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Client concerns about your going indy

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Aug 28, 2008 9:26 pm

How did you folks who’ve left Jones to go indy explain to your clients where you were going and why?

  Did your clients have questions or concerns about whether their money would be as "safe" without the perceived backing of a big company like Jones?   
Aug 28, 2008 9:52 pm

Borker, are you testing the waters? Good luck to you if you are.

  To most of my clients, it wasn't a big deal. Going with LPL, I could say that LPL is roughly the same size as Jones (at least in # of reps).  If they were nervous, I explained SIPC insurance, and LPL's private insurance.    LPL has been around roughly 40 years, and they have nice LPL brochures talking about how they are a billion $ company.  It's funny, when I first moved, I gave that brochure out to all of my Jones clients and even new clients. Now (over two years later), I never give out that brochure.  It's not because it's a bad brochure, it's just because now I sell me vs. LPL. I still stress the importance of LPL's independence and how I could "fire" them if they aren't doing their job. Clients like that.
Aug 28, 2008 9:56 pm

It really wasn't a problem once they realized that the funds were insured and I wasn't planning on keeping stock certs under my mattress.

Aug 28, 2008 10:12 pm


It really wasn't a problem once they realized that the funds were insured and I wasn't planning on keeping stock certs under my mattress.

[/quote]   That's funny, and actually the kind of crazy question I could see a client asking.   There's no difference in an FA going indy versus a lawyer or CPA leaving a firm to become a sole practitioner.   I wouldn't not do business with a lawyer just because he didn't have 50 other lawyers working alongside him. I just hope the same logic follows for clients' views of their FA.
Aug 28, 2008 10:29 pm

Actually I just told my clients the truth.  I didn't believe in the Jone's system, I didn't feel like I was able to offer my clients the types of investment products I truly believed in, and I didn't want any part of the revenue sharing fiasco that was occuring.  As long as I was sticking with a reputable clearing firm and B/D then the issue became "do you trust me".

Aug 28, 2008 10:46 pm

[quote=Borker Boy]There’s no difference in an FA going indy versus a lawyer or CPA leaving a firm to become a sole practitioner.
That’s not exactly true.  There IS a difference - there’s less risk for a client of an independent financial advisor. 

In the odd event that the (established) advisor was so incompetent that he went bankrupt, ALL of the client assets would still be in accounts at the custodian (or b/d) in the client’s name.  It would be a hassle and an inconvenience to the client to find another advisor and transfer, but their assets would be safe as they are never comingled with the advisor’s assets. 

Of course, that assumes that the advisor is competent enough to recommend investments that don’t tank, but clients face that risk regardless of whether the advisor is captive or independent.

But I’m really confused that you even ask this question, Borker Boy.  In this post you are asking about going independent.  But in another post today about EDJ fee platform you say: "Our minimum is $100k, and if someone brings that in, I’ve got to have the upfront pop."

You sound like a junkie who is so desperate for the “upfront pop” that I can’t imagine how you could possibly be spending any time thinking about going independent.  If you truly have so little production that you have to have the upfront pop, you’re not established enough to go independent.   

Aug 28, 2008 11:01 pm

Am I reading that correctly that you are implying that it is SAFER for a client to be investing with LPL than with EDJ?  If so, this should become an interesting thread tomorrow morning. 

Aug 29, 2008 12:00 am

[quote=Spaceman Spiff]Am I reading that correctly that you are implying that it is SAFER for a client to be investing with LPL than with EDJ?  If so, this should become an interesting thread tomorrow morning.  [/quote]
No I didn’t say that, space.  I said there is less risk to a client of an independent financial advisor than to a client of an independent attorney or CPA. 

Clients of a FA have their money held in their names on their behalf in accounts that remain unaffected by whether or not an FA is a lousy businessman or not.  OTOH, you could pay an attorney a bunch of pre-paid legal fees and have them go out of business and you certainly have a large “risk” of never seeing your money again.

However, I would say a client is AS “safe” investing through an independent financial advisor at, say, LPL than through a FA at EDJ.  There may be a difference on perception, but not in reality.  The whole safety issue is largely a canard because of all the industry safeguards and regulations, which apply to independents and captives alike.

Aug 29, 2008 3:50 pm

The inflection in my voice doesn’t come out very well just typed out.  I didn’t think Morph was saying that indy is safer than Jones, but I just wanted to make sure.  I didn’t mean for it to come across as me coming out swinging.  However, I do have a tendancy to do that from time to time. 

  Morph, my apologies if you thought I was swinging at you.    Borker - you need to figure out where you want to be.  If you want to be indy, then go indy.  If your production numbers aren't good enough to go it alone, see if there is an indy office around that will take you while  you build your book.  There are way too many options as far as where to work out there to be stuck somewhere you really don't want to be.   I love EDJ, but I'm not one of those guys who believes that Jones is the ONLY place to be.  Go where you can serve your clients interests the best way you believe you can. 
Aug 29, 2008 4:14 pm

Just tell them the truth “Mr. & Mrs. Client …i’m leaving Jones because I couldn’t hack it and my numbers weren’t good enough to be at this firm…but come with me anyway because your money is still safe and i’m a good guy”…  

  LOL...that was for you ICE    And yes...before I get slammed...I"M JOKING!!!
Aug 29, 2008 7:34 pm

My production is fine, but I’m still at the point in my career where I need to gross as much as possible today to keep my dot above the stinkin’ red line, so I don’t get shipped back to St. Louis for additional training and then sent to phone sessions to cold call in a room full of other losers.

  I have an opportunity to focus on a niche that spans my entire state, but in this case, brand recognition is actually hurting me. Since we have an EDJ office on every street corner, it's difficult to convince prospects to do business with me: an EDJ guy who's located on the other side of the state from them.   The indy firm I've been talking with focuses on this niche and has clients all over the state; they've very successfully separated themselves as being the experts in the particular field.   Trust me, I understand the importance of being honest. I was just wondering whether it's wise to refrain from saying negative things about EDJ, or rather just tell your clients exactly how you feel about the ol' green machine.
Aug 29, 2008 8:30 pm


  I would certainly avoid talking negatively about EDJ.  I run money MUCH differently than everyone in my office, and likely in my entire firm.  I run money MUCH differently than many of you on this board.  I tell my clients up front that many of my investment strategies will differ from those in my office, at my firm, and probably all of the other FAs in the county.    Then, most importantly, I explain to them WHAT is different about my approach, and WHY it is different.    They usually respect that a great deal.[/quote]   You definitely take money management several levels deeper than I. My idea of putting together a portfolio is using 100% mutual funds and then telling them to hang on for the ride. (Not in those exact words, of course.)    That's all I know to do, but I'm also convinced that trusting the expertise of the money managers is going to benefit my clients much more in the long run than my trying to guess at when and where I should be putting money. I don't have the training, background, experience, expertise, etc., to even attempt that.
Aug 29, 2008 8:55 pm

Borker, it sounds like on many levels, it would be a good move for you.  Jones is not great at serving niches very well, unless that niche is in your back yard (I’ve met guys from LA that have all musicians, I’ve met a guy from Detroit that built his business on the UAW layoffs, one guy in my region built his business on the local electric company he worked for).  However, it can be done.  You just have to believe in it.  I don’t think you believe you can do it with Jones.  That’s fine.  You should probably start seeking that avenue.  Focused niche’s can be the key to success in this industry.