Anyone Else Thinking of Adding to Your Office Now?
I was wondering if any other indys out there are thinking of bringing in a broker or two in the current environment? I keep reading these boards about the new people being cut lose and I'm sure there are a number of rrs who are close to starving to death, maybe 2-3 years in the business and a small book, but not enough to support them at their current firm.
It seems like a great opportunity to build add to my office and have someone else cover part of my overhead. About the time I'm ready to start recruiting, I worry about my own revenue, when assets are down, fee income is down and I know there would likely be upfront costs I would incur, most likely some type of salary/draw until their book transferred. Then there's the risk of what damage someone else may have done to their clients that I could be transferring to my office.
Guess I'm asking what other indies are thinking. I'm not in a large market, but the local economy is very solid, unlike a lot of country. I'm even thinking if I can't find someone locally, that some of the towns within 60-100 miles would be worth exploring. I'm guessing relocation isn't much of an option in this economy, unless they don't own a house. What are your thoughts? Pros and cons? Your personal experience recruiting someone you didn't know to come into your practice?
Issues will come forward in 3-5 years when both of you are up and running, and start to have different views on how to run the business..
I had a parter for a number of years... Everything started out fine, we both came from different places, EDJ & ML...
Sharing expenses was great, sharing support staff was great..
Problems occurred when partner wanted to spend more time away and wanted to farm out all the investments, and then his clients would show up and I would have to say he wasn't there or some bs excuse... He wanted the pay of a successful advisor without the work or to put the time in.. Got to the point where I felt his client started to hate me because I couldn't do anything for them(didn't want word to spread about me).. Left took my clients with me and started over..
I think there is only risk bringing someone in because sharing the expenses aren't worth it in the end..There is only downside (unless you are taking a piece of their production).. And once they realize they really don't need to pay you that portion, they will leave..
Squash - thanks for sharing your experience. I'm figuring I'd look for someone who doesn't really have the financial ability to go independent on their own and that I would take a piece of their production. But I hadn't thought about how to handle the kinds of issues you brought up -- guess I've been on my own for a bit too long, lol!
I had originally planned on adding an advisor this year, but have backed away as assets and revenues have shrunk, since like you, I expect that at least initially, I'd be subsidizing the new rep's compensation. I'm also wary of bringing in the wrong person. I've talked to one possibility and that person decided not to leave a comfortable situation with full benefits. Given what's happened since then, it's hard to blame a person for making that decision. I'm watching another possibility, but that person is probably a couple of years away. By then, they may have no interest in moving. My biggest problem is that I simply don't want to bring in an unknown, and my pool of knowns is fairly small. I feel like I've worked too hard to build what I have to mess things up by bringing a bad fit into the business. I see mysel adding people to my practice very slowly and with a great deal of caution, even though I know that I need more people at some point...mostly so I can take a vacation without being chained to my PDA.
I think the real problem with the brokers 2-3 years out is that they do not know how to sell. I have hired several like that in the past years and they did not work out.
What I would look for is the broker doing sub 300 who is probably going to get the boot from their current firm. Keep your ear to the ground and they will turn up.