When to go independent

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Sep 6, 2010 2:39 pm

I am a very successful licensed banker for a large bank.  I will soon be a Financial Advisor for them and feel that I should pursue that for a couple of years to ensure that I will be just as successful when I am independent.  I go above and beyond to ensure that I am number one w/in the institution.  However, my success is limited which is why I need a plan as to when it will be best for me to go independent.  Part of the reason for me wanting to wait a couple of years before I go is to ensure that my finances are in place to bridge the time that it will take for me to build my book of business.  However, I do not want to wait too long b/c my ambition will not allow me to.  Does anyone have any recommendations for a path to follow?  Another words, how long should I be a FA w/the bank before crossing over to being independent?  What are some of the independent firms I should look into being apart of?  How long does it take to build a book of business independently before you can truly start living off of it?  What were some keys to your success in getting started?

Sep 6, 2010 5:01 pm

Gather 30-50MM in assets of people that are loyal to you and then go if that is your goal.....

Sep 6, 2010 8:12 pm

What concerns me w/working at a bank is that my loyal clients that I create over the years could be gone tomorrow at the control of the bank.  As I have seen this happen excessively over the past yr w/the high bank turnover and mergers.  I think the 30-50mm is a great templete to follow, but that is a major conern of mine along w/the fact that I would have to wait for my non-compete period to close before tapping into that BOB.  Has anyone followed the same path as me and gone independent or can anyone share w/me why they went independent and what did they use in determining they were ready?

Sep 7, 2010 7:04 am

Sounds obvious.  Don't work for a bank.

Sep 7, 2010 3:11 pm

[quote=freedom4me]

What concerns me w/working at a bank is that my loyal clients that I create over the years could be gone tomorrow at the control of the bank.  As I have seen this happen excessively over the past yr w/the high bank turnover and mergers.  I think the 30-50mm is a great templete to follow, but that is a major conern of mine along w/the fact that I would have to wait for my non-compete period to close before tapping into that BOB.  Has anyone followed the same path as me and gone independent or can anyone share w/me why they went independent and what did they use in determining they were ready?

[/quote]

I went independent from a large bank program when the clients viewed me as their "guy" and not the bank...

Sep 7, 2010 9:59 pm

[quote=on my own]

I went independent from a large bank program when the clients viewed me as their "guy" and not the bank...

[/quote]

How long did that take you and approx how much did you have in AUM?

Sep 8, 2010 1:52 pm

[quote=freedom4me]

[quote=on my own]

I went independent from a large bank program when the clients viewed me as their "guy" and not the bank...

[/quote]

How long did that take you and approx how much did you have in AUM?

I took a different approach.

I did not want every client that I had at the bank...I am more concerned with quality of life....I'm still prospecting however I don't want just any client in my practice...I'm thinking long term. First thing I did was screen my bank client base...who do I like personally. Then I went by assets...do they have an account of over 100k and is it wrapped. If I liked them, assets over 100k and wrapped I called them. I left all the Pain in the _ss customers and all the fixed annuity customers that the LB sold....I even left the million dollar clients that would call me almost every single day. I wanted life to be simplier.  I made a list of 75 clients that fit the criteria I was looking for and took 50 of them. Average account size was 325k. All I do now is a client account review over lunch a day and cold call affluent neighborhoods every morning asking if they ever invested with a bank broker...if so when was the last time they heard from their bank broker.

[/quote]

Sep 8, 2010 3:08 pm

[quote=freedom4me]

[quote=on my own]

I went independent from a large bank program when the clients viewed me as their "guy" and not the bank...

[/quote]

How long did that take you and approx how much did you have in AUM?

[/quote]

You probably don't want to hear this... It will take at least 5 years, and probably need to have a book of at least 80m when you leave.

Sep 8, 2010 9:09 pm

[quote=on my own]

I took a different approach.

