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May 1, 2007 9:02 pm

[quote=mikebutler222][quote=Indyone]

If LPL can make money taking 10-20% off the top from a 100K producer, you know that banks and wirehouse managements are just plain greedy.

[/quote]

Well, they might still be "greedy", but the fact is LPL charges for things banks and wirehouses provide their people, doesn't provide others the rep is expected to carry out of their own pocket AND LPL doesn't (currently, but watch for it to change) carry the same business and regulatory exposure the banks and wirehouses carry for their brokers.

IOW, if LPL had the same expenditures and exposures banks and wirehouses have "10-20% off the top" wouldn't keep them in the black.

[/quote]

Mike it is true that we pay for some things that come free at a bank or wirehouse, but the difference doesn't even compare when you factor in the higher payout.
May 1, 2007 9:34 pm

Vin Deisel-Tru Dat

Joeda-Indy may be a good gig, but a decent bank program will put 1-2mill of prospects through your office a month. Leverage that with a wirehouse prospecting attitude and things can end up looking pretty good. I do think the future brings an even bigger squeeze to the (soon to be) sub 400k producer.

May 1, 2007 9:44 pm

[quote=badmove?]

Vin Deisel-Tru Dat

Joeda-Indy may be a good gig, but a decent bank program will put 1-2mill of prospects through your office a month. Leverage that with a wirehouse prospecting attitude and things can end up looking pretty good. I do think the future brings an even bigger squeeze to the (soon to be) sub 400k producer.

[/quote]

People with wirehouse prospecting attitudes don't end up in banks. Banks are for people with social worker prospecting attitudes.

May 1, 2007 9:53 pm

[quote=Bobby Hull][quote=badmove?]

Vin Deisel-Tru Dat

Joeda-Indy may be a good gig, but a decent bank program will put 1-2mill of prospects through your office a month. Leverage that with a wirehouse prospecting attitude and things can end up looking pretty good. I do think the future brings an even bigger squeeze to the (soon to be) sub 400k producer.

[/quote]

People with wirehouse prospecting attitudes don't end up in banks. Banks are for people with social worker prospecting attitudes.

[/quote]

bobby bobby bobby,

i do feel like a social worker in that i help people, but i just compensated significantly more

May 1, 2007 10:08 pm

[quote=Vin Diesel][quote=Bobby Hull][quote=badmove?]

Vin Deisel-Tru Dat

Joeda-Indy may be a good gig, but a decent bank program will put 1-2mill of prospects through your office a month. Leverage that with a wirehouse prospecting attitude and things can end up looking pretty good. I do think the future brings an even bigger squeeze to the (soon to be) sub 400k producer.

[/quote]

People with wirehouse prospecting attitudes don't end up in banks. Banks are for people with social worker prospecting attitudes.

[/quote]

bobby bobby bobby,

i do feel like a social worker in that i help people, but i just compensated significantly more

[/quote]

Yes. The difference between $24,000 and $36,000 is significant. 50% more.

May 1, 2007 10:32 pm

[quote=Bobby Hull][quote=Vin Diesel][quote=Bobby Hull][quote=badmove?]

Vin Deisel-Tru Dat

Joeda-Indy may be a good gig, but a decent bank program will put 1-2mill of prospects through your office a month. Leverage that with a wirehouse prospecting attitude and things can end up looking pretty good. I do think the future brings an even bigger squeeze to the (soon to be) sub 400k producer.

[/quote]

People with wirehouse prospecting attitudes don't end up in banks. Banks are for people with social worker prospecting attitudes.

[/quote]

bobby bobby bobby,

i do feel like a social worker in that i help people, but i just compensated significantly more

[/quote]

Yes. The difference between $24,000 and $36,000 is significant. 50% more.

[/quote]

Bobby, you're just bitter that bank reps do more biz than you. But hey, if making fun of people makes you feel better...knock yourself out.

May 2, 2007 12:36 am

If you've been in the biz 5 years and can't put up 350k, you deserve a 90% holdback or whatever it's going to take to make you realize you're in the wrong career.

May 2, 2007 12:53 am

[quote=joedabrkr] [quote=mikebutler222][quote=Indyone]

If LPL can make money taking 10-20% off the top from a 100K producer, you know that banks and wirehouse managements are just plain greedy.

[/quote]

Well, they might still be "greedy", but the fact is LPL charges for things banks and wirehouses provide their people, doesn't provide others the rep is expected to carry out of their own pocket AND LPL doesn't (currently, but watch for it to change) carry the same business and regulatory exposure the banks and wirehouses carry for their brokers.

