Legacy AGE Broker looking at other wirehouses

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Oct 4, 2008 10:31 pm

Okay, here's the situation and I would greatly appreciate any feedback from the group:

 
1.  I'm Legacy A.G. Edwards and have been in production roughly five years.  I have $50m in assets and generate roughly $400k year.
 
2.  I'm assuming the Wells Deal will go through and have no idea if they will add additional retention to the retention we received last year from Wachovia.  Long story short, I want my ducks in a row with available options in case Wells low balls me with 30% or less.....
 
3.  So my question....I don't want to go Indy right now, don't like Merrill, Smith Barney or UBS.  I really like Stifel but they are not in my area.  So, my options appear to be Morgan Stanley, RBC, Janney Montgomery and Morgan Keegan.  Any insight on these firms would be very helpful (and any knowledge of the upfront wouldn't hurt
 
Thanks in advance!
Oct 4, 2008 11:03 pm

I am a former AGE broker, now at MS, and I believe that you will probably not get a retention package.  Why would anybody give you one, when the package paperwork you signed indicated that anybody who takes over WB would become master of what you signed?  I could be wrong, but if I am the guy calling the shots, I know that you are over a barrel at least for a while....

Oct 4, 2008 11:14 pm

Benjamin,


 
Moving from AGE to MS, could you give me an insight on what they had offered you as a retention?  Also, what are the major difference between AGE and MS.  Any help is appreciated, thanks.
 
 
Oct 4, 2008 11:26 pm

Let me get this straight...you get a retention package less than a year ago from WachEdwards, and now you're concerned whether or not Wells will try to "lowball you" by giving you 30% more on your trailing 12?

I'd say you're a greedy fool....

Oct 4, 2008 11:40 pm

Greed, schmeed.  It's all about making a good business decision.  I have been offered 100 - 120% upfront cash by RBC and 150% by UBS.  Let's say I get 30% from Wells Fargo to stay in my seat.  That's a 90% difference from the RBC offer or $360,000 upfront.


If you think about it, whether I have to "pitch" Wells Fargo or pitch another brokerage firm, I'd like to get paid to go through what I've had to go through for the last year by convincing my clients to drink the Wachovia Kool-Aid.
Oct 5, 2008 12:54 am

Jeroxide,

I am new to the forum, so be kind.  I have been at AGE/WS for about 8 years and have tried to make it a practice to talk to any successful adviser and industry legend that I can find (I know several).  I received some pretty good advice that I will pass on.

I know that you want to make a good business decision.  So don't just make a decision out of greed.  Truly make a decision that will help you business for the rest of your career.  You only get to make 1 or 2 moves in your career most people say, or your clients will rebel.  Make sure it is for the right reasons, not just a check. 

From what I have heard and experienced in my office and with friends, the average adviser only takes 85% of his assets in a good market, 75-80% in a bad market.  While I am sure that you are an above average adviser and like to think that you will take 100%, you can't make a decision as large as this on a 'like to think'.  You have to be conservative.  If the math works out on conservative assumptions and you end up doing better, that is gravy. 

So here is how I see the math of up front cash.  Assuming that you lose 15-20% of your assets, your gross will drop 20%. (I know that there are stories of guys who jump their numbers in transition, but in my experience, that has been through churning and doing bad business to support the move.  I know that you wouldn't do something like that though.) If you get 100% up front, they are really only paying you for your lost production.  Realize that if you grow your business at the same rate at your new firm as at your old firm, you will never catch up.  Never.  That means that for the rest of your career, you are 20% behind where you would have been if you stayed put.  You are a financial adviser, build a spreadsheet.  My spreadsheet tells me that if you are growing your business at 20% (which you should be doing, assuming you built your $50M book in 5 years and didn't inherit it), you start falling behind towards the end of year three if there is not a difference in your growth rate.

The only way that it makes sense is if you are jumping to a company that you are convinced will have the culture, platform, and support that will allow you to grow your business at a faster rate than before.  Then, you had better do some math and try to predict when that break even will be.

Additionally, you must pay back the majority (minus the 8 or so months already accured) of your previous bonus.  At $400K at AGE, that was 50%.  So your 120% from RBC becomes 70%. 

For a guy with so many years ahead of you, the check you get should be the last thing that comes into the decision.

Oct 5, 2008 9:40 am

CommonSense,

Welcome to the forum.  Please stick around and continue to add your thoughts here more often.  Good stuff.

I've repeatedly made the same point about not basing decisions such as this on the size of the check.  It certainly does make one wonder if it is simple greed or if some really don't believe in the value of examining the numbers on different scenarios over a meaningful period of time (which is the height of irony).

The only thing I would add - really a repeat of what I've said more than once here - is that too many FAs never make the effort to actually learn about, much less do due diligence on, their independent options.  I know that route is not for everyone, or perhaps even for most, but how can one make an important decision about the future without even seriously CONSIDERING an important option. 

Jeroxide, you may be doing this right now.  I'm not sure from your brief posts here, so I won't say your are, but anyone with your AUM and production should at least seriously consider the option, yet you simply tell us "I don't want to go Indy right now."  Fair enough.  To each his own.  But what are your main reasons for that thinking right now?



