Got my Contract Today
Can you belive how thoughtful the Green Empire is? They sent me my employment contract and pointed out a few things to me. That was really thoughtful, my wife and I are thinking about sending Christies Cookies to the lawyer that sent it. It was really so very nice…
Do you think that he would prefer Oatmeal Raisin or Chocolate Chip??Noggin-funny! Chocolate chip because of the dark brown pieces…reminds them of the S_IT they love! Use any corporate legal you can…and sink their nasty green arse. I laugh at the messages they sent to the 1m+ brokers that left on the same day. Dang…I envy you–better yet, I remember. It is really fun looking back. Go for it, and don’t let anyone or anything make you regret. God Bless!
They worked quick on you. You must be a good broker. My congrats for making them crazy!
The ACATS are coming, eat them up Jones…
Tell Chris Pickett hello for me. If you need direction in the future, PM me, I have experience.
BTW the firm he represents is a wholly owned subsidiary of none other than the mother ship itself.
Chris Pickett and the green machine just want time and money. Don’t fight it, give them their cash and their non-compete and move on. You’ll spend more for a decent lawyer then you will on what they end up with if you just negotiate it out with them. If you haven’t gotten your TRO yet, I am sure you will. One of these days though, Jones will get nailed for these cheap shots and incredibly sleazy business practices. It’s called Karma and Jones is building up a large bank that needs to be repaid! Good luck to you and don’t let them stress you or your wife out. Send me a message if I can help!
Who the hell is Chris Pickett? I guess I missed this one. Who is he? Sorry to be so naive, but I really don’t know. For some reason (and obviously not because of my 400k+ commissions before I left) I didn’t get hit by this. Again, who is he?
He is the hitman lawyer that files ream after ream of paper on behalf of the green machine. Maybe he just works certain regions or something, but he sure seems to be the solicitor of choice on all of the documents I researched when I was considering fighting the TRO.
Nobody I know who left EJ ever got a TRO.
Hmmmmm… guess I must have made them angrier when I left then most. That makes me feel like a million bucks!!!
Has anyone (like a BIGSHOT STLOUIS GP) called SCREAMING that you are bad parent because you have left jones? (sign of desperation)
Seriously, one well known jones guy yelled this at me the day after I left....Spiff can now watch Noggin get "The Jones Treatment" and see that it's not regional or rare.They do issue TRO’s. That’s why the first two weeks are critical. I asked every person I called if I had their permission to send transfer paperwork (kept track of it) so even if they had not made up their minds I was still able to call no matter what dirty tricks were played.
[quote=GoneIndy02]Has anyone (like a BIGSHOT STLOUIS GP) called SCREAMING that you are bad parent because you have left jones? (sign of desperation)
Seriously, one well known jones guy yelled this at me the day after I left....Spiff can now watch Noggin get "The Jones Treatment" and see that it's not regional or rare.[/quote] I'm still going to tell you that I believe it happens, but I haven't personally seen it. Maybe because I've never left the firm.i just have one question for everyone on this board. I don’t care what firm you work for or not but how is it that you all have time to get on here during all times of the day? Do you not work? Do you just hang out at your desk and bash other firms?
Wow! Icy is actually a ‘warm’ guy.
People browse and use the Internet every chance they get - whether employers monitor them or not...but some have the good sense to always use caution while on a work computer. Remember the IBM lawsuit where the employee said he was a sex maniac and had a 'need' to view porno while at work: not sure if he won or not.Simply put, part of being indy is having more time. I don’t need 1000 $20,000 clients, and until this market looks like it is going to recover, there isn’t a whole lot to do with the clients that I have other than take their referrals.
It’s called multitasking. While I’m listening to the phone ring I can read a post. While I’m eating I can answer the post. I tend to jump on first thing in the morning before I really get started, during lunch, and then some time in the afternoon. We’re all adults. We can manage our own time. I do wonder how much more money I’d make if I made myself call three prospects for every post I make. That’s over 100 additional prospects called a month. Maybe I’ll try that. I’m like 15 behind so far this morning.
