I am indy and can tell you I know many that are grossing 600K. The net depends on your lifestyle. If you have a fancy location and huge tenant improvements and startup costs or too much staff you can easily get south of 50%. If you are the opposite, work at home, employ your spouse, you can net well north of 75-80%.

There are many factors…

Wolverine, I would suggest zero-basing your budget. Start with your revenue, and then just go expense-by-expense. RIA or affiliate with B/D? What would be the payout, after ticket charges? MAKE SURE you get the bottom line from someone at the same B/D. What are the haircuts, tech charges, program fees, etc? How much staff? What would you pay them? Don’t forget benefits you might give them and payroll taxes. What type of office would you use? If it’s class-A, move-in condition, you will spend less on build-out. How much rent, CAM charges, utilities? What would you need for furniture? Start looking on office furniture websites (look at the wholesale, over-stock type places). A couple of laptops and some monitors. Printer, fax, etc. What would you do for postage? Supplies should just be few hundred a month at most (depending on what you mail, print, etc.). Could be less. Tech stuff - internet, CRM system, quotes and whatever else you think you need (i.e. Morningstar).

I would be careful about grabbing margins off a forum like this. In my years on this forum, I have heard people doing as low as 30-40%, and as high as 85%. It’s all over the place. At 600K in production, your margin SHOULD be really high. You are doing good production, but not so high that you need to load up on staff. If you do it right, you should be no lower than 70%, and most likely quite a bit higher. If you are primarily fee-based, you should strongly consider going RIA. Your overhead would be much lower (or your “payout” higher, however you want to look at it).



But again, zero-base it for your own situation. There is another thread several months back about indy expenses, and that would be helpful to look at. You just have to search for it, I can’t remember where it was.

Many of the Indy shops in my area would pay you 70-75% at 600K in production.

90% base payout, then deduct 15-20% for your share of the office expenses.

Depending on the production mix, haircuts could be as much as 10%.

If I were to go Indy, I would look for an existing office to decrease management issues and have all of the infrastructure details taken care of.

From what I have seen, going into an Indy office is much cheaper than starting your own office.  It also becomes much easier to focus on building your business without having to deal with payroll, taxes, office expenses etc.

This is a great option.  However, in my area, with the exception of a few monster indy firms (not the types that would let you join them), almost all the indies are solo/no asst (maybe 1/2 time asst) and not really interested in adding someone.  We are very suburban (and not near any major city), so not a lot of firms other than wirehouses and insurance agents.

As an RIA: The ongoing technology costs should be $1000-3000 a month with everything but a bloomberg terminal. Your monthly cost of a bookkeeper, and other consultants (e.g. compliance) should be something less than $1000/month. E&O is a couple hundred bucks. What you pay your staff is what you pay them. You pay for health insurance and any other benefits. Then there’s rent. And that’s really about it. Anything else is gravy. So, I think you’re looking at $50k plus a year if you can run it from your den.
The key issue in the RIA model vs. the Indy broker model is that once you’ve covered your costs, it’s pretty much a 100% payout.
I met with an indy firm the other day that tried to recruit our little team and they’re on a 50% payout (firm does cover their rent and some other costs). Still, that’s crazy. It’s also not independence if you’re having to negotiate over office space. That’s what brokers in wirehouses are most likely to have a fight over with management.
In addition to having too much commission business, most brokers can’t go RIA because of capital. The big issue with an RIA is that you have to use your own capital. If you can’t build out an office and run it for a year on your own, without any cash coming in then you can’t do it. Your first ACATs won’t hit for at least a month when you get started and some accounts will take 6mos to a year to come over.
If you can run a home office and have your wife (or husband [ya, right]) answer the phones and pull over all your clients, then you’re set and should go that way.

Why are you asking here?
All of the Indy producers on this board do between 200-300k per year
They are pikers in your world
Would have been fired from your firm

DD - "All of the indy…blah, blah, blah"



and you’ve seen ALL the commission runs? Anyone who touts #'s is a fool. Anyone who acts like they are big stuff probably isn’t. You can call me a piker too if you want, but I left all this hostility behind. But you should really get off your high horse and not make blanket statements. I fired my firm because they were the piker, get it?

