Retention....please do not hijack

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Dec 28, 2008 9:07 pm

timetogo,
 A little reality check here. You, like all the rest of us, are a salesperson. Your clients may well buy the rest of that pitch (and maybe there’s a reason they should), but hey, we’re all in the club here You’re compensate exclusively on that which you are able to sell (period).
 Tough job to succeed at? Sure, but to compare it to the “rarity” of skill and knowledge of practicing medical doctors…please.
 As far as the direction of this thread…I say, great job, Duster, you began something that has interested people. This is where the debate, such as it is, is happening on Registered Rep. and since there doesn’t appear than there will be any new “retention” news any time soon, I say ride it. Or don’t.

Dec 28, 2008 9:15 pm
YHWY:

bondguy,
 Do you have the credentials to be an attorney? If so, and it really has become an easier job over the past ten years, why aren’t you an attorney? As for “teachers”, last I checked, the vast majority of teachers are employed by the Government. And, as the son of two career teachers, in their part of the country, at least, your compensation estimates are WAY off. Try again.

I don't have the credentials to be an attorney, but most attorneys don't have the credentials to do my job either.  But I do think their job has gotten easier.  Do you remember the politicians (most of them are attorneys) making a big deal about 12b-1 fees a few years agoThink about it 25bps equals $25 per $10,000 invested and they consider that too much.  I wish our industry would charge per phone call, and  charge $3 per page for photocopying like attorneys do.  What do teachers make per hour when you figure actual hours worked and benefets?  How about professors at public universities with tenure?  I am without a doubt in the top 1% of income earners in our profession, but most brokers I know are making 50-70k a year, working 50hr weeks and dealing with lots of b.s..  How much does a "career teacher" make?  How many hours are they working a year?
Dec 28, 2008 9:24 pm

bondguy,
 Both of my parents retired with 30+ years in and Masters Degrees in their field of expertise and the most they ever made (their last year) was about $55k. They did get great health insurance and a pension, granted (provided by the government, which I stipulated have provided easier jobs the past 10 years) and did get about 10 weeks of vacation each year. Keep in mind, that’s all AFTER 30-35 years on the job. Starting salary in that neck of the woods is about $22k+.
 If you’re going by an FC pay range of $50-70k per year, then your point is spot on. In fact, at those levels, those brokers you know will be asked/encouraged/forced to seek employment in another field before long.

Dec 28, 2008 9:27 pm

Sorry, about ten weeks of SUMMER vacation each year, in addition to holiday breaks.

Dec 28, 2008 9:30 pm

[quote=Wolfgang]

Danny can go to bat for his troops all day long but WFC is now king and they make all the rules.  They don't have to pay a retention.  They know that the only reason any one would transition away from WB in this environment (or any environment) is because they are flat broke and if they do leave only taking 1/3 of book anyway.  Remember, WFC bought Wachovia Bank, Wachovia Securities was like a free side order of beans with your burrito, nice, but you don't really need them. 

[/quote]   Well the name on the door now or soon will read WF.
Dec 28, 2008 9:51 pm

You must have a son or daugher in medical school or are a child of a doctor.  We can reduce our positions to sales people, fine, but the reason teachers, custodians, doctors, lawyers, mlb baseball palyers, truck drivers, factory workers, policeman, retail employees and on and on get paid what they get is based on the scarcity or lack of people who can do the job adequately as desired by the demand of the service provided.  Doctors may be one rare exception to that fact and even then I have some as clients who are very successful and others who are not doing so well.  They may have passed the exams, but a business it is. 

As salepeople, some more successful than othere, this field is based on econ 101, supply and demand.  There is a shortage of brokers who generate a certain level of pretictable revenue, the same way only so many guys rush for a 1000 yards or bat 300 or win 15 games.  We may come from varied backrounds and some not the pedigree MD's have, but the math is simple.  You get what your worth.  We will see soon what WFC thinks of that.  The market and price has long been set.  They will pay what they feel we are worth.  They will pay that not on cfp designations, or post graduate work, but on what counts in t his business, crd and t-12.    I hope you and everyone who has sent a message to this bitchfest gets paid.  We are worth it.  Whether you need the money for next months mortgage or will just bank it and build wealth. 
Dec 28, 2008 9:52 pm