I got three of those letters from Jones and the same lawyer–it really doesn’t mean a thing! They just want to scare somebody!
Based on a variety of reports I've gotten, it means something if the newbie that takes over the office accomplishes his mission of getting some "dirt" on you that is enough for them to put together paperwork for T.R.O. He/She has strict instructions to look for anything they can get a client to "testify" to that implies breaking the non-compete. If he or she can get the wrong person to unknowingly tell them something and say they would repeat it in front of a panel if asked, they will put together the paperwork to really look threatening and take it to the next step.
This is how they squeeze cash out of people...the balance between time and funds spent fighting vs. paying them off and being done with it.Seriously? You really think that newbie that takes over that office has anything on his mind other than keep as many clients as possible and survival for the next two years? That’s a stretch and I think you know it.
Spiff,
That's the fundamental reason FA's leave EJ and other wirehouses...BD's think the clients are theirs...WRONG!!!! No home office has done one thing to establish new clients for an FA. There should be no "non-compete" contracts out there...they should be outlawed for FA's. The only contract we should have outlines our cost structure from the BD, as they can change your payout any time they want. They could change it to ZERO and still get a TRO on you if you leave and talk to clients (yes...I know it's an exaggerated example but there is nothing to stop it). BD's have too much power over us to include there ability to end your career with a negative comment on your U-5 which you can't even appeal. We need a trade association with some real clout. Workers Unite!! Ouch...that sounded like union talk and I'm not a fan of unions.Or we can vote with our feet - as I know you have already done uwec1986 - by going independent.
Nothing reduces a B/D’s leverage like eliminating the B/D!
Going independant doesn't solve the payout change problem. LPL or RJ could decide today that they are reducing payouts to 60% across the board. Where is it in your contract or agreement with them that they have to keep payout at 80%, or whatever it is, indefinitely?
I agree with you that the B/D mindset that those clients BELONG to them is flawed. I agree that there shouldn't be TROs. Clients should be allowed to follow their advisor wherever he chooses to go. Ultimately, they can. I don't think you can fault the B/D for wanting to retain assets that they spent money to acquire. Salaries, equipment, buildings, licensing, etc all cost a bunch of money. If they didn't try to retain some of those clients it would cost a fortune. My arguement here was with CIB stating that Jones gives a directive to those new FAs taking over existing offices in a competitive situation to dig up legal evidence or witnesses for the prosecution. Like I said, those new FAs have nothing on their mind than retaining clients and surviving.That’s naive. My contract says 90% for the life of the contract. This cannot be unilaterally changed by LPL. Now, the contract can be terminated with 30 days notice from either party, but that also gives me complete freedom to either negotiate another contract with terms agreeable to me, or I can take my book elsewhere. Beyond that, the only change I’ve seen since I’ve come on board, has been an increase in the bonus structure beyond 90%. Spiff, I’m fine with you personally, but you need a fact check on that one. Contracts are much different than employer/employee relationships where such crap can (and did ) happen to me.
[quote=Spaceman Spiff]
Going independent doesn't solve the payout change problem. LPL or RJ could decide today that they are reducing payouts to 60% across the board. The difference is that and Indy can leave 30 days later and nobody will be trying to keep his clients. Nor will the Indy BD badmouth the FA or hire a new guy to do it.
I don't think you can fault the B/D for wanting to retain assets that they spent money to acquire. Salaries, equipment, buildings, licensing, etc all cost a bunch of money. If they didn't try to retain some of those clients it would cost a fortune. The BD is paid 60% to cover their costs and make a profit. The BD did not create the client base and in many cases the back office screws up and may reduce the client base. Like I said, those new FA's have nothing on their mind than retaining clients and surviving. The new FA goes out of his way to bash the old guy who built the business and I'm sure it's with training from the BD (informally...of course). The new FA should just be happy that he got a one or two year head start and sing the praises of the guy who really did the work. I dealt with this personally...but I got more than even by blowing the whistle on EJ for Revenue Sharing. Yes...I'll be riding that horse FOREVER!!!! [/quote] How did the spreadsheet look and are there things I need to update? I think you'll agree that I was fair to EJ.I think if you look at my posts you will see I do not engage in mindless Jones bashing...I stand behind my comments because the new guy is watching the dollars roll out the door, and in his/her mind, if he can get the evidence to get Jones to go after the former IR, the bleeding will stop and his job will be easier. Keep in mind they are led to believe they are "entitled" to most of those assets. They are in my old region anyway... the RL tells them "Jones says only half will leave, so you'll end up with $xx million."Seriously? You really think that newbie that takes over that office has anything on his mind other than keep as many clients as possible and survival for the next two years? That’s a stretch and I think you know it.
