Team's

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Greenbacks's picture
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I have been asked to join a team we are all with LPL. What are the pro's and con's of forming a team?  
 

rankstocks's picture
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Con's:
    1.  Average production at LPL is less than 200k.
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
    3. If the team goes sour, you might be stuck holding the bag.

Greenbacks's picture
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rankstocks wrote:
Con's:
    1.  Average production at LPL is less than 200k.
Well we are all well above the 200k mark.
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
  We all have our own offices now but,we are thinking of purchasing a new one if we do this.    
    3. If the team goes sour, you might be stuck holding the bag.
We would have to have a buy out clause.   

Devoted SA's picture
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rankstocks wrote:
Con's:
    1.  Average production at LPL is less than 200k.
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
    3. If the team goes sour, you might be stuck holding the bag.

Uh, don't Jones IR's work from home too? Unless they walk-in to an open office? I'd have to say a guy that gets fired has bigger things to worry about than having an office to work from.

Gone Indy's picture
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rankstocks wrote:
Con's:
    1.  Average production at LPL is less than 200k.
         Why is this important?  The guy is interested in joining an office with other LPL reps.  What is the average production at Jones?
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
          Again, why does that matter?  So what if some Jones flunkie works for LPL out of his house.  I doubt I will lose many clients to him.
    3. If the team goes sour, you might be stuck holding the bag.
           I sure would think that Greenbacks has enough common sense to protect himself should that happen.

Incredble Hulk's picture
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I am my own TEAM!  Everything is GREAT!

troll's picture
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rankstocks wrote:Con's:
    1.  Average production at LPL is less than 200k.
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
    3. If the team goes sour, you might be stuck holding the bag.I work out of my house, and I suspect it is far nicer than your office!

Indyone's picture
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joedabrkr wrote: rankstocks wrote:
Con's:
    1.  Average production at LPL is less than 200k.
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
    3. If the team goes sour, you might be stuck holding the bag.
I work out of my house, and I suspect it is far nicer than your office!
Joe, you'll have to excuse Rank as he's getting his answers from the inside of a GP's colon...

blarmston's picture
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"I am my own TEAM!  Everything is GREAT!"
COngrats... Now go back to rolling over 10K IRA's and setting up $100/ month systematics... You would probably puke on yourself if you ever had to compete for real business...

troll's picture
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Indyone wrote:joedabrkr wrote: rankstocks wrote:
Con's:
    1.  Average production at LPL is less than 200k.
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
    3. If the team goes sour, you might be stuck holding the bag.
I work out of my house, and I suspect it is far nicer than your office!
Joe, you'll have to excuse Rank as he's getting his answers from the inside of a GP's colon...lol...that's a lovely mental picture....

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Rank
"Please don't ever" and I mean ever leave Jones. You have to be the dumbest idiot with a series 7. I now realize why people really hate Jones....because they harbor senseless fools like you.
I dont care what you say about working from your home..it doesn't matter! Ihope some day I do work from my home and only my home.
 

Devoted SA's picture
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joedabrkr wrote: Indyone wrote:joedabrkr wrote: rankstocks wrote:
Con's:
    1.  Average production at LPL is less than 200k.
    2.  Many brokers work from home. (One I know was fired from Jones and worked out of his home for 3 1/2 years before he got an office....100% true story)
    3. If the team goes sour, you might be stuck holding the bag.
I work out of my house, and I suspect it is far nicer than your office!
Joe, you'll have to excuse Rank as he's getting his answers from the inside of a GP's colon...
lol...that's a lovely mental picture....
 I'm still trying to poke it out of my mind's eye. On another note, when Rank makes his 25 contacts a day, does he carry the GP on his shoulders? -OR- Do they maneuver utilizing a wheelbarrow race type of stance?

rankstocks's picture
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Registered Rep magazine, June 2006,
    Average Assets per rep:
             LPL:     16.2 million
             RJ:       30.4 million
             EDJ:     41.6 million
And you are telling me the average LPL broker grosses more on 16.2 million in assets than the average Jones broker with 41.6?  How is that possible?  Churning?  or maybe you are flat wrong.

