What's your "specialty"?

21 replies [Last post]
scrim67's picture
Offline
Joined: 2005-04-28

Since we are almost at year end I was looking where my business came from this year.
Mine broke out as follows:
80% mutual fund wrap programs (many combinations)
17% mutual funds
2% annuity products
1% individual stock trades
I have about 7m of my 12m book annuitized if that is relevant.
2006 will be my 2nd full year in my practice and I hope to add Long Term Care as I deepen the relationships with my clients.
scrim

BankFC's picture
Offline
Joined: 2005-05-27

Scrim,
You use inhouse allocation models, right?  tell us more about those...I remember you saying you get paid 3% upfront with a trail...how'd that work again.
 

noggin's picture
Offline
Joined: 2004-11-30

Scrim67- Talk about a balanced book...80% mutual fund wraps and 17% Mutual funds for a grand total of 97% in funds???? There is this thing called fixed income that you might want to consider...  The more types of investments a client owns with you the less likely they are to leave you.

scrim67's picture
Offline
Joined: 2005-04-28

I haven't broken it out but out of all those mutual funds about half are bond funds both taxable and tax free depending on the situation
 
scrim

tjc45's picture
Offline
Joined: 2005-05-06

scrim67 wrote:
I haven't broken it out but out of all those mutual funds about half are bond funds both taxable and tax free depending on the situation
 
scrim
I'm probably making a mistake by picking this scab, but you might want to rethink wrapping bond funds. Two reasons, need and cost. Most fixed income investments don't need professional management. Within a MF wrap fixed income gets professional management on two levels. First level is the fund manager and second level is you. Looking at the long term history of bond funds you will find the more, rather than less fail to out perform the bonds themselves. The reason: professional mangers out guess themselves. Also, most funds are managed for total return, not income. So if the client's reason for owning fixed income is to receive income this has to be factored in. A fund may not be the best place for them. The second reason, cost. The client is paying for both levels of management. With 75 beeps to the fund and 75 beeps to you, that's a lot of dough to get a 5 or 6% return. It's much less expensive and usually a better deal for the client to buy indivdual bond, notes etc., and then just hold them until maturity. Muni bond portfolios should be reviewed on a yearly basis for swap opportunities.
I'm not saying wrapping fixed income is wrong, just something to think about.

BankFC's picture
Offline
Joined: 2005-05-27

I did an account with all short erm corporates, and I wrapped it for 40bps.  it isn't right to charge more than that.

bankrep1's picture
Offline
Joined: 2004-12-02

BANK AND SCRIM
WHAT DO YOU CHARGE IN DISCRETIONARY WRAP ACCOUNTS?

scrim67's picture
Offline
Joined: 2005-04-28

none of the allocation models used are 100% fixed income.   There are equities in all of the models ranging from 20% to 100% depending on the model.
My firm uses a wrap fee of either 1.5 or 1 depending on non qualified or not.
The fee does start dropping as the assets grow.
We can discuss these fees until the cows come home to roost but the crux of the matter is "How much do we deserved to be paid?"  
What does everyone feel the "average" producer should show on their w-2 every year assuming they've been in their practice for a few years.  How about the top decile?
scrim
 

tjc45's picture
Offline
Joined: 2005-05-06

scrim67 wrote:
none of the allocation models used are 100% fixed income.   There are equities in all of the models ranging from 20% to 100% depending on the model.
My firm uses a wrap fee of either 1.5 or 1 depending on non qualified or not.
The fee does start dropping as the assets grow.
We can discuss these fees until the cows come home to roost but the crux of the matter is "How much do we deserved to be paid?"  
What does everyone feel the "average" producer should show on their w-2 every year assuming they've been in their practice for a few years.  How about the top decile?
scrim
Scrim, you make a good point. We do deserve to get paid. The relationship with clients isn't going to work unless all the parties involved get a fair return. Those parties are the client, the firm and the advisor. The question is what's fair? With my post, above taking fixed income as an example; Client A buys a mutual fund and pays 75BP a year. Client B buys the same fund within a wrap and pays 2.25% a year(entry level wrap fee of 1.50%). Client C buys a 10 year bond with a 1% mark up. Over a ten year period client A pays 7.5% in fees, B pays 22.5% and C paid 1%. Additionally, client A may have paid a load to buy the fund. There is no right or wrong with any of these choices, each can be justified, each has pluses and minuses to the parties involved. But, as an advisor you have to chose what you believe to be the right choice for each client. You have to strike the balance between the client's right to get paid and your right to get paid.
How much do we deserve to be paid? Every dime, of course! If you're not making six figures in three years it's time to re-evaluate your career choice. That's six figures to you, not gross. Longer term, many consider anything less than $250,000 an off year. I don't know were the top is. However, here in Philly there are dozens of brokers, if not more, pulling in well over a million dollars income per year, year in, year out.
The formula in this industry for making money is this:
assets X velocity = yield to pocket
Increases in either assets or velocity will increase your income. However, increasing only velosity will eventually decrease your income if assets don't increase. The cost of trading will gradually reduce the asset pool leading to a spiral of decreasing income. If for no other reason, this should be reason enough not to churn accounts. Not only is it illegal, it's counter productive.
You can see the real path to increasing income is by way of increasing assets under management. This holds true whether you're an RIA, sitting in a bank lobby, or working for a wirehouse. It also holds true whether you're a trading genius or collecting the money and wrapping it. Your job, our job, is to find the money. It's that simple and that hard.

