Bank or Independent?

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Dec 2, 2006 10:52 am

I have been stuggling with the decision to go with a bank (I have an offer) or go independent (I have an offer).


I was at a wirehouse for 8 yrs but hated the culture.  My book (38 mil) was mainly "middle America" clients, although I had a handful of mil+ clients.


My main problem at the wirehouse was prospecting.  At 25% payout (yes, I was not a big producer), I could not afford to do much marketing.  My business came mainly from referrals (I had very strong client relationships) and from networking.


I left the wirehouse about 8 months ago to pursue another opportunity, which turned out to be not what it was portrayed as.  I realized after I left, that I missed the business, and it was the environment I was in, not the business that I disliked.


In looking to get back into the business, I've had an offer from a small firm in town (2 brokers) who use Royal Alliance as their B/D.  It's the ideal way (for me) to consider going independent - I would have an established office, right in the center of town, colleagues to cover for me, no start-up - phone, computer, utilities, rent, E&E, compliance supervision, all covered for a 60% payout at the lowest grid.  My fear is that I could not bring back enough clients to make a go of it.


I looked at banks knowing that prospecting is not my strong suit.  The bank has a good reputation, a decent deposit base, and they offered me a fair deal.  I know that I will be in culture shock (I've been warned), but I will have a life outside of work, and may have a chance at building a decent business this way.  My fear is that it will all feel too "Mickey Mouse" to me (as my friend said to me "banks WANT to be in the business, Royal Alliance IS in the business), and I will be stuck with hundreds of "nervous nellie" clients.  However, I know people that make a decent living this way, and have convinced their bank to use a good b/d such as RJ.


Independence is the Holy Grail, but how hard would it be for someone in my situation?  I was able to build my business by myself, cold calling for 5 years, then networking, but I am not sure at this point in my life I want to start all over.  I talked to a few friends who are clients, and even they didn't know if they would be inclined to follow me - not because the thought I wouldn't do right by them, but because I already HAD (they are in good stuff) and they are comfortable where they are.  I thought if THEY won't come, what chance might I have to get the rest after this long.


Thoughts?





Dec 2, 2006 11:46 am

Given what you've stated above, I might be more inclined to go with the bank first, then go indy with the 2 other brokers, in a few years or so.


Good luck! 

Dec 2, 2006 12:29 pm

If you're an employee type, go to the bank. If you're an entrepreneur, go indy.


Good luck at the bank.

Dec 2, 2006 1:52 pm

I talked to a few friends who are clients, and even they didn't know if they would be inclined to follow me - not because the thought I wouldn't do right by them, but because I already HAD (they are in good stuff) and they are comfortable where they are.  I thought if THEY won't come, what chance might I have to get the rest after this long.


Sounds like they are not afraid that you will do wrong by them, sounds like they think you already did bad by them. Abandoning them at the wirehouse when you got out of the business.


Thomas Wolfe wrote a book a long time ago by name of You Can't Go Home Again. I'm afraid that's where you now live. You were here and then you left, you can never step into that same river again (as they say).


While on the one hand it is very likely that the clients you left behind are being underserved at your previous firm, they'll be (or should be if they have any brains) trepidatious about following you anywhere but especially to an unknown firm and especially especially to your own office (when I opened my own office one of the major spoken and unspoken fears was, "what if something happens to you?").


I'd suggest that you look into the Jones paradigm (I'm not a fan but I don't hate them) it sounds like your history is right up their alley and if you grow a good new business there (more of your old clients could be convinced to join you at a Ed Jones office IMO) in x years you will have a better jumping off place for the Independent model. But expect to be creating a whole new book made up of people who don't know you.


Mr. A  

Dec 2, 2006 3:04 pm

A lot of this depends upon how financially stable you are.  If you need a nice check every two weeks to pay the bills, you are not ready for independence.  Your friends' words speak volumes to me...rebuilding your business after an eight month absence will take time...can you live on your savings while you wait for that payday?  I went six weeks without a paycheck and six months until I started netting close to what I left.  At close to a year and a half after leaving, I'm netting about 20% more than I ever did at the bank on about 2/3rds the production.  With an eight month sabbattical, I would guess that it will take you longer to hit these metrics than it did for me, since I was up and running 24 hours after I left the bank.

Dec 2, 2006 4:02 pm

I do need a paycheck to pay the bills, and I do have enough to live on for a year, but only if I liquidate my 401(k).  I was hoping not to do that given the 10% fee and taxes.


If I had a bigger book, or a better sense of who might, come, I'd jump at the Indy offer.


Given my financial situation, however, it may make sense to do the bank.

Dec 2, 2006 4:20 pm

I think you're right...liquidating your 401(K) would be a bad thing and the bank deal sounds like the safer bet for you. Just work with an attorney to try and get the best deal you can, especially with contract restrictions.  If the day comes that you want to make a move to independence, the attorney's fees will be money well spent.


Meanwhile, work on building a business that you're proud of and when the day comes that you feel ready to make the jump to independence, read Robert Fragasso's book cover to cover and take your time making the transition.

Dec 2, 2006 6:54 pm
newrookie:

I do need a paycheck to pay the bills, and I do have enough to live on for a year, but only if I liquidate my 401(k).  I was hoping not to do that given the 10% fee and taxes.


If I had a bigger book, or a better sense of who might, come, I'd jump at the Indy offer.


Given my financial situation, however, it may make sense to do the bank.




Why do you want to be in this business? You don't strike me as someone who can do well, so why bother? Why don't you go do something that you'll actually work at?


If you believed in yourself, you'd liquidate and not look back. If you can't throw yourself into this with NO reservation, you won't make it.

Dec 2, 2006 8:42 pm

For myself, I don't think he should go to the bank either. Why? Hehas a history of getting bored and jumping when things aren't the way he thought they would be.


I never worked in a bank but two  buddies of mine tried it. They were not happy soon into the deal. Further, I don't know that his old wirehouse clients are going to be as willing to change banks AND brokerages (which they'll feel they're obligated to do even if they aren't.) As I have said to others as well, people look at you as probably gone from the first moment they meet you in the bank. All real banks have revolving doors.


Upside being that there are always new tellers to have crushes on!


"I got a crush on the nw teller, she looks at me, and she knows!"


Mr. A

Dec 2, 2006 9:06 pm

New Rook, you mihgt consider EDJ. I think it would be an easier

jumping-off point than from a bank. I've never done it, but it's seems to

make sense.

Dec 2, 2006 11:00 pm

I don't want to be the bad guy, but if prospecting isn't thing, then maybe a career in the brokerage business isn't your thing.  You weren't terribly successful the first go around and now you are thinking of starting over? Maybe you could look into a management program at the bank.

Dec 3, 2006 12:30 am
Lex123:

I don't want to be the bad guy, but if prospecting isn't thing, then maybe a career in the brokerage business isn't your thing.  You weren't terribly successful the first go around and now you are thinking of starting over? Maybe you could look into a management program at the bank.



I think he should look into the teller training program...

Dec 3, 2006 12:35 am