Interesting observation about "making it"

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Aug 21, 2008 7:52 am

I have a question for those of you that have experience in a wirehouse.  Over the past few months I have been talking to as many people as possible about this industry.  One interesting thing I have come across is the way in which a few of the people I have talked to have greatly increased their chances of success. 

  I have met three people who started at one firm (UBS, ML, and Ameriprise) and went through about 2 to 2.5 years in their training program getting paid a full salary (at least at ubs and ml) and building their book of business.  Then, right as the are getting ready to go full commission, they switched firms and for some reason the new firm allows them to join their new FA program.  Therefore, they start all over with a 2 to 3 year salary.  But the difference is now they already have a small book of business and a head start.  Plus the salary that their new firm offered them was pretty high because they bring experience and a book of business.   Do you guys see this happening a lot?  To me, it just seems like a way to give yourself new life IF (and only if) you are at the end of your current training program and you know the first year without commission is going to be too hard to make it.   I even asked one of they reps that had moved from UBS to ML if his goals in the new PMD program were higher then a newbies and he said no.  He still has to get 15 mil in two years, but he already has seven in the books when he started. Where I would be starting at zero.   Just seems like that would encourage people to jump from one firm to another.
Aug 21, 2008 8:33 am

It’s not quite so smooth as you make it sound.   Ask your friends how exactly they handled their training contract, or if they waited until they had fulfilled the service requirement (typically 3 years, but can be longer depending on the firm) contained in that contract. 

If you are contemplating this strategy, be very aware of the terms of your training contract as you may be obligated to write a big check to your old b/d, or convince your new b/d to do so as part of the terms of your switching.  

The Catch 22 is new b/ds typically only are willing to cover that training buy out cost if you have already built up a good book, but if that were the case, why would you need to switch firms?  No salary will exceed the money you can make from a good book.

Aug 21, 2008 8:46 am


I read back over my post and I can see where you would think that I meant that I was contemplating using this strategy.  Actually that is not what I meant to say. I can't imagine starting off in the business with this strategy because it sets you up for failure or at least the mindset of failing.  I want to succeed wherever I start.   What I meant to say is that it surprises me that SB, ML, etc allow reps with experience and a book of business to go through their training program as a newbie.  To some extent, that will encourage jumping from one firm to another after your training is up.   Also, the reps I were referring to in my first post didn't have any obligation as they had all completed the training program.  That is kind of my point.  As soon as they completed the salaried training program and went commission, they just joined another training program.    You are correct in that I don't know all of the specific details of their change, but none of them mentioned anything about having to deal with a training buyout.
Aug 21, 2008 9:37 am

I would say rarely does someone early in their career make a jump like you are discussing unless they are not making it.

Aug 21, 2008 9:47 am

Thanks for the clarification, runner. 

B/Ds absolutely protect themselves through the terms of their training contracts, which generally run at least 3 years AFTER you complete training and enter into regular production.  This end of salary is typically not what defines the end of the required training length of service.

If you are referring to someone who has truly fulfilled their training LOS obligation, and then transfers to a new b/d as a trainee FA rather than as a transfer FA, I’d have to assume their “book” was non-existent or so small that they couldn’t survive otherwise, as they would otherwise make more money through straight production that any training contract.

As for the new B/D, they figure their odds are not much better than taking a new/new trainee, but at least they don’t have the cost of the licensing and non-production period, so all they are risking is the salary vs. the salary during non production plus training costs.  Their motivation for doing this would probably be driven by the BOM’s need to hit his recruiting targets for new trainees and/or transfer FAs, or perhaps because their production hurdles are much lower than those of the 1st B/D.

Bottom line is that this doesn’t happen much.  In the final analysis, if someone couldn’t build a (transferrable) book they could live off of in, say 3-5 years at their 1st b/d, what are the odds they will be able to do it the second time around? 

I suspect the details of your friends’ situations are more than meets the eye, and more than they want to share with anyone.  Better to sound like you cleverly manipulated the system than admit you barely survived.

Aug 21, 2008 10:31 am


I couldn't agree more.  A lot of FAs are not fully honest when talking to clients.  Why would it be different with colleagues?  I also wonder how some of these FAs handle non-compete contracts when making transfers like this.  If anyone could comment, I would appreciate input.

I have a friend of mine who is a bright individual.  He used to work for a major wire (like SB,ML, or MS) and he left to go work for a bank as a FA in another city.  He said he didn't have to sign the non-compete, or that he negotiated the non-compete from including clients he was already bringing to the wirehouse, can't remember which.  At any rate, he told me, "You don't want to work for a wire.  They have "fancy" Wall Street names, but they are all the same.  They work you to death until you leave and keep the clients you brought in."  I took his comments to heart, at first.  However, after talking to others, I have the distinct feeling he either just could not bring in the assets or didn't get along with the office.

Aug 21, 2008 10:53 am

I’d imagine they are indeed barely surviving but have found a way to keep themselves in the business for a few more years.

  I have a friend who left Jones and went to a wirehouse recently, and he'll be on salary for two years. He was failing at Jones but wanted to stay in the business a little longer to see if all of his doorknocking would eventually pay off.