The value of a brand

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Mar 21, 2011 2:33 pm

I've had this conversation with a few FA friends and I'm curious what others think as well..... what value in attracting new business do you place in a brand? I've had plenty of people tell me they feel more comfortable knowing their investments are housed at a big company. Surely its easier to bring in more new assets at ML than say BOBS WEALTH MANAGEMENT

If there is value why do more people not go the route of Raymond James, ING Financial Partners, Wells Fargo FINET, or even Waddel Reed?  Does the cut they take off the top not get replaced by the velocity of growth you can experience with a brand? 

What do you think?

Mar 21, 2011 3:14 pm

I think it cuts BOTH ways.  I think these days fewer and fewer people are SEEKING out wirehouse advisors.  Many will get referred to them, as that is where the bulk of existing clients are housed. 

Some people are very skeptical of the "big Wall Street" firms.  They think they are going to get screwed somehow.  So many people are drawn to the "local financial planner" idea.

Having said that, you are right - some people gain comfort in knowing their investments are housed at a big firm.  People sometimes have the mistaken notion that the biggest risk they face is an advisor running off with their money, even though that is probably the least likely thing to happen - and one of the few things that clients actually have control over (if you are diligent, you can spot potential problems).

What I will tell you having worked at both Edward Jones and now as my own RIA, is that you get some of both.  I find that COI's and other busines owners tend to value me higher now.  But I also do get some questions from potential clients about safety of assets, etc.  But they are very few and far between.  And I don't even use a household-name custodian.  Using someone like Schwab or TDA would alleviate most of those fears.

The final thing I will say is that as an indy, you have to work more for your assets.  Meaning, you ae not in an office of 15 other brokers, so nobody is retiring, resigning, getting fired, or sloughing off their smaller clients and prospects to you.  I have older friends at wires that built their books on other people's backs.

Mar 21, 2011 6:08 pm

I never thought I would say this, but being solo and being affiliated with a well known  brand that provides turn key service makes me feel a lot more comfortable when I'm sitting here in my golf clothes watching an uncertain world.

And working in a bigger firm with partners and multiple employees is real work.

It doesn't make the fish just jump in the boat, but once they are on the line it feels like 1000 pound test. It costs more and I just work to live, that's not for everyone but it's a good option.

Mar 22, 2011 10:11 am

SuperMan, what are you talking about?

The head count at indy firms is growing by leaps and bounds, and in the coming years it will be like a tidal wave. The reason why many folks haven't jumped ship already, is because they valued a "check" more than their freedom. I have had countless discussions with former colleagues that envy my independance and either wish they would have, or plan on going indy as soon as their loan is up. 

Brand, that used to mean something. Today, it's worthless in the traditional sense. I've done this for 20 yrs, and the progression has been simply amazing. The wirehouse model is dead, dead, dead, and even they know it. They'll respond here sooner or later, and try to stem the tide. I can expand on that if you'd like, as there are many things about the past that folks don't know, or have forgotten. 

Oh, but if you are indy, yes, you'd better "brand" yourself, so the client can visualize what you do, and how you are capitalized and backed up. Most Indy firms are very good about helping reps do that.  

Mar 22, 2011 1:32 pm

Big - I think you worked at a bank and left with a large book so this might not apply to you as much.

How about the guy that works at a wire or Jones with a 20-30mm book?  If they went indy and hung their own shingle does being associated with a major brand help them raise assets quicker? I realize they might give up a few % pts of payout but do they make it up in raw production from being associated with a brand.

That is what I was asking.

Mar 22, 2011 1:14 pm

Depends on the "brand" you are referring to and the particular community the rep is in.  The big brands are severely tarnished from their misdeeds, and middle-market brands have marginal value in many cases (--ie Waddell Reed anyone?).  Many seasoned reps who go indie take the opportunity to create or refine their own brand to reflect their business values, practice focus, etc... With today's technology, developing one's brand and getting the message out can be easier and cheaper than the past. 

Cheers,

Indyguru

Mar 22, 2011 3:05 pm

My advice to anyone at Jones, is to not even think about leaving unless you have a current book of at least 45m. Jones isn't too bad, and in the coming years they will more than likely do things to retain reps, like increase payouts, or improve the work experience. Not because they want to, but because the market forces will make them do it. 

SuperMan, yes, I left a HUGE bank, and I brought most of my clients over without signage, or nothing. We have a name brand clearing firm with Fidelity, and my clients like/trust/find us knowledgeable. The old days of glamorous offices, research, market making, IPO access, inventory of bonds... that is all in the past. The big firm these days, all they got is a check book. So, I see the wires doing the same as what I see Jones doing later, improving the work experience, and increasing payouts. If not, their dead...

Mar 22, 2011 2:34 pm

Affiliation with a well know brand made it easier for me to succeed and bring assets under management. The benefits of disassociating with that brand are now marginal. At a certain level of production and net income, there is a beneficial confluence of turn-key services, branded marketing, net income after business expenses, compliance considerations in a changing regulatory environment, and so on.

