Unique Opportunity to start Indy

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May 11, 2014 2:16 pm

Hello Everybody-

I think I may have incorrectly posted this in the wrong forum earlier (independents and RIA).  Seems more appropriate in the newbies and rookies area.  

I have a unique opportunity on the table to go independent and I was wondering if you all could provide some feedback.  
I have over 7 years experience in the industry and started out as a financial advisor but have been with a mutual fund company for the last 4 years. (I have a series 7,66 and just finished my CIMA) I want to get back on the advisor side and move closer to my family so my good friend who is an independent advisor and has offered me and incredible opportunity.  He's willing to let me work out of his office with virtually zero overhead costs other than a small $200 monthly rent after the first six months.   He's also going to provide me with a salary of 2k a month for the first six months and access to an assistant.   I've managed to save up 9 months living expenses as a buffer for when I make the jump.  I will be starting with zero clients which is a little concerning but I'm confident in my work ethic and ability to build relationships. 
Current Expectations set for myself
Average 5 new accounts per month after month 3.  
100k of new assets AUM per month for months 2-6 
300k of new assets AUM for months 6-12
I'm hoping to have at least 2 million AUM in my first year.  
I've built a business plan with client aquisition strategies needed to hit these numbers. 
What are your thoughts?  Is this realistic?  Should I think about staying and saving up more money? Any feedback would be greatly apprecaited.

May 18, 2014 2:45 pm

Hey brokerr22,

Sounds like you got a good opportunity, I’m in a similar situation going to an Indy that I met through a referral. I think the goals you set for yourself are honestly low, if you want to survive. I would shoot for 4mm at the bare minimum after yr 1. Ideally 10mm would be phenomenal but you gotta think bigger. You also have to ask yourself if you will be fee only or broker as well. If you go fee only than you will certainly need a lot more runway to get off the ground. This business takes time, because money doesn’t move quick. I’ve got a handful of clients that are coming with me & that’s nice to know but I think most importantly is getting those commitments from as many people as possible so you can hit the ground running.

Jun 4, 2014 10:01 pm

Thanks for responding JK0015. That’s what my business partner told me too. I’ve spoken to one of the business consultants and ideally I’d like to build a book of business comprised of mostly fee based. The challenge is knowing which clients to put into advisory and which ones to do brokerage. I’d have to set minimums of course. Do you think it’s better to do a mixture of fee and brokerage at first, or save up more money and go strictly fee based from jump? My business partner seems to think 9 months of living expenses is good enough, but what would you suggest?

Jun 5, 2014 11:31 am

BrokerR22, knowing how much to save up honestly depends on the quality of your prospect list and ability to move assets in the door. I know guys at the major wirehouses who have been there 10-12 years and only have 200-250k in annualized revenue. All depends on your situation

Jun 5, 2014 11:23 pm

I’m currently living in a different city so I would have to relocate to take this opportunity. I don’t have a prospect list at all. I would have to do it the old fashion way. I’m not ignorant to the level of difficulty this entails, I just hope my runway is enough to give me time to bring assets in the door. The things I have going from me are:

I have almost 8 years experience in the industry I have a very successful advisor as a mentor to help me along the way. I’m very comfortable giving presentations and seminars. I have very low start up costs as my business partner is helping out with that. Couple that with an 80-90 percent payout (as opposed to 20-30% at a major BD)hopefully it wouldn’t take me as long to replace my income needs

Part of me says jump and learn how to fly on the way down. But I have two little kids and a wife to support so I’m constantly going back and forth as to whether or not this is an intelligent risk to take now.