Incredble Hulk's picture
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Rank,
They are just flat wrong.  They are all MORONS!
 

munytalks's picture
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rankstocks wrote:
Registered Rep magazine, June 2006,
    Average Assets per rep:
             LPL:     16.2 million
             RJ:       30. 4 million
             EDJ:     41.6 million
And you are telling me the average LPL broker grosses more on 16.2 million in assets than the average Jones broker with 41.6?  How is that possible?  Churning?  or maybe you are flat wrong.

 
Rank-
LPL = 16.2 Mil  x 1.0% Fee = $162,000 per year. MINUS 10% to LPL= $ 145,800 net to Broker. (assume he works from home, like YOU did when you first started at Jones)
EDJ = 41.6 Mil x .25% Trails = $ 104,000 per year. MINUS 60% to GP's = $41,600 net to you. (Assume all 41.6 is in Mutual Funds.) NOW, the number is a little sketchy to come up with since you also get One Time Only Upfront Commission- we'll say 25% of that 41.6 comes in per year the average is $10.4 Mil x 2% = $208,000 MINUS 60% to GP's = $124,800 net to you / add the $41,600 in trails = $166,400.
Looks to me like if you want to Keep Up with LPL the Jones people are the ones who need to CHURN and BURN.

munytalks's picture
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Before you get all excited to point out the larger number for EDJ- Remember, I gave credit for a person who can bring in over $10 Mil a year AND gave full .25% in Trails.
This is not possible. The average IR at Jones has Mutual Funds make up between 50-70% of their book. That was the number when I was there- look up Firm average before you go spouting off again.

munytalks's picture
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I just re-checked those numbers - I know I'll catch hell for this:
Commission should be $208,000 x 40% to IR = $83,200 - (Sorry about that, I gave you the GP cut) 
$83,200 + $41.600 = $124,800
I looked back through my P & L when I hit $41.5 Mil (pretty close) my gross was $359,000 and Net was $132,000. This was on an ascending asset basis, so I had to keep bringing in assets and dropping tickets to maintain this.

Indyone's picture
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rankstocks wrote:
Registered Rep magazine, June 2006,
    Average Assets per rep:
             LPL:     16.2 million
             RJ:       30. 4 million
             EDJ:     41.6 million
And you are telling me the average LPL broker grosses more on 16.2 million in assets than the average Jones broker with 41.6?  How is that possible?  Churning?  or maybe you are flat wrong.
I'll tell you once more and maybe this time it will stick.  LPL has a partners program where CPAs. etc. are licensed to revenue share on referrals.  Most likely, these folks have no book themselves, bringing down the average.  I've been at LPL all of ten months and my book is just north of $24 mil.  I find it very hard to believe that I already have a bigger book than the average PRODUCING rep, but who knows.  I'll try to clarifiy this at the national sales conference this summer and let you know.
...and on the 2nd question...not only is it possible, it's probable.  Frankly, I should get paid more for managing a client's account as opposed to just buy and hold and let 'em rot.  I can't tell you how many former Jones clients have told me that they haven't heard from their advisor in years.  Why should you get paid for that?
It's time to get your head out of some GP's @ss, quit repeating that stupid propaganda they are feeding you and think for yourself.

Devoted SA's picture
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Indyone wrote:rankstocks wrote:
Registered Rep magazine, June 2006,
    Average Assets per rep:
             LPL:     16.2 million
             RJ:       30. 4 million
             EDJ:     41.6 million
And you are telling me the average LPL broker grosses more on 16.2 million in assets than the average Jones broker with 41.6?  How is that possible?  Churning?  or maybe you are flat wrong.
I'll tell you once more and maybe this time it will stick.  LPL has a partners program where CPAs. etc. are licensed to revenue share on referrals.  Most likely, these folks have no book themselves, bringing down the average.  I've been at LPL all of ten months and my book is just north of $24 mil.  I find it very hard to believe that I already have a bigger book than the average PRODUCING rep, but who knows.  I'll try to clarifiy this at the national sales conference this summer and let you know.
...and on the 2nd question...not only is it possible, it's probable.  Frankly, I should get paid more for managing a client's account as opposed to just buy and hold and let 'em rot.  I can't tell you how many former Jones clients have told me that they haven't heard from their advisor in years.  Why should you get paid for that?
It's time to get your head out of some GP's @ss, quit repeating that stupid propaganda they are feeding you and think for yourself.

