FINET Annuity changes makes mockery of the term "independent."

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Mar 24, 2011 7:08 pm

"Simplifying Independence."  It is amazing that FINET has the audacity to use that slogan, as if it is really an independent firm.  Nothing illustrates the point more fully than the stunt that Wells Fargo pulled this week when they eliminated "L" share annuities.  Every annuity vendor on the street offers "L" share annuities, and Wells Fargo decides that it doesn't like "L" shares, so it is not going to offer them anymore.  In place of the "L" share annuity, they have strong-armed the annuity vendors to build a "B" share only, with an option for the client to choose a 4 year surrender charge schedule.  The only problem is that the 4 year surrender charge option on the "B" share does not pay the same comp as the "L" share.  Instead of 3 upfront and 1 trail, the short surrender "B" share pays 3 upfront and a 75 basis point trail (or 2 upfront and a 1% trail).  Let me make this clear-- Wells solicited this change!  "L" shares are still offered by each and every vendor that has a selling agreement with Wells, but they can no longer offer an "L" share at Wells.  Now, as irritating as it may be for those working in the PCG channel or the bank channel, this kind of thing is expected in those channels because, of course, the firm feels it owns the client.  But at FINET?  This is supposed to be an independent shop.  The advisor owns the client!  The client and advisor make the decisions!  And if "L" shares are available in the market, FINET advisors want access to "L" shares.  There was one of those cowardly conference calls today; you know, the kind that has you email your questions in advance so there is no open mike.  This product guy was yakking about how wonderful it is that the client gets a reduction in fees.  He kind of glossed over the fact that the reduction in fees was funded by a 25% reduction in trail payments.  25%!!  Where do they get off?? I am not out here trying to be Charlie Schwabb or Ameritrade!  My clients are not doing business at a discount broker.  The trails on annuities are the equivalent of "advisory fees" to annuity producers, and, the last time I looked, a 1.00% advisory fee is at the low end of the range for advisory fees.   Why doesn't FINET management have our backs on this?  If FINET continues to go down the path of just being another distribution channel of Wells Fargo, then we all should leave for real independent firms.  Simplifying Independence?  For who? I'd love to hear some feedback from other FINET "owners." 

Mar 24, 2011 8:44 pm

Edward Jones is doing the same thing.  Calling it an O share.  The industry is moving in this direction, I think.

BTW: Did FINET ban paragraphs?

Mar 24, 2011 10:16 pm

You realize that your entire rant centers around your payout, don't you?

Mar 24, 2011 10:17 pm

You realize that your entire rant centers around your payout, don't you?

Mar 24, 2011 10:18 pm

How many other "independent" firms or channels are cutting the L share gross commish by a third? none I would venture to say. That jackoff on the conf call today had the nerve to say that the firm was not taking any haircut at all from the annuity companies,  The only haircut is coming to the advisors gross... "Let me repeat myself" as that douche kept saying.  The commission is being reduced in the interest of best practices to add long term value and transparency to the client. This place is practically becoming a den of thieves from the top down.  I guess we are learning what it is like to work for the "Evil Bank"...

Yes your rant does center around our payout...Right on....It fits the topic line of the thread unlike most of the other B.S. that occurs around this site...

Mar 25, 2011 7:07 pm

RJ did something similar years ago.  Are they true indy then?? 

Mar 26, 2011 10:06 pm

2 years ago we were getting the 4% upfront and 1% trail starting in month 13.  Sure we can make a living off of B share payouts and the 2/1 but that is not the point. The real point here is that this is simply another area where they are cutting what we get to our gross.  We have already been cut in other areas recently...WTF does it end?  Probably not till we are working for a flat salary of 50-60k a year and they have eliminated the word "commission".  Shame on the brokers here that are slamming their clients into anything with longer than a 7 year CDSC, i.e. EIA's...  They are the ones giving everone a bad name in this profession because their compliance babysitting is lacking...Hopefully some regulation comes soon for these little pieces of sh*t...

Mar 27, 2011 12:56 pm

Let me clarify a couple of things about my original post.  First of all, it is absolutely about comp.  Secondly, it is about the audacity of Wells to limit the choices of an independent advisor in the marketplace.   Regardless of your opinion of "L" shares, they are widely available in the mainstream of the marketplace.  Why anyone in the independent channel would be comfortable with a unilateral, arbitrary elimination of the availability of mainstream product is beyond me, especially when it diminishes compensation.  We in the independent channel have a massively different business that those working in the traditional channels.   In effect, we own and run "boutiques," and we should not be affected by the marketing decisions of a big box retailer.  There should be clear separation of management and management decisions between the traditional channels and FINET.  But, alas, there isn't, and it is getting clearer and clearer everyday that decisions that affect our businesses are being made based on the strategies of channels that have nothing to do with us.  Had I known that when I came here from a non-Wells traditional brokerage, I would not have come.  Now, it appears inevitable that I will flip the shingle shortly. because this type of thing is no doubt going to just continue unabated.

And by the way, this is not a "piker" business as one respondant so elequently suggested as he suffered through a bout of incontinence as he ate his breakfast.  I have approximately $77MM in assets under management.  "Making a living" is not a concern.  Clearing with a firm that is truly built for an independent producer is.

Mar 27, 2011 7:46 pm

I am with Wells PCG and I don't have a problem with what they did.  They are making the product more client friendly and for that the FA gives up 1% to give the client a lower expense over the life of the contract.  If you want the 4 year surr period, you can still do it, but the clients expenses drop after year 4.  Most people claim that they did the L share for the 1% trail anyway and you can still do it with 2% upfront.  I agree with Ice on this one.

