I don’t know about this particular story, but the things you describe,
“increasing production” and cutting payouts, are typical ways of
increasing profitability.  They’ve been done many times before.



Often, “increase production” translates to “sell some sh*t to your
clients to make money regardless if it is good for them or not”. 
I’ve seen it.  The pressures exist.



Cutting payouts occurs, too.  I’ve seen that as well.  
Slashing payouts is the quickest way to increase
profitability–overnight results. 



Would you like to take a $50,000 per year pay cut?  I’ve seen it
happen.  Payouts can drop by 5% or more from this year to next.



That’s why I always want everyone to know that just because things are
the way they are now, it doesn’t mean that it’s going to be the same
tomorrow.  Sometimes people are lulled into complacency.



The time will come:  Merrill, Wachovia, and all the other big
firms will LOWER payouts.  Guaranteed.  The hammer will come
down.  Wall Street isn’t content with consistent returns. 
The Street wants growth, year over year.



That’s why reps must always keep the “power” that they have.  They
must always maintain control of client loyalty and never delegate it to
the firm (as I’ve heard so much about regarding Merrill Lynch).



The only power a rep truly has is the power to LEAVE and go to another firm when things take a turn for the worse.



BrokerRecruit, since you are a recruiter in the business of helping reps with career moves, I’m sure you know all about that.

[quote=inquisitive]I don’t know about this particular story, but the things you describe,
“increasing production” and cutting payouts, are typical ways of
increasing profitability.  They’ve been done many times before.



Often, “increase production” translates to “sell some sh*t to your
clients to make money regardless if it is good for them or not”. 
I’ve seen it.  The pressures exist.



Cutting payouts occurs, too.  I’ve seen that as well.  
Slashing payouts is the quickest way to increase
profitability–overnight results. 



Would you like to take a $50,000 per year pay cut?  I’ve seen it
happen.  Payouts can drop by 5% or more from this year to next.



That’s why I always want everyone to know that just because things are
the way they are now, it doesn’t mean that it’s going to be the same
tomorrow.  Sometimes people are lulled into complacency.



The time will come:  Merrill, Wachovia, and all the other big
firms will LOWER payouts.  Guaranteed.  The hammer will come
down.  Wall Street isn’t content with consistent returns. 
The Street wants growth, year over year.



That’s why reps must always keep the “power” that they have.  They
must always maintain control of client loyalty and never delegate it to
the firm (as I’ve heard so much about regarding Merrill Lynch).



The only power a rep truly has is the power to LEAVE and go to another firm when things take a turn for the worse.



BrokerRecruit, since you are a recruiter in the business of helping reps with career moves, I’m sure you know all about that.

[/quote]



The Independents are feeling a crunch (low and behold because they are
not getting the fund rebates now either).  They are having tough
times and…what??? what may they do??? Reduce the 90%
pay-outs??? Or maybeeee…just maybe… there could be INDUSTRY
CONSOLIDATION…just a few real big players in the Indie place? 



Uh Oh- now all of the Indie Reps are beholden to just a few clearing
firms?  What might those firms do?  They may need to boost
profits…but the reps are not growing the business fast
enough…hmmmmmm well what is the quickest way to get this thing
done???  Lets ask Inquisitive…or Lets increase ticket charges,
lets LOWER PAY-OUTS, lets cut back on back office support.



Your not as sheltered as you may think.

"The time will come:  Merrill, Wachovia, and all the other big firms will LOWER payouts.  Guaranteed. "

I guarantee you they won't be cutting production while they're wheeling out the strongest recruiting packages they've ever had.

[quote=stanwbrown]

"The time will come:  Merrill, Wachovia, and all the other big firms will LOWER payouts.  Guaranteed. "

I guarantee you they won't be cutting production while they're wheeling out the strongest recruiting packages they've ever had.

[quote=rightway]

<span =“bold”>The Independents are feeling a crunch (low and behold because they are
not getting the fund rebates now either).  They are having tough
times and…what??? what may they do??? Reduce the 90%
pay-outs??? Or maybeeee…just maybe… there could be INDUSTRY
CONSOLIDATION…just a few real big players in the Indie place? 

