Payouts At Firms

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Aug 18, 2009 11:24 pm

I've been looking at the 2009 payout grid for independent b/d on http://www.financial-planning.com and I've got to wonder, do reps at EJ, ML & MSSB even come close to this when they add up all their forms of compensation. I'm thinking a top producing EJ rep with LP is taking home about 65%. 

I see several firms in the 50-90 payout range and I'm curious what production you need to climb to 60,70,80,90.

Anyone know?

Aug 18, 2009 11:28 pm
Still@jones:

I've been looking at the 2009 payout grid for independent b/d on http://www.financial-planning.com and I've got to wonder, do reps at EJ, ML & MSSB even come close to this when they add up all their forms of compensation. I'm thinking a top producing EJ rep with LP is taking home about 65%. 

I see several firms in the 50-90 payout range and I'm curious what production you need to climb to 60,70,80,90.

Anyone know?



I think you should focus on getting a job or even opening 5 accounts.

Aug 18, 2009 11:39 pm

How 'bout a div trip...when are they going to give me my div trip!!!

Aug 19, 2009 12:00 am

how hard are those trips to get?

Aug 19, 2009 9:40 am

Not very especially for new guys they give you credits..

Aug 19, 2009 10:22 am
Still@jones:

I've been looking at the 2009 payout grid for independent b/d on http://www.financial-planning.com and I've got to wonder, do reps at EJ, ML & MSSB even come close to this when they add up all their forms of compensation. I'm thinking a top producing EJ rep with LP is taking home about 65%. 

I see several firms in the 50-90 payout range and I'm curious what production you need to climb to 60,70,80,90.

Anyone know?

 
Still,
Keep in mind, you have to compare apples to apples.  I know you know this, but you can't directly compare an indy payout to a wirehouse/regional payout, since indy advisors have to pay for everything themselves.  Now, at the end of the day, higher producers will likely make more as an indy (your expenses don't grow sequentially with prodcution growth as an independant).
And ignore LP as a form of compensation - it's an investment.  You pay for it.  Top producers are probably netting more like 55-60%.  You should also add in what Jones gives as profit sharing.  It's small as a % of gross, but it can add up to a few % points.  And it's uncapped - once you exceed the IRS limit, they just add it in as a taxable bonus on your paycheck. 
Aug 19, 2009 10:44 am
B24:
Still@jones:

I've been looking at the 2009 payout grid for independent b/d on http://www.financial-planning.com and I've got to wonder, do reps at EJ, ML & MSSB even come close to this when they add up all their forms of compensation. I'm thinking a top producing EJ rep with LP is taking home about 65%. 

I see several firms in the 50-90 payout range and I'm curious what production you need to climb to 60,70,80,90.

Anyone know?

 
Still,
Keep in mind, you have to compare apples to apples.  I know you know this, but you can't directly compare an indy payout to a wirehouse/regional payout, since indy advisors have to pay for everything themselves.  Now, at the end of the day, higher producers will likely make more as an indy (your expenses don't grow sequentially with prodcution growth as an independant).
And ignore LP as a form of compensation - it's an investment.  You pay for it.  Top producers are probably netting more like 55-60%.  You should also add in what Jones gives as profit sharing.  It's small as a % of gross, but it can add up to a few % points.  And it's uncapped - once you exceed the IRS limit, they just add it in as a taxable bonus on your paycheck. 
 
I agree with much of what B24 says but would also add some important things to consider. All gross is not gross. For instance Dealer concession varies widely on different products. When I was at Jones, VA's B share version paid about 4.75% of which I would get 35%. Now that I am independent that same VA B share actually pays 6.00% of which I get 90%. If you look at an average ticket size of 100K, that is 1662.50 net at Jones as opposed to 5400 net being independent. The payout percentages don't always tell the whole story. You have to look at the dealer concession. This also applies to mutual fund business as well. Annuity business for me is less than 15% of my overall business but being independent I realize a significant difference as opposed to my prior life at Jones. I always assumed that I made 38.5% of all revenue that I made for Jones but I soon realized that I was not correct. You have to understand what is being trimmed off before you get compensated......
Different firms take differing amounts.
You cannot take a percentage of payout alone and make that estimation without knowing the other factors at play.
 
Good luck to you. 
Aug 19, 2009 10:57 am
chief123:

Not very especially for new guys they give you credits..

