Slowly but surely the Commissioned broker is Dead

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Sep 15, 2008 10:59 pm

ML Brokers becoming Bank brokers is another nail in the coffin for us. Clients are tired of this commissioned based conflict of interest model. My friends at Schwab and Fidelity said they were literally on the phone all day, and my buddy at Schwab had $16million in incoming acats today, $5million from Lehman and the rest from ML. He's got appointments with ML clients the rest of the week. His manager got 7 calls from ML reps looking for a job.


 
The banks have got the foot traffic coming in and the banking platform, the discounters have got the marketing, pricing, products and service  to bring in and retain the Full service client.
 
Stick a fork in me, I'm done.
Sep 15, 2008 11:07 pm

Tell us, how is charging commissions a "conflict of interest"?

Sep 16, 2008 2:22 pm

To each their own. There's a lot of agony and stress that comes with the "5 times what they do" bit.

Sep 16, 2008 2:41 pm
sbbroker:

ML Brokers becoming Bank brokers is another nail in the coffin for us. Clients are tired of this commissioned based conflict of interest model. My friends at Schwab and Fidelity said they were literally on the phone all day, and my buddy at Schwab had $16million in incoming acats today, $5million from Lehman and the rest from ML. He's got appointments with ML clients the rest of the week. His manager got 7 calls from ML reps looking for a job.


 
The banks have got the foot traffic coming in and the banking platform, the discounters have got the marketing, pricing, products and service  to bring in and retain the Full service client.
 
Stick a fork in me, I'm done.
 
The discounters have service?  Really?  Everybody that I've ever spoken with that deals with a discount broker gets discounted service also.  Sure, they're great at marketing (we do everything for free), pricing (again with the free), and products (again, free...however, some good products if you know how to look for them), but service should not be included in this mix. 
 
People have a tendancy to believe that just because something is free that it is better.  Well, you get what you pay for in my experiences. 
Sep 16, 2008 8:45 pm

The comments here all have some truth. The pikers at Schwab and Fidelity ARE pikers. They are order takers. They arent even in our business they might as well be in the shoe buisness. And yeah, we take more stress to make a lot more money.

 
But the original poster makes an important point. The guys in my office who do commission only business (as opposed to fee) are dying on the vine, and this is the end for them. One of them, a guy actually in the biz for 35 years, came out and said he expected to be able to finish his career out and last another 3-5 years, but he realizes now, he is done, unless he learns the fee based programs. It has less to do with the banks getting involved and more to do with the publics attitude, and the wealth management model. We are not getting paid to do trades anymore, ever again. We used to be able to do the pfd syndicate and hide the commish, but thats over too. Pfds are gonna have to pay a whole lot more in the future for anyone tlook at them.
Sep 16, 2008 8:47 pm

I don't buy it that the commisssioned broker is dying.  The heaviest hitters in my office are still primarily commisioned with say 20% in trail type of business and I don't see this changing much here.  Don't get me wrong, I do like the trails coming in without having to really do any more heavy lifting.  The biggest problem here is that a down market certainly makes the client question why he is paying an ongoing fee, regardless of activity in account,  to watch his account values go down.  They don't question this when the market is going up.  Most silver haired clients that I have seen are against fee-based platforms.

Sep 16, 2008 11:31 pm

Even fee based reps feel the pressure. A rep's average ROA decreases every year. Why? Because of pricing pressure. I used to get 2 1/4% gross on a ML Consults account 6 years ago. Now I'm lucky to get 1%. No client is gonna pay 3% like they used to when the discounters have a similar and in many cases Better product for 1%. Heck Schwab's mutual fund wrap program charges 50bps and the performance beats the pants off of MFA!

 
My "piker" friends at the discounters make between $100-$150k. I'd have to do $450K gross just to net that. If you're doing it well then god bless ya. But for someone like me who started in this biz less than 10 yrs ago, Doing $450k is next to impossible in this environment. 
 
