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Sep 27, 2005 2:48 pm

I too thought that cutting brokers has harges is a load of horse manure, but there are 401(k) match, ESPP, health care cost, E/O insurance, and other ancillary costs taht we don’t see.  I think I was told that firms break even at 150k. 

Sep 27, 2005 9:18 pm

[quote=frumhere]I too thought that cutting brokers has harges is a load of horse manure, but there are 401(k) match, ESPP, health care cost, E/O insurance, and other ancillary costs taht we don't see.  I think I was told that firms break even at 150k.  [/quote]

150k in production means they pay the broker 50k and keep the other 100k.  I really doubt it costs more than 100k to keep that advisor employed. 

The arguement about office space, Assistants, and management salaries are all good except for one thing.... dumping 1 FA doesn't save you on any of those things.... your rent stays the same, managers aren't taking pay cuts.   You have the same bills, but less people to help pay them.

Sep 27, 2005 9:23 pm

[quote=mikebutler222

Either you don't have his production numbers right or your manager is brain dead. I hear from friends in MS management that they never recruited people with numbers that low.

[/quote]

I know of 2 that went to MS with roughly 400-500k about a year ago.  The bad press hurt them a lot, so there numbers this year are down.  A lot of it depends on the location of the office.

The 125% shocks me.  They could keep a lot of the bigger producers from looking talking to the recruiters if they gave some sort of retention bonus.

Sep 27, 2005 10:10 pm

The arguement about office space, Assistants, and management salaries
are all good except for one thing… dumping 1 FA doesn’t save you on
any of those things… your rent stays the same, managers aren’t
taking pay cuts.   You have the same bills, but less people to help pay
them.



---------------------------------------------------------- -------------



But you replaced them with a rep that is actually a growing self
motivated producer, who actually thinks a million dollars in production
is a minimal standard, and one which will be accomplished.

Sep 28, 2005 12:24 am

That's a good concept, but how long does it take to recruit 1,000 million dollar producers?  And what about the million dollar producers who are leaving now.  And what about the 400k producers who are being told "you're next" by recruiters.

I just think that in a division that is pretty mediocre anyway, you would scrape to get all the gross revenue you can get.  Why not just elimiate brokers as you find bigger producers? 

Sep 28, 2005 9:00 am

Bottom line is, Firms need senior producers 500k and up.  Anything under that around the 10 year mark will never cross that barrier for the remainder of their career.

Sep 28, 2005 10:01 am

Like you said before about recruiters, inconsult - if we're not talking to MWD reps, it's like a doctor committing malpractice.  Activity has definitely picked up.  It's not advisable for every MWD broker to run for the door, but it doesn't hurt to get your foot in the door elsewhere while they sort their ideas out.  For some, MWD will turn out to be the best place ever and they'll be happy they stayed.  Not the approach most recruiters take, but I don't want to kid myself.

Sep 28, 2005 2:54 pm

[quote=iconsult100]

 And what about the 400k producers who are being told "you're next" by recruiters.

[/quote]

People buying lies have their own problems. It's hard to blame managment for that.

[quote=iconsult100]

I just think that in a division that is pretty mediocre anyway, you would scrape to get all the gross revenue you can get. 

[/quote]

Perhaps it isn't mediocre once you trim the deadwood. From what I've heard MS's rev per broker jumped up to the same level as SB after the cut. Also, there clearly wasn't much "revenue" there among those cut. Remember the TOP "producers" let go were doing $225k and most of those assets stayed and are being (presumably) better handled by surviving brokers.

[quote=iconsult100]

 Why not just elimiate brokers as you find bigger producers? 

[/quote]

And how would that process work? Over the next year and a half (or however long it took you to hire 1000+ producers at $500k or better) everytime you make a hire some national sales flunky consults "the list" (word of which would have to be held silent) and calls the bottom guy somewhere in the firm with the bad news? Hardly seems workable to me.

Sep 28, 2005 2:56 pm

[quote=BrokerRecruit]

Like you said before about recruiters, inconsult - if we're not talking to MWD reps, it's like a doctor committing malpractice. 

[/quote]

You know recruiting better than I do, but it seems to me the window for grabbing MS brokers is closed. Those that survived have to be feeling good about the accounts they picked up and the changes being made. If anything I'd guess it's time for MS to be recruiting strong and for UBS, etc., to worry.

Sep 28, 2005 3:02 pm

[quote=iconsult100]They could keep a lot of the bigger producers from looking talking to the recruiters if they gave some sort of retention bonus.[/quote]

I simply don't see the mass wave of exits you're talking about among big brokers. Every firm sees big producers move and the bad press MS lived through didn't help them in that regard, BUT, I'm betting what there was is over. Big producers know the business well enough to know that the big firms all have their time in the barrel. MS escaped what hit ML and SB until the Phil mess. Anyone who jumps now is leaving the frying pan for the fire.

As far as retention bonuses, isn't that what inherited accounts amount to? Has any firm, other than after a merger, offered people cash to keep their current jobs? I don't know...

Sep 28, 2005 3:15 pm

The pay-to-stay approach seems more efficient than the merry-go-round that firms end up on now....SB gets a 500k guy from ML who gets a 500k guy from MS who gets a 500k gal (let's be diverse here) from SB.  The net economic gain is negative for the firms, who had to pay the brokers to move, and the brokers go through the hassle of moving.

However, it MUST be that firms know a certain large % of people will (and do) stay so that it's not in their economic interest to pay for retention...otherwise EVERY broker gets their piece once they achieve a certain level.  So the broker has to be willing to do something that others won't (pull the trigger and move) to gain the benefit.  But, it does seem that a firm could figure out how to make retention bonuses work for them since they could then lock people in--like the forgiveable recruiting loans do.

Sep 28, 2005 3:18 pm

I don't think it is, yet.  You still have to see what the effects of the Gorman acquisition will look like.  There are many that see this as a potential issue and know more changes could be coming down the pipe. 

I am still working producers doing $350k/5 yr. LOS, $600k/12 yr. LOS, $700k/15 yr. LOS, etc.  Many are just sick of the press and BS that seems to keep coming.

That said, I think for many of the brokers that are going to stay, the new business model Gorman is sure to institute is going to benefit them very much.

Sep 29, 2005 11:38 pm

A lot of the senior producers are from the old Dean Witter days.  I think it’s going to be tough to convince them to change the way they do business using the Mother Merrill’s Model.