going indy vers going to wire house?

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excitr1011's picture
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i know the majority on this board will say go indy...I myself see it as a great opportunity. but my question will be how do you know when is the right time and if you can make it with all the expenses involved?
Why do larger producers who have large amount of assets under management change firms and go to wirehouse when they can go indy for more freedom?
 
 just curious if there is a magic formula as to determine if indy will make sense at a particular moment in your career..
what numbers were you doing before you left and what did you set your budget at, i.e, rent..

Baldy McGrindy's picture
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Joined: 2009-10-01

I think most producers that go to the wires vs. Indy simply want the big upfront check and seem to feel more comfortable with a big name.  If you're going Indy, I think you absolutely need to be cost conscious and be efficient as possible.  You can really start killing your payout % when you tack on having an assistants salary, health, benefits;  high rent and office expenses, on top of you licenses, ticket charges, operating expenses. 

Personally, I think if you're production is under 250k, going Indy probably makes more sense.  You can still work without assistant, and maximize your payout.  If you're over 250K and have the potential to take a big fat upfront check, theres something to consider.  Weigh both, and do what you feel is best for your family and future. 
 

excitr1011's picture
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Joined: 2006-10-19

thanks . that does make sense...i will weigh both options out..

mrclutch's picture
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Joined: 2006-09-23

I don't think you will find a check unless you are doing at least $500k

henrybar's picture
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Joined: 2009-09-22

I think indy makes sense for the $150-500K producer.
 
Baldy is right.. you start tacking on expensive items that your clients have grown to expect AND still have to transition your book.

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

I think some Wirehouse Advisors opt not to go either the Independent B/D or Independent RIA route because it isn't in their blood to be a business owner.  Some Advisors truly thrive in the employee advisor model while others would find it distasteful.  My best advice to you would be to self-examine what it is you truly want for yourself (income, freedom, business ownership, etc., etc.,) and seek out the business model best fitting with your criteria.
 
The employee model can be good -- a lot of it has to with how the firm treats the Advisors, what flexibility do they allow in structuring your practice, etc., etc.

aeromaks's picture
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Joined: 2007-01-13

You dont get assigned accounts once you are Indy.  And quite honestly, when that over times becomes a large part of your book, you probly wont move over much of it if any.So that is why alot just take the check.

B24's picture
B24
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Joined: 2008-07-08

Good piont.  One fo the Merrill offices near me has gone through a LOT of brokers in the past 10 years.  A retiree of that office told me that most of the guys that are 25+ years there built half their books on that methodology, and never actually speak to the clients.  SOme of those brokers have over 1000 households and just collect the C-share trails.  They get attrition every year in their book, but they don't care, as there will awlays be new blood to poach.

Baldy McGrindy's picture
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Joined: 2009-10-01

aeromaks wrote:
You dont get assigned accounts once you are Indy.  And quite honestly, when that over times becomes a large part of your book, you probly wont move over much of it if any.
So that is why alot just take the check.
 
Not 100% true about Indy's not getting assigned assets.  It is no where near as frequent or easy as B24's example like at a whirehouse but it depends on what kind of Indy b/d you're at.  If its a smaller one and you are well liked by the home office management, you can get some house accounts.   I've gotten probably 3mm over the years assigned to me that were just house accounts from brokers leaving and some of them have been pretty bid/decent revenue accounts.  Most are garbage but still assets.  I don't see this happening at an LPL or bigger Indy, but some of the smaller regional ones I think its possible.  And if a broker is getting out of the business or retiring, they'll put you in contact with them if you're interested in buying a book.  That's always nice because the deal is made by the two brokers and most don't know what the hell they're asking for.  I once bought 2mm of assets (and 750k of it was in moneymarket funds) for 3k cash.  I got another 1mm from a rep a few years ago and all I had to pay him was 6 months worth of the trails.  So, you can still accumulate some assets by being Indy, but it's ussaully not quite as easy and frequent as a big wire office that has turnover. 

aeromaks's picture
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Joined: 2007-01-13

By Indy I meant RIA. =)

cobia's picture
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Joined: 2009-10-16

