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Dec 28, 2008 9:18 am

I'm a new advisor in the process of learning the business. Competing firms are offering alot of money upfront for experienced FA's to transition. How do these firms know they're not being sold a bag of goods? What would prevent a 900k producer from saying he does 1mm? Can the new firm verify this info?


 
Dec 28, 2008 10:29 am

They will definitely ask for book of business reports and ytd and trailing 26 gdc reports.

Dec 28, 2008 11:02 am

I usually ask for paystubs as well.

Dec 28, 2008 11:49 am

Generallly speaking, Trailing 12 is simply trailing 12.  The fact that you get "haircut" does not really matter.  To answer the question of a guy who does 900, but fudges it to get 1mm, my guess si that nobody really cares.  To get a transition package of that size, and that is going to mean it is at least a 6 year deal (more than likely 8 or 9 years).  If I do 900K (which I do not), am i really going to risk a decade long partnership by fudging the numbers a little??  I am sure it happens, but not that often.

Dec 28, 2008 12:41 pm
Questions101:

I'm a new advisor in the process of learning the business. Competing firms are offering alot of money upfront for experienced FA's to transition. How do these firms know they're not being sold a bag of goods? What would prevent a 900k producer from saying he does 1mm? Can the new firm verify this info?

 




I can't believe that people are actually answering your question. First of all, I think we're being punked. If I'm wrong about that, the only thing you need to know about this business is which button to push to get an outside line.

Dec 28, 2008 1:09 pm

One of the guys who came over to my firm switch his clients to A-share mutual funds and VA's in the months leading up to his move, to get his T12 way up.  It staggered the imagination that he still got a 250% deal, based on largely non-recurring commissions and fees.

A big problem lately will be that the T12 for fee-based advisors will be a whole lot beter than the future 12.  With assets down 40% or more across the board, fees will be way down.  Even more when you account for assets that won't move, will be withdrawn, etc.  Risky time to be funding transition deals, if you ask me.

Dec 28, 2008 8:22 pm
Bodysurf:

One of the guys who came over to my firm switch his clients to A-share mutual funds and VA's in the months leading up to his move, to get his T12 way up.  It staggered the imagination that he still got a 250% deal, based on largely non-recurring commissions and fees.

A big problem lately will be that the T12 for fee-based advisors will be a whole lot beter than the future 12.  With assets down 40% or more across the board, fees will be way down.  Even more when you account for assets that won't move, will be withdrawn, etc.  Risky time to be funding transition deals, if you ask me.

 
You are right, people we have had come over this year, even well before it got real ugly are all doing less than 50% of what they were supposedly doing (couple came over 600K+ T-12 and can't do 10K per month).  Can not imagine giving anyone a nickle to come over based on t-12 right now.  So many accounts/relationships are blown up.  I would think for anyone to leave right now, 90% of them know their blown up and are leaving to get a final check before its over for them. 
Dec 29, 2008 4:17 pm

My t12 has doubled and my clients have made money in the last few months. I guess if your strategy is to say hang in slugger sooner or later things will work out, you get what you put into it ... not much. Boggles my mind how most brokers dont know how to go short or use a simple hedge. But alas .... I'm just a newbie.