Wachovia Finet

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Oct 5, 2008 7:34 pm

I have been with Wachovia Finet for some time.  I have been very happy with everything about the company.  They have really stuck to all their promises.  I have been happy with the payout.  Their fee based products are very good.  However, with the recent news I am concerned that the Wachovia name will cost me clients and future prospects.  I have tried to tell my clients over and over that I am not employed by Wachovia.  It is hard for my clients to get beyond this when they see the Wachovia name on their statements month after month.  My question is what does it take to go the RIA route?  I do believe this is the only true way to be independent.  Since I am independent with FINET I already have the infrustructure in place  i.e.  computers, incorporated, office space desk and so forth.  I understand that first clearing (Wachovia’s clearing firm) has an RIA channel.  Any experience with them???  What is the first step to make??   Anyone gone from Indy B/D to RIA.  After my experience with Wachovia I am not interested in going with another B/D.

Oct 5, 2008 8:46 pm

Here is a brief summary of how I have taken the leap that you are considering.

I was with AGE for over 20 years.  As Wachovia made branch consolidations in my market area, where I was a branch manager overseeing 3 offices and over 50 employees, I was offered a rather substantial severance package which I jumped at.  This has given me the freedom to execute a plan I had been formulating for the past  3 years.

I have registered my firm as a RIA and have chosen Schwab Institutional as my custodian of client assets.  They have great resources on their website to help answer just about any question you may have.  Give them a call tomorrow, they went the extra mile to help me along.  I also considered Fidelity Institutional as well.  They were equally helpful and also have all the info you would want on their website.  I wanted a big recognizable name to comfort my clients.  Search all of the posts here by Morphius as they have really been helpful too.

It is imperative that you hire legal counsel right away.  Choose a firm that specializes in the RIA world.   This process took all of 3 months to do so properly.  Due to the nature of my own situation, I did none of this while I was at Wachovia.  I couldn’t put at risk my severance package.  I suppose you could get a head start to cut the time needed.  I’ll also plug RIA Compliance Consultants in Omaha as I have used them for a few of the needed projects as well.  They will help keep you compliant. 

MY RIA firm has a fee based Mutual Fund / ETF program as well as a discretionary individual stock program.  I charge less than 1/2 of what the big firms charge.  I will make up more in the following programs…

I have established a Commodity Trading Advisory firm (CTA) to trade financial futures as well.  I am charging 0% Mgmt Fee with 20% incentive allocation on profits.  Monthly with a high water mark.  $50,000 minimum.

We have filed for a Hedge Fund offering as well.  The structure will be 1% Mgmt Fee and 20% incentive allocation.  This will be for the accredited investor big boys!  $250k minimum.

So far I have invested the following:

Legal and SEC registration            $22,000
Computers                                       $5,000
Furniture & equip                              $9,000
Real time quotes                                 $110 per month
postage                                             $8,000
Office rent and overhead                    $2,200 per month
Redtail                                                       $75 per month
GoDaddy domain and email                      $200 plus $10 per month
Printing  and sales material design        $7,000 so far

(Morphius, what have I missed?)

So far transferring accounts has been like shooting fish in a barrel with all the termoil.  I have about 90% signed over in short order.  Now I plan to blast out the marketing effort I have been planning.  I expect that to be succesful in this market as well.

In the next year or so, I plan to add a number of IAR’s around the area (the country for that matter!) who want to go RIA with less of the upfront work that I have done.  I’ll take a 5% cut to cover my Compliance Officer overhead and a small profit to continue to grow.

So far so good and I am energized each day.  Without AGE this is the next best thing for me personally.  I wish you luck in the process - I’m sure you will never look back.  GO FOR IT!

Oct 6, 2008 8:05 am


Well said, and well done.  Please stick around and add your experience to the forum.  I feel like a lone (RIA) voice crying in the wilderness here sometimes!  Captain is a great resource on RIA issues although unfortunately he hasn’t been posting much of late.

I’m intrigued with your plan to add IARs and have discussed something similar with my business partner, especially given the recent events at so many big firms.  More on that later as for the moment I’ll try to simply respond to uglyfinet’s basic question, but I’ll do that in the RIA & Independent Section as he posted the same basic question there and it might be easier for others looking for RIA info to find it there.

Dec 4, 2008 5:39 pm

Are there any legacy AGE offices ( 1 - 3 person FA)  that are being asked to possibly consider going to the FINET side or consolidating to other branches in different town?

Dec 4, 2008 6:49 pm

What are the finet payouts? 

Dec 4, 2008 8:03 pm

Depending on how much production you do per month so if you do can get anywhere from 70-95% payout depending on traditional or fee based.

Dec 4, 2008 8:12 pm

AGE2RIA…Nice post and great information. 

Dec 5, 2008 8:32 pm

AGE2RIA knows his stuff.   He trained me as I became a manager at AGE for over 12 years, and I left 14 months ago to a large wirehouse.

Although we took different paths, he is an expert in many areas. Good to hear from you old buddy!!!
Dec 5, 2008 10:33 pm
Hank Moody:

What are the finet payouts? 

  Finet payouts suck if you do a lot of fee based business.  Don't believe anybody who tells you the payouts are 90%.  What nobody tells you is that you get whacked b/w 25-75 bps per years on your advisory fees within Finet. Then the remainder of your fee receives the 75-90% payout.  However, after you pay the penalty on your advisory fees, your actual payout is closer to 65% before expenses.  A couple of the guys in the office and I crunched the numbers recently. Within PCG and ISG, we take it for granted that ALL of our advisory fees hit our gross, it is not so within FiNet.  Six in one hand, a half dosen in the other if you ask me.      From a financial perspective, I just don't see how going to Finet makes much sense unless you decide to own your own building (to save on rent) or if you are a $1million+ producer because your fixed costs would be such a small % makin Finet compelling.  Just my two cense.
Dec 6, 2008 6:38 pm

I know a few Finet guys with production in the mid six figure range and mostly fee based. They say that they get about 85% on average before local expenses (payroll, rent, utilities, etc.). They compare nicely with RJFS and LPL.

Dec 7, 2008 4:58 pm

Agreed.  I’m with FINET and not sure how much longer I’ll be staying.  I too have had clients and or potential clients worry about adding or placing money with Wachovia.  I’m quite concerned.  For the most part, they have been upfront and provided a family-like apmosphere, but the powers to be have really dropped the ball in communications with us over this WFC merger. 

A good FA calls his/her clients more often in a bad market to build on the relationship (if nothing else), but not so the case with FINET management to us in light of the merger.