 
Once you hit Seg. 3 you should be getting 2 diversification trips a year without much thought about it.
Aug 19, 2009 11:11 am

EDJ rebates 12b-1s back to customer. Also you can discount the fee at EDJ up to a certain point before it decreases your payout.



Jones platform is pretty decent as far as reps getting paid..40% on 1.25% on every dollar that goes into the program. There biggest problem are the choices and lack of discretion, but that fits the firm profile.. Plus now people can do advisory and not take the haircut on C shares.



The new thing at jones that I have been hearing about is putting clients in A Shares(over 100K break point) for 2-3 years, then flipping over to advisory.

Aug 19, 2009 11:14 am
noggin:
B24:
Still@jones:

I've been looking at the 2009 payout grid for independent b/d on http://www.financial-planning.com and I've got to wonder, do reps at EJ, ML & MSSB even come close to this when they add up all their forms of compensation. I'm thinking a top producing EJ rep with LP is taking home about 65%. I see several firms in the 50-90 payout range and I'm curious what production you need to climb to 60,70,80,90. Anyone know?



Still,

Keep in mind, you have to compare apples to apples. I know you know this, but you can't directly compare an indy payout to a wirehouse/regional payout, since indy advisors have to pay for everything themselves. Now, at the end of the day, higher producers will likely make more as an indy (your expenses don't grow sequentially with prodcution growth as an independant).

And ignore LP as a form of compensation - it's an investment. You pay for it. Top producers are probably netting more like 55-60%. You should also add in what Jones gives as profit sharing. It's small as a % of gross, but it can add up to a few % points. And it's uncapped - once you exceed the IRS limit, they just add it in as a taxable bonus on your paycheck.


I agree with much of what B24 says but would also add some important things to consider. All gross is not gross. For instance Dealer concession varies widely on different products. When I was at Jones, VA's B share version paid about 4.75% of which I would get 35%. Now that I am independent that same VA B share actually pays 6.00% of which I get 90%. If you look at an average ticket size of 100K, that is 1662.50 net at Jones as opposed to 5400 net being independent. The payout percentages don't always tell the whole story. You have to look at the dealer concession. This also applies to mutual fund business as well. Annuity business for me is less than 15% of my overall business but being independent I realize a significant difference as opposed to my prior life at Jones. I always assumed that I made 38.5% of all revenue that I made for Jones but I soon realized that I was not correct. You have to understand what is being trimmed off before you get compensated......

Different firms take differing amounts.

You cannot take a percentage of payout alone and make that estimation without knowing the other factors at play.



Good luck to you.







As an independent, what has been your overall increase (in percentages) after leaving EDJ?

Aug 19, 2009 11:46 am
iceco1d:

Good point Noggin.  But, lets put the shoe on the other foot.

 
CORRECT ME IF I'M WRONG, BUT:
 
At EDJ, and at a wire, if you are using a fee-based platform, MF Wrap, etc., and you charge the client 1.5%, your GROSS is 1.5%, yes?  No ticket charges, no "program fees," etc.
 
At EVERY indy firm I've seen, there is ALMOST always a ticket charge (usually < $50 per trade on MF), AND/OR a PROGRAM FEE.  Program fees can be hefty.  At my firm, on a 1.5% wrap, the program fee is 50 bps!  Granted, no mins, and no tickets, but a hefty fee no less!  So, the 85% my OSJ gets, isn't necessarily 85%.  I think LPL's program fees are on a sliding scale, based on account size (they cap @ like 25 bps?). 
 
Now there's also the question of 12b-1s in a wrap account.  RIA custodians pocket them (usually).  My b/d pays them out (hence the big program fee).  I think LPL pays them in taxable accounts, and rebates them in retirement accounts.  What does EDJ do?  How about the wires?
 
I'd like to see how this stuff adds up in an indy vs employee comparison. 
 
Mind you, there's also the question that some of the wires are pulling "you don't get paid anything on tickets of less than $XX, or you don't get paid on households under $XX,XXX."
 
I'd love to see a study, comparing true payouts at different levels of production, at different types of firms. 
 
I'm sure it matters whether or not you are insurance or investment heavy, as well as do you have a ton of small/med clients, or a few HNW clients too.
 
Interesting.
 