IOW, if LPL had the same expenditures and exposures banks and wirehouses have "10-20% off the top" wouldn't keep them in the black.

[/quote]

Mike it is true that we pay for some things that come free at a bank or wirehouse, but the difference doesn't even compare when you factor in the higher payout.
[/quote]

I'm not talking about YOUR end of it, I'm talking about what LPL would have to take FROM you if they provided for you everything a bank or wirehouse provided for their people.

May 2, 2007 1:24 am

[quote=mikebutler222]

I'm not talking about YOUR end of it, I'm talking about what LPL would have to take FROM you if they provided for you everything a bank or wirehouse provided for their people.

[/quote]

It would still be less.

Think about it, there are three levels of expense

1) Operating Expense
2) Human Expense (i.e what the indy's provide for themselves)
3) B/D Profit margin.

For $100 of GDC, the argument is that

(OpEx + LPL Profit) + Self Paid HumEx << (OpEx + HumEx + MER Profit)

So far the annecdotal evidence from indy's is that even after paying your own HumEx, the total expenses are less than at a wirehouse.


May 2, 2007 1:25 am

"Bobby, you're just bitter that bank reps do more biz than you. But hey, if making fun of people makes you feel better...knock yourself out"

Most bank brokers are like the TD Ameritrade and Schwab guys. They can wear Brooks Brothers to work everyday with a nice pair of Allen Edmunds and a nice tie from Ferragamo. They can walk into their office, check their emails and a couple voicemails in the morning. They can put on their Plantronic earpiece and get to work. But at the end of the day- everybody knows that they really arent Brokers.

They just play pretend with the 50MM book that is given to them. Or with the live bodies that are schlepped into their office by the 19 year old teller who you promised an ice cream cone to for every referral that they give you.

Notice that I underlined "most" above, as I know of several decent bank brokers in the area. But most are hacks on their way out of the industry or on their way over to Scottrade...

May 2, 2007 3:44 am

[quote=AllREIT] It would still be less.

Think about it, there are three levels of expense

1) Operating Expense
2) Human Expense (i.e what the indy's provide for themselves)
3) B/D Profit margin.

For $100 of GDC, the argument is that

(OpEx + LPL Profit) + Self Paid HumEx << (OpEx + HumEx + MER Profit)

So far the annecdotal evidence from indy's is that even after paying your own HumEx, the total expenses are less than at a wirehouse.


[/quote]

Said "total expenses" don't seem to include any costs for regulatory and liability exposure. Trying employing 12,000 people and ignoring that cost. Furthermore, you're not duplicating the expenses faced by a bank or wirehouse for every rep they put in a desk, because, for among other things, you're not duplicating their office standard, support staff and advertising budget . How big is your compliance department? The reason Indies, themselves, can be profitable at much lower production levels than a bank or wirehouse is, among other reasons, the barebones nature of their average operation. I’m not passing judgment, simply pointing out that the Indy takes on, and thus takes off the balance sheet on the cost side, many duties the bank/wirehouse broker doesn’t face and combines roles the bank/wirehouse ITSELF doesn’t combine.

More importantly, you're changing the original question. Indy said “If LPL can make money taking 10-20% off the top from a 100K producer, you know that banks and wirehouse managements are just plain greedy.”.

All I pointed out was that while banks/wirehouses (actually, shareholders, and most reps there ARE shareholders too) may be greedy, LPL couldn’t “make money taking 10-20% off the top of a 100k producer” if LPL had to provide everything a bank or wirehouse provides their people. Somehow that got twisted into a question of TOTAL cost to operate an Indy shop.

May 2, 2007 3:58 am

[quote=mikebutler222][quote=joedabrkr] [quote=mikebutler222][quote=Indyone]

If LPL can make money taking 10-20% off the top from a 100K producer, you know that banks and wirehouse managements are just plain greedy.

[/quote]

Well, they might still be "greedy", but the fact is LPL charges for things banks and wirehouses provide their people, doesn't provide others the rep is expected to carry out of their own pocket AND LPL doesn't (currently, but watch for it to change) carry the same business and regulatory exposure the banks and wirehouses carry for their brokers.

IOW, if LPL had the same expenditures and exposures banks and wirehouses have "10-20% off the top" wouldn't keep them in the black.

[/quote]

Mike it is true that we pay for some things that come free at a bank or wirehouse, but the difference doesn't even compare when you factor in the higher payout.
[/quote]

I'm not talking about YOUR end of it, I'm talking about what LPL would have to take FROM you if they provided for you everything a bank or wirehouse provided for their people.