uwec - the spreadsheet was fair to Jones. I haven’t had the time yet to dig through it, but from a quick glance it looks like your numbers are pretty good. I’ll let you know. Thanks for sending it.
I knew that someone would say, but I can leave to go to another B/D. You can, sure. But, if the indy world as a whole started to lower payouts, where would you go? If you are with the firm you think is the best right now and they screwed you, do you go to the second best firm for a better payout? You're in no more secure of a position than I am at EDJ as far as that goes. You still have to answer to your own mother ship when it comes to payout.Spiff,
Sorry but you blew this one. 1. You can move from Indy to Indy and nobody will try to steal your clients. 2. BD's can't set prices as a whole...that's illegal. 3. The "best" firm is based on more than just payout. 4. The BD can change payouts but we can move...Indy BD's look at the world 180 degrees from Jones. This has been said before...Indy firms work FOR the FA (but still try to make a profit and meet the regulations). At non-Indy firms, the FA works for the BD and if they don't like the changes, yes, they can leave but the BD DEMANDS that the clients stay with them and in THEIR perfect world, the clients would. Non-Indy firms believe the FA is less mobile and will eat what ever excrement sandwich they dish out. Indy BD's know we have options and have shown a willingness to use that option so they at least try to keep us happy. FA's are the profit center and Indy firms know it...EJ just says it and $crews them every chance they can.Noggin, quick question…did you go S corp or LLC?
I am a Sole Prop right now and was talking to a CPA about incorporating today. I could certainly use some guidance on the subject.
From my accountant: If you are talking dividends to avoid FICA-consider that as a one-man company we are producing the majority of the revenue, so “reasonable comp” would be most of our income.
FICA is only paid up to 102,000 in 2008. To be an S Corp you need to have payroll service (at what expense?-apparently more than the 15.3% of the income you can reasonably consider a dividend) Additional accounting work (expense) LLC requires no payroll, and very little accounting work. It is my CPA's opinion that S Corps are overused for small businesses such as ours that are service businesses. I am taking his guidance on the issue. If someone can make a strong case against the above, I'd be interested in hearing it.The reason for my question…My accountant is questioning the validity of having an S corp when LPL pays commissions in my name and then direct deposits into corp acct. He said I can’t assign my income to any entity…IHO. When questioning LPL they say they only contract with individuals and will not contract with a corp or ein number…the reason we get the 1099 not the corp. I know of several who incorporated and some who have LLC’s. I hate to get audited and then find out it wasn’t allowed and IRS wants me to pay social security on gross and not on the salary I pull out of my corp…
Going independant doesn’t solve the payout change problem. LPL or
RJ could decide today that they are reducing payouts to 60% across the
board. Where is it in your contract or agreement with them that they
have to keep payout at 80%, or whatever it is, indefinitely?
[quote=Morphius]Or we can vote with our feet - as I know you have already done uwec1986 - by going independent.
Nothing reduces a B/D’s leverage like eliminating the B/D!
[/quote]
Spiff,
It also depends on how you define “independent.” If you go RIA you completely eliminate the B/D altogether, which is what I was referring to.
If there IS no B/D, there is no ‘mother ship’ nor anyone to dictate your payout, which of course is 100%. How much of that makes its way to your bottom line depends, again, on you and the expenses you deem necessary or worthwhile.
The independent B/Ds have done a marvelous job of co-opting the term “independent” so that when most reps hear it they think only of independent b/ds, of which LPL is the largest. And for many that is as far along the spectrum of operating models as they care to go. But that wasn’t what I was referring to.