[quote=timetogo]Let’s face it…the folks in this business who are successful are well compensated.  So when someone on the outside gets wind of the income or even better yet the transition or retention packages paid it seems over the top.  The truth is this business is ruthless and about two things, your crd and trailing 12…you can add what percentage is annuitized over the last 5 years.  All firms still throw shit at the wall and see what sticks.  That is the process of hiring talent.  The reason retention and transition is what it is is because those who succeed do something almost everyone else who tries this cannot…not fail.  The math works here to pay transition and retention because the firms make money net of paying us.  They may provide the support and research, but we provide what counts most, the ability to generate revenue, year in and year out.  This year at WS has been a complete disaster.  First, the big move to St. Louis.  We lost Rod and Michael, our managed money platform, esp fundsource, has sucked, calling the home office is a joke, WB blew up, the industry and markets became the story and the reason markets fell, we were on display to the country for days as WFC and C fought over who was getting us for a song and a dance and now we wait like street people wondering when and what retention will be.  Those who think it is not of good character to expect a retention must be in a different business than me.  When any of our names are mentioned within the business either inside this firm or from recruiters on the outside the question is, “What’s his/her trailing 12?”  So with all due respect to the MD’s out there, and I have plenty of them as clients, what we do is as rare and we get the income because believe it or not we do what almost everyone else cannot.  WFC will pay the industry standard.  If not they will lose the best talent they have, because this first decision will be a  window into what all future decisions will look like.

  Danny seems like an honorable guy.  He seems concerned for us and respects the job we do, even if at times he talks to us like our DAD.  That being said, he has not once tried to lower out expectations about retention.  I choose to believe that in the end, he is what he says.  He might even be in a dog fight with WFC about how to offer AGE retention in addition to what was already paid out.  Regardless, we will know soon.  If WFC blows us off for whatever reason, this firm is done.  They know that and that is why they will pay.    We may not have gone to medical school, but give us some credit.  If this was so easy, the compensation would not be what it is.    [/quote]   So many absurd comments in here I would not know where to start, so off base I would think your joking, but not sure you are.  "If WFC blows us off this firm is done," what do you mean, as Wolfgang said they bought WB for the bank, If they are done you need to tell WFC CEO Sutmpf because I dont think he knows that yet.  Also WFC will pay "industry standard," What is the industry standard, the industry has changed forever, the banks calling the shots.  Was the "industry standard" for BAC to give ML brokers under 500k a bag of peanuts.  Or is the industry standard the grid that BAC just came out with, Under 350K gross 15% payout..those are just a taste of the "new" industry standards.  Danny is trying and has been trying for retention, but WFC has thown it into the hopper, Stumpf has recently said he has never had any desire to have a brokerage firm, never been interested in Investment banking or trading...Timetogo did Santa still come and give you some toys while you where sleeping??
Dec 28, 2008 9:56 pm

I always talk business with clients.  Guess what, attorneys, doctors, plastic surgeons - they all tell me it’s all about selling in their lines as well. 

If they don’t sell - no one walks in the door and the specialized college degree is as good as so much toilet paper. 

Some lawyers don’t even make $50,000 a year.  I understand many doctors make under $100,000 net.  So make any analogy you want as to whether we should or shouldn’t get paid - bottom line is bottom line and good brokers make a large amount of money.  So do good real estate agents - mortgage brokers - and independent business people selling anything from water purifiers to owing large furniture stores. 

That’s why some unsuccessful brokers try and spend their time playing analyst - researching balance sheets - sitting on several hour conference calls - and many fail thinking as they are working when they aren’t - sales is what makes the money in any profession.  Working is getting new clients and keeping people and their assets safe. 

Everything is commoditized - legal advice - medical advice - everything.  Sales is what differentiates the successful from the unsuccessful.  Here’s a great statistic I found to further verify my opinion here…

In 2002, the median annual earnings of all lawyers was $90,290. The
middle half of the occupation earned between $61,060 and $136,810. The
lowest paid 10 percent earned less than $44,490; at least 10 percent
earned more than $145,600. Median annual earnings in the industries
employing the largest numbers of lawyers in 2002 are given in the
following tabulation.
 
That’s what we make - well we make more!  Thank God they spent the $100,000 for law school to buy themselve a job.  Of course, with that degree you have a reall shot at being a hero and making a ton of money.  How are the hero’s made?  Sales ability that bring clients in and now and then a bit of luck.  