Mar 28, 2011 1:23 pm

[quote=Longtimeplayer]

Let me clarify a couple of things about my original post.  First of all, it is absolutely about comp.  Secondly, it is about the audacity of Wells to limit the choices of an independent advisor in the marketplace.   Regardless of your opinion of "L" shares, they are widely available in the mainstream of the marketplace.  Why anyone in the independent channel would be comfortable with a unilateral, arbitrary elimination of the availability of mainstream product is beyond me, especially when it diminishes compensation.  We in the independent channel have a massively different business that those working in the traditional channels.   In effect, we own and run "boutiques," and we should not be affected by the marketing decisions of a big box retailer.  There should be clear separation of management and management decisions between the traditional channels and FINET.  But, alas, there isn't, and it is getting clearer and clearer everyday that decisions that affect our businesses are being made based on the strategies of channels that have nothing to do with us.  Had I known that when I came here from a non-Wells traditional brokerage, I would not have come.  Now, it appears inevitable that I will flip the shingle shortly. because this type of thing is no doubt going to just continue unabated.

And by the way, this is not a "piker" business as one respondant so elequently suggested as he suffered through a bout of incontinence as he ate his breakfast.  I have approximately $77MM in assets under management.  "Making a living" is not a concern.  Clearing with a firm that is truly built for an independent producer is.

LPL - LPL - LPL - LPL!!! 

Longtimeplayer, you're 100% Correct!!!

No Haircuts, No Unnecessary  Incompetent Management, No Restrictions on Business (Except only 2X in the ETF's), None of these Pikers you have to deal with in other channels!!

Just you, your clients and a friendly, responsive Broker Dealer that knows they work for you and not the other way around!! 

PS, You pikers who bend over for a reduction in payout deserve what  BIG BANK DECIDES YOU RECEIVE!!

Independence is Just that, not  taking what THEY decide to give you, it's doing what you decide is best for your clients and your business, otherwise just stay in a Bank or a Wirehouse where they own you and your book and where you should expect to get  Screwed.

Mar 28, 2011 7:26 pm

Clients decide what commissions to pay, not the b/d. - or guys on here with self righteous attitudes. I wonder how many of these same saints are slamming people into C shares at 1% a year only to touch them once a year.  By your same SAINTLY logic wouldn't A shares be better?  What if your b/d got rid of C shares ... would you be pissed?

If you want to charge 1% on everything I think you should be a RIA.  We are registered reps so IMO it's about doing what is right for our clients and making a nice living.

Mar 28, 2011 8:53 pm

[quote=I am legend]

I am with Wells PCG and I don't have a problem with what they did.  They are making the product more client friendly and for that the FA gives up 1% to give the client a lower expense over the life of the contract.  If you want the 4 year surr period, you can still do it, but the clients expenses drop after year 4.  Most people claim that they did the L share for the 1% trail anyway and you can still do it with 2% upfront.  I agree with Ice on this one.

[/quote]Guess what else will drop after year 4...Let me help you. Your trail.  They can't lower the expenses without lowering what they pay you. They just haven't made that announcement on trail cuts yet.

Kinda wierd you don't have a problem with this most recent case of incest.  Every broker I have spoken with about it is furious.  I am talking some heavy hitting top ten producers in the region, not your everyday guys that are just doing the L's to make a living as some would like to assume.  Most are AGE guys that are simply sick of being cut on every corner of every dollar they make for the firm since the merger.  Most of the Wach guys seem to be O.K. with being sodomized since they have to be quite used to it by now.

One more little thought just to make you like the firm even more...If the CDSC on the "L" or new 4 year "B" is 7,7,6,6  what do you suppose the firm is being paid first before they give you the 2% gross?   

Judging by some of these posts it would seem there are are a few guys here that inherited their biz and didn't start from the ground up the old fashioned way. 

Mar 28, 2011 9:02 pm

You are correct that there is a 7% payout on B shares, but that payout has zero trail I think and we aren't able to choose anything w/ zero trial.  You can take 6% with a small trial.  I have a little bit of a problem with it, but at the same time I thought it wasn't good for the client to pay the higher fee forever either.  Like someone else said RJ did something similar years ago.  Others will soon be following.  BTW, I built it the old fashioned way.

Mar 29, 2011 1:14 am

Why can't you make a career off of 25 basis points? Sell A shares and do what is right for the client - since that is what you are preaching about.

Mar 29, 2011 10:20 am

I'm sorry, I don't take advice from a guy slinging wrap accounts in the teachers lounge.

Mar 29, 2011 2:10 pm

Do you disclose to your clients the payout on these product?

I wount not sell my dead grandmother annuities!

Mar 29, 2011 3:22 pm

Wow, puts, I should come to you for advice.  

I have a couple with 700k in assets. She is 58 and he is 64. He has medical problems and needs her to be with him at all times.

Income goal from the portfolio is $2400 per month (plus taxes, $$ is in IRA).

This gives us a portfolio withdrawal rate of well over 5%, starting immediately.

Give me some strategies for meeting this goal. Don't tell me throw it in a wrap account and pray.

I wount not sell my dead grandmother annuities!

With all respect, death is not always an option.

Mar 29, 2011 3:56 pm

Times-

5% sounds like muni world to me.

I like 12-15%, It requires about 400 trades a year for that size account.

Mar 29, 2011 4:22 pm

You don't have a real solution?

Mar 29, 2011 7:39 pm

Agreed. It's funny how some folks are calling themselves advisors.