I get a personal deposit from my b/d, then it goes straight to my LLC business account as gross income. Then I net expenses off through Quickbooks and report it on schedule C with a tax ID #, but part of my personal return. My CPA is experienced and conservative, and he has given me no reservations about this structure. I'm an LLC if it wasn't clear above.The reason for my question…My accountant is questioning the validity of having an S corp when LPL pays commissions in my name and then direct deposits into corp acct. He said I can’t assign my income to any entity…IHO. When questioning LPL they say they only contract with individuals and will not contract with a corp or ein number…the reason we get the 1099 not the corp. I know of several who incorporated and some who have LLC’s. I hate to get audited and then find out it wasn’t allowed and IRS wants me to pay social security on gross and not on the salary I pull out of my corp…
[quote=uwec1986]
Disclamer...not a tax professional. LLC gives you more flexibility to move partners in an out. I use an S Corp. and do payroll through Quickbooks but you could just use a tax table online to do your payroll calculations...I just like QB Payroll ($200/yr). LLC or S Corp. you still need to keep track of your expenses and categorize them. I also signed up online with the IRS to make my payroll deposits that way and the same with my state. You don't have to run a payroll to take funds out of your business and you can avoid FICA for about 40% (do at least 60% of your profit as W2). Try to pay your FICA as a payroll and not quarterly to avoid a penalty if you should have a big month in Dec. Quarterly payments will recalculate and the IRS will say that you should have paid more even though you didn't have a huge month until Dec. If you pay with payroll deduction for your payroll taxes, you just pay more when you have a big month. That's how I do it...right or wrong.[/quote] I too am not a licensed tax professional...I would guess based on my conversations with my CPA your allocations may be a big "aggressive," though tax law is very subjective on this issue. He feels dividends are more appropriate on "management of revenue" rather than "self-production." (my own terms)CIB,
Just to be clear...you pay income tax on 100% (60% from W2 + 40% from Divs) but the 40% from divs is not taxed as FICA wages. Profit from K1 to personal return + W2 wages and you pay all the tax on your personal return. The Divs are taxed as ordinary income.Having some background in tax prep as a CPA and sitting in an office of CPA's here's my take: UWEC is spot on with pretty much everything he says. Quickbooks makes payroll pretty simple and any accountant worth his salt can show you how to run payroll in 15 minutes.
Spears, it is my experience that you CAN assign your income to an S-corp. My 1099 goes to a schedule C and I have one expense item, wiping the entire amount with a label "reported through S-Corp EIN #XX-XXXXXXX" or something to that effect. It's been done for years by many and I've not heard of it being challenged. The IRS cares more that it IS reported than where it is reported. IMHO, your accountant needs to think just a bit out of the box. On reasonable comp, there's no reason to believe that you can't pay yourself the same percentage you were paid as an employee. If that's 40% of the gross, then pay at that level and dividend out the balance of profits without social security taxes. That is a very reasonable level that should be very defendable in an audit. If you're producing at a decent level, you won't save much in social security taxes, but medicare taxes go on forever. You'll save 12.4% on the difference between your wages and social security maximum (if any) and 2.9% on all non-wage income taken as dividends. FWIW, the government from time to time makes noise about considering all such withdrawals as wages. If that happens, the social security and medicare tax savings will disappear, but those are hardly the only tax benefits of incorporating. Some of you guys have some real pussies for accountants. DISCLAIMER: I'm not your tax advisor, so don't be using this post for defense in an audit. Your situation and state rules may be very different than mine. However, if your accountant is being a pussy about this, you might want to look for another who is willing to grab his cajones and take a position.[quote=uwec1986]CIB,
Just to be clear...you pay income tax on 100% (60% from W2 + 40% from Divs) but the 40% from divs is not taxed as FICA wages. Profit from K1 to personal return + W2 wages and you pay all the tax on your personal return. The Divs are taxed as ordinary income.[/quote] I was aware, but good to clarify for the newbs and those considering future independence-this is a big issue.That would run completely counter to economic theory. As long as a profit can be made, there will always be a competitor willing to do it for less. Again, I have a contract that says what my payout will be. Any desire for LPL to pay less requires a new contract. You have no such leverage as an employee. As an employee, I had four pay cuts in four years. In the three years since, I've had no pay cuts and two significant pay raises...one when I started and one when the bonus structure was raised.I knew that someone would say, but I can leave to go to another B/D. You can, sure. But, if the indy world as a whole started to lower payouts, where would you go? If you are with the firm you think is the best right now and they screwed you, do you go to the second best firm for a better payout? You’re in no more secure of a position than I am at EDJ as far as that goes. You still have to answer to your own mother ship when it comes to payout.
