Inheriting a book

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May 26, 2005 8:26 pm

I asked this in another thread but I dont think many people saw it so here goes again...



What is the best way of going about inheriting a book?  As a
younger guy starting out, I am fully prepared to make it on my own, but
there is going to be many many brokers retiring from my branch during
my career (some with over a billion in AUM) and I would obviously like
to get a peice of that.  What should I do from the get-go to
increase my chances of having this happen down the road?  Do the
managers redistribute the assets or does the retiree decide who gets
them? 

May 26, 2005 9:07 pm
Scorpio:

I asked this in another thread but I dont think many people saw it so here goes again...

What is the best way of going about inheriting a book?  As a younger guy starting out, I am fully prepared to make it on my own, but there is going to be many many brokers retiring from my branch during my career (some with over a billion in AUM) and I would obviously like to get a peice of that.  What should I do from the get-go to increase my chances of having this happen down the road?  Do the managers redistribute the assets or does the retiree decide who gets them? 


It depends on the firm, but I can tell you a couple of the major wirehouses will allow brokers to make deals between each other over books. How you approach the subject has to do with your firm's policies and the attitude and aims of the senior brokers involved.


I've seen flat upfront money deals, three year transition deals, partnership leading to ownership deals. The parties involved can determine what's fair between them.


Have you identified any senior brokers in particular? What's their situation? How close to retirement are they?

May 26, 2005 10:43 pm

Marry one of the top producer's daughters.  She may be so ugly that you actually earn every nickel of that book, but you'll have financial security to last a lifetime.  Good luck!

May 26, 2005 11:09 pm

Inheriting a book may sound like an easy way to accumulate assets, but you may be better off not "trying" to build a quick business this way.


If you are at a reputable firm with reputable brokers, they will be very protective over their clients. The best way to gain the trust of a senior broker is to work hard, show genuine interest in the way they do business. Your personality will naturally meld with some (brokers), and not with others...ultimately, you want a book with clients that you work well with, and the first step is forming a relationship with a broker who's personality and investment philosophy is similiar to yours. If not, the clients won't stay with you. Many clients move their accounts once a senior broker steps down because they don't have the same connection with the new person. 


Being young and new to the business is tough, but the clients you find on your own will most of the time end up being your best clients.


Good Luck. Remember high ethics, high standards means long and profitable career

May 27, 2005 11:05 am

"Marry one of the top producer's daughters.  She may be so ugly that you actually earn every nickel of that book, but you'll have financial security to last a lifetime.  Good luck!"


NICE- I like that advice sooth....

May 31, 2005 1:33 pm

We just brought in someone who bought a book from a person who retired.  Doesn't look like a bad way to start a business to me.

Jun 3, 2005 5:08 pm

I will bet you he losses 25% of that book within a year, and at the end of 5 years only has 50% of that book if he "bought" the book without a transition period.


In my opinion, it's a sleazy short cut unless you partner with someone.  Does'nt they guy have enough connections and confidence in his own skills to go build his own book? What a loser. Why pay for a book if you have the capability to build 15mm to 20mm in less than two years.


I expect some good arguments from you guys from the above statement, don't disappoint me.

Jun 3, 2005 6:27 pm

I do think its sleazy and unwise to "buy" a book from someone with whom
you have no affiliation whatsoever.  However if you're at a
wirehouse and doing well for yourself already, and a senior broker
retires and the firms needs someone to take over his billion in
assets, why not?  Of course, when negotiating a purchase price for
the book you would have to assume at least a 30% account loss
rate. 



 

Jun 3, 2005 6:57 pm

Is it sleazy when one bank buys out another?  If not, what's the difference?

Jun 3, 2005 7:42 pm

I agree with both of you, making an arrangement with a retiring brokers is a great deal for all involved when an existing broker is already established. 


Banks are a whole different can of worms, many times it is sleazy too.

Jun 4, 2005 11:47 am

I thinks it's cheap and sleazy by the selling party.  It's just a shortcut for the buying party.  Doesn't this person give two sh*ts of a rat's ass what happens to his or her clients for the next 10 years.  In the end, all he or she looked out for was their own selfish interest--that is, what idiot will give me the biggest pile of jack for access to my client's financial security.  If I were a client in this situation I would run, not walk, away from this situation.  If I had a second or third guy who had been dripping on me for awhile, it's time to get the ACATs ready.