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Feb 8, 2006 1:20 am

Personally, I don't have the kind of confidence in my abililty to arbitrarily and completely "go to cash" when I think the markets are headed south for good, and do it at precisely the right moment.

That's what keeps this business interesting, I guess. 

Feb 8, 2006 2:23 am

You can make that happen anywhere.  I have a friend who blows me away working for an insurance company.  It’s always about getting people behind you.

Feb 8, 2006 2:59 pm

[quote=mikebutler222]

A broker with 57,000,000 under management, with about 8,000,000 in trailing 12 new assets was fighting to keep her position because she had gone to cash.

No offense, but this doesn't pass the sniff test. That ROE is amazing and would attract a great deal of compliance interest, as would the decision to take 100% of her client's  money and "go to cash". Sounds like an urban legend.

[/quote]

Sorry, I keep forgetting that not everyone here comes from a wirehouse background. Trailing 12 refers to performance during the latest 12 month period. Today, that would mean performance from 2/05 to 1/06. It's a contantly moving target number. Wirehouses track production, new assets, and new account production using this method. If a wirehouse FA choses to move, the deal they receive is based on these trailing 12 numbers. In this end of the biz noone cares what you did last year. The trailing 12 is all that matters.

I can't tell you what to believe. This woman was an FA in our office in addition to being a personal friend of my wife. I saw a run showing her assets, and production. I referred her to the attorney who helped her fight the suits. Believe what you will. For those of you working for banks, regionals, or wirehouses the message still stands. That is, production is the only number that counts. Think I'm wrong? Try it. Bring in your normal asset capture and do little gross. See what happens. I'll buy a car from you.

As for compliance, as I said this woman, by sticking to her guns, did well for her clients. With an equity based business, she was smart enough to realize that the markets of 01/02 were unprecedented.  What's compliance going to do, fire her for doing the right thing for her clients?

Lastly, speaking of sniff tests, you can't say no offense and then call me a liar. That's disingenuous.

Feb 8, 2006 3:39 pm

[quote=tjc45][quote=mikebutler222]

A broker with 57,000,000 under management, with about 8,000,000 in trailing 12 new assets was fighting to keep her position because she had gone to cash.

No offense, but this doesn't pass the sniff test. That ROE is amazing and would attract a great deal of compliance interest, as would the decision to take 100% of her client's  money and "go to cash". Sounds like an urban legend.

[/quote]

Sorry, I keep forgetting that not everyone here comes from a wirehouse background. Trailing 12 refers to performance during the latest 12 month period. Today, that would mean performance from 2/05 to 1/06. It's a contantly moving target number. Wirehouses track production, new assets, and new account production using this method. If a wirehouse FA choses to move, the deal they receive is based on these trailing 12 numbers. In this end of the biz noone cares what you did last year. The trailing 12 is all that matters.

I can't tell you what to believe. This woman was an FA in our office in addition to being a personal friend of my wife. I saw a run showing her assets, and production. I referred her to the attorney who helped her fight the suits. Believe what you will. For those of you working for banks, regionals, or wirehouses the message still stands. That is, production is the only number that counts. Think I'm wrong? Try it. Bring in your normal asset capture and do little gross. See what happens. I'll buy a car from you.

As for compliance, as I said this woman, by sticking to her guns, did well for her clients. With an equity based business, she was smart enough to realize that the markets of 01/02 were unprecedented.  What's compliance going to do, fire her for doing the right thing for her clients?

Lastly, speaking of sniff tests, you can't say no offense and then call me a liar. That's disingenuous.

[/quote]

I average at least 8% in commissions on every dollar I raise. I didn't know that I was supposed to starve, while raising assets.

Feb 8, 2006 5:18 pm

I average at least 8% in commissions on every dollar I raise. I didn't know that I was supposed to starve, while raising assets.

"Annuity here, come get your annuity here !!!!!" (Picture Dirk at some booth on the street corner throwing prospectuses at passersby....)

Feb 8, 2006 7:15 pm

[quote=tjc45][quote=mikebutler222] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

A broker with 57,000,000 under management, with about 8,000,000 in trailing 12 new assets was fighting to keep her position because she had gone to cash.

No offense, but this doesn't pass the sniff test. That ROE is amazing and would attract a great deal of compliance interest, as would the decision to take 100% of her client's  money and "go to cash". Sounds like an urban legend.

[/quote]

Sorry, I keep forgetting that not everyone here comes from a wirehouse background. Trailing 12 refers to performance during the latest 12 month period. [/quote]

I'm familiar with trailing 12, I've just never seen the term used on anything other than production. Thus, when I saw "trailing 12" used, I thought 8M in production on 57M in assets.

