Indy expenses

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Sep 27, 2009 10:32 pm

Found a new option.



500 sqft. 2nd floor of brand new bank branch that doesn't have/do investments. A little more expensive but maybe worth if it I can some how leverage that.

Sep 27, 2009 10:37 pm
B24:

Wow, that's a pretty small office. Are you by yourself? I assume you can't fit an assistant. I can't remember your setup, are you with an indy B/D doing primarily investments?



I would prefer #1 I think. Unless you are a big ensemble firm, I don't like the big "office building" feel.



#3 seems pretty small. I have about 1100 sq. ft., which is more than I need, but my actual office part is about 500 sq. ft. The rest is reception area, conference room (I have another FA in there right now), and storage room.



I still have a hard time dealing with the "no assistant/single office" setup. I can't envision real high net worth folks being comfortable with that. I have a lot of clients/prospects ask me where everyone else is, and then look strangly at me when I say it's just 3 of us.





It depends how you present your business. I came from Edward Jones, so the office set-up isn't that different except the BOA. And I tell the client that my BOA spent 7 hrs/day doing crossword puzzles. And that it is an additional expense or an unwanted client relationship I have to bring on to justify her existence. I let them know that down the road if we ever got too big then I would have someone but my goal is to keep the client number small.



So I have to find a certain client, with a certain asset size to justify adding them as a client. So now my average account size is $300K(not huge) but I made 4x what I made at my last year at Jones.

Sep 29, 2009 1:51 pm

It's funny, I was just talking to one of my RIA friends.  He has a very small practice, maybe 25-30mm, probably 45-50 clients.  He has no assistant, but a small office (nice location near me, on the water).  We got to talking about business (which we rarely do - he is Pres of Rotary, which is how I know him, so we are usually discussing Rotary stuff) because he was asking about our Contact Mgmt System.  He is not happy with his - he just uses Outlook - not robust enough, even for a simple practice.  But he was saying his expenses are about 30K per year.  He does mostly mutual funds, with a few ETF's, stocks and bonds mixed in, and adds very few new clients.  So his ticket charges are probably minimal.  But he was also saying that not having an assistant is starting to hinder him, although he doesn't really need someone full-time.  Unfortunatly, in his words, he "only needs someone when he needs them".  In other words, when he's out of the office, on vacation, in appointments, etc.  The paperwork is minimal, so he doesn't need really need an admin.

Have an indies worekd with answering services and/or common receptionsists with other businesses?
Sep 29, 2009 2:09 pm

They have executive suites set up that way. Common receptionist who answers the phone with your business name then xfers the call.

Sep 29, 2009 2:45 pm

Yeah, it's tough in an area that doesn't have those.  We are working on getting one of those in our area, as it is a big demand among small CPA's/attorneys/advisors.  Real Estate is at a premium, though, so space is an issue.

Sep 29, 2009 3:33 pm

Check REGUS, they are nationwide they offer executive suites, with common receptionist

Sep 29, 2009 9:46 pm

I am in a Regus facility and i have to say, they are first class. Nice facility, professional receptionists, i have had complememnts from clients on how they answer the phone. They nickel and dime you on everything but its part of the deal, all in all it is very very reasonable cost for what you get.


I am also a one man shop, no assistant. Took a little getting used to but now that i have adjusted its not a problem. I actually have plenty of time to prospect. I dont do much transactional biz , mostly fee based discretionary mgmt, so it really works. If you scale your business, you can do probably 350, maybe 400k without an assistant.
Sep 29, 2009 9:49 pm

What do they nickel and dime you on?

Sep 29, 2009 11:56 pm

What do you guys' clients think about the one room/no assistant set up. Sweet for your bottom line.

 
What can you net at RJ/LPL with the no assistant/exec suit set up?
Sep 30, 2009 10:03 am

I have heard LPL is getting harder and harder to operate a one man office. Their applications and paperwork take a lot of time. A friend of mine is there who came from EDJ and he said setting up an account takes forever. Because everything has to be typed into the system and then updated, even if the client fills out a paper app.



MR.. That is how I am set up. don't know about net net at RJ/LPL but here is an example:



Gross production $125000(what you need to be osj so it works in my example)



monthly gross: 12,600

LPL 10%          1,260

LPL branchnet      125

LPL website        60

LPL portfolio       75

LPL bond            10

LPL E&O            200

Rent               800

Phone/Internet     150

Supplies(ink,paper)150



So for this bare bones operation you are net net 78%..



WARNING: This is very vague. This doesn't take into account the following(which will vary greatly depending on business): postage, marketing, ticket charges, furniture, computers, printers.



Sep 30, 2009 4:53 pm

Of course then there are taxes and other stuff that your employer pays that you would have to pay, but on the plus side you get some deductions too.

Sep 30, 2009 7:39 pm
chief123:

What do they nickel and dime you on?

Use of the conference room $40 an hour and up. Use of the copier, 15 cents a copy. They bring up bagels on Friday mornings, and add $30 a month to the rent, whether you want them or not, they call it a kitchen charge.
But i am not complaining. All in, for what i am getting i am paying a more than reasonable cost. Plus, I like bagels.
Sep 30, 2009 7:43 pm
mrjones99999:

What do you guys' clients think about the one room/no assistant set up. Sweet for your bottom line.

