Who's the BEST?

[quote=lady_trader]

What firm would you choose to work with if you had to do it all over again? From the posts, there are a lot of people who say that Ed Jones, Ameriprise and Merrill are difficult places for a newbie to start out at…

I certainly wouldn’t put Merrill in with those also-ran firms. Merrill is the

class of the field, while Jones and Ameriprise represent firms that are, well,

bottom tier.

[quote=Philo Kvetch]I certainly wouldn't put Merrill in with those also-ran firms. Merrill is the class of the field, while Jones and Ameriprise represent firms that are, well, bottom tier.[/quote]

I think it's funny that to you, a bottom tier firm is a firm with the most CFPs of any firm, period.  I guess that after all those CFPs get their designations, they head for the "lowest tier" firm they can find?

[quote=Big Taco]

[quote=Philo Kvetch]I certainly wouldn't put Merrill in with those also-ran firms. Merrill is the class of the field, while Jones and Ameriprise represent firms that are, well, bottom tier.[/quote]

I think it's funny that to you, a bottom tier firm is a firm with the most CFPs of any firm, period.  I guess that after all those CFPs get their designations, they head for the "lowest tier" firm they can find?

[/quote]

In the absence of anything else, that many CFPs would, in itself, make your firm bottom tier.  As you might guess, I don't hold the CFP trademark in very high regard.

Do you hold the CFP designation?

please explain the attributes of a firm that you consider "bottom tier", and then what makes a firm "class of the field", in your opinion.

[quote=Philo Kvetch][quote=Big Taco]

[quote=Philo Kvetch]I certainly wouldn't put Merrill in with those also-ran firms. Merrill is the class of the field, while Jones and Ameriprise represent firms that are, well, bottom tier.[/quote]

I think it's funny that to you, a bottom tier firm is a firm with the most CFPs of any firm, period.  I guess that after all those CFPs get their designations, they head for the "lowest tier" firm they can find?

[/quote]

In the absence of anything else, that many CFPs would, in itself, make your firm bottom tier.  As you might guess, I don't hold the CFP trademark in very high regard.

[/quote]

CFP's sell something that most people don't want - asset allocation. It forces people to buy the worst performing asset classes at all times. In short, cfp's don't make people money. Go look at the ADV's of some of those losers on financial-planning dot com. Many have been in business for years with less than $10mm under management. All they do is sit around and whine about all of the dishonest salesmen who make it impossible for them to acquire or keep clients.

[quote=Big Taco]

Do you hold the CFP designation?

please explain the attributes of a firm that you consider "bottom tier", and then what makes a firm "class of the field", in your opinion.

[/quote]

I did the coursework for the CFP, but I refuse to pay for nothing more than a trademark.  Try the CFA on for size if you think CFP is impressive.  Then you can laugh at CFPs too!   

[quote=Big Taco][quote=Philo Kvetch]I certainly wouldn’t put Merrill in
with those also-ran firms. Merrill is the class of the field, while
Jones and Ameriprise represent firms that are, well, bottom
tier.[/quote]

I think it's funny that to you, a bottom tier firm is a firm with the most CFPs of any firm, period.  I guess that after all those CFPs get their designations, they head for the "lowest tier" firm they can find?
[/quote]

Taco, as long as AMP remains a platform for flogging VUL and annunities, AMP will never be respected by anyone inside the industry or outside the industry.

AMP is leading the fight over allowing CFP's to avoid having a duty to act in the best interests of clients.

BTW,AMP has all the problems of revenue sharing that EDJ has, as well as problem of horrible proprietary RVS funds etc.

[quote=Philo Kvetch]I did the coursework for the CFP, but I refuse to
pay for nothing more than a trademark.  Try the CFA on for size if
you think CFP is impressive.  Then you can laugh at CFPs
too![/quote]



CFA and CPA/PFS are the only designations that are prestegious. The
main reaons for doing the CFP program is that you gain the knowledge
from doing it.

Sorry...while the CPA exam is more difficult than the CFP, the PFS is just a rubber stamp for CPAs to do financial planning...not difficult or prestigious at all, which is why I didn't bother even though I already had the CPA.  The CFP is also considerably more recognized than the PFS.

...and while the CFA is consiferably more difficult to obtain than the PFS or CFP, recognition among the masses is very low.  It's fine if you're chasing mid-seven figures and up, but my market demographic understands CPAs and is just now figuring out CFPs...other designations are meaningless to them at this point.

…and back on topic, you can look at the Wall St. firms such as Merrill, Morgan S or Smith B, or if that playground is too large, try a regional such as AG Edwards or Raymond James.  No firm is perfect, so your best bet is doing several interviews and seeing what the best fit is.

J.T. Marlin

[quote=Vin Diesel]

J.T. Marlin

[/quote]

He's you're father, isn't he?

[quote=Big Taco][quote=Philo Kvetch]I certainly wouldn’t put Merrill in with those also-ran firms. Merrill is the class of the field, while Jones and Ameriprise represent firms that are, well, bottom tier.

I think it's funny that to you, a bottom tier firm is a firm with the most CFPs of any firm, period.  I guess that after all those CFPs get their designations, they head for the "lowest tier" firm they can find?
[/quote]

Taco, as long as AMP remains a platform for flogging VUL and annunities, AMP will never be respected by anyone inside the industry or outside the industry.

AMP is leading the fight over allowing CFP's to avoid having a duty to act in the best interests of clients.

BTW,AMP has all the problems of revenue sharing that EDJ has, as well as problem of horrible proprietary RVS funds etc.

[/quote]

You're painting with a broad brush here. 

Is amp the only firm with prop funds?  and prop funds don't fit into my practice, my investment recommendations come from filtering and analysis; objectivity.  We don't do just 1 fund family in my office.

Do I "flog" VUL?  No.  I've sold it before, but only in estate planning for wealthier clients.  VAs?  yes, I sell them if appropriate.  Flog them I do not.

Revenue sharing?  again, revenue sharing has no effect on my office, as we objectively filter and analyze funds, across all available families on our platform.  I don't even have time to meet with wholesalers, or see their presentations on their company's next big idea.  the proof is in the pudding, and that's what we search for.

