Wachovia FiNet

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Aug 25, 2008 9:03 pm

I'm considering FiNet and I've read all the notes here available with the search feature. I wonder if anyone can give me a run down of the most recent pros/cons on them.

 
Thanks is advance.
Aug 26, 2008 6:46 pm

I think you'll find mostly negative comments on this board to FiNet. Perhaps because they are part of a wirehouse and many of the indies on this board loathe the wirehouses.

 
Anyway, here is what I found. After visiting FiNet and then seeing this board I decided to also visit RJFS, Commonwealth, Cambridge and talk with Fidelity about an RIA model.
 
First off, the platforms are quite a bit different. My business is fee based with much of it discretionary on my part. I can do my type of business on any platform, but it fit neatly with an RIA model as well as Cambridge and (surprisingly) FiNet. The others would take some modification to how I currently do business to fit. I'm not sure I want to modify my investment management process at the same time I'm transitioning my practice.
 
Payouts at the $500-$600,000 production level are essentially the same. The RIA model grosses more, but has an additinal $20-30,000 in yearly expenses and more start up costs.
 
Committtment to the independent model is obviously stronger with the true independent b/ds, and they have stronger marketing and practice management departments. RJFS was particularly impressive in this area.
 
Hybrid RIA/Independent rep model (where you have a practice that charges hourly for financial planning as well as fees for AUM) works best with Cambridge who were perhaps the first to promote it.
 
Home office visits were all impressive. So none stood out to me.
 
Compliance oversight. RJFS was the most restrictive. Nothing major, but if you chafe under wirehouse compliance rules, who will likely feel the same with RJFS.
 
Capital contribution (ie upfront $) Best is FiNet, but only about 5% more than RJFS. The others about 5-10% less than that. Of course, RIA w/Fidelity is $0.
 
Finally, I decided to come up with practices affiliated with all the firms that were not on the list of referalls the firms provided and just call them out of the blue.
 
After all the negative coments about Wachovia Finet on this board, I fully expected to hear some regrets, etc. But all the Wachovia practices I cold called were very happy. All viewed themselves as fierce independents and said that if FiNet ever dropped the ball they would leave them, but that they are currently quite satisfied. Surprisingly, a not uncommon comment from RJFS affiliated practices was the stricter compliance.
 
The last, and perhaps most important, consideration is cultural "feel."  You just have to get out there and see that for yourself because it is very subjective and personal.
 
I have not decided which course I wil take, but I can tell you that FiNet is back on the top of my list. And this is after I had all but dropped them from consideration after reading the posts on this board. I do believe (and this may ruffle a few feathers) that FiNet is mostly interested in upper end folks ($500k+) and routinely brings on $million practices. Wheras the others mostly pick off $200 -$300k guys.
 
RJFS is a close second based on marketing and practice management support, and Cambridge not far behind based on their a la carte menu and support of RIA practices.
 
Sorry for the length and hope it helps.
 
 
 
Aug 26, 2008 7:41 pm

Yea I think Wachovia Securities, I mean Finet and Ray Jay are for you. They deal with the upper end folks you know. You'd be happier with folks like that.

Aug 26, 2008 8:30 pm

Very useful post, northfield.  I hope you post more often.  We need more folks here with some exposure to independent options.

Having said that, I do have a couple of comments on your post, in the interest of helpful dialog.

Northfield:
 I'm not sure I want to modify my investment management process at the same time I'm transitioning my practice.


Nothing beats RIA in terms of having the most freedom to operate in your preferred way.  It's not even close.


  [quote=Northfield] The RIA model grosses more, but has an additinal $20-30,000 in yearly expenses and more start up costs. [/quote]
Which at $500K + gross is essentially offset by the 100% gross, plus the reduced expenses associated with an RIA vs. a b/d. 
 
[quote=Northfield] Hybrid RIA/Independent rep model (where you have a practice that charges hourly for financial planning as well as fees for AUM) works best with Cambridge who were perhaps the first to promote it. [/quote]
A hybrid RIA is one who charges both fees (through an RIA) and commissions (through a b/d affiliation).  It has nothing to do with planning fees, hourly or otherwise.  Also, Cambridge is fee friendly, but nowhere near the most fee friendly b/d.  If you look hard you will find b/ds who are content to only take their cut on your commission busines, and nothing on your fee business.  For a hybrid RIA, that trumps Cambridge's business model quite handily. Not even close.
 
