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What percent of assets can I expect to move?

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Jul 11, 2008 12:33 pm

  I’m thinking about going indy, I’ve got about 40mm AUM.  What is a realistic expectation of moving assets and how quickly.  Can I expect to move a higher percent of fee based accts compared to commission based?  Are non-solicits really a pain to deal with?  I’ve read other posts about start-up costs and feel comfortable with that.  But I’ve heard a very wide range for folks that have left our firm and what assets they took with them.  Just would like to here from some folks that have been there and done it.  And if this has been covered in depth in the past, I’m new here and couldn’t find any old discussions about it. 

Jul 11, 2008 1:12 pm

First, there are some industry averages but recognize that so much depends on variables such as the specific type of business you do currently, how long and how happy/loyal your clients are, etc.

With that important caveat, it is not unusual to see 85-95% or more of your desired AUM move with you within a reasonable transition time.  This “desired” number excludes those clients that you decide to intentionally cull from your book by not inviting them to join you, for whatever reason (they are PITA, or too small, or resistant to doing business they way you wish to, etc.)  You know who they are - and you know you would be better off without them.

Again, much depends on you and the strength of the bond you have with your clients.  But if the bond is there most are fine moving with you even when the firm name is not previously known to them. 

Jul 11, 2008 2:05 pm

 I’m told that most of your clients who are going to move will do so in the first 90 days.  If you don’t get them in 90 days, you probably won’t.  Something to think about.

Jul 11, 2008 2:35 pm

I’d agree with that 90 day time frame for the vast majority, although there are some exceptions.  If you’ve prepared properly and the clients are motivated, it can go quickly.

Jul 13, 2008 2:50 am

As Morphius says, the important number is the “Desired” number. I left Ed Jones and had $30 million. I had a “Desired” number of $21 million, and took $20 million from Jones, and an extra $1 million from a client who had some money with me, but wanted a fee-based arrangement, which at the time I couldn’t offer at Jones, so in total, I met my goal of $21 million. I also reduced number of households from 365 to around 100. Much better way to service those clients and solidify those relationships, which has led to more referrals.

It’s hard to accept, but you need to accept the fact that no matter how badly you want a client to move with you, if they don’t want to move for whatever reason, then the relationship probably wasn’t as strong as you had thought that it was. That’s just how it is. I had some good surprises (clients who I didn’t think would move that did), some bad surprises (clients who I thought would move with no problem, but didn’t), and some clients with whom I had to do a serious selling job (here’s why you should come with me). We as advisers take client relationships very personally, so my move re-energized me significantly because in a lot of cases, I had to “fight” for my client (Jones rep saying that I left because I was greedy and wanted more commissions and couldn’t make it at Jones), and I had to remind clients why they did business in the first place, which was because of me.

In answer to your other question, about non-solicit, I had no problem, other than a couple of nasty letters from Jones. If you are with Jones, I hear that they have become more vicious about enforcing them, but I think it depends a lot on your situation and standing with Jones (I left on my own terms, and was on good terms with Jones)

Also, I’ve converted around 25% of assets to pure “fee-based”, but I also do some C share funds and L-share recurring revenue, which also plays into the equation…Hope this helps.

Jul 13, 2008 6:06 am

Bubba, let me pick your brain… pick & choose what to answer…

Did you start new new or take over or receive GK assets? How long since you left EJ? Was it in a good market or a crappy market?  DOES THIS MATTER? How has your business grown since then? Now looking in the rear view mirror, what do you wish you'd done before transitioning (I'm assuming indy) or what would you do differently? What was your greatest challenge transitioning indy? How long was your active planning stage? Do your still have any contact with any EJ cronies (How do they view you being an employer rather than employee) or are you persona non grata to those who are grotesquely green with kool aid toxicity? thanx Supe
Jul 13, 2008 6:56 pm

Been Indy now for almost exactly 2 months and have taken right at 67.5%.  From AGE/WS to LPL.  One important point that someone mentioned before is that there are some clients you do not want to come.  That amounts to about 7% of my old book that I didnt even contact/send a letter to letting them know of my move.  So YOU be picky about who you want to come over.

Jul 13, 2008 9:29 pm

[quote=SupermanFan]Do your still have any contact with any EJ cronies (How do they view you being an employer rather than employee) or are you persona non grata to those who are grotesquely green with kool aid toxicity?[/quote]
I’ll let Bubba respond to the questions you asked of him, most of which were good ones, but had to comment on this one.

What does it even MATTER how old EJ cronies view you, or whether you become person non grata?  Would how they react to you influence your decision in any way?

Jul 14, 2008 1:04 am

ClarkKent Fan,

I’ll answer your questions asbestos I can:

1) Started new-new in 2000. Moved to vacated office with around 20 million in 2001 (existing broker went to another firm). That asset number quickly eroded to 4-5 million when 15-16 million transferred to said broker (he is a great guy, still a good friend, and I expected most assets to leave). Of the assets that I took from Jones, 90% were assets that I’d captured, and the rest were from accounts I had inherited from that broker.

