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Jul 12, 2006 5:03 am

I don't post very often, but I did have time to look at some of the threads tonight and here are a few observations:

1. I don't believe that Ed Jones is in league with the Antichrist.  They do sound a little odd, but I can hardly argue with a firm that stresses things like American Funds and Franklin Templeton.  Believe me, I can certainly argue with some of the other "strategies" I've seen here and elsewhere.  That said, I do think that EJ manages to combine some of the worst of wirehouses and indies and I'd think they must lose a lot of folks to the indy side.  I may be feeling a bit charitable toward EJ since I just had a client sign a $700K ACAT today to bring their account to me from EJ.  Still, I see statements from all of the firms and I find the work done by most EJ folks to be very clean.

2. All this BS about summer slowdowns is just that - BS.   I agree that some clients may have their minds elsewhere, but I think it is mostly an excuse for brokers to rationalize poor performance / results.   My experience is that my production goes up in the summer because the clients that want to meet with me are serious about getting things done.

3. It really doesn't matter which firm you start with, but it matters a whole lot whether you have the focus to succeed. 

4. Along that line, I do indeed think that cold calling still works.  The real thing is that, irrespective of your prospecting strategy, you have to find a way to get qualified folks into your office on a regular basis or you are toast.  It does not matter whether you cold call, run seminars, network, etc. but you've go to stick with it. 

5. The various channels (Wire, Indy, Bank) are not inherently superior or inferior to each other.  They are just different channels with different tradeoffs.  A truly inferior channel would quickly become extinct in a market economy.

6. I think it's great that folks express their opinions and even get into arguments over various topics on these forums.  It sure would be nice if it could be done without name-calling and such. 

Jul 12, 2006 1:24 pm

Regarding number five.  That is liberal pablum--the idea that there is no such thing as "Good" "Better" and "Best" must be denied lest the conversation turn to the fact that it is better to be able to afford a higher quality item.

Liberal dogma demands that the true believer never acknowledge that it would be good to have more money. After all people with more money got it by exploiting the masses in some form or other.

We are all equal........ooooohhhhhmmmmm.

The fact is wirehouses are the best place to work in this industry.  You have the huge firm's resources to draw upon and support you.  You have national name recognition and you have virtually every possible investment vehicle to utilize--I've heard it described as a quiver filled with arrows.

No other channel offers as much.  Period, not even open for a logical discussion.

Sure there are negatives, but they're more imaginary than real.

High on the list is the perception that a wirehouse broker is not truly free.  What does that mean?

A big hitter wirehouse broker does not feel pressure to sell some evil proprietary product.  They don't even feel pressure to show up or not.  They are treated as royalty, wined and dined, and given anything they want.  There are legendary hissy fits being thrown over such innane things as "If he has a sofa in his office I want a sleeper sofa in mine."  My point is that there is no logical reason to leave a wirehouse.

There are plenty of emotional reasons--but even they are somewhat suspect.  If you're truly of the caliber to run your own business that will be noticed by your wirehouse managers and you will be offered a branch to run--it will be a hell of a lot more fun and challenging to your desire to captain your own ship.

Sometimes the dream is to escape a manager you happen to be oil and water with---that happens, you'll never get me to say it doesn't.

What I will say is that that reason can be exceptionally short sighted--why not just change firms?  Or wait for your nemisis to retire or yield to your, "Why don't you just die" unspoken epithets.

For those who are reading this to try to understand the industry--this old war horse is saying that those who "go indy" do it because of the accellerated payout and for almost no other logical reason.

If you're generating (say) $200,000 at a place like UBS you're no hero.  You're probably netting about 75 to 80 thousand dollars and taking home about 70% of that.  In short you're not getting rich, and you think you're working your ass off.

You're really not working all that hard, but you think you are.

So, one day you realize that in the independent channel you will be able to keep (say) 90% of your gross.  Instead of giving about 60% of what you earn to "Mother Merrill" or some other wirehouse you'll get to keep just about everything.

What a deal!

Well, maybe not--no, almost always not.  First one must come to grips with the reality of who is in the mirror.  It is nonsensical to think that the reason your production is what it is is unrelated to you and your personality.  Are you not really very smart?  Could be.  Are you working as hard as you could?  Almost certainly not?

Several of the more angry types who post on this forum sneer about bloated management, too much compliance and a host of other whines.  It is true that a bare bones broker dealer is not going to have things like a research department--who needs it anyway when there's the USA Today for recommendations?  It is true that most bare bones broker dealers do not advertise--but who needs advertising?

It is true that bare bones broker dealers are not going to have a home office expert to call upon when you need specific assistance--but who needs help anyway.

The list is long.  In order to buy into the idea that sixty percent of your gross is wasted by giving it to your wirehouse employer you must buy into the fact that the world's most successful broker dealers are inefficient bureauacracies filled with layers of unnecessary employees.

That is simply not the case--for example, you don't have to have an options department if your plan is to make trading options very difficult, if you allow it at all.

So, it's just plain old wrong to say that the various channels are "the same, just different."

Jul 12, 2006 2:23 pm

What would happen if, for some odd reason, American Funds and FT tanked and hit some bad years?  They would simply stress another preferred fund.  The whole idea of proprietary/preferred products is a joke in the competitive times we are in.  When a firm stresses seven specific products, it can sometimes limit the client, as well as develop tunnel-vision for the rep.

Obviously Jones is the right place for some, but those that leave to go on to wires or independent firms simply view it as the minor league system to the Yankees. 

The difinitely have their market niche established and have done a great job in letting the reps know what they're all about.  However, when you are limited as much as you are there, it simply just can't compare on a broad basis to some other firms with broad platforms and resources.

Jul 12, 2006 3:33 pm

Enjoyed your post Proton.

"Several of the more angry types who post on this forum..." Now that's irony!

"Sometimes the dream is to escape a manager you happen to be oil and water with---that happens, you'll never get me to say it doesn't."     A valid point, I think the reason many wire & bank brokers leave is because of management, not payout.

Jul 12, 2006 4:58 pm

Great post, Proton.