Syracuse, NY
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Yeah, except, encourage them to save a cash reserve to get the minimum 25k, or whatever. Having cash makes people feel powerful.
Yes, my clients call me whenever they want to! It took me ten years to get over my "financial advisor" training, and act like a broker - call, email, call, have lunch. Access is what their paying for, you're making the case. I'm well paid to provide immediate access, and be proactive, too.
Rebalancing is about common sense. I thought there might be a recession coming, about two years ago I started reducing equities if the client agreed. (Did not call the meltdown.)
Touch, service, just like Bond Guy and Spaceman. We're all good guys.
So, with our model, I would argue the overhead of a wirehouse, or even EDJ, is just ripping off the clients, AND the advisors. Because time is money, and personal contact is valuable. Of course, the whole industry knows it. The big wirehouse layoffs is just a short term move to aggregate 12b1s and such against fixed costs, until they figure out their next move. Kinda like being eaten by minnows!
Actually I think misunderstanding is a proper word - - perhaps I'm just misremembering what I learned in school.
BF
[quote=Brett Favre]
You're misunderstanding (thanks to Roger Clemens for that piece of English language expertise)Actually I think misunderstanding is a proper word - - perhaps I'm just misremembering what I learned in school.
BF
[/quote]
If I’m a client, I have a hard time paying you a fee if you’re just going to give me a quick risk toleralance quiz, check your asset allocation model and put me in index funds.
It’s funny to hear the A share bashing, as if Jones guys are somehow getting rich putting people in A shares. Guy gives me 500k, we wind up using two fund families, buy some individual bonds and individual stocks, put 100k in CDs, – total cost to him is probably less than 10k upfront, plus his annual expenses are very low. My gross commission is probably 12k tops, which I net maybe 4k, which makes me wonder how I can make it when a great account pays me living expenses for less than one month. I have a couple of clients like this and I provide them good service but I’m getting very little out of it beyond selling them another 20k bond every six months.
Fwiw, though, I think A shares are on their way out. The public wants to get something for nothing, and even Jones guys are smart enough to figure out that fee based business is a better way to go, for the advisor, for clients who want an advisor.
You're making my point. I respect you. I think you're getting screwed.
But I don't think the public wants something for nothing. Maybe the partners at Jones do, or something like that. You know darn well that I, and we, do a lot more than just give a quiz and throw stuff in wrap. I'd rather have a smaller client who is paying me. 500k ain't no big swingin' d***, neither is 2m. That's the whole problem, everybody (not you) wants to be a swingin' d***, and noboby wants to do the work. Well guess what, cut out the fat and everybody can eat.Total cost upfront is less than $10k??? Thats a Hyundai!! Why would someone rather pay $10,000 upfront before getting any type of value for his dollar yet? If I charge someone who has $500,000 with me at 1%, after year one he's out $5,000 and if I suck and don't provide the value he's looking for, he can take his money somewhere else without worry of being stuck in some crappy fund family. If I put him in A shares and I suck, he can take his money somewhere else (as long as the company is able to hold the fund family), but he's stuck with the same fund company for however long it'll take him to recoup the upfront fees.If I’m a client, I have a hard time paying you a fee if you’re just going to give me a quick risk toleralance quiz, check your asset allocation model and put me in index funds.
It’s funny to hear the A share bashing, as if Jones guys are somehow getting rich putting people in A shares. Guy gives me 500k, we wind up using two fund families, buy some individual bonds and individual stocks, put 100k in CDs, – total cost to him is probably less than 10k upfront, plus his annual expenses are very low. My gross commission is probably 12k tops, which I net maybe 4k, which makes me wonder how I can make it when a great account pays me living expenses for less than one month. I have a couple of clients like this and I provide them good service but I’m getting very little out of it beyond selling them another 20k bond every six months.
Of course he could dump the fund family, but then he would not have learned a darned thing.
You know what's amazing, guys have been trained to defend the status quo that is sucking them dry. You've got to defend all of these costs, instead of just moving from where I am now, to where I oughta be. Irony is, now is the PERFECT time to be honest and move forward.You make interesting points, Mishigun. … Me, I’m just a piker trying to figure things out so I can, as you say, move forward. … The irony is that I’d like to put people in fee-based, even the EJ model, but I need the A-share upfront money. But I don’t even do that right, because I keep doing what’s best for the client. Fock, I am getting screwed.
