Need Some Advice - What Would You Do?

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Nov 2, 2009 7:49 pm

Here's my situation.

4 years in the business. Annual production of about 125k and rising. Series 7, 63 & Insur Lic. Currently drinking the Kool-aid. Divorced a year ago with a 5 year old son(single Dad.) I like where I work because of the flexibility and freedom it gives me to be a father. I'm not tied to the office 8-5. School is out at 2:30(PT) and I can either bring my son back to the office, if needed(he colors and plays in the conference room), or be done for the day. I love that aspect of where I work. My son is my priority and working here goes along nicely with that. Soon after my divorce, my production dropped as adjustments were made to our new situation. There was a lot of things that needed to be ironed out, that for a few reasons affected my production. Things have worked themselves out and I am back to having my production up to par. However, my employer has recently but a production goal on me for the next 4 months. I very well could meet it, but am not positive that I will. That has me thinking of my options.  So knowing these things, what would you recommend I do?   ----   I have had an un-solicited offer from a bank. But the 9-5 isn't ideal for me. I would love some payout to switch and pay off those student loans! I like the backing and infrastructure of wirehouses/regionals etc, so not sure if Indy is the right way to go, I could be wrong though. What firms would you be looking at? Thanks for your help in advance.

Nov 2, 2009 7:56 pm

GD,

 
Have you talked to them about your personal situation?  I am assuming you work at Jones.  Theya re often very accomodating with sticky family situations.  I can't really recommend other B/D's, as Jones is probably the most liberal as far as production, work schedule, etc.
The one thing you could consider is going to work for an existing indy firm that might be willing to take you on.  You may get a slightly higher payout (though it wouldn't be like having your own indy firm), but you might not get the same level of benefits.
Yes, you could go to a bank, but you may end up in a salaried position, and essentially be a 9-5 man.
Nov 2, 2009 8:07 pm

An insurance company B/D sounds like it would be ideal for you.

Nov 2, 2009 8:16 pm

why not move to a major Indy firm.  they have great platforms/technology/research.  Far more investment options for your clients so it's easy to sell them on it's in their best intrest.  You keep your flexibility of schedule and if you're over 125k T-12 you're going to get 85% on average.  Get a small office, don't be brainwashed that you NEED a secretary b/c your production can't afford it.  Good luck.

Nov 2, 2009 9:28 pm

Where are you located? how much in assets? I would say an insurance bd or going indy can be a descent move.

or hook up with an existing RIA.

Nov 2, 2009 9:47 pm

How much of your book do you think is portable ? If you have 15mil that you know you can move that is one thing, but being just 4 years out you still need growth to your book and client base. A bank will give you the least amount of freedom, but it will probably give you the greatest earning power over the next 3-5 years if you can find the right situation.

Nov 2, 2009 10:36 pm

Ron14 and B24 both had good points.  Sounds like you work at Jones, I would bet they may be able to work with you, once on goals you may be in trouble, so I would see if you can find a loop hole with your divorce.  If you are going to move you need to take a good hard look at your book and find out what you will be able to move, don't over estimate as this is your paycheck.  At 125K you probably will not find a upfront payout.  If you can't take a decent part of your book going indy may just buy you some time but you won't make much.  You could try a wire, ask for the higher end salary, around 70K depending where you live and if you can move your existing book should be able to reach your numbers for the first few years.  You may not be able to take off at 3 every day and won't be able to take your kid to the office but you would have some flexability.  I think you need to think long and hard about the bank route.  You will have to sacrifice the flexable schedule but as Ron said you could build a book quick and bring home nice pay.  I know family is important and I think it's great your dedication but if you really want to get this thing off the ground you may have to put more time in for a few years.  If you can get 30-40 million fee based 5 years from now you could then move indy and have the best of both worlds.  Good luck.

Nov 2, 2009 10:54 pm

LA - nice picture, lol, well played

Nov 2, 2009 11:38 pm
GavsDad:

Here's my situation.

4 years in the business. Annual production of about 125k and rising. Series 7, 63 & Insur Lic. Currently drinking the Kool-aid. Divorced a year ago with a 5 year old son(single Dad.) I like where I work because of the flexibility and freedom it gives me to be a father. I'm not tied to the office 8-5. School is out at 2:30(PT) and I can either bring my son back to the office, if needed(he colors and plays in the conference room), or be done for the day. I love that aspect of where I work. My son is my priority and working here goes along nicely with that. Soon after my divorce, my production dropped as adjustments were made to our new situation. There was a lot of things that needed to be ironed out, that for a few reasons affected my production. Things have worked themselves out and I am back to having my production up to par. However, my employer has recently but a production goal on me for the next 4 months. I very well could meet it, but am not positive that I will. That has me thinking of my options.  So knowing these things, what would you recommend I do?   ----   I have had an un-solicited offer from a bank. But the 9-5 isn't ideal for me. I would love some payout to switch and pay off those student loans! I like the backing and infrastructure of wirehouses/regionals etc, so not sure if Indy is the right way to go, I could be wrong though. What firms would you be looking at? Thanks for your help in advance.

 
 
Tough situation. Yu are less likely to hit your number if you start the process of bailing...and your trailing 12 will be sinking too. Unless you have some big tickets in the pipleline and can hold the production to where they want it and to be attractive to a wire..... I say paddle for all you are worth in the boat you are in, young man.
 
