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Aug 16, 2006 12:06 am

How tough is it to leave a large wirehouse (ml, sb, etc…) and take your

clients with you to go indy with a firm like lpl? At what level (AUM) do you

see most wirehouse advisors leave? (if they ever leave) and also what is the

average tenure of an advisor when he switches?



Thanks for any info…

Aug 16, 2006 2:17 pm

[quote=Boomer]How tough is it to leave a large wirehouse (ml, sb, etc…) and take your

clients with you to go indy with a firm like lpl? At what level (AUM) do you

see most wirehouse advisors leave? (if they ever leave) and also what is the

average tenure of an advisor when he switches?



Thanks for any info…[/quote]

When clients are involved, it is more difficult to go indy than to go with another firm.  There are several reasons for this.  For example, the receiving wirehouse or bank will usually indemnify you against claims from your former employer.  In many cases, firms have mutual agreements about how to handle client transitions. 

You will forego most of these protections by going indy.

I’m not saying it can’t be done.  Obviously, it can.  However, you run a greater risk of legal troubles by doing this on your own.  Step carefully and talk to a good lawyer.

Aug 16, 2006 2:27 pm

JCadieux,

What assistance do the larger indy's provide (LPL Ray Jay)?  Obviously, they want your revenues as well, but how can they help in this transition besides luring the carrot in front of you?  It seems that they have a vested interest in helping you bring as much of your book as possible.

Aug 16, 2006 2:40 pm

If you're making a living where you are there is no reason to leave the nest.

Those who leave are failing where they are, so they grab for the high payout lure of being "Indy."  A few years later, after depleting their meager savings and running up their credit cards they finally realize it wasn't their broker dealer's fault after all.

The management of Independent firms had a gathering in Atlanta recently--they spent much of their time discussing what they need to do to attract producers worth having instead of those who were short timers at wirehouses because of their lack of production.

That would not be such a big deal among their managers if it wasn't a very real problem.

Aug 16, 2006 3:17 pm

[quote=hubbabubba]

JCadieux,

What assistance do the larger indy's provide (LPL Ray Jay)?  Obviously, they want your revenues as well, but how can they help in this transition besides luring the carrot in front of you?  It seems that they have a vested interest in helping you bring as much of your book as possible.

[/quote]


That's an interesting question.  I'm not aware of any assistance from the indy's in handling legal issues with your former employer.  Then again, I'm a biased recruiter who deals mostly with wirehouses and large banks.  My knowledge of the indy side is not that deep.  The "transition specialists" at LPL or Ray Jay may be better equipped to answer this one.

If you're serious about looking into going indy, then drop me a note and I'll refer you to a friend of mine who handles that kind of placement.
Aug 16, 2006 3:20 pm

I would think that Joeboy, who has recently gone though the transition, would be a good source of information about what LPL gave him in the way of support.

And if you want somebody articulate to talk about their experience Indyone would be a good choice.

Aug 16, 2006 3:31 pm

Newb,

Have any $500k producers at wirehouses ever gone indy?

Were all the independent b/d's at this meeting? What ones were there?

Aug 16, 2006 3:34 pm

Boomer,

It depends on the relationships you have w/the clients and what service you provide.  Do they do business w/you or your firm? Do they fully understand your value proposition?

If yes, then I wouldn't think it would be much of a problem to move a majority of your clients. 

It helps that clients/investors are seeking out independent advisors, especially the baby boomers.

Good luck.

Aug 16, 2006 3:34 pm

Thanks for the responses.  They are appreciated.

Aug 16, 2006 3:54 pm

[quote=moleary]

Newb,

Have any $500k producers at wirehouses ever gone indy?

Were all the independent b/d's at this meeting? What ones were there?

[/quote]

Ever gone indy?  Sure.

The meeting was conducted by the Securities Industry Association--you can go to their website

http://www2.sia.com/rosters/committees.jsp?comm=IND.%20FIRMS

All of those people would have been there, plus lots of others from firms that are not on that committee.

Aug 16, 2006 4:24 pm

[quote=JCadieux] [quote=hubbabubba]JCadieux,

What assistance do the larger indy's provide (LPL Ray Jay)?  Obviously, they want your revenues as well, but how can they help in this transition besides luring the carrot in front of you?  It seems that they have a vested interest in helping you bring as much of your book as possible.[/quote]
That's an interesting question.  I'm not aware of any assistance from the indy's in handling legal issues with your former employer.  Then again, I'm a biased recruiter who deals mostly with wirehouses and large banks.  My knowledge of the indy side is not that deep.  The "transition specialists" at LPL or Ray Jay may be better equipped to answer this one.

If you're serious about looking into going indy, then drop me a note and I'll refer you to a friend of mine who handles that kind of placement.[/quote]

I'm guessing that legal assistance from independent B/D's varies from case to case.  I'm only familiar with one case where a friend of mine went to LPL and was involved in a legal dispute with the previous B/D, including a TRO.  The action was eventually settled just before it went to arbitration, and although he is bound by a mutual confidentiality agreement, I can tell you that I was privy to the preliminay details and for what it's worth, I felt that LPL was very fair in allocating legal costs (they retained a significant share), and since he was brand new to them, they financed the rest of the bill interest-free for several months.  I think they debited his commissions each time for a set amount.

While you probably won't get full indemnification, I think it's fair to believe that at least some independents provide some legal support, and in the case of my friend, LPL provided significant legal support, even hiring his lawyer (who ended up being an excellent choice).

Aug 17, 2006 2:55 am

A few years ago a guy left our office who was grossing around 500.  He was young in the business and doing real well for the number of years out.  He went to LPL and as far as I know seems to be happy.