You can do the right thing for the client at places other than Edward Jones, and it might pay a lot better.
Indpendent you can do a combination of upfront fees and fee-based.B&H, as you know, the present value of your practice resides with the firm, the future value is you. Your clients know you are doing the hard work of survival. They like you and want you to be successful.
When the time is right, with the stroke of a pen, the present will become the future ( I notice my b/d dropped compliance documentation requirements for shifting A shares to ETFs. No written explanations or signatures required.) My point is, we have been trained to fight like dogs or roosters about meaningless crap that enriches management. Clients have been trained to be loyal to meaningless concepts, like buy and hold the overpriced funds of mediocre companies like Fidelity and Oppenheimer. I respect every EJ guy and every BG and c***y RIAs alike. America needs us ... now. I thought that Robyn posting on here was a real reminder ... of how we industry professionals share some common instincts and experience that needs to be respected better by those who would profit from our sweat equity.[/quote]
Total cost upfront is less than $10k??? Thats a Hyundai!! Why would someone rather pay $10,000 upfront before getting any type of value for his dollar yet? If I charge someone who has $500,000 with me at 1%, after year one he's out $5,000 and if I suck and don't provide the value he's looking for, he can take his money somewhere else without worry of being stuck in some crappy fund family. If I put him in A shares and I suck, he can take his money somewhere else (as long as the company is able to hold the fund family), but he's stuck with the same fund company for however long it'll take him to recoup the upfront fees. [/quote] But then if he likes you and stays with you for 5 years, he will have paid you at least $25,000 for what he could have bought for $10,000. You guys are amazing. What ever happened to doing what is best for the client and not stuffing your pocket every year with that 1% fee. You are stealing fees from your clients that they did not need to pay. They could have bought good A share funds and never paid another commission after year 1. You make them pay something every year...forever. What a rip-off for the client. You make money and they pay unnecessary fees. I meet with my A share clients whenever they want to and whenever we need to without charging them for my time.I think you're a little out of touch. By the time the time you run the #s, pay the fixed costs of the business, a provide a quality product, you can't afford to do it for less than 1%. I don't know about your situation, but most business people herewould probably agree. It's fun to say "what a rip off for the client" and provide anecdotal evidence, it's another to fly solo and provide real value for real clients over a long period of time. If you're selling A shares you're obviously hooked in with a b/d, you're carrying a ton of costs with (hidden) fees. Whatever, I don't care about your business.
[quote=Mishigun]
I think you're a little out of touch. By the time the time you run the #s, pay the fixed costs of the business, a provide a quality product, you can't afford to do it for less than 1%. I don't know about your situation, but most business people herewould probably agree. It's fun to say "what a rip off for the client" and provide anecdotal evidence, it's another to fly solo and provide real value for real clients over a long period of time. If you're selling A shares you're obviously hooked in with a b/d, you're carrying a ton of costs with (hidden) fees. Whatever, I don't care about your business.
[/quote] Regardless of your justification, you are not doing what is right for your client. You are overcharging them on fees to fill your pocket. Go find new clients to work with, don't overcharge the ones you have because I steal those clients away everyday by doing what is right for THEM.[quote=CreditOnion]
[quote]Total cost upfront is less than $10k??? Thats a Hyundai!! Why would someone rather pay $10,000 upfront before getting any type of value for his dollar yet? If I charge someone who has $500,000 with me at 1%, after year one he's out $5,000 and if I suck and don't provide the value he's looking for, he can take his money somewhere else without worry of being stuck in some crappy fund family. If I put him in A shares and I suck, he can take his money somewhere else (as long as the company is able to hold the fund family), but he's stuck with the same fund company for however long it'll take him to recoup the upfront fees. [/quote] What a rip-off for the client. You make money and they pay unnecessary fees. I meet with my A share clients whenever they want to and whenever we need to without charging them for my time. [/quote] Hopefully the wholesalers are taking good care of you. You'll be in your 20th year still having to acquire 40 clients a year to maintain a commission business because you can't afford to stay afloat with the residual 12b-1 fee every year. A client you've had for 10 years with $100,000 in A shares is paying you $250 in trails each year, and after the payout you could be netting half of that. You're working for a $100,000 account, meeting 2-4 times a year, doing admin work and doing account rebalancing for $100-$200 per year. How on gods green earth can you stay in business with that set up? [quote]But then if he likes you and stays with you for 5 years, he will have paid you at least $25,000 for what he could have bought for $10,000. You guys are amazing. What ever happened to doing what is best for the client and not stuffing your pocket every year with that 1% fee. You are stealing fees from your clients that they did not need to pay. They could have bought good A share funds and never paid another commission after year 1. You make them pay something every year...forever. [/quote] If he likes me and I'm providing him good value and giving him the choices and services that all my clients should be entitled to have then what is wrong with him thinking I am worth his money? You say "good A share funds", what if I was around in 1995 and put a client in Putnam? Good choice at the time, they had a solid mix, but if they were still my client today I'd have gotten their a$$es out of there years ago. And they'd have to pay another commission to get into a different fund family. Are you really confident enough to bank your client relationships and your business on the hope that a good A share today will be still be just as good if not better 15-20 years from now?I know it may sound hypocritical, but I think you’re both right. I LOVE the fact that Jones has given me another way to get paid for what I do through Advisory Solutions. I have prospects that I couldn’t even have competed for without AS. Met another one yesterday in fact. Another Mutual Fund store client. Said she knows she is paying a high fee. I can now talk with her about both A share mutual funds, fee based mutual funds, fee based ETFs, or commission based ETFs. Or individual stocks or bonds. This time last year I didn’t have two of those choices.
