Is the Timing Right?

or Register to post new content in the forum

10 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Dec 1, 2008 8:03 pm

I work for a major wirehouse, and like a lot of brokers, have beeen contemplating the move to independent. I run a mostly annuitized business (75%+) with the majority of that business in "C" share mutual funds. It has been suggested to me that a firm such as LPL would be a good place to go to.  Obviously I need a firm that has the most similar platform to the one I currently use, but I also need a compelling story to tell to my clients of 15+ years as to why I am going independent.  Also, I am wondering if now is a good time to make a break.  Any thoughts? 

Dec 1, 2008 10:18 pm

Yes times a thousand.

Dec 1, 2008 11:07 pm

Why wouldn't you go indy? More control, greater choices and better payout.

Dec 1, 2008 11:35 pm

The most compelling story you have tell is the turmoil among Wall Street firms.  I don't know which wire you're coming from, but odds are, there have been some pretty negative headlines about your employer over the past 12 months and that is what I'd lead with.  Tell your clients that you are concerned about the problems facing Wall Street firms due to activities beyond investment management that are outside of your control and threaten to interfere/disrupt your ability to best manage client accounts.

 
An independent firm, such as LPL, has for the most part, avoided the problems of toxic derivatives and auction rate preferreds by mostly staying out of those kinds of business.  More importantly, other than compliance-related issues, a good indy will not tell you how to run your business, allowing you to act in the best interests of your clients without interference or fear of reprisal.
 
If anything, the headlines of the past year make this almost the perfect time to make such a jump.  Put your story together while you're doing your due diligence and take your time making the jump.  A hasty jump can create problems you didn't anticipate that end up making you look foolish.  I'd recommend getting a copy of Robert Fragasso's book on running an independent practice and reading it cover to cover before making your move.  I think you can buy it on his website, www.fragassogroup.com .  Good luck.
Dec 1, 2008 11:40 pm

Here's a better link for the book...

 
http://www.startingyourpractice.com/
Dec 2, 2008 7:08 pm

This looks like an awesome read.   I've already ordered a copy.  Thanks.

 
Also, does LPL offer the best platform for an advisor like myself who is coming from a major wirehouse.  I have some concerns that there may be products (mutual funds, for example) that I would have to liquidate to move accounts.  Also, one of my fears, given the state of the economy and the markets, is not getting some upfront money.  My understanding is that the independents do not offer $$ upfront.  I like the payout at an independent, but my business is down about 20% because it is so annuitized.  I am a little worried that if the markets continue to suck and I don't bring every client with me when I make the move, that I may become financially pinched.  Any ideas here?
Dec 2, 2008 10:43 pm
aande24:

This looks like an awesome read.   I've already ordered a copy.  Thanks.

 
Also, does LPL offer the best platform for an advisor like myself who is coming from a major wirehouse.  I have some concerns that there may be products (mutual funds, for example) that I would have to liquidate to move accounts.  Also, one of my fears, given the state of the economy and the markets, is not getting some upfront money.  My understanding is that the independents do not offer $$ upfront.  I like the payout at an independent, but my business is down about 20% because it is so annuitized.  I am a little worried that if the markets continue to suck and I don't bring every client with me when I make the move, that I may become financially pinched.  Any ideas here?
 
The upfront money is dwindling from many of the independents. There will always be some to cover ACAT and licensing fees along with E&O but most of the transition assistance packages now come with some sort of loan (or line of credit, if you will) payable over several years. This is handy because it gives you some comfort but when you activate it, it takes away your true independence. But you have that at wirehouses as well.
Dec 3, 2008 12:49 am
aande24:

This looks like an awesome read.   I've already ordered a copy.  Thanks.

 
Also, does LPL offer the best platform for an advisor like myself who is coming from a major wirehouse.  I have some concerns that there may be products (mutual funds, for example) that I would have to liquidate to move accounts.  Also, one of my fears, given the state of the economy and the markets, is not getting some upfront money.  My understanding is that the independents do not offer $$ upfront.  I like the payout at an independent, but my business is down about 20% because it is so annuitized.  I am a little worried that if the markets continue to suck and I don't bring every client with me when I make the move, that I may become financially pinched.  Any ideas here?
 
On whether or not LPL is the best fit for you, that's your call...can't really help you there.  I visited both LPL and Raymond James and came away feeling like I could work with either one.  No firm is perfect and LPL is not without it's warts.  That being said, three-plus years later, I'm still well-satisfied with LPL and feel like it was the best fit for my business.  If you do a lot of annuity business, Raymond James is not a good fit for you.  That wasn't an issue when I jumped, but it would be today.  My biggest problem was the sales manager questioning my viability and what I perceived as over-the-top compliance.  As far as assets went, I had no problem moving anything over.  LPL has a lot of selling agreements, so unless you have a lot of proprietary stuff, you should be fine there.
 
As far as your business being down 20%, the increased payout will more than make up for that.  I was making more money as an independent with 35% less revenue in my first full year.  As far as upfront $$$, not much help there.  I'm hearing 3-5% for ACAT fees, etc., and 10% of trailing 12 in the form of a loan.  Someone who's jumped more recently may be able to correct and expand on my information.
Dec 3, 2008 10:29 pm

Those are accurate numbers Indyone.

Dec 5, 2008 5:31 pm

Varying types of independence exist.  I'd recommend examining what each firms definition of independence really means considering many b/d's have "house rules" which may prohibit a certain activity while another b/d may not have the same rules.  I would explore also Hybrid Advisor Models (Maintain B/D Registration while also owning your own RIA Firm) and perhaps in a few years, transition to complete independence by dropping the B/D side altogether.  The ability to do this would obviously depend on your circumstances, clientele supported, etc., so no one solution is a fit for all.  Best of luck to you.