Indy - don't let Rank's lack of independent thought -OR- originality for that matter dishearten you. His "handle" reeks of Jones constipation.
RANKSTOCKS is a command code utilized in the archaic 1970's communications system for Jones operations. This command supplies an IR with the top stock holdings for his branch, by dollar amount.
At the end of the selling month, many IRs pull up their RANKSTOCKS and scroll through to try and find some dogs to sell, and re-trade into some other Jones deitized "buy & hold" for a couple bucks to throw into the old commission pot. (*Ohh and maybe just maybe some of those trades might just count for a few points towards that next div trip to Jerks & Caicos) 
The only posts you ever seem to groan out are: 
The average LPL/RJ rep makes less than $200k per year (which I bet beats the pants off the net you make any day)
Most reps work from home. (umm, like I've said before until recently when Jones Vets were leaving the firm in droves New IRs work from THEIR homes too)
Try some benefiber, or ex-laxx dude you're all bunged up.
 

Gone Indy's picture
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Speaking of great Jones technology, here is the command (on the black screen) to get a list of your states muni bonds:
"inv,mbd,iob=y,st=ca"  (reminds me of the old DOS language I learned in college)
and then, if you are lucky, you will have a choice of 3 to 5 muni's from your state which are all at least 30 years in maturity.  Remember, at Jones the only bonds to choose from are the bonds that they have in their inventory (and then the client gets raped on the mark-up!

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Gone Indy wrote:
Speaking of great Jones technology, here is the command (on the black screen) to get a list of your states muni bonds:
"inv,mbd,iob=y,st=ca"  (reminds me of the old DOS language I learned in college)
and then, if you are lucky, you will have a choice of 3 to 5 muni's from your state which are all at least 30 years in maturity.  Remember, at Jones the only bonds to choose from are the bonds that they have in their inventory (and then the client gets raped on the mark-up! On my "Bond Desk" I get a map and click on the state I'm interested in. Not only do I see my firm's inventory, I see "off firm" offerings. Kinda like the old Blue List on computer. No wonder the jones brokers have to sell 30 yr. paper.....takes'em that long to look up the bonds.

rankstocks's picture
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Munytalks,
    You stated "LPL = 16.2 Mil  x 1.0% Fee = $162,000 per year. MINUS 10% to LPL= $ 145,800 net to Broker. (assume he works from home, like YOU did when you first started at Jones)"
    90% net?  I must assume that you are breaking the law and not paying FICA at 12.6% (all out of your pocket) up to 90k.  What about ticket charges.  How about postage?  You must illegally not be mailing confirmations or perspectuses to clients.  No assistant, your business must be booming.  How about health insurance, decided to chance it?  No phone bill?  How do you grow your business.  No marketing expenses?  At 24 million I brought that in in the last year and a half.  Working from home?  I bet clients really respect your business.  No contact management system?  How do you keep track of your clients?  What about Insurance?  Decided to chance it if your clients file a suit?
    You better start growing your business to make the independent move more profitable.

Revealer's picture
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Rank: What does your jones insurance cost you? 

csmelnix's picture
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Rankstks,
If you weren't so blind to the reality of the industry you might actually take a step back and look into the real numbers.  LPL just had a Moss Adams study completed, you ought to call them and have them send it to you - it'll shed some light on how well producers at LPL do compared to the cookie cutter shop you were FOR. 
Secondly, LPL provides these numbers to Reg. Rep and they (LPL) determine the number this way.  All licensed individuals are included.  That means, licensed assistants, licensed paraplanners, CPAs, etc... which dilutes the number.  When you actually look at the producing reps the numbers are far larger.  The average production of producing reps tends to fall in the $350k range.  Finally, even if we all accepted the $168k number - I would love to compare that to your $41m aum number at jones considering the fact that the jones advisor has that spread across 1000+ households v the 150-200 households the LPL advisor would have.  Hmmm, what book would I rarely work with.
Do some investigation in to the industry and not just your little realm of "pyramid scheme" cookie cutter shop you are in now, you'll see there are far greater ways of doing business than your current situation.

