Bait and switch?

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Oct 26, 2006 7:41 pm

I work at Smith Barney and got cold called last week by a recruiter who said that Morgan Stanley is paying upfront "well in excess of 2X trailing 12."  This statement got me to a meeting with the local branch manager from Morgan Stanley who denied that the deals were even close to that rich.  What is the going rate?

Oct 26, 2006 7:52 pm

3 X Trailing 12.

Oct 26, 2006 9:38 pm

Eleventykabillion X Trailing 12.*



*Eleventykabillion is the registered trademark of Joedabroker



Oct 27, 2006 12:38 am

1-2x is quite common, depending on assets,production,  fee v. transactional, CRUD report, LOS etc. MS is paying as much, if not more than the other wirehouses rt now. 

Oct 27, 2006 9:16 am

If you are a not a compliance nightmare, have a strong fee-based practice and are producing in excess of $750k, geographical location, etc., then the deals could approach those levels, but these amounts are not all up-front.  MS is paying, on average, the largest deals on the street.


A big portion will be up-front, but you will also have benchmarks to hit years two, three, four, etc.  These will bring that amount up to 200%, if all of the above are met; however, these instances are rare. 


I've heard recruiters saying many untrue statements to try to throw $#it to the wall. 

Oct 27, 2006 9:45 am
mikebutler222:

Eleventykabillion X Trailing 12.*



*Eleventykabillion is the registered trademark of Joedabroker






Oct 27, 2006 11:39 am

With all the moving parts of a deal noone knows how much you're worth until you put yourself out there. If you're serious about moving, either contact a recruiter, Jeff comes to mind, or interview at several different firms. Most of the offers will be in the same ballpark. Yet, local or regional needs could put one offer well above others. Usually not a good idea to jump at the highest number. Best fit with the local BOM followed by fit with the firm are the biggest concerns.


The problems with moving, if you've never done it are:


1. The grass is never greener at the office across the street.


2. That manager you really like gets fired for sexual misconduct with a trainee. Who Knew?


3. The tax man cometh. And he keeps cometh-ing for the length of your deal. This is a problem for some if not most. Take the taxes on let's say $500k, that's easily $150k. Over five years that's $30k a year, or $2500 out of every paycheck for five years. Longer deals will lower that number, but it still a cash flow planning issue.


4. Mercedes depriciate. A time honored tradition for recently moved FAs is a trip to the car dealer. Porsches ,Escalades, BMWs, Benzes, Lotus, Jaguar, and Aston Martins adorn the parking lots of many brokerage offices. At least they do mine. I counted 8 BMWs from our office alone. 3 sevens, 4 fives, and one M3. These cars may not lose value on a percentage basis faster than a Chevy, but basic math tells us that after 2 years 35% of $90,000 is a much bigger number than 45% of $20,000.


Point is, make sure you want to move because the money spends and the taxes stay.


Oct 27, 2006 11:59 am
BondGuy:

With all the moving parts of a deal noone knows how much you're worth until you put yourself out there. If you're serious about moving, either contact a recruiter, Jeff comes to mind, or interview at several different firms. Most of the offers will be in the same ballpark. Yet, local or regional needs could put one offer well above others. Usually not a good idea to jump at the highest number. Best fit with the local BOM followed by fit with the firm are the biggest concerns.


The problems with moving, if you've never done it are:


1. The grass is never greener at the office across the street.


2. That manager you really like gets fired for sexual misconduct with a trainee. Who Knew?


3. The tax man cometh. And he keeps cometh-ing for the length of your deal. This is a problem for some if not most. Take the taxes on let's say $500k, that's easily $150k. Over five years that's $30k a year, or $2500 out of every paycheck for five years. Longer deals will lower that number, but it still a cash flow planning issue.


4. Mercedes depriciate. A time honored tradition for recently moved FAs is a trip to the car dealer. Porsches ,Escalades, BMWs, Benzes, Lotus, Jaguar, and Aston Martins adorn the parking lots of many brokerage offices. At least they do mine. I counted 8 BMWs from our office alone. 3 sevens, 4 fives, and one M3. These cars may not lose value on a percentage basis faster than a Chevy, but basic math tells us that after 2 years 35% of $90,000 is a much bigger number than 45% of $20,000.


Point is, make sure you want to move because the money spends and the taxes stay.




So that would suggest the true value would be in perhaps a 2 year old M5 or S55?

Oct 27, 2006 12:58 pm
BondGuy:

If you're serious about moving, either contact a recruiter, Jeff comes to mind, or interview at several different firms.





Thanks for the plug, BG.  Your check is in the mail.


LEX-

Recruiters like the one who burned you are, unfortunately, all too common.  I hope you told the BOM about the bait and switch tactics. Recruiters who waste a BOM's time do not last long.

Up front deals are in the 100%-200% range these days.  Firms are paying premiums for long tenures and fee based books. 

It's not easy to get a 200% offer no matter how large the book.  They're looking for quality AND quantity.  However, the typical deal size is higher than ever.

They are also aggressively pursuing high-growth practices by putting together revenue deals with strong multipliers on their back end bonuses.  This is the easiest way to reach 200%.

So, you may only qualify for a marginal up-front deal, but reach 200%  total when you grow your book over the next three years thanks to a strong bonus multiplier.

There are a number of different factors driving up prices.  Some of
them are only temporary, so it's difficult to tell how long these
conditions will last.





Oct 27, 2006 2:22 pm
joedabrkr:


So that would suggest the true value would be in perhaps a 2 year old M5 or S55?



