Wachovia/Wells FiNet

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Jan 11, 2009 8:03 pm

Does anyone know the date the legacy AGE guys can move to FiNet? Seems to me this will become an attractive option as some will feel slighted by a lackluster retention package.

Jan 11, 2009 8:43 pm

You will have to wait until post-combination I’m sure. Fi Net is great, but you handle all HR…I had a pro forma run 2 years ago and as a big fee based producer (major haircuts/service fees on fee based biz) my payout was within 5% of profit formula…I went with profit formula. If you have a low client count, large client size, and more transactional practice…finet will be a no brainer, prob a 70-75 net payout.

Jan 11, 2009 8:50 pm

What are the prerequisites to go to FiNet? With 300 being the new 500, wont a lot of brokers consider that channel, considering big brother hasn’t done too much for any of us. Seems like a great way to leverage the Wells name but not put up with the bank culture.

Jan 11, 2009 9:15 pm

What about territory with Finet. Will they carve out and protect/restrict a geographical area for you? Or will they just shoe horn in Finet offices any where an FA wants to set up shop?
Another Finet guy was kind enough to post this on another thread:
QUOTE=training wheels]Been with Finet several years after moving from
wirehouse. Overall a positive experience. Ditto on earlier comments
regarding fee-based biz. There is no such thing as a 90% payout with
Finet. The “fee-based admin fees” add up pretty substantially thereby
reducing your payout to more like 65-75%. To Finets credit, they have
recently (2008) started a bonus program that effectively refunds some
of these fees based on the amount of fee-based AUM you have at the
firm. This does NOT however apply to assets held away. i.e. DVP assets.
But you still get charged the admin fees on DVP. Finet HAS been willing
to negotiate lower admin fees on very large realtionships which is
helpful, although it has not been until recently that these negotiated
fees have been competitive.

  The biggest negative right now is that the Wachovia name is all over EVERYTHING, including performance reports and statements. My clients get all the same mailings that PCG clients get so they are hammered with Wachovia crap. I know for a fact that LPL and others allow you to custom brand everything with the name of YOUR firm including statements and performance reports. IMO, Finet MUST move in this direction soon if they want to continue to compete with LPL, Schwab, RJ etc.   Another potentially severe limitation, depending on your business mix is the fact that Finet has yet to offer a hybrid RIA platform. Again, this puts them at a competitive disadvantage.   In a nutshell, Finet has provided a great opportunity for us to spread our wings and do our own thing. I would NEVER go back to a wirehouse. How long I remain with Finet will depend on how things shake out with Wells and specifically their "financial response" to the acquisition of Wachovia.[/quote]

Jan 11, 2009 9:21 pm

The first possible date to go live from AGE to Finet is the first weekend in March. I am waiting an extra month to capture a significant (to me) sales bonus in the March 15 pay cycle, putting the first practical transfer date to the first weekend in April. They only make the move on the first three weekends in each month and they only move three reps per weekend. You need to be at least $250k in production, clean compliance record and 5+ years at the firm. I think there were some other restrictions, but these were the major ones. They did suggest that it was not practical to move to Finet unless your production was at least $350k unless you lived in a very low cost part of the country where you could hire a sales assistant and rent space cheap, or could team up with another rep and share costs.

This seems like the most practical way to go indy if you are a WS or AGE rep. It may not be perfect, but I have not found any that are. Feel free to PM me if you want more info.

Jan 11, 2009 9:24 pm

More good info courtesy of trainingwheels on Finet thread:

"Our admin fees last year were roughly 180k. This is not a “out of
pocket expense” but rather a reduction in your payout. Per the new
bonus program we should get about 30% of that back in Feb.   Your office space is completely up to you. Finet will not assist you in this. We chose to purchase rather than lease. We created a seperate LLC to own the property and our S-corp (Financial Firm) pays a lease of about $6500/month to the LLC. This is enough to cover the mortgage and a little extra. I know that seems like a lot, and it is. But we have a #3000 sq/ft historic office building which is considered "Class A". Certainly someone could get by just fine with much less than this.   Ballpark tech expenses: Depending on the size (number of computer users) of your office, Finet will recommend a router-to-router connection (approx $200/month) or the installation of a T1 (approx $1500/month). While the T1 is great, it is very expensive. I would choose the router. In addition, there are monthly "access" fees of up to $300 per user depending on the data package you choose.   There are NUMEROUS other startup expenses that you should consider. Furniture, hiring an attorney and CPA, signage, bix cards, stationary etc. I would hope that Finet would be offering some form of working capital loan to help you out with these costs.   Our office is a team of 3FA, 3FT support staff(2registered, 1 admin). We pay our staff well above market. I do however enjoy the freedom of having a very experienced staff at the office to handle client inquiries and send things to me as needed. This allows me to focus primarily on my family and client strategies.

 Our team shares in everything equally but Finet will give the option of doing business under separate rep numbers also. If you are at 575, you should easily meet their minimum which I think is roughly 250-350k per FA. If you team up with someone at 800k, and you successully transition most of your book, you will be in execellent shape. Its ALL about the overhead though on the ownership side. You will learn over time where to spend your money to bring the most value to your firm and your clients. It is a learning experience though, especially if you have never owned a business before. BUT, Vet20 is correct. The freedom is a great feeling. I haven't worn a tie to the office more than 3 times in the last 5 years and only change my jeans when a client comes in.

ALSO: Do not underestimate the cost of health insurance! Finet offers a group plan that isnt bad, BUT since you are not an employee of Wachovia, you pay 100% of the premium. Currently this is about $1300/month for a family plan with health/dental/vision."

Jan 12, 2009 1:59 am

3rd ID:

  I forgot to mention that the purpose of my suggestion to take into account the cost of attorney and CPA is because they may be necessary as you establish your own firm.  For us, setting up an LLC, an S-Corp, appropriate buy-sell agreements, key man life insurance etc. was around 10k. If you are the only producer/owner the costs will be considerably less. The CPA will come in handy as you try to navigate through all the things like payroll tax, what you can and cant deduct as a small business owner etc. Its a whole other world as a business owner versus a producer in a branch. As frustrating as the tax stuff gets, I still wouldn't trade my freedom.
Jan 12, 2009 9:23 pm

Is it possible to move from ISG to FiNet without WS fighting to keep the assets in the branches?

Jan 12, 2009 9:48 pm

frickster…I hear they are supportive. They like the idea of the FA taking his assets to Finet, still producing for the firm profitably. Then they get to throw in a new Merrill sub 300k refugee into the branch, hoping he will bring some of his book and rebuild the assets. Wash, rinse, repeat.

Jan 14, 2009 9:47 pm

I've seen FiNet offer 25% T12 for transition money and I've heard of as much as 75% for a team. Does anyone know of any specifics about their offers, or anyone else in their space that's offering that kind of transition help?

Jan 14, 2009 10:50 pm

Didn’t Wells own First Allied? They sold them off if I recall correctly. Do You think Finet will be sold by Wells?