"Going independant doesn’t solve the payout change problem. LPL or RJ could decide today that they are reducing payouts to 60% across the board. Where is it in your contract or agreement with them that they have to keep payout at 80%, or whatever it is, indefinitely? "
Spiff, don’t be appalled… This is warfare where the newbie has nothing to lose and everything to gain. What CIB was stating about newbie successors digging in the dirt to slam the departed vet is hardly debatable. I will confirm that this has indeed been FACT in my EJ neighborhood. I don’t know about what percent of the time this occurs but this seems factually accurate. Specifically, I saw the newbie get three or four clients to sign an affidavit that the departed vet had solicited them to move their accounts and VIOLA, then came the TRO and (and the newbie can not legally talk to clients about any details of this…) a FINE.
Thanks for the feedback on the tax question. I won’t pass along the Pussy quote…but will pass along the thoughts I’ve recieved. I have no problem thinking out of the box, I’m Indy. But to say my accountant needs to think out of the box is …well…not their nature. In my situation, my wife and I own our own businesses and we fall into the high risk of being audited category because of S corps and Income, active and passive. Just don’t want the IRS knocking on my door…no matter how in or out of the box we think.
as an indy myself, if we indies have to change b/ds, it’s still a pain in the ass to move. in other words new acat forms have to be signed by all clients AGAIN.
Spears, if you can believe it, one of the CPAs in this office sometimes call ME a pussy (he thinks I could pay myself less in wages). I understand that calling your accountant names might not be the most productive thing you can do, so no...I wouldn't recommend you call him a pussy. From a distance, I can opine that he's probably costing you money. There is a lot more aggressive accounting out there than what I've described. Could the government take an adverse position? Sure they could. Would I fight it much like an ex-EDJ rep would fight a training assessment? Absolutely. I didn't create these strategies myself and it's not like they're even uncommon. They've been outlined here before by others and I personally know other independents that have used similar strategies for years without issue. The important thing is to run your business as a business. If you just set things up for tax avoidance, you are playing with fire, and thus, my rationale for paying myself just as I was when I was an employee. That way, a tax official looking at the structure would correctly come to the conclusion that my pay structure generates similar amounts of social security and medicare taxes than what I operated under before. Why indies should pay more is beyond me, so I don't. ...and you are correct in your observation that it's not in the nature of many accountants to think creatively, but the good ones are capable without costing you an arm and a leg in an audit. If you don't have that, I'd ask your best business clients for a referral. There are plenty of good accountants who will tell you that what I've outlined is not unique or even very aggressive. If you have a good accountant, there's no reason to fear an audit unless you are governor of New York.Thanks for the feedback on the tax question. I won’t pass along the Pussy quote…but will pass along the thoughts I’ve recieved. I have no problem thinking out of the box, I’m Indy. But to say my accountant needs to think out of the box is …well…not their nature. In my situation, my wife and I own our own businesses and we fall into the high risk of being audited category because of S corps and Income, active and passive. Just don’t want the IRS knocking on my door…no matter how in or out of the box we think.
I've asked my CPA to get a second opinion on this whole process. You say you can assign income from and individual to an S Corp, he says you can't. His hangup is on the way the 1099 is reported. He called LPL to see if we could get the income reported as income to my ein and they said absolutely not. So if he believes, wrong or right, that you can't assign personal income to an S corp, then we have an issue. It seems to me it would be a simple yes you can or no you can't, no gray areas, as far as being able to assign income to a Corporation. Anyway, Its my decision on either keeping the Corp or moving to another form of structure, such as LLC. I wonder if I get audited, could I say I read it on a forum as justification.