BankFC's picture
Offline
Joined: 2005-05-27

TJC,
I charge anywhere from 150 bps in non-competitive situations all the way to 80bps when trying to win business.
 

rightway's picture
Offline
Joined: 2004-12-02

My teams specialty is rich people.  Really Really Rich people.

bankrep1's picture
Offline
Joined: 2004-12-02

I don't think someone should reevealuate anything if there making say 75K three years in.  What should they do go be a teacher and make 40K.  If you like what you do and you make enough money to keep you happy go with it.  There aren't many careers that offer the incomes you can make as a good advisor, it is tough to get assets tahts why the people on top make 7 figure paydays.

tjc45's picture
Offline
Joined: 2005-05-06

bankrep1 wrote:I don't think someone should reevealuate anything if there making say 75K three years in.  What should they do go be a teacher and make 40K.  If you like what you do and you make enough money to keep you happy go with it.  There aren't many careers that offer the incomes you can make as a good advisor, it is tough to get assets tahts why the people on top make 7 figure paydays.
When you take your car to the dealership for service, the guy with his name on his shirt who takes down the information on what's wrong with your car, he makes 75K a year. When you pay your toll on the NJ turnpike, the toll taker makes 75K a year without OT. There are many JOBS that pay 75K that come without the responsibility of this CAREER.
Two of my friends sell Acuras. Both are top sales people. Both make between $100 and $150k a year. These guys could sell sand in the desert or ice cubes to eskimos. Within their profession, until they move into management, their incomes are topped out. They have almost no control of how much money they will make. Customers control when they will come through the front door, managers control the prices. Make no mistake, their jobs are not easy. They work long hours and come home dog tired. They've maximized their opportunity. Now let's take our profession. The top incomes are in the millions. We control how much we make. Even though most of us don't make million dollar incomes, we never stop trying to increase our incomes. Which is why many of us make high six figure incomes. The opportunity in this profession is unlimited. Why would anyone settle for a low income? 

scrim67's picture
Offline
Joined: 2005-04-28

do toll takers really make $35-40/hr?
That number is very surprising to me.
scrim

skeedaddy's picture
Offline
Joined: 2005-06-16

My electrician charges $65/hr and $35/hr for his "go-pher". My plumber...
$50/hr. First year lawyers make about $90K, but they work 100 hours a
week = $18.75 an hour.

Beagle's picture
Offline
Joined: 2005-03-21

How much someone makes is completely relevant only to those in the same
geographic region.  I looked up on a website the cost of living
index.  An Acura salesman making $100k per year in New York metro
area is about the same as the Chevy salesman making $38k per year in
Jackson Mississippi.  Not very impressive making so much money
when your cost of living is so high.

A $150k salary in St. Louis is the same as about $420k in San
Fran.  It's all relative when you start giving salaries and
talking it up. 

tjc45's picture
Offline
Joined: 2005-05-06

scrim67 wrote:
do toll takers really make $35-40/hr?
That number is very surprising to me.
scrim

Yes they really make that amount. With over time many make over $100,000 a year. The NJ Turnpike Authority is a classic patronage pit.

tjc45's picture
Offline
Joined: 2005-05-06

Beagle wrote:How much someone makes is completely relevant only to those in the same geographic region.  I looked up on a website the cost of living index.  An Acura salesman making $100k per year in New York metro area is about the same as the Chevy salesman making $38k per year in Jackson Mississippi.  Not very impressive making so much money when your cost of living is so high.A $150k salary in St. Louis is the same as about $420k in San Fran.  It's all relative when you start giving salaries and talking it up. 
 
You make a good point. For the record, both of my friends live in South Jersey. South Jersey has a very reasonable cost of living relative to the North Jersey, New York metro area, the suburbs west of Philly and the Metro Balto-Washington area to the south. If my house, located in the Philly suburb of Cherry Hill NJ, was 80 miles farther north it would be worth twice its value. 30 miles to west and it's 30 to 50% higher. Put it in Potomac MD and its worth 4 times its current value. We also have a place in Cape Coral Florida. Prices for food and gas are cheaper in Cherry Hill. So, no doubt our dollars don't go as far as they do in Jackson Ms, but $100k income buys a pretty nice lifestye here.

troll's picture
Offline
Joined: 2004-11-29

tjc45 wrote:scrim67 wrote:
do toll takers really make $35-40/hr?
That number is very surprising to me.
scrim

Yes they really make that amount. With over time many make over $100,000 a year. The NJ Turnpike Authority is a classic patronage pit.

I wonder what a NYC cabbie is making today with the transit strike!
But they work pretty hard...
Yep much of transit in the NY metro is patronage bs.  Try getting a job as an LIRR conductor punching tickets if you don't have a relative on the job.  I understand that STARTS around 45 with full benefits, and only goes up from there.

tjc45's picture
Offline
Joined: 2005-05-06

joedabrkr wrote:tjc45 wrote:scrim67 wrote:
do toll takers really make $35-40/hr?
That number is very surprising to me.
scrim

Yes they really make that amount. With over time many make over $100,000 a year. The NJ Turnpike Authority is a classic patronage pit.

I wonder what a NYC cabbie is making today with the transit strike!
But they work pretty hard...
Yep much of transit in the NY metro is patronage bs.  Try getting a job as an LIRR conductor punching tickets if you don't have a relative on the job.  I understand that STARTS around 45 with full benefits, and only goes up from there.

The out going attorney general of NJ just gave a special pension benefit to one of his retiring administrators. The guy is entitled to $72,000 a year for life. But, the AG decided that wasn't good enough and gave him a Police/fire fighters pension of $87,000 a year for life. Nice Huh!

Please or Register to post comments.

Industry Newsletters
Careers Category Sponsor Links

Sponsored Introduction Continue on to (or wait seconds) ×