Leading the CFP what?  AMP is an RIA and the franchisees are IARs under the Investment Advisory Act of 1940.  besides, just because you're a CFP, or a CFA, or a CPA, it doesn't change a persons ethics.  Some people will be scumbags no matter what letters are after their name, or which firm they work for.  A fiduciary standard is in effect in my office, whether it's mandated by a corporate office or not.

Allreit's painting with a broad brush?  You're the one that maintains that AMP is somehow great because they have a lot of CFPs.

Look, Taco, like it or not, your firm is one of the laughingstocks of the industry, Jones being the other.  There's a reason for that.  So you're the one AMP guys who's ethical and does the right thing at all times.  Reminds me of how 99% of lawyers give the rest a bad name.

[quote=Philo Kvetch][quote=Big Taco]

Do you hold the CFP designation?

please explain the attributes of a firm that you consider "bottom tier", and then what makes a firm "class of the field", in your opinion.

[/quote]

I did the coursework for the CFP, but I refuse to pay for nothing more than a trademark.  Try the CFA on for size if you think CFP is impressive.  Then you can laugh at CFPs too!   

[/quote]

I agree that it would be very impressive and a real accomplishment to have CFA on my card, but only to those who know what it is.  I focus most on planning and ensuring that my clients are invested according to an asset allocation model, and then find the best investments available to plug into that.  I don't think I'll get to the point where I 'laugh' at CFPs any time soon.  I like the idea that someone took the time to learn more holistically about financial planning

So you didn't answer my question on what attributes you qualify in the top and bottom tier firms? 

Also, Philo, I think that many people in this industry associate amp with the P1 platform.  that's the trainee platform.  I don't like it, I feel that's where any rep tarnishing has come from, and I think the company is switching the country over to an 'apprentice' style training program, which makes so much more sense to me.  most of the other franchisees I know aren't "company" men.  They're financial advisors, individuals, and use amp just like an indy uses their B/D.  On my card it says "my firms' name", a financial advisory practice of Ameriprise.

[quote=Philo Kvetch]

Allreit's painting with a broad brush?  You're the one that maintains that AMP is somehow great because they have a lot of CFPs.

Look, Taco, like it or not, your firm is one of the laughingstocks of the industry, Jones being the other.  There's a reason for that.  So you're the one AMP guys who's ethical and does the right thing at all times.  Reminds me of how 99% of lawyers give the rest a bad name.

[/quote]

to me, it seems that you maintain that the CFP is about as worthless as yesterdays newspaper.  Yet you say you took all the courses, and learned, and yet you don't want to just take thoses test and get the credential?  Sounds suspect to me, but that's just my opinion.

I'm not saying (as you say) that I'm the one ethical person in a company.  That's my whole point.  I know quite a few other investment professionals/competitors in my area.  some are good, some aren't.  It's not a firm specific issue. 

I rank my office compared to the other competitors in my area.  All the new accounts that have come over through the years from indys, insurance companies, wirehouses, and banks.... I know this happens for all of us, but you know how you look at the statements from other firms and think: those guys are idiots, or worse, crooks.  I've had accounts leave, too.  Happens to the best of us.  and then, of course, we all have clients that still have accounts elsewhere, and haven't consolidated with us yet.  What I'm getting at is: we all get an idea of how other firms are operating in our communities.  It's partly how we find our niche:  I believe I do fee based asset management better than anyone else in my county.  and as I've gotten familiar with the M.O.'s of the local branded and indy firms, I know that at least in my neck of the woods, Ameriprise is not even close to being the laughingstock you claim it is.

"Taco, as long as AMP remains a platform for flogging VUL and annunities, AMP will never be respected by anyone inside the industry or outside the industry."

Partly accurate... The majority of people in the industry consider Ameriprise a third- tier firm... Those in the general public may have a better perception of the firm- if only due to its past affiliation with American Express and its recent catchy advertising campaign...

Who is doing the laughing?

It always comes down to the individual client and advisor.

Advisor, affiliate where you are comfortable and excel. Client, work with a trusted advisor ( I would recommend a CFP).

AMP chooses to manufacture products and offer a broad choice. LPL only brokers others products.

The problem with the above arguement, for most here, is you need to take it to a logical conclusion, which would likely be, fee only financial planner.

Anything else is really debate about shades and smells of different ka ka.

Unless you come back full circle, look the client in the eye, and with full understanding and full disclosure, work off of just about any platform that is legal.

Hence, even Bobbies ka ka is equal, with full disclosure.

Anyway, it is the same old arguement over and over again. It is basically lame and hypocrytical.

And is usually degenerates into nonsense, like people saying the CFP is unimportant, and so on.

That's just loser talk.

[quote=Big Taco][quote=Philo Kvetch]

Allreit's painting with a broad brush?  You're the one that maintains that AMP is somehow great because they have a lot of CFPs.

Look, Taco, like it or not, your firm is one of the laughingstocks of the industry, Jones being the other.  There's a reason for that.  So you're the one AMP guys who's ethical and does the right thing at all times.  Reminds me of how 99% of lawyers give the rest a bad name.

[/quote]

to me, it seems that you maintain that the CFP is about as worthless as yesterdays newspaper.  Yet you say you took all the courses, and learned, and yet you don't want to just take thoses test and get the credential?  Sounds suspect to me, but that's just my opinion.

I'm not saying (as you say) that I'm the one ethical person in a company.  That's my whole point.  I know quite a few other investment professionals/competitors in my area.  some are good, some aren't.  It's not a firm specific issue. 

I rank my office compared to the other competitors in my area.  All the new accounts that have come over through the years from indys, insurance companies, wirehouses, and banks.... I know this happens for all of us, but you know how you look at the statements from other firms and think: those guys are idiots, or worse, crooks.  I've had accounts leave, too.  Happens to the best of us.  and then, of course, we all have clients that still have accounts elsewhere, and haven't consolidated with us yet.  What I'm getting at is: we all get an idea of how other firms are operating in our communities.  It's partly how we find our niche:  I believe I do fee based asset management better than anyone else in my county.  and as I've gotten familiar with the M.O.'s of the local branded and indy firms, I know that at least in my neck of the woods, Ameriprise is not even close to being the laughingstock you claim it is.

