ML Investment Advisor

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Feb 4, 2009 2:29 pm

It looks like Merrill Lynch is starting to promote the option of converting from an FA to an IA.  Unfortunately there has been little information provided as to what an IA does or what the pros and cons are to being an IA over an FA.  Can anyone shed some light on this?


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My understanding is that IAs don’t “own” any of the relationships and that they are salaried employees.  Does 100% of the salary come from the FA or does the branch pay part of it?  Is compensation at all based on production?  Can an IA maintain their own book?



Now that all ML FAs have signed the new agreements with BoA, my understanding is that the FA can’t take anyone with them should they want to leave ML.  Does this apply to IAs teamed with FAs or does it just apply to CAs? 


 
What about if an FA retires?  Can the IA take over as the FA for the book of business?

--WM

Feb 4, 2009 3:59 pm

Let me make it simple;

IA = steer (castrated) More docile, less wild, more predictable- helps animal gain leaner weight faster and therefore brings more at slaughter time.

FA = bull - no explanation needed there.



Feb 4, 2009 5:05 pm

IAs are just like back-seaters in carrier aviation. As long as your pilot is alive, the sky's the limit. But if he craps out or retires, you're f&#cked and will never make it back on deck alive.



And you can forget IAing for an older FA in the hopes he retires and leaves you his book. ML requires the book to be distributed across the branch, so when he goes away so will you.

Feb 4, 2009 7:16 pm

Client relationships and owning your practice are everything.  Becomong an IA doesn't sound like a sound business decision.

Feb 4, 2009 9:31 pm

my team has two IA's.  one of them used to be a semi big producer and then became gigantic when he became an IA. i do not know why he gave up being an FA.  IA's dont prospect. they just work with existing clients and are told what to do by the lead partner.  he gets all the accolades and compensation. you are paid a salary. 

i recently spoke to an fa who became an ia on a big team.  the team left and he found it extremly hard to become a fa because of management...(not sure why).  he said never become an ia because you lose your "Fa-ness" which i understood it as freedome. 
i hope this helps.
Feb 4, 2009 10:01 pm
BAC= Big A$$ Conjob
 
FA=Foget About it
 
IA= I did Already....
 
Badahbing
Feb 4, 2009 10:30 pm

I know a few people who have been/are IA's and they have never complained.  A couple of them went from IA to FA without a problem.  Others went from FA to IA and never switched back.  On all occasions the teams worked great together and there never any problems.  I have no more specifics, but it works for some.

 
There are all kinds of discussions in our office of guys considering moving into an IA role to increase their payouts.  No one has pulled the trigger yet.  It will be interesting to watch.
Feb 4, 2009 11:00 pm
burtonfinancial1:


IA = steer (castrated) More docile, less wild, more predictable- helps animal gain leaner weight faster and therefore brings more at slaughter time.

FA = bull - no explanation needed there.



Well put!  Thank you for making it simple.  That's pretty much what I thought it was.

--WM

Feb 5, 2009 11:42 am
bondo:

There are all kinds of discussions in our office of guys considering moving into an IA role to increase their payouts.  No one has pulled the trigger yet.  It will be interesting to watch.

 
Please give some more details on this.  Are you talking about a family team that moves one advisor to IA so that the lead FA gets a bigger grid payout?  If so, does that mean that the book of the FA going to IA does not need to be distributed?
 
--WM
Feb 5, 2009 12:05 pm

Never, ever, ever give up your book, EVER

Feb 7, 2009 2:13 pm

I hate to be picky here but the term Investment Advisor Representative comes from the 1940 Investment Advisors Act. IAR's are people who work for RIA (Registered Investment Advisor) which is a term applied to the corporate entity that manages assets (or not). IA(R)'s by law have a fiduciary relationship. I don't think BAC wants to open that can of worms at any time

Feb 7, 2009 2:34 pm
MinimumVariance:

I don't think BAC wants to open that can of worms at any time

 
They may not want to, but the managers and directors are openly talking about deadlines and rules to switch from FA to IA.
Feb 8, 2009 4:09 pm
BukiRob:

Never, ever, ever give up your book, EVER



What about if your "book" is more of a pamphlet or newsletter?

I'm guessing that this may be a way for short-term survival for many FAs.  I am curious to find out how they will let people structure the deals.  I would only consider this option if the bulk of my compensation was based on production and if there was a clear path to migrate back to FA in the future.

--WM

Feb 10, 2009 11:33 am

I asked some questions and found out more about the IA route.  This recent push is targeted towards those FAs who are in the “penalty box.”  They don’t have to distribute their book to the office.  It goes to the FA that they are working as an IA for.  It also seems like a decent option if they want to eventually switch back to an FA and remain a team member with the FA that they worked as an IA for.<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


Straight FA teaming seems like a MUCH better option for those who are not in the penalty box.


 


--WM


Feb 10, 2009 12:26 pm

Hate to burst any bubbles, but I believe it's Investment Associate.

Feb 10, 2009 1:15 pm

BB, that sounds more reasonable.  Investment Advisor is a technically defined term like Registered Rep (unlike financial advisor, financial planner, financial counselor, etc.).