I should have entitled this thread "The wirehouse broker is a dieing breed"  The banks and the discounters are eating my lunch because they are getting in front of a heck of alot of people and showing them how cost effective they are compared to the wirehouses.
Sep 17, 2008 12:34 am

Just be happy you guys have a job........who cares where it's at, at this point in the game.

 
Define piker.....or have you all seen boileroom one too many times and just like to say it.
Sep 17, 2008 2:27 am

Guys, it's not that commission based business is dead. It that commissions VISIBLE TO THE CLIENT AS A SEPARATE CHARGE are more difficult to get clients to accept. When at a discounter, I used to hear clients to nothing but bitch and bitch and bitch about paying any commission at all, calling consistently to request refunds due to their "account size with us." Now I can write VA after VA and even disclose the internal fee expense, which no one seems to mind so long as it isn't itemized for them.

Sep 17, 2008 11:21 am

I have yet to do any fee based business, but I was looking at a sample statement the other day, and the itemized fee JUMPED off the page at me.

 
It sucks to have to deal with all the complaints about accounts going down, but I'm sure glad I'm not having to deal with PO'd clients whose accounts are going down while they're still being charged a fee.
 
I'll bet there are lots of Jonesers who wish they'd kept their clients in those A shares a little longer before switching them over. 
Sep 17, 2008 12:23 pm
Borker Boy:

I have yet to do any fee based business, but I was looking at a sample statement the other day, and the itemized fee JUMPED off the page at me.

 
It sucks to have to deal with all the complaints about accounts going down, but I'm sure glad I'm not having to deal with PO'd clients whose accounts are going down while they're still being charged a fee.
 
I'll bet there are lots of Jonesers who wish they'd kept their clients in those A shares a little longer before switching them over. 
 
Borker, keep in mind, you are feeling this way from the perspective of someone in the business just a few years.  If you had clients for 15 or 20 years, that have been through the ups and downs a few times, and stuck with your advisor because he did very well for you though those times, you will likely trust them, even through what we are experiencing now.  But yes, a client you picked up 18 months ago might not be happy about paying a fee (or a commission, or seeing their account down, or seeing gas at 4.00/gallon, or seeing milk at 4.00/gallon, or seeing their home value down 20%, or whatever). 
Sep 17, 2008 12:47 pm

edit*

Sep 17, 2008 12:49 pm
iceco1d:
Dictionary.com Unabridged (v 1.1) - Cite This Source - Share This
pik·er       /ˈpaɪkər/ Pronunciation Key - Show Spelled Pronunciation[pahy-ker] Pronunciation Key - Show IPA Pronunciation
–noun Informal.


 
(Read:  Producing FA for 9 years doing less than 450K gross.)
 


 
(Read:  I won't pay for competent advice - but I will pay for $8 trades.)
 


 
(Read:  "I want to be a stock broker, but I don't have the balls to prospect...so I'll take orders for Schwab over the phone and pretend I'm legit!")
 

[Origin: 1275–1325; ME: petty thief, equiv. to pik(en) to pick1 + -er1; cf. dial. (N England, Scots, Hiberno-E) pike to pick1]

—Synonyms 2. cheapskate, penny pincher, skinflint.
 
Good enough? 
 
wait, so how do any of those definitions fit into:
 
icecold:

5x as much Ferris?  I think you are selling yourself short aren't you?  Probably 6x or 7x as much as those pikers...


 
iceco1d:

In business 8 or 9 years and not doing $450K gross?  Yikes. 

