7yrvet,

PM me and I'll send you a little spreadsheet that will help you.

Interesting to note, the big producers who have left Jones in the previous year, why have none of them gone indy? I have ran a lot of numbers, and indy makes sense for me in some ways and not in some others. My payout on the upper level is pretty close to what the RJFS, LPL guys told me to expect. (I posted that number in a fidderent thread) 7yr, ask this board, who has seen a business sold and for what price? Don’t fall back on that one. Unless you run a very large fee based business, and you are not at Jones, your book is not worth what you would like. Don’t know what the answer is 7yr for retirement but then, neither do the indies. (they just won’t admit it)

Guest1,

I don't think your perceptions are accurate.  I recently went back and looked at my net/net at Jones with gross between 600 and 800k over several years and comapred it against my time at RJ.

The Jones numbers don't even come close.  In one year where the bonus brackets were high....it was closer.  But still over a 100k difference in favor of indy. 

The reason Guest1 that some choose to go to the wirehouses or banks is for the front money.  Brokers tend to be blinded by the big check.  I turned down nearly 900k myself to go indy instead.  In the long run--you come out ahead.   It's simple math.... 

My answer for retirement is that I will have many more choices and options than you will have at Jones.

Zacko-

Is Guest1 argument regarding equity in business accurate now that you have made the move to RJ? What really is your biz worth (% of 12 month trailing)? Is the Jones model (primarily mutual funds) very little recurring revenue other than 12b-1 fees, worth anything? Or are Guest1's comments accurate unless fee based, not much to sell. On that note do you know of books that people acutally pay for?So far all I have heard is that books are paid in installments, usually a small down and then paid from revenues for a period of years. Interestingly, I have heard that EDJ is adopting some form of this. On a case by case situation. Nothing formal or published. Your point of more choices...is that because you make more %? Please expand.

7yr,  Good question.  The bottom line is your book does has value...Here is what I am doing.

I am in the process of setting up a buy/sell agreement in case I die and my wife will get 1 million dollars and a friend of mine will get my business.  There is a letter going out to clients if I should pass on that explains this (Hopefully the letter never gets sent) to them in a comforting fashion.

Also, I have a couple of kids.  I have the flexibility of bringing either one of my kids in at some point in the future and retiring while still recieving a payout on the book.  I can also bring in a partner and sell the business...and you are right--it's always done over installments or a payout over a period of time.  Fee based is worth more...but it depends upon the quality of the book as well.

As a branch manager, I can also hire brokers, supervise them and recieve a payout on their trades.  I haven't done it yet...but I can.  I will probably do that at some point.  Compare that to the goodknight program where you give someone 5-10 million AUM and create a competitor with another office down the street.

Jones has been talking about a severance package for YEARS with....nothing coming as a result.  If you die...your wife gets a term policy worth a 100k and the locks get changed at the office.  There is also no written guarantee that she will get to keep any partnership.  It is all at the managing partner's discretion.  No thanks!

You have flexibility and choices when you own the business--and you don't when you are an employee.  That's the difference.  It goes well beyond a higher payout, better technology, and more products to offer to your clients.

Hope that helps you some.

Remember Our Top VA Producer? He's Independent Now
Magazine: On Wall Street, April 2004

By Rebecca McReynolds

The last time we checked in with Wayne Dictor and partner Steve Martin, the two were happily ensconced at UBS PaineWebber in Sarasota, Fla. Dictor, who had spent 12 years with Dean Witter before joining PaineWebber, was the office's insurance coordinator. Martin was the administrative half of the team. The partnership focused on wealthy retirees, did few transactions, but lots of comprehensive planning and wealth management.

"When UBS took over, they told us they would keep PaineWebber just as it was," Dictor recalls. As reflected by the name changes to UBS PaineWebber and then to UBS, he said the bank's involvement kept expanding. While he says they didn't push proprietary product, they did encourage the firm's brokers to become more credit oriented.

"If it's appropriate, I'll ask my clients about their mortgage," Dictor says, "but many of my clients don't have mortgages and I didn't want to be a mortgage officer. In the same vein, UBS boasted about its international lending strength. That's all true, but how often does one of my clients need a $50 million loan linked to LIBOR?"