[/quote]

I didn't say that I didn't get the credential...I said that I don't pay for it or do the continuing ed, meaning that I can't use it on my business card.  I never did anyway, as the reason I took the courses was for MY information...not for the public aggrandizement that many seem to think it engenders.  As to learning, yeah, I suupose I did learn something, though not enough to make it worthwhile given the cost and effort.  Now I don't use my CFA on my card either, but THAT is a credential that I consider worth maintaining, and it was certainly worth the effort.

[quote=blarmston]

"Taco, as long as AMP remains a platform for flogging VUL and annunities, AMP will never be respected by anyone inside the industry or outside the industry."

Partly accurate... The majority of people in the industry consider Ameriprise a third- tier firm... Those in the general public may have a better perception of the firm- if only due to its past affiliation with American Express and its recent catchy advertising campaign...

[/quote]

Okay, Blarmston, we're getting back to the issue of "tiers".  What are the parameters of these tiers?  this is essentially what the original poster/thread starter was asking, I think.

what firms are eligible?  I would guess that they have to be national to qualify.  what other characteristics do these "tiered" firms posess? 

1st Tier:  (this is what characteristics a national firm has to exhibit to fit into this tier)

2nd Tier: (etc...)

3rd Tier: (etc...)

Are there 4 tiers?  5th? 

Is any of this at all quantifiable?

Taco, I wouldn’t even say that they have to be national firms…there are lots

of boutique firms that most definitely qualify. However, if we want to keep

this strictly among the bigger guys, an outstanding training program would

be a qualifier in my book.

Philo- Why are do I keep running into those who advise regular "Joe's" who have the CFA?? Typically, the most common profession for a CFA is an analyst or a portfolio manager.

Lastly, on this whole CFP business: One thing to note: BOTH Merrill and AMP boost the largest number of CFP's and have the largest "push" for their producers to get this designation. (Heard of the debate on the "Merrill Rule" on the disclosure of Merrill CFP's?)

In my original question, I was trying to see who had good training programs, overall. I was looking for a veteran's experience.

It is basically branding. The big b/ds are busy pushing out low producers, and creating special new products for the ultra rich.

It has always been about perception, the cool stuff you talk about at a cocktail party. That's why it is cool to get rid of your broker and go "direct", or go to a botique firm and get "special treatment" (or at least specially hosed) by an RIA.

It is all retail sales - of products and advice.

The really crazy thing is that folks like blarn continuously take the bait and focus on things that keep all of us at the mercy of a huge intermediary managment and labor force that shifts and feeds with the tides of perception, regulation, and taste.

Too bad, 'cause it's our clients money, and our money ( remember, we're the ones that do the work) that perpetuates the myth of tangible differences between the various packagers we support through our hubris.

Not that I have any illusions that we could collectively increase our awareness as professionals. The thinking in this little fishtank just about says it all.

The really crazy thing is that folks like blarn continuously take the bait and focus on things that keep all of us at the mercy of a huge intermediary managment and labor force that shifts and feeds with the tides of perception, regulation, and taste."

All I focus on bud is developing my business and the activities it takes to do that... I realize the weaknesses of my firm, as well as its strengths... I realize those in the other players as well... I simply point out that the collective wisdom of this fishtank would place my firm a couple tiers above yours....

Sorry bud- it is what it is...

I did both the CFP and the CFA programs and find them both very very
usefull.  They are both difficult, the CFA more so, but they serve
very very different things.  As we evolve as advisors, we should
embrace all area’s where we can improve, not pick on the ones that we
feel do not suit us or represent some political stigma you don’t
like.   These two designations, will  help every advisor
who has not gone through the training improve.



If we all got all of the designations and never put any of them on our
cards we would not have this debate so often, all be better advisors,
and all be MUCH better salespeople. 

[quote=Indyone]

Sorry...while the CPA exam is more difficult than the CFP, the PFS is just a rubber stamp for CPAs to do financial planning...not difficult or prestigious at all, which is why I didn't bother even though I already had the CPA.  The CFP is also considerably more recognized than the PFS.

...and while the CFA is consiferably more difficult to obtain than the PFS or CFP, recognition among the masses is very low.  It's fine if you're chasing mid-seven figures and up, but my market demographic understands CPAs and is just now figuring out CFPs...other designations are meaningless to them at this point.

[/quote]

Recognition of the CFA depends upon the age of the client (inverse relationship) and degreee of contact that they have with financial types like VCs, Investment bankers and analysts (positive correlation). Certainly people who have regular contact with research reports see the CFA as being widely held by analysts and there aren't any analysts that I've ever seen touting their CFPs...

[quote=rightway]I did both the CFP and the CFA programs and find them both very very usefull.  They are both difficult, the CFA more so, but they serve very very different things.  As we evolve as advisors, we should embrace all area's where we can improve, not pick on the ones that we feel do not suit us or represent some political stigma you don't like.   These two designations, will  help every advisor who has not gone through the training improve.

If we all got all of the designations and never put any of them on our cards we would not have this debate so often, all be better advisors, and all be MUCH better salespeople. 
[/quote]

It's important to note that "Private Wealth Management" has become a large component of the CFA curriculum and that the non-commissioned higher end of retail is increasingly getting this credential, though...

[quote=Philo Kvetch][quote=Big Taco][quote=Philo Kvetch]

Allreit's painting with a broad brush?  You're the one that maintains that AMP is somehow great because they have a lot of CFPs.

Look, Taco, like it or not, your firm is one of the laughingstocks of the industry, Jones being the other.  There's a reason for that.  So you're the one AMP guys who's ethical and does the right thing at all times.  Reminds me of how 99% of lawyers give the rest a bad name.

[/quote]

You earned the CFA and you don't use it? My God - I would tattoo it to my forehead if my wife would let me after all that work and sacrifice....

to me, it seems that you maintain that the CFP is about as worthless as yesterdays newspaper.  Yet you say you took all the courses, and learned, and yet you don't want to just take thoses test and get the credential?  Sounds suspect to me, but that's just my opinion.

I'm not saying (as you say) that I'm the one ethical person in a company.  That's my whole point.  I know quite a few other investment professionals/competitors in my area.  some are good, some aren't.  It's not a firm specific issue. 