I did not want every client that I had at the bank...I am more concerned with quality of life....I'm still prospecting however I don't want just any client in my practice...I'm thinking long term. First thing I did was screen my bank client base...who do I like personally. Then I went by assets...do they have an account of over 100k and is it wrapped. If I liked them, assets over 100k and wrapped I called them. I left all the Pain in the _ss customers and all the fixed annuity customers that the LB sold....I even left the million dollar clients that would call me almost every single day. I wanted life to be simplier.  I made a list of 75 clients that fit the criteria I was looking for and took 50 of them. Average account size was 325k. All I do now is a client account review over lunch a day and cold call affluent neighborhoods every morning asking if they ever invested with a bank broker...if so when was the last time they heard from their bank broker.

[/quote]

[/quote]

Assuming you had a noncompete, how did you get around your noncompete?  Did you call them prior to leaving?

Sep 8, 2010 9:12 pm

[quote=freedom4me]

[quote=on my own]

I took a different approach.

I did not want every client that I had at the bank...I am more concerned with quality of life....I'm still prospecting however I don't want just any client in my practice...I'm thinking long term. First thing I did was screen my bank client base...who do I like personally. Then I went by assets...do they have an account of over 100k and is it wrapped. If I liked them, assets over 100k and wrapped I called them. I left all the Pain in the _ss customers and all the fixed annuity customers that the LB sold....I even left the million dollar clients that would call me almost every single day. I wanted life to be simplier.  I made a list of 75 clients that fit the criteria I was looking for and took 50 of them. Average account size was 325k. All I do now is a client account review over lunch a day and cold call affluent neighborhoods every morning asking if they ever invested with a bank broker...if so when was the last time they heard from their bank broker.

[/quote]

[/quote]

Assuming you had a noncompete, how did you get around your noncompete?  Did you call them prior to leaving?

[/quote]

Also, the bank I am at really does promote wrap accts.  Any suggestions around that?

Sep 10, 2010 8:20 am

To get around noncompete I tried to fly under the radar. I only called 1-2 clients a day and transferred the accounts over slowly. I had some wraps however alot of my business was direct...L share annuities. All I did was change of rep forms.

This is just my personal opinion...if you are going to build your practice doing wraps you will stare out of the business. Just do the math. If you invest $1,000,000 mo in wraps for 12 mos.(which is hard because the bankers will not give you enough referrals to get that volume and you'll probably have 1-2 branches...but lets say you do) = 12 million yr in managed assets at a 1% to 1.5% fee that equals $120000-$180000  yr in fees...at 25% payout =$30000-$45000 in income to you. (Again thats assuming you can get 12mill in assets from referrals. That's high. You'll probably get half that if you are lucky) With those numbers you'll starve or management will force you out for lack of production. Another factor...You said you where the top LB...did you give your rep 12 mill a year to invest? If you did great however the are other bankers doing that and are you good enough to close that amount of business. These are just questions to ask yourself...not trying to be confrontational.

Sep 15, 2010 6:35 pm

I love your enthusiasm but you're naive.  IF you were an FA at a bank, I'd say take your book, then cut that in half. Then take another half and call the revenue from that 25% your BEST possible outcome if you go to ANY indy firm. What does that generate for you? Take that number, whack 45% of that revenue off for expenses (real world) and then ask yourself if you can live on that and start tommorow to build from there.

This comes from YEARS of experience and many such cases like yours that I've seen and had a hand in. The recruiter at firm a, b or c will tell you otherwise, but frankly, the best move you can make is to get into a formal FA role, solidify your business, then maybe break from the bank, and then IF your clients are strong, you get 50% oft them to follow you out. Moving from a bank based investment platform is much easier if you're the FA vs. Private Banker. Keep in mind that a Private Banker leaving has the FA working against them if you try to pull relationships with you. Position yourself over time then make the move.

Oct 17, 2010 6:03 am

Try to conceive how many are advantages and how many are dis-advantages then try to think many times if you are confident to do it or not.