Two Years at ML, Then What?

or Register to post new content in the forum

12 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jul 30, 2005 7:43 pm

Ok, once you've been at ML for two years and have reached $15MM AUM, what is the ongoing AUM fee for the FA?  Is it the the industry standard 1%?  If so, does this 1% get split between ML and the FA?  I'm try trying to figure out what is the minimum I'll be earning when salary disappears after year two.

Jul 30, 2005 10:08 pm

1% @ 35 pt 40%    = $50,000


However, I doubt that you will have all $15,000,000 in annuitized products.

Jul 31, 2005 3:19 pm

Lambda- I doubt that you are at Merrill at all. After 2 years you should know what your comp will be going forward.. Secondly, you should be looking to jump to another firm because one of 2 things are going to happen. You will either starve because having 15MM after 2 years probably wont pay the bills due to your salary going away. And secondly, your management team is probably considering letting you go since you didnt hit their "unofficial" goals of 30MM after 24 months... Sorry to be blunt, but you should know the answers to your questions if you have been there for 2 years...

Jul 31, 2005 11:57 pm

Point of clarification....I'm not at ML......it's one of the firms that I'm considering...

Aug 1, 2005 1:20 am

My bad... Even though the official POA goals are 7.5MM and 15MM for 12 and 24 months, they are looking for you to double that in order to survive once you come off salary... That is one reason why they encourage you to offer fee-based accoutns to clients in order to annuitize your income... They have a great lineup of money managers, ranging from the MFA mutual fund program, MLUA, to Consults- probably the best manged money platform out there ( SB's up there as well)..

Aug 3, 2005 2:23 pm

so let's say... 25 mill under management at ml after 2 yrs... what should a rookie expect to earn off that?

Aug 3, 2005 3:00 pm

Expect to gross around $375K if your average fee is 1.5%. And thats assuming that all your AUM are annuitized... You will inevitably have some transactional accounts, dead accounts, and non-paying accounts that will be part of your book.... Figure on $325K to be safe.. But that doesnt take into account the new money coming in...

Aug 3, 2005 3:48 pm

Assumming $25MM  x 1.5% = $375K.  However, doesn't ML keep a piece of that 1.5% ?  And isn't 1% a more agreeable number with clients?

Aug 3, 2005 5:09 pm

You are right in that ML keeps a certain %- but only on Consults accounts.. You get the full fee on MFA mutual fund accounts. Re: 1% fees that are more equitable with clients, that is dependant on the client and the asset size... If you have a client with $400K, then 2% wouldnt be out of the question.. If you have a client with 1.5MM, then you may have to discount to 1% or .75% to gain the business.. Its all negotiable to an extent. Do you discount the fee to get the biz ( while taking a reduced fee that it generates) or do you attempt to ask a higher fee for the services with the chance that a broker down the street may come in below you... Like everything, it depends on the sitaution, sophistication of prospect/client, are you in competition for the account, etc, etc.. Its all a crapshoot to a certain extent...

Aug 3, 2005 5:27 pm

I find it hard to believe a rookie could keep them at 1.5% indies can offer everything you have and more for .95% on managed money and .5% for wraps and they can also blend several money managers for .95%. Please don't take this wrong but this business is very competitive and for a rookie to charge more then a experienced rep!! Well put yourself in the clients shoes! True there are people out there that are different and they like to brag about having a ML rep! Kind of like the person that will only buy certain name brand products. But they look foolish at a party when they brag about there ML rep and how they are paying a certain money manager 1.5%-2% and an indies client pipes up and Say's I have the same manager for .95%.  And the indy rep and can do my taxes to! The next thing you know the client is talking to the indy rep because the ML rep is no longer there for not meeting  his quota. I would recommend you find an indy and work for him/her for a couple of years! Good Luck!

Aug 3, 2005 9:14 pm

You must be joking if you think an indy can offer everything "and more" that ML does.



Just FYI, clients don't sit around at parties and talk about what fees
they are being charged at their wealth management firm.  People
with money don't discuss the specifics of their situation with each
other quite that openly. 



But even if they did, I think most affluent individuals would gladly
pay a slighly higher fee to have the security that comes with "The
Bull" watching over your assets. 



If they were at a party discussing their brokers, the one who would
look foolish in that crowd would be the one who says he has Jimmy
McNobody Investments watching over his assets.      

Aug 3, 2005 9:40 pm
Greenbacks:

I find it hard to believe a rookie could keep
them at 1.5% indies can offer everything you have and more for .95%
on managed money and .5% for wraps and they can also
blend several money managers for .95%. Please don't take this
wrong but this business is very competitive and for a rookie to
charge more then a experienced rep!! Well put yourself in the
clients shoes! True there are people out there that are
different and they like to brag about having a ML rep! Kind of
like the person that will only buy certain name brand products.
But they look foolish at a party when they brag about there ML rep and
how they are paying a certain money manager 1.5%-2% and an indies
client pipes up and Say's I have the same manager for
.95%.  And the indy rep and can do my taxes to! The next
thing you know the client is talking to the indy rep because the
ML rep is no longer there for not meeting  his quota. I would
recommend you find an indy and work for him/her for a couple of years!
Good Luck!





This is a good post for ML reps to read.  Taking the fee quotes
that an Indy can offer as quoted, this post has a ton of truth in
it.  ML has SO MUCH MORE to offer than managed accounts.  If
you, as a ML rep, are not embracing all of the planning, hedge,
lending, insurance, review and performance reporting, and the treasure
box of other items at your disposal, you are missing it.  At ML,
it is and always will be difficult to compete based on fee's.  We
are not cheap, and we should not want to be.  I believe you should
provide more and charge more.  If you cannot do that, go
Indy.  Provide less and charge more and Greenbacks will pack your
lunch with his fee's and tax service.