Growing frustrated, Dictor and Martin decided to look into independence. The process consumed 18 months of research, analysis and in-person tire kicking. They decided they wanted a truly independent firm, not one affiliated with a big bank or a wirehouse; they wanted to leave that environment. At the same time, they wanted a firm that could handle the specialized needs of high-net-worth clients.

"We wanted to make sure we were going somewhere that could support us in delivering high-quality investments, due diligence and legal oversight, but one that made it cost effective, cost efficient and gave us the latitude to look at a broad array of investment and insurance products," he says.

While attracted to Raymond James, which met their requirements, the pair felt the firm's dominant local presence wouldn't set them apart. Instead, they went with Linsco/Private Ledger, which had no other independent reps in the area and offered a product mix and technology support that Dictor says is equal to or better than what they had at UBS.

"LPL's insurance offerings are far better, but what truly clinched it was when we spent two days in San Diego," Dictor recalls. "I was introduced to Todd Robinson, the chairman of the firm, who said he knew me from the OWS cover story. I couldn't believe it; in the seven-plus years I was with PaineWebber, none of the top executives ever met me, let alone knew me. Then Todd told us he wanted to work with us and that his goal was to make us their happiest customers. At PaineWebber, I never felt I was their customer. I was their lackey."

With LPL providing back-office support, Dictor and Martin leased offices in "the most exclusive piece of real estate in Sarasota" -- the 1 Sarasota Tower Building, right across the street from the Ritz-Carlton Hotel. Setting up the 2,000 sq. ft. office cost more than $60,000.

After identifying the top 70 clients out of their book of about 150 families they wanted to bring with them, the team got ready to move. (While Martin was bound by a non-solicitation agreement that forbade him from doing business in a 50-mile radius of the UBS office, Dictor got PaineWebber to forego such an agreement when he was hired because they wanted him as a managed accounts coordinator.)

The day before Thanksgiving, Dictor performed his annual ritual of handing out Amish pies to his colleagues. At the branch manager's office, the pie was accompanied by a resignation letter.

As Dictor was driving from his old office to the new one, a client called Dictor's cell phone to find out what was going on. It seems that in those few minutes, another PaineWebber broker already had called the client.
"The departure was brutal. The firm was offering to waive all their fees for a certain period of time, and they even sent out copies of newspaper articles that warned readers about rogue brokers -- without using our names, of course," recalls Dictor, who wasn't worried. "People don't change doctors because one down the street charges 25 percent less. Clients know what they want, and our clients had built a relationship with us."

Dictor said that 68 of the 70 targeted clients came with them. Do any of them miss the large-firm environment?

"Our business was always based on referrals, and we had one very large client who never gave us any, even when we asked. When we went independent, he sent us referrals. He told us that although he thought we did a good job, he only referred professionals who worked for themselves. He perceived PaineWebber as a Wal-Mart. Now he perceives us as having a vested interest in our own company's success."

As Dictor is wont to say, perception is everything.

Zacko, I have ran them. Running this year at 60% after all inclusive. I have well over 200k in LP, it must be looked at also since I paid (yes paid) for it with pennies on the dollar. Even without the LP I am well above 55%. Zacko, a buy-sell agreement is NOT valuing your practice. The only difference between that and me buying a policy is that your preium is tax-deductable. (although, I could structure mine to be a tax deduction). WHAT IS YOUR BOOK WORTH RIGHT NOW IF YOU SEL it? You don't know, do you? See, the indies are forever saying they own their book, so what in the above example. There are many reasons why indy is best for some, but I have yet heard of ANY book going for much.

Zacko, what does the above comment regarding too many RJFS offices nearby to be successful mean? Do you not stand out? Even in Jonesland, many of us stand out in our communities.

Good points Guest1.

<SPAN =line>Market Watch

<SPAN =deck>Whether you’re buying, selling, or building, the more you listen to what the market for advisory practices is telling you, the more valuable your practice will be.

