Independents?

John Mcain

yanni

Kinky Friedman

me

Thanks for the great insight everyone…

Now, back to my original question which I assume was “misunderstood”.  Anyone have any information on independent brokers?  What is the process to go this route if you have limited experience?

An independent is affiliated with a broker dealer but is not an employee of the company.  You can use your own ficticious business name or your own name with a smaller “securites offered through the XYZ investment firm blah blah blah”.  Generally you can contract to do outside business in the fixed and life insurance arena without any overrides or oversight by the B/D.  (This is probably going to be changing becuse of the abusive sales of EIAs)

The B/D will take a percentage of your commissions and usually an affiliation fee. You pay ticket charges on brokerage trades you make, are responsible for your own E & O insurance, pay additional charges for research access and so on.  Each B/D will have different charges and production requirements to maintain affiliation with them. Some have very minimal production requirements like HD Vest  and some like LPL have much larger. 

You need to contact the B/D and ask them these questions.  I don't think they generally care about your limited experience, just how much money will you make for them and that you won't be a lose cannon and get them in trouble.

Definition of independent:

1.      Very little direct oversight of broker (What oversight does your broker have?)

2.      Typically recommend wrap accounts or managed money (Do you know what you are paying your broker?)

3.      Payout is high, but office expenses such as assistant, health insurance, rent, etc are out of pocket (Does your independent advisor work out of their house? Who is his assistant?)

4.      No research (where does your broker get his/her research?)

5.      When he/she is gone on vacation, who can you talk to about your portfolio?

6.      Average production is quite low (less than 200k on average) making many fish for very high commissionable products (index annuities, variable annuities, fixed annuities)

7.      Many work inside banks. (What’s their arrangement with the bank? Are they required to make certain recommendations?)

8.      Many had fallout with old firm (Did something happen to force your broker to move to his/her new firm?)

9.      When they switch brokerages, investments need magically switched as well.

10. Often move independent because of the money, not for what's right for the client (Did your broker discuss with you his compensation reasons for leaving?)

[quote=rankstocks]

Definition of independent:

1.      Very little direct oversight of broker (What oversight does your broker have?)

Not true, unfortunately.

2.      Typically recommend wrap accounts or managed money (Do you know what you are paying your broker?)

Not my style, but those quarterly reports show EXACTLY what is being paid.

3.      Payout is high, but office expenses such as assistant, health insurance, rent, etc are out of pocket (Does your independent advisor work out of their house? Who is his assistant?)

100% on index annuities, 90% on everything else. Net of expenses, I'm at about 90%. I have an office and an assistant.

4.      No research (where does your broker get his/her research?)

We all have research. Research is for stock jockeys and suckers.

5.      When he/she is gone on vacation, who can you talk to about your portfolio?

My assistant or one of my buddies.

6.      Average production is quite low (less than 200k on average) making many fish for very high commissionable products (index annuities, variable annuities, fixed annuities)

I don't know about that. Mine is a lot higher. One thing for sure...I don't work as hard as my wirehouse counterparts who make the same income. I hate rush hour traffic, so I go in at 10 or 11 and leave at 4-4:30.

7.      Many work inside banks. (What’s their arrangement with the bank? Are they required to make certain recommendations?)

Anyone who works in a bank is gay.

8.      Many had fallout with old firm (Did something happen to force your broker to move to his/her new firm?)

In my case, nothing happened. I paid them 54% of MY money and they gave nothing in return.

9.      When they switch brokerages, investments need magically switched as well.

Pretty cool, isn't it? We make a boatload of money right out of the gate.

10. Often move independent because of the money, not for what's right for the client (Did your broker discuss with you his compensation reasons for leaving?)

Funny you mention that...Most of my clients moved because I was so excited about it. I didn't have to twist any arms. I told them that I was going to make about twice as much money, which they were happy about. They would have thought it would be stupid to change for LESS money.

1) Oversight is provided by the B/D, NASD, SEC.  You know.  The usual cast of characters.

2) Typically recommend wrap accounts?  Hardly.  It's an option for the client, nothing more.  You clearly know little to nothing about how the investment world functions.

3)  I haven't worked out of my house since I worked for EDJ.  And I have 2 assistants.

4)  For research, I use Credit Suisse, Zacks and ValueLine.  Who do you use?  Alan Skrainka?

5)  Who does anyone talk to about their portfolio when their broker is on vacation?

6)  With double the payout, why would anyone need higher commission products?  Seems to me that higher commission products would be mother's milk to someone getting a 38% or so payout.

7)  I don't now and never have worked in a bank, so I really can't speak to your concerns.  However, the last time I was "encouraged" to sell any particular product was when I was with Jones, and not since.

8)  You're darned right I left because of a falling out.  I didn't like the cult mentality and the "groupthink" (with apologies to George Orwell).  So I left.

