Bank Brokerage Trends

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Jan 24, 2006 8:28 pm

Has anyone heard of bank programs migrating to higher end programs,
placing all smaller accounts (under $100K) into call centers
keeping/recruiting only fewer, larger producers?

Jan 24, 2006 8:40 pm

At our bank, everything under $50,000 is to be done by the platform (series 6 and insurance licensed folks), and we really strive to keep the referrals above $100,000.


ML has the same $50,000 threshold (try not to take accounts below that, although they can be held)...

Jan 25, 2006 12:04 am

Morgan Stanley did the same thing at the $50,000 level, but it's the broker's decision.  They also pay a lower payout on the accounts below that level and they pay nothing on accounts under $35,000.  They also increase fees for those under $20,000.

Jan 25, 2006 12:25 am
rightway:

Has anyone heard of bank programs migrating to

higher end programs,

placing all smaller accounts (under $100K) into call centers

keeping/recruiting only fewer, larger producers?







Yes.



You in IL or Michigan, by any chance???

Jan 25, 2006 12:48 am

stupid.


i'll take their small account and put it in a good asset-allocation fund and talk to them a couple of times a year.



then, when their 250k rollover comes in a few years later the rest of y'all won't hardly have a chance.....


stupid corporate decisions made at a level several steps removed from the front lines and reality...

Jan 25, 2006 1:04 am
Visigoth:
rightway:

Has anyone heard of bank programs migrating to

higher end programs,

placing all smaller accounts (under $100K) into call centers

keeping/recruiting only fewer, larger producers?







Yes.



You in IL or Michigan, by any chance???





No

Jan 25, 2006 1:18 am

No-  Let me qualify.  I am from out farther West. 
However I have a close friend who is Indy, and his main compeditor is a
reMidwest Regional bank.  That bank went this way, which prompted
my question.  

Jan 25, 2006 9:27 am
iconsult100:

Morgan Stanley did the same thing at the $50,000 level, but it's the broker's decision.  They also pay a lower payout on the accounts below that level and they pay nothing on accounts under $35,000.  They also increase fees for those under $20,000.


All true. They did also, however, make it very easy to lump these smaller accounts into households that make the aggregate account larger and undo all of the above restrictions.

Jan 25, 2006 9:30 am
joedabrkr:

stupid.

i'll take their small account and put it in a good asset-allocation fund and talk to them a couple of times a year.


then, when their 250k rollover comes in a few years later the rest of y'all won't hardly have a chance.....


stupid corporate decisions made at a level several steps removed from the front lines and reality...


Amen, brother Joe.  Sometimes it's not about the current balance in the account, but the potential of the relationship.  That makes 401(K) plans, SIMPLEs, etc. more attractive than some folks think.  When participants inherit, etc., their 401(K) rep will certainly be in line to get the $$$ if he/she has done a good job over the years taking care of plan participants.

Jan 25, 2006 10:02 am
Indyone:

[quote=joedabrkr]stupid.

i'll take their small account and put it in a good asset-allocation fund and talk to them a couple of times a year.


then, when their 250k rollover comes in a few years later the rest of y'all won't hardly have a chance.....


stupid corporate decisions made at a level several steps removed from the front lines and reality...


Amen, brother Joe.  Sometimes it's not about the current balance in the account, but the potential of the relationship.  That makes 401(K) plans, SIMPLEs, etc. more attractive than some folks think.  When participants inherit, etc., their 401(K) rep will certainly be in line to get the $$$ if he/she has done a good job over the years taking care of plan participants.


[/quote


Double Amen!  The company mentality is the same as a lot of Reps out there and that is get the money now!  Forget the long term.

Jan 25, 2006 11:00 am

Although Merrill wants accounts of no less than 100K, there is some leeway there. I opened an account for a client back east with a 60K rollover. My manager asked me about it. The guy is 63, been at a manufacturing firm for 28 years, and will have nearly 2M in his 401K and lump sum pension benefit to be managed in the next 18 months. All I need to do is privde superior service to him ( monthly calls), provide our client review services, prepare him for his transisiotj out of the workforce, and help manage his wealth. the client has already said that those monies are mine, and that his brother, who has been there about 20-21 years and is retiring, wants to meet with me the next time I am back in New York...


So it isnt as black and white as some may think....

Jan 25, 2006 6:26 pm

I left one of the firms mentioned during an earlier post. I now work with a company that uses common sense not policies, and people treat other people because they share a mutual respect for each other.  I called each and every one of those "Small" accounts, moved the assets here, provided a sensable asset allocation strategy and built relationships.  Funny how small clients become big clients once a relationship is "Qualified" not "Quantified". 


I think the Morgan's, Merrill's, and Smith Barney's figured out a great way to through out the "babies with the bath water".  God bless 'em!  I hope they never stop.

Jan 25, 2006 7:04 pm

Is it 10k at 30 or 10K at 60.  That is how I look at things.  I have a large book of young successful people who add 5-10K every year.  In addition every 5 -10 years they will have rollovers averaging 90K.