[quote=Northfield]Capital contribution (ie upfront $) Best is FiNet, but only about 5% more than RJFS. The others about 5-10% less than that. Of course, RIA w/Fidelity is $0. [/quote]
Fidelity's capital contribution for a $500K gross is certainly not $0, if they know you are serious and take the time to provide specific details on your book so they can work up a proposal.  They will not beat Finet or other b/ds, but it is a far cry from zero.
 
[quote=Northfield] But all the Wachovia practices I cold called were very happy. All viewed themselves as fierce independents and said that if FiNet ever dropped the ball they would leave them, but that they are currently quite satisfied. Surprisingly, a not uncommon comment from RJFS affiliated practices was the stricter compliance. [/quote]
That is a strong positive.  Kudos to you for showing the initiative to do first hand research.

 
Of course, the only important thing is where YOU would be most happy, not if many others are happy where they are.  No doubt you would find many who are happy at the very b/d you are looking to leave.  Take it with a grain of salt.

 
[quote=Northfield] I do believe (and this may ruffle a few feathers) that FiNet is mostly interested in upper end folks ($500k+) and routinely brings on $million practices. Wheras the others mostly pick off $200 -$300k guys.  [/quote]
I won't argue with the premise that Finet mostly targets $500K + guys, but it is not an accurate statement about either Fidelity or Schwab, who routinely brings in large to huge practices..  It is accurate about Cambridge though.

 

Thanks for your contribution, northfield.  Good stuff.

Aug 27, 2008 12:42 am

Morphius,

 
Thanks for giving Northfield the attaboy. He deserved it!
 
Would you mind elaborating on your comment regarding indie b/d s that only take a cut of commish business, and leave fee alone?
At what level?
 
Thanks!
 
 
Aug 27, 2008 2:37 pm
Thanks for your detailed response. It was very informative.
 
Northfield:

Capital contribution (ie upfront $) Best is FiNet, but only about 5% more than RJFS. The others about 5-10% less than that. Of course, RIA w/Fidelity is $0.
 
What sort of percentages are we talking?
 
 
Aug 27, 2008 7:26 pm
Effay:

Morphius,

 
Thanks for giving Northfield the attaboy. He deserved it!
 
Would you mind elaborating on your comment regarding indie b/d s that only take a cut of commish business, and leave fee alone?
At what level?
 
Thanks!
 
 


I know of one b/d that is fine with the arrangement so long as you do as little as $50K a year in commission business through them.  Obviously that excludes the RIA fee revenue.

Sep 1, 2008 10:21 am

Northfield,


Good post.  I've been with FiNet for 4 years and am happy.  I agree that there seems to be a lack of understanding on this board that FiNet is a true independent firm.  I'm glad you called some for yourself.  And yes, most of the FiNet producers are larger and probably are too busy to be reading this board and defending their affiliation.  I looked at RayJay pretty hard and found that the payouts were about even.  But FiNet had better product offerings and a smaller more entrepreneuarl management (completely seperate CEO, and org chart form the wirehouse side).  You can custom brand your practice and they have recently rolled out a hybrid RIA model in which we can charge hard dollar amounts for certain services.  Although this is still in the pilot phase and I don't know all the details.  And yes, the upfront capital contribution (I think it is around 10-20% of t-12 depending on your book and production) certainly helps during the transition.    Though not perfect,  from my experience, the affiliation with the larger WS has more pros than cons.
Sep 1, 2008 1:12 pm
Indy4Life:

Good post.  I've been with FiNet for 4 years and am happy.  I agree that there seems to be a lack of understanding on this board that FiNet is a true independent firm. 


How do you define "independent firm?"

Sep 7, 2008 12:28 pm

Morph,

 
The term "independent" is obviously a realitive one.  I think most people on this board would agree that to be an independent FA you must not be a w/2 employee, must own your book, pay your own overhead and employees, set up and brand your practice as you see fit, and have freedom to choose from an unlimited scope of products and services, and run and price accounts based on the FA's philosophy and what is right for the client, not based on a larger firms agenda.
Sep 14, 2008 1:59 pm

Not really crazy about the sliding scale payout platform FiNet offers.  In a bad month, this could really screw with your business.