Kicking
Nov 3, 2009 12:13 pm
iceco1d:

Timeout.  What is your book composed of?  And which of those assets are you pretty sure you can move?

If you've got 75K in C-shares/Advisory/MAP or other recurring revenue, that will move with you, you can pretty easily go indy and see over $50K in your "paycheck" - minus a few expenses (which won't be much, if you hook onto an existing office).

If you are all transaction based, or these are GK clients, or some other mix, maybe you are stuck and need to look somewhere with a salary.

Details on your book though - and what you think you can take, are very relevant.

 
Agreed..
 
If you can't take anything with you(my guess is 4yrs you are out of the EDJ 75K handcuffs) then you should look at a bank.
 
Wire is out of the picture because you want a work/life balance...
 
OSJ indy could work out depending on what the conditions are.. For example if you get an 80% payout, probably will have to kick in for office expenses.. But with a 55-60% payout probably not.
 
Indy... If you do it alone, you could get 80-95% depending, but then just allow for expenses..so on 125K @80% gets you $100K, but then you need an office and other stuff, so probably taking home $65-80K depending how you set it up.
 
In all the indy situations remember you need health insurance(expensive) and to save some for SE taxes..
 
Nov 3, 2009 1:22 pm

I'm projecting a 30% reduction in productivity in year 1 in all my scenarios. I'd rather be flush with cash than regretting the move.



I'm not planning to fail, but it's all rosey til somebody asks you to pay the E/O and you've got nuthin'.

Nov 3, 2009 2:09 pm

Thanks for the input so far. Keep it coming!

Here's how my business looks -
50% A share funds
30% Individual Bonds
10% Annuities
5% Stocks
5% Cash

In reality, I'd feel comfortable saying that I could easily take 5M with me. Possibly 7M.

Nov 3, 2009 2:27 pm

yeah but you don't have anything the produces income...

 
Assuming you could get clients to move from A shares to a wrap program(nevermind the compliance issues)
 
The bonds are useless.
 
Annuities at jones don't pay anything more than 25bps trail, so that is useless too.
 
Stocks, maybe some buying and selling, but if they are jones guys then they won't like that.
 
Cash???
 
So if you take $5M:
[email protected](funds)= 6250/year
[email protected](bonds)=0/year
[email protected](annuities)=1250/year
 
So your production would be $7500 @75%=$5625
 
Not looking to good..
Nov 3, 2009 2:28 pm

Go to www.cantella.com and request the free book on going independent. You'll get through the read in about 35 minutes and it's worth your time and some introspection as to whether or not this is the move.

Nov 3, 2009 3:01 pm

I hear what you are saying about the bank not being ideal.  There is quite a bit more structure, both day to day supervision as well as pointless meeting crap that you will have to deal with.  However, it's a great lifeboat to jump on for a while, and it sounds like your ship has hit an iceberg.  You probably can't work the amount of time you want to work and make it work at EDJ.  I also don't think you could get a wire to take you, and if they did I doubt you would last that long, if you are being realistic about how hard you want to work it.  If you go either route, you are probably just putting off the inevitable.

 
If you are at a bank, especially a small one, you may be able to a certain extent run your own show out of their offices.  Even if not, you get some low lying fruit that gets walked to your office.  Convert them to permanent clients with loyalty to you (not the bank), and you can leave in  a few years when your book and production are big enough to justify it.
 
You may or may not be able to do the same thing from an indy office you join, I wouldn't try it on your own though, you will probably starve out of the business, especially if you are wanting 30 hour weeks right now, and not a couple years of 60 hour weeks to get it started.
 
Even though I would recommend a bank to you now, and that is where I am currently parking myself, I will pass on some advice a seasoned advisor gavel me a few years ago.  It's not a matter of whether the bank will f--- you, it's a question of when the bank will f--- you.   I agree with that, and am seeing that to a certain extent myself.  However, even if I leave, it has provided me with a great boost that would have been hard to replicate otherwise.
 
Good luck!
 
 
Nov 3, 2009 3:18 pm

Here's another way to look at it.  You are sort of stuck in a situation right now.  I think you have three real choices...(1) stay at Jones and try to keep building slowly (assuming you make it), (2) find an existing indy and let them bring you on, or (3) go work for a bank.

 
I would take the bank route if you could figure out how to make the schedule work, and they were going to pay you enough that you could just stay there and take a "breather" while you get the personal stuff back on track.  Once your situation improves with child care, you will have more options. 
 
Honestly, for the time being, I would try my best to make it work at Jones or go to a bank.  Going to an indy would be stressful, as you would have to move clients, etc.  At a bank, at least the pipeline is built-in, you may get a decent salary (or not), and there would be less pressure to move clients.  I would talk to your RL and your DL in STL.  Go through the whole thing with them and explain your situation.  If you are working hard and showing that you are proactive, you might get some sort of dispinsation.  I have seen it happen frequently.  At one point, I had hit a "low", and my DL told me that there may come a time when I would be put on "goals".  She then asked me if there were any circumstances in my personal life that were making work difficult, and they would consider that.  Don't be too proud to ask for help.  And don't wait until it's too late.
Nov 3, 2009 9:17 pm
Ron 14:

LA - nice picture, lol, well played

 
HaHa, I thought you would like that.  Sometimes I feel like I'm living in a house of cards.  I'm selling bonds to clients while talk of inflation next year is all over, stocks after a 50% move and cheering for a 40 year old QB to last the season.  It feels great now but Jan could get ugly.