Production at Indies

I felt bad that your post/request had no replies in public.  Glad I could help privately.

You kind find average production numbers on any number of websites… Investment News, Financial Advisor Mag… etc…

Bob, the problem with looking at “averages” in the indy world, is that production and expenses run the gammut (sp.?).  At any particular firm (say LPL) you can have a guy doing 150K and 25mm AUM working solo out of his house, to a huge firm with 40 people doing 5mm in production and a half billion in AUM.  There is simply no way to reconcile the two, and the “average” is meaningless.  You probably have to be more specific, i.e. “for indies doing between 250-750K in revenue, that have an office and at least one assistant, what is your typical net?”  Now, this still leaves a lot of variation, but it narrows down the results a bit.

For example my annual expenses(rent,software,e/o) is $15189.

I think a big variable at lower gross levels is whether or not you have staff.

I share an office and assistant with another rep.  Our net with both of us doing $300K each is around 62%.  We pay our assitant well and she does an excellent job with our clients.  That beats getting a 38% payout at a wirehouse all day long.  You can net a lot more if you hire a assistant with no financial services experience or not one at all.  Just depends on the area you are in and what your clients expect from you.  Everyone is different.

[quote=B24]I think a big variable at lower gross levels is whether or not you have staff.

Plus all my expenses are deductible so I think that bumps my payout a little bit back up…

Full RIA, 76% net through my practice. NO skimping on anything. If we need it, we get it.



C

Yes, and thank you, your information was very helpful

This is all good information.
I can run the numbers and come up with where i think i would be, the problem i am having is getting my arms around ticket charges. I do a lot of discretionary management and i trade a lot.

To answer your original question, average production at LPL and RayJay is about the same, around 200k annually.  What is interesting is that around 1/2 of all reps GROSS less than 100k.  All the numbers come out annually in INVESTMENT NEWS.

Anyone know of a B/D that has no minimums(gross production) requirements. A friend of mine who is was recently a registered sales asst is looking to start. I know most b/ds have anywhere from $25K-$125K minimums… anyone aware of someone who doesnt…

To answer your original question, average production at LPL and RayJay is about the same, around 200k annually.  What is interesting is that around 1/2 of all reps GROSS less than 100k.  All the numbers come out annually in INVESTMENT NEWS.

[quote=Captain]Full RIA, 76% net through my practice. NO skimping on anything. If we need it, we get it.



C[/quote]

This is a great number!!  I have been able to get some of my clients to 70%.  Could you talk more about your practice and firm size. 

One thing I would agree with other posts is to share costs as much as possible with another advisor or advisors.  I am working with three advisors now that want to setup their own individual RIAs but share office space.  A few compliance issues to watch out for, but otherwise an easy way to get a better payout.

Good Luck.

ash
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Average at Ray Jay is over $300 gross currently.  You need $250 to get your own branch.

[quote=rankstocks]To answer your original question, average production at LPL and RayJay is about the same, around 200k annually.  What is interesting is that around 1/2 of all reps GROSS less than 100k.  All the numbers come out annually in INVESTMENT NEWS.

Yeah but also if you are doing $100k out of your house(i.e. no expenses) and a 80-90% payout that isn’t a bad living.

I think a big problem (i raise my hand to this) is once you come from a payout of 38% and your always scraping and scraping to get a higher gross vs 90%…I don’t work as hard.  Hell, theres days I don’t do much of anything except talk to clients about whatever they want to talk about.  I’ve streamlined my practice as far as paperwork, reviews etc…have an assistant here 8-12…she faxes all paperwork, files everything, makes sure transfers are progressing, does cost basis work, screens my calls, deposits.  She even makes sure everything is up to speed for compliance.  I pay her 10 an hour, no benefits.  She was initially trained at Jones, her and her husband have money.  She does it to get out of the house.

I can see that happening. Seriously, if you do 200-250K in gross, at 80-90% payout, and you have 50K in expenses, and work 15-20 hours per week (though maybe your wife thinks you’re “working” 45), that’s a pretty good life if you want that.



Problem is that most indy B/D’s payouts are much less than 90%, especially at lower gross levels. I know my friend who just started at Cambridge gets somewhere between 60-70% (he produces maybe 125K).



What would really make sense is being an RIA only. 100% payout. Fewer expenses.

I can see that happening. Seriously, if you do 200-250K in gross, at 80-90% payout, and you have 50K in expenses, and work 15-20 hours per week (though maybe your wife thinks you’re “working” 45), that’s a pretty good life if you want that.

Problem is that most indy B/D’s payouts are much less than 90%, especially at lower gross levels. I know my friend who just started at Cambridge gets somewhere between 60-70% (he produces maybe 125K).

What would really make sense is being an RIA only. 100% payout. Fewer expenses.

I’ve been very steadily at 68% since I started, hovering on the ± side of $300K gross the last two years.  Payout after ticket charges is right about 86-87%.  I have a P/T assistant and rent space from a group of accountants.  I get by on the cheap on several things since I take care of my own payroll/accounting/tax returns and get to use the accountant’s software as a part of my rent.  All in all, a sweet deal with lots of freedom.

I agree with many of the posts here in regard to finding your ‘net - net.’  Many successful emerging RIA Advisory firms I’ve helped often share office space with an allied professional like a CPA, Estate Attorney, etc., and have often entered into a solicitors agreement as well.  It makes for an interesting marketing dynamic all while reducing overhead.  No secret that RIAs earn 100% and I have seen net income percentages close to 90% but the landscape does vary considerably.  I believe Cerulli & Associates produced a very informative report on this very subject not too long ago.

Bob–we’ve discussed the issue before I believe.  We use TDAmeritrade for our discretionary and fee-based business, and pay 20bp for unlimited trades, statements, etc.
Good luck!

Bodysurf are you at Harbour?

Harbor, not Harbour.

Sorry… How do you like it… I looked into them last year but wasn’t sure what was included in that monthly fee, and never considered it enough to move…

I pay $1100 a month for pretty much everything as far as the B/D is concerned.  I also pay $1000 to them to rent a beautiful office; other FA’s pay more, but he saw me as a way to reach other Smith Barney FA’s who work a few floors down.  The thousand covers computers, phones and fax, an assistant which I share, some postage, etc.

The $1100 covers my compliance and clearing, basically, but also gives me a 100% on everything, with no haircuts.  I sell an annuity, I get 6-7%.  I do almost exclusively managed account business, and charge 2-3% on assets, and I get it all.