How One Wealth Management Firm Intends To Grow Amid Competition - RegisteredRep.com

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Nov 16, 2010 10:36 pm

http://registeredrep.com/news/cap_guardian_seeks_advisors/

See attached article.  I've had several conversations and hired people from this forum.  I've tried to always be a positive and informative contributor.  This is a nice story that Registered Rep wrote about our firm.  Top Story yesterday.  Feel free to PM me for any serious inquiries.

Nov 17, 2010 12:16 pm

Ok, I read the article. You got 85 reps, and you wanna grow by as much as 10% per...MONTH? Dang, that is a pretty lofty goal, especially when you want average production of 400k. Well, tell us about your Titanium Mouse Trap with the Kung Fu Grip?  

Nov 17, 2010 12:48 pm

Recruiters are always calling me at the office to measure my ambition. I just woke up from nap. Annual growth at 10%, compounded, would ruin my lifestyle and enrich the wrong people.

Nov 17, 2010 1:53 pm

LOL, so what would happen if you grew at 10% per Month, let alone annually? They could name an entire tax collection office in your honor. Who knows, maybe even start a new regulatory body, since you can't trust a 7...

Nov 17, 2010 2:01 pm

Shhhhhhhhhhhhhhhhhh, don't tell anyone about my quality of life thing. Just wait until the progressives figure out the relationship between employee, owner, government and taxes. I still keep an old wool Mao suit in the closet so I'll be able to fit in when I want.

Nov 17, 2010 3:36 pm

So they had 20 reps at the end of 2009 and now have 85? So they are adding 5 reps a month... Now they want to triple that? That to me spells disaster, too much growth with advisors and not enought back office people will eventually become a problem and then advisors will leave, I know one advisor who is there, who is quite unhappy..

IBDs are a dying breed..Too much cost for compliance, too many competitors, too much overhead costs to run one that someone is happy with.. RIA seems to be the new trend.

LPL is launching an IPO so the private equity firms can get paid for their investments....

Nov 17, 2010 5:35 pm

Wow,  tough crowd

Nov 17, 2010 6:13 pm

Nothin personal Clutch, just roll with it, have some fun. Seriously, if I told you I wanted to go from 100 to 500 households in 60 months, you'd be a skeptic too. So, are you planning on doing this via acquisition? Because the numbers you're looking at are the equivalent of taking on an entire mid sized firm, sans the small brokers. Tough accomplishment wouldn't you admit?

Nov 17, 2010 11:33 pm

The number is probably more like growing to 300 in 5 years and I can't tell you how much fun I'm having.  There has never been a better time to acquire talent in this business.  We have been very forutnate and are being introduced to a lot of good advisors via recruiters, wholesalers and product companies.  We have some potential opportunties to bring on groups of advisors to start offices.  There is one large team in particular that we are close with who has over a $1 B in AUM and 10 Reps.  Skepticism runs deep on this board and I'm aware of that, but If you miss miss firms like JC Bradford, Legg Mason, AG Edwards, Everen Securities, Wheat First, IJL, etc then you may like what we are building.  We understand that we aren't for everyone.

Nov 18, 2010 8:15 am

What makes your firm different then other competitors (LPL, Cambridge etc) other than your size?

You clear through Pershing, and that alone is enough to make me ill..

However what do you offer that a $400k producer would be interested in.

Nov 18, 2010 8:34 am

I will say that your corporate locations look real nice... how much square footage is an average office?

Nov 18, 2010 8:53 am

I know a producer with your firm that is actually quite happy.  Sqaush, can you provide hard information why you think IBD are a thing of the past.  Not your silly opinion.

