Payout Percent for Joining an Independent Wealth Mgt firm

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Nov 2, 2010 1:45 pm

I was hoping someone could help me with the % payout I should expect/negotiate with an independent wealth management firm I am looking to join. I will be brining in AUM to their firm and they charge 1% for all AUM. They have an established practice of about $100 million of AUM. I will be coming in with no salary and just taking a % of the management fee the assets I bring in generate. At first the partner will allocate the assets but I will take that role over for my clients over time as I learn the business and finish my CFA (3rd test this summer). I have read some posts on this subject and it seems like 40% is a reasonable number. Any insight would be helpful. Thank you.

Nov 2, 2010 1:51 pm

How much you bringing in, and what is their monthly overhead? You getting any benefits, are you expected to pick up costs, are you getting any equity in the firm? Lots of variables in a deal like this.

Provide some details and that might help. There are a few guys here that have hired outside folks, like you're talking about, maybe they can chime in too.  

Nov 2, 2010 2:00 pm

40% and no upfront cash?  You better have a hell of alot of rich friends.  I'd have a deal that is structured to give you a 1st year salary with a low payout and then a bigger payout when salary goes away. EDJ gives you 40% and you get bonues, salary, training, benefits, assistant, and an office.  Good way to start unless you can get a better deal.

Nov 2, 2010 2:31 pm

Thanks, that is a help. 

I would not have any benefits and I would cover all my costs.  Not sure the fees i can bring in as i have never done this but i am planning to build a book of 50 million of AUM over the next 5 years.  Eventually i would get on their health care plan as a benefit.

They have 4 employees 1 office I magine they generate about a million in fee income.  They are covering all their costs now and both partners are likely making 300K each as an estimate.    The variable costs for extra money being brought in would not add to their overhead expenses significantly.  However, it would take one of the partners time to deal with the clients I bring in until I take that role over.

I have sold my stake in two startup companies i helped start so I have some financial support to build a client base. 

Nov 2, 2010 2:45 pm

Just a general rule of thumb is 33% for the salesman, 33% for the prospecting, 33% for the platform to do it all.

Of course these percentages will fluctuate a little to a lot depending on what value you bring to the table versus what value they bring to the table but you kinda see what to look for.

A bank can offer a platform and prospects and you provide the salesman for ~35% payout. I have heard of indy shops offering up to 70% but all you get is a platform to work with so you do all prospecting and cover all discretionary expenses.

Nov 2, 2010 6:29 pm

Move this over to the what's up at firms section or repost for better feedback from indy guys....sounds way low to me especially as a CFA 3.

Nov 2, 2010 11:02 pm

Correction: EDJ gives 40% of your finite transactional (pillage and churn the client) business. Keep in mind this is annuitized business. How much can you really expect from a companies entire revenue? We give 55bps on advisor generated and managed assets and 35bps firm generated and managed assets. However our fees are also more than 1% for our actively managed accounts. I believe 40bps is quite reasonable in your situation.