Sep 14, 2008 10:10 pm
Indy4Life:

Morph,

 
The term "independent" is obviously a realitive one.  I think most people on this board would agree that to be an independent FA you must not be a w/2 employee, must own your book, pay your own overhead and employees, set up and brand your practice as you see fit, and have freedom to choose from an unlimited scope of products and services, and run and price accounts based on the FA's philosophy and what is right for the client, not based on a larger firms agenda.


Given your definition, I would imagine many FAs with the larger independent b/ds would not be considered independent, as few truly are free to choose from an "unlimited scope of products or services" or price their services as they see fit, to name just a couple of things.  Clearly they have more freedom than does an FA at say a wirehouse, but that isn't saying much.

But my point is not to argue about whether this FA or that is independent or not, it is simply to point out that people in this industry use the term "independent" to mean very different things, as your response confirms.  Little wonder there is so much confusion on the topic, when people often are thinking entirely different things but using the same term.

Sep 30, 2008 11:55 pm

From what I hear, FiNet is staying with WB and should be stable.  For what thats worth...

Nov 5, 2008 9:09 pm
etj4588:

Not really crazy about the sliding scale payout platform FiNet offers.  In a bad month, this could really screw with your business.

 
Is there a hurdle as w/ Wachovia Sec. ?
Nov 5, 2008 11:12 pm
dizzy:
 
Is there a hurdle as w/ Wachovia Sec. ?



Yeah.  For the 85-90% payout a branch has to do $53K from what I remember.  It falls to 80% at $32-53K, and under $32K payout is 70%.

Not really an indy b/d imo.  Sort of a hybrid between indy and employee.  Tech fees are astronomical btw.

Nov 6, 2008 6:41 am

Thanks, I'm attracted to the minimum paperwork part but didn't know ab't that sliding scale. I also need to get a handle on all of the fees such as tech fees u mentioned, licensing, consulting, etc. I'll keep my eyes open for more info on FINET on this forum; I don't even know what I don't know if u know what I mean.

Nov 6, 2008 9:36 am
dizzy:

Thanks, I'm attracted to the minimum paperwork part but didn't know ab't that sliding scale. I also need to get a handle on all of the fees such as tech fees u mentioned, licensing, consulting, etc. I'll keep my eyes open for more info on FINET on this forum; I don't even know what I don't know if u know what I mean.


Ah, but you at least KNOW that you don't know what you don't know, and that puts you at a huge advantage over many!  It's hard to solve a problem you don't even realize you have.

As you begin to learn, pay attention to the trade off between the short run stuff, like paperwork hassles, and long term stuff, like what firm you affiliate with and how that will impact you every single day for as long as you are there.  In that light, the paperwork consideration may not be as critical as you now imagine it to be.  Kind of like those credit card offers that charge no interest for the first 6 months, but thereafter carry an above market rate.

Good luck.




Nov 6, 2008 10:04 am
dizzy:

Thanks, I'm attracted to the minimum paperwork part but didn't know ab't that sliding scale. I also need to get a handle on all of the fees such as tech fees u mentioned, licensing, consulting, etc. I'll keep my eyes open for more info on FINET on this forum; I don't even know what I don't know if u know what I mean.

 
That sliding scale is pretty low. For a single licensee it's only 20k a month to hit 90%. Frankly, if you're doing less than that, I don't see how the math works for you unless you're doing this all on a shoestring budget. Perhaps that's why they have a $250k poduction minimum to join.
 
Contact someone at FINet, they'll be happy to run a proforma for you that details all fees and reasonable projections for your particular costs.
 
Disclosure, I have no association with WB or FINet, what I've learned, I learned via personal research.
Nov 16, 2008 6:29 pm

I did a lot of research on all of them and they are all good.  None are perfect.  I am moving to Finet mostly because I do not have to repaper my accounts and I get to keep my retention bonus from the AGE merger.  I tracked down a few Finet guys from wholesaler friends and cold called them.  They had mostly good things to say about the firm.   Finet does cater to the former wirehouse reps doing $500k plus, although the guys I cold called were all a little under that and had no complaints.