Choosing the right house

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Aug 29, 2008 9:35 pm

I have interviewed with SB, MS, EJ, and ML. SB has called me for a third interview, at EJ I have the in-person interview left, and MS wants me to come in Tuesday- 3rd meeting, Branch Manager says to bring a pen to sign the offer. Two interviews at ML, but things are moving a little slower.

 
If it comes down to MS and SB, who offers better training? Both offer a salary to begin, and MS salary is pretty low. Financially, where do you start with SB and EJ? I still need to put food on the table before production begins.
 
As far as Jones, where do they start you off at salary wise? Are there advantages to a wirehouse over jones or vice versa?
 
This is a lot, but I would appreciate any serious input as I am making a career change that will have a huge impact on my family. I have no financial experience, but I have five years sales experience.
Aug 29, 2008 10:56 pm

That was a heck of a detailed answer! I do have somewhat of a buffer, but having a base salary is necessary through training and the beginning of production. I have about eight months of cash on hand, and mutual fund worth 10K.

 
SB, ML, and MS have all been very up front with the failure rate. I am excited to see what this week will bring, as all indications show offers from MS and SB, and possible ML as well. EJ is all but certain, but that is my last resort. I have been told SB and ML will negotiate on salary, is this true?
Aug 29, 2008 11:35 pm
newguy44:
I have been told SB and ML will negotiate on salary, is this true?



Of course they will, although the amount of negotiation would depend upon the branch manager and perhaps even the district manager.

Keep in mind also that the larger salary they give you, the greater their expectations.  If you're costing them a lot of money and not making your goals in a particular measuring period, you'll get less slack than a trainee who is costing them less because they took a smaller comp package.

Your goal should be to figure out how to build up a pipeline of prospects and actual clients as effectively as possible in order that you can get off commissions as quickly as possible.

Aug 30, 2008 10:25 am

Ice,

Helpful post above as usual, but wanted to make one correction, for the record.

"... you will be literally able to offer any security on Earth at a wirehouse ..."

While you certainly have very broad access to securities through a wirehouse - no question about it - you have slightly overstated the case with your comment about "any security on Earth." 

I was surprised to find I was able to access MORE as an independent that I could at a wire.  Sometimes that requires that I sign a selling agreement with a provider, but it's up to me if I choose to do so.  Beyond that, b/ds are not anxious to allow their reps to offer something that they (b/d) can't be paid on, so that will eliminate some offerings as well.  I can advise on and get paid on assets regardless of where they are held, or if they pay 12b1s, etc.

FWIW!

Aug 30, 2008 10:29 am

BTW, newguy - a quick word in your ear: none of the firms you mention are commonly referred to as "houses" by those in this industry.  The only place I've seen that term commonly used is while referring to mutual fund companies or casinos ... or places to live.  

Aug 30, 2008 11:08 am

Personally, I would not make a decision on where to start based on the variety of investment choices (unless you're talking about an insuracne company or primerica or some chop shop). I say this because in the first few years, you will be selling mostly MFD's, stocks, and bonds. I would be base it purely on the place I think I could make it 3-5 years, period.

Aug 30, 2008 12:39 pm
B24:

Personally, I would not make a decision on where to start based on the variety of investment choices (unless you're talking about an insuracne company or primerica or some chop shop). I say this because in the first few years, you will be selling mostly MFD's, stocks, and bonds. I would be base it purely on the place I think I could make it 3-5 years, period.


Agreed.  Not critical when starting out. 

I would add all this talk about starting salaries also misses the most important point in selecting a firm.  I understand it can be one consideration, but based on the never-ending stream of questions here about it, too many seem to make a career choice based on the equivalent of a low teaser rate on a credit card.

Aug 30, 2008 3:45 pm

Great info from many on this thread.  How would you guys stack up Wachovia to SB and ML in regards to culture, starting salary, prestige etc...

Aug 30, 2008 7:34 pm

Great post by Iceco1d, lots of good information. However, a few points -


1. salary at SB- you will get salary for 2.5 years FROM PRODUCTION START DATE. Salary will start on day one, but the clock doesnt start ticking till you start production, which for someone who is unregistered is about 5 months after actual start date. So effectively, you would get salary for just under 3 years. However, the salary is full for the first 2 years (again, from production start date) and then declines in equal increments for 5 months, to zero.
2. The SB training program is extensive - 5 months in the branch (including time to study and pass the s7, THEN 2 weeks at a natl training center, then you start production. You are in the training program for 3 years over which time you go back to the training center 3 more times. I dont know the MS program first hand, but someone who recently left there told me that you pass the 7, spend some time with established FA;s in the office then start production. You go to National Training only after you have hit your numbers after year one. If you dont hit them you are done. This is, again, 2nd hand information, maybe someone else on the forum could confirm or non confirm this firsthand.
 