I rank my office compared to the other competitors in my area.  All the new accounts that have come over through the years from indys, insurance companies, wirehouses, and banks.... I know this happens for all of us, but you know how you look at the statements from other firms and think: those guys are idiots, or worse, crooks.  I've had accounts leave, too.  Happens to the best of us.  and then, of course, we all have clients that still have accounts elsewhere, and haven't consolidated with us yet.  What I'm getting at is: we all get an idea of how other firms are operating in our communities.  It's partly how we find our niche:  I believe I do fee based asset management better than anyone else in my county.  and as I've gotten familiar with the M.O.'s of the local branded and indy firms, I know that at least in my neck of the woods, Ameriprise is not even close to being the laughingstock you claim it is.

[/quote]

I didn't say that I didn't get the credential...I said that I don't pay for it or do the continuing ed, meaning that I can't use it on my business card.  I never did anyway, as the reason I took the courses was for MY information...not for the public aggrandizement that many seem to think it engenders.  As to learning, yeah, I suupose I did learn something, though not enough to make it worthwhile given the cost and effort.  Now I don't use my CFA on my card either, but THAT is a credential that I consider worth maintaining, and it was certainly worth the effort.

[quote=Big Taco][quote=blarmston]

"Taco, as long as AMP remains a platform for flogging VUL and annunities, AMP will never be respected by anyone inside the industry or outside the industry."

Partly accurate... The majority of people in the industry consider Ameriprise a third- tier firm... Those in the general public may have a better perception of the firm- if only due to its past affiliation with American Express and its recent catchy advertising campaign...

[/quote]

Okay, Blarmston, we're getting back to the issue of "tiers".  What are the parameters of these tiers?  this is essentially what the original poster/thread starter was asking, I think.

what firms are eligible?  I would guess that they have to be national to qualify.  what other characteristics do these "tiered" firms posess? 

1st Tier:  (this is what characteristics a national firm has to exhibit to fit into this tier)

2nd Tier: (etc...)

3rd Tier: (etc...)

Are there 4 tiers?  5th? 

Is any of this at all quantifiable?

[/quote]

1st Tier: PWM divisions of Morgan Stanley, Goldman Sachs, PBIM at Merrill, Citigroup Private Bank, JP Morgan Private Bank. People fed with IBD leads, generally have VERY strong educational pedigrees, everyone has a bloomberg terminal and the firm pays for first class airfare. Also would include elite local RIAs in Trophy Class A office buildings. The standard would be WHICH Ivy league business school the top office manager went to.

2nd Tier: Merrill Lynch GPC, Smith Barney, UBS, Morgan Stanley GWM. Firms where there are plenty of eight figure accounts at every branch and where million dollar plus producers are treated like the first tier, but don't pay base salaries to anything but trainees. Class A office space. Managers are usually unsuccessful former brokers, act like well-programmed robots.

3rd Tier: National Bank Brokerages, AB Edwards, Edward Jones. Firms that have national recognition, decent technology systems (ex Jones), have solid benefits but don't allow for discretionary accounts. Firms where million dollar accounts are a big deal, but no real investment banking. Class B office space. Managers in production.

4th Tier: Regional firms, indy brokers like LPL. Firms where a broker's biggest account is $2.5 million and the offices are generally located in Class C office space. No real management.

5th Tier: Firms with a boiler room atmosphere and undeveloped fee-based platforms. Firms with names you've never heard of. Generally subleasing Class A office space. Manager is fat slob wearing gold pinky rings.

san fran you seem to be pretty knowledgeable but in this case it is interesting to see how your perspective is somewhat skewed.  I am sure that guys like Bob Fragasso, Ron Carson, and our local 1 mil + producer would be interested to see that you rank LPL as 4th tier.

One of the things that surprised me when I began to investigate the indy channel was the high level of talent present at some shops.  I don’t mind if you guys continue to underestimate us…it makes it easier to steal accounts.

[quote=joedabrkr]
One of the things that surprised me when I began to investigate the indy channel was the high level of talent present at some shops.  I don't mind if you guys continue to underestimate us...it makes it easier to steal accounts.
[/quote]

well put.

It really doesn't matter if you're a "1st tier" PWManager when your client has a $350K nestegg that they depend on for the next 20 years, along with SS, a pension, watching out for icebergs on the horizon like LTC, and trying to reduce unnecessary taxes. 

If you do an excellent job with your niche market, then you're a "tier 1" firm in their eyes.

[quote=san fran broker][quote=Big Taco][quote=blarmston]

5th Tier: Firms with a boiler room atmosphere and undeveloped fee-based platforms. Firms with names you've never heard of. Generally subleasing Class A office space. Manager is fat slob wearing gold pinky rings.

[/quote]

This sounds just like Ed Jones, except most of the nation has heard of them.  The manager is also usually wearing a fuzy, purple hat pimping out the brokers below him to sell ICA

The standard would be WHICH Ivy league business school the top office manager went to.

 Your post reminds me of the Cornell graduate in the TV series " The Office ", a fellow who is sucking up for a junior manager job.

The problem with your logic is a misapplication of economic diminishing returns.

As if you add any more value than the local solo LPL branch office guy who pulls down a couple hundred thousand net a year net and spends every afternoon golfing with client friends.

Guess it depends on how you define value added, and personal success.

Your tiers might end up being a self-fulfilling scarlet letter. You'll be too busy commuting and sitting in your corner office to know the difference.

Wow, extremely well said and a moment of absolute clarity

on this otherwise stale forum.

1st Tier: PWM divisions of Morgan Stanley,

Goldman Sachs, PBIM at Merrill, Citigroup Private Bank, JP Morgan Private

Bank. People fed with IBD leads, generally have VERY strong educational

pedigrees, everyone has a bloomberg terminal and the firm pays for first

class airfare. Also would include elite local RIAs in Trophy Class A office

buildings. The standard would be WHICH Ivy league business school the

top office manager went to.

2nd Tier: Merrill Lynch GPC, Smith Barney, UBS, Morgan Stanley GWM.

Firms where there are plenty of eight figure accounts at every branch and

where million dollar plus producers are treated like the first tier, but don’t

pay base salaries to anything but trainees. Class A office space. Managers

are usually unsuccessful former brokers, act like well-programmed

robots.

3rd Tier: National Bank Brokerages, AB Edwards, Edward Jones. Firms

that have national recognition, decent technology systems (ex Jones),

have solid benefits but don’t allow for discretionary accounts. Firms

where million dollar accounts are a big deal, but no real investment

banking. Class B office space. Managers in production.

