Do any indy firms offer up front money???

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today1's picture
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Joined: 2008-05-07

just curious if anyone know this.  i am currently locked into a note for a couple of years at my current firm.  i am wondering if there are any indy firms like lpl or RJ that offer any upfront money so i could pay off my note and go indy.  thanks for any insights.

snaggletooth's picture
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Joined: 2007-07-13

We were offered $50,000 in August 2008.  Didn't take it.

Omar's picture
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Joined: 2009-03-19

LPL offered me $10K in cash and $10K in loans. I hear that's pretty standard.

I have also heard that smaller Indy firms(like mine) are offering cash upfront to certain big producers.   Everything is negotiable I guess.

FVDA_Trade-PMR's picture
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Joined: 2008-09-24

From what I've seen in the typical B/D world, they will provide some financial transition support mainly used to the hard costs of ACAT/Account Closing fees plus some re-licensing expenses, etc.
 
The notes are typically provided in the form of a forgivable loan and may also include a small grant.  It depends on the firm.  In recent years, one insurance based B/D was offering loans up to 40% but that is not common.
 
Questions to Ask:
 
1. What is the payment/forgivable loan schedule?
2. Is their a balloon payment at the tail end?
3. What is the interest rate, if any?
4. What happens if I don't hit the production bogey in a given year?
5. What is the term of the loan?
6. What happens to the loan if the B/D asks that I resign or terminates me?
7. What happens to the loan if the b/d is sold?
 
As you can see, lots to consider.  Some Advisors opt not to enter into any type of loan arrangement considering all of the stipulations above.  I knew of several advisors who took out a loan and were "stuck" -- the promises made by the B/D were not kept and they were obligated to staying with the firm (even though they wanted to leave ASAP) because of their contractual loan obligations.  Sometimes its better NOT to take the money and be completely free of it all.
 
Firms I believe offering loan packages:
 
1. Sterne, Agee & Leach, Inc.
2. LPL
3. Raymond James
4. INVEST Financial Corporation
 
and many, many others.  Please don't consider this list to be all-inclusive.  Just as the recruiter your dealing with and good luck with your search.

LockEDJ's picture
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Joined: 2009-07-06

It will definitely depend on your production. Personally and through the grapevine, I've heard between 5 and 10% of your T12 from smaller BDs, plus transferring costs for your clients, FINRA bills, etc. I can vouch for Omar's numbers through LPL. Wires are still running around with 300%.
Personally, I found other incentives much more important than money - accessibility; service; flexibility; culture.  PM with direct questions.

etj4588's picture
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Joined: 2008-08-18

We got 8% from LPL, but I don't know what they might offer now.

MovingUp's picture
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Joined: 2010-02-20

Wow, what a timely question for me.  I was going to post the same question in the next day or so.  Starting the education process and speaking with two Jones that both went to LPL with T12 between $150-$200k they got $5k (not loan) plus misc transfer expenses.  And they didn't ask.  The advice they gave me is to negotiated this because they believe they left money on the table.Also, talking with one B/D, when asked them about this type of help they asked "How much do you need?"Now we have a rough idea but are not ready for the "numbers" portion of the conversation.Good info from TradePMR.For us, this difference between getting even a loan could vs. doing it all on our own could be going Indy in 6-months vs. 18-months.

today1's picture
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Joined: 2008-05-07

MovingUp
i agree with you that the difference between a loan or not for me is the difference between 6 and 18months of going indy.   I am in a situation where i am not interested in selling my soul to another bank or wire, but want to go indy and do my own thing.  Given my current situation i would need to get a loan for about 30-40% of my trailing 12 or wait another 2 years till my note is done.  so FVDA i am currenlty 'stuck' unless i can find a way to get unstuck.

on my own's picture
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Joined: 2009-11-03

today1 wrote:just curious if anyone know this.  i am currently locked into a note for a couple of years at my current firm.  i am wondering if there are any indy firms like lpl or RJ that offer any upfront money so i could pay off my note and go indy.  thanks for any insights.

Yes and No.
I went indy last year and got 10% upfront cash...not a loan...cash. The deal was they wanted me to sign 60 mo contract. I got them down to 36 mos. This was a smaller B/D with only 200 reps.

on my own's picture
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Joined: 2009-11-03

on my own wrote:today1 wrote:just curious if anyone know this.  i am currently locked into a note for a couple of years at my current firm.  i am wondering if there are any indy firms like lpl or RJ that offer any upfront money so i could pay off my note and go indy.  thanks for any insights.

