The 30 day war!
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It depends what type of business your are running. At jones(not a knock) you can’t afford to turn people away because you are getting 25bps on the backside. So you need assets and accounts to keep it going. For some of us we run feebased accounts and aren’t looking for quantity, but instead a minimum amount of assets.
[quote=B24] Yes, we have had this discussion before. Here’s my twist on what you’re saying…I totally agree that most people with less than 100K should just buy indexes directly. If they are retired, they should have a focus on fixed income indexes (“huh?”), some large cap, small cap, and international (“uh, OK”). It might also help to use some some niche market investments (real estate, emerging markets, commodities, etc.) (“uh, OK, now you’ve lost me”). Point is, most people with small sums of money are so unsophisticated at investing that to them, and index is the S&P 500, and that’s it. Msot people have neither the intelligence, experience, or discipline to buy the right indexes and keep them at the right times. I can almost guarantee you that I can improve someone’s return by $1300 per year over what THEY would have done without any help. So it’s great in theory, but doesn’t happen. It’s like saying “people should just exercise and eat right”. OK. Sure.
As far as taking up time, I don’t think anyone goes in with the attitude of “let’s see how many small accounts I can open today”. Starting out, you fish in an area, and you take what you catch. Unless you are extremely committed to a niche or focus area (and it’s working), I don’t see how newbies can just turn away business.
But I totally agree that at some point you have to start “avoiding” the little fish. [/quote]
I don’t think we should be dumbing down investing. If you aren’t smart enough to exercise and eat right, you will probably die before it’s your time. Same for investing if you can’t save $100K or read a book that says buy the S&P 500 index, In’t Fund and a bond fund because you only have $5K then I don’t want you as a client.
I do need to up my game on new contacts though, I’m really failing here.
Me too, I'm putting in apps, but failing to add enough new contacts everyday. I will starve if I don't immediately turn this around. Time management is a bitch for me.[quote=Spaceman Spiff]I don’t understand the mentality of not dealing with small accounts. The average person knows 200 people that I don’t. (referrals) They have kids (529 plans) and spouses (life insurance), they change jobs on average 7 times during their working lives (rollovers)(401k business), and meet new people at those new jobs (more referrals). There are so many ways beyond the initial transfer of funds into our offices to make money, it just doesn’t make sense to turn anyone away.
Personally, I would use an asset allocation fund for that $50K account. I know I'm not going to be spending any time rebalancing and I can't justify using 10 different funds that I put together and manage. So, find a fund that does what I would like to do, but won't, and let it go. Call the folks, ask for referrals, hope you get some extra biz from time to time and move on. It will realistically cost you about 5 minutes a year. So, if you do an A share @ 4.5% = $2000 gross (dealer concessions) and service the account for the next 10 years = 50 minutes you made $2000 an hour. Not a bad gig. I'll take those accounts ALL DAY LONG. So, squash, you get those folks, just let me know. I'm sure you and I can work out a deal. volt & berk - keep up the good work guys. In this climate, business is business. Do it however, whenever, and as big or little as you can. [/quote] I like this mentality. No one is actually prospecting hoping to acquire 1,000 $25,000 households. But if they're willing to give you the money, won't be a constant headache and will do what you say, there's no downside to taking them on (Unless you work primarily fee-based, in which case there is a downside). $25,000 a day is $900 or so in GDC with A shares (avg. with breakpoints). $900 per day is $9,000 per service period, and at 40% payout that's a $3,600 paycheck and comes out to $94,000 for the year. Not a whole lot of newbies that wouldn't take that in their first few years before they are able to transition to fee-based.[quote=Full Throttle]I do need to up my game on new contacts though, I’m really failing here.
Me too, I'm putting in apps, but failing to add enough new contacts everyday. I will starve if I don't immediately turn this around. Time management is a bitch for me.[/quote] That's my issue. Over the last three months I've opened 40 accounts but have not been replanting the field. This month will be great (by my standards) but Sept. worries me if I don't get hustling. With respect to small clients. I've gotten referrals and additional business out of almost everyone of them - for the most part they've been larger pieces of business. I flat out tell them I need their help, ask them to hand out business cards for me and give me three names of people they think could use my service. Also, Jone's reps get new account bonus so that extra 500-700 I've been getting is a nice incentive to help the small fries as well. LUNCH time and then back into call block.I thought this thread was about Volt’s 30 day war and I read about Modern Portfolio Theory and the making of a hypo. Fill up that funnel to replace the ones that you opened accounts for or that you kicked out of the funnel as a pretender. Good luck and have a good week!
People with $7000 hang out with people with $7000. It’s pretty rare to get a good introduction from such a small account.
This one is really going to chap your ass if you make fun of a $7000 account. I have a 4pm meeting on Friday to set-up a $75/month Roth IRA contribution, no other business at this point. 22 years old, $5000 in a savings account (decent saver at least), in sales as a 1099'er, single, and no other real assets. My commission = $41, I actually lose money on it. There is no potential for a DI sale at this point as she has no established income history, no need or desire for life insurance yet, and only $150 per month to work with at this point. I'm not getting greedy and trying to rob her of her necessary liquid money and I'm only using half of her small monthly savings to fund a Roth IRA so she can continue to grow her liquid savings.
