Commission to Fee Based

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Jan 28, 2010 6:50 pm

The issue is how to make a living while new, and how to produce a livable trail when you have more experience. The conflict is trying to do what is best for the client while trying to earn a decent income in the process.

Jan 28, 2010 6:51 pm

There is no conflict.  Do what’s right for the client, and the money will come.


Jan 28, 2010 7:04 pm
Moraen:

There is no conflict.  Do what’s right for the client, and the money will come.


  Agreed.  Also to follow up on my initial question, met with the client the other day, before I could even go over anything, he was like, "So if I keep this 401k at my company, there is no 1.5% management fee.  Why should I roll it over and pay your 1.25% fee...I mean that's a lot of money?".   sh*t.  My jaw hit the ground.  He's one of my best clients and very loyal.   I told him, our 1.25% fee pays for our advice (thanks Ice) and the service we'll provide to you.  I told you to allocate money to high-yield bonds back in April, you're up 30%.  I told you to move money to senior rates and floating income in October, you're up 16%, plus getting a 6% yield.  You won't get that in an un-managed 401k by keeping it there.   He agreed.   I think he was testing me or something because he brought the paperwork and is rolling it over, but it threw me for a loop.  Plus there's potentially another $2mil coming in from inheritances soon...
Jan 28, 2010 7:19 pm
snaggletooth:

[quote=Moraen]There is no conflict.  Do what’s right for the client, and the money will come.


  Agreed.  Also to follow up on my initial question, met with the client the other day, before I could even go over anything, he was like, "So if I keep this 401k at my company, there is no 1.5% management fee.  Why should I roll it over and pay your 1.25% fee...I mean that's a lot of money?".   sh*t.  My jaw hit the ground.  He's one of my best clients and very loyal.   I told him, our 1.25% fee pays for our advice (thanks Ice) and the service we'll provide to you.  I told you to allocate money to high-yield bonds back in April, you're up 30%.  I told you to move money to senior rates and floating income in October, you're up 16%, plus getting a 6% yield.  You won't get that in an un-managed 401k by keeping it there.   He agreed.   I think he was testing me or something because he brought the paperwork and is rolling it over, but it threw me for a loop.  Plus there's potentially another $2mil coming in from inheritances soon...[/quote]

Nice!
Jan 28, 2010 7:31 pm
Moraen:

There is no conflict.  Do what’s right for the client, and the money will come.


  The conflict is...if a Newbie does AS...there is a good chance he/she won't be around to service the client...so it is in the Client's best interest to have me around, therefore, I won't use it.  The response, "just do more of it"...doesn't really hold, because you would have to do a ridiculous amount of business, as a new/new doorknocking/coldcalling FA than is really possible, even with the low bar set for EJ reps. 
This is fact....as a matter of fact, it is already being addressed in St Louis and will likely be resolved within a few months.  Seems that they are kicking around giving the full year's worth of AS Commission upfront (not for real but for Expectation purposes only)...and the actual commission will be paid monthly in arrears as usual.  The problem began when they knocked the AS minimum down to $50K...that brought the Seg 1, 2 & 3s into the mix!