But go ahead and call me a piker too! I am laughing all day.



Some of the comments on this post may be helpful and remind someone of the expenses to consider before leaping. The expenses are high if you do it right; I left with the mindset of comparable payout without the non sense and needing a teet to comfort me. Credibility with large prospects and COI’s is great. It’s different for every single indy depending on your business model.    

[quote=LogansRun]DD - "All of the indy…blah, blah, blah"



and you’ve seen ALL the commission runs? Anyone who touts #'s is a fool. Anyone who acts like they are big stuff probably isn’t. You can call me a piker too if you want, but I left all this hostility behind. But you should really get off your high horse and not make blanket statements. I fired my firm because they were the piker, get it?

But go ahead and call me a piker too! I am laughing all day.



Some of the comments on this post may be helpful and remind someone of the expenses to consider before leaping. The expenses are high if you do it right; I left with the mindset of comparable payout without the non sense and needing a teet to comfort me. Credibility with large prospects and COI’s is great. It’s different for every single indy depending on your business model.    



[/quote]

300k producer got his lil feelings hurt
Make more calls if you are sensative

DONT LET THE d*** HIJACK THE THREAD. IGNORE HIM

“Piker” has got to be a relative term.
If viewed on income - there’s simply no comparison between wires and independence. At lower levels of production, some comparisons are possible, but at $600k - very different worlds.

Why?
You need to view this as a business and generation of earnings as opposed to revenue. And, as I’m always explaining to my wife, size doesn’t matter.
Assuming that all other things are equal - the issue is, fundamentally, take home income - your earnings. The wires have brainwashed everyone into thinking that revenue (production) is what’s important, but as a business owner (whether indy or at a wire), what matters to you is your earnings. The issue is not how much revenue you generated, but how much cash you take home - how much you earn (If you don’t believe me, ask your wife / girlfriend / favorite stripper.)
If you produce $500k at a wire, your payout will be, let’s say 33%?  So that means $165k / year income.
If you produce $300k as an RIA and your overhead is $135k a year (dedicated CSA, nice office), then that’s the same amount of income.
If you produce $300k as an Indy broker and your payout is 70%, then you take home $210k.
So, because of how much the wires screw brokers at lower levels of production with reduced payouts and ticket charges, the guy generating $200k as an independent probably is less of a “piker” than the guy generating $400k at a wire.
In fact, if you really want to apply a true standard to “pikerdom”, let’s do it by reversing the numbers.
Assuming that your average wirehouse
broker who’s producing let’s say $550k is not a “piker”, the payout’s
going to be ~37% depending upon product mix. So he makes $204 k a year.
The indy broker’s got to produce only $291 at a 70% payout to make the
same amount of money. The RIA’s got to produce $339k (under the above
assumptions above) to make the same amount.
So, an Indy who’s producing $291
from the comfort of his home office is a “piker” and the guy who earns the median production at a wire, who shares an assistant with two other brokers, who puts on
a suit and drags himself down to an ML office with a view of a parking
lot isn’t a “piker”? By what standard? The approval and love of Bank of America/Merrill Lynch? $550k producers don’t get much love from Mother Merrill. They just don’t get run out.
So, you have to produce A LOT less as an RIA or broker to be a “piker” in my view, if “piker” is determined by income. (And, to me, it is. I don’t want Mother Merrill’s love. The new stepfather looks at me creepy.)

We haven’t even talked about bigger producers or growth of business where it’s a real no brainer. At $600k, the numbers really, really show up:

Wirehouse: $600k @ 42% payout (?): $252k income

RIA: $600k - $225k overhead (note - overhead’s higher, he’s grown since producing $339k, now he’s got couple of assistants, great office, bloomberg terminal): $375k income

Indy broker: $600k @ 72% payout (?): $420k income
$420 vs. $252. That’s a material lifestyle difference.
And we haven’t even talked about taxation of income. Big difference.
Or the liquidity to sell your practice and retire.
Am I missing something here?

