrals we have gotten (we have
gotten 1 and given about 20).  On the other hand, I will not open
households under $300,000...so I need to refer them to someone. 
We run seminars every 2 weeks and usually get about 3-5 meetngs from
each one.   Some of these people are under our minimum so I
make the referral.



This is the reason for the post.  I am eager to get other Indy opinions on the matter.

Apr 6, 2007 12:00 pm
rightway:

Right now we are loosing financially.  Clearly the referrals we have made produce far more than the referrals we have gotten (we have gotten 1 and given about 20).  On the other hand, I will not open households under $300,000...so I need to refer them to someone.  We run seminars every 2 weeks and usually get about 3-5 meetngs from each one.   Some of these people are under our minimum so I make the referral.

This is the reason for the post.  I am eager to get other Indy opinions on the matter.


It sounds like you're coming out ahead. All you've done is send the other person people who you would never do business with and you've received one that you will.


Why aren't you qualifying people for your minimum before you meet with them?

Apr 6, 2007 12:55 pm
rightway:

Right now we are loosing financially.  Clearly the referrals we
have made produce far more than the referrals we have gotten (we have
gotten 1 and given about 20).  On the other hand, I will not open
households under $300,000...so I need to refer them to someone. 
We run seminars every 2 weeks and usually get about 3-5 meetngs from
each one.   Some of these people are under our minimum so I
make the referral.



This is the reason for the post.  I am eager to get other Indy opinions on the matter.



Unless you are going to create a structure on your team to handle those smaller accounts, I don't see how you are losing out.  If you refer those accounts within the office I suppose you'll get credit with the BOM as a "team player", but unless you have a super BOM that doesn't mean jack.  One other possibility is that you could obtain some kind of agreement with the POA chum to do joint work with you on large cases perhaps large life cases since they can be complex and lucrative.

One negative to consider about your current practice is whether or not it could come back to bite you for sending referrals outside the firm, say if perhaps an unhappy client tried to name in in an arbitration and your firm refused to help defend you because you referred outside.


One major positive is that should you ever feel you need to make a change you have a friend in the indy world who owes you BIG time.  Their knowledge and experience in the indy world can do a lot to smooth your way, because there are differences.  Food for thought.

Congrats on your success...it's inspiring.  I've followed your posts on an ongoing  basis, and they give me a lot to think about.

Apr 6, 2007 7:49 pm
joedabrkr:

One negative to consider about your current practice is whether or not it could come back to bite you for sending referrals outside the firm, say if perhaps an unhappy client tried to name in in an arbitration and your firm refused to help defend you because you referred outside.


Bingo, Joe. That would certainly be my concern. You can't go to ML attorneys and ask for an opinion, since they'd be upset at the referring of clients over $100k outside the firm.


Maybe make the indy a job offer as a team member who handles smaller accounts. Think of the assets and expertise they'd bring over. Or just hire someone to handle it. Either way, I'd probably put the "kibosh" on referring outside the firm, since the risks and uncertainties outweigh the benefits, in my opinion.

Apr 7, 2007 7:55 am

Referring out of the firm is a valid concern.  I have thought
about referring these to POA, but I am the coach so I cannot play
favorites, which it would appear I am doing regardless of what I
say.  I do not want to have a division of the team managing new
smaller relationsihps.  I do not want to work out a split
arrangement with another FA in the office because of our team
dynamic. 



For you Indy folks, would this arrangement seem attractive, and is it
feasable to think you would refer any business back?  Be honest.

Apr 7, 2007 9:02 am
rightway:

Referring out of the firm is a valid concern.  I have thought about referring these to POA, but I am the coach so I cannot play favorites, which it would appear I am doing regardless of what I say.  I do not want to have a division of the team managing new smaller relationsihps.  I do not want to work out a split arrangement with another FA in the office because of our team dynamic. 

For you Indy folks, would this arrangement seem attractive, and is it feasable to think you would refer any business back?  Be honest.


I don't see myself taking your small prospects and sending you my large ones.

Apr 7, 2007 3:01 pm

I'd have to say the same...I'd like to think that I could handle just about anything thrown at me and I also have a hard time believing that at some point, you wouldn't make a play, however passive it might be, for the rest of the assets that I've retained.  However, if you've found someone willing to do so, run with it

Apr 7, 2007 7:13 pm

The current situation we are working with simply holds us out as a
money manager of sorts as we run discretionary portfolios.  The
Indy is a very close friend, so there is trust that I will not
over-step my role.  I would have to agree with you all...it is a
one off situation and that is it.  Just thinking out of the box a
bit.

Apr 7, 2007 7:19 pm

Suppose you call on an "ML-qualified" prospect who happens to use your indy as their broker. Suppose you don't find this out until well into the relationship; say, after your 4th or 5th contact and the prospect wants to move their relationship to you.


I see problems, especially if the prospect was one of the indy's larger clients.



Apr 7, 2007 7:21 pm

Agreed