Yes and No.
I went indy last year and got 10% upfront cash...not a loan...cash. The deal was they wanted me to sign 60 mo contract. I got them down to 36 mos. This was a smaller B/D with only 200 reps.

I forgot to write this...I spoke to other reps who went indy and they said that upfront money is becoming harder and harder to find because FINRA is starting to look negatively at it and revenues are down for the indy B/D's.

NewIndy68's picture
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Joined: 2010-03-07

Just left wire for LPL last week, 10% cash plus 10% loan, interest free for 6 months, fully payable by month 18 @ 4.75%.  I love the firm, support has been amazing.  Best move I have ever made, only wish I did it sooner!  I am a 325m a year producer 5 years in, did 580m in 2008, but huge jump was due to someone in my group who landed a huge trading client.  90% managed money for my practice, made move to break way from team and go on my own.  Also bought an insurance brokerage agency doing only fixed insurance with 650 paying clients, 250 are doctors age 40-75, 65% between 50-60.  Wire would not allow me to own such a business and run fixed insurance through it, they wanted their cake and then some.  Truly excited and very fortunate, would love to share all I can with anyone interested.

LA Broker's picture
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Joined: 2008-12-03

Which firm are you coming with?  What percent of clients have agreed to come and what are your expectations of clients to follow when the dust settles.  Congrats on the move.

joelv72's picture
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Joined: 2008-11-28

NewIndy68 wrote:Just left wire for LPL last week, 10% cash plus 10% loan, interest free for 6 months, fully payable by month 18 @ 4.75%.  I love the firm, support has been amazing.  Best move I have ever made, only wish I did it sooner!  I am a 325m a year producer 5 years in, did 580m in 2008, but huge jump was due to someone in my group who landed a huge trading client.  90% managed money for my practice, made move to break way from team and go on my own.  Also bought an insurance brokerage agency doing only fixed insurance with 650 paying clients, 250 are doctors age 40-75, 65% between 50-60.  Wire would not allow me to own such a business and run fixed insurance through it, they wanted their cake and then some.  Truly excited and very fortunate, would love to share all I can with anyone interested.nice!!

MovingUp's picture
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Joined: 2010-02-20

As we are in due diligence process and talking with several firms and consultants, small firms are from 0%-4%.  If they have corporate backer then they are looking at having a little more money.  Many firms got near their ratios (or past them) and had to cut back on this.LPL was offering good money (we are not at NewIndy68 level) but we talked to several people that lost reps or asked to leave LPL (not transfer to an office) because production was below $150k.  One lady had a $350K office and asked her to remove a new/new person.  Spoke with LPL about this and they said they have been trying to reduce lower producing reps.  Finely pushed and got a number of $150-$200K T12.  Consultant said they want to get their ave rev per rep way up for IPO.Cambridge will go as high as 6%.  Good firm and good people.Brooker Express talks big money and then it is all about the fees you will not have to pay (everybody pays these fees).Because upfront was not a disqualification point during our search we only saw the money as we got to final stages.  I have been told by many that some firms will continue talks if they think you are all about the upfront.  Even if they have a good package.  They don't want to spend the time and money  visiting with you if you are going to run to LPL becasue they offer 5% more.

Independent's picture
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Joined: 2006-08-15

I know that you can get upfront money from LPL.  It seems to be negotiable.  A number of independent firms will give you the seed capital to get your business started.  On the back end, some are making reps sign five year deals to keep it.  You are not dealing with wirehouse $ for sure.  These guys are only keeping 10 to15% of the pie, so there is not much to work with. I think Cantella will  give you what you need to function for the first few months and focus on transferring your book of business over and put you at an 80% payout instead of the 90% payouts they normally pay until Cantella recoups their costs.  They do not have any handcuffs on the money, it gets you functioning, and the 80% is still pretty good.

kaptiv8her's picture
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Joined: 2010-04-19

Just remember...everything is negotiable.  I received 10% cash t12 plus 10% loan...but also negotiated conference credits and other items into the deal...that were not part of the cash offer.  All you have to do is ask...and the worst they can say is no.

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