csmelnix's picture
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csmelnix wrote:
Rankstks,
If you weren't so blind to the reality of the industry you might actually take a step back and look into the real numbers.  LPL just had a Moss Adams study completed, you ought to call them and have them send it to you - it'll shed some light on how well producers at LPL do compared to the cookie cutter shop you were FOR. 
I mean "work FOR"
Secondly, LPL provides these numbers to Reg. Rep and they (LPL) determine the number this way.  All licensed individuals are included.  That means, licensed assistants, licensed paraplanners, CPAs, etc... which dilutes the number.  When you actually look at the producing reps the numbers are far larger.  The average production of producing reps tends to fall in the $350k range.  Finally, even if we all accepted the $168k number - I would love to compare that to your $41m aum number at jones considering the fact that the jones advisor has that spread across 1000+ households v the 150-200 households the LPL advisor would have.  Hmmm, what book would I rarely work with.
I mean "rather work with"
Do some investigation in to the industry and not just your little realm of "pyramid scheme" cookie cutter shop you are in now, you'll see there are far greater ways of doing business than your current situation.

Indyone's picture
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rankstocks wrote:
Munytalks,
    You stated "LPL = 16.2 Mil  x 1.0% Fee = $162,000 per year. MINUS 10% to LPL= $ 145,800 net to Broker. (assume he works from home, like YOU did when you first started at Jones)"
    90% net?  I must assume that you are breaking the law and not paying FICA at 12.6% (all out of your pocket) up to 90k.
That's the beauty of incorporating.  Of my six figure net, I'm paying FICA and medicare on less than $40,000.  Ask your tax advisor about that one...it's all legal, rookie.
What about ticket charges.  How about postage?  You must illegally not be mailing confirmations or perspectuses to clients.  No assistant, your business must be booming.
 You don't have ticket charges?!!!  No postage costs?!!!  I do have an assistant, and yes, my business is producing as much as we can handle.
How about health insurance, decided to chance it?  No phone bill?  How do you grow your business.  No marketing expenses?
I have health insurance...probably cheaper and better than yours.
At 24 million I brought that in in the last year and a half.
Gee...it only took me 10 months to get there...and who knows how inflated your number is...I know mine is real.
Working from home?  I don't I bet clients really respect your business.  They do No contact management system?  I use Act! 6.0...it does a great job and syncs with my PDA.  How do you keep track of your clients?  See above What about Insurance?  I have E&O...costs about $150/month.  I understand that Jones doesn't offer any such protection...Decided to chance it if your clients file a suit? No, but apparently you have since you're working for Ed.
    You better start growing your business to make the independent move more profitable.  It's already six-figure profitable, with about 60% of that recurring, so I'd be satisfied with just a little growth going foward.  I sure don't start at zero every month.

I wouldn't have responded, but since you've got my AUM mixed up with muny's post, I thought I'd address your comments since who knows who you were trying to tak a shot at.  You've got a lot to learn, and you're not going to learn it listening to the propaganda you're obviously getting from your employer.  You and Guest1 (Holder?!!) should go have a group hug...

munytalks's picture
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rankstocks wrote:
Munytalks,
    You stated "LPL = 16.2 Mil  x 1.0% Fee = $162,000 per year. MINUS 10% to LPL= $ 145,800 net to Broker. (assume he works from home, like YOU did when you first started at Jones)"
    90% net?  I must assume that you are breaking the law and not paying FICA at 12.6% (all out of your pocket) up to 90k.  What about ticket charges.  How about postage?  You must illegally not be mailing confirmations or perspectuses to clients.  No assistant, your business must be booming.  How about health insurance, decided to chance it?  No phone bill?  How do you grow your business.  No marketing expenses?  At 24 million I brought that in in the last year and a half.  Working from home?  I bet clients really respect your business.  No contact management system?  How do you keep track of your clients?  What about Insurance?  Decided to chance it if your clients file a suit?
    You better start growing your business to make the independent move more profitable.