And, as for lower commission payouts - don’t bet on it.  With firms willing to take only ten cents per dollar where as others are taking sixty cents per dollar - the competition is hot and heavy for someone to bring in those dollars.  The technology - once the barrier to change from a wirehouse - is now not even an issue.  It’s so good everywhere you hardly even need an assistant.

There will always, always, be someone willing to pay you $600,000 as long as they know you will pay them $600,000 for seven years - less the 40% they have to pay you per year.  That deal will be made night and day summer, fall, winter, and spring.  Let’s see - they lay  out $600,000 and they are almost guaranteed to get $360,000 a year for seven years - I mean really - who wouldn’t make that deal?  We’re the dopes for taking it!

So, as this becomes more and more clear - innovative firms like Schwabb start competing paying top payouts with the name and the technology - you think the wirehouses are going to cut back on payout?  No way.  They will continue to improve offerings and increase productivity through technology and pay as much as possible.  Each $600,000 producer that lasts seven years means over two million in revenue!  What type of business would turn that away?

In my opinion WFC is walking a tight line here with no news whatsoever.  Nothing - radio silence.  I have to assume they are going to pay on 2008 through December and that’s why they may have strung it out.  I have to believe when they finally announce it - it will be a number to make you say - that ain’t great but… that ain’t bad!

I think one silver lining in this merger may be that mortgage compensation will go up big.  Some people make a huge living selling mortgages for Wells.  Many mortgage brokers have made much more than many of us make - that’s for sure.  If we can add that business line and really get paid for it (not 1/2 point divided by three but get paid like the WFC mortgage brokers)  it could be a huge pay raise for everyone.

 

Dec 28, 2008 10:01 pm

timetogo,
 My kids are 5 and 8 years of age and my parents were humble public school teahcers, so, not conflict of MD interest here.
  Fact is, I know LOTS of successful salespeople; FCs, Realtors, Yacht Brokers, etc. and, the bottom line is, you sell or you leave. Firms are, of course, motivated to pay the very most successful of these salespersons more than the not-as-successful, no question. That is where the supply and demand issue starts and stops, however. My point began as; the more pedestrian among “us” (of which I am one) are HANDSOMELY compensated for what we do relative to our peers.

Dec 28, 2008 10:02 pm
YHWY:

bondguy,
 Both of my parents retired with 30+ years in and Masters Degrees in their field of expertise and the most they ever made (their last year) was about $55k. They did get great health insurance and a pension, granted (provided by the government, which I stipulated have provided easier jobs the past 10 years) and did get about 10 weeks of vacation each year. Keep in mind, that’s all AFTER 30-35 years on the job. Starting salary in that neck of the woods is about $22k+.
 If you’re going by an FC pay range of $50-70k per year, then your point is spot on. In fact, at those levels, those brokers you know will be asked/encouraged/forced to seek employment in another field before long.

I have seen a  lot of 200-300k  brokers recruited by other firms, I don't think that will  change.  I beleive 250k producers are pretty profitable for regionals and indy's.  I would rather hire a 250k producer with a clean record then a trainee.  Trainees are expensive and the fail rate is high.
Dec 28, 2008 10:06 pm
mnbondguy:

[quote=YHWY]bondguy,
 Both of my parents retired with 30+ years in and Masters Degrees in their field of expertise and the most they ever made (their last year) was about $55k. They did get great health insurance and a pension, granted (provided by the government, which I stipulated have provided easier jobs the past 10 years) and did get about 10 weeks of vacation each year. Keep in mind, that’s all AFTER 30-35 years on the job. Starting salary in that neck of the woods is about $22k+.
 If you’re going by an FC pay range of $50-70k per year, then your point is spot on. In fact, at those levels, those brokers you know will be asked/encouraged/forced to seek employment in another field before long.

I have seen a  lot of 200-300k  brokers recruited by other firms, I don't think that will  change.  I beleive 250k producers are pretty profitable for regionals and indy's.  I would rather hire a 250k producer with a clean record then a trainee.  Trainees are expensive and the fail rate is high.[/quote]
 I know for a fact that you are correct in your belief.
Dec 28, 2008 10:14 pm

[quote=timetogo]Eleven weeks later…rumor is that Danny has the job and an announcement is coming Monday.  All communication from management has been positive.  WFC is aware that the brokerage unit is in need of standard retention.  ISG and PCG will both get industry standard deals very big producer biased, but not so harsh on the middle of the pack like MER and BAC.  The complications come from the amount of money already received by AGE and even the smaller amount rec’d by WS PCG brokers.  An industry deal announced next week will subtract any EFL balance…If you are a new hire, there will most likely be a cuttoff on retention like the MER deal…ie 2006 or after.

