Banks, Wirehouses, Regionals

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Oct 3, 2006 10:10 am

I don't get it...what the heck do these firms do for you that causes you to want to pay them 60-70% of YOUR money?

Oct 3, 2006 10:38 am

As my GDC grows from my own hardwork (not bank referrals) I start to ask myself the same question.

Oct 3, 2006 11:15 am
Helter Skelter:

I don't get it...what the heck do these firms do for you that causes you to want to pay them 60-70% of YOUR money?


Ask the thousands of large producers throughout the industry who belong to those firms why they think it's worth the cost. It's a mistake to assume they haven't done the math and determined, that at least for now, it's worth it. (btw, nobody that I know of takes 70%, the range runs more like 64% to 56%)

Oct 3, 2006 11:57 am
mikebutler222:
Helter Skelter:

I don't get it...what the heck do these firms do for you that causes you to want to pay them 60-70% of YOUR money?


Ask the thousands of large producers throughout the industry who belong to those firms why they think it's worth the cost. It's a mistake to assume they haven't done the math and determined, that at least for now, it's worth it. (btw, nobody that I know of takes 70%, the range runs more like 64% to 56%)



You aren't what I had in mind when I posed the question.

Oct 3, 2006 1:03 pm

Obviously, we should consider the business end of the cut as payment for services received.  It's no different than life as an indy.  I give my B/D roughly 14% in override and ticket charges for providing a technology/product platform, clearing trades, printing statements, etc.  There are some services that banks, wirehouses and regionals provided (name recognition, referrals, operations management, etc.) that I did not use or value sufficiently for me to consider my employer's cut a good deal.


At the same time, I do several tasks that my employer used to do for me.  The money part of the decision to stay with an employer vs. go independent is as simple as asking yourself whether or not you feel that you are overpaying for the services your employer provides that an indy B/D won't.  Those that stay employed do so for as variety of reasons, but the money part of the decision was not the primary consideration in my choice.  I wanted my freedom...the extra money is just gravy and compensation for the management functions I take care of now.

Oct 3, 2006 1:20 pm
Helter Skelter:

I don't get it...what the heck do these firms do for you that causes you to want to pay them 60-70% of YOUR money?



You're too focused on percentages.   Who cares if your payout percentage is higher, when your total income is lower?

The average FA at a Wirehouse makes about $250K.  The average independent takes home a lot less than that.  Not all FAs who go indy see an increase in their take home.  I know some who made more by going indy, and some who did not.

Sure, you can probably take most of your book with you.  Probably.  But can you grow your book?  How well will you weather a bear market?  Will you see more growth as an indy than with a big name?  These are all big unknowns.

Whatever the reason, you can't deny that the majority of million dollar producers prefer working with a major firm.

If they are unhappy with their current firm, they just move to a better one.  These are smart people, and they are interested in building for the long-term.  Give them some credit. 


Oct 3, 2006 1:28 pm
Indyone:

At the same time, I do several tasks that my employer used to do for me.  The money part of the decision to stay with an employer vs. go independent is as simple as asking yourself whether or not you feel that you are overpaying for the services your employer provides that an indy B/D won't.  Those that stay employed do so for as variety of reasons, but the money part of the decision was not the primary consideration in my choice.  I wanted my freedom...the extra money is just gravy and compensation for the management functions I take care of now.



You make a good point about freedom.  A good number of the indy FAs that I know wanted the ability to hire others and build a firm (instead of just a practice).  It's almost as though they wanted to become a branch manager (only with more freedom).


Oct 3, 2006 8:36 pm

You can do that at a good wire.  We are allowed to build a team
with as many partners and employees as we want.  The firm is
limited as to what they will pay for 100%, but you can hire and create
comp for them based on goals you set up for them. 



As an example- If I am a producer doing 1.5 million at a 45% pay-out I
am making $675,000 pre bonus.  Now I want to grow but am at
capacity, so I hire a newbie and pay them $50,000 to handle all
accounts under $250k, but I keep all fees from these accounts. 
They get a bonus for each new account they bring in by putting those
accounts into a pool where they earn fee's on top of the $50K I am
paying them.  This free's up my time to spend more time with the
better clients and develop more real business.   



How much do I need to bring to pay for the $50k?  About $10
million in new business-just once (its fee based)  after that I am
in the black.  Thats a few clients plus a little market tailwind
easily done inside of a year.  Do this on a regular basis,
bringing people along the way and you have a nice business.  This
is how many of the real big teams (5 million plus in production) do
it.  I know people that we 1 million and change 7 years back that
are now 6 million plus under this model...it works.



All the while having 2-3 assistants paid for by the firm plus the tools
and resources.  Add in your corp stock growing like my employers
is (nearly doubling in 4 years) and you have a nice base to build some
wealth.  All the while providing a profound and noble service to
the public.  Not a bad gig.

Oct 3, 2006 9:21 pm
Helter Skelter:
mikebutler222:
Helter Skelter:

I don't get it...what the heck do these firms do for you that causes you to want to pay them 60-70% of YOUR money?


Ask the thousands of large producers throughout the industry who belong to those firms why they think it's worth the cost. It's a mistake to assume they haven't done the math and determined, that at least for now, it's worth it. (btw, nobody that I know of takes 70%, the range runs more like 64% to 56%)



You aren't what I had in mind when I posed the question.