Each of us can argue our own side and make very compelling points. However, at the end of the day, the client has to make the decision about how, or if, they pay an advisor to do what we do.[quote=Spaceman Spiff]I know it may sound hypocritical, but I think you’re both right. I LOVE the fact that Jones has given me another way to get paid for what I do through Advisory Solutions. I have prospects that I couldn’t even have competed for without AS. Met another one yesterday in fact. Another Mutual Fund store client. Said she knows she is paying a high fee. I can now talk with her about both A share mutual funds, fee based mutual funds, fee based ETFs, or commission based ETFs. Or individual stocks or bonds. This time last year I didn’t have two of those choices.
Each of us can argue our own side and make very compelling points. However, at the end of the day, the client has to make the decision about how, or if, they pay an advisor to do what we do. [/quote] I agree. However, some of the biggest accounts I have ever transferred were from clients that realized they were going to pay that 1% every year so long as they were invested with the other firm. I showed them a less expensive way to invest and get good returns and they became my clients.[quote=CreditOnion][quote=Spaceman Spiff]I know it may sound hypocritical, but I think you’re both right. I LOVE the fact that Jones has given me another way to get paid for what I do through Advisory Solutions. I have prospects that I couldn’t even have competed for without AS. Met another one yesterday in fact. Another Mutual Fund store client. Said she knows she is paying a high fee. I can now talk with her about both A share mutual funds, fee based mutual funds, fee based ETFs, or commission based ETFs. Or individual stocks or bonds. This time last year I didn’t have two of those choices.
Each of us can argue our own side and make very compelling points. However, at the end of the day, the client has to make the decision about how, or if, they pay an advisor to do what we do. [/quote] I agree. However, some of the biggest accounts I have ever transferred were from clients that realized they were going to pay that 1% every year so long as they were invested with the other firm. I showed them a less expensive way to invest and get good returns and they became my clients. [/quote] Kind of like the recent "Office" episodes, where Michael Scott Paper Company steals business by going into debt. Basically, commissions of any kind are good for paying up front costs, and leveraging the labor of other people (look at any sales organization). Using new business to subsidize long term business relationships is not a sound strategy. Please don't go around feeling virtuous with your head in the sand.Regardless of your justification, you are not doing what is right for your client. You are overcharging them on fees to fill your pocket. Go find new clients to work with, don't overcharge the ones you have because I steal those clients away everyday by doing what is right for THEM.[/quote] If lower fees are your justification then if you were really doing whats best for the client you'd draw up a good Vanguard allocation for them to go implement w/no loads and .2% annual fees.[quote=Mishigun]I think you’re a little out of touch. By the time the time you run the #s, pay the fixed costs of the business, a provide a quality product, you can’t afford to do it for less than 1%. I don’t know about your situation, but most business people herewould probably agree. It’s fun to say “what a rip off for the client” and provide anecdotal evidence, it’s another to fly solo and provide real value for real clients over a long period of time. If you’re selling A shares you’re obviously hooked in with a b/d, you’re carrying a ton of costs with (hidden) fees. Whatever, I don’t care about your business.