  Either way, the time that has passed is an indication the the priority this has had with WFC.  Next week is the week it needs to be done.  With retention that is less than the industry standard, tied to the 10-11 weeks we've been waiting will speak to the future of the NEW firm.  Anything beyond that, I will assume we are screwed.  It will be a complete disregard to us as we all try and salvage a sense of relief and peace and enjoy a few days for the holidays.  Instead we will be forced to make tough decisions as deals to go other firms have expiration dates.  Instead of eggnog, we will be preparing protocol lists for the acats.    [/quote]   I must have missed it, you said an "announcement is coming monday" this post was on Dec 13th...What did they end up doing??
Dec 28, 2008 10:31 pm
Sell High:



In my opinion WFC is walking a tight line here with no news whatsoever.  Nothing - radio silence.  I have to assume they are going to pay on 2008 through December and that’s why they may have strung it out.  I have to believe when they finally announce it - it will be a number to make you say - that ain’t great but… that ain’t bad!

    It's time to start turning this thing around. Get back on offense. 
Dec 28, 2008 10:41 pm

One last thing, as for Stumpf not wanting securities representation - here’s what he said Dec 10:

Stumpf said it was possible Wells would look for a large brokerage firm in the future.

Once Wells purchased Wachovia the bank became "a national company," he said. "And, as we look to build out our brand and build out our distribution, that's an important part of the company," he said.

This made a lot of sense to me.  If you have the infrastructure to run 1,000 brokers - you could probably use it to run 25,000. 

Say. as an example, you have a research department.  Whether 1000 brokers get the research or 15,000 it doesn't cost a nickel more.  Same with corporate actions, bond desks, and a whole lot of other areas.  However, 15,000 brokers will bring in a lot more against the fixed costs to run things than 1000. 

As you expand distribution and the profit made from it against the fixed costs of running these various areas - profitability moves higher and higher.  And, so can payout. 

So, from what I've read Stumpf has said exactly the opposite and, from a clear headed business perspective, it makes a lot of sense to expand distribution. 

Thus I think Fritz is dead wrong.

Dec 28, 2008 11:31 pm

illinois…your off base. A lot of us are great at managing other peoples “investments” not great at dealing with our own money. They say the same for many other professions. I have had a number of atty clients over the years who I discovered had no will. Shocking, but they never got around to it. Some of us have had to finance our survival in this business during lean times in ever ending quest to one day make it big enough to never have to worry again. Maybe you live in Mayberry where it all peaches and cream, and everything is just dandy. The rest of us have been in a bare knuckles brawl to make it in this business and sometimes the finances be damned. Whatever it takes to make it. 

Jan 2, 2009 1:35 pm

Did anyone see the Ny Times yesterday:

In a conference call on Dec. 19, Tim Sloan, a Wells Fargo executive who will head the global markets and investment banking unit, told a group of Wachovia bankers that they would not receive big bonuses. Instead, their allocated bonus money will be returned to shareholders.

He also said there would be no retention packages, according to a Wachovia employee who listened to the call. A Wells Fargo spokeswoman declined to comment

  I hope he is talking about retention packages for the investment bankers and not the brokers.
Jan 2, 2009 1:38 pm

http://www.nytimes.com/2009/01/01/business/01pay.html

Jan 2, 2009 1:43 pm

The key piece of this article:

In a conference call on Dec. 19, Tim Sloan, a Wells Fargo executive
who will head the global markets and investment banking unit, told a
group of Wachovia bankers that they would not receive big bonuses.
Instead, their allocated bonus money will be returned to shareholders.

He
also said there would be no retention packages, according to a Wachovia
employee who listened to the call. A Wells Fargo spokeswoman declined
to comment.

“I know that’s very painful to hear, but that’s the
reality,” Mr. Sloan told the employees, as recounted by the
participant. “It just would have been irresponsible to the company’s
shareholders to do anything else.”

Given Sloans position within the Investment Banking group, I doubt his words here pertain to anyone or any piece of the brokerage at Wachovia. We shall see.
Jan 27, 2009 7:18 pm

dismusbedaplace where the retention is gonna be announced at the 100th page…it certainly didn’t happen on the other thread…I am soooooo disappointed…

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