From Bank to Indy...?

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Feb 26, 2012 3:59 pm

So I've stalked this forum in the shadows long enough...I would appreciate your opinions and tips on going Indy given the following situation(s):

I've been in the business for about 6 years - 3 at Waddell & Reed (don't judge) and the other at a very large bank.  While at the bank, I took on the role of "Relationship Manager' and worked very closely with the financial advisor.  I decided to make the leap to the bank in the first place due to a variety of factors, most notably that I did not feel like the former firm had what I wanted in the way of a long term career.  Once at the bank, because of my background, we did not run our book the way most do in that industry.  I generally did the profiling and the soft sell, while my partner made the bulk of the recommendations and closed the business.  If there was planning involved, I generally took the lead in that.  We were very successful and as such earned the trust of our clients.  The game has changed significantly in the past few months....

The bank sold a large number of branches, including all of the branches in our region.  From there, the new buyer sold two of three that we cover (we work together 5 days a week).  The buyer of the two branches bought my partner and I.  This bank is a small regional bank with an unsophisticated platform.  The buyer of the other bank is slightly larger with a little better of a platform. 

Where my parter and I are going, there is no advisor to cover if we leave.  This is because we are the only ones within hundreds of miles going to this particular institution and the deal does not close until later this summer.  They will not be able to bring over an advisor from the buying institution as a result...well, not until late summer.  In the other bank that we used to cover, they switch over this spring.

Our production looks like this: T-12 of 400k (everything goes through one rep. code - my partner's)...AUM of about 65 M.  Good mix of assets - 7-8M in managed money; 40m in funds; rest in either fixed or VAs.  Also, we are very close with a couple of local estate planning attorneys, where we do quite a bit of that; usually involving insurance strategies, etc.

We are in the advanced stages of discussions with an independent BD.  Once committed, we will share rev. 50/50.  I know this is a lot, but it's complicated.  I guess my questions are:

* am I crazy or is this a great opportunity to go Indy??

* I am aware of the issues of how difficult it can be to take bank clients...any advice?

*  Any tips or thoughts would be greatly appreciated!  Thanks in advance

Feb 29, 2012 12:23 pm

Are you crazy?  Maybe ... but not for thinking about going Indy. 

Will you have a legal battle on your hands?  Probably.  Just do the right thing and speak to an attorney.

Start planting seeds of discontent for the clients you like.  "Look Mr. Client, this merger is not positive for either of us. No matter what however anything I do will be for you and you alone" blah blah blah.

Here are questions to ask yourself.  Do you have a prospecting plan?  Do you have the capital for a legal battle? Did these attoneys like you because you worked for a bank or just because you are great guys? How many clients do you need to bring to make it worth it? 

Feb 29, 2012 8:49 pm

[quote=Element]

Are you crazy?  Maybe ... but not for thinking about going Indy. 

Will you have a legal battle on your hands?  Probably.  Just do the right thing and speak to an attorney.

Start planting seeds of discontent for the clients you like.  "Look Mr. Client, this merger is not positive for either of us. No matter what however anything I do will be for you and you alone" blah blah blah.

Here are questions to ask yourself.  Do you have a prospecting plan?  Do you have the capital for a legal battle? Did these attoneys like you because you worked for a bank or just because you are great guys? How many clients do you need to bring to make it worth it? 

About the legal part - Several unique circumstances to note.  First, I signed something akin to a non-compete earlier this year, but our attorney says it will not affect us.  We got a second opinion on that too, becuase it sounded unbelieveable.  The other attorney agreed with the first opinion.  Part of why this is so relates to the complexity of what is going on... Bank A (current employer and will have no local presence in region) sold to Bank B all branches within region.  Bank B turned around and sold two of my branches to Bank C.  The 'non-compete' was signed with Bank A and mentions Bank B in it, but not Bank C, nor any subsidiary of Bank B...thus the legal opinion.  I don't think anyone thought it could get this complicated, and so details were missed.  Plus people in my role don't usually leave in the manner that I am about to, so the language is quite weak.  Anyhow, it is just short of mass chaos here....and in terms of going Indy, that's just the way we like it!

In terms of seeds of discontent...you betcha!  Bank B (see above) is keeping one of my branches...and even though we are not going there, they have made the mistake of leaving my partner in this branch for the past 1 1/2 months.  We get to see all of our clients and hint around about what we may or may not be doing.  We are careful to state 'you will have a choice to make' while all the while feeling them out for their loyalties.  We have been pleased with what we have learned about their future choices.  In the other branches, we are acting much the same way.

Other stuff...Prospecting plan = we have segmented our book into A,B,C and are going to start from the top and run right through it.  After that, we will crank up the referral machine...plus we have experience with seminars with our attorney friends (retirement and estate planning) so we will go with that.  Lastly, we are leasing space with a local CPA firm that just happens to have a payroll business too - we are discussing 401-k referrals with them.   The attorneys have worked with me since before the bank, so I choose 'because we are great guys.'  we are hoping for 30 mil. of our 40+ mil. book (well, more would be nice too...just trying to be realistic) and then transitioning most to fee based.

We also have an agreement with an Indy BD that includes upfront money...just reviewing it carefully.  Appreciate your comments....

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Mar 1, 2012 12:28 pm

Sounds like you have a plan!  Good luck and keep us posted on the transition!

Mar 5, 2012 4:16 pm

It sounds like a terrific situation legally.  You got lucky