[/quote]



There are a number of independent clearing firms.  Many brokerages
also have clearing divisions.  Fees are quite reasonable.

[quote=rightway]

Uh Oh- now all of the Indie Reps are beholden to just a few clearing
firms? 

[/quote]



There are far more clearing firms to choose from than big
wirehouses.  Many smaller independents have clearing arms that are
capable and competent.

[quote=rightway]

What might those firms do?  They may need to boost
profits…

[/quote]



Nobody needs to boost profits.  They may want to, though.

[quote=rightway]

but the reps are not growing the business fast
enough…hmmmmmm well what is the quickest way to get this thing
done???  Lets ask Inquisitive…or Lets increase ticket charges,
lets LOWER PAY-OUTS, lets cut back on back office support.

[/quote]



Are we talking about the same thing?  Trade fees for clearing
firms are quite reasonable.  Check them out.  It may cost you
a $15 ticket fee to do a trade you charge $100 (or more) to the
client. 



What’s Merrill’s policy on small trades?  Oh yes, no payout, at least not on under $100k accounts, isn’t that right?

[quote=rightway]

Your not as sheltered as you may think.

[/quote]



You are living in fantasy land.  Perhaps Merrill Lynch is pumping happy gas into your office.



If I had high enough production ($1 million) and a loyal client base
with the occasional referral, I’d seriously take a look at going
independent.  Perhaps even maybe forming my own firm with a few
other guys.



I wouldn’t be fool enough to work for Merrill Lynch.



Working for giant, mega McCorporations who don’t have the interests of their producers at heart is for chumps.



Methinks rightway may be brainwashed by Merrill.

"What’s Merrill’s policy on small trades?  Oh yes, no payout, at least not on under $100k accounts, isn’t that right?"



No that is not correct.  I am, however, not a good source for that
question.  I don’t have any relationships that size. 
However, I do know that Merrill does not pay out on household
aggregates under $50K  (not $100k) and any transaction business
(like the stock trade in your example) the pay-out is reduced to an
unattractive level.  If you are an advisor who specializes in
commissioned stock trade business, Merrill is not the place for
you. 



I am not brainwashed.  I happen to think the mentality of
management and the corporate environment places the corporation first,
at all times.  There is very little, if any, real loyalty to the
reps.  But I do believe they provide a platform and basket of
tools to use that is quite good.  I can accomplish virtually
anything for all of the clients I target and service. 



I would love to have my own shop but I have little interest in closing
out my career with IRA Rollovers and Taxable trust accounts for
families.  My business does not look like that and when I have
looked around, I have not found an independent firm that can support my
practice to the level it is supported right now. 



My whole point here is that ones firm needs to fit their business
model.  My firm fits mine, not yours.  Your firm fits yours,
and not mine.  Thats OK.  And NOTHING in either firms
(independent or wire) will be the same a few years from now.  If
all of your forcasts come true for Merrill Lynch, I will look you up
and be your assistant.

NEW YORK (AP)--American Express Co. (AXP) said Wednesday that it has chosen
a new name for the financial advisory unit it plans to spin off, Ameriprise
Financial.
  New York-based American Express said in February that it would spin off its
American Express Financial Advisors unit, which is based in Minneapolis, so
the parent company can focus on the faster-growing credit card and travel
businesses.
  The spin-off is expected to be completed in the third quarter.
  American Express said the Ameriprise name will be used starting Aug. 1 for
the new holding company as well as for selected business lines, such as
Ameriprise Retirement Services. The financial advisory will do business as the
Personal Advisors of Ameriprise Financial, it said.
  American Express said it was adopting the name RiverSource for the new
company's insurance, annuity and asset management lines.

I don't know how much they paid the pr firm to come up with those names but I would ask for a refund if I were unfortunate enough to work at Ameriprise.

I would, too.  People hear Merrill Lynch, Smith Barney, Morgan Stanley, Goldman Sachs, etc. and it exudes a particular feeling of strength and reliability.  Whether Ameriprise were opening today or 75 years ago, it just seems kind of cheesy.  Maybe it’s just me and I know I’m being blunt (not trying to offend anybody), but it seems like a brokerage firm that rents cars or something.

