How long to 100K

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Jul 14, 2006 9:18 am

On Avg. how long does it take for a FA to earn at least 100k a year?

Jul 14, 2006 12:46 pm

For some, forever. Other can do it in a year in the right spot or with exceptional skills.


Less than 10% are in the same place after 5 years. That isn't a fresh stat but I bet it's still or near correct.


This board is dominated by the eat what you kill, wirehouse related, high goal types or wannabes. I just say that as you might consider related tracks as well.







Jul 14, 2006 1:30 pm
gmoney46:

On Avg. how long does it take for a FA to earn at least 100k a year?




I'm just guessing here, but I think you'd be considered "exceptional" to hit $100K in under three years.  And if you haven't made it within six years at a good firm you probably never will.

Reaching that goal in a bear market will take longer.  Reaching that goal in a bull market will be easier, but it will be a temporary victory if you don't build long-term relationships with your clients.

I've talked with a lot of FAs who did $400K in production in 1999 but haven't beaten $150K since.


Jul 14, 2006 11:02 pm
gmoney46:

On Avg. how long does it take for a FA to earn at least 100k a year?


The real question is not how long it takes to earn that but rather what is the level of assets that I need to reasonably make that level of income continously... At a 40% commission level and .85 to 1% velocity you will need about 25-35 Million in AUM to maintain that level of income. The assets are a greater predictor of present and future income than any other measure I know of. I have been out 3 1/2 yrs and have a little over 22 mill myself, so I am not quite there yet. Good luck.

Jul 14, 2006 11:07 pm
noggin:
gmoney46:

On Avg. how long does it take for a FA to earn at least 100k a year?


The real question is not how long it takes to earn that but rather what is the level of assets that I need to reasonably make that level of income continously... At a 40% commission level and .85 to 1% velocity you will need about 25-35 Million in AUM to maintain that level of income. The assets are a greater predictor of present and future income than any other measure I know of. I have been out 3 1/2 yrs and have a little over 22 mill myself, so I am not quite there yet. Good luck.



That is an excellent use of this forum.


I remind a lot of you that a great many of the readers of this stuff are young people considering a career.  They probably have no idea what the highlighted sentence means, much less how to translate it into what they would be doing day to day.

Jul 15, 2006 2:54 am

It's funny how hard this biz is.  When I was 22 years of age, I worked as a personal trainer at a Ballys made 60k my first year..you can say that I was a captive agent.  My second year, I was independent (charging my own rate), and I made 120k.  The reason I quit was because I have never met a personal trainer who made over 150k.  So I decided to switch to financial planning for more money.  I tell you what...netting 100k is 10x harder than being a personal trainer.  I"m sure that the mantra of "The hardest 40k/year job out there, but the easiest 250k/year job out there" is certainly true.  Believe me, somedays I feel I would have been better off opening a personal training studio managing personal trainers.  Now I have a little gut.

Jul 16, 2006 10:28 pm

About 43 1/2 days

Jul 17, 2006 3:11 pm
NASD Newbie:
noggin:

At a 40% commission level and .85 to 1% velocity you will need about 25-35 Million in AUM to maintain that level of income.

I remind a lot of you that a great many of the readers of this stuff are young people considering a career.  They probably have no idea what the highlighted sentence means, much less how to translate it into what they would be doing day to day.



Good point, NASD.

AUM is Assets Under Management.  Also known as "Your Book".  This is the total amount of money invested by your clients through your services.  This includes things like stocks, bonds, cash and annuities.  Bank FAs should not include Assets on Deposit within their AUM.

Velocity is the ratio of assets to fees charged.  This ratio applies for ALL fees, whether you charge a flat percentage or on a per-transaction basis.  For example, if you managed $10M in AUM, and collected a total of $100,000 in fees for the year; then your velocity is 1%.

Commission Level is the percentage of total fees that is paid to you.  Some firms offer higher payouts, but stick you with chargebacks and other expenses for things like rent and your computer.  Therefore, it's important to know that your commissions are not necessarily the same as your earnings before taxes.

So, taking the more aggressive numbers from the above example, you will earn $100,000 if you have $25M in assets under management, charge your clients 1% in fees on those assets and then your firm pays you 40% commissions on those fees  (assuming no chargebacks for expenses).

You need to do this calculation for each firm on your short list, since the numbers will vary from firm to firm. Then you need to ask yourself two questions:

Given each firm's name recognition, marketing support, training and product mix, where will I be most likely to reach my AUM target within X years?
Is that firm the best place for me, given my target market and business plan?  (Big payouts mean nothing if you fail to meet your goals due to a bad fit.)


Jul 17, 2006 7:15 pm

Jeff, as always, a good post.

Jul 17, 2006 7:35 pm

If you are with an insurance company, you can do it in your second year if you are not a superstar, but you work your butt off.

Jul 17, 2006 8:06 pm

It's taken me over 4 years to make 100k, and I was a quick study. You better have some jack to survive in this biz. There are easier ways to make 100k. There are harder ways to make 200k.