 
What can you net at RJ/LPL with the no assistant/exec suit set up?
I end up with about 70% of gross net to me, after overhead, i think. I say i think because i have only been in business for 4 months, and havent normalized my flow yet. But i think thats a pretty good guesstimate.
Also, definition of gross is gross production credits, net of haircuts, ticket charges etcrather than gross fees and CMN from the client
Sep 30, 2009 7:46 pm

So 70% is really not "net". In other words, if I did 150K gross, and had 25K in ticket charges, haircuts, etc. you would call it 125K gross? From what I hear, ticket charges can add up depending on your investment style.

Oct 1, 2009 12:17 am

I'm in the process of moving out of an accounting firm and into my own office (owned, not rented!).  Being that it is fresh in my mind, here are a few ideas that might be helpful...

 
I bought a Brother MFC9840-CDW as my main all-in-one.  No, it's not commercial press grade, but for a typical office, I think it will do very well.  It's a color laser that is network-ready.  It auto-duplexes and even handles legal-size paper.  For $600, it looks like a fantastic machine.  IMO, the print quality I pulled out of the demo was beautiful.
 
I'm putting in a Buffalo network drive for all my imaged files (we image everything and keep on paper only original signature documents).  It's redundant (auto backup to a second partition) and you can even access the drive remote over the web with password protection, so I can see my files at home.  The 250GB version is about $250 and it also plugs right into the network so everyone in the office can access it without a server.
 
My conference room will have it's own Dell with a 40" 1080p flat screen on the wall that will be plugged into the computer via a 25-foot VGA cable ran through the wall (it's also connected to my Dish satellite system if I want to run Fox Business, Bloomberg or CNBC in there).
 
My phone system is an NEC DSX 6-phone system.  Its' all programmable over the web and is more than I need at the moment.  I intend to grow into that one, but for $1,500 installed, I'm satisfied.  We will carry 2 traditional lines with a 3rd line through, oddly enough, Magic Jack.  My tech guy says that is far the cheapest way to do long distance if you have high-speed internet (which I do). 
 
Incoming faxes are through Packetel, which for $3.95/month, send all incoming faxes to my and my assistant's email as PDF files.  That keeps my traditional lines free from incoming faxes.
 
There's lots more I could share if I weren't so busy with this move (and making money while I'm making the move).  As an aside that won't matter to most of you, I should be into my building at about $150K.  That includes about 1500 square feet on the main level and about 900 SF in the basement.  For now, that's a lot of space for me and my assistant, but we are actively seeking another advisor and may ultimately have as many as 3 advisors and two assistants comfortably in that space.  The building looks great thus far and is on the second busiest street in town, IMO.  You can just flat-out do it cheaper in the good old midwest.
Oct 1, 2009 11:06 am

Indy do you use the Brother as your only printer? I have always heard that color lasers waste color ink even if printing with just black.



Oct 1, 2009 11:13 pm
Squash1:

I have heard LPL is getting harder and harder to operate a one man office. Their applications and paperwork take a lot of time. A friend of mine is there who came from EDJ and he said setting up an account takes forever. Because everything has to be typed into the system and then updated, even if the client fills out a paper app.

MR.. That is how I am set up. don't know about net net at RJ/LPL but here is an example:

Gross production $125000(what you need to be osj so it works in my example)

monthly gross: 12,600
LPL 10%          1,260
LPL branchnet      125
LPL website        60
LPL portfolio       75
LPL bond            10
LPL E&O            200
Rent               800
Phone/Internet     150
Supplies(ink,paper)150

So for this bare bones operation you are net net 78%..

WARNING: This is very vague. This doesn't take into account the following(which will vary greatly depending on business): postage, marketing, ticket charges, furniture, computers, printers.

 
 
Sounds like a recipe for a 100,000 per year part-time job!
 
Oct 2, 2009 12:54 am

Can't really tell if you are mocking me.. I was just showing what a net net was if you ran a basic operation. The numbers actually come from a guy who is doing $600K/year.

 
The thing I never understood about some indys is this: The reason for the low payouts at wires, jones, banks.. is the overhead(office, support, staff, branding). So the only thing I can control as an indy is expenses(A newspaper ad is not going to do anything compared to the multiple times an hour MSSB runs a tv ad, so why waste the money) I am looking for a smaller number of clients who appreciate what I do and don't need me to build an office similar to where I left, with marble bathrooms, brazillian cherry floors and a secretary who does little to nothing.
 
But you are right, I work very little, but I make over $100K which is pretty decent in my area(not NY)
Oct 2, 2009 10:41 am

Squash, that's not a nock on you. More of a compliment. Even doing 150-200 in that set up is a sweet gig. If you do 600 with 2-3k/month in expenses. Damn! So you're taking home around 400-500?



The bare bones set up is very attractive.



Seems like you could easy net 100k part time.



Right or wrong?

Oct 2, 2009 11:17 am

MrJOnes, I think I might have posted this earlier, but I've got one particular friend (business colleague) that's an RIA.  He runs a VERY simple business.  I don't know the EXACT numbers, but from how he explains it, he has between 40-50 clients, probably 25mm in assets, charges about 1%, does primarily active mutual fund models.  So his revenue is in the 250K range (give pr take).  He said his annual expenses are around 30-35K.  Now, he has no assistant, and he doesn't use much sophisticated software or anything.  So he probably nets around 200-225K per year, so call it 80% margins.  And I can tell you , he does NOT work very hard.  He does NO marketing, only takes referrals, and will only take a new account over 500K, as he really doesn't want to grow very much.  I can tell you, THAT's a very nice life.