9)  No, I didn't make radical changes to anyone's portfolio.  And I don't use "liquidate and transfer" tactics.  Do you?  If so, I'd be most hesitent to criticize anyone else in that regard.

10)  So far, everything about my move has benefitted my clients.  Moving to me would clearly benefit your clients as well.

So what else do the voices from St. Louis tell you, Skippy?

[quote=rankstocks]

Rankstocks you are truely a branwashed idiot

Definition of independent:

1.      Very little direct oversight of broker (What oversight does your broker have?)

      Much better oversight than was done at EDJ.  Every on line trade is reviewed by the home office and if switch letters, ROA, LOI or other paperwork is required it is faxed to the operations center. Our office (yes even those working at home) is inspected every year by either our OSJ or another auditor. Initial direct trades are sent to the home office for review before being processed.

2.      Typically recommend wrap accounts or managed money (Do you know what you are paying your broker?)

       And you know that this is typical how?  Oh yeah  because Mother Jones told you so.   With every managed account the paperwork disclosing fees and detailing the investments in the program is required to be reviewed an signed by the client before they invest and then they still have a time in which to change their minds. 

3.      Payout is high, but office expenses such as assistant, health insurance, rent, etc are out of pocket (Does your independent advisor work out of their house? Who is his assistant?)

       So pay out is high how is this a problem?  Office expenses are something that we can control AND they have siginificant tax advantages by being able to be a direct business deduction instead of adhering to the 2% floor. You do understand how tax returns for small businesses work don't you?  DOH nevermind I forgot who I was talking to. Office personell have to go through the same background checks and fingerprinting that the indy rep did.  In addition since it is MY name on the door I am going to be very very careful about the qualifications and demeanor of my assistant.  Plus I can decide that I don't need a full time assistant at this time and control my expenses.

4.      No research (where does your broker get his/her research?)

       Ummm lets see. Value line, Standard and Poors, Morning Star, Credit Suisse, Zacks, Second Opinion (technical research).  Where do you get yours.. Right from one source only.

5.      When he/she is gone on vacation, who can you talk to about your portfolio?

      I manage this the same way you do. I contact an affiliated office nearby and make arrangements for my calls to be forwarded or have the clients contact the home office directly through a toll free number.  Contrary to your mistaken impression we independents to have more than two cans and a string to communicate with.

6.      Average production is quite low (less than 200k on average) making many fish for very high commissionable products (index annuities, variable annuities, fixed annuities)

      So the average production might be less than 200K which is also less than the average production at EDJ.  Since I don't need to (now hold on I am going to discuss a big economic secret here) GROSS as much to have a higher NET, the pressure is actually off to "fish" for high commission products.  Because independents get to keep the lions share of their production........and they are not under a daily quota system..... the can run their office in a more relaxed manner.

7.      Many work inside banks. (What’s their arrangement with the bank? Are they required to make certain recommendations?)

      I would hardly call that an Independent Representative situation. But those are good questions to know no matter where you decide to invest.  Do you clients now these things about you?

8.      Many had fallout with old firm (Did something happen to force your broker to move to his/her new firm?)

      Usually the fall out has to do with either personalities or disagreements about the operating style and pressures to churn accounts at the old firm. At least in my situation.  I explained all of that to my clients and they were very happy to know I was no longer under the corporate thumb.  You are implying that the leaving broker did something illegal and underhanded (a typical Jones move) but if that were the case their U-4 would show that and they would not be able to be hired.

9.      When they switch brokerages, investments need magically switched as well.

      Says the firm that liquidates and transfers in as a routine matter.  All of my client's assets were moved in kind through the ACAT system. Why would I change a perfectly good portfolio that I had spent years helping to construct.  Ahem....that is why I moved in the first place....churning.

10. Often move independent because of the money, not for what's right for the client (Did your broker discuss with you his compensation reasons for leaving?)

     Not only are you an idiot, you must have short term memory loss as this question has been asked (by you) and aswered by many.  Yes.  I did tell my clients why, when, where and how I was moving.  And the fact that I might be able to make (refer back to the economic discussion) more money by doing less with their accounts was actually a good thing in their eyes.  Clients aren't stupid you know. They understand that when you call them every week to pitch a bond or other investment that you are really doing it for yourself. 

Rankstocks you are a laughing stock.  Someday you will wake up and remember what an a@@ you made of yourself.

[/quote]

That's the same faulty arguments that the Kool-Aid Kid has been spouting on other threads in the past, and all efforts to correct his distorted view of reality will most likely fail since his head is so far up some RL's posterior that he can't see any light.  I'm not sure when the last time he came up for air and thought for himself was, but the best thing we can hope is that he keeps believing that pile and stays in the bush league.  As he is, he should pose no real threat to any modestly skilled advisor.  God help his clients, though...

That is a great response. Bab you are funny, but right.

