25 mil RIA @ 1%

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.
Oct 22, 2010 11:49 am

I've been at it 18 months as an RIA.  Currently at 11 mil with 100kish  in gross revenue.  My overhead is no more than 20k per year.  My goal is at 36 months to have 25 mil with around 225k in gross...hire an assitant, keep overhead low and bring home around 150k per year.  To me, that's a great life.  Anyone else in a similar type of situation? 

Oct 22, 2010 12:05 pm

Most indys...

Oct 22, 2010 12:06 pm

Hire the assistant 6 months before you really "need" that person. Get involved with networking, since you probably have much time on your hands. Learn everything you can about simple and advanced estate planning, be an "EXPERT" on that subject. I'm constantly amazed at how many HNW folks don't even have a current will, let alone a living trust, TOD listings, or current bene designations on IRA accounts. My entire book was built on fixing old advisor registration mistakes, updating benes, and advanced profiling. Started with 600 households doing that at a bank, and I never ran out of work, or opportunities. Clients are fascinated by the subject, appreciate the help, and it is market neutral. Other reps are really not doing this, a great way to differentiate yourself.

I've got 55m AUM, goal is 70m in 18 months. Our roe goal is 75-80 bps, IMHO, 100bps is too high, can turn off some potential relationships.

Oct 23, 2010 9:20 am
Hello IA,I wanted to ask your advice on how you got started as a RIA and with what company.  I am at a crossroads in my career- I have been working with Northwestern Mutual for 2 years now.  Their philosophy is insurance, insurance, insurance, and after you have sold enough of that than you can move into managing assets. They emphasize education but you can't get anything until you have proven you can sell insurance. I was told i could get my CFP designation between year 4 and 5 into the business.  Not to mention, I wonder how much of the business i create is really my business since they seem to have control over everything I do.  What are my options with my existing clients if I leave?   I would like to learn more about working as independent or at a bank, or firm.  Or how about on a financial team.   Can you point me in that direction please.  Maybe Bigfirepower could throw in his 2 cents?Thanks
Oct 23, 2010 11:00 am

Zip...

At NW Mutual, how have you built your client base? Make sure you have a copy of your employment contract. Are you 7 licensed?

Working at a bank can be a great way to build a career, a book of business. You have enough experience now, to land a job there. You have decent to unlimited access to the deposit base, and can build a network of support from bankers. The trouble is, many bank programs are Mickey Mouse when it comes to product and services, literally a bit on the demeaning side. You're always expected to kiss butt, and kowtow to the bank. You'll make more money than the bankers if you're successful, and they'll resent you for that. You are required to sign at least a non solicit, if not a non compete as well. I spent 12 yrs at two bank programs, and my longest stint was very agreeable for me and my colleagues, but the bank failed... I would have stayed indefinitely, if not for that.

Lots of folks went indy inside the last two years, for the same reason I did. Either no choice, or just got fed up with Wall Street and the major banks. After two years, these indies are recognized as businesses by the banking system, and many folks like me, are going to want to expand. Buying book, buildings, advertising and marketing... Maybe you could fit into a growing team? If you really know insurance, that might be a real bonus to some group that is big, and caters to HNW investors. If you go that route, be sure to get it all in writing! You could start your search, by contacting the top 10 or so indy firms, as they all have strategic development departments. My firm, is surprisingly helpful and qualified in this area.

I've worked at wires and banks in the past, for 18 years total. I was careful not to make going indy some sort of dream, kept my expectations realistic. 18 months later, I'm incredibly pleased and satisfied with what I get from my broker dealer. The resources are so much more professional and helpful than anything I'd seen in my prior career. Going indy, is a huge step up, for probably even someone at Morgan or Merrill. My clients, the real test, have nothing but praise for our Indy Broker Dealer.

Oct 24, 2010 12:19 am

In a very similar position.  Honestly, I'm surprised your overhead is 20k with no assistant.  Do you have office space, but no assistant? 

Oct 26, 2010 9:06 am

How does someone run a real practice with only 20K in overhead?

Oct 26, 2010 11:02 am

[quote=ia]

I've been at it 18 months as an RIA.  Currently at 11 mil with 100kish  in gross revenue.  My overhead is no more than 20k per year.  My goal is at 36 months to have 25 mil with around 225k in gross...hire an assitant, keep overhead low and bring home around 150k per year.  To me, that's a great life.  Anyone else in a similar type of situation? 

[/quote]

My goal is similiar...I'm Indy...My goal is 30 Mill at 1% and 90% payout. It take me about 20k-24k year to run office. And I have been at it for about 1 1/2 years as well.

I'm growing my business by referrals from existing customers and cold calling. I'm only looking to have 1new appointment week with a new prospect. I'm almost at the point where I am no longer funding the business out of my own pocket. I only need to sell one new 100k "L"share annuity mo and with existing trails/wraps to cover expenses. That is why I said only need 1 appointment week with new prospects.

How are you growing your practice?

Oct 26, 2010 12:40 pm

[quote=B24]

How does someone run a real practice with only 20K in overhead?

[/quote]

I needed to rerun my numbers, not under 20k as I originally thought. 

Home office, with a virtual office that costs about 3k per year.  I have no assistant, huge cost savings - I have a business partner, I run the book, he prospects.  Not that hard to run a book without an assistant, if you don't have to also make time for prospecting.  E&O - 5k Mail - 1k Supplies - 1k Tech - 1k Phone/Internet - 1.5k Travel - 6k Perf Reporting - 2.5k

So a hair over 20k, but that is also divided by 2.  With gross of about 400k for the practice, that isn't bad. 

