Wirehouse Envy

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Jan 18, 2007 7:32 pm

For all of the wire bashing that goes on on this board, it appears that many of you have a bad case wirehouse envy.  It's a proven fact that wire reps have significatly more assets under management and produce significantly more gross than their non-wire counterparts. Perhaps those that are critical: A. Couldn't get hired by a wire. or B. Left because they were marginal producers and had no choice but to chase a higher payout.

Jan 18, 2007 10:22 pm

Sometimes it's just too easy...


It's also a known fact that there are more @ssholes in the wirehouses...that doesn't mean I want to be one.

Jan 18, 2007 10:33 pm

Lex,



It's also a matter of symantics. Wirehouses only KEEP high producers.

That artificially inflates their numbers since they churn through rookies

like crazy. And when they leave, the assets are given to seniors. Not that

I am knocking it, it's just how the model works. Also, the tenure is

generally longer for the seniors at wirehouses. The Indy phenomenon is

a relatively recent thing (huge growth the past few years). So those books

are really growing. Indy nation has started to shed it's "place of last

resort" for failed brokers stigma. You are finding many more successful

brokers going Indy than you used to. I think that is a trend that is going

to continue. Why do you think major firms are pushing or considering

new managed money platforms, indy platforms, etc? It's because that

appears to be the trend of the future.

Just my thoughts...

Jan 19, 2007 6:52 am

Broker24 ..


I totally agree about Indy coming into it's own.. and you know the majority of it is fed by the greed of the firms.. IMHO... be it banks or wires or whatnot ..


I mean there was an EDJ rep in Michigan I know of that went Indy he had a $200million plus book ..one of the biggest at Jones and bailed.. so it is happening at all levels..


Jan 19, 2007 7:59 am

I worked at a wirehouse for 17 years. Yes they have more assets, but not because they are better. A wirehouse broker has more assets because so many people leave. Unless you have all family accounts, you will leave people behind. Also, they buy the largest brokers. When mcdonald was taken over by UBS, they were stunned that the average production was around 600k .  I went to a regional firm and made the same amount of money my first year here as I did my last year there despite only bringing over 75% of my assets and doing about 75% of the gross. This does not include my massive signing bonus.They  also let me do a weekly radio show that my previous company would never let me do and no one in management lies to me anymore.I also get a 10%+ match of my income in stock. I see people here getting 100k in stock dividends from the esop stock each year.  


 many of the Ed jones bashers say that EJ is a good place to start but I think it is the other way around. A wirehouse is a good place to start but a regional or an independent is a better way of life. I know that one day this could end and we will be bought out. That is why the independent channel is expanding so fast.

Jan 19, 2007 12:21 pm
Lex123:

For all of the wire bashing that goes on on this board, it appears that many of you have a bad case wirehouse envy.  It's a proven fact that wire reps have significatly more assets under management and produce significantly more gross than their non-wire counterparts. Perhaps those that are critical: A. Couldn't get hired by a wire. or B. Left because they were marginal producers and had no choice but to chase a higher payout.



Lex, that would be funny if you weren't serious.


I worked at a wire for most of my 24 year career. Over that time management became filled by more and more empty suits. When an empty suit, former failed broker, college chum of the regional director, became my branch manager I realized that the inmates had finally taken over the asylum. It was sad to see what that former great firm had become. And the truth is, I no longer fit their model advisor. Their model advisor is someone who will gather assets to put into a fee based programs no questions asked. That doesn't float with us old dinosaurs who were taught to question everything. You know things like how does the fee help the client who doesn't trade much? And why does a tax free muni client have to pay a fee for an asset that doesn't need to be managed? You know, stuff like that, the round peg square hole stuff. So my partner and put ourselves on the market and made a move. We couldn't be happier. At our current digs those who are better off with fee are in fee. Those who are benefiting from a traditional structure are in transaction. And we're no longer getting hosed on the munis we buy. Everybody is happy.


Jan 19, 2007 2:06 pm

It seems that every career path haas it's pro's and con's and MOST of the options out there work very well for a specific type of person:


Banks - for people who don't want to do much prospecting in exchange for a lower payout


Wires - for people who want brand recognition in exchange for putting up with a lot of political BS


Ed Jones - for newbies who want to learn the business in exchange for a lot of things


Indy - for established advisors who want higher payout and less supervision and newbies with a big financial cushion and someone to show them the ropes


For me I think the best avenue is with an established indy who wants me on his team, I get some training but will have to learn alot on my own, I will work in a team environment where everyone helps, my payout will be higher than EDJ but lower than a true indy, my mentor will show me how to go indy and encourage and support me, when I do decide to go indy it will be quick and painless and I will take 100% of my clients.