 
Who are you to talk? You haven't even been in the business half that long.
Sep 17, 2008 5:05 pm

we are all commission brokers - fees are a form of commission. now maybe you can make a case that transactional brokers are going away in the merrill lynch system, but the biggest producers in the business are transactional. look at martin sharinoff, brokers at goldman, and brokers at retail banks are all transactional.


imo mutual fund crap accounts provide no value to a client, they benefit the firm & the rep with reocurring revenue. sma accounts however do provide some value add

Sep 17, 2008 5:31 pm
iceco1d:

So when a person goes into H&R Block to get their taxes done...is that fee another form of commission? 

 
commission - fee, bottomline there is a Cost of Doing Business
Sep 17, 2008 5:37 pm
Vin Diesel:
iceco1d:

So when a person goes into H&R Block to get their taxes done...is that fee another form of commission? 

 
commission - fee, bottomline there is a Cost of Doing Business
 
I tend to barter for my service at times.  Usually I barter for one night with the wife.
Sep 17, 2008 7:19 pm

Ice, exactly how would someone who easily mocks others he doesn't know (something any bum can do) distinguish himself?

 
 The 'Don't burn bridges because you never know" has always been a cliche but in a world where Merrill sells itself, bears and Lehman go under etc, it has turned into fact.  Merril freaking Lynch, the company that scoffed down on others in the industry, was sold and you're poking fun at others (Schwab)! I thought you were a smart guy, how does any of that make sense to you?

I'm not interested in how you have to try and convince yourself how successful and distinguished you are when I know, were it true, you would be spending your time making a sales call rather than typing out fantasies on a message board name calling (again, something any bum can do but I degress, you're distinguished). I've only known people that brag, much less on a f'n message board, to be people with no self esteem.
 
Regardless, you stick to your smart ass and irrelevant (didn't you like using that term when it was convenient for you?) remarks about bleeding accounts to mask how pointless your ego stroking here is. Really, you're on pace this year and you think that paves what will happen for the next 6-8 yrs in your business? What a freaking joke. That was almost embarrassing to read until I realized I didn't type it.
  I like to use my age to acknowledge I have a lot to learn rather than trick people into thinking I'm a freaking know-it-all from behind a monitor. I respectfully decline your offer for help based on your 1-2 year tenure as I have surrounded myself with a mentor and business partner who has been in the biz for 41 years.

 
Sep 18, 2008 1:18 am

icecold:

I have no idea what your point is...really.




 
First off, do not put words in my mouth and tell me what I do or don't insinuate. Totally irrelevant to what is said. And yes you do know what my point is. If you can't then I highly suggest you do not knock other people's reading comprehension. That's the run around you use when you get called out and can't accept the truth. You're boring. All this talk about how your distinguished and what a $450k should be when you're neither. How embarrassing.
 
And just for kicks, I never insinuated anything and never claimed you were with Merrill. My point was simple really, if the untouchable Merrill guys who for so long thought they were THE guys got unexpectedly sold, who are you to talk/act like you're not vulnerable to being bought as well? What if you got bought out by Schwab? Simple really. You knew what I was saying.
 
Don't worry about why others choose their path and aren't $500k producers when you yourself aren't. Don't be angry at me and get defensive because you embarrass yourself.
 

[quote=icecold]I don't need to convince myself of jack shit - but I'm not going to be spoken down to by some random guy on the internet that thinks he can belittle me, and discount my POV, without opposition, simply because he thinks I'm a noobie and I'll sit there and take it.  [/quote]
 
That's what the distinguished do, right? They call people who never did anything to them pikers (you to Schwab) behind their backs but when you're called out it's unfair and waa waa waa. Hypocrite and judgmental. You don't care what I think about you but think we care about what you think about Schwab guys you know nothing of? Hypocrite. The post before your last was riddled with insinuations about why I'm stressed and you have the gall to accuse me of insinuation? hypocrite. Being unintelligent and hypocritical are not mutually exclusive to being a noobie.

 
The distinguished, successful and intelligent people do not brag about how successful and intelligent they are. They're too busy working to be successful and learning while you talk crap on a message board.
Sep 18, 2008 9:12 am

Ice just got a beat down....I thought it was only the Jones boys who got beat downs...

Sep 18, 2008 9:31 am

It's about time. Thanks Ana.


Go crawl in your sanctimonius hole and relish how well you have done in your prior business and how well you will do in the future. I second ANA.


STFU Ice, its getting really old.