Average FA @ ML = GDC $853,000 !?!?!?!

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Aug 31, 2010 9:48 am

 I just read this from a RRep. article (Neck &NEck, Morgan and Merrill of Hiring Sprees):

Following the joint venture, MSSB suddenly had a decisive lead in
headcount and assets. At the end of the second quarter, MSSB employed
18,087 financial advisors, surpassing the thundering herd's network of
15,142. Meanwhile, Morgan Stanley reported total client assets of $1.5
trillion, versus $1.4 trillion at Merrill.

Still, Merrill is
ahead in average revenue and assets per advisor. The average Merrill FA
generates $853,000 in annualized revenue, versus $679,000 at MSSB.
Meanwhile, average AUM per FA at Morgan is $92.5 million, compared with
$83 million at MSSB.
(There are some questions about differences in the
ways these numbers are calculated, however.)

WTH...??!!?? I know quite a few people, especially at Merrill, and this seems quite contradictory to what they are saying...

I am guessing this article is taking their gross rev. and dividing it by the # of FC's...? Including their investment banking and other biz...

Maybe I am off base, but these numbers seems off...

Aug 31, 2010 12:38 pm

The avg AUM formula you have is correct.  The revenue includes revenue that an FA is geeting off all lines of business.  Most FAs have clients with lines of credits, mortgages and etc trhough BofA and those generate revenue on top of wealth mngmt.  These numbers seem in line with what I've seen and heard, how are they different from what you've heard?

Aug 31, 2010 2:41 pm

I woudl also agree that these sem in line.  But keep in mind, averages can be misleading, since there are a lot of urban offices with 50 or 60 advisors, and many many of them are doing in the multi-millions.  There are not a lot of  "small" producers at Merrill.  And remember, many of the 500K-1mm producers got that way becasue of longevity and inheriting assets of departures and failed brokers.

I live in a small suburban town, and most of the wirehouse brokers are doing north of 850K, simply because they have been around for 25+ years and acquired lots and lots of assets.  Not too long ago, I spoke with a MSSB FA who was about 66.  He was thinking of leaving.  When I asked him about assets, etc., he said "I only have maybe 125mm AUM, and maybe 750K in production (I forget the exact number), so I'm not a huge producer, and if I leave, I probably only want to keep $75-85mm."

That puts it in perspective.

Aug 31, 2010 2:43 pm

Just curious, do those revenue numbers include all fees, such as account fees?  Not the IRA fees and stuff makes a huge difference, but with IRA fees, other account-level fees, along with credit lines, mortgages, etc, for someone with 500+ households, that could add 50-75K to your production (or more).

Aug 31, 2010 3:22 pm

Yes, they do include all those account fees...there are plenty of items that can legitimately be counted in the total revenue/advisor calculation that does not hit the grid.  I don't think we'll ever see an "average of grid-credited revenue per FA" published (from any firm).  That would explicitly acknowledge the margin/amount of revenue that each FA does NOT get paid on and people would start asking questions...

Aug 31, 2010 4:14 pm

Actually Cowboy, Jones publishes numbers that only include GDC.  We don't consider any fee/ancillary revenue as part of "FA Revenue".  However, it is considered when calculating our branch P&L.  It goes in as revenue for the office.

Aug 31, 2010 10:22 pm

[quote=B24]

Just curious, do those revenue numbers include all fees, such as account fees?  Not the IRA fees and stuff makes a huge difference, but with IRA fees, other account-level fees, along with credit lines, mortgages, etc, for someone with 500+ households, that could add 50-75K to your production (or more).

[/quote]

Exactly....ML includes revenue that other firms don't include including all acct fees, etc.

Aug 31, 2010 10:34 pm

average 3rd quintile has approx 290k in ytd a/o end july. 5 quintiles so average 3rd is the exact middle. This is all LOS not broken down by los quintiles.

Sep 4, 2010 9:59 pm

There is a massive difference between Revenue (they include almost everything including fees off of Blackrock funds) and Production Credit (what actually hits the grid, known as PC's).  From a December 2009 year-end meeting, I think the Northeast Merrill PC average was about $480,000.  I know several advisors whose Revenue is almost 50% higher than their PC's.  Pretty deceptive but I'm sure useful when Merrill is trying to recruit talent.

Sep 6, 2010 8:25 am

My Merrill Office

1.2mm,800m,800m,750m,750m,700m,600m,550m,500m,400m,300m,250m,200m,200m,200m,150m,150m,80m,60m,35m,20m

Average = 433k

Of course this is after they laid off half the office of 250k below producers last year, and half the office left for Morgan, UBS, or to pursue another career.  

I guess in order to keep the averages up you just keep getting rid fo the weak players.  If we kept all the producers and there were no accounts for producers to inherit I wonder what the averages would really look like.