 
RANK! Put down that UZI and back slowly away from your computer!
Geez Oh Pete, I did not mean to push all your buttons. Calm down, you probably have viens popping out of your forehead right now.
You said you have to ASSUME I am "breaking the law"? Why?
Let's be honest, Okay? When you come in, don't you sit down and enter  COMM on your screen to see what your month to date Commission is? Doesn't it read like this:
Gross Commission $XXXXX         Net Comm $ 40%
Trails  $XXXXX                          Net Trails  $ 40%
Total Gross Commission $XXXX   Total  NET COMM $ 40%
I was using the JONES deffinition of NET , not what the REAL world uses. I thought if I explained in terms you are used to seeing, you would get it.
STAY WITH ME  RANK- Now, a couple of days before payday, don't you then enter  CALLPATHID  to find out what Jones has taken out of your  "NET" in order to see what the basis for your monthly GROSS number will be?
Included in there will be Postage, Fedex, BOA overtime and/or bonus,printing, supplies and don't forget the biggie- Mandatory Business Expense plan reduction. Hey man, you don't even get to pick that number, it's assigned to you.
I didn't go through all the expenses because I didn't think that is what you were saying in your initial post.
Bottom Line is this: I looked at my Total Gross Number one day and said "If I can do that at Jones, why can't I do that Independant?"
I'm sorry you don't have the confidence in your abilities as a Financial Professional to step out on your own. It isn't for everybody. And not all Indy's WERE superstars in their previous positions- people go Indy for a variety of reasons. Having failed, as you always put it, in a previous position is NOT one of them. Going INDY is a HUGE step.
Furthermore, most Jones brokers do not come from other firms. In fact, an overwhelming number of them came to Jones because their previous careers had tapped out. Case in point, my former Regional Leader who was unemployed and in rehab when he applied at Jones. He is now a General Partner. God bless the NASD for making the U4's public knowledge.
Now, think about what I have said before you blast away. If I were still at Jones, it is very likely you would be asking me for ideas so that you could get your production up to my level.
Have a nice day.

Devoted SA's picture
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Muny - 1
Rank - Nuthin
Thanks for playin

rankstocks's picture
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To answere revealers questions: $259/month health premium for my wife and I, add another $300 cash for my HSA. 
My office expenses for 1/2 postage, phone, etc averages about $350/month.  My payout is around 38% on average before office expenses.  With expenses, it averages around 36% net net.
Jones then adds 3-5% profit sharing annually, LP has averaged over 20%/year, Bonuses have been good, and a couple free trips a year is nice.
A recent registered rep article showed the TRUE cost of being independent.  At 400k gross, the average producer NET's 41.6%.  If you have a problem with this number, take it up with Registered Rep.  All I know is that I NET around 45% with all the compensations Jones provides.

exdrone's picture
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Why would one assume that a guy that injects the kool-aid like rankstocks started out of his house.  He is probably Holder's love child and as such was set up with a fat goodknight or an existing office.  I'm sure you are netting 45% after all the bs expenses you pay at Jones......NOT!

exdrone's picture
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I can hear the GP's now.  "We didn't look to good on last years comp comparison.  We should increase the value of those trips IR's win.  It makes us look better and doesn't cost a penny.  Only person it scews is dumbass IR at tax time."  45% my A$$

Indyone's picture
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rankstocks wrote:A recent registered rep article showed the TRUE cost of being independent.  At 400k gross, the average producer NET's 41.6%.  If you have a problem with this number, take it up with Registered Rep.
OK, I AM taking it up with Registered Rep.  Someone (broker editor?)please post a link to this article, as I think that number is complete crap.  I'd like to see how it is arrived at since I don't gross near that number yet, and my net is considerably higher than 41.6%.  If/when the article is posted, I'll be happy to shoot holes in it if indeed, it says that the average 400K producer only nets 41.6%.  That number sounds like it came straight out of St. Louis.