<SPAN =byline>By David Grau

<SPAN =storydate>April 1, 2003- <SPAN =content>Sometimes things don’t turn out the way you plan. When we launched FP Transitions just over three years ago, our goal was to help the growing number of advisers who were reaching retirement age find qualified buyers for their practices and facilitate those sales with a confidential listing system, legal documents, and financing arrangements. But as the market we created has grown (2,166 buyers and 142 sellers were listed on our Web site in 2002), and the economy has struggled, we’ve seen an increasing number of younger advisers transition out of the profession, as well as an avalanche of buyers who see acquiring existing practices as an opportunity to replace revenues lost to the current bear market.

We've also realized the information we're gathering from the hundreds of transactions we facilitate each year and the thousands of buyers and sellers listed on our site, FPtransitions.com, is almost as valuable as the services we offer to advisers. Each year, we package this market intelligence in our annual Practice Transitions Report. In the 2003 report, we explore the current trend toward younger sellers and more experienced buyers.

It seems the struggling bear market is once again taking a toll on advisers who prefer not to deal with this kind of intense volatility periodically throughout their careers. And yet, even though the number of sellers today is up, the number of buyers is up more, driving up the value of practices, supporting price to revenue multiples, increasing down payments, and bringing the number of sellers who close deals to over 90%. In fact, contrary to what you might think, our data shows that now may be the best time we've seen yet to sell an advisory practice -- and even better if you're an established, successful financial planner.

To help you create value in your practice, each month we'll tell you exactly what the market for advisory practices is telling us. From profiles of successful buyers and sellers to why some deals fall through, we'll keep you abreast of trends in the marketplace, cutting-edge transition strategies, and keys to building and realizing value in your practice.

The messages that the markets send are often surprising. For instance, did you know that:

If you didn't know these things, don't feel bad. Neither did we. In fact, over the years our data has revealed that when the stock market goes down, the value of advisory practices actually goes up, thanks to the increased demand from advisers to replace lost revenues.

What's more, sellers in down markets get an added boost because most practices are sold on an earn-out basis. Their depressed revenues are more likely to increase in the next few years than they would have following boom years, when the only place to go is down. And while older, more established firms have been reluctant to sell lately, they've been more than replaced by younger advisers leaving the business.

Here are a few of the topics we'll cover in future columns:

We think these stories will make you a more sophisticated buyer, seller, or builder of an advisory practice. At the very least, you'll give yourself the best chance to succeed.

David Grau is president of Business Transitions in Portland, Ore, a leading facilitator of buying and selling advisory, accounting, and insurance practices on its Web sites: FPtransitions.com, CPAtransitions.com, and Insurancetransitions.com.

Jonestown, let's try and find something recent shall we?

Look at the website today. Inquires are high, sales are low. Hmmm.

"See, the indies are forever saying they own their book, so what in the above example. There are many reasons why indy is best for some, but I have yet heard of ANY book going for much." ...Guest1

..you keep your head in the sand and you won't hear a thing. 

Nice diversion from the question. What, no 3 year old news article to print?

Jonestown, you are not worth a damn unless you can copy someone elses article on here. Have you ever posted more than a sentence or two of your own thoughts? Funny, folks are always slamming the Jones brokers for not thinking for themselves yet, Jonestown can only copy and paste. Step aside Jonestown and let a REP answer the questions.

I think it's best that you stay employed with Edward Jones.  You'll be just fine.

It's impossible to know if that kind of disclosure will change investor behavior, but it will certainly give us all a better look at just what's driving the motivation of different dealers and their brokers. At least for now, though, customers of Edward Jones have some idea of what they're facing. If you're one of them, and your broker comes calling to switch you from one of the American Funds to an offering from Hartford--whose funds have generally performed less impressively over the years--don't be afraid to put on your most skeptical game face. Edward Jones may be getting paid, but you definitely don't have to play.

http://www.forbes.com/finance/feeds/mstar/2005/02/24/mstar1_ 2_20871_132.html

Some things are worth reposting...enjoy

Looking for the Secrets to Success. Motivational presentation by Edward D. Jones Investments. Sponsored by New Castle County Chamber of Commerce. 11:30 a.m.-1 p.m. 630 Churchmans Road, Christiana. Free. Registration requested. 798-0900

Hey...this guys gonna tell the secrets!

