Choosing a BD and Clearing Firm

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May 17, 2007 5:43 pm

I have found 3 people + myself who are going to form a financial
group.  A CPA, an attorney, myself, and a “newbie” rep who will be
under me.  We are trying to find the most appropriate independent
BD and have so far only talked to Berthel Fisher.  I have heard
good things from others on this site about them, but also feel like it
might be a bad idea to jump at the first offer.  We will primarily
be doing SMA’s, WRAPS, (alot of fee based stuff), Life/LTC insurance,
and some small group fund plans.  The CPA is not 7 licensed, just
6 & 63, I am the only 7 in the group.  Combined we do not have
a rolling 12 month >100,000-but we both figured out early on that
what we have planned is what we definitely want to do long-term, so we
figured if we can afford it, no better time than the present.  Any
insight would be greatly appreciated.  thanks.

May 17, 2007 5:48 pm

What kind of revenue stream are the others bringing to the table? $100,000

is even close to enought to feed four of you.

May 17, 2007 5:59 pm

The CPA makes enough on the tax side to support himself.  He just
started to do the financial stuff 12 months ago and did 15-20K GDC in
the last 8 months.  I realize I am taking a huge gamble because my
production not in the 100K range and my GDC’s are under the 100K
mark.  I came from an insurance background and made roughly
$100,000 there for '04 and '05 and moved to a wirehouse within the last
12 months, where I completely changed my business model.  My 12
month GDC’s are a shade under 50K.  I know deep down I cam do
this, and do not feel like working for anyone else will benefit me in
any way, other than I would have less on the line debt wise.  And
I also know the products I want to offer are not supported where I am
currently.  So I guess I am not looking for advice on whether my
plan is a huge gamble and not recommended.  We have decided we are
doing it, now we need to find the best route to take.

May 17, 2007 7:14 pm

With all due respect, if your trailing 12 is under $50K, you might want to consider going back to insurance.  That's a level well below failure on just about any yardstick.

If you're stubborn about sticking it out, you might look at HD Vest which specializes in small producers/CPAs.

May 17, 2007 8:35 pm

Indyone-I can appreciate your comments and still be quite certain I am
NOT going back to insurance, but know I will do considerably more
insurance than the rep down the street, which will greatly help my
business.  I know the pitfalls of VUL’s and some VA’s, and will
not be doing much of them, but I also feel completely comfortable
talking about DI, LTC and other insurance products, which will no
longer go through my grid and pay 40%.  I have just begun to
"build a book" the way I want, which is fee based, and completely
realize my trailing 12 month is low relative to the standard level of
acceptabilty for going inependent.  My CPA partner is with HD Vest
now, and they do not allow alot of stuff we want.  Series 24,
1031, REITS, and the payouts are way low.