4th Tier: Regional firms, indy brokers like LPL. Firms where a broker’s

biggest account is $2.5 million and the offices are generally located in

Class C office space. No real management.

5th Tier: Firms with a boiler room atmosphere and undeveloped fee-

based platforms. Firms with names you’ve never heard of. Generally

subleasing Class A office space. Manager is fat slob wearing gold pinky

rings. Where your account executive (they still use the

term) is likely named Bruno, Hal or Dominick.

[quote=AllREIT] [quote=Philo Kvetch]I did the coursework for the CFP, but I refuse to

pay for nothing more than a trademark. Try the CFA on for size if

you think CFP is impressive. Then you can laugh at CFPs

too![/quote]



Allreit - why would a client mgr want a cert for the investment mgr’s job? Isn’t that why we hire investment mgrs?

I'm sorry if I was unclear on my previous post. I am simply tiering in terms of the average client size and production, not necessarily quality of personnel. But, I would suspect that the average level of competence at Northern Trust or Credit Suisse is a bit higher than Merrill Lynch, or LPL or Edward Jones.

There are very high quality advisors at all of the firms (well, maybe not ALL) and I'm NOT arguing that the BEST advisor MUST be at Goldman Sachs. I'm just talking about AVERAGE competence, AVERAGE income and AVERAGE sophistication of clients. And for those people that only money is the name of the game - yes, its always better to TAKE HOME $1.2 million at LPL than to simply PRODUCE $2.4 million at JP Morgan Private Bank and take home $300k. I'm just talking about how nice the view from your office is, how hot the receptionist is and whether people with fancy degrees are impressed with where you work...

[quote=Ashland]
Allreit - why would a client mgr want a cert for the investment mgr’s job? Isn’t that why we hire investment mgrs?[/quote]



So that they can evaluate and understand what the investment managers are doing. And so they can do that job themselves and have real value over other less eduacated competators.



Also the rigor of the CFA process is such that it tends to screen out the obviously stupid/fraudulent/dangerious such as the Chartered Senior Annuity Advisors etc floating about.



My $0.02 cents as a non-CFA.

[quote=AllREIT]

[quote=Ashland] Allreit - why would a client mgr want a cert for the investment mgr’s job? Isn’t that why we hire investment mgrs?[/quote]



So that they can evaluate and understand what the investment managers are doing. And so they can do that job themselves and have real value over other less eduacated competators.



Also the rigor of the CFA process is such that it tends to screen out the obviously stupid/fraudulent/dangerious such as the Chartered Senior Annuity Advisors etc floating about.



My $0.02 cents as a non-CFA.



[/quote]



Let me understand. So, there’s more value to my client in my creating a portfolio that is forever on the efficient frontier(or being inefficient in ways that hopefully make more money) and not have the time to let the client know that he’s got a 50% probability of running out of money in 19 years if he doesn’t change his spending habits or if a $50,000 emergency hits in the next 2 years his 30 year retirement plan is cooked.



Can’t I hire a group of 20 or 30 CFA’s to handle the investment management & collect a 1% fee for taking care of both.

[quote=Ashland] Can't I hire a group of 20 or 30 CFA's to handle the investment management & collect a 1% fee for taking care of both.[/quote]

Yes, that would be founding an investment management practice.

The only relevant question is what designation is more valued and whether they enhance your money making- in the aggregate. This is simply answered by looking at the relative incomes of the average CFA and the average CFP and then looking at the average income of people holding both credentials.

I know that average CFA holder makes considerably more than the average CFP. What I don't know - but suspect, is that the average holder of both makes more than the average holder of just one of either.

Maybe the standard should be not which, but rather whether you should be getting both credentials.

Actually managing securities is a fairly complex task, but you don't have to make it a time consuming one. Most good money managers don't spend ours a day barking into a trader's turret and pouring through annual reports. Information technology and the popularity of fundamental factor approaches have made money management basically an easy job - if you know what you're doing. Most evidence suggests that the less you actually do - the better your performance. Accordingly, one does not have to choose between client development or portfolio management, the two can co-exist in one practice and one person - if you know what you are doing. Problem is, its complicated. This is where the CFA comes in.

Now, depending upon what kind of clientele that you have, you can generally find that 1% of assets under management is what you can get paid for being a financial advisor. If you run the money yourself - you don't need to pay for a sub-advisor - whether its a fund, separate account, ETF - whatever. All things being equal, this means greater margins for your business or better performance for your clients (if you tend to pass the costs of the subadvisor along to them).

If you are getting paid less than 1% AUM you are selling yourself cheap.

Are you saying, 1% times payout, minus expenses, or 1% net?

you can generally find that 1% of assets under management is what you can get paid for being a financial advisor.

This is generally sort of a useful benchmark statement, and I am wondering if that is 1% from the clien'ts point of view.

Of course haircut, admin, office costs are going to cut that number down.

Do you think greater that 1% from client's view is competitive?

[quote=rollinrock]

Do you think greater that 1% from client’s view is competitive?

[quote=Ashland]
Let me understand. So, there’s more value to my
client in my creating a portfolio that is forever on the efficient
frontier(or being inefficient in ways that hopefully make more money)
and not have the time to let the client know that he’s got a 50%
probability of running out of money in 19 years if he doesn’t change
his spending habits or if a $50,000 emergency hits in the next 2 years
his 30 year retirement plan is cooked.


Can’t I hire a group of 20 or 30 CFA’s to handle the investment
management & collect a 1% fee for taking care of both.[/quote]



Ashland, if you stick to just what I say you’ll have plenty of grist for the mill.



I never said that you spend all your time doing investment management,
just that you can pinch hit if call to and have a working BS detector
as well. A CFA helps with all of that, but much much more on the
investment management side.

I'm sorry if I was unclear on my previous post. I am simply tiering in terms of the average client size and production, not necessarily quality of personnel. But, I would suspect that the average level of competence at Northern Trust or Credit Suisse is a bit higher than Merrill Lynch, or LPL or Edward Jones.

Thanks for the clarification. When you are talking about pure intelligence and competence, it gets interesting. If you want to serve the CEO of a F500, you better match educational styles, be a type A, whatever.

If you just want to make a lot of money, maybe work 25 or 30 hours, spend a ton of time with your family, whatever, you need to own your office.

