Monthly Expenses

You’re right…it will vary a great deal. Most of your stuff looks OK, except your utilities look light (depends on the lease as you say) and your office/postage does not compute. My little one-man office is running 5-6K/month with a full-time assistant, which is about 20% of my gross, but I’m guessing that yours would be lower since you’re sharing expenses and have more gross to spread it over.



What B/Ds are you looking at?

RJ, LPL, FiNet, and Cambridge

Yes, sorry, postage was off.  But we’re figuring a total of about $2K per man in overhead.

How much would your overhead drop if you didn’t have the assistant?

Same comments as Indy. However, will you be renting any equipment? CAM charges? Office Cleaning? Tech cots light? I guess it depends on how much you buy versus lease, and what type of software services you pay for each month (i.e. quotes, cost basis, website, e-mail, Morningstar, portfolio tracker, contact management, etc.) . You’re not going to hire an assistant for a 4-man office? What are your production numbers and assets for the team?

We have equipment charges built into the start-up costs.  What is CAM and Tech cots light?

Most of the tech packages are ala carte and have what we need which comes to about $800 per month.

We will be hiring a full-time assistant but not right off the bat.  Will use temps for a month or two until we get things under control.

[quote=etj4588]We have equipment charges built into the start-up costs.  What is CAM and Tech cots light?

Most of the tech packages are ala carte and have what we need which comes to about $800 per month.

We will be hiring a full-time assistant but not right off the bat.  Will use temps for a month or two until we get things under control.


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If you only plan on using temps for 1-2 months, you should give serious thought to figuring out how you can hire a full-timer right from the start instead.  You will benefit from the fact that he/she will be learning right along with you, instead of having to get them trained on your systems when you hire them a month or two later.

CAM = common area maintenance charges from your landlord (i.e. snow removal, landscaping, cleaners, common energy, common water, taxes, insurance, security, etc.). It’s usually part of your lease agreement, so it may be included in your number. If it’s trip-net, you would have to pay all this stuff. Depending on your building, it may not amount to much.

[quote=B24]CAM = common area maintenance charges from your landlord (i.e. snow removal, landscaping, cleaners, common energy, common water, taxes, insurance, security, etc.). It’s usually part of your lease agreement, so it may be included in your number. If it’s trip-net, you would have to pay all this stuff. Depending on your building, it may not amount to much.[/quote]

In many situations, landlords include it in your initial rent for the first year(base year), and then you only need to pay for any increases over and above the base year during the remainder of your lease.  It varies from building to building, and generally I wouldn’t expect it to be significant compared to other expenses.

[quote=etj4588]Hey all,

We’re completing due diligence on 4 indy bds and have started to run my own proformas to determine revenues based on my production and the various platforms.

However, the proformas generated for me by these bds have high variances when it comes to overhead costs.

We’re a 4-man team and currently figuring about $8000 per month in overhead expenses which would include rent, utilities, phone, technology costs, affiliation fees, quote services, office supplies, general liability insurance, E&O and misc. costs.

Here’s how I’m breaking it down:

Rent:  2000sqft X $20 = $40K/12 = $3300/mo.
Utilities:  $1500 per year = $125/mo. depending on lease terms
Phone:  $3600 per year = $300/mo.
Technology costs:  $10K per year = $833
Affiliation fees:  $6000 per year = $500/mo.
Quote services:  $3600 per year = $300/mo.
Office supplies/postage:  $3600 per year = $900/mo.
General liability:  $100/mo.
E&O:  $10K per year = $833/mo.
Misc. costs = $400/mo.

Total = $7591/mo.

Not figuring in an assistant as of yet, just wanted to get a feel if these monthly overhead costs seem to be “in the ballpark”.  I know costs will vary with each bd, but in general does overhead costs seem to run about 13-15% of GDC?

thanks in advance

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2000 sq feet might be a pretty generous assumption for a 4 person team, depending upon how many staff members you want and whether or not you plan on having a separate conference room.  If it is well configured, you could probably do just fine with 1500-1600.

Then again, you may want room to expand.  If you decide to go with a smaller space, ask your real estate agent/landlord about having the ability to take on other space within their building or other buildings they own in the future…many will do that as long as you are increasing your total square footage.

i don’t know all of the details, but my four advisor staff shares 1,600 square feet and an operations manager at $60k/year and our total monthly budget is about $19,000.  This includes about $3k/month for marketing.  Our biggest expense outside staff and office is technology.  I’m RIA, so we don’t get b/d pricing for portfolio accounting software.  When bought stand alone it runs 4 bps on AUM.  In our case thats about $45k/year.  Be sure to weigh the tech costs versus tech quality at the firms your looking into.  I would only look into RJ and LPL; avoiding Cambridge entirely.  Poor technology in comparison.

I think you are a little high on E & O, but overall pretty close on other line items.

Costs seem reasonable albeit some areas seem to be a bit on the "high" side but still within the norm.  Under the B/D model, you can either cut your overhead expenses, increase your firms revenues or up the ante at the B/D level and have them pay you a higher GDC percentage.  Most would choose to use a combination of all three.