I would agree with you. You have to look at all the angles to make a good decision.
I forgot to mention payout on insurance cases. I just submitted a couple of terms and a UL that as an independent my payout is 100% on. I know there is some additional comp there but at least I get 100% of the premium amount. Nice little 5K gross day.
 
True payouts would be an interesting subject to get to the bottom of. I don't think anyone really knows.... You just hope that you are not being taken advantage of at the end of the day.
On a managed acct scenario, really you are looking at cap of 20 bps for program costs at my firm. I have seen ticket charges being steadily reduced. I think that these are important considerations to make. 40% of 1.25% is 500 net on 100K acct yearly. 90% of 1.25% after taking off .20 for program and say another .25 for tickets is still 722.50 net if my math is correct. When the program costs are in the 50 bps range that makes it a totally different conversation.
 
Aug 19, 2009 11:48 am

Otane, just remember, the net/net/net will vary widely as well, based on your office expenses.  If you are a solo with an expensive office and assistant, that is much different than having a cheap office/share with other advisors/work out of your house.  You really have to consider everything.  My friend that left Jones to go indy can't even THINK about getting an office until he increases his production.  But I think he said his payout at his production level at Cambridge is like 65% (before ticket charges and other expenses).  So he is netting slightly more than at Jones, but not by much.  The variance will widen as his production grows.

Aug 19, 2009 12:17 pm
Still@jones:

I've been looking at the 2009 payout grid for independent b/d on http://www.financial-planning.com and I've got to wonder, do reps at EJ, ML & MSSB even come close to this when they add up all their forms of compensation. I'm thinking a top producing EJ rep with LP is taking home about 65%. 

I see several firms in the 50-90 payout range and I'm curious what production you need to climb to 60,70,80,90.

Anyone know?

 
Well, first you need to get a job. Then open an account. Then you need to make $1. It's like a treasure hunt. When you get the booty, then you can ask questions like that :). And feel free to wear a peg leg, giant hat, and wear a parrot on your shoulder.
Aug 19, 2009 12:45 pm
B24:

Otane, just remember, the net/net/net will vary widely as well, based on your office expenses. If you are a solo with an expensive office and assistant, that is much different than having a cheap office/share with other advisors/work out of your house. You really have to consider everything. My friend that left Jones to go indy can't even THINK about getting an office until he increases his production. But I think he said his payout at his production level at Cambridge is like 65% (before ticket charges and other expenses). So he is netting slightly more than at Jones, but not by much. The variance will widen as his production grows.





I guess there are pluses and minuses for both cases. I imagine that going indy gives you more freedom and free of the BS piranhas at the office.

Aug 19, 2009 12:52 pm

FYI noggin, the payout on a "B" share annuity at EDJ is 5% not 4.5% and you received 40% payout on it (or a minimum of 36% in the 5 states if you are a new broker)...not 35%...indy payouts are still higher than that but lets get the facts straight when making the comparison.

Aug 19, 2009 1:36 pm
Hey Kool-Aid:

FYI noggin, the payout on a "B" share annuity at EDJ is 5% not 4.5% and you received 40% payout on it (or a minimum of 36% in the 5 states if you are a new broker)...not 35%...indy payouts are still higher than that but lets get the facts straight when making the comparison.





Depends on when he was there.

Aug 19, 2009 1:40 pm
Hey Kool-Aid:

FYI noggin, the payout on a "B" share annuity at EDJ is 5% not 4.5% and you received 40% payout on it (or a minimum of 36% in the 5 states if you are a new broker)...not 35%...indy payouts are still higher than that but lets get the facts straight when making the comparison.

When I was there the payout on 100K and above for Hartford Leaders was 4.75% as I stated, that may have changed in the time since I have left and also at the time payouts for 100K or greater B share VA were reduced to 35%. Have they changed these policies?
 
If not, begin your apology.
Aug 19, 2009 2:27 pm

Some B share VAs pay at 4.75% - some pay 5%.  Different companies pay different rates.


American Legacy does pay 35% over 100k  -- guess I won't be using them.
 
Let's get our facts straight.
Aug 19, 2009 2:29 pm

Exactly, thank you for clarifying Voltmoie.


I guess I will have to wait for an apology from Hey Kool Aid.

Aug 19, 2009 2:54 pm

Worry about gaining new clients and creating production, then payouts.  90% of very little isn't much differnet than 45% of very little.