When you say "completely independent", you mean no more B/D?  Not even an independent B/D?  So, you are going RIA?  If it is the case that you are going RIA, you now get to keep 100% of your fees.  But you did leave out at least one expense if that is the case:  compliance review/preparation...at least $2000/year ($167/month). 

If you are still going to have an independent B/D (i'll assume you are), I think your expenses look accurate and fair (as long as your rent is INCLUDING your utilities, as you did not list this).  Disclaimer:  I have only been Indy now for about a month.  Here would be your breakdown in monthly P&L...

Gross $12,000
-B/D  $  1,440 (88% payout to you)
-tax  $  3,260 (31% taxes - higher due to Self Employment)
-exp  $  2,100 (monthly expenses)
-----------------------------
NET NET of $5,200 (43%)

Note that this does not take into account the tax benefits of owning your own business (deductions and otherwise), as I am not yet too familiar with this side of the business. 

Any way you could lessen your expenses as you are starting out (like sharing half an office to lessen the rent)?   My rent is $375 and includes internet and utilities as I share an office for the next year at least.

You probably aren't going to be spending that much monthly in supplies.  Once you have done most of your initial purchasing your office supplies would be minimal. I would budget however, for a new computer or upgrades at least every two years.  You should also have a back up printer and fax machine. I assume that the phone includes your Internet service?

E&O looks about right.  You also have annual registration fees for your office if you are going to be a NASD registered office and you pay for your registrations in other States than your home state.  Those costs total less than $1000.00 for me...minimal.

I don't see any advertising, seminar or promotional costs budgeted.  You will want to do some extensive promotion during the first year or two that you are independent. 

I assume your health insurance (if you have it now) will be more expensive. 

Also, what about marketing?  Even if it's just taking a client to lunch every once in a while, it's still a cost. Chamber dues? Yellow pages? I know these really aren't FIXED costs, but I would recommend treating them like a fixed cost.  These things help grow your business. If you're having a bad month, it's easy to not ask a prospect to lunch or dinner because you don't want to spend the $50.  However, if you have a fixed $200/month marketing budget (or whatever amount you're comfortable with, mine is $500), you won't be as likely to hesitate on asking that prospect.  As you know, that $50 dinner could turn into a $500K rollover.

Just my $.02

I never take anyone out to eat and my business is on fire.

Sorry about the misinformation.  I plan on going independent with
a broker/dealer, so I misspoke when I said “completely
independent.”  I appreciate the comments so far.



Yes I should plan on budgeting for marketing, and I can see the benefit
of making that a fixed cost.  However, I do plan on setting aside
3k for marketing during my initial 3 months of transition.  



Any other expenses I may be overlooking?

[quote=bankrep1]I never take anyone out to eat and my business is on fire.[/quote]

Maybe the bank doesn't allow you to leave for lunch?

You might want to save up and buy the "R" for your handle too.

Freebase at least explains what you must be smoking!

Look, Indy is NOT for the marginal producer (which you'll need to add another $60M/ year to reach). It's not for the guy going out of the business. It's for the guy looking to create a real business.

If you are doing a Gross, gross on 16MM and you are leaving from someplace... Be sure that better salesmen than youself are going to be all over your book. They are going to tell your clients to wait a year before they go with you because the chances are very good that you won't be in business in one year. "...And what will happen to your account, Mr. Jones when Fee goes belly up?"

Legitimate or not, it's going to sit in your client's head and a percentage of them (especially considering that you are not a big swinging richard) are going to stay behind (or use the moment to switch their account over to that guy who is making all that money for my neighbor).

How many sub marginal "indys" can you fit in the back of a pickup truck? Two, with lawnmowers. 

Guys like you give guys like me a bad name (guys like you are a BIG reason I didn't go with LPL or RJ)!

Find somebody in your firm that will accept your offer to be his butt boy. Independence is the exact opposite of your solution.

Mr.A

OOPPPs I wanted to take this out...

(guys like you are a BIG reason I didn't go with LPL or RJ)!

Not that it's not true... But I wanted to be out of that controversial discussion.

Too late now...

Mr. A

Mr. A,

You were kinda tough on the young lad. Also, what's wrong with LPL or RJ Mr. A$$??

$$$$$,

Did I lie to the guy?

Look, this is a hard business in the ideal situations. Last time I hired a guy I told him I'd lend him the money for his ACAT fees (up to $10M). Otherwise this guy would have had to pay them himself (or the clients would have and that would have been a barrier for some of them, mostly the ones with the money). Point being that this business is like any other, IT TAKES MONEY TO MAKE MONEY.

And even then....

What's wrong with LPL or RJ?

My perception, as a consumer, was that they were more of a "Firm of last resort" for failing brokers that figured they could hang on if they worked out of their basement. It's not just me, it's the way that Indies were perceived up until recently.

Maybe it was their advertising, their marketing, I don't know exactly, I'm just telling you that I had watched their ads (in the trades) for years and that image of "Last Resort" or "outside the spirit of the law" was always there for me.

In this area there were severalteens of guys who would pop up occasionally and then disappear in a suspicious cloud, and they were LPL guys, at least in the groupthink of my wirehorse buddies and I.

I'm not saying everyone who uses them are like this (indeed, they seem to be the provider of choice for ex Jonesers) but, guys like Freebase (and you, I'm sorry to have to say) seem more likely to fit my perception of an LPL user.

Told you I didn't want to go here...

Sorry for any feelings I hurt. I'm talking about personal perception.

Mr. A  

No feelings hurt here. I’m not a failing broker. Doing 300+ and have done well since my beginnings. What exactly do you do for a living? If you’re indy what’s the difference between your firm and lpl or RJ Mr. A$$ ??

Exactly, I own an investment firm.

The firm I clear through comes with a different load of baggage than LPL and RJ. What that difference is I don't care to share with such as yourself. I told you the story when I first (second, if you count the time I spent here three years ago) came  here. You've done nothing but huff and puff and blow your own house down, while saying "I'm gonna do it! I'm gonna do it...How much money do you think I'll make?" since.

Mr. A

hey,hey, hey!! This is a big decision for me and my family. As I said the wife doesn’t work and I have my concerns. Your feedback has been helpful in that you’re saying I can do it with my aum (correct me if I’m wrong) However I still have my concerns. Help a guy jump will ya?

"this is a BIG decision for me and my family"

Sounds reasonable to me...when all else fails, go to an internet message board to resolve any & all BIG decisions that will impact your family.

No, I won't.

You have to have reached the point.

I'm not exactly sure what the Mustard Seed analogy was, but it is a widely taught analogy that change only comes from busting out of the shell (which I think is what the mustard seed thing is).

You need to grow testacles enough for yourself enough that you will break the testa of your own seed.

Point is, nobody can pull you through your seed cover. It's like the pistacio nut... to get the fruit out you need to kill it (crushing it or roasting it)... and even then some of those shells won't open. "I just eat 'em..." (what's that from? Oh heck, ya'all'll never get that one! Rodney Dangerfield to Joe Pesci in Easy Money ).

Mr. A

Are there enough enoughs there?

Mr.A

[quote=mranonymous2u]

.... I own an investment firm.[/quote]