Validity of Statement
First and foremost, great threads - a veritable wealth of valuable information and entertainment. I'm trying to be a good newbie and am currently doing some research on the "business". I'm curious of the validity of the following statement:
"...from what I've researched, consider this: on average, it's going to take $1 million of client's investments for you to make $6,000 annually."
Does this sound about right?
That's a gross generalization. It depends on what channel. If you had
$100mm AUM, that would put your income at $600,000. You might be
able to do that indy, but I doubt it at a wirehouse or regional. It also
depends on how much is fee based vs. commission, how much new
business you do, etc.
I agree with Broker24 ..it does matter on the business mix and if you do ancellary business ..loans for your client (bank channel) .. and life insurance.. I will give you and eample.. $150k in an IRA earmarked as an ineheritence for the children.. take that money fund a 10 pay annuity ..set up a life policy to get the money to client's heirs (death benefit by the way now at $250,000) and if the client passes before the insurance company gets all the payments bonus for the heirs.. anyway that case paid out $14,000 gross.. so you can see it all depends on how you use what is there..
And at Jones I would have made about $1.75 net/net/net/net on that case.
I like to throw a bone to you guys once in a while....
Seriously, Buk, it might be easier to estimate average payout, for say $50mm in assets at a wire or regional, doing a traditional mix of business or something. But fee-based and ancillary business can throw it way off. My partner in the office just got a $30K gross payout on a life case, and he is only about a $300K/yr producer, so that will be about 10% of last year's gross for 2007. He does a lot of estate planning, so he has a nice ROA for his asset size (lot of large insurance cases).
I usually looks like this:
$1,000,000 client at .75% fees charged annually (this is low, but you would
be new, and lowballing your fee) = $7,500 per year in commissions
Apply a 40% payout for a new advisor, and you are left with $3,000 in W2
income from that single client.