[quote=7GOD63]

That is a great response. Bab you are funny, but right.

[/quote]

How do you know?  When will you get a job in the industry?

Good response Babs.  Answered very well.  It all goes back to the "Is the Grass Really Greener" propaganda that is sent out to the reps. 

Contrary to popular belief, indy reps sometimes move because client service is better.  The increase in payout is simply a benefit.  If I knew I could move my business to another shop to better serve my clients to make them happier, I would know as an intelligent human being, that referrals would continue to come and monetary reward would simply be a by-product of the move. 

I know many $1M+ producers that have gone indy to get away from the corporate BS.  In turn, I've only run across two EDJ reps grossing $1M+, so I would argue the production comparison all day long.

And oversight??????   NASD or SEC ring a bell?  They should because they've fined your company before.

Yes, RJ has a bank platform, but it's an employee scenario.  There are a couple of instances where an indy may base out of a bank, but very rare.  Even more rare than an EDJ rep working out of their trunk when they get their start.

You don't have to like the independent platform, but get the facts straight, chief.

Hey Big could you read.. I said BAB not BIG. So go blow smoke up your ...

Already have a job.

How much experience do you have in a wirehouse, to allow you to draw comparisons with the pros and cons of being an independent?

You're the one blowing smoke--shooting your mouth off without any idea of what you're talking about.

Your time would be better spent studying for an exam, don't you think?

[quote=Big Easy Flood]

How much experience do you have in a wirehouse, to allow you to draw comparisons with the pros and cons of being an independent?

You're the one blowing smoke--shooting your mouth off without any idea of what you're talking about.

Your time would be better spent studying for an exam, don't you think?

[/quote]

It's nice to see "Put" is back.

[quote=rankstocks]

Definition of independent:

1.      Very little direct oversight of broker (What oversight does your broker have?)

2.      Typically recommend wrap accounts or managed money (Do you know what you are paying your broker?)

3.      Payout is high, but office expenses such as assistant, health insurance, rent, etc are out of pocket (Does your independent advisor work out of their house? Who is his assistant?)

4.      No research (where does your broker get his/her research?)

5.      When he/she is gone on vacation, who can you talk to about your portfolio?

6.      Average production is quite low (less than 200k on average) making many fish for very high commissionable products (index annuities, variable annuities, fixed annuities)

7.      Many work inside banks. (What’s their arrangement with the bank? Are they required to make certain recommendations?)

8.      Many had fallout with old firm (Did something happen to force your broker to move to his/her new firm?)

9.      When they switch brokerages, investments need magically switched as well.

10. Often move independent because of the money, not for what's right for the client (Did your broker discuss with you his compensation reasons for leaving?)

[/quote]

Wow, I thought I knew some clueless EDJ reps.  (sorry, RS, just so you understand, that is the same as an IR)

Please do your clients, and yourself, some justice by pulling your head out of your arse and doing some research on your own.  That means taking some inititive, and not blindly believing everything the H/O tells you. 

Don't get my wrong, EDJ was good to me.  But I did open trade publications (other than Uptick), check reasearch from other sources (other than Alan), and talked to other reps (again, IRs) outside of Jones.  Instead of spending your time on this forum, maybe you could invest that time trying to better yourself which will in-turn better your clients position. 

(I'm sure I am wasting my breath here, just by your closed minded outlook that you have continued to spew on this board.)  And if I wasn't such a gentleman, I would call you a freaking moron or something along those lines.

There, now I feel better! 

Half the questions are common sense for anyone who is involved with small business or this industry.

examples (responses below):

1.      Very little direct oversight of broker (What oversight does your broker have?)  

3.      Payout is high, but office expenses such as assistant, health insurance, rent, etc are out of pocket (Does your independent advisor work out of their house? Who is his assistant?)

4.      No research (where does your broker get his/her research?)

6.      Average production is quite low (less than 200k on average) making many fish for very high commissionable products (index annuities, variable annuities, fixed annuities)

8.      Many had fallout with old firm (Did something happen to force your broker to move to his/her new firm?)

10. Often move independent because of the money, not for what's right for the client (Did your broker discuss with you his compensation reasons for leaving?)

------------------------------------------------------------ -----------

1. OVERSIGHT: What independents are in another world? Same rules, but your business/reputation is on the line.

3. EXPENSES: business write offs and who says the INDY has to rent anything more then what meets their needs. Partner could work and bring in the benefits.

5. RESEARCH: Well last I looked we have access to everything that anyone else in the industry has.

6. REVENUE: Well the laws of increase margin (commission) and the same or less AUM = Increase in total revenue/income.

8. FIRM FALL OUT: The indys that I meet are go getters and wanted to control their assets and future. Similar to a small business owner who desires the freedom to do business as they want with no big brother (firm) standing over them.

