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Making Sense of All These Firms

Making Sense of All These Firms

Are you at the right firm? Model? Type?

I have spent countless hours over the last several years doing research on the brokerage industry.  In fact, if you add up all the research my entire team has done we have invested over 7,000 hours.  We have discovered a lot of interesting things about many different firms.  At The Rummage Group we break the industry into firms, models and types.  There are about 2,000 broker dealers and over 10,000 RIAs that employ financial advisors.  Making up these firms are about 10 models; wirehouses, regional firms, independents, RIAs, hybrids, insurance companies, boutique firms, chop shops, banks and discount firms. 

We further break up the 10 models into three types: hunter, gatherer and skinner firms and each one of these types requires a different skillset for success.  Where did we come up with the names for these three types?  From our early ancestors, who each had a role in the village.  The hunter would go into the woods and hunt for the village’s food.  There was a lot of skill and risk involved with hunting and it required a certain type of person.  The gatherers were the ones who foraged for nuts and berries and it required a lot less risk and a little less skill.  Finally, the skinners were the ones who would stay in the safety of the village and process the food found by the hunters.  So what firms make up the three types?

The Three Types:

Hunter Firms are made up of wirehouse, regional firms, independents, RIAs, hybrids, insurance companies, boutique firms and chop shops.  At these firms the advisors are not given any clients, referrals and seldom any leads – unless a manager buys them a list.  Success lies in their ability to hunt for new prospects and turn them into clients.  At hunter firms, an advisor’s success is determined 100 percent in their ability to hunt.

Gatherer Firms are made up of banks and sometimes “one off firms” like Ric Edelman, but there are not too many of these. Gatherer Firms provide something the Hunter Firms don’t – referrals, leads and a warm prospect base.  Both Hunter and Gatherer Firms provide advisors with products and technology, but the Gatherer firms give them someone to close.  Providing leads and referrals makes success easier.  It also allows for a much higher growth rate.  Not all gatherer firms are made equal.  At some, there is more of an abundance of leads, referrals and access to existing clients.  Others make success more difficult by fewer referrals and/or restricting client access.

Skinner Firms are made up of the discount firms.  These firms take it to the next level and provide the advisors with clients.  Since Skinner firms usually do a lot of advertising, client acquisition is provided by the firm.  These firms just need advisors who can up-sell, cross-sell and service the existing client base.  Of course some of them do financial planning as well, but acquiring clients is provided by the firms.  At Skinner Firms the compensation structure is also different than the other types – outlined in Table 1.

Now that we have defined the three types, let’s discuss how the industry views them.  There are many misconceptions in the industry about all three types.  Listed below are a few of the more common ones:

  • Wirehouses push advisors to sell proprietary products – NOT TRUE, many years ago this sometimes happened, but not anymore.  These firms are now too afraid of even more law suits.
  • Independent firms don’t have the product and technological capabilities of the big firms – NOT TRUE, the best Independent Firms have better technology than most of the biggest firms.  They also provide as many, and sometimes more, products than wirehouses.
  • If you go Independent your payout will be about the same after you pay all of your expenses – NOT TRUE, the average advisor at an independent firm keeps about 70 percent of their revenue in take home pay.
  • Banks only sell annuities, have few products, poor technology and cater to tiny clients – NOT TRUE, the best banks have almost everything the wirehouses do.  Yes, many banks are still stuck in the Dark Ages, but the good ones have great technology, deep product offering, a diverse asset base and a high average account size.  In addition, some banks have average production of 600-700k.
  • If you work at a discount firm you won’t make much money – NOT TRUE, the top 30 percent of advisors are making about 100-130k and the top 10 percent are making over 200k.  If an advisor can’t make over 100k at a discount firm, they should reevaluate their profession.

All of these mistruths float around the brokerage industry like a terrible virus.  These viruses sometimes prevent advisors from investigating the type of firms that would better suit their skill set.  At The Rummage Group we come across thousands of advisors every year who should work at a different firm and in many cases a different model or type.  We often find advisors at hunter firms who have been in the industry for 7-plus years and produce less than 150k.  Even worse are the advisors with industry tenure of 15-plus years producing less than 300k.   Clearly these advisors are not hunters or maybe just lazy.  It’s also possible they have never truly learned how to hunt.  They would have much higher success at a gatherer or skinner firm, but their misinformation and biases often hold them back.

There are some hunter firms filled with small producers that hang on year after year.  These advisors would triple their take home pay by walking across the street to a gatherer firms.  In addition, their growth rate would also triple or quadruple.  In most cases these advisors are too stubborn and may feel they are giving up if they go to a gatherer firm. 

As a human I think it is better to understand one’s strengths and weaknesses.  Advisors should focus on exploiting their strengths.  If an advisor isn’t getting the abundance of success their seeking, maybe it’s time to investigate a new type of firm.  Some of the greatest football players became wide receivers after spending much of their time, on the bench, as the quarterback.  Either embrace reality or make significant changes in your habits.


Table 1

This table is based on the research done by The Rummage Group.  We have used industry averages and estimates.  Keep in mind, there are always exceptions to the rule.


1-10 Entrepreneurial Scale

Payout Range

Payout After Expenses & Haircuts






For advisors who are mostly excited about managing the money.





The best choice for entrepreneurial- minded advisors wanting to keep most of their revenue.





For advisors who want to straddle the fence between the models.





Some unique opportunities which are hard to find.





Best for those who love insurance.





For those who want a little more attention and flexibility than a Wirehouse.





For those who need a big name.





Best model to grow a book quickly and still keep the industry average payout.



Salary+ Bonuses


If you can sell, it’s the easiest place to make 100k in the first year.


I strongly believe all advisors should assess their skillset, book, growth rate and happiness factor.  We put our clients through an extensive consultation to help them determine the best firm, model and type.  Life is way too short to stay seated on the bench and not utilize your best skills.  Make sure your firms model and type fits your skill set and needs.  If you are a hunter then hunt, but if not, don’t waste your reality on mediocrity.  Happy hunting!


Rick Rummage is the founder and CEO of The Rummage Group, a career consulting group in the financial services industry, and a former financial advisor.



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