Like it matters what's in your mind......

Oct 3, 2006 10:51 pm
JCadieux:
Helter Skelter:

I don't get it...what the heck do these firms do for you that causes you to want to pay them 60-70% of YOUR money?



You're too focused on percentages.   Who cares if your payout percentage is higher, when your total income is lower?


Nobody with any brains.

The average FA at a Wirehouse makes about $250K.  The average independent takes home a lot less than that.  Not all FAs who go indy see an increase in their take home.  I know some who made more by going indy, and some who did not.


I'm not average. I saw a marked increase in take home and in gross. I found that the more gross I get to keep, the more I do. Ironic.

Sure, you can probably take most of your book with you.  Probably.  But can you grow your book?  How well will you weather a bear market?  Will you see more growth as an indy than with a big name?  These are all big unknowns.


THese are not unknowns. My book is more than twice as large and it's EASY to take business from wirehouses. Real easy.

Whatever the reason, you can't deny that the majority of million dollar producers prefer working with a major firm.



Why the hell do you think I asked the question? What you see as million dollar producers I see as $400,000 earners.



If they are unhappy with their current firm, they just move to a better one.  These are smart people, and they are interested in building for the long-term.  Give them some credit. 


Yes, they are smart people. That's why I'm baffled.



Oct 4, 2006 12:15 pm
Helter Skelter:
JCadieux:



You're too focused on percentages.   Who cares if your payout percentage is higher, when your total income is lower?


    HS> Nobody with any brains.

The average FA at a Wirehouse makes about $250K.  The average     independent takes home a lot less than that.  Not all FAs who go indy see an increase in their take home.  I know some who made more by going indy, and some who did not.

    HS> I'm not average. I saw a marked increase in take home and in gross. I found that the more gross I get to keep, the more I do. Ironic.

        JC> I think that's my point.  Not everybody is the same. Some do better, and some do worse.  That's why not everybody goes indy.


Sure, you can probably take most of your book with you.  Probably.  But can you grow your book?  How well will you weather a bear market?  Will you see more growth as an indy than with a big name?  These are all big unknowns.


    HS> THese are not unknowns. My book is more than twice as large and it's EASY to take business from wirehouses. Real easy.

        JC> But you're not like everybody.  Not everybody is certain that they will do better before they jump.  And a certain percentage are wrong about it, and end up doing worse.

Whatever the reason, you can't deny that the majority of million dollar producers prefer working with a major firm.



    HS> Why the hell do you think I asked the question? What you see as million dollar producers I see as $400,000 earners.

        JC> Maybe they're focused on the next million.


If they are unhappy with their current firm, they just move to a better one.  These are smart people, and they are interested in building for the long-term.  Give them some credit. 


    HS> Yes, they are smart people. That's why I'm baffled.

         JC> I talk to candidates all the time about switching wirehouses, only to lose them to the indy channel.  Some of them have good reasons for going.  I really can't blame them.  Some of them don't seem to know what they're doing.  All of them understand that it's a big change with lots of hassles and risks.


Oct 4, 2006 12:52 pm

All of them understand that it's a big change with lots of hassles and risks


Isn't that the definition of life in general?

Oct 4, 2006 3:10 pm
babbling looney:

All of them understand that it's a big change with lots of hassles and risks


Isn't that the definition of life in general?



Good point.  I never disguise that there are also risks and hassles with moving between wirehouses.  They're just different from the risks and hassles of going indy.

I also remind people that there are risks and hassles with staying at their current firm and doing nothing.

It's all about the kinds of risks and hassles you prefer, and the potential rewards involved.




Oct 17, 2006 9:08 pm


























































Jeff Cadieux



The indys dont pay you so I can see why you are not that positive about them.





















Oct 17, 2006 9:49 pm

Let me see when I worked at the wirehouse I had 0 clients walk in the door and I had a 50% payout and a free office.



If I go indy I get a 90% payout with no one coming to see me but I have to pay rent and do the business owner tasks.



At the bank I get about a 40% payout, free office abd my calendar is pretty full without doing any prospecting. What exactly don't you get? while your looking for your next sale I am writing business all day long.



Oct 17, 2006 11:14 pm
bankrep1:



At the bank I get about a 40% payout, free office abd my calendar is pretty full without doing any prospecting. What exactly don't you get? while your looking for your next sale I am writing business all day long.


One $2k IRA at a time.....

Oct 17, 2006 11:18 pm

Mike, your information is dated...IRAs are $4K now.

Oct 17, 2006 11:46 pm
Indyone:

Mike, your information is dated...IRAs are $4K now.


That's the limit, that's not what the average bank customer contributes 

Oct 18, 2006 12:27 am
mikebutler222:
bankrep1:



At the bank I get about a 40% payout, free office abd my calendar is pretty full without doing any prospecting. What exactly don't you get? while your looking for your next sale I am writing business all day long.


One $2k IRA at a time.....




Oct 18, 2006 2:35 am
mikebutler222:
Indyone:

Mike, your information is dated...IRAs are $4K now.

That's the limit, that's not what the average bank customer contributes 


ouch...glad I'm out of the bank so I can escape your wrath...