One of the other things you need to consider is the branch - its not just about the firms training program - i would ask the BOM directly , how much in branch training and mentoring you should expect, from him, and from others in the branch.
Aug 30, 2008 8:02 pm

I really appreciate everyone's input. I feel like I can't go wrong with SB or MS. It sounds like most hires by EJ never get their branch office. The branch manager at Smith Barney touted their training program as being very expansive. How much do veterans help the rookies? I am going to talk with reps at both this week. I am also meeting with a rep from ML for lunch. I want to pick his brain about the industry.

Aug 31, 2008 7:17 am

I am not in a salaried role anymore but would disagree with the common sentiment that those entering the industry should disregard this aspect. If this were the case, why not go indy right from the bat and get the higher payout? Obviously the initial monetary support is the main advantage that the wires have to offer. I'd avoid letting a branch manager tell you how much greater your hurdles will be as an incentive to take a lower comp package initially. They're going to be quick to get rid of you NO MATTER WHAT. The chances are that you WILL get axed from a wire, so you might as well use them to get your licenses, decent training, and an ok base for the 6-9 months that they're likely to keep you there. Or better yet, just start in a different business model. I did not opt to join a wire when starting out because I simply did not see the value for a new rep in any way. You mean I have higher hurdles, a pathetic 35% payout, AND the salary really isn't that great even though I'll have it thrown in my face as a reason I have to behave as an employee? Or an experienced one for that matter. There's a REASON they are forced to pay huge sign on bonuses to get talent.

Aug 31, 2008 10:23 am
xbanker:

I am not in a salaried role anymore but would disagree with the common sentiment that those entering the industry should disregard this aspect. If this were the case, why not go indy right from the bat and get the higher payout? Obviously the initial monetary support is the main advantage that the wires have to offer.


Not sure where you got the idea that people should "disregard" the salary, xbanker.  Here's what I said on it:
I would add all this talk about starting salaries also misses the most
important point in selecting a firm.  I understand it can be one
consideration, but based on the never-ending stream of questions here
about it, too many seem to make a career choice based on the equivalent
of a low teaser rate on a credit card.

That is a far cry from saying one should "disregard" salary. 

I have no problem with discussing and disagreeing on the issues, but don't misrepresent what I said and then argue against that misrepresentation. 

Aug 31, 2008 4:35 pm

Morphius, I'm not referring to you at all. This topic has come up numerous times on the board. That's why I said "prevailing sentiment." It seems that new reps get lambasted for even brining up a salary. Don't get me wrong, I don't think anyone should choose a firm for that reason, but if you're going to a wire, that's really all they have to offer since every other aspect in that environment is cause to run for the hills.

Aug 31, 2008 4:58 pm

From what I've seen in the two branches i've been in, (wire) it doesnt matter how much salary you take. If you dont hit numbers you are done, you get the same amount of time to produce no matter what your salary. I saw a trainee come in wtih a $70k salary for 2 years, he is there fo two and a half yeas to date, 5th quintile. Who knows how he is paying the bills.

So the salary can be important if it allows you more time to get the asset base you need to support yuourself. Of course if its a diff between 50 and 55k, it is meaningless, but if its 50 vs 75, it gives you some breathing room. And i dont subscribe to the theory that if you pay someone more they will be hungrier. In our busienss, you are either driven or you arent.
Aug 31, 2008 8:11 pm

Sportsfreakbob, Can you tell me what the 5th quintile means at the firm you're referring to? Is that the lowest metric within that specific program?



I get the impression (although I've never been at one) that many wires will keep someone on who is in the ball park on their metrics. The large turnover in two branches I know of from coworkers had several reps who brought in goose eggs, nada, zilch, zero, and flamed out between 6-9 months. If you must go to a wire (not my recommendation), I say take them for all their worth. I know someone who accepted 30k even at MS and got sacked 8 months in. This didn't buy him any wiggle room.

