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Annuity snake strikes again

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Aug 18, 2006 7:22 pm

[quote=FREE AT LAST]

Newbie, maybe my english isn`t the best.  I can live with that. Are you an Ivy league student? Or did you go strait from high school to the McDonalds training program, and then to Jones.

[/quote]

Strait?  You mean like the Straits of Gibraltar?

Aug 18, 2006 7:48 pm

As in NWA's seminal work "Strait outta Compton"

Aug 18, 2006 8:56 pm

[quote=NASD Newbie]

Mumbo jumbo double talk.  You're a salesman--if you can fool enogh other fools to trust you you can keep your job.

"....we speak with the clients , review their goals and then put together an extensive plan to help achive their goals."

Sounds like something you copied out of a "Interesting careers to have when you grow up" article from the Daily Reader.

Analysts make mistakes--live with it.  Anybody who got registered since 1982 has enjoyed nothing but a bull market--interupted by a scary slide that lasted for a few months after September 11th before bottoming out and starting up again.

A monkey with darts could do as well as those of you who are out there pretending to be financial advisors, but don't know the difference between advice and advise.

[/quote]

Man, I hate to do this, but I have to agree with Newbie on this one.  The problem I find with Newbie's point of view is that he hails the Wall Street wirehouses as the "big leagues", but this is EXACTLY what they are training their new brokers to be; asset gatherers.  So on one side Newbie is slamming on the business model of the wirehouses and on the other he is praising them.

Newbie, would you address this apparent contradiction?

Aug 18, 2006 9:19 pm

In addition, NASD, how do you feel a trainee should go about getting the knowledge they need to be an effective advisor?  What is the minimum knowledge base a FA should have?  Since I was trained at a top 3 wirehouse for 7 months I gained a lot of 'technical' understanding about economics, VAR, MPT, Monte Carlo etc...... but no real training on technicals, fundamentals and understanding market flow.  Even though I received a pretty decent overview of these subjects the push of my training was to be an 'asset gatherer' and to toss all my clients into the firms' wrap programs. 

I would like to escape my current 'asset gatherer' mentality and do more portfolio management, since I can't seem to find many packaged products (mutual funds, wrap programs etc....) that step too much outside of the norm.  The problem is that I am not interested in blowing my clients up.  Where should someone like myself start (I'd love to have a mentor, but haven't found one)?

Aug 18, 2006 10:04 pm

[quote=dude]

Man, I hate to do this, but I have to agree with Newbie on this one.  The problem I find with Newbie's point of view is that he hails the Wall Street wirehouses as the "big leagues", but this is EXACTLY what they are training their new brokers to be; asset gatherers.  So on one side Newbie is slamming on the business model of the wirehouses and on the other he is praising them.

Newbie, would you address this apparent contradiction?

[/quote]

Essentially the entire industry has morphed to asset gathering.

The insurance industry had been doing nothing but that for years--and they had very few compliance issues.

That was not true among the traditional brokerage firms.  As we moved into the late '80s it became apparent that the dumbed down school had in fact yielded an entire generation of near morons.

Oh sure there were some smart kids, there always will be, but they went to medical school, or became lawyers, or bankers, or investment bankers.

Brokerage houses were finding it almost impossible to find bright young people to replenish the sales force.  For the first time in years new hires were failing exams, and as these functionally illiterate sales people moved into production they were arbitration claims.  Somebody who doesn't know that you determine the decimal equivalent of 7/8th by dividing seven by eight is going to be terrible at deciding which investments his clients should assume.

So, in almost emergency meetings, the firms scrambled to find something that dull eyed college graduates could do without getting themselves and the firms embroiled in arbitration.  The answer was obviously mutual funds--but how could they be made more attractive?  To date they had been considered burying money--one time sales charge earned, never see that money again.  No turnover, which is the key to transaction oriented brokerage.

So money managers were approached--would they be willing to hire, say, Merrill Lynch as an asset gatherer for them and pay Merrill a fee on an annual basis?  Does the Pope wear a funny hat?

So proprietary type wrap accounts were born--dull witted kids who were born in 1965 and later could gather assets, turn them over to a money manager, and get trails.  Just like in the insurance business.

Almost concurrently happening was the transfering of managing retirement money from the corporate plan to 401(k) and other qualified plans.  Now it was even more important that the brokers not be allowed to make buy sell decisions, and the money managers were even more eager to promise to share fees, provide trails and so forth.

Anyway--todays market is what it is.  The reason that I boost the wires is because if you're going to be gathering assets you might as well gather them in an environment where you'll also be able to do other things if the opportunity arises--and have a household name behind you.

Carrying a business card that introduces you as an account representative of Smith Barney, Member NYSE, NASD, SIPC, MSRB is a far more powerful tool than a card that introduces you as the President of Jones Asset Management and Grocery Delivery Service---Securities offered through Smega, Inc, member of the NASD and SIPC.

Given the opportunity anybody is a fool to not accept an offer from a top tier wirehouse.  If you don't have what it takes to get that offer you should shoot for one from a top tier insurance company.  If you can't get that settle for a bank or credit union.

Never accept a job with the chop shops--it would be better to be on welfare than to ruin your resume with a chop shop.

Never go "indy" unless you're on your way out the door and need the much higher payout to keep you and your family under the roof while you make your stand.

They should call all Indy firms, "Alamo Securities"--brave men making their last stand.

There is a reason that the wirehouse big hitters don't leave--and that's because they know the business backwards and forwards and know that they're already at the top of the heap.

