Banks vs. Wirehouses vs. Insurance Cos
Can someone tell me very broadly the differences between the three?
Thin margins and low payouts. Major push to sell proprietary funds if the bank has their own brokerage division. Inherent fear of new financial service products. Inherent fear of variable products. Multiple compliance levels (bank compliance; b/d compliance). Big Brother atmosphere. Corporate minutia. Difficult to get HNW clients to give you their "real" money.
Overhead expenses are paid in full. Free leads. Instant name recognition when you mention that you work for XYZ bank. Work bankers hours. Most banks offer salary + commission and/or bonus structure to start.
Lower payout than you would expect. No free leads. Overhead expenses are often taken out of commissions (the bank does this too by giving you a lower commission rate overall). You are expected to put in 12 hour days 5-6 days a week for the first 2-3 years.
Greater freedom than bank or insurance company when you reach "goals". Most wires offer access to a wider range of products than banks or insurance companies. Often viewed as the traditional brokerage opportunity (may be considered a pro or con depending on your views).
Viewed as an employee of the insurance company. Most often you are captive on the insurance side which limits your ability to place difficult cases. Major push to sell fixed insurance over variable products. Often times you are limited to proprietary products on both the fixed and variable side. Most times when you sell variable products they are packaged as one of the insurance company's "retirement plans" (Thank you Mr. Jones. Our research shows that you need package 'C' to retire. You get a variable annuity, LTC, and a term life policy. All underwriten by ABC insurance). Most of the time all of your expenses are paid out of your pocket.
Still more freedom than the bank. Hell...I can't think of anything else.
Why would someone choose to work at Merrill Lynch, Morgan Stanley, etc. instead of working with a top insurance agency?
Reasons for working at wirehouse:
It sounds more prestigious
Don't want to sell insurance
Wants to primarily be an asset gatherer
Wants to be a stock picker
Insurance agencies have reputations for hiring everybody
Reasons for working at a top insurance agency:
Realistic opportunity to make 6 figures in your second year
Insurance sales don't go through grid
Opportunity to do complete financial advising (sorry wirehouse guys, but as long as you don't sell DI, you are failing at financial advising)
Pays much higher % of GDC. Typically 40% for small producers and 80% for larger producers.
It seems to me that the wirehouse guys have more prestige, but the insurance guys make more money and do a better job for their clients. Am I missing something?[/quote]
Considering that you think that DI is a must sell you are missing a ton. Now in today’s current age nobody and I mean nobody is paying on DI. That wasn’t always the case but it is almost impossible to get someone classified as disabled. I wouldn’t waste my clients money on DI at all, LTC is a different story and that would probably be a better route.
Lower payout than you would expect. No free leads. Overhead expenses are often taken out of commissions (the bank does this too by giving you a lower commission rate overall). You are expected to put in 12 hour days 5-6 days a week for the first 2-3 years.[/quote]
One minor correction. You are expected (actually, you are required) to hit specific production levels in your first couple of years. However, my experience is that no one tells you how you have to work, or where you have to work, or for how long you have to work to attain these levels. It's the number of dollars that you gather and produce that matter, not the number of hours you put in.
Your argument has some merit if you are talking about group disability policies covered under ERISA. I sure as hell wouldn't want to have to collect a claim on one of these policies.
You can also make a reasonable argument that getting coverage in the first place is much more difficult than it used to be.
However, your statement that "nobody and I mean nobody is paying on DI" is just ludicrous when it comes to individually underwritten non-group policies. I'd ask you to back that up, but you can't.
What are you going to say to one of your clients after they lose their house following their disability when they ask, "Hey, Dodger, why didn't you suggest that I buy supplemental disability insurance? You know that I could have easily afforded the extra $60/month."
(The reason that supplemental disability gets ignored by wirehouse and bankreps is that it's a lot of work for the rep and will net them a commission in the $100 range. The insurance guy will make about $400 on the identical sale.)
The thread entitled <span style=“font-weight: normal;” =“lgText”>‘Broker or Life Insurance Co.’ under Rookies & Trainees has some great content.