Doing one or the other does not make you smarter or better. That's why I say, if we appreciate our common strengths, it is a lot more fun to be a financial planning professional.

[quote=AllREIT] [quote=rollinrock]

Do you think greater that 1% from client's view is competitive?

[/quote]

No it's high. but unsophisticated clients will fall for it.

It should be 1% to the client, which groses about 80-75bp to you.
[/quote]

I operate from the assumption that 1% is acceptable based on the guidelines provided by the CFA institute on hiring a financial advisor ( http://www.cfainstitute.org/aboutus/investors/pdf/FinancialA dvisor.pdf)

This was also the number given as the "general rate" by Jonathan Clements in a WSJ piece a while back. But, he argued that he thought the fees were high and that the client should expect comprehensive financial advice for a 1% fee. (I keep a reprint of the article for my prospect marketing kit.)

"High" is a relative phenomenon and its important to consider that the number really only matters from an Advisor's standpoint. What should (at least theoretically) concern a client is not the percentage, but the after-tax return on their portfolio and the actual dollars paid; interestingly Bessemer Trust - one of the most highly respected firms on the street -charges 1% on accounts that are $25 million and more on accounts smaller than that. They make more money off of the private equity funds in which they place their clients and will charge hourly for "extraordinary" services. Its reasonable to expect that many of their clients - which include many sophisticated investors - pay more than $500k a year in investment management fees.

To me, I would agree that paying $500k a year for financial advice seems outrageously high, but when I was opening $250k IRAs not too long ago, I can remember clients giving me a hard time. Due to the views that are expressed by some financial advisors like rollinrock, a large number of very middle class people seem to feel that 1% is high regardless of wealth level. (Admittedly this perspective is supported by the fact that due to their excellent advertising of the discounters as well, they were well aware that the Vanguard 500 charges 9 basis points and Brown & Co charges $6 per trade). Now, considering that each client gets an annual financial plan, all of their trades included, their advice included all aspects of their financial picture, and performance that has generally outperformed the S&P 500, it seems to me like anyone with less than a million dollars got a pretty good deal.

The turning point for me was when I opened a $5 million account for an elderly gentlemen that I met at a local organization meeting. Naturally, as I was three years in the business, I was thrilled. (I'm still thrilled when I open a $5 million account, of course). He ACATed the funds and after about a month we sat down to chat. After he had me run an investment proposal for him (which I spent hours on), he balked at the notion that I wanted to charge him 1% per annum. When I explained that the mutual funds that I was trying to sell him out of had higher expense ratios than that - he expressed shock that there were ANY expenses in those funds - he had never had that explained to him. After another six months or so of "still thinking about the proposal" and us run all kinds of little tasks for him (helping him figure out the website, DTCing shares to various children and charities, sending documents to his accountant, etc), he finally called and agreed to sell 5,000 shares of a crappy closed end fund that he bought from his previous broker (naturally, at the IPO). When I had the audacity to charge him $750 for the trade he started arguing that he had no idea and that the trade would have cost him $10 at E-trade. At that point I fired him (boy, was he pissed). When I looked at how much I had grossed for the account over the previous 12 months, it was a whopping $1,250. The guy still called me "to get my opinion" on what his Charles Schwab broker was recommending (a series of Charles Schwab mutual funds, actually) and I very politely told him that I was very busy right now (again, very offended). Since then, I am primarily concerned with whether a client is willing to pay me. What is so ironic is that he'd probably paid more than 1% of his account in most years, but because they had all been hidden in sales credits or internal expense ratios, he was outraged at my transparent structure which was actually lower.

I almost feel an obligation to the profession to express (an admittedly slightly arrogant) total lack of interest in a person who doesn't think that they should pay any more for full service than a discounter. It really is an insult. Now, on the very rare occassion when a prospect suggests that 1% is too high, I simply wrap up the meeting ASAP ("Well, I think I have a pretty good idea... I have another meeting coming up in about half an hour... we'll be in touch to set up another meeting...), have my SA return their documents and in an unsigned letter addressed to "Dear Prospective Client" have her politely indicate that I am so very sorry that my schedule was so busy and that I simply cannot take on any new accounts for the forseeable future. Any inquiries they might have should be directed through email (Where elsewhere should they go? Well, why not look up their alternatives at Vanguard?) and we "wish them the best of luck as they proceed in this very important decision." If they don't want to pay me - fine, but simply having a few million dollars does not entitle them to ANY more attention and I think they should know that.

However, if I ever got a $25 million account, I can't imagine charging them 1% (well, maybe its a pleasant fantasy...) My gut is that an excellent financial advisor should be paid about $250-400 an hour (similar to an attorney) and that it takes between 5-30 hours a year to really serve a client well. But by that reasoning, it seems reasonable that no one should really expect to pay more than $12,000 a year or so - but I have clients that pay much more than that and I certainly start to become uncomfortable with those numbers, as this would mean that probably the top earning potential of an FA would be about $600k a year (billing 1,500 hours a year would be impressive for an attorney). This certainly isn't scratch, but it starts to make me think that I'd be smarter to get in the asset management business and start a hedge fund if thats the best I could ever HOPE to make was $600k...

I like 1% because its simple and I've never gotten much push back from clients for it. Also - who decides how much we should be paid for delivering solid relative returns? The evidence suggests that most self-directed investors do quite poorly. And mutual funds charge more than that on average.

I think where 1% is excessive for accounts less than $5 million is when all a financial advisor does is run MoneyGuidePro for a client every couple of years and places all of their clients in three mutual funds with a 50% bond allocation. But for someone who comes to their clients' homes and offices, who engages in dynamic financial planning, is a proactive financial advisor and who is constantly educating themselves on the available new investment alternatives, it seems reasonable to expect that their clients' portfolios should outperform their appropriate benchmarks by 1% per annum and that they should feel comfortable with that rate. Particularly for those who aren't millionaires.

Just my opinion...

[quote=san fran broker]

I almost feel an obligation to the profession to express (an admittedly slightly arrogant) total lack of interest in a person who doesn’t think that they should pay any more for full service than a discounter. It really is an insult.

[quote=san fran broker]I like 1% because its simple and I've never gotten much push back from clients for it. Also - who decides how much we should be paid for delivering solid relative returns? The evidence suggests that most self-directed investors do quite poorly. And mutual funds charge more than that on average. [/quote]

I enjoyed your post, and thanks for the link to the CFA pdf.