[/quote]

Fair enough.

I choose to believe that wirehouses and banks waste a lot of money between my 70-90% payout and your 35-45% payout.

I'm happy to keep the difference and provide for myself.

In the end Mike, there's more than one way to skin a cat.  You like your way, and I like my way.  And that's just fine by me.
May 2, 2007 4:05 am

[quote=badmove?]

Vin Deisel-Tru Dat

Joeda-Indy may be a good gig, but a decent bank program will put 1-2mill of prospects through your office a month. Leverage that with a wirehouse prospecting attitude and things can end up looking pretty good. I do think the future brings an even bigger squeeze to the (soon to be) sub 400k producer.

[/quote]

Good for you if you're happy with it!

At your payout you NEED 1-2 mil in new prospects to make a decent living.

How do you ever have the time to get to know any of your prospects or clients beyond a superficial level?
May 2, 2007 4:46 am

[quote=joedabrkr]

Fair enough.

I choose to believe that wirehouses and banks waste a lot of money between my 70-90% payout and your 35-45% payout.

I'm happy to keep the difference and provide for myself.

In the end Mike, there's more than one way to skin a cat.  You like your way, and I like my way.  And that's just fine by me.
[/quote]

Agreed, my comment about LPL making a profit off only 10-20% of a 100k producer's gross wasn't a slight of indies, it was to point out what LPL povides.

May 2, 2007 6:03 am

[quote=mikebutler222]

[quote=joedabrkr]

Fair enough.

I choose to believe that wirehouses and banks waste a lot of money between my 70-90% payout and your 35-45% payout.

I’m happy to keep the difference and provide for myself.

In the end Mike, there’s more than one way to skin a cat.  You like your way, and I like my way.  And that’s just fine by me.
[/quote]

Agreed, my comment about LPL making a profit off only 10-20% of a 100k producer's gross wasn't a slight of indies, it was to point out what LPL povides.

[/quote]

All true....and the real little producers are often a challenge for OSJ's who are trying to build a serious business or already HAVE a serious business.

I guess in some ways there are plenty of similarities....just slightly different numbers.
May 2, 2007 6:55 am

[quote=joedabrkr] [quote=mikebutler222][quote=joedabrkr] [quote=mikebutler222][quote=Indyone]

If LPL can make money taking 10-20% off the top from a 100K producer, you know that banks and wirehouse managements are just plain greedy.

[/quote]

Well, they might still be "greedy", but the fact is LPL charges for things banks and wirehouses provide their people, doesn't provide others the rep is expected to carry out of their own pocket AND LPL doesn't (currently, but watch for it to change) carry the same business and regulatory exposure the banks and wirehouses carry for their brokers.

IOW, if LPL had the same expenditures and exposures banks and wirehouses have "10-20% off the top" wouldn't keep them in the black.

[/quote]

Mike it is true that we pay for some things that come free at a bank or wirehouse, but the difference doesn't even compare when you factor in the higher payout.
[/quote]

I'm not talking about YOUR end of it, I'm talking about what LPL would have to take FROM you if they provided for you everything a bank or wirehouse provided for their people.

[/quote]

Fair enough.

I choose to believe that wirehouses and banks waste a lot of money between my 70-90% payout and your 35-45% payout.

I'm happy to keep the difference and provide for myself.

In the end Mike, there's more than one way to skin a cat.  You like your way, and I like my way.  And that's just fine by me.
[/quote]

...well, I didn't intend to start a cost structure debate.  I was speaking from my personal experience and some anecdotal information on waste in the wirehouse, i.e., the "Todd Majal" and the "money honey" controversy.  I saw up close some very stupid and wasteful decisions in the program I was in...we literally hired people to stand around with their hands in their pockets because of their supposed "connections".  People were hired to help and ended up only interfering with my productivity.

I'm not saying that LPL has no waste in their cost structure, but I feel like I have A LOT more control over wasteful spending than I did before, vs. having expenses just forced upon me.  When management did something stupid, it was up reps who ultimately paid with lower profitability bonuses, unrealistic production goals and creative new grids designed to squeeze us further.  I don't miss any of that.

May 2, 2007 7:27 am

[quote=mikebutler222]Said “total expenses” don’t seem to include any
costs for regulatory and liability exposure. Trying employing 12,000
people and ignoring that cost. Furthermore, you’re not duplicating the
expenses faced by a bank or wirehouse for every rep they put in a desk,
because, for among other things, you’re not duplicating their office
standard, support staff and advertising budget . [/quote]

You must be confusing me with someone who wants to pay for all of that.

