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Jan 9, 2009 8:31 pm

Looking for some info on transitioning to Finet. The good, the bad and the ugly. Thanks.

Jan 9, 2009 8:36 pm

Not yet, but our go date is march 20

Jan 9, 2009 10:09 pm
3rd ID:

Looking for some info on transitioning to Finet. The good, the bad and the ugly. Thanks.

  The big negative on FiNet is you are penalized for doing fee-based business.  For example, if you do Fund Source, instead of being paid on all of the gross, you will first have to pay 35bps.  So, when you hear 90% payout, it is a lie.  It is more like 65% which is still good.  However, you still have your expenses.  Also, if you are going from PCG to FiNet, you need to have your clients sign the transition letter within 30 days before the PCG reps in your branch start calling your clients.      One of the many pluses is that you can always transition from FiNet to a better and less costly Indy platform if you aren't happy. 
Jan 9, 2009 10:37 pm

What about ISG to Finet? Anyone here with experience on that? Also is management cooperative with the transition? I heard they were supportive of it, but dont know for fact. 

Jan 9, 2009 10:40 pm

Can’t say about ISG, but for PCG I know they don’t like it at all…but can’t do a thing about it.  then again, our branch is closing due to our production leaving and we stay where we are so that has something to do with it.  We own the building. 

  Under different circumstances, you wouldn't receive any friction from PCG management, they just don't advertise it.
Jan 9, 2009 10:45 pm

[quote=3rd ID]What about ISG to Finet? Anyone here with experience on that? Also is management cooperative with the transition? I heard they were supportive of it, but dont know for fact. 
We had an FA go from PCG to Finet, no problem. And no we didn’t distribute any of his clients that failed to return the form in 30 days. He was kept informed of clients not transferred.

Management was supportive, they do get a slice for i believe 2 years. Thats better then them leaving the firm.

Jan 9, 2009 10:58 pm

branch gets a slice for 1 year

  I am considering the finet channel   no push back from management at all
Jan 10, 2009 12:04 am

If guys are coming over from the wirehouses and setting up PF shops in
communities already with Wach coverage, isnt this bound to cause some

Jan 10, 2009 12:07 am

And the big plus is you get to keep that great Wachovia name lol!

Jan 10, 2009 2:13 am

I am moving from AGE to Finet early April. Management has been supportive.

Jan 10, 2009 1:16 pm

If guys are coming over from the wirehouses and setting up PF shops in communities already with Wach coverage, isnt this bound to cause some problems?

Jan 10, 2009 3:58 pm

Been with Finet several years after moving from wirehouse. Overall a positive experience. Ditto on earlier comments regarding fee-based biz. There is no such thing as a 90% payout with Finet. The “fee-based admin fees” add up pretty substantially thereby reducing your payout to more like 65-75%. To Finets credit, they have recently (2008) started a bonus program that effectively refunds some of these fees based on the amount of fee-based AUM you have at the firm. This does NOT however apply to assets held away. i.e. DVP assets. But you still get charged the admin fees on DVP. Finet HAS been willing to negotiate lower admin fees on very large realtionships which is helpful, although it has not been until recently that these negotiated fees have been competitive.

  The biggest negative right now is that the Wachovia name is all over EVERYTHING, including performance reports and statements. My clients get all the same mailings that PCG clients get so they are hammered with Wachovia crap. I know for a fact that LPL and others allow you to custom brand everything with the name of YOUR firm including statements and performance reports. IMO, Finet MUST move in this direction soon if they want to continue to compete with LPL, Schwab, RJ etc.   Another potentially severe limitation, depending on your business mix is the fact that Finet has yet to offer a hybrid RIA platform. Again, this puts them at a competitive disadvantage.   In a nutshell, Finet has provided a great opportunity for us to spread our wings and do our own thing. I would NEVER go back to a wirehouse. How long I remain with Finet will depend on how things shake out with Wells and specifically their "financial response" to the acquisition of Wachovia.
Jan 10, 2009 5:03 pm


What does it typically cost out of pocket for admin
and rent and tech expenses? Do you have other Finet FA’s in your office sharing
expenses or are you in a team?  Also, what type of office space is required? Does it have to be class A space? Does Finet secure the space or is that up to the FA to handle all that? 

Jan 10, 2009 5:37 pm

3rd ID:

  Our admin fees last year were roughly 180k. This is not a "out of pocket expense" but rather a reduction in your payout. Per the new bonus program we should get about 30% of that back in Feb.   Your office space is completely up to you. Finet will not assist you in this. We chose to purchase rather than lease. We created a seperate LLC to own the property and our S-corp (Financial Firm) pays a lease of about $6500/month to the LLC. This is enough to cover the mortgage and a little extra. I know that seems like a lot, and it is. But we have a #3000 sq/ft historic office building which is considered "Class A". Certainly someone could get by just fine with much less than this.   Ballpark tech expenses: Depending on the size (number of computer users) of your office, Finet will recommend a router-to-router connection (approx $200/month) or the installation of a T1 (approx $1500/month). While the T1 is great, it is very expensive. I would choose the router. In addition, there are monthly "access" fees of up to $300 per user depending on the data package you choose.   There are NUMEROUS other startup expenses that you should consider. Furniture, hiring an attorney and CPA, signage, bix cards, stationary etc. I would hope that Finet would be offering some form of working capital loan to help you out with these costs.   Our office is a team of 3FA, 3FT support staff(2registered, 1 admin). We pay our staff well above market. I do however enjoy the freedom of having a very experienced staff at the office to handle client inquiries and send things to me as needed. This allows me to focus primarily on my family and client strategies.   ALSO: Do not underestimate the cost of health insurance! Finet offers a group plan that isnt bad, BUT since you are not an employee of Wachovia, you pay 100% of the premium. Currently this is about $1300/month for a family plan with health/dental/vision.
Jan 10, 2009 5:51 pm

Once your start up costs are out of the way,you,ll be fine. It,s your freedom

Jan 10, 2009 5:57 pm

training wheels…thanks kindly for the info. Does your team evenly split payout or is there a percentage assigned to the individual? ie…say I team up with a guy doing 800k currently and I’m doing 575k…how do we go about figuring how we will take comp? Do we just pool everything? Do we keep separate and pool new biz? Also, is your attorney and CPA on staff or just retainer and utilized as and when needed? Lastly, is there a min revenue requirement in order to go Finet?

Jan 10, 2009 6:15 pm

Our team shares in everything equally but Finet will give the option of doing business under separate rep numbers also. If you are at 575, you should easily meet their minimum which I think is roughly 250-350k per FA. If you team up with someone at 800k, and you successully transition most of your book, you will be in execellent shape. Its ALL about the overhead though on the ownership side. You will learn over time where to spend your money to bring the most value to your firm and your clients. It is a learning experience though, especially if you have never owned a business before. BUT, Vet20 is correct. The freedom is a great feeling. I haven’t worn a tie to the office more than 3 times in the last 5 years and only change my jeans when a client comes in.

  All that being said...I am sure Vet20 will also agree that the Finet brokers have been VERY neglected the last several months. Obviously none of the Finet execs are in control of anything right now.