Nov 18, 2010 10:02 am

Our corporate locations range in size depending on the market and what we think we can buildout.  We are typically looking at 4,000-5,000 square feet with 8-12 offices with a nice reception area and conference room.  What makes us different than other firms?  CULTURE, CULTURE, CULTURE.  Again, we have an independent channel and branch office channel.  IBD's and 90% payout is pretty much a commodity, we know that, but there are a lot of people who don't want to go independent and want to have "plug and play".  Our firm was founded, built and managed by people who were either financial advisors in the past or still work with clients today.  So, we think we know how advisors and their clients want to be treated.  Most of us came from either wirehouse firms or large independents, so we know how we DON'T want to be treated.  We have a very good advisory services team where each FA or team has a dedicated relationship manager.  There is no call center.  Our service team has to be accountable to our advisors.

On the product and services side, we have a robust platform for alternative investments and I don't just mean non-traded REITs.  If you consider yourself a good advisor and you aren't talking to your clients about managed futures, multi-strat hedge funds or other alternative product, I think you are making a mistake.  Besides Pershing's Bond Central (Bond Desk), we have dedicated fixed income traders who can source bonds at institutional pricing.  We will crush the pricing that the average firm delivers, which will only lead to more bond business for you if you have serious bond buyers.  We can handle international business and have a very good relationship with Deutsche Bank for structured notes and offshore custody.

Let's be honest, if you are only doing stocks, mutual funds and variable annuities, you can do that anywhere.  If your business is a bit more sophisticated and you want a firm and a management team who can support that, than we may be a firm worth talking to.

As far as the comment about Pershing, I can't imagine a better firm to partner with.  Maybe your problems with more with your BD.  We have a great relationship with them and they ARE the leader in the industry.  Who else spends $300mm a year on technology?  Who else is 100% focused on catering to BDs and RIAs?  This is their only business and they do it very well, in my opinion.

Nov 18, 2010 11:03 am

[quote=SuperMan]

I know a producer with your firm that is actually quite happy.  Sqaush, can you provide hard information why you think IBD are a thing of the past.  Not your silly opinion.

[/quote]

Consolidation, Compliance, Failures, Rising Costs, Decreasing Production, Need.

I. Consolidation: IBD's biggest expense is back office (salaries, buildings, etc), so like most advisors 80% of their revenue comes from 20% of their advisors. IBD's are merging, being bought at rapid pace because the back office requirements are getting astronomical.

II. Compliance: The reason for the increased back office requirements are simply because of Compliance.. Fear of the next ponzi scheme, rogue/dishonest brokers, finra crackdowns..

III. Failures: Of IBDs due to increase cost, compliance or regulatory issues

IV. Decreasing production: Since 20% of advisors generate 80% of their firms revenue, it is getting hard for a IBD to survive movements of that top 20% either through defection to another IBD/wirehouse/ria or through decrease production.

V. Need: It used to be that if you left a wire/regional/bank you needed an IBD to have a career but with the massive competition in the RIA market that isn't true anymore.. Sure not everyone will qualify for Schwab,Fidelity, Pershing, but TD, TradePMR, Scotttrade, etc are willing to take smaller brokers. No longer is the need for clearing hard to find or worth the 10-30% override some of these IBDs take.

LPL for example is only growing by acquisition and or RIAs...they lose as many new brokers as they bring on. Only time their numbers go up is when they acquire other BDs..

A good example would be with this IBD Capital Guardian.. They have 85 reps..so when they ask Pershing for something how does that compare to: 1. LPL who self clears  2. A larger IBD using pershing....

Money still talks in this industry and so do bodies.. So leveraging deals on clearing,software etc becomes harder for smaller IBDs..

Nov 18, 2010 10:50 pm

[quote=mrclutch]

As far as the comment about Pershing, I can't imagine a better firm to partner with.  Maybe your problems with more with your BD.  We have a great relationship with them and they ARE the leader in the industry.  Who else spends $300mm a year on technology?  Who else is 100% focused on catering to BDs and RIAs?  This is their only business and they do it very well, in my opinion.

[/quote]

I haven't used them since 360 came out, but before that is what like working a DOS system..