Schwab/Etrade/ScottTrade/Ameritrade?

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May 5, 2009 11:25 pm

How do advisors/ brokers get paid in the discount realm?

May 5, 2009 11:36 pm

Usually their employer issues them a paycheck on a periodic basis.

May 6, 2009 12:15 am

Very little.

May 6, 2009 12:56 am
Soothsayer:

Very little.



how much you think?

May 6, 2009 9:01 am

$30-50k salary + bonus potential = $70-90k total compensation + benes

Good luck....in this environment, they are probably getting 10+ inquiries for each position- if they are hiring.

May 6, 2009 9:32 am

They generally hire brokers based on total assets in the branch (ie every broker gets a certain sized "book").  Currently, most branches are not hiring because the assets per broker is getting too small. 


Some actually make very good money, over $200k.  They do not have a standard grid like the rest of the industry.  They are paid to move the discount brokerage money into fee-based business (similar to ours) and also for bank products.
 
And it is almost impossible to take the book if you leave.  They are not part of any protocol and rarely settle without all sorts of injunctions and a big payment.  Discount clients loathe full-service brokerages, anyway.
May 6, 2009 11:10 am

A friend of mine in Miami said they're hiring and pay 100 - 125k a year, plus bonuses. Is that just because its such a large office or what? (other option is he is full of it)

May 6, 2009 11:32 am

What company is that with?

May 6, 2009 3:13 pm

BACFA - you nailed it.  It IS impossible to take your book if you leave.. at least more than 1% of it.  We've actually tried a few times having hired both a former Schwab and a former Fidelity guy ove r the last 18 mos. or so. Complete failure on their part and ours.  The Fidelity advisor had a proven and validated 'book' of $280M that he serviced at Fidelity. He came to us having been a top ranked producer when his office was closed and combined with another. He was offered no opp at the new office.   

We figured.. how can we go wrong.. get him for nearly nothing and perhaps we'll get 10-20% of his clients over.  We got 1 in 2 months. He oversold us on his relationships and the weight he carried with his clients.   Bottom line.. if you go discount.. you're going to be stuck with a discount firm and getting out requires starting over from the start.

May 7, 2009 3:53 pm

Schwab was the place, but maybe they're talking "total comp" or something. Anyways, I guess the logic is there to take a book--build the relationship then move, but I guess the story of going from .5% in fees to 2.0% in fees is too hard to swallow. If the relationshi doesn't matter at the discount brokerages, why do they even hire personal advisors?

 
Personally I think if you can build a real relation ship, focus on those that use managed money, then look at a comparable fee, then move to a wirehouse and discount until its "worth the switch" to get the added services, plus the performance with better managers. I guess I would make that switch if I were the client. Go figure.
May 8, 2009 10:48 am

I spoke to Schwab and they offer a base plus bonus, but when listening to him I realized I was there for life.  If I had to leave here, I would go Indy instead.  A friend of mine left Schwab and I told him not to...ps. I saw him the other day and he said he will be out of the business in 3 months.  He wasn't able to bring a single person.  Maybe it's just the FA's that work there (not business people) or the clients or both, but once at these places, they don't leave with FA because they are there for Firm, not FA

May 8, 2009 6:25 pm

It's pretty simple, really.  Almost without exception, clients who choose to open regular retail accounts at Schwab or similar discount brokerage firms are DIY'ers who are choosing a firm that lets them do their thing at a discounted price.  They may subsequently be assigned a rep to help them, but from the client's viewpoint this has no more significance than when they go out to eat and someone comes to their table and tells them that "I'll be your server tonight."   

 
Now fast forward a few years, and this Schwab "FA" decides to leave for whatever firm.  They may have been assigned to service a decent size "book" but those "clients" are STILL DIY'ers looking for cheap online account access, and they still viewtheir "FA" as interchangeable employees of Schwab.  If they thought they could do the same thing on their own at E*Trade or Fidleity or wherever, they would go there in a heartbeat without a second thought to their "FA."
 
To think any significant number of these "clients" would suddenly change their DIY stripes and develop an allegiance to and follow this FA elsewhere is simply unrealistic, just like thinking customers at a restaurant will follow their waiter to another restaurant.  It ain't gonna happen because no one goes the that restaurant because of the waiter, just like no goes Schwab retail because of their FA. 
May 11, 2009 10:25 am

They will chase anyone who takes their clients like a pack of hyenas.  In fact, they show the arbitration panel that they do not allow incoming brokers to bring any of their former clients, so therefore outgoing brokers are held at the same standard.  And they have been very successful at protecting their books.