New Rep in Small Town

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Feb 2, 2008 11:51 pm

This is my first of what I am sure will be many posts here.  I have been in the business for a little over six months now but have spent a lot of that time learning the basics of how the industry works and getting my series 7 and 66.  I am located in a smaller community where most people either casually know each other or are one or two people away from knowing somebody.  My history is a degree in finance, a stint at a large corporation for a year and then work at a local public accounting firm for seven years.  I have a great working relationship with the CPA firm I previously worked at (I was not a CPA but did a lot of tax and accounting work there).  My wife is a successful medical professional and owns her practice so cash flow is not currently a requirement but of course is in the future plans. 

  I have a few individual clients so far and three 401k plans with a couple more potential plans on the horizon.  Current assets under management are a little over $1,000,000 but considering they are mostly 401k assets that only equates to ~$6,000 a year in ongoing comp so far.  I definately prefer the ongoing trail-based compensation versus commissions but I am open to either platform.  I am not getting a salary or wages and only getting paid based on my sales and assets under management which I am fine with.  I am working with one of the few established advisors in the area who is my OSJ and my broker-dealer is a smaller sized independant.  So far I'll admit that I haven't been pushing myself too hard on the sales side of things and most of my clients have been through referrals.  Since starting in the business my personal life has been very hectic (baby on the way, kids starting school, addition on house, and other miscellaneous stuff) but things are getting more orderly now and I am going to be able to dedicate much more time to work.    However, from my experience so far, many of the traditional ways of marketing aren't very effective in a small town environment.  There isn't much opportunity for cold calling or cold walking and even tactics that are slightly high pressure can rub people the wrong way and burn bridges quickly here.  I am willing to do seminars but the two that I've tried so far (in conjunction with the advisor I'm working with) have not had enough registrants to make them worthwhile.  Other than passively nurtuting relationships with individuals and local businesses what can I do to drum up more business?  I know there is plenty of potential clients and assets out there, I just can't figure out how to draw them in.  As long as I do a good job with my current accounts I know I could eventually get to a decent level of production but that would be a very long road - not that I'm expecting to get there overnight.  Are there any reps/advisors out there that have experience operating in a smaller community  that can offer some advice to me as to what works and what doesn't when it comes to building a book in a small town environment?   Thanks in advance,   Matt
Feb 3, 2008 12:59 am

Seminars about creating income from savings for retired people. Take a look at fixed-rate immediate annuities vs cd’s. CD rates are in the 3% range now. If a client is in their 70’s they can get an immediate annuity that will guarantee a payout of 7 - 8% or more for life & will increase by 3 - 4% in payour per year. This will allow customers to use half as much of their money for income production, it can very easily(and correctly) be equated to buying into a pension, and it’s got terrific word of mouth impact.

Also - showing people ways to efficiently pass wealth to kids is a great thing. Helping people control how spendthrifts get their money is also a very good thing.

You can’t lose money for your clients in a small town… Don’t assume that anyone is sophisticated enough to know that markets go both down as well as up until you are well established. Good luck!

Feb 3, 2008 11:12 am
Good points.  Yes, if the market drops and a client loses money and pulls out before it can recover if he/she has a spreads the word it could give you a bad reputation.  I have seen that happen in my town.    If you have any large towns within any decent range of your town (maybe 500 miles or more) you can cold call/market there with decent success.  I have a large city about 350 miles away and have a number of clients there.  I visit once a month to call on clients, prospects and referrals. 
Feb 3, 2008 11:17 am

Having worked in a small farming commuity with Edward Jones for 15 years and now a Indy almost a year--I can say without a doubt--time is your best friend.  Join some local clubs and do it for the right reasons--otherwise they will see right thru you.  Offer a investment that sounds good to get your foot in the door.  If you pm me I will tell you three investment grade bonds that will yield your client over 7.0%--believe me, they will listen to 7% when CD's are falling.  Good Luck--it will work out for you if you want it to! 

Feb 3, 2008 11:20 am

Sorry about the post: the word is community–glad I took that spelling course!

Feb 3, 2008 5:30 pm

Thanks for the replies.  It all sounds like great advice and I will look into all of your suggestions.  I like the seminar idea concerning FAs.  Sounds like a pretty easy sell as long as I can get a decent turnout.  I will need to brush up on FAs a little and I assume I would need my insurance license for that as well?  As far as targeting a large city, there actually is a pretty big city not to far away.  I’ve got a few connections there that I have been trying to tap but haven’t had any results so far.  Maybe I will direct more of my efforts there, both with those current resources as well as doing some cold-calling.

  Although I have some connections and what I consider a great opportunity, one of the biggest things I have going for me right now is time.  From my perspective not needing an immediate income takes away a lot of pressure and allows me to focus on a long-term plan.  I also don't have to feel guilty about not earning my salary since I am not getting one.  Don't get me wrong, I like making money as much as the next guy but right now I am happy to be in the industry and that I am getting a few clients and having some success.  Even if the potential for high earnings wasn't there and it was just another job this is what I would want to be doing.  As small as it may sound, I will feel pretty good once I am on track for an annual production of $50,000 with signs of continued growth.  For some reason I have it in my head that if I can get to that level everything will just kind of fall into place.   And speaking of making money, I have one other question.  As far as compensation what would be considered a fair net payout for an independant rep/IAR?  I don't have any expenses except my insurance, licensing and direct expenses such as marketing and travel.  I am provided with an office, phone, supplies, etc...  and I currently share my OSJ's assistant since I am in the same office and am not taking up too much of her time.  I basically get on the job training on an as-requested basis but don't get the formal training that would be provided by a wirehouse.  I think I have a good compensation arrangement set up but being new to the business it would probably be prudent to confirm that.  Anyone want to give me a rough idea of how much of my production I should be netting?   Thanks again for the advice and for any additional suggestions anyone wants to offer.   Matt
Feb 3, 2008 5:57 pm

Whatever you are getting is a pretty good deal.  With that type of production and slow growth goals very few Indpendent Advisors would even take you under their wing.  Much less let you use their assistant.  I think a normal rep in that situation the OSJ would take 20-30% depending on level of production (plus the aprox 25% the BD would take)  If I were your OSJ I’d would prob want a minimum of 1k per month for rent and payroll and then take 25% on top of that.  I imagine you are getting a pretty sweet deal.

Feb 4, 2008 8:43 am

Matt -

Yup, you’ll need your insurance license & call a wholesaler in regards to getting product knowledge. NY Life, AIG, and Western-Southern are well rated companies & offer fixed immediate annuities. There are also some companies that offer fixed immediate annuities that have some access to future payments, but there’s usually a trade-off to such products in payout to the customer or payout to you. Lincoln Financial Group(via their American Legacy VA) has an interesting twist to variable annuitization, but you have to have the right client there.

If you have questions about how annuitization fits into a client’s life a good place to start might be

Don’t trust a wholesaler to educate you on the why’s of this because their job is to tell you that you should do 100% of someone’s retirement income need in their product. That isn’t to say don’t ask them questions & listen to their pitches. They have fantastic & creative ideas on how to make the most of their products.

Good luck!

Feb 5, 2008 11:11 am

Thanks for the replies.  I guess it’s off to get my life and disability license now.  I guess I’m going to need it to write 401ks with some of the the insurance-based  companies anyways.

  Also, thanks for sharing what some of the typical payouts are in the industry Dark Knight.  Compared to the industry norm I am getting a great deal.  I admit I have been slow getting started but the reason I am posting here now is because I want to turn the corner and become more efficient at getting new business in the door.  In any case, you all have given me some good ideas and insight into the business and now it is time to put that to work.  Thanks again.   Matt