I also feel that the overwhelming evidence suggests that DIYers as a whole don't do all that well as compared to professional management.  What do you think of the BCT paper, touted by Donald Moine from Morningstar (who uses it to sell his products), and, if you can, please link to some substantial information or reputable studies showing the performance of DIYers as compared to clients who invest with a professional.

[quote=san fran broker]This was also the number given as the “general
rate” by Jonathan Clements in a WSJ piece a while back. But, he argued
that he thought the fees were high and that the client should expect
comprehensive financial advice for a 1% fee. (I keep a reprint of the
article for my prospect marketing kit.) [/quote]

That's a very long post.

[quote]interestingly Bessemer Trust - one of the most highly respected firms on the street -charges 1% on accounts that are $25 million and more on accounts smaller than that. They make more money off of the private equity funds in which they place their clients and will charge hourly for "extraordinary" services. Its reasonable to expect that many of their clients - which include many sophisticated investors - pay more than $500k a year in investment management fees.[/quote]

1% is pretty typical in upper limits, but the level of service you get is very high as well. Since you have an AE with a team who works on only a few clients. But that is a family office model which very different than an ML POA sweating out his first 15M in AUM.

The fee's charged on alternative investments are very high and a big money maker. It's not uncommon to have fee's on fee's so you get a 1% account fee on top of 2/20 in a hedge fund etc.

[quote]To me, I would agree that paying $500k a year for financial advice seems outrageously high, but when I was opening $250k IRAs not too long ago, I can remember clients giving me a hard time. Due to the views that are expressed by some financial advisors like rollinrock, a large number of very middle class people seem to feel that 1% is high regardless of wealth level[/quote]

It's also a good deal for people with more money, as you pay for the wisdom/experience not to make big foulups. However in general your not offering that much in objective terms over vanguard except for the personal service.

Another way to explain it, is that you keep yourself to a limited client base, vs a whorish broker who wants max AUM, and therefore fixed costs are higher.

[quote]I almost feel an obligation to the profession to express (an admittedly slightly arrogant) total lack of interest in a person who doesn't think that they should pay any more for full service than a discounter. It really is an insult. [quote]

It's a rational response on the customers part. It means they arent convinced of the value proposition.

I explain what we do, why it is valuable, why other people have found it valuable, and leave it at that. If clients are receptive they will be.

Also, I have a niche of high income and risk averse investing, so you won't find too many people who specialise in investing in our target assets.

[quote=Bobby Hull] [quote=Philo Kvetch][quote=Big Taco]

[quote=Philo Kvetch]I certainly wouldn’t put Merrill in with those also-ran firms. Merrill is the class of the field, while Jones and Ameriprise represent firms that are, well, bottom tier.[/quote]

I think it’s funny that to you, a bottom tier firm is a firm with the most CFPs of any firm, period. I guess that after all those CFPs get their designations, they head for the “lowest tier” firm they can find?

[/quote]

In the absence of anything else, that many CFPs would, in itself, make your firm bottom tier. As you might guess, I don’t hold the CFP trademark in very high regard.

[/quote]

CFP’s sell something that most people don’t want - asset allocation. It forces people to buy the worst performing asset classes at all times. In short, cfp’s don’t make people money. Go look at the ADV’s of some of those losers on financial-planning dot com. Many have been in business for years with less than $10mm under management. All they do is sit around and whine about all of the dishonest salesmen who make it impossible for them to acquire or keep clients.

[quote=san fran broker][quote=AllREIT] [quote=rollinrock]

Do you think greater that 1% from client's view is competitive?

[/quote]

No it's high. but unsophisticated clients will fall for it.

It should be 1% to the client, which groses about 80-75bp to you.
[/quote]

I operate from the assumption that 1% is acceptable based on the guidelines provided by the CFA institute on hiring a financial advisor ( http://www.cfainstitute.org/aboutus/investors/pdf/FinancialA dvisor.pdf)

This was also the number given as the "general rate" by Jonathan Clements in a WSJ piece a while back. But, he argued that he thought the fees were high and that the client should expect comprehensive financial advice for a 1% fee. (I keep a reprint of the article for my prospect marketing kit.)

"High" is a relative phenomenon and its important to consider that the number really only matters from an Advisor's standpoint. What should (at least theoretically) concern a client is not the percentage, but the after-tax return on their portfolio and the actual dollars paid; interestingly Bessemer Trust - one of the most highly respected firms on the street -charges 1% on accounts that are $25 million and more on accounts smaller than that. They make more money off of the private equity funds in which they place their clients and will charge hourly for "extraordinary" services. Its reasonable to expect that many of their clients - which include many sophisticated investors - pay more than $500k a year in investment management fees.

To me, I would agree that paying $500k a year for financial advice seems outrageously high, but when I was opening $250k IRAs not too long ago, I can remember clients giving me a hard time. Due to the views that are expressed by some financial advisors like rollinrock, a large number of very middle class people seem to feel that 1% is high regardless of wealth level. (Admittedly this perspective is supported by the fact that due to their excellent advertising of the discounters as well, they were well aware that the Vanguard 500 charges 9 basis points and Brown & Co charges $6 per trade). Now, considering that each client gets an annual financial plan, all of their trades included, their advice included all aspects of their financial picture, and performance that has generally outperformed the S&P 500, it seems to me like anyone with less than a million dollars got a pretty good deal.

The turning point for me was when I opened a $5 million account for an elderly gentlemen that I met at a local organization meeting. Naturally, as I was three years in the business, I was thrilled. (I'm still thrilled when I open a $5 million account, of course). He ACATed the funds and after about a month we sat down to chat. After he had me run an investment proposal for him (which I spent hours on), he balked at the notion that I wanted to charge him 1% per annum. When I explained that the mutual funds that I was trying to sell him out of had higher expense ratios than that - he expressed shock that there were ANY expenses in those funds - he had never had that explained to him. After another six months or so of "still thinking about the proposal" and us run all kinds of little tasks for him (helping him figure out the website, DTCing shares to various children and charities, sending documents to his accountant, etc), he finally called and agreed to sell 5,000 shares of a crappy closed end fund that he bought from his previous broker (naturally, at the IPO). When I had the audacity to charge him $750 for the trade he started arguing that he had no idea and that the trade would have cost him $10 at E-trade. At that point I fired him (boy, was he pissed). When I looked at how much I had grossed for the account over the previous 12 months, it was a whopping $1,250. The guy still called me "to get my opinion" on what his Charles Schwab broker was recommending (a series of Charles Schwab mutual funds, actually) and I very politely told him that I was very busy right now (again, very offended). Since then, I am primarily concerned with whether a client is willing to pay me. What is so ironic is that he'd probably paid more than 1% of his account in most years, but because they had all been hidden in sales credits or internal expense ratios, he was outraged at my transparent structure which was actually lower.