2) Left in '06. Market was decent, but not spectacular when I left. I don’t know how much that plays into it. The market can be whatever advantage you want it to be (many clients will come with you no matter what, some you’ll need to show concrete, non-relationship reasons why they should move, such as by bringing up things you can now do for them such as Alternative Investments, greater access to bond inventories, etc.)

3) Business has grown at a comfortable level. The most satisfying thing is that when I bring on a new client, I know that it is a quality client, since I get to choose who I deal with, rather than having to deal with any jackass that has money, just to make my New Accounts number look good to Jones.

4) Wouldn’t do a thing differently.

5) Greatest challenge was overcoming fear of the unknown (what if only 5 or 10 million transfers? What if I get sued by Jones?) Overcame that by hitting it hard right away after my license transferred, and things worked out.

6) Knew I wanted to leave for a year prior to actual date. Active planning stage was 5 months. My new office was up and ready to go the day I left Jones. Planning meant everything in the transition.

7) Soon after I left Jones, I came to the realization that despite all of the sunshine-up-rear-end, the people at Jones don’t care about you once you leave Jones. I’ll leave it at that.


Jul 16, 2008 1:47 am

What does it even MATTER how old EJ cronies view you, or whether you become person non grata?  Would how they react to you influence your decision in any way?  - Morphius

Morph, my inquery was from a slightly different perspective... I don't need other Jonsers to validate me but  since Jones' business model is so parallel to indy, it just seems they are ripe for mass exodus to indyland.  After all you can't blame every indy defection on "Oh, they weren't cutting it... After they left the regions health actually went up!"  I've certainly heard that in the past.

Jul 17, 2008 12:04 am

[quote=SupermanFan] Morph, my inquery was from a slightly different perspective… I don’t need other Jonsers to validate me but  since Jones’ business model is so parallel to indy, it just seems they are ripe for mass exodus to indyland.  After all you can’t blame every indy defection on “Oh, they weren’t cutting it… After they left the regions health actually went up!”  I’ve certainly heard that in the past.


If you think Jones model is so parallel to "Indy" I can't fathom what criteria you are considering.  Perhaps the simple fact that almost all EJ'ers work out of offices by themselves?  If so, I would say your premise is definitely flawed.  EJ'ers are no more ripe for an exodus than your typical wirehouse.  Probably much less so. 

Look beyond the externals to the business model and type of service offered. 
Jul 17, 2008 9:07 pm

I left S.B. several months ago after over ten years there.  I planned the move 18 months in advance.  By that I mean I deceided who I wanted to take with me and then I spent the next 18 months doing everything I had to to make sure those clients loved me.  I targeted the clients who generated roughly 85% of my revenue which was only around 63% of my total households.  I also threw in some small clients who I just liked a lot or who really relied on me going back many years. 

  I got 97% of those households I targeted.  I went after anyone I wanted even if a noncompet was signed for that client.  "When you inherit an account at a wire you sign something saying you wont go  after them if you leave."  I did it anyway and had no problems.  I aggressively called everyone and Fed-Exed announcement letters out that hit the day after I left on a three day weekend.  With in three days the battle was over and S.B. lost.   So my point is, if you plan it all out right, are doing a good job for you clients and REALLY work the relations, you will clean out your old firm.     The key is planning well in advance in my opinion.   
Jul 17, 2008 11:44 pm

There’s am involved, nuance answer to your question, ice, rather than a cut and dried yes or no, and the process has been altered by the recruiting protocol agreement signed by most of the larger firms.  Used to be you couldn’t legally do it before hand, but everyone did, many were sued, and stupid legal chaos ensued. 

The protocol was supposed to eliminate that by laying out exactly what you could do and how, and if you followed the process there was supposed to be no TROs or law suits.  One result is fewer TROs/lawsuits, another is much less preparing ahead of time.  In short, you sacrifice a little speed for less likelihood of legal action.

The bottom line is you prepare the limited (Christmas card list) info ahead of time, resign, and THEN transmit the info to your new b/d, who immediately produces the pre-populated documents and either gives them to you or sends them directly to clients, along with your ‘tombstone’ non-solicitation solicitation.  Clients then have to provide you with non-public info you had before but couldn’t use, such as account numbers, SSNs, DOB, and copies of account statements.

If done properly, you start just a touch slower than the old days, but that is more than made up for (IMO) by not getting bogged down nearly so often with silly TROs, etc.  You are definitely off to the races within minutes of resigning.  Preparation and good counsel is absolutely the key.  Do it right and it’s smooth sailing; screw up and you’re, well, screwed.

The process is slightly different if you are going to a custodian instead of a b/s (straight RIA), but that’s another issue than you asked.

Jul 19, 2008 3:19 am

Some good info so far.  I am confident in my client relationships, at least the one’s I want to move over.  I’ll have many more questions on which structure I’ll end up with (RIA, or IAR).  What I’m looking for is the most open platform I can find, and I’ll take my time to do a lot of research.  Thanks for the insights so far though.