We talk several times a year and what is there to say, he likes it and he is making good money.  This guy wanted to run everything and so it suits him.  He has a CPA leasing some space from him and a full time and part time assistent. 

For the most part though, I believe the vast majority of people who go indy are tiny little producers.  Clearly, that is the case with what we see on this forum.  Undisiciplined children. Loosers who couldnt make it at a wire house.  How in the world do these people manage to get anything done when some of them are on this forum all day long. Now I know there are a couple exceptions but that's about it.  Tiny little loosers who could'nt hack the big leagues.

As for me, I cant see why any large producer would leave to go indy.  But that's just me. My payout is a bit less.  But not that much less given all the perks I get.  

Generally people who leave wires to go indy do not have legal problems because usually they are not significant producers.

Aug 17, 2006 3:11 am

Yeah, that must be it.

Aug 17, 2006 3:24 am

You're going to be outdone by many other people.  Don't be so dull.   Your ego must compel you to come up with something witty and intelligent sounding.  Replay...I'll give you two days to think just like on the other post. 

Good night sweet world.  I hear the horses singing to me outside.

Aug 17, 2006 3:36 am

Two days?

I'll get right on it.

Aug 17, 2006 12:46 pm

[quote=Indyone][quote=JCadieux] [quote=hubbabubba]JCadieux,

What assistance do the larger indy's provide (LPL Ray Jay)?  Obviously, they want your revenues as well, but how can they help in this transition besides luring the carrot in front of you?  It seems that they have a vested interest in helping you bring as much of your book as possible.[/quote]
That's an interesting question.  I'm not aware of any assistance from the indy's in handling legal issues with your former employer.  Then again, I'm a biased recruiter who deals mostly with wirehouses and large banks.  My knowledge of the indy side is not that deep.  The "transition specialists" at LPL or Ray Jay may be better equipped to answer this one.

If you're serious about looking into going indy, then drop me a note and I'll refer you to a friend of mine who handles that kind of placement.[/quote]

I'm guessing that legal assistance from independent B/D's varies from case to case.  I'm only familiar with one case where a friend of mine went to LPL and was involved in a legal dispute with the previous B/D, including a TRO.  The action was eventually settled just before it went to arbitration, and although he is bound by a mutual confidentiality agreement, I can tell you that I was privy to the preliminay details and for what it's worth, I felt that LPL was very fair in allocating legal costs (they retained a significant share), and since he was brand new to them, they financed the rest of the bill interest-free for several months.  I think they debited his commissions each time for a set amount.

While you probably won't get full indemnification, I think it's fair to believe that at least some independents provide some legal support, and in the case of my friend, LPL provided significant legal support, even hiring his lawyer (who ended up being an excellent choice).

[/quote]

Many indy BDs are willing to consider covering legal expenses, but it is not something they will outwardly offer.  Typically, if the rep is highly desirable to the firm (especially for larger producers and/or OSJ groups), and brings this up to the firm prior to making a decision, the BD will at least consider it.  I've dealt with a few cases like this for OSJs and it has been done a few times.

Aug 17, 2006 7:31 pm

I know someone who was with 2 large wirehouses, and after about 10 years

left to start his own deal with a parter. They were a major producer for a top

wirehouse. The reason I started this thread was to just get some ideas of

why large producers leave the wirehouses.



I know the payouts are more than double at indy. (correct me if I am wrong)



what other reasons do people leave and what is keeping say a broker doing

1 mil in gross from leaving and over doubling his take home pay.



what perks to these large producers have at the wirehouses?



just trying to get a grasp on al this…

Aug 17, 2006 9:05 pm

[quote=Boomer]
I know the payouts are more than double at indy. (correct me if I am wrong)



what other reasons do people leave and what is keeping say a broker doing

1 mil in gross from leaving and over doubling his take home pay.



[/quote]

You’re right that payouts can be double (or more) at an indy.

But you’re wrong in assuming that payouts are the same thing as take-home.  Independents have to pay all of their own expenses.  Some of the other posts on this board are long debates about the relative costs of having your own office, technology, support staff, insurance and etc.  The bottom line is that starting your own business may or may not be more profitable.

Somebody’s about to point out that I’m an FA recruiter and most of my
clients are wirehouses.  And that DOES make me biased.  Please keep my
comments in context. 

But it’s worth noting that our recruiters talk to a lot of
candidates who are considering going indy OR jumping to another
wirehouse.  There are many issues that we discuss while working with these clients.  The bottom line is you have to make this decision for yourself.

There are a huge number advantages you give up by going indy (brand name, quality of technology, quality of research, local support staff).  You should consider the relative value of these advantages to your individual practice.

Payouts vary greatly from indy to indy.  The level of service also varies significantly.  The highest payout is not automatically the best deal.

Another thing to remember:  you’re going to be the boss.  That’s a big drain on your time no matter how small the office is.  Your BOM and office staff keep a lot of HR, bookkeeping and minor administrative issues out of your hair so you can focus on production.  You’ll have to do all this yourself, or hire somebody to do it for you.

Running the office will take away from production time, but hopefully the higher payout will balance that.  If you can manage the additional back-office hassles and continue to produce while keeping your expenses down, then you have a good shot at making more money as an indy.


Aug 17, 2006 9:07 pm

For what it’s worth, the technology at LPL is far better than most of that at UBS.

Aug 17, 2006 9:09 pm

[quote=joedabrkr]For what it's worth, the technology at LPL is far better than most of that at UBS. [/quote]

What I found really curious was the intern deal at Scottrade.  "Sending emails for stock quotes."  I guess that means they don't even have an internet connection.

Not good, but still better than SW Bach.