Aug 18, 2006 10:25 pm

[quote=dude]

In addition, NASD, how do you feel a trainee should go about getting the knowledge they need to be an effective advisor?  What is the minimum knowledge base a FA should have?  Since I was trained at a top 3 wirehouse for 7 months I gained a lot of 'technical' understanding about economics, VAR, MPT, Monte Carlo etc...... but no real training on technicals, fundamentals and understanding market flow.  Even though I received a pretty decent overview of these subjects the push of my training was to be an 'asset gatherer' and to toss all my clients into the firms' wrap programs. 

I would like to escape my current 'asset gatherer' mentality and do more portfolio management, since I can't seem to find many packaged products (mutual funds, wrap programs etc....) that step too much outside of the norm.  The problem is that I am not interested in blowing my clients up.  Where should someone like myself start (I'd love to have a mentor, but haven't found one)?

[/quote]

You're about fifteen years too late.  You can be a portfolio manager, or you can be a asset gatherer.  You can't be both.

Joe will pop up and say that he's doing both.  Apparently, if I gronk what he's been saying all these months, he is an old fashioned transaction broker who dabbles in asset gathering.

I suspect that if I were still in production I would be like that too--I love, absolutely love, the idea of putting people into positions, watching it for a few months and taking them out.  Hopefully at a profit.  But you have to put up with the stupid boys and girls calling you old fashioned because you can actually read a balance sheet and understand why you would want to enter a buy stop above the market.

I don't mean to be trite, but you really are fifteen years too late unless you happen to find the smaller firms that still believe there is money to be made as a full service transaction oriented broker.

They do exist--go to your library and get the S&P Security Dealers of North America "Red Book" and see who's in your neck of the woods.

Or PM me with your city and I'll look for you since I tossed mine in a box as I left.

Aug 19, 2006 1:11 am

I considered doing options business, which can allow one to quantify the risk they are taking and establish much clearer objectives than most other investments (excluding fixed income), but came to the conclusion that my life would be hell tracking all those positions, plus I didn't want the compliance nightmare. 

So here I am, frustrated by the one size fits all approach and knowing that when every broker/finacial planner/registered rep and his mother are out there hawking wrap programs, generally based on the same fundamental foundation, that bad times lie ahead for the financial markets.  What is one to do?

Aug 19, 2006 1:36 am

Dude- What is your point?

NASD Newbie is correct: you can 't be both- at least to all clients.  Still, you can charge an annual fee to manage an account and do well for the client.  In addition you can find certain clients that are willing to trade certain positions.  Today I grossed over 20k taking profits in MSFT, JNJ & VZ trades; clients made anywherere between 10-15% in less than 2 months and were happy (and grateful) to take quick profits of that amount.  Next week, I'll likely focus on taking profits on MRK, PFE, MO, GYMB, and CSCO.  People are paying you to make money for them.  Period.  Make it happen.

Aug 19, 2006 4:27 am

[quote=NASD Newbie][quote=dude]

In addition, NASD, how do you feel a trainee should go about getting the knowledge they need to be an effective advisor?  What is the minimum knowledge base a FA should have?  Since I was trained at a top 3 wirehouse for 7 months I gained a lot of 'technical' understanding about economics, VAR, MPT, Monte Carlo etc...... but no real training on technicals, fundamentals and understanding market flow.  Even though I received a pretty decent overview of these subjects the push of my training was to be an 'asset gatherer' and to toss all my clients into the firms' wrap programs. 

I would like to escape my current 'asset gatherer' mentality and do more portfolio management, since I can't seem to find many packaged products (mutual funds, wrap programs etc....) that step too much outside of the norm.  The problem is that I am not interested in blowing my clients up.  Where should someone like myself start (I'd love to have a mentor, but haven't found one)?

[/quote]

You're about fifteen years too late.  You can be a portfolio manager, or you can be a asset gatherer.  You can't be both.

Joe will pop up and say that he's doing both.  Apparently, if I gronk what he's been saying all these months, he is an old fashioned transaction broker who dabbles in asset gathering.

I suspect that if I were still in production I would be like that too--I love, absolutely love, the idea of putting people into positions, watching it for a few months and taking them out.  Hopefully at a profit.  But you have to put up with the stupid boys and girls calling you old fashioned because you can actually read a balance sheet and understand why you would want to enter a buy stop above the market.

I don't mean to be trite, but you really are fifteen years too late unless you happen to find the smaller firms that still believe there is money to be made as a full service transaction oriented broker.

They do exist--go to your library and get the S&P Security Dealers of North America "Red Book" and see who's in your neck of the woods.

Or PM me with your city and I'll look for you since I tossed mine in a box as I left.

[/quote]

Am I really that predictable?

I suppose to some extent I do both.  I raise assets wherever I can.  I still do some comission business, which is what I always thought of when folks use the term "transaction broker".

However, more than half my business is in fee-based accounts, of which most are discretionary.  About 65% of those fee based accounts are in mutual funds, the remainder are in ETF's and stocks.

I'm fanatical about managing risk for clients, particularly for the fee-based accounts.  So, fortunately I don't really need to constantly raise new assets to replace accounts I've lost due to a bad month or quarter.  I've been lucky, and I work hard at it too.  Most months end with my assets a bit higher than the prior month.  Generally comes from a combination of organic growth of portfolios, a new relationship here and there, and additional assets from existing clients.

Lately I'm getting nice additional assets from clients as they have become more comfortable with my new firm-with me being an independent professional.  Generally I get the sense that they like the way things are being run.  Low key, no pressure, high level of service.

Now I'm going to get to work on actively marketing, see if I can kick things up a notch.  That should be interesting!
Aug 21, 2006 12:08 am

newbie

a.k.a. dinosaur

is there anything you WON'T comment on????? even if you have absolutely no clue on the subject matter?