Would you like a VUL with that?  Thank you for shoppping at Ameriprise.

That name is terrible! 



Ameriprise–how stupid!!!

There is also an asset management division as a result of the spinoff and it is called "RiverSource". 

[quote=inquisitive] [quote=stanwbrown] [quote=inquisitive]<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

"The time will come:  Merrill, Wachovia, and all the other big firms will LOWER payouts.  Guaranteed. "

[/quote]

I guarantee you they won't be cutting production while they're wheeling out the strongest recruiting packages they've ever had.

[/quote]

The brokerage industry tends to move together, much as the airlines do.  Merrill typically leads the way.

A number of firms cut payouts in 2001 - 2002.  Where you been?

[/quote]

The only thing remotely like a payout cut I’ve seen is the small household cut ML put inplace. Perhaps you have a link or source for others.

[quote=inquisitive]

Payouts will drop when the firms can't meet growth targets.  Merrill will probably lead the way.
[/quote]

Please explain how they can be in such a big fight with other firms to recruit talent AND cut payouts at the same time. You do realize a cut in payout would make recruiting tougher and it would cause an exodus of brokers and assets, right?
 
[quote=inquisitive] [quote=rightway]
The Independents are feeling a crunch (low and behold because they are not getting the fund rebates now either).  They are having tough times and.....what????? what may they do????? Reduce the 90% pay-outs???? Or maybeeee....just maybe.... there could be INDUSTRY CONSOLIDATION...just a few real big players in the Indie place? 
[/quote]

There are a number of independent clearing firms.  Many brokerages also have clearing divisions.  Fees are quite reasonable.

[quote=rightway]
Uh Oh- now all of the Indie Reps are beholden to just a few clearing firms? 
[/quote]

There are far more clearing firms to choose from than big wirehouses.  Many smaller independents have clearing arms that are capable and competent.

[quote=rightway]
What might those firms do?  They may need to boost profits...
[/quote]

Nobody needs to boost profits.  They may want to, though.

[quote=rightway]
but the reps are not growing the business fast enough....hmmmmmm well what is the quickest way to get this thing done???  Lets ask Inquisitive...or Lets increase ticket charges, lets LOWER PAY-OUTS, lets cut back on back office support.
[/quote]

Are we talking about the same thing?  Trade fees for clearing firms are quite reasonable.  Check them out.  It may cost you a $15 ticket fee to do a trade you charge $100 (or more) to the client. 
[/quote]

It’s fascinating to hear you, Inquisitive, talk about the coming pressure on wirehouses to increase profits and the effects that will all have on brokers working there and in the next breath pretend that those same pressures won’t set upon clearing firms and denying there could be any effect on the indies who clear through them.

 [quote=inquisitive]
You are living in fantasy land.  Perhaps Merrill Lynch is pumping happy gas into your office.

If I had high enough production ($1 million) and a loyal client base with the occasional referral, I'd seriously take a look at going independent.  Perhaps even maybe forming my own firm with a few other guys.

I wouldn't be fool enough to work for Merrill Lynch.

[/quote]

And maybe that would be a good plan, otoh ML isn’t hurting given all the $1M producers who think the name there is worth it to them.

[quote=inquisitive]

Working for giant, mega McCorporations who don't have the interests of their producers at heart is for chumps.

[/quote]

yawn…. Employers have conflicts of interests with their employees, imagine that….shocking and heretofore unknown. (Of course that’s not the case with regionals, right?)

[quote=inquisitive]
Methinks rightway may be brainwashed by Merrill.



[/quote]

Me thinks you’re either bitter because some ML guy took your best accounts using the tools his wirehouse has that your regional lacks, or you suffer from the little brother syndrome. 

