How am i doing, AUM wise?

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Jul 3, 2010 1:53 pm

I have been looking all over for a forum to pick the brains of fellow RIA's and I was delighted to find this place... I have a dying question to ask.

I have been working for prudential for 6yrs now. I was "coaxed" into working here by a manager straight out of college, with the promise of doing investments. It turned out that it was more of insurance than anything... In fact, no one did investments. Even if it was, it was annuities. I was one of the only ones in the office to start offering mutual funds, because the old fashioned insurance agents didn't advise anyone to any other products besides variable life and annuities. I hated insurance (but I do believe in it) so I did mostly investments and it was all self taught. I currently have all the licenses required for managed money, stocks, etf, etc.(65,6,63,7,L&H) And after 6 years of scratching a living in an insurance company, now I can honestly say things are "easier" for me.

After 6yrs, I currently have 8 million in wraps (I net .50 percent as commissions w/o bonuses) , 5 million in annuities (but they pay no trails), 2 million in brokerage A shares. This year I have been rolling over 400k a month so far.

My question is, how am I doing? I am surrounded by insurance guys and its next to impossible to gauge how I am vs other RIA's in terms of accumulated assets. Am I on par or below with someone who's been doing this for 6 years? Very few of us have s65 in my office, and these guys get excited when they roll 20k accounts. There's no one to learn from here, or look up to for motivation. All these kids out of college sell are annuities, and I just shake my head in disgust because there's no advising involved. They are just salesmen and cannot even explain the product correctly to clients.

Jul 3, 2010 4:28 pm

So you have a total of 15MM in assets after 6 years?  This is on the low side, but you have over half of it wrapped.  Why only .50% on the wrap fees??

Jul 3, 2010 5:32 pm

Prudential pays like crap on wraps. We charge 1.25 on mutual fund wraps, of which I net .54 to be exact. On seperately managed accts, equity is charged 3 percent, of which I net 1, and on fixed income we charge 1.25, of which I net .295.

The company's excuse is that if you write insurances and annuities, the bonuses on over all production including mutual funds will make the over all payout bigger than .54.

I have been thinking of switching companies.... Its been hard finding assets using in-house clientelle that only has insurance policies.

How much do you have AUM? How many years have you been doing this?

Jul 3, 2010 5:35 pm

Prudential pays like crap on wraps. We charge 1.25 on mutual fund wraps, of which I net .54 to be exact. On seperately managed accts, equity is charged 3 percent, of which I net 1, and on fixed income we charge 1.25, of which I net .295.

The company's excuse is that if you write insurances and annuities, the bonuses on over all production including mutual funds will make the over all payout bigger than .54.

I have been thinking of switching companies.... Its been hard finding assets using in-house clientelle that only has insurance policies.

How much do you have AUM? How many years have you been doing this?

Jul 3, 2010 8:31 pm

I have almost 40MM in assets in 6 years.  I started with AG Edwards which is now Wells Fargo Advisors.  Actually, your fee based net payout on mutual fund accts isn't that bad compared to a major wirehouse.  If I charge 1.25%, I end up at about .5% also.  But if you want to gather investment assets, you should consider going to a wire or independent, but your asset base probably isn't large enough yet to go independent.  Basically, most say you need about 30MM in order to go independent.

Jul 3, 2010 9:47 pm

Is ur 40m all wraps or combinations of everything?

Thanks for the info!

Jul 4, 2010 9:30 am

The question you ought to be asking...

Why 's don't I have recurring revenue from my annuities? I have NEVER done an annuity unless it paid a trail in the 13th month.If you want to get out of the how do I eat each month mentality, you MUST created ongoing revenue from as many sources as possible.

As an example I found a money manager who pays a trail immediately for my clients who are parking cash. I make 75bps no upfront and client has the ability to leave at any time without surrender charge. The national muni fund pays currently 3.4% and Cal portfiolio 3.1%, It's a great door opener and right now with almost 1M in 6 weeks I am grossing 600 per month. Best of all, they can short US Treasuries if rates start to rise holding the value. In 04 when we had 17 rate hikes in 18 months this portfolio shined when most bond funds did not.