Only if you lack the good sense and taste to buy the obviously superior car, a Porsche. 

Oct 27, 2006 2:38 pm
mikebutler222:
joedabrkr:


So that would suggest the true value would be in perhaps a 2 year old M5 or S55?



Only if you lack the good sense and taste to buy the obviously superior car, a Porsche. 



Yes but it's not as easy to fit two kids in the back of the 911......

Oct 27, 2006 2:42 pm

JoeDaMan- thats why you get the Range to lug the kiddies around in...

Oct 27, 2006 3:33 pm
joedabrkr:
mikebutler222:
joedabrkr:


So that would suggest the true value would be in perhaps a 2 year old M5 or S55?



Only if you lack the good sense and taste to buy the obviously superior car, a Porsche. 




Yes but it's not as easy to fit two kids in the back of the 911......


Depends on their size. Once they reach 6' you may have to get a Cayenne in addition to the 911 

Oct 27, 2006 4:03 pm
joedabrkr:
mikebutler222:
joedabrkr:


So that would suggest the true value would be in perhaps a 2 year old M5 or S55?



Only if you lack the good sense and taste to buy the obviously superior car, a Porsche. 



Yes but it's not as easy to fit two kids in the back of the 911......



Most kids these days don't get enough exercise.  Let them run along side the car.

Oct 27, 2006 7:17 pm

mktsystms:

Most kids these days don't get enough exercise.  Let them run along side the car.


-----------------------------------------


     That would make a great Nike commercial!

Oct 27, 2006 7:24 pm
joedabrkr:
BondGuy:

With all the moving parts of a deal noone knows how much you're worth until you put yourself out there. If you're serious about moving, either contact a recruiter, Jeff comes to mind, or interview at several different firms. Most of the offers will be in the same ballpark. Yet, local or regional needs could put one offer well above others. Usually not a good idea to jump at the highest number. Best fit with the local BOM followed by fit with the firm are the biggest concerns.


The problems with moving, if you've never done it are:


1. The grass is never greener at the office across the street.


2. That manager you really like gets fired for sexual misconduct with a trainee. Who Knew?


3. The tax man cometh. And he keeps cometh-ing for the length of your deal. This is a problem for some if not most. Take the taxes on let's say $500k, that's easily $150k. Over five years that's $30k a year, or $2500 out of every paycheck for five years. Longer deals will lower that number, but it still a cash flow planning issue.


4. Mercedes depriciate. A time honored tradition for recently moved FAs is a trip to the car dealer. Porsches ,Escalades, BMWs, Benzes, Lotus, Jaguar, and Aston Martins adorn the parking lots of many brokerage offices. At least they do mine. I counted 8 BMWs from our office alone. 3 sevens, 4 fives, and one M3. These cars may not lose value on a percentage basis faster than a Chevy, but basic math tells us that after 2 years 35% of $90,000 is a much bigger number than 45% of $20,000.


Point is, make sure you want to move because the money spends and the taxes stay.





So that would suggest the true value would be in perhaps a 2 year old M5 or S55?


Absolutely a better way to go! Even better, buy a new BMW motorcycle and an off lease 5 series. If it's the need for speed you crave, a K1200RS will bring tears to your eyes. Literally, your eyes will tear from the speed. Off the line it makes an M5 look like a K car. Think refined GSXR. If crotch rocket isn't your bag, go with the couch rocket K1200LT. It's a Honda Goldwing without the fat butt. From the heated seats to the the six CD changer this Luxo barge will still take anything starting with M to the mat. Fun, fast ,and comfy. Not to mention 50 MPG. Either of these bikes can be had for under $20K. Match that up with a 3 year old 530I for about $25K and you've got two for the price of one.


Then again, the new Shelby? Hmmm... got rent me one of those.


Oct 27, 2006 7:27 pm
BondGuy:

Absolutely a better way to go! Even better, buy a new BMW motorcycle and ...



And become an organ donor? 

Oct 27, 2006 8:04 pm
mikebutler222:
BondGuy:

Absolutely a better way to go! Even better, buy a new BMW motorcycle and ...



And become an organ donor? 



I think what you meant to say was  become a motor donor. That's the term used in ERs. We hear that  a lot.


If you want fun, and can handle the risk, nothing beats a bike.


Misspoke in a previous post. The fastest BMW K bike is the K1200S. Somewhere along the line they dropped the R designation.


Zero to sixty in 2.8 seconds for under $20K. Bring extra underwear.

Oct 27, 2006 9:11 pm
BondGuy:
mikebutler222:
BondGuy:

Absolutely a better way to go! Even better, buy a new BMW motorcycle and ...



And become an organ donor? 



I think what you meant to say was  become a motor donor. That's the term used in ERs. We hear that  a lot.


If you want fun, and can handle the risk, nothing beats a bike.


Misspoke in a previous post. The fastest BMW K bike is the K1200S. Somewhere along the line they dropped the R designation.


Zero to sixty in 2.8 seconds for under $20K. Bring extra underwear.



I thought the oft-used term was "donorcycle."

Oct 27, 2006 10:43 pm
BondGuy:
mikebutler222:
BondGuy:

Absolutely a better way to go! Even better, buy a new BMW motorcycle and ...



And become an organ donor? 



I think what you meant to say was  become a motor donor. That's the term used in ERs. We hear that  a lot.



Uh, I'll try that on my ER MD golf buddy tomorrow. He's the who told the the organ donor line. Pretty funny.