What is needed to become an independent rep?

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Mar 17, 2008 9:02 pm

What would you say your numbers (book and commissions) should look like and time frame? How much savings needed as a back-up?

Not sure of the timing with banks and brokerages in the news so much. Clients may be jittery about change right now.
 
Thanks for you input!
 
Mar 18, 2008 2:02 pm

The most common numbers I hear are 30 million AUM, 225K production, with at least five years in the business.



As far as an emergency fund goes, I'd want at least 6 months worth of living expenses in a cash (not stock) account.



Keep in mind...these are only best guess minimums. I left with more experience, production, AUM, and reserves because I was leaving a bank program with a higher percentage of sticky assets and knew I needed a bigger margin. Certainly people have left with less, but I wouldn't want to personally.



My transition went pretty well and I love being an independent.

Mar 20, 2008 8:50 pm

I hear a lot about the 90% payouts. Can anyone give an idea how much thru LPL will an advisor take after ticket charges, misc  expenses, etc? Excluding rent, utils, salaries. Averaging closer to 80%? Are there a lot of hidden expenses?


I really appreciate this discussion and your professionalism, thank you!
Mar 20, 2008 9:55 pm

My net after everything is about 68%.  That includes assistant, rent, advertising, you name it.  My 91% through LPL ends up 86-87% after ticket charges, etc.  Somewhere on here, I detailed all of this, so make use of the search button and you should find a wealth of information on indy net after expenses.  I hear anything from 60-80% from the indies I've spoken with, although for the mega practices, it's probably even more.

Mar 21, 2008 9:57 am
Indyone:

My net after everything is about 68%.  That includes assistant, rent, advertising, you name it.  My 91% through LPL ends up 86-87% after ticket charges, etc.  Somewhere on here, I detailed all of this, so make use of the search button and you should find a wealth of information on indy net after expenses.  I hear anything from 60-80% from the indies I've spoken with, although for the mega practices, it's probably even more.

 
Actually, I know a couple of megas in my area, and their profit% is actually a little lower.  The reason is that they have alot more built-in overhead.  Larger office space (they both own buildings), more assistants, advisors, staff, etc. (I have friends that work as staff at both, which is how I know this).  I think a lot of it also depends on what type of business you are doing - this may determine level of ticket charges, overhead, etc.  I have two friends that are solos.  One of them has a tiny little single office in a shared complex, and no assistant.  His take home is in the mid/high 70% range I think.  I have another friend, about the same production, but has two assistants and a larger, dedicated office space.  His take home is around 50%.  Neither are super producers (maybe in the 300K range?).  They just have different focuses, and manage their businesses very differently.
Mar 21, 2008 5:56 pm

50% is low for an indy, but if a 300K producer thinks he needs two assistants, he obviously values his leisure more than his net. I'm at that level with a single part-time assistant. One thing for sure, he ought to be able to provide outstanding service.

Mar 21, 2008 6:54 pm

Search for any and all Indyone's posts.  He could (and almost has via this forum) write a book about transfering indy- especially if you are analytical and are curious about the nuts and bolts.

Mar 22, 2008 12:22 pm

That's a fair assessment, Chaz. I sometimes wonder why I'm so motivated to do so...averaging 2-3 posts a day for almost three years now. I've come to the conclusion that my motivations are two-fold. I really do enjoy the virtual water cooler. If there's one thing I miss from my W-2 life, it's the camraderie. This acts as a decent substitute. I also enjoy teaching...both clients and other reps considering a move to independence. I found a wealth of information here, which I found very helpful, and this is a way I try to give back. It's kind of a cross between community service and a hobby, which can quickly become more time-consuming than it should. There may soon come the day when I no longer have the time to devote to this hobby, but for now, I find it an enjoyable diversion.

Mar 22, 2008 2:49 pm

I can appreciate your thoughts Indy.  I don't post very often, just learning the ropes and reading as many of the posts as I can.  I hope you find it enjoyable for a long time.

Mar 23, 2008 6:33 pm

Keep up the post IndyOne.  I very much enjoy your insights into the indy world!!!!!

Mar 26, 2008 6:34 pm

Thanks folks, I will do the search and enjoy. Great area by the way - this indy RIA section! J$