Recurring revenue is what is all about.

Jul 4, 2010 12:56 pm

Almost 99% of the people in pru take annuities with all the commissions up front, because the company pays a whopping 3%. Sad part is, I know that the indies and other companies pay better. For every 100k, we net 3000 in out pocket with no trails ever again. So much of these new college grad types never elect the renewal option.

We can take 1 percent up front, and then .5 each year, but when these starving kids come into the business to sell their mommy and daddys annuities, why would they elect that?

What is the industry standard with trails on annuities? is it pretty much the same or are you guys getting far better? I personally dont take the trail option either, but lately I have been thinking about doing it since I am not starving for money.

Hey cheese, were you referring to muni bond funds? I never heard of moneoy market funds now offering high interest rates in the 3% range with trails of .75.  whats with that??

Jul 4, 2010 1:45 pm

[quote=Buddy Fox]Is ur 40m all wraps or combinations of everything? Thanks for the info![/quote]

No it is not all wrapped.  Between C shares and wrap, I probably have about 18MM wrapped.

Jul 4, 2010 2:15 pm

How do you guys get paid on annuities? using 100k as an example. like I stated before, we get 3k for 100k... but no trails. what do you guys get in terms of trails and commissions up front?

Jul 6, 2010 5:05 pm

Keep your chin up, think of how many advisors failed out. You have done most of the hard work to this point.

You might be able to partner with the other advisors to take the investment load off of them. I know "investment specialists" at NML who do just this. The basically split the business 50/50 and do very little prospecting. It is a good deal for both parties.

I don't think being at Pru is bad at all, you just may need to look at how to leverage the brand better. I started out of college as well at NML (not there anymore) and was in a similar situation as you. Not many investment producers. Use it to your advantage if you can before thinking the grass is greener on the other side.

Also, if the office is comprised of "old insurance agents", see if you can put together a plan to either buy their book or some other way to move them into your name as they begin retiring. Just a thought.

Jul 6, 2010 10:55 pm

thanks guys, any and all pointers are welcome. Always wondering whether or not the company is shafting me or not, ya know?

Jul 9, 2010 9:58 am

[quote=Buddy Fox]

thanks guys, any and all pointers are welcome. Always wondering whether or not the company is shafting me or not, ya know?

[/quote]

Sounds like a lot of work for a low grid payout.  It almost sounds like a bank platform.  Does Pru cover ALL your office expenses and such?  They better with that payout.  I do Pru VAs all the time on an L share.  4 year surrender, and we get 4% upfront and a 1% trail in the 13th month.  I get a 75% payout and my office expenses are covered.  If I want to do my own office, the payout is 85%. 

I worked at a bank for a couple years...........BAD IDEA!!  We got haircut all the time on upfront gross, the bank would only let us write 7 year VAs, and they wondered why folks kept leaving.............:(

Jul 9, 2010 12:27 pm

I've been in the business since 1992, I've worked at several wires, a couple banks. I've had great experiences, and terrible ones. You are the right guy, at the wrong place.

I went indy during the Spring of 2009, set up my own office, have a jr partner and assistant. Just couldn't take the nonsense any longer. I'd give our whole operation about an A- since we left.  

You are obviously tough as nails, patient, confident, and can live within your means.

Find an independent office, where there are established reps, and you offer to come in and share costs. You probably can bring most of your book, because you built it yourself. If you're in a decent financial situation, you might also consider trying to buy a book to compliment what you have. There aren't a ton available, but the going rate of price is still only about 1.5-2x trailing twelve, and can be paid over time.

Good luck!

Jul 17, 2010 3:27 pm

I actually thought about buying a book, but its sorta hard to find 'em ya know? 1.5x to 2x is the going rate for a book? That's better than I expected actually.

Thanks for the pointers!