Entertaining the idea of going into Indy channel
I've recently met with a couple BD's that offer independent channel businesses. I'm intrigued with a couple of the offers enough to submit their initial ppwk that they have asked for.
My question to you guys that have made the switch is "how accurate do the numbers need to be?" Does anyone fudge the numbers as most people fudge their resumes?
That is a great question… The real answer is it depends on your production. When I went Indy I was worried with the whole process and I can tell you now that I really didn’t know what I was getting into even with all the prep I did. With that said I have NEVER regretted the decision to set up my own shop.
The commission payouts are correct but what you really need to focus on is the net-net. That means all expenses, rent, phones, staff, marketing etc. Then add all the firms technology fees that you sign up to get against your commission grid.
Personally for me I make a solid 20-25% more even after all fee(s), expenses etc. I hope that helps… I am with LPL Financial.
Be honest. If you fudge numbers and the broker/dealer you join gives you up front money, it could come back to haunt you. Why take the risk of possibly ruining your career? If they find out you were lying, they in turn could report it on your U4. Attorney Bill Singer writes a great blog that is humorous and often painful to read about when things go wrong with broker/dealers and their reps. You can view other cases at www.rrbdlaw.com in his broke and broker blog to get a feel for what might happen. If your production is not large enough to join a firm, then be upfront about it so that both sides can make an objective business decision. Find a firm that is willing and wants to help you grow and be successful. A book from Cantella is helpful in going through the pros and cons of independence. Their web site is www.cantella.com
I left a large wire house a year and a half ago. I now know that my priority would be their tech platforms and clearing firm used. My business is BASIC. Stocks, bonds, and some mutual funds. Half my business in commissions and half is fee. It seems most of the RIA community do packaged product and charge a fee so they would never find my firm’s technology platform or clearing frim (Pershing, which sucks) an issue. I don’t regret making the change. All my clients followed me and therefore I am making more money but the whole experience of entering orders and just doing business and tracking my business in general is really subpar for this day and age.