[quote=BrokerRecruit]I would, too.  People hear Merrill Lynch,
Smith Barney, Morgan Stanley, Goldman Sachs, etc. and it exudes a
particular feeling of strength and reliability.  Whether
Ameriprise were opening today or 75 years ago, it just seems kind of
cheesy.  Maybe it’s just me and I know I’m being blunt (not trying
to offend anybody), but it seems like a brokerage firm that rents cars
or something.[/quote]



Some of those firms you’ve mentioned are the reason the industry has such a tarnished reputation in the first place.



Yeah, I was thinking the same thing about the car rentals!



A terrible name.

There is always the confusion between Edward Jones and AG Edwards.  Could there be a new confusion looming between Ameriprise and Primerica?  Yikes!

[quote=inquisitive][quote=BrokerRecruit]I would, too.  People hear Merrill Lynch, Smith Barney, Morgan Stanley, Goldman Sachs, etc. and it exudes a particular feeling of strength and reliability.  QUOTE]

Some of those firms you've mentioned are the reason the industry has such a tarnished reputation in the first place.
[/quote]

Yeah, those dirty guys. Unlike the angelic regional firms, or mutual fund companies, or banks or insurance companies…. Say, does it really bother you that people don’t share your white-hot hatred of the bigs, but they do worry that your small firm might not be around in a year or two?<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

[quote=stanwbrown][quote=inquisitive] [quote=stanwbrown] [quote=inquisitive]

"The time will come:  Merrill, Wachovia, and all the other big firms will LOWER payouts.  Guaranteed. "

[/quote]<o:p></o:p>

I guarantee you they won't be cutting production while they're wheeling out the strongest recruiting packages they've ever had.

[/quote]

The brokerage industry tends to move together, much as the airlines do.  Merrill typically leads the way.

A number of firms cut payouts in 2001 - 2002.  Where you been?

[/quote]

The only thing remotely like a payout cut I’ve seen is the small household cut ML put inplace. Perhaps you have a link or source for others.

[/quote]

  [quote=stanwbrown]

[quote=inquisitive]

Payouts will drop when the firms can't meet growth targets.  Merrill will probably lead the way.
[/quote]

Please explain how they can be in such a big fight with other firms to recruit talent AND cut payouts at the same time. You do realize a cut in payout would make recruiting tougher and it would cause an exodus of brokers and assets, right?

[/quote]

A cut in payout would make recruiting tougher IF it wasn't matched by the other players in the industry.  Right now as the assets are being gathered, competition for reps is high.  That is driving up deals and comp.

The economy is good now.  But it will turn down eventually.  Then, cost cutting, less recruiting, and I believe the firms are going to look at cutting comp.

The easiest way for any firm to increase profitability is to cut payouts.  Overnight results.  And, as clients become more loyal to the firms (which is happening), reps will have a harder time leaving (also factor in deferred comp--pure evil).  So if you are stuck where you are, why is your firm going to pay you so much?  They won't.  That would be stupid, because they don't need to.

By the way, the competition isn't for the reps so much as it is for their clients' assets.

[quote=stanwbrown]
[quote=inquisitive] [quote=rightway]
The Independents are feeling a crunch (low and behold because they are not getting the fund rebates now either).  They are having tough times and.....what????? what may they do????? Reduce the 90% pay-outs???? Or maybeeee....just maybe.... there could be INDUSTRY CONSOLIDATION...just a few real big players in the Indie place? 
[/quote]

There are a number of independent clearing firms.  Many brokerages also have clearing divisions.  Fees are quite reasonable.

[quote=rightway]
Uh Oh- now all of the Indie Reps are beholden to just a few clearing firms? 
[/quote]

There are far more clearing firms to choose from than big wirehouses.  Many smaller independents have clearing arms that are capable and competent.

[quote=rightway]
What might those firms do?  They may need to boost profits...
[/quote]

Nobody needs to boost profits.  They may want to, though.