Gone Indy's picture
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I love how the Jones guys always count the LP as part of their compensation.  Last time I checked they have to BUY the LP, it is not given to them.  So if you receive 20K in LP it costs you 20K.  As an independent I could take the same 20K from my account and buy a  solid investment.  Now, I know the drones will all tell me how great the returns of the partnership have been.  But I can (and do) invest in very good funds that not only have similar returns but also are far better diversified.
I remember sitting at one of the Jones trips and listening to one of the drones brag about how he has $250,000 in LP.  All I could think about was why in the world would you want 250K invested in one company?

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That's the beauty of incorporating.  Of my six figure net, I'm paying FICA and medicare on less than $40,000.  Ask your tax advisor about that one...it's all legal, rookie.
I think I heard about this I1.  Love for you to post more details or PM me.  S-Corp that pays dividends is what I heard??

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rankstocks wrote:
To answere revealers questions: $259/month health premium for my wife and I, add another $300 cash for my HSA. 
My office expenses for 1/2 postage, phone, etc averages about $350/month.  My payout is around 38% on average before office expenses.  With expenses, it averages around 36% net net.
Jones then adds 3-5% profit sharing annually, LP has averaged over 20%/year, Bonuses have been good, and a couple free trips a year is nice.
A recent registered rep article showed the TRUE cost of being independent.  At 400k gross, the average producer NET's 41.6%.  If you have a problem with this number, take it up with Registered Rep.  All I know is that I NET around 45% with all the compensations Jones provides. I work @ a "wire". Do lots of transaction biz and take down approx 39% with NO "paperclippostagephone" charges. Health ins. $217/mo. 6% 401K match and stock options (better than LP?) don't know. I go on trips when and where with whom I want. Heck, the paper clips,etc. would pay for 2 wks in Belize. Things are just as good at places besides jones.  

munytalks's picture
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rankstocks wrote:
Munytalks,
    You stated "LPL = 16.2 Mil  x 1.0% Fee = $162,000 per year. MINUS 10% to LPL= $ 145,800 net to Broker. (assume he works from home, like YOU did when you first started at Jones)"
    90% net?  I must assume that you are breaking the law and not paying FICA at 12.6% (all out of your pocket) up to 90k.  What about ticket charges.  How about postage?  You must illegally not be mailing confirmations or perspectuses to clients.  No assistant, your business must be booming.  How about health insurance, decided to chance it?  No phone bill?  How do you grow your business.  No marketing expenses?  At 24 million I brought that in in the last year and a half.  Working from home?  I bet clients really respect your business.  No contact management system?  How do you keep track of your clients?  What about Insurance?  Decided to chance it if your clients file a suit?
    You better start growing your business to make the independent move more profitable.

 
RANKSTOCKS-
I am still waiting for an answer to my post directed at you. Since you assume twice in your post that I am operating illegally, I think you owe me the courtesy of an answer.
Isn't it true that Edward Jones terms your monthly commission BEFORE deductions as 'NET'?  Does that mean they are operating illegally? Are they lacking in full disclosure?  
How can you expect people to have repsect for you when you blast out character attacks, then don't respond when you are asked a simple question?

Indyone's picture
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Ready2Jump wrote:That's the beauty of incorporating.  Of my six figure net, I'm paying FICA and medicare on less than $40,000.  Ask your tax advisor about that one...it's all legal, rookie.
I think I heard about this I1.  Love for you to post more details or PM me.  S-Corp that pays dividends is what I heard??
Set up an S-Corp and pay yourself a reasonable salary.  The salary is treated as W-2 earnings.  Dividends paid out beyond that are not taxable.  The net earnings beyond your W-2 wages are taxable whether withdrawn or not.  HOWEVER, the earnings in excess of your salary are income taxable but not social security taxable.