“Piker” has got to be a relative term.
If viewed on income - there’s simply no comparison between wires and independence. At lower levels of production, some comparisons are possible, but at $600k - very different worlds.
Why?
You need to view this as a business and generation of earnings as opposed to revenue. And, as I’m always explaining to my wife, size doesn’t matter.
Assuming that all other things are equal - the issue is, fundamentally, take home income - your earnings. The wires have brainwashed everyone into thinking that revenue (production) is what’s important, but as a business owner (whether indy or at a wire), what matters to you is your earnings. The issue is not how much revenue you generated, but how much cash you take home - how much you earn (If you don’t believe me, ask your wife / girlfriend / favorite stripper.)
If you produce $500k at a wire, your payout will be, let’s say 33%?  So that means $165k / year income.
If you produce $300k as an RIA and your overhead is $135k a year (dedicated CSA, nice office), then that’s the same amount of income.
If you produce $300k as an Indy broker and your payout is 70%, then you take home $210k.
So, because of how much the wires screw brokers at lower levels of production with reduced payouts and ticket charges, the guy generating $200k as an independent probably is less of a “piker” than the guy generating $400k at a wire.
In fact, if you really want to apply a true standard to “pikerdom”, let’s do it by reversing the numbers.
Assuming that your average wirehouse broker who’s producing let’s say $550k is not a “piker”, the payout’s going to be ~37% depending upon product mix. So he makes $204 k a year. The indy broker’s got to produce only $291 at a 70% payout to make the same amount of money. The RIA’s got to produce $339k (under the above assumptions above) to make the same amount.
So, an Indy who’s producing $291 from the comfort of his home office is a “piker” and the guy who earns the median production at a wire, who shares an assistant with two other brokers, who puts on a suit and drags himself down to an ML office with a view of a parking lot isn’t a “piker”? By what standard? The approval and love of Bank of America/Merrill Lynch? $550k producers don’t get much love from Mother Merrill. They just don’t get run out.
So, you have to produce A LOT less as an RIA or broker to be a “piker” in my view, if “piker” is determined by income. (And, to me, it is. I don’t want Mother Merrill’s love. The new stepfather looks at me creepy.)
We haven’t even talked about bigger producers or growth of business where it’s a real no brainer. At $600k, the numbers really, really show up:
Wirehouse: $600k @ 42% payout (?): $252k income
RIA: $600k - $225k overhead (note - overhead’s higher, he’s grown since producing $339k, now he’s got couple of assistants, great office, bloomberg terminal): $375k income
Indy broker: $600k @ 72% payout (?): $420k income
$420 vs. $252. That’s a material lifestyle difference.
And we haven’t even talked about taxation of income. Big difference.
Or the liquidity to sell your practice and retire.
Am I missing something here?

I agree with you both.  I recently spoke with a younger partner in a 4 person team at MSSB that are looking to go indy.  They have NO interest in running their business and want to affiliate with an indy firm that will take care of everything for them (i.e. Hightower).  They produce around 3.5mm as a team.

This all sounds great…but do have the UBS name?



What’s that worth?    huh?



I know that will shut you guys up.

[quote=B24]I agree with you both.  I recently spoke with a younger partner in a 4 person team at MSSB that are looking to go indy.  They have NO interest in running their business and want to affiliate with an indy firm that will take care of everything for them (i.e. Hightower).  They produce around 3.5mm as a team.

I’m an ex-wire, now independent, at about 600k. Here’s my experience.

Left a wire a couple of years ago, now doing 300 at a small firm, my net last year was about 65% the firm paid for all fixed expenses, tech is so much better, don’t need an assistant. Ticket charges etc, I took home over $190 last year, about the same as a wire doing 600. Less stress and overall better enviroment.

Shania…you’re funny, UBS=U Been Screwed

[quote=Northfield]I’m an ex-wire, now independent, at about 600k. Here’s my experience.