[quote=rightway]
but the reps are not growing the business fast enough....hmmmmmm well what is the quickest way to get this thing done???  Lets ask Inquisitive...or Lets increase ticket charges, lets LOWER PAY-OUTS, lets cut back on back office support.
[/quote]

Are we talking about the same thing?  Trade fees for clearing firms are quite reasonable.  Check them out.  It may cost you a $15 ticket fee to do a trade you charge $100 (or more) to the client. 
[/quote]

It’s fascinating to hear you, Inquisitive, talk about the coming pressure on wirehouses to increase profits and the effects that will all have on brokers working there and in the next breath pretend that those same pressures won’t set upon clearing firms and denying there could be any effect on the indies who clear through them.
[/quote]

Is it easier to change clearing firms, or is it easier for a rep to pack up and move to another firm?

I don't know what kind of contracts independents are locked into.  You yourself have made the prospect of moving to a new firm sound terrible. 

If I can switch clearing firms relatively easy, I'm going to do it if needed.  If it is hard for me to switch firms as an employee, I'm stuck where I am.

It's an entirely different dynamic.  You are comparing two different business models.  Sure, everybody wants to increase profitability.  But if the switching costs of independents is low, that drastically reduces the power of the clearing firm to increase fees.

Basic economics.  Switching costs are an important aspect in the supplier-customer relationship.

Also, clearing firms have none of the rep's deferred compensation which he will lose if he leaves and no non-compete agreements to try bind the rep to the clearing firm.

[quote=stanwbrown]
 [quote=inquisitive]
You are living in fantasy land.  Perhaps Merrill Lynch is pumping happy gas into your office.

If I had high enough production ($1 million) and a loyal client base with the occasional referral, I'd seriously take a look at going independent.  Perhaps even maybe forming my own firm with a few other guys.

I wouldn't be fool enough to work for Merrill Lynch.

[/quote]

And maybe that would be a good plan, otoh ML isn’t hurting given all the $1M producers who think the name there is worth it to them.
[/quote]

I don't think any $1 million producer gives a rat's arse about the Merrill Lynch name.  They could go anywhere and be successful.  Handcuffs and inertia keep them where they are.  I read recently that among ML's high producers there is a 4% turnover rate.  Low, yes.  But, people do leave ML.  So that name isn't important to everyone.

[quote=inquisitive]

Working for giant, mega McCorporations who don't have the interests of their producers at heart is for chumps.

[/quote]

 [quote=stanwbrown]

yawn…. Employers have conflicts of interests with their employees, imagine that….shocking and heretofore unknown. (Of course that’s not the case with regionals, right?)

[quote=inquisitive]
Methinks rightway may be brainwashed by Merrill.

[/quote]

Me thinks you’re either bitter because some ML guy took your best accounts using the tools his wirehouse has that your regional lacks, or you suffer from the little brother syndrome.
[/quote]

Bitter, no.  Hey, who led the way on deferred comp?  Ah, helps the rep build wealth.  What a fine idea.  Who cares if it limits your mobility and freedom?

ML may be fine for some people.  But they aren't the best thing since sliced bread.

ML may be the biggest.  But it's not all organic growth.

I had a private message session with BrokerRecruit.  He told me that a lot of reps believe that they can't leave because they'd lose too much deferred comp.  That right there is a reduction in the only power a rep has--the power to leave.

[quote=stanwbrown]

[quote=inquisitive][quote=BrokerRecruit]I would,
too.  People hear Merrill Lynch, Smith Barney, Morgan Stanley,
Goldman Sachs, etc. and it exudes a particular feeling of strength and
reliability.  QUOTE]

Some of those firms you’ve mentioned are the reason the industry has such a tarnished reputation in the first place.
[/quote]

Yeah, those dirty guys. Unlike the angelic regional firms, or mutual fund companies, or banks or insurance companies…. Say, does it really bother you that people don’t share your white-hot hatred of the bigs, but they do worry that your small firm might not be around in a year or two?

BrokerRecruit:

...Maybe it's just me and I know I'm being blunt (not trying to offend anybody), but it seems like a brokerage firm that rents cars or something.

---------------------------------------------

You nailed it, Broker! That's exactly what it sounds like...Do you want economy or mid-size?

And can you please initial here, here, and here acknowledging that you are foregoing the variable annuity, the variable life insurance, and those pitiful proprietary funds…

…and in addition to your life insurance policy we’re opening today, would you like the $6 insurance for your rental?