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Indyone wrote:Ready2Jump wrote:That's the beauty of incorporating.  Of my six figure net, I'm paying FICA and medicare on less than $40,000.  Ask your tax advisor about that one...it's all legal, rookie.
I think I heard about this I1.  Love for you to post more details or PM me.  S-Corp that pays dividends is what I heard??
Set up an S-Corp and pay yourself a reasonable salary.  The salary is treated as W-2 earnings.  Dividends paid out beyond that are not taxable.  The net earnings beyond your W-2 wages are taxable whether withdrawn or not.  HOWEVER, the earnings in excess of your salary are income taxable but not social security taxable. Dividends from S corp ARE taxable, but only at 15%, just like qualifying dividends from stocks. Also,put your wife on payroll so she earns enough $$ to max out 401K (if you are into maxing retirement savings.) I am NOT indy but I have part ownership of a successful family biz. EVERYBODY is on the payroll and we pay small salaries and BIG dividends. My CPA set it all up. Could do same thing with an LPL/RJ type operation (except put EVERYBODY on payroll.)

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Oh, and for Rank....my wife works out of home and she takes money to the "bank". According to you, 2 of the 5 places......

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Revealer wrote:Indyone wrote:Ready2Jump wrote:That's the beauty of incorporating.  Of my six figure net, I'm paying FICA and medicare on less than $40,000.  Ask your tax advisor about that one...it's all legal, rookie.
I think I heard about this I1.  Love for you to post more details or PM me.  S-Corp that pays dividends is what I heard??
Set up an S-Corp and pay yourself a reasonable salary.  The salary is treated as W-2 earnings.  Dividends paid out beyond that are not taxable.  The net earnings beyond your W-2 wages are taxable whether withdrawn or not.  HOWEVER, the earnings in excess of your salary are income taxable but not social security taxable.
Dividends from S corp ARE taxable, but only at 15%, just like qualifying dividends from stocks. Also,put your wife on payroll so she earns enough $$ to max out 401K (if you are into maxing retirement savings.) I am NOT indy but I have part ownership of a successful family biz. EVERYBODY is on the payroll and we pay small salaries and BIG dividends. My CPA set it all up. Could do same thing with an LPL/RJ type operation (except put EVERYBODY on payroll.)
Ummmmm...I'm pretty sure that dividends on S-corps are NOT taxable.  The net income from an S-corp is passed through to the owner(s) and taxed as ordinary income (but not subject to social security taxes).  How much you take as a dividend from an S-Corp is irrelevant for income tax purposes.  The net income is taxed each year regardless of whether or not you take it out in the form of a dividend.  I believe you're thinking of a regular C-Corp where the income is taxed at the corporate level, and then taxed again  when it is removed as a dividend.  That is precisely why most owners (including myself) do an "S" election to avoid taxation at the corporate level.
I'm not here to bust your chops, man...adding family on payroll is a valid income tax deferral strategy, although partially offset by the additional social security taxes incurred.  I just wanted to make sure everyone understands how an S-Corp functions, as opposed to the C-Corp, which I think you're describing.

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Sorry. I meant LLC. To max a 401K, you pay salary of 17K and shelter 15K. The other 2K covers SS. Point is that these ARE NOT things you can do as an "employee".

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Agreed...didn't mean to obscure the point...and that is it!

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That is a great setup.  So what I am hearing is that the dividends are NOT taxed corporately OR through pass through in come at regular rate... but are taxable at the 15%capital gains rate? 
Can I pay my assistant this way as well? 

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Ready2Jump wrote:That is a great setup.  So what I am hearing is that the dividends are NOT taxed corporately OR through pass through in come at regular rate... but are taxable at the 15%capital gains rate? 
Can I pay my assistant this way as well?
Yes, no, no and unless she has her own S-Corp, no.
S-Corp income is not taxed at the corp level, is not taxed at the cap gains rate, and is not subject to social security taxes.  It simply flows through to the owner as ordinary income.

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OK, so dividends flow through as ordinary income, but avoid the self-employment tax... correct?  
You guys have been a welath of info at a critical time for me.
THANK YOU!!!!

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