Oct 5, 2008 10:18 am
CommonSense:


For a guy with so many years ahead of you, the check you get should be the last thing that comes into the decision.




Oct 5, 2008 11:00 am

Hello,

 
What it comes down to is that I'm at the point in my career where I am at a crossroads.  I have talked to a number of Indys and here's why I feel that at this time of my career it's not right for me:
1.  I'm in my early 30s and only have been in the business for five years.
2.  I'm only doing $400k and I feel that I would need to increase this before I make the leap.
 
So, that leaves me with wirehouses and the reason I'm on this board is to try to determine which wirehouse would be the ideal fit.  (and yes, since I owe WS from last year's retention bonus, I need something upfront to eliminate this).   As I type this, I have info from RBC, MS, Morgan Keegan and Janney and am having a very difficult time deciding.
 
Any help would be greatly appreciated.  Thanks.
Oct 5, 2008 4:40 pm

Allot of the Legacy AGE guys have already spent the retention money or invested it in the market & now find it is down dramatically from last year.  So even if they decided to go Indy they would have to reach deep in their own pockets to escape the non compete that they signed.  It's really a bad situation to be in.

Oct 5, 2008 4:50 pm

For what it is worth, I am in the same boat with a few more years in the business. I would only look at the ones you listed plus Ray Jay.

Oct 5, 2008 4:53 pm

And Morgan Keegan is owned by Regions which has some issues. Look at RF stock versus RJF, RY, SF....or WFC for that matter (just to confuse things).

Oct 5, 2008 8:24 pm

You're right, Morgan Keegan does appear to be having some problems.

 
How would the forum rank the following full service firms....
RBC, Stifel Nicolaus, Morgan Stanley and Janney Montgomery?
Oct 5, 2008 8:54 pm

AGE guys seem to love SF. RBC seems appealing based on a strong parent company. I have no interest in MS, too much baggage. Janney is good but small, right? I also wish we had a SF to talk to in my community.

Oct 9, 2008 4:34 pm

Guys, just my opinion.  "Recruiters" are generally not something I'd suggest, but in these days with 'deals' in flux, firms on the ropes and freaked out clients, I would not go looking on my own. I worked with a super guy when I moved and I had the best experience I could have expected. He grew up in the business and I know this is not always the case.

Deal got massaged on my behalf, helped keep the future relationship with my new firm from being muddied up in the negotiations.
Kept me up on what's going on, constant feedback, guidance
Helped focus my search on the specific firms that best fit my book and business
Never pressured me to do anything. Just a methodical process that worked very well. I know this is not always the case with just anyone who buzzes the phone.




Oct 9, 2008 5:02 pm

Gekko, you should call SF about bringing a branch to your community. I've heard they are looking to grow branches. Just a thought.

Oct 9, 2008 7:30 pm

I know someone who had made that call and if a few of us wanted to (granted this was a while back, prior to the crud hitting the financial fan), we could open an office. I am a little hesitant to be the trailblazer in my town for Stiefel. Any Legacy AGE guys with input for someone like myself would be appreciated.

Oct 9, 2008 7:54 pm

Former AGE - left 6 days before the Wachovia takeover in '07 and have never looked back. Ended up at RJA - Advisor Select platform.  Couldn't be happier I left - in spite of no  upfront check (though I do get 70-75% payout before expenses).  That being said, Stifel is a great firm and they appear to be trying to be the destination for former AGE FCs. The only criticism I've heard is that pace of growth might be exceeding ability to absorb it.

 
Sad what has happened to our old firm - I honestly don't know how FCs work is such a toxic corporate environment.
Oct 9, 2008 9:15 pm
WSxAG:

Former AGE - left 6 days before the Wachovia takeover in '07 and have never looked back. Ended up at RJA - Advisor Select platform.  Couldn't be happier I left - in spite of no  upfront check (though I do get 70-75% payout before expenses).  That being said, Stifel is a great firm and they appear to be trying to be the destination for former AGE FCs. The only criticism I've heard is that pace of growth might be exceeding ability to absorb it.

 
Sad what has happened to our old firm - I honestly don't know how FCs work is such a toxic corporate environment.
It's good to see that RJ has worked well for you.  They are on top of many AGE FCs lists, along w/ Stifel.  I also question SF's too rapid growth.  Their mkt'ing strategy is simple, "this is the way AGE used to be".  It certainly has it's appeal but????  Also, they are the only ones willing to put a "bail out clause" in their contract: i.e. We get bought, you are a free agent....I have also heard someone say, "move once, get pd twice."  Actually, that doesn't instill alot of confidence on their remaining independant.  Additionally, their deal is about 1/2 cash and 1/2 SF stock. 
They are VERY willing to open branches in new areas.  Have had that exact same discussion with them in our area. 
Oct 9, 2008 9:25 pm

In regards to Ray Jay select, is that the deal where your payout might run in the mid to high 40's after expenses, you get benefits as a RJF employee, etc.? Only drawback would be the no check part but guys I know are happy over there.