Comparing deals ubs/ms/stifel

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Nov 20, 2008 8:19 pm

What would a deal look like from each of the three firms(ubs/ms/stifel)…

Team of 2 doing 2.2mm 400mm in assets 15 years in the business   Is there a benefit of using a recruiter or can we approach them on our own?   Thanks
Nov 20, 2008 9:09 pm

If you’re really doing those numbers, you would already know the answers to your questions. 

Nov 20, 2008 9:40 pm

Thanks for the help Hank

Nov 20, 2008 9:57 pm

Your team should be able to demand $8-10MM upfront, local country club memberships with company homes on the 18th fairway, company-supplied Bugatti Veyrons and a 3% interest in all of the firm’s pre-tax profits going forward.

Nov 21, 2008 6:44 am

220% TT is the high end of what I’ve heard from the wirehouses. Stifel, I would be shocked if they’d be in that ballpark. Recruiters have to get their cut from somewhere. I am sure they add some value, just ask them.

Nov 21, 2008 7:25 am

SB 225-230%
UBS 250-260%
MS - no money left, they gave i all out.

The deals wont last long at all.

Nov 21, 2008 9:06 am

[quote=tired]What would a deal look like from each of the three firms(ubs/ms/stifel)…

Team of 2 doing 2.2mm 400mm in assets 15 years in the business   Is there a benefit of using a recruiter or can we approach them on our own?   Thanks[/quote]
If we're only discussing numbers, here's a rough guesstimate of another deal you should at least consider with those of ubs/ms/stifel:

0% upfront (or a small amount), but instead more than double your payout forever, say from 45% to 95%.  Out of this doubled + payout, though, you have to cover your expenses directly instead of paying them to your current b/d who pays them on your behalf.  At $2.2 mm, this additional 50% payout would yield you about $1.1 mm a year to cover your expenses.  Anything you spend less than that goes into your pocket, and the pockets of your partners.  Anything more comes out of those pockets.

Compared to the typical upfront deals, and not even including the back end kicker when you sell out of 200%-300%, you would typically break even in about year 4 or so, and every year after just adds to the financial benefit.  The longer your planning horizon, the better the numbers look for independence; the shorter the horizon, the better the numbers look for taking the upfront deals.   But the upfront deal with it's attractive 'free cash' comes with a 5 or 7 or 9 year CDSC.  Like investors, some people are OK with high early surrender charges, and others are not.

This is way oversimplified of course, and you may be among those who have no interest in independence, but if you're doing your due diligence it is an option often overlooked. 

Note I am not saying the independent option is right for everyone, or for you specifically.  But at your revenue level you should at least explicitly consider the option and run the numbers. 

You just might find that your best deal is the one you offer yourselves.  If not, you at least know what you are saying no to.

Good luck.
Nov 21, 2008 1:23 pm

Some good answers so far. But, having been in a ‘hiring authority’ capacity for some time in the past I can speak to the recruiter piece from having worked with a load of them over time.

It’s the 80/20 rule. 80% range from adding ‘some’ value to outright vultures, but 20% hit home runs working with both clients and candidates.  Some of my favorite guys I know in this business are recruiters who’ve helped me move myself and also build out former branches.

I’ve never seen 1$ come out of the FAs deal on the upfront or back end because we paid the recruiter 6% or whatever the fee was then. In fact, I probably got more exceptions through after the recruiters I respected and liked worked on behalf of the client to shape the transition package.   As a manager, I managed the recruiting expense impact on my P&L and when I could not afford or did not want the extra hit on a recruiting fee I’d put more time into my own recruiting efforts. But, If a whale was dropped on me by a recruiter and I could justify the cost, hell yes I paid it.

Good recruiters should will:
1) Do the work!  ie… set up initial meeting and even QB the subsequent meetings. Saved me time! Poor recruiters will shove a lead to you and wish you good luck. Make em’ work!
2) Do the prequal work- not send me non-target producers or retreads
3) Submit a solid profile and breakdown of the production and book. Keep me from going into a meeting cold. Highlight unique aspects of a FAs business
4) Set up initial expectations for the candidate and hiring authority- make sure both are aware of the others needs and concerns and not waste both parties time.
5) Be as involved in the process as both parties want. I never minded a good recruiter’s feedback and involvement during the process. Again- the guys I respected and liked had my ear as a manager because they took a load of work off my shoulders.
6) Use discretion- confidentiality on both ends.
7) Participate on regular external recruiting conf. calls- every firm does them- they know what’s really out  there vs. guess at it. Stayed up on what my specific firm was wanting, how deals were being structured etc.

Work with recruiters you know or partners in firms that have been in the game a while. Most good recruiters were FAs, managers, etc. and moved into the recruiting side because it’s flexible, very profitable and a nice place to go when you’re tired of the daily grind.

FYI- the best guys recruiting FAs regularly earn 7 figures. Even the average recruiter who’s been at it for a year or more and works it full time is likely earning on par or more than the average FA he or she is cold calling. There are some chumps or ‘research assistants’ who just grind the phone. Get past that bozo and get the Sr. on the horn. Or go find the recruiter worth talking to. Ask people you trust. Everybody keeps a recruiter list somewhere.

If you want to locate a good one vs. take the one calling you at the moment- the best are regularly featured in articles at, and other sites.

Lastly- never work with a troll on this site!

Nov 27, 2008 9:32 am

$600K Producer 100M Assets, Clean U4, Good Business Mix. LOS 8.

Offered 2.35  UBS  Best Deal, Easy Backend, Offered 2.35  MS   Hardest to Make.   All Cash Offered 2.3    SB   Asset only back end. --------------------------------------------------- UBS has 50-1 Leverage Ratio.  Got to pray the Swiss Govt saves them. Process takes forever....started just prior to BAC takeover. Didn't use the recuiter....I figured I can call them myself and save the 6% for the firm.    
Nov 27, 2008 11:06 am

Is that 2.35 X your trailing twelve? When I first read your post I was thinking $2.35 million which is 400% TT which is just silly.

Nov 27, 2008 8:58 pm

Anybody know what merrill and morgan stanley would offer a guy with a tt of $540k and an LOS of 9?  Thanks.

Nov 27, 2008 10:04 pm

Your scenario is almost exactly the same as an FA friend of mine who has worked offers from UBS and Morgan in the last 2 weeks. He’s LOS 8, $540k t-12 and has a 90% annuitized book of about $47M.

His Morgan Stanley offer is 125% up front, 100% back end on 1,2,3 year bogeys. I hear the biggest deal they’ll do is 140 max with exceptions signed off.  Deals are definately tightening up.

Nov 28, 2008 12:05 am

I love easy ‘back end’… few offices have those nowadays:) PC and all

Nov 28, 2008 7:27 am

Burton, any idea what the UBS deal terms were?

Nov 28, 2008 8:23 am

2.35 TT 12

Nov 28, 2008 9:16 am

UBS 1.5 Upfront.  .85  back end.  When I say easy backend, withing 3 years bring 75% of assets and production.  Easiest to make. 

Nov 29, 2008 10:39 am

How much is the up front cash a MS? How long is the contract. What makes the backend hard?