COOPER: Let's shift gears. When you speak to brokers about changing firms, how much do they know about the state of the broker job market or about other firms? Do they understand the alternatives at regional firms?

WAREHALL: I think each individual is in the middle of his or her own forest. They may claim to know what's going on in the Street but they just know what's going on in their office.

JOHNSON: It's also the firms that are clueless about the other segments of the market. I mean, if you look at how they've handled the Internet and discount brokerage, they had no knowledge of each other. The firms themselves can be very nave.

DIAMOND: The big firms have done a very good job of brainwashing their producers into believing that the reason client A is your client is not because you're a great broker but because they love the Merrill Lynch name or the Morgan Stanley name. And I think a lot of brokers have their nose to the grindstone and don't bother to look elsewhere.

One of the major components of our job as a recruiter is to educate people. Before we sell, we educate about the landscape of the industry and what's out there.

KING: You'll find a lot of brokers who don't know a thing about what's out there. Some are the grandiose types. They talk about a friend getting 400 percent for moving and they want the same deal. Or they want 200 percent plus the cost of their children's college education. Total insanity. But there also are brokers who have a more realistic understanding of the numbers, yet no idea how it all works.

FERBER: I want to make a quick comment on brainwashing. I just talked to someone at Morgan. He's not doing well -- a few hundred thousand. When I spoke about regionals, he said he couldn't give up the Morgan name. If I could have reached through the phone, I would have shaken him by the lapels. He's in a very wealthy market in South Florida and he could talk to Legg Mason or Janney Montgomery, but he won't because he's been brainwashed to think it's a step down. And as far as other brokers know what's out there in terms of deals, most are stuck in the forest.

WAREHALL: I think we all hear things from brokers that blow our minds. They have lots of misperceptions about regionals. The quality of life there can be very good; you can have tremendous technology and a much better corporate culture and working environment.

SARCH: It comes down to knowing your client and knowing your client base. If the broker can't make a compelling argument to his client as to why he should move to a regional firm, then he shouldn't move. But if the client is doing a basic transaction or managed money and little or none of the exotic things, the business can be handled generically somewhere else.

McGINNESS: One thing we've seen is that wirehouse brokers have no idea what it's like or what it takes to become completely independent. I get calls all the time from good producers, people with $50 million books at the wirehouses, who are thinking about it but who don't know the first thing about what's involved in setting up their own RIA. That's one of the reasons some independent firms have put together transition programs.

I can't make it up...I can just copy and paste...links available upon request.

"He's in a very wealthy market in South Florida and he could talk to Legg Mason or Janney Montgomery, but he won't because he's been brainwashed to think it's a step down."

It would be a step down, but it might be one he needs to take if he's doing a couple hundred K a year....

Guest1,  Someone else pays the premium on the buy/sell.  Not me.  And yes, the broker does own the book and have much more flexibility.  So, I sorta will have a sell agreement.  Plus, what about bringing in other brokers?  It's an option--if I so choose.

Also, I get RJ stock options FOR FREE.  Last year, I got 750 shares at a nice discount.

Consider 2002 or 2003--when there was little or no bonus?  You have a great year--and Jones doesn't?  May net/net was barely 40% in 2002.  So , in that year--the difference was about 25 payout percentage points.  My branch consistently had plus or minus...about 300k in profit on P&L.  Clearly, when Jones was in a VERY high bonus bracket...it would make the numbers closer...but not close enough in my view.  I can't speak for your numbers or exactly how your calculating it....but having been indy now for over a year--that is my view.

All I can say is that my disposable income has went up dramatically since going indy.  15-20 points in net/net.  67% was my net/net last year.  Never made close to that at Jones....not once.  But, I did get a veneer and plastic award at the summer regionals every year!  I figure, with all my time at Jones those awards cost me close to a million dollars.  Expensive--but I love em!

Jonestown, you are your own worst enemy.  You get slammed for cut and past with one liners and then you come back with multiple cut and pasts one liners.

 You showed him.