10. INTEGRITY: Once again the indy's reputation and business is on the line. Of course there has been times when an Indy did wrong, but everyday I see Wall Street firms paying millions to clear their name or lack of INTEGRITY.

Big I dont mean to bite back, but sometimes I feel as if people here think no one on the earth has a clue, but people with 10 years experience inside the industry.

Who ever wrote these 10 questions has less knowledge of INDY's then I do of firms. Obviously I don't want to know if this is an example of someone who works for a firm.

[quote=Starka]

8)  You're darned right I left because of a falling out.  I didn't like the cult mentality and the "groupthink" (with apologies to George Orwell).  So I left.

So what else do the voices from St. Louis tell you, Skippy?

[/quote]

Exactly right man! When will Jones fans realize they are nothing more than big dumb work-horses carrying the load, while their "comrades" the pigs are sleeping in the farmer's bed, wearing clothes and walking on two legs?

What is gay about working in a bank?  Just curious

[quote=bankrep1]What is gay about working in a bank?  Just curious [/quote]

Nothing.  Some here have a misconception that only failures work in a bank program.  Platform can be a plus or a minus, but in the end, it's always more about the rep than it is the platform.  I produced well over $350K annually in a bank program at five years in, and routinely won more than I lost against local non-bank brokers.

No doubt there are some losers in the bank channel, but there's no need to tar all bank brokers with the same brush.

[quote=Devoted SA] [quote=Starka]

8) You’re darned right I left because of a falling out. I didn’t like the cult mentality and the “groupthink” (with apologies to George Orwell). So I left.

So what else do the voices from St. Louis tell you, Skippy?

[/quote]

Exactly right man! When will Jones fans realize they are nothing more than big dumb work-horses carrying the load, while their “comrades” the pigs are sleeping in the farmer’s bed, wearing clothes and walking on two legs?

How is an EDJ broker any more a workhorse than any other regional/wirehouse broker?

What portion of your bonus/profitability do you earn? How much is paid to YOU...how much goes to hire, train, and sustain the "health"of New IR's? How much goes into the pockets of the GP's?

And don't give me the "volun-told" crap.

Ok I won't. So long as you don't tell me it makes you jump out of your chair for joy everytime you come across some "below expectations" IR (in my day it used to be called RED) who b*tches about going to meetings, doesn't doorknock, doesn't do any business and in general has a piss poor attitude. Don't tell me you'd jump at the chance to mentor that guy. Don't tell me it doesn't just give you the red *ss knowing a portion of your profit is used to keep that guy treading water.

I find it very interesting...."partner" broker would call any broker a workhorse.

Ok - boy you got me here. That's right, I do make less than my Rep. (I never called her my partner - that patronizing terminology comes from Jones) I also have considerably less risk involved in my job. I will get paid come first of the month no matter how many days I missed, she might not. As a workhorse she could plow 24 hours a day, 7 days a week and the crop could still "fail". You'd be hard pressed to find any BOA at Jones sympathetic or even aware of that fact. 

Devoted -

I hope you understand your broker’s clients questions better than you do mine. My question was "how am I any more of a workhorse?"

Payout is within roughly 2% above or below all the other major regional and wirehouse firms. What does it matter whether HQ spends the money on training new brokers or buying established ones? It doesn’t affect my payout. As far as the GP pay…this has been debated numerous times. The top guys at EDJ make less than many of their counterparts at other firms.



Jump out of my chair to help a broker with a “piss poor attitude?” No - I wouldn’t take their phone call if they have a bad attitude. If they’re not doing the work, I’ll tell them once.



Hard pressed to find any boa at Jones sympathetic? I think you’d be hard pressed to find any boa that doesn’t understand the difficulty of this business for brokers, especially new ones. If they don’t it would be their broker’s fault and they won’t likely be there long anyway.



Devoted, I have a feeling that you and my BOA would have been very good friends had you been in our region. Piss and vinegar. (meant as a compliment)

Thanks... I think?

I don't mean any disrespect. We enjoyed our time at Jones, but my workhorse comment was just an opinion.

As for the BOA awareness at Jones...I didn't see it in my region. Most of those gals were just "there for the paycheck" and didn't have clue one about the tough job you guys do.

Let me wrap this up…Rank ,just because you are an “employee” and can’t controll your future stop projecting negativity towards the owners of their own business. You remind me of a 5 foot basketball player putting down Michael Jordan. Now get back and finish your 25 contacts moron! Oh, and have your call list ready for Tuesday…I’m sure there’s plenty of 30 year 4.5% bonds with an estate feature attached in the already marked up inventory, but be careful not to sell too much to one client you might be subjected to the bond aggregate rule. Thank god you have a baby sitter(GP’s) unlike the lost indys of the world…Rank you are every employers dream…do as you are told ,don’t ask questions and put down the competition. You are CLUELESS!