I would go broke if I prospected for these accounts, but I'll take the one's that come to me. Why? 1. She is an established saver and I believe she has future financial potential. 2. There will be a DI sale in a year to three years. 3. Eventually there will likely be some life insurance sales. 4. She has older siblings that have families that I should get introductions to them. I could be wrong about her potential, but I'm willing to give her a phone call on her birthday and once a year for an annual review (which can be done over the phone). If she wasn't an established saver, responsible, and I believed she would always be poor, this would be a complete waste of time.I think that is a waste of time. Instead of the two hours of prep time, talking on RR about the case, and the actual meeting. Spend those 3 hours looking for people who have at least $250k to invest.
Or since you sound like an insurance guy - spend those 3 hours calling someone who can do $5000/yr in whole life premium.In the short run,
Two cups of coffee = $3.50 Gas = $5.00 *Mainly opportunity cost which is why the meeting is scheduled for my last slot on a Friday. Leaves a balance of $35 profit before overhead expenses. I had a manager tell me not to spend time with these accounts, send them to a bank or sell them life insurance. His theory, you're targeting three sales per week and only have so much time, do you want a $43 sale to be one of your three for the week? I see his point, but believe it to be focused entirely on short term thinking. Also, if I made my money primarily from investments this would likely be a total waste of time as well. Once again, I believe it comes down to future financial potential. If it's not there, it's not worth the time.I’ll give you another reason that I take small accounts…I just finished up with a lady that makes $200K per year as a Director of Clinical Pharmacology for a major pharma co. She’s 49 years old. She was referred to me by a CPA I know in town, that knows I focus on clients of this particular company. So right now, those are two big pluses - 200K income, referred by CPA. How much was her rollover? 26K. Why? She’s an ex-pat from overseas that has worked all over the world. She’s got a few hundred grand in the UK, about 75K in liquid savings here (her “layoff” contingency fund), and some company stock and a few other little things. So I won’t make that much of this, but you know what? She doesn’t hang out with secretaries and the guy that does overnight security. She hangs out with other Directors making 200K+ per year. And Directors making 200K per year usually aren’t 35 year-olds. I have all kinds of clients like this, and they just build on themselves. Smart, well-paid people just have a way of making good things happen.
So, I think the whole "don't take samll accounts" thing has to be taken with a grain of salt. I DON'T take the 68 year-old lady living in a trailer that gives me the 25K settlement she just got because she slipped and fell at the supermarket. But a highly intelligent, well-paid, well-connected professional? The amount doesn't matter. That's free advertising for me.The sad story is she’s 49 with less than 300k in retirement money. Probably loaded down with credit card debt, 70k vehicle, to big a house and now she’s got money with ED JONES. I hope she’s hot.
The sad story is she’s 49 with less than 300k in retirement money. Probably loaded down with credit card debt, 70k vehicle, to big a house and now she’s got money with ED JONES. I hope she’s hot.
I agree. She's screwed. Hopefully by B24.
I don’t consider somebody with “a few hundred grand” “$75K emergency” “$26K rollover” a small client… Maybe I didn’t explain small client… see the example of the 18 year old in a couple posts before(that is a small client)… Someone with over $250K isn’t small(for me)
Chief is right on - we’re talking about the 18 year old with $7000…that is a small account. Not someone with $200k in the UK.
OK, lots of incorrect assumptions out there. She spent several years in the Peace Corps, she's from overseas (she's from Portugal, and never really understood investing), and didn't start her "real" career until later in life (she has BS, PhD and two masters). She has no debt, other than a $140K mortgage on her condo, which is worth 400K (on the water, nonetheless). She has no kids, so a pretty cheap lifestyle. She maxes out her 401K. In addition to the cash overseas, she also has some real estate overseas. And she's not hot. You ARE right though, she's now got money with Eddie Jones.The sad story is she’s 49 with less than 300k in retirement money. Probably loaded down with credit card debt, 70k vehicle, to big a house and now she’s got money with ED JONES. I hope she’s hot.
p.s. Actually Spears, you’re assumptions are not that far off from many of the clients I have come in here. It’s actually pretty sick. I have clients making 250K, but have like 400-500K in debt, massive house, two nice imports on loan in the garage(s), and can barely fund their 401K’s. I tell these people they are screwed when they retire. I actually had one guy, a general counsel for a major F100 company, tell me flat out “I’d rather spend the money” than put more away for retirement. Okie Dokie. It’s your life. And this guy only has about $1.5m (about 800K with me, the rest in his 401K). But he lives a 250K lifestyle, and just a small pension other than that. 62 years old.
[quote=B24]p.s. Actually Spears, you’re assumptions are not that far off from many of the clients I have come in here. It’s actually pretty sick. I have clients making 250K, but have like 400-500K in debt, massive house, two nice imports on loan in the garage(s), and can barely fund their 401K’s. I tell these people they are screwed when they retire. I actually had one guy, a general counsel for a major F100 company, tell me flat out “I’d rather spend the money” than put more away for retirement. Okie Dokie. It’s your life. And this guy only has about $1.5m (about 800K with me, the rest in his 401K). But he lives a 250K lifestyle, and just a small pension other than that. 62 years old.[/quote]
Am I missing something? He’s got ONLY 1.5 million at 62 and he rakes in 250k a year and that’s considered a bad situation, not to mention a pension??
svm … the moment that guy retires he still has the debt, still wants to eat lobster every night, still wants to take great vacations and drive German cars. It’s not bad if you live on 100k its ugly if you live on 250k
He’s 62, prob. going to retire in three years and he’ll take a 60% cut in income. Still good living but he’ll blow through 1.5 million like me through a cheerleader camp.
Spiff, you better slam that guy into a SPIA and take one more pop off that account before you lose it (not to mention you’d do him a favor saving him from himself).