With all due respect, I think your CPA is wrong. I can’t imagine people like Bob Fragasso and Ron Carson not running commissions through a corporation. This example is insurance, but read the third question’s answer…
http://www.wvinsurance.gov/forms/agency/Business_Entity_Licensing_FAQ.pdf ...and no, you can't use a forum post as defense...that's why I have a disclaimer in my post.and I personally know other independents that have used similar strategies for years without issue. [/quote] As of last year, the IRS is specifically singling out S Corps taking large dividend distributions for audits as way to increase revenue. As far as assigning the 1099 income to the S Corp or LLC, I think bspears your accountant is making it more difficult than need be. My schedule-C has my EIN on it, therefore "assigning it."[quote=bspears]Thanks for the feedback on the tax question. I won’t pass along the Pussy quote…but will pass along the thoughts I’ve recieved. I have no problem thinking out of the box, I’m Indy. But to say my accountant needs to think out of the box is …well…not their nature. In my situation, my wife and I own our own businesses and we fall into the high risk of being audited category because of S corps and Income, active and passive. Just don’t want the IRS knocking on my door…no matter how in or out of the box we think.
“As of last year, the IRS is specifically singling out S Corps taking large dividend distributions for audits as way to increase revenue.”
That's why you must have reasonable compensation paid out in the form of a W-2. The people the IRS are after is the rep grossing $500,000 with a $50,000 W-2 and $300,000 in dividends. We've discussed this at length in the office and believe that the key is being reasonable. The most interesting thing is here, is that the IRS is targeting something that will do virtually NOTHING for their collections...it would all go to social security and medicare collections...with the exception of fines and penalties. We have strayed way off topic here, but I'll leave you with this... 1. You and not your accountant are ultimately responsible for the numbers on your return and the method of reporting. Your accountant gets into liability issues if hs/she knowing files false and/or misleading information. 2. There are plenty of gray areas in the tax code so there will always be disagreements in interpretation. There's nothing illegal or immoral about taking a position that falls into these gray areas. Just understand that you may get a fight if audited, but that doesn't mean you are wrong, it doesn't mean you will lose, and it doesn't mean you will pay the full amount if you do. 3. Ultimately, almost everything said here by all parties is opinion only. Your job is to find a like-minded tax advisor and make tax decisions based on the guidance you get from that advisor. Never rely on information from this forum without doing your own due diligence.To tie this back to Jones (as we always must!) I will leave this exchange with this…
Note the EJ people go quiet on these discussions. Partly because it is irrelevant to them, but also because if they are like me while I was at EJ (I admit it) I used to run scared from these discussions. Now I can engage myself with the client and their tax pros to a much greater extent (which is part of the service I can now provide for my advisory fee). This is because I am not chasing dollars daily to make a living, so I have the time to research this stuff, and because I am now actually a business owner, I don't just play one on TV.Thank God, I thought a perfectly good Jones bashing thread had been ruined! Maybe we should start a thread that just says Jones Bashing and keep them all in one place. It’s hard to keep track of all of them when they are spread throughout all the topics…
Jones still sucks…does that help?
LoL!!! I can go back to work now that is out of the way…
Hey Guys-I think we are bringing Spiff closer. When he goes indy it will be a great day for him.
More than one avid EJ supporter has reversed course and seen the light in the time I’ve been on this board.
Agreed…
I think I was most shocked by Bill Fakkland. I hope he comes back and tells us the rest of the story some day…
Gone - don’t hold your breath. Feel free to keep trying though.
Space maybe if you took your helmet off it might soak in fasterGone - don’t hold your breath. Feel free to keep trying though.
Space maybe if you took your helmet off it might soak in faster[/quote] Just for that I'm going to shoot you with my blaster gun.[quote=Spaceman Spiff]Gone - don’t hold your breath. Feel free to keep trying though.
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