Oct 26, 2010 6:23 pm

Jeez...$20K. That is unreal.  I am not sure how many clients you have but I can't imagine not having staff to personally greet clients and answer the phones knowing who is calling. If I didn't have staff,  I am pretty sure I wouldn't be able to do anything but service work. It is also interesting how you label an assistant a "huge cost". My production took off when I began hiring. Maybe you should hire someone to free your time. Even going from 400 to 500 would most like more than cover her/his costs.

Just curious (my interest has been peaked), what does your practice look like? All investments I assume considering you mentioned running the book.

Take this the right way. Producing $400k without professional help seems like a  compliance bomb waiting to go off.

More power to you and your prospecting partner.

Thx

Oct 26, 2010 7:30 pm

[quote=WiAdvisor]

Jeez...$20K. That is unreal.  I am not sure how many clients you have but I can't imagine not having staff to personally greet clients and answer the phones knowing who is calling. If I didn't have staff,  I am pretty sure I wouldn't be able to do anything but service work. It is also interesting how you label an assistant a "huge cost". My production took off when I began hiring. Maybe you should hire someone to free your time. Even going from 400 to 500 would most like more than cover her/his costs.

Just curious (my interest has been peaked), what does your practice look like? All investments I assume considering you mentioned running the book.

Take this the right way. Producing $400k without professional help seems like a  compliance bomb waiting to go off.

More power to you and your prospecting partner.

Thx

[/quote]

50 households, pretty low inbound calling.  I make a monthly outbound calls.  I said having no assistant was a huge cost savings, meaning, low relative to a total cost burden for an office.  The difference of 20k total, to 80k total, is a pretty large cost in relative context.  I'll add an assistant when I feel it is necessary, but right now, I have plenty of time to service the book, and then some.  I don't know about your practice, but if you are the sole advisor, you almost certainly need an assistant, since you need to devote time to growth.  That isn't the case for me.  Adding an assistant would have very little chance of moving the AUM or production needle, as it isn't freeing me up for any prospecting or business generation activities. 

In my few years at a wirehouse, I probably had 10 total office visits with clients.  I am in a major metro area, and clients don't like to come into the city very much.  A lot of it is out of state, phone based, or in clients homes.  No need to an assistant to be greeting clients. 

Why a compliance bomb?  I have full control over all client matters, so nothing slips through the cracks, and my assistant never forgets to tell me something imporant that a client told her.  I would think if anything, an assistant creates a liability for me there, rather than alleviates it.  How would adding an assistant lower your compliance liability?  I mean, I could imagine ways one could potentially lower it, but I don't think it is likely that I'd have my assistant doing more than answering phones and doing routine work, not mission critical duties.

I know it is different, but it works for me/us.  We haven't been on our own even a year yet, and the future does include office space and a dedicated assistant as we grow, we just haven't found a need yet.

Not sure I answered all your questions.  If you have more, I am happy to reply further.

Oct 26, 2010 7:36 pm

Its do-able if you have the right type of accounts AND scale your business model. Fire your pain in the assses, especially if they aren't paying you what you are worth. And either outsource your money management (MF wrap programs, SMA's etc) or run your money on a discretionary platform with block trading capabilities. I do the latter, and all accounts are linked to one of 5 models. I do one trade for 15 accounts, with a push of the enter button and no phone calls. I spend about 30 - 45 minutes a week running 55 accounts. 55 HH's. No assistant, office in an executive suite, costs me 1300 a
month including phones, office cleaning, furniture and receptionist

I don't have a big book, but as an indie it provides me with a decent living and a good lifestyle. I have capacity to grow, which i am working on (making a living but not satisfied without growth). I left the country for 12 days this summer (and every summer) and i got one phone call. 90% of the phone conversations with clients are initiated by me, not them.

My point is, it can be done. With that said, i think i would probably benefit growth-wise with an assistant, and in July the plan is to move out of the executive suite and share an office with another FA (friend) and we will share a part time assistant.  But i could run my business the way i am, with no support, with capacity for probably, another 5-7 Million assets if i had to.

Oct 27, 2010 9:49 am

[quote=Flyonwall]

[quote=B24]

How does someone run a real practice with only 20K in overhead?

[/quote]

I needed to rerun my numbers, not under 20k as I originally thought. 

Home office, with a virtual office that costs about 3k per year.  I have no assistant, huge cost savings - I have a business partner, I run the book, he prospects.  Not that hard to run a book without an assistant, if you don't have to also make time for prospecting.  E&O - 5k Mail - 1k Supplies - 1k Tech - 1k Phone/Internet - 1.5k Travel - 6k Perf Reporting - 2.5k

So a hair over 20k, but that is also divided by 2.  With gross of about 400k for the practice, that isn't bad. 

[/quote]

Tech at only $1000/year?  Morningstar alone costs like $200/mo.  Don't you use any software?  Presentations?  Archiving?  Tech support?  Backup? 

Oct 27, 2010 10:01 am

Pretty much all the software I use is purchases, not rented.  What I use from Morningstar is provided through my custodian and BD, no additional charges.  Archiving done through my BD for minimal cost, backup of data included in my performance reporting bundle, some tech support.  Not sure what you mean by presentations...

And if it is 1.5 or 2k when things settle out, so be it.  The point is the same.  It is a low overhead operation. 

Oct 27, 2010 10:30 am

Nice.

Oct 27, 2010 3:16 pm

B24, you pay $200 for Morningstar Workstation?? I pay $80 for that, argus, value line and SP resch.