I also have alot of 100K + accounts, but I still have downtime so I see no reason to turn people away.

Feb 1, 2006 7:03 am
bankrep1:

Is it 10k at 30 or 10K at 60.  That is how I
look at things.  I have a large book of young successful people
who add 5-10K every year.  In addition every 5 -10 years they will
have rollovers averaging 90K.


I also have alot of 100K + accounts, but I still have downtime so I see no reason to turn people away.





True to an extent.  Your book has a time value, much like an
expiring Call option.  When you look at the time it will take to
reap the benefits of the smaller accounts it changes a bit. 



Especially when you factor in the risk:  A CLient opens up a
$10,000 account and adds $500 per month for a couple of years...the
market drops, the fund company gets in some trouble and the "client"
decides to write a scathing letter about... how you mis-directed them,
failed to return calls on 6 occasions, never explained the load being
charged on new deposits, and failed to properly react to concerns about
reducing risk "he just kept telling me its long term, and things should
bounce back".  Now you have an Arb issue and will probably get
fired.  Meanwhile, you very best clients will suffer because you
just got fired.  Just something to consider.

Feb 1, 2006 9:00 am
rightway:
bankrep1:

Is it 10k at 30 or 10K at 60.  That is how I look at things.  I have a large book of young successful people who add 5-10K every year.  In addition every 5 -10 years they will have rollovers averaging 90K.


I also have alot of 100K + accounts, but I still have downtime so I see no reason to turn people away.




True to an extent.  Your book has a time value, much like an expiring Call option.  When you look at the time it will take to reap the benefits of the smaller accounts it changes a bit. 

Especially when you factor in the risk:  A CLient opens up a $10,000 account and adds $500 per month for a couple of years...the market drops, the fund company gets in some trouble and the "client" decides to write a scathing letter about... how you mis-directed them, failed to return calls on 6 occasions, never explained the load being charged on new deposits, and failed to properly react to concerns about reducing risk "he just kept telling me its long term, and things should bounce back".  Now you have an Arb issue and will probably get fired.  Meanwhile, you very best clients will suffer because you just got fired.  Just something to consider.


Rightaway,


One thing about the bank, they cover their ars.  We have alot of disclosure.  It is going to be hard for anyone to argue they didn't understand when they initialed and signed in what seems like 20 places.


I will not work with pikers.  We always return calls, and if someone truly doesn't grasp risk I am not the one to introduce it to them, we'll start in a balanced type strategy and see how things go over time.

Feb 2, 2006 10:46 am
bankrep1:
rightway:
bankrep1:

Is it 10k at 30 or 10K at 60.  That is how I look at
things.  I have a large book of young successful people who add
5-10K every year.  In addition every 5 -10 years they will have
rollovers averaging 90K.


I also have alot of 100K + accounts, but I still have downtime so I see no reason to turn people away.



True to an extent.  Your book has a time value,
much like an expiring Call option.  When you look at the time it
will take to reap the benefits of the smaller accounts it changes a
bit. 

Especially when you factor in the risk:  A
CLient opens up a $10,000 account and adds $500 per month for a couple
of years...the market drops, the fund company gets in some trouble and
the "client" decides to write a scathing letter about... how you
mis-directed them, failed to return calls on 6 occasions, never
explained the load being charged on new deposits, and failed to
properly react to concerns about reducing risk "he just kept telling me
its long term, and things should bounce back".  Now you have an
Arb issue and will probably get fired.  Meanwhile, you very best
clients will suffer because you just got fired.  Just something to
consider.


Rightaway,


One thing about the bank, they cover their ars.  We have alot
of disclosure.  It is going to be hard for anyone to argue they
didn't understand when they initialed and signed in what seems like 20
places.


I will not work with pikers.  We always return calls, and if
someone truly doesn't grasp risk I am not the one to introduce it to
them, we'll start in a balanced type strategy and see how things go
over time.





I was a sales manager at my bank and was in several Arb sessions. 
We had the same disclosure documents for every little thing.  Time
and time again the argument of "I signed that, but he told me..."
won.  Bank lost, rep fined/fired. 



I have no doubt you return calls.  But the time you spend with
some of those calls can be better spent.  What is your hourly
rate?  A $50,000 account may produce $600 in annual revenue
(amortize if you sell A or B shares), at a 50% pay-out that is $300 in
my pocket.  This client will have 1 hours worth of phone calls and
at least 2 hours worth of review time.  That is 3 hours, which is
$100 per hour...far, far below what our hourly rate should be. 
Just food for thought.

Feb 2, 2006 8:05 pm

Like I said when I no longer have the time I will become more selective, I don't prospect I spend all my time meeting with clients or soon to be clients.  Works for me, my plan is when I have no time I will hire jr. he will see all the small accounts and refer everything bigger to me.  When he is to busy repeat.


Where is the flaw in this strategy.  I am truly not concerned with an arb case, knock on wood.