You'll know when it's time to change, but most of the money behind even forums like this is in getting advisors to change (and proprietary products that favor certain custodians or structures).

Mar 25, 2011 4:28 pm

B24 - I must have missed it, weren't you always a Jones guy? When did you go independent?

Mar 25, 2011 7:12 pm

He actually went RIA

Mar 25, 2011 11:41 pm

This is really pretty simple.  If you are Rookie, then you probably need a brand.  If you have made a living off of inheriting accounts from a wirehouse firm, then you probably need a brand.  If you have no confidence in yourself as a quality advisor who has done a good job servicing your clients, then you probably need a brand.

If you are a good advisor who communicates frequently with your clients and provides unbiased advice, then you are the brand and you should find a platform and a culture where you can thrive without the beauracracy of the large "brands".

Mar 26, 2011 3:12 pm

You missed the jist of the question.  You are not a brand to people that do not know you.  You are just some guy. I 100% agree you are the brand to your clients and their referrals.

I know for a fact you can rasie assets quicker with an established brand on the indy side .. ie: Wells Fargo, Raymond James, ING Financial ......  The question of the value comes in when you determine does the increased production equate to increased NET if you join forces with one of those firms or does the lower payout offset the increased production.

Guess it's tough to know either way.  Thanks everyone for weighing in.

Mar 27, 2011 1:57 pm

[quote=American Flag]

B24 - I must have missed it, weren't you always a Jones guy? When did you go independent?

[/quote]

October - RIA

Mar 27, 2011 2:06 pm

[quote=SuperMan]

You missed the jist of the question.  You are not a brand to people that do not know you.  You are just some guy. I 100% agree you are the brand to your clients and their referrals.

I know for a fact you can rasie assets quicker with an established brand on the indy side .. ie: Wells Fargo, Raymond James, ING Financial ......  The question of the value comes in when you determine does the increased production equate to increased NET if you join forces with one of those firms or does the lower payout offset the increased production.

Guess it's tough to know either way.  Thanks everyone for weighing in.

[/quote]

I think you might be right, but only if you LEVERAGE the brand name.  I know many indies that work through a brand, but use thier own DBA, and don't leverage their brand.

FWIW, there are two massive indy firms in my region (one 700mm+, the other $1B+), and nobody goes there because of their B/D affiliation.  They ARE their brands.  I happen to know that one goes through RJ, but the other one is an RIA, and don't even know their custodian.

But as a solo indy guy, you might be right in a lot of cases.

But I will tell you this, I rarely get asked who my custodian is.

Mar 28, 2011 2:28 am

I never thought I would say this, but being solo and being affiliated with a well known  brand that provides turn key service makes me feel a lot more comfortable when I'm sitting here in my golf clothes watching an uncertain world.

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Mar 28, 2011 9:22 am

24 - do you have your own RIA, or work at someone else's?

How was your transition from Jones?

Mar 28, 2011 12:39 pm

B24 ... where did that two indy frims come from originally? Wires?  Banks?  Any idea how much was their legacy business?

Mar 28, 2011 2:45 pm

Hats off to B24, For going RIA

Mar 28, 2011 5:13 pm

To answer a few questions above:

1. It is my own RIA. 

2. The transition from Jones was easy.  They made it easier by taking 3 months to fill the office, so even the few clients that were on the fence got sick of a new transition FA from STL every 2 weeks.  Jones sent me their standard "don't forget about your contract" letter, and I never heard from them again.

3. The 2 huge indy firms have pretty much always been indy.  Both of the principals have run those firms for 25+ years.  I am sure they worked someplace previously, but that was ancient history, and almost all the assets came while running these firms.  They are bnoth nationally receognized firms (ie. they make those "largest indy firms" lists).  To give you a brief synopsis (since I am sure you will ask), one of them built their business on being on boards of non-profits and being VERY philanthropic in an area of wealth (shoreline).  The other built their business by getting in with human resources at a very large pharma company when they went through major layoffs many years ago.  They were essentially THE referral firm that HR sent laid off workers to.  And these were mostly highly-paid technical workers.  I will also add, that both firms are run as full-service firms.  The larger one has like 40-50 employees, and the smaller one has like 25.  The larger one sold to a regional bank about 5 years ago, and is now a division/subsidiary of the bank.  I don't know this for sure, but I think the assets are firms assets (as opposed to a rollup of individual FA's), and most of the advisors and planners don't really consider themselves "producers".

Mar 29, 2011 10:13 am

[quote=B24]

To answer a few questions above:

2. The transition from Jones was easy.  They made it easier by taking 3 months to fill the office, so even the few clients that were on the fence got sick of a new transition FA from STL every 2 weeks.  Jones sent me their standard "don't forget about your contract" letter, and I never heard from them again.

 [/quote]

24 - What percentage of your assets did you bring with you?

What size was your office when you left? I would think good size. Jones didn't bring in a TR?