Aug 31, 2008 10:50 pm
xbanker:

Sportsfreakbob, Can you tell me what the 5th quintile means at the firm you're referring to? Is that the lowest metric within that specific program?

I get the impression (although I've never been at one) that many wires will keep someone on who is in the ball park on their metrics. The large turnover in two branches I know of from coworkers had several reps who brought in goose eggs, nada, zilch, zero, and flamed out between 6-9 months. If you must go to a wire (not my recommendation), I say take them for all their worth. I know someone who accepted 30k even at MS and got sacked 8 months in. This didn't buy him any wiggle room.

 
The wires rank their FA's by quintile, 1st thru 5th, (obviously top 20% is 1st quintile, etc)
FA's are ranked against all other FA;s with the same lenght of service (in the industry, not with the firm), thru year 10, then everyone in the industry 10 yrs or more is ranked together. Trainees, are usually ranked by quintile against their training class.
If someone is in a low quintile, maybe even not making the numbers, if they are showing progress, and showing that they are working hard, most managers (at least at the wire I am with)  would give them the time, as long as they keep progressing.
 
Yeah, i;ve seen a lot of trainees flame out, rarely does anyone at least from my experience, open zero new accounts, even if its just family.
I really believe that 80-90% of those that dont make it, are victims of their own inability to grasp what it takes. In our buisness, when you first start out, its like a rocket ship - think about how much fuel it takes to get it from the ground up into orbit. Once it reaches a certain level, the fuel (pipeline) requirements still exist but at a much lower level.
Its very hard for someone who hasnt seen it first hand, to grasp how much of a pipeline you need to build to get started. They think, oh, i have 10 people i am talking to about opening an account with me, this is cool. Those are the folks that flame out. Thats why a mentor and support in the branch is so important.
Of course managers are people and they make mistakes too, which is the other 10-20% of those who fail. Those who should never have been hired in the first place. Those who dont have the traits necessary to succeed.
Sorry, in an attempt to answer your question, i started to ramble.
Sep 1, 2008 7:30 am

No prob Sportsfreakbob. I sometimes wish I'd started at a wire. I got an offer from ML when just starting out and another later on from MS but just didn't see any point in that business model. My one issue with the wire numbers is the narrow focus on AUM vs. production. My explanation for this is that the only purpose for a new hire is to bring in accounts, put them in a fee based environment, then get fired so the firm is paying no one in production for those assets. Otherwise why focus on AUM to such a large degree? The system is designed for failure. If you've been divorced once, I'll believe your ex was at fault, but if you've been divorced 10 times, it's probably you. Same with the wires. When 90% of your hires or more flame out, it's the system.



Either way, I want to focus on MY interests, not those of a branch manager.

Sep 1, 2008 7:49 am

So then who is making it at these wires? I mean you have ML with over 16K advisors. I am sure not all of them came from rich families. Someone has to be doing somethig right....Besides doesnt this business in general have a 90% wash out rate regardless if you are at Avalon Partners, Cit, Raymond, Edward or ML???

Sep 1, 2008 12:19 pm

xb - i dont see how bringing in AUM is in the interests of the BOM, rather than the broker. If a trainee brings in assets then flames out, what happens to those assets? Do you think they just sit there collecting fees for the branch, and are not paid attention to? The assets/accounts are distributed to existing FA's - who then get the payout that the trainee used to get. In fact in some cases, with the first and second quintile FA;s the branch ends up paying out more, because those brokers are on a higher payout. SO your assumption that its good for the BOM if trainees fail out is not valid. Besides which, BOM;s success in hiring and DEVELOPING trainees is tracked and trust me, its not good for the BOM when he has a bad track record.


I would also venture to guess that the success rate at wire with a solid training program is higher, due to the fact that there is a structured training program and a lot of support. Not only from the firm, and management but in a decent size office, you can always find good brokers to talk to and bounce ideas off of.


 
Newrepd - Its a combination of brokers trained at the wire, brokers trained at other wires, and folks who took a check (i guess the last two are the same). Honestly, most, not all, but probably 70% of the  brokers in my office are those who took a check to come over from another wire.
Sep 1, 2008 1:08 pm

xbanker - As you may know I'm not a big wirehouse fan by any means, but there are benefits that you are ignoring, and disadvantages that you are exagerating.  Whether you are doing this out of ignorance or intentionally I'm not sure, but you sure sound like you have an axe to grind against wires for some reason.  

Care to elaborate?