[quote]How big is your compliance department? The reason Indies, themselves, can be profitable at much lower production levels than a bank or wirehouse is, among other reasons, the barebones nature of their average operation.[/quote]

Which means I can charge less and yet earn more.

Alternately I can spend money on where I think it is important. I.e my T&E expenses and dry cleaning bill. As I tell clients, the marble tiles and oakwood trim in the lobby don't help your investments.

[quote]More importantly, you're changing the original question. Indy said “If LPL can make money taking 10-20% off the top from a 100K producer, you know that banks and wirehouse managements are just plain greedy.”[/quote]

Not really, LPL works in a competative market. If an Indy doesn't like the price of the platform, he can switch. If an ML broker doesn't like it, he can't switch to another provider of the ML experience.

[QUOTE]Somehow that got twisted into a question of TOTAL cost to operate an Indy shop.[/quote]

Which after you include platform fee's and imputed expenses is still cheaper than working at a wirehouse.

May 2, 2007 7:28 am

[quote=joedabrkr]

How do you ever have the time to get to know any of your prospects or clients beyond a superficial level?
[/quote]



After you sell them an annuity and get your check; who cares?

May 2, 2007 12:01 pm

[quote=mikebutler222]

[quote=joedabrkr]

Fair enough.

I choose to believe that wirehouses and banks waste a lot of money between my 70-90% payout and your 35-45% payout.

I'm happy to keep the difference and provide for myself.

In the end Mike, there's more than one way to skin a cat.  You like your way, and I like my way.  And that's just fine by me.
[/quote]

Agreed, my comment about LPL making a profit off only 10-20% of a 100k producer's gross wasn't a slight of indies, it was to point out what LPL povides.

[/quote]

Mike, your harping on provisions is laughable. What do we need that is so expensive? I need a phone and an office. All other costs are variable, driven by revenues.

May 2, 2007 12:31 pm

[quote=AllREIT][quote=mikebutler222]Said "total expenses" don't seem to include any costs for regulatory and liability exposure. Trying employing 12,000 people and ignoring that cost. Furthermore, you're not duplicating the expenses faced by a bank or wirehouse for every rep they put in a desk, because, for among other things, you're not duplicating their office standard, support staff and advertising budget . [/quote]

You must be confusing me with someone who wants to pay for all of that.

[/quote]

No, I didn't have you confused with anyone, I simply assumed you knew you were not making an apples to apples comparison of costs.

[quote=AllREIT][quote=mikebutler222]How big is your compliance department? The reason Indies, themselves, can be profitable at much lower production levels than a bank or wirehouse is, among other reasons, the barebones nature of their average operation.[/quote]

Which means I can charge less and yet earn more. [/quote]

You seem to think my original comment was about you and what you can charge and still be profitable. It wasn’t. It was about what LPL needs to charge YOU to be profitable.

[quote=AllREIT][quote=mikebutler222]More importantly, you're changing the original question. Indy said “If LPL can make money taking 10-20% off the top from a 100K producer, you know that banks and wirehouse managements are just plain greedy.”[/quote]

Not really, LPL works in a competative market. If an Indy doesn't like the price of the platform, he can switch. If an ML broker doesn't like it, he can't switch to another provider of the ML experience. [/quote]

Not only are you wrong about the ML broker (they move to other providers of the wirehouse experience all the time), you’re confused about the original question. It had to do with profitability of LPL (and simply as a proxy for all firms that provide Indies with back office operations) versus that of banks and wires.

It doesn’t mean much of anything that LPL can stay in the black taking only 10-20% of the gross of a $100k producer while banks/wires can’t, because even if you remove what YOU consider excess (class A versus class C office space, no national advertising budget, no regulatory or legal exposure carried by LPL) LPL doesn’t even provide things NO ONE would rationally consider excess, like ANY form of office space. It's not shocking they can be profitable working with lower producers and charging far less, they don't provide a great deal or have the exposure banks/wires do.

[quote=AllREIT][quote=mikebutler222]Somehow that got twisted into a question of TOTAL cost to operate an Indy shop.[/quote]

Which after you include platform fee's and imputed expenses is still cheaper than working at a wirehouse.

[/quote]

Again you’re in left field, I was NEVER commenting about how cheap or not it is to work at a bank/wire versus an Indy platform. The POINT was the production percentage LPL must take and how small a producer they can keep to be profitable given the fact that they do not provide many of the BASIC elements of running the office and leave THAT expense to you. I have no idea how that basic, indisputable fact keeps being twisted to question about what the Indy brokers THEMSELVES have to charge or produce to be profitable.