[quote=tjc45]

I can't tell you what to believe. This woman was an FA in our office in addition to being a personal friend of my wife. I saw a run showing her assets, and production.

[/quote]

There were two things about the story that sent up red flags. The first being the idea that you could, even if you tried, manage only 100k in production on 57M in assets. That would require an almost 100% liquidation of all assets and doing so for free.

That last one led me to the second red flag, that being a broker in wirehouse (or anywhere where they didn't bear all the compliance burden alone) deciding the market was such that across the board, all their clients, regardless of the financial goals, personal tax situation, etc, all should go to cash.

The liability the firm would pick up if a broker unilaterally (and it sure wasn't some strategist at the firm recommending it) going to 100% cash, would be incredible. There's no doubt in my mind that such a move would be discussed in detail in the very largest corner offices of the firm by compliance guys in a cold sweat and management guys thinking about all those arbitration cases they stood a chance to lose because some broker somewhere decided they had a crystal ball and they were going to time the market. Not get defensive, mind you, but go 100% to cash.

 [quote=tjc45]

As for compliance, as I said this woman, by sticking to her guns, did well for her clients. With an equity based business, she was smart enough to realize that the markets of 01/02 were unprecedented.  What's compliance going to do, fire her for doing the right thing for her clients?

[/quote]

We don’t need to open up a thread just to discuss the specifics of a broker going 100% to cash on a market call and what their chances of success with such a move are, do we?

[quote=tjc45]

Lastly, speaking of sniff tests, you can't say no offense and then call me a liar. That's disingenuous.

 

[/quote]

If I wanted to call you a liar, I would have, trust me. For all I knew you were repeating a story told 'round the office about what happened to old so-and-so. When something big happens in an office, there appears at least three “truths” that are told; there's the story management told the other brokers, the story the broker told the other brokers, and then there’s the truth.

The thing is you portrayed this story as a brave broker who refused to “do production for productions sake” because she knew something about the markets of 2001-2002. What my Series 24 ears heard was, “OMG, can you imagine the heart attacks that would result if some broker made a market call and decided to take his/her entire book to cash?????”. It’s liability, not production as I see it.

Feb 9, 2006 3:23 am

[quote=blarmston]

I average at least 8% in commissions on every dollar I raise. I didn't know that I was supposed to starve, while raising assets.

"Annuity here, come get your annuity here !!!!!" (Picture Dirk at some booth on the street corner throwing prospectuses at passersby....)

[/quote]

That was some funny sh*t!

Feb 9, 2006 3:28 am

Dirk with his homemade disclosures

Feb 9, 2006 6:12 pm

[quote=mikebutler222]

[quote=tjc45][quote=mikebutler222] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

A broker with 57,000,000 under management, with about 8,000,000 in trailing 12 new assets was fighting to keep her position because she had gone to cash.

[/quote]

There were two things about the story that sent up red flags. The first being the idea that you could, even if you tried, manage only 100k in production on 57M in assets. That would require an almost 100% liquidation of all assets and doing so for free.

[/quote]

Thanks for your in depth analysis. Couple things:

I don't think I posted anywhere that she had gone to 100% cash. If I did then I misspoke, because she didn't. As a tranactional broker she significantly reduced her clients exposure to equities. Doing so  generated a lot of gross, which the company was all to happy to book. She then went to cash, as in, putting her clients money into short term holding places. She made some other investments, and generated some gross in spite of herself. She wasn't in trouble with the firm until she continued to stay in cash. Believe me, on the crystal ball thing, I hear you. The branch manager made that clear to her, as he did to us all. Which goes to the original point of my post, all that mattered was gross.

Regardless of your view of the world, it's not uncommon for equity based brokers/advisors/FAs/FCs or whatever you want to call them to build huge individual stock positions or to make big picture strategy calls. The wirehouse we worked for, big and respected, had no problem with this. In this case I don't know the percentage that she unwound, other than her book went from equity weighted to fixed income weighted. Many cash equivalents were carried on the books as fixed income.

I know of this from having this woman in my house and sitting across the kitchen table from her. Yeah, she could have BSed me on some aspects of her situation, but her purpose in talking to my wife and I was to reach out for our help. She did so because , I'd fought this company, came out on top, and remained with the firm in good standing. My settlement with this firm, undisclosed, was urban legend around the office. For that matter in our entire region. It didn't hurt that the branch manager, who was universally disliked, got bounced as a result. So our meeting was a kind of "how did you do this" meeting. If she lied, then she did so using bogus documents from the firm showing her production, and asset allocation mix.

Ok,I see were you're coming from on the sniff thing. I apologize for taking it as I did.

The last word is yours.