I almost feel an obligation to the profession to express (an admittedly slightly arrogant) total lack of interest in a person who doesn't think that they should pay any more for full service than a discounter. It really is an insult. Now, on the very rare occassion when a prospect suggests that 1% is too high, I simply wrap up the meeting ASAP ("Well, I think I have a pretty good idea... I have another meeting coming up in about half an hour... we'll be in touch to set up another meeting...), have my SA return their documents and in an unsigned letter addressed to "Dear Prospective Client" have her politely indicate that I am so very sorry that my schedule was so busy and that I simply cannot take on any new accounts for the forseeable future. Any inquiries they might have should be directed through email (Where elsewhere should they go? Well, why not look up their alternatives at Vanguard?) and we "wish them the best of luck as they proceed in this very important decision." If they don't want to pay me - fine, but simply having a few million dollars does not entitle them to ANY more attention and I think they should know that.

However, if I ever got a $25 million account, I can't imagine charging them 1% (well, maybe its a pleasant fantasy...) My gut is that an excellent financial advisor should be paid about $250-400 an hour (similar to an attorney) and that it takes between 5-30 hours a year to really serve a client well. But by that reasoning, it seems reasonable that no one should really expect to pay more than $12,000 a year or so - but I have clients that pay much more than that and I certainly start to become uncomfortable with those numbers, as this would mean that probably the top earning potential of an FA would be about $600k a year (billing 1,500 hours a year would be impressive for an attorney). This certainly isn't scratch, but it starts to make me think that I'd be smarter to get in the asset management business and start a hedge fund if thats the best I could ever HOPE to make was $600k...

I like 1% because its simple and I've never gotten much push back from clients for it. Also - who decides how much we should be paid for delivering solid relative returns? The evidence suggests that most self-directed investors do quite poorly. And mutual funds charge more than that on average.

I think where 1% is excessive for accounts less than $5 million is when all a financial advisor does is run MoneyGuidePro for a client every couple of years and places all of their clients in three mutual funds with a 50% bond allocation. But for someone who comes to their clients' homes and offices, who engages in dynamic financial planning, is a proactive financial advisor and who is constantly educating themselves on the available new investment alternatives, it seems reasonable to expect that their clients' portfolios should outperform their appropriate benchmarks by 1% per annum and that they should feel comfortable with that rate. Particularly for those who aren't millionaires.

Just my opinion...

[/quote]

That was long. Sure glad I didn't read it.

[quote=bankrep1]


Bobby just rubs his crystal ball and knows what asset class will
underperform next year. Then he removes it from client portfolios,
what a genius.[/quote]



Bobby is a troll, probably lives alone in his parent basement, and the
only person he sells financial products to are his socks in his drawer.

His point of view is valuable, in that it is always concise.

[quote=rollinrock]His point of view is valuable, in that it is always concise. [/quote]



No its not, it has zero informational content. That is what would make his perspective valuable.



The gullability around here is staggering some time. People will bend
their heads into a preztel to assume that Bobby, is adding something to
the discussion or anything other than a troll.

Obviously San Fran's post above provides a lot of insight based on experience, which I for one appreciate. Bobby's comment is just funny and in character, as is your little pretzel head image.  Just my take.

[quote=AllREIT]

[quote=rollinrock]His point of view is valuable, in that it is always concise. [/quote]



No its not, it has zero informational content. That is what would make his perspective valuable.



The gullability around here is staggering some time. People will bend
their heads into a preztel to assume that Bobby, is adding something to
the discussion or anything other than a troll.









[/quote]

Not always  zero, but frequently.  Sometimes he is entertaining, sometimes because he has the guts to call someone out on their bs.

[quote=AllREIT] [quote=rollinrock]His point of view is valuable, in that it is always concise. [/quote]

No its not, it has zero informational content. That is what would make his perspective valuable.

The gullability around here is staggering some time. People will bend their heads into a preztel to assume that Bobby, is adding something to the discussion or anything other than a troll.




[/quote]

You've overestimated my level of interest in adding value and information to your life. I suggest you go find a new hero because I'm alway going to disappoint you.

[quote=rollinrock]

Obviously San Fran’s post above provides a lot of
insight based on experience, which I for one appreciate. Bobby’s
comment is just funny and in character, as is your little pretzel head
image.  Just my take.

[quote=joedabrkr]

Not always 
zero, but frequently.  Sometimes he is entertaining, sometimes
because he has the guts to call someone out on their bs.
[/quote]



What is that proverb about a stopped up toilet overflowing twice a day?

 I'm sure you are right about ignoring, anyway.

For what it's worth, a little Monday philosophy: what I like about the nature and process of the internet forum is its how its immediacy mirrors reality, markets and so. Good luck controlling or even influencing the flow.

Missed that proverb about the toilet, don't think it's biblical.

If you find a good idea, grab it. Anyway, you're in no immediate danger of being my hero, Bobby.

rollinrock/Freedom Advocate - attempting to play on both sides of Bobby really does prove what many have claimed, that you need professional help. I am not referring to professional investment help, either.



If you want to become a Financial Advisor, stay on this site and add to it. If you want to accomplish your mission of doing whatever it is you are attempting to do, then get off this site and discuss it with someone who cares. Oh, and bye the way, no one cares but you.



Again, if only it was still okay to slap you smartass kids…

Let me guess, your parents still tell you  that you're the brightest light in the harbor ...

Since you carry on conversations with yourself and your meds have yet to be corrected, I imagine that you are the only one who speaks to the dead around here. Tell them I said hi.



Are you even considering a job in this industry?

It occurred to me that I might sell my practice and do something else. But it would require taking a "real" job. I guess sometimes success can be hard to handle. Did you get that " meds corrected " line from Joe?