Skip navigation

Urgent! Should I go Independent?

or Register to post new content in the forum

15 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
May 23, 2005 2:24 am

I'm getting squeezed out at a major wirehouse, and I'm considering going independent.

My business is about 200k with $15M AUM. I started out at a discount firm in 96' went to the major wirehouse in 2000 so my length of service really hurts me when comparing against other brokers with similiar years in the business. The managers are giving me month to month ultimatims and I need to make a decision soon. My business is overall wealth management, maybe 50% mutual funds 25% stocks, 25% fee based, and I've been bringing in about $2M-$3M in new assets a year. I put in a lot of work networking and getting my name out there and feel I'm close to breaking out. Unfortunately its not soon enough, and I need to find out which firms would fit well with my business model.

I'm looking at LPL, Commonwealth and Raymond James, but don't know much about any of them. Do you need to have your own office? Or can you start off working from home? What are realistic payouts after expenses?

Thanks for any help!

May 23, 2005 12:28 pm

I say no, you shouldn’t go independent.



Your production is not high.  With your rather short length of
time in the industry, I question the strength of your client
relationships.  Will they follow you if you go independent? 
Or will they stay with the wirehouse???



I think you should look for a regional firm to go to.  Some
regional firms will welcome you with open arms, for they realize that
even at $200k in production, you are still profitable.  The
wirehouses are very snobbish sometimes.



I think you should go where you will be appreciated.  Build your
business, let your client relationships grow.  Then when your
production is sufficient and you have a track record with your clients,
then think about going independent.



Just my opinion.

May 23, 2005 12:34 pm

Gridiron, I’d wait 'til I had at least $20 million in assets.  Additionally, $200K with $15 million AUM is a bit high, and in this current regulatory environment, managers might be hesitant about that 1.4% velocity.

May 24, 2005 12:00 am
Starka:

Gridiron, I’d wait 'til I had at least $20 million in assets.  Additionally, $200K with $15 million AUM is a bit high, and in this current regulatory environment, managers might be hesitant about that 1.4% velocity.

May 24, 2005 12:19 am

[quote=gridiron][quote=Starka]Gridiron, I'd wait 'til I had at least $20 million in assets. [/quote] [/quote]

Unfortunately I might not have that option. If management wasn't threatning to let me go, I would not be thinking of leaving.

What makes it difficult is I still have 1 year left on my loan, that makes a move that much more daunting.

Inquisitive, regarding your comments, my clients are very close to me and I probably could take 80-90%. Since most of my new clients are from networking referrals, most new business is coming to me not really my firm. My close relationship to clients and the way I get new business, are the two things going for me right now.

May 24, 2005 1:15 pm

When I went independent in 1984 I had been in the business for two years, had about 15M AUM and a gross of $384,000.  Granted, times were different then.  It is good that you have a lot of fear about going independent.  If it was a really easy decision, then everyone would do it.  After all, who wouldn’t prefer to keep 90% as compared to 40%.  That being said, there are risks associated with independence and there always will be.  This may sound really corny, but it is the way that I have lived my life.  Think about your ancestors and the risks and chances that they took to live the American Dream.  There is not one statue in this Nation to anyone who failed to take a risk.  A brave man dies but once, a coward dies a thousand times.  Tee it up and hit it straight.  Grip it and rip it!  Live long and prosper.  Nanoo! Nanoo! Secrest Out! Say goodnight Gracie!

May 24, 2005 1:37 pm

It's not ideal, but is possible to make it work on $200k as an independent.   But, at that level (assuming you do it right w/ a decent office, some admin support, etc.) don't expect your net to be appreciably better than a good wirehouse payout.  However, assuming your business is growing, the gravy will come later, because you're operating costs are relatively fixed, regardless of production.  So, as your production increases your margins widen.

To lighten the economic load of operating an indy office by yourself you might find a partner to do this with (or see if a local existing indy office with the firm of your choice would be interested in sharing space, etc.)

I can't speak for LPL & Commonwealth, but RJFS does require it's indy branches to be located in non-residential offices.  While I'm biased to RJFS, you've identified three very good indy firms to consider.  Go through a thorough due diligence, including having them bring you to their home offices.  Talk w/ other reps w/ those firms, ideally including some that came from your same firm.  Get a full understanding of how what each b/d provides meets your and your clients' needs.  Get comfortable with their cultures.

May 25, 2005 12:04 pm

[quote=gridiron]

Inquisitive, regarding your comments, my clients are very close to me
and I probably could take 80-90%. Since most of my new clients are from
networking referrals, most new business is coming to me not really my
firm. My close relationship to clients and the way I get new business,
are the two things going for me right now.[/quote]



Gridiron, the fact that most of your new business is coming from
referrals isn’t very reassuring considering your level of production
and impending termination.  If it were such a positive, you
wouldn’t be worried about being terminated.



$200k in production will be respected by some regionals.  They
won’t toss you out like yesterday’s trash like the big wirehouses will.



Going independent–I thought that was the wave of the future years
ago.  It hasn’t panned out, probably for good reasons. 



By no means are you a failure.  Like I said, $200k will be
respected by some regionals.  I suggest you go work for one of
them, bringing as many of your current clients as you can, and focus on
building your book over the next 3 - 5 years.  Then, if you grow
your business, worry about going independent.



Put Trader has made some points about the importance of a brand
name.  Being an independent, nobody really knows who you are, if
your firm is trustworthy, or if you are a fly-by-night conman. 



At least consider the prospect of a regional.  You are the one who
has to suffer the consequences of your decision.  Don’t limit your
options in this very difficult time, OK?




May 27, 2005 1:28 am

Gridiron, I read your post with interest as the situation you

describe mirrors the one I was faced with several months ago. I

was at a “major” with about $20 million in assets with around

$210k in production. I couldn’t believe the bs they put me

through in a tough environment. I looked at independents but

couldn’t get past being out there with little support. I looked at a

couple of regionals but you will never believe where I ended up

and with what I think was my best deal… H&R Block Financial

Advisors! I struggled with the name for a while but when I

started asking my clients if they’d come most said yes! Its been

a few months and I’m happy with the amount that followed me.

BTW, my payout is almost double what I used to get and I’m

due an asset bonus soon.   My “major” pushed me out and I just

want to say thanks! Before going independent check them out.

May 27, 2005 1:42 am

Yeah check them out at your local strip mall they will be sitting right next to Edward Jones and the tatoo parlor.

May 27, 2005 1:58 am

Now now Broker Fee, dont be so snooty… 

May 28, 2005 1:24 am

My firm assists a lot of reps making the transition to an independent practice, especially those setting up their own RIAs.  Feel free to call me at 310-275-7300 or email me at [email protected]

Patrick J. Burns, Jr.

<?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Beverly Hills Regulatory Consultants Group LLC<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Web site: www.bhrcg.com  

May 28, 2005 7:49 pm

"H&R Block Financial
Advisors! I struggled with the name for a while but when I
started asking my clients if they'd come most said yes! Its been
a few months and I'm happy with the amount that followed me.
BTW, my payout is almost double what I used to get and I'm
due an asset bonus soon. "

Did they give you an upfront bonus? what region are you in?

May 28, 2005 9:03 pm

Gridiron, I was given a choice between forgivable loan or

salary for a year. I took the salary. The $ was more on the loan

but by taking the salary I got a 55%+ payout for the next three

years.

Jul 8, 2016 7:33 pm

Welcome to Global World Loan Company:
The company wish to inform you that we are currently given out loan
at 2.5% interest rate, if you are interested in any Kind of loan email
us for more information.
Company Email:[email protected]
phone number:+14158309895.