? on AUM and Production averages

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Sep 19, 2008 6:15 pm

I recently saw an article that stated MS & SB reps have an avg AUM of ~$90mm and avg production of ~$900k - so assuming a 45% payout the avg annual comp for reps at those firms is ~$400k…seriously?

Sep 19, 2008 9:05 pm

Keep in mind, averages can be misleading. There are producers with 100mm, 200mm, 300mm, 500mm, 1B, etc. Then there are producers with 40mm, 50mm, 60mm, etc. Just like average returns, the averages can be misleading. Most firms simply take total AUM for the firm, and divide by # FA’s (same with production).

I know several of the SB reps in my town, and they are generally in the 85mm/650K range. Most have been there a long time, and most of their books are still commission-based (they average about 55 years old, 20-25 LOS).

The muners tend to egt skewed by the real huge producers. Also keep this in mind…some of them teams that have 500mm+ in AUM have several team members that are not licensed (or are licensed non-producers), and do not count towards production numbers, but get payed salary and bonus by the producer, not the firm. So the net payout may actually be less because of these expenses, and the average production is increased because some of the team memebrs are not counted in the numbers.

My point is, you can do more production with more team members. At Jones, most of the advisors with 250mm+ in AUM have 3 or 4 people on their team. They couldn’t manage that much with just one other team member.

Sep 19, 2008 9:12 pm

b24-you been drinkin’?..the muners tend to egt skewed??? dang, you had a rough week, huh?

Sep 19, 2008 9:23 pm

Yeah, I tried to edit my post, but I can’t seem to get that to work. Sumtimesz I just typwe too fuckasing fast.

Yeah, I’ve been drinking.

T-h-e     n-u-m-b-e-r-s   t-e-n-d   t-o   g-e-t    s-k-e-w-e-d

I rode the short bus.

Sep 19, 2008 9:25 pm

I was wondering if anyone would call me out on that fubar.

Sep 19, 2008 9:34 pm

You crack me up! Have a good night.

Sep 19, 2008 9:49 pm

Dont ever let the so called average intimidate you..The median is a more accurate number and it is far lower for most branches.  Almost impossible for new trainees to make it, something like 5% at MS after 2 years are still around.  Median probably around 250-275K at most shops from what I hear consistantly. I have seen many recruits come in with big trailing 12 numbers and in almost all cases they end up doing 50% less than where they came over.

Sep 19, 2008 11:19 pm

The median at the wirehouses is more like 400-450k, but point made—mean and median are two very different measures. Also, keep in mind they calculate the avg production same way they calc avg AUM as B24 says. If EJ had $4B of revenue last year and they have 10,000 brokers, they come up with $400k avg production. We all know that don’t add up: the reason is that all the stuff we don’t think as “production” is still revenue to the firm and thrown in this calculation…such as: account fees, margin interest, nickel and dime fees, etc etc. Merrill is the only firm I am aware of that acknowledges the differences. But basically all firms add stuff in to the numbers that their FAs don’t get grid/comp on.