Before you jump in and tell me I will never find this "dream job", let me stop and tell you, I already have.  I will hold off on posting full details until it is finalized next week.

Jan 19, 2007 2:07 pm

"That doesn't float with us old dinosaurs who were taught to question everything." BondGuy


Amen, my brother!


And the tuition to learn that lesson was steep indeed!


What I can tell you is that the people that I meet at the meetings in Richmond are absolutely NOT guys who couldn't slash wouldn't make it at a wirehouse. They are generally individual producers with +100MM in AUM. Oh sure there are some pikers, like myself, but the vast majority of FA's are aged gentlemen who have good old time conservative clientele based book and they were tired of punks from Merrill being recruited into their with 2-7 years of experience in the business becoming their manager at the wirehouse.


There was this one guy (fairly young, say 40ish), who works from the upper peninsula of Michigan in the summer and then operates out of his winter quarters in Florida. You don't get to do that without decent prodo.


Now, I used to do the opposite(ish) in that I would leave the local branch to work on the mid coast of Maine for the summer (something I have not been able to do since I went Indy, so I am slightly jealous of the wirehorse in that regard.


One thing you'll notice (I hope) is that no one beats up on the Wire Horse, only on the Wire Hose Management. I still see the Wirehorse as being in the same business as I am, and I know that the products and services measure up more than favorably with the offerings of the WireHose. We are the vanguard of the industry. What we are doing is what the WireHoses should have done in the '90's .


I will say that I'm underimpressed with the direction of the WireHoses. They keep pushing fee based... How long will it take brokers to wake up to the fact that I can offer the exact same managers in the exact same disciplines in the exact same accounts... I get paid 90% of the fee (or would if I did them)... Or that they can get a 90% payout on the Mutual fund Trails that they already are receiving!?


Mr. A


Jan 19, 2007 10:22 pm
aldo63:

Yes they have more assets, but not because they are better. A wirehouse broker has more assets because so many people leave. 


Any broker that expects to build a book on inherited assets isn't going to go far no matter where they work. Maybe my office is the exception, but it's rare that ANYONE leaves.  Why would they when we have it do good? The REAL REASON the wirehouse brokers have so much more assets is because most potential clients (especially high net worth) feel more comfortable giving their money to a large company that they are familiar with rather than "Joe's Financial."  I'm not saying it's right, it's just the way it is.

Jan 20, 2007 10:08 am

My best friend is Indy and I am at ML.  We have these discussions
all the time.  We both were raised in the business in a bank, and
he went Indy and I went Wire.  It has been almost 10 years now and
here is what it is:



Friend:



Doing around $350k in production.

Keeps around 65% of it for him and his family.

Has ownership and works about 35 hours a week.

Worries sick about cost savings, rent, and his BD changing things, but
manages to golf at his club 3x a week (sometimes with me!)

He is generally happy and runs mostly mutual funds, annuities and bonds.

Typical account size is arounf 150K.



Me:



I formed a team and we are clearing about 2.5 mil in production all fee based.

We keep just over 50%.

I own nothing and work about 50 hours a week minimum.

My firm gives me everything including an expense account.

Every change the firm has done with my pay has resulted in an increase for me, including this year.

I run my own portfolios and use money managers.

Typical account size is around $1 million.

I have a PILE of MER stock (look at the chart).





I like my path better, but my firend would not trade places with me for
a million dollars.  He is so proud of what he has done and what he
has created on his own becuase everyone said he could not do it, and I
think that is worth more than money. 



For me I am amazed at how people bash Merrill so much, I happen to like
the company and think they really have it figured out...and they have a
chasis that is built for success, especially for existing reps.



To each there own...lets just all do it the Right Way.

Jan 20, 2007 10:55 am
rightway:

Me:

I formed a team and we are clearing about 2.5 mil in production all fee based. We keep just over 50%.
I own nothing and work about 50 hours a week minimum.
My firm gives me everything including an expense account.
Every change the firm has done with my pay has resulted in an increase for me, including this year.
I run my own portfolios and use money managers.
Typical account size is around $1 million.
I have a PILE of MER stock (look at the chart).
To each there own...lets just all do it the Right Way.


I pray I can do it the "rightway" myself!  (Time to coin "rightway".) Hopefully the rightway can be accomplished at other wires just the same - that is, except substituting the MER part for something that rhymes with bee.

Jan 20, 2007 11:00 am

Amen rightway. If wherever you are is working for you, keep working it!

Jan 22, 2007 9:39 pm

I like my path better, but my firend would not trade places with me for a million dollars.  He is so proud of what he has done and what he has created on his own becuase everyone said he could not do it, and I think that is worth more than money. 


Well put, right way. I think the sense of accomplishment from building a practice and having ownership can't be measured in money only. And surviving and thriving in the corporate environment is to be respected.