If you run the #s and amortize the upfront even at an extreme, 240% (UBS) you still come out ahead in the indy channel.  You can match the upfront just by putting 20% of your gross in a cash balance or 401k which depednding on age could be 150k on a pretax basis.  The 240% is taxed at say 41% over the forgivable note and some of that is stock.  As and indy you get a bunch of deductions for expenses so your expenses are a lot less than they appear.  Ultimately on an after tax basis and pretax basis, even paying full income and employment taxes you will come out ahead going indy regardless of production.  I know 2 guys that left Credit Suisse with 300mm in assets/3mm in gross and with an office twice as nice as what they had come out way ahead.  You just have to decide if you want to run your own business which has a cost of time doing things you never had to do before.

excitr1011's picture
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Joined: 2006-10-19

FVDA_Trade-PMR wrote:I think some Wirehouse Advisors opt not to go either the Independent B/D or Independent RIA route because it isn't in their blood to be a business owner.  Some Advisors truly thrive in the employee advisor model while others would find it distasteful.  My best advice to you would be to self-examine what it is you truly want for yourself (income, freedom, business ownership, etc., etc.,) and seek out the business model best fitting with your criteria.
 
The employee model can be good -- a lot of it has to with how the firm treats the Advisors, what flexibility do they allow in structuring your practice, etc., etc.

What type of freedom would you have if you were the ops manager ,S24,  as well as producer?

Cash-22's picture
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Joined: 2008-12-19

excitr1011 wrote:i know the majority on this board will say go indy...I myself see it as a great opportunity. but my question will be how do you know when is the right time and if you can make it with all the expenses involved?
Why do larger producers who have large amount of assets under management change firms and go to wirehouse when they can go indy for more freedom?
 
 just curious if there is a magic formula as to determine if indy will make sense at a particular moment in your career..
what numbers were you doing before you left and what did you set your budget at, i.e, rent..There's no magic formula or number.  It depends on you.  If you can put food on your table after paying all the cost while being an indy then that's good.  If you're going indy from the beginning, then I'd suggest getting salaried first and/or do joint-work with a good branch manager/mentor to get started, then start phasing out your salary and branch out on your own to find your own clients/niche market.  If you're coming from a wirehouse then just be prepared to start over.  Or, you could let your top clients know you're leaving before you leave.  You can't contact them for a year after you leave, but it's up to them if they still want to be with you.

excitr1011's picture
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Joined: 2006-10-19

I don't have any non competes in place.. I'm from a Bank

aeromaks's picture
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Joined: 2007-01-13

If you are from a bank, the biggest thing you have got to start pounding into your head, no matter if you go wirehouse or ria route.... YOU ARE NOT GOING TO HAVE WALK INS, or bankers giving you referrals.get your marketing plan in place. asap.

Independent's picture
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Joined: 2006-08-15

Best advice I can give someone in the bank channel is build up a book of recurring revenue such as fee based accounts and C shares.  If you are getting spoon fed leads, you can build a valuable business rather quickly.  You need enough clients that you can continue to build your business through referrals.  Then hit the bricks and go independent.  Forget the upfront one time commission hits.  Not sure why someone would go from a bank channel to a wirehouse.

aeromaks's picture
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Joined: 2007-01-13

and make sure to really partner with the bankers.  At the bank, they are who stands between you and prosperity.

excitr1011's picture
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Joined: 2006-10-19

Great advice.. Yeah i would love to stay where I am, but I'm at citi and were being forced to combine our books and join teams with 9 or 10 other reps... Looking at wire vs Indy... I'll get a nice check to go wire, but office is little further away from my bank branch, versus if I go Indy, I can open up shop few blocks away, easier to transition...

aeromaks's picture
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Joined: 2007-01-13

Fred from TradePMr put out a great guide today, 40 pages of great stuff. Would invite anyone to contact him and get it.

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where is that?

aeromaks's picture
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Joined: 2007-01-13

get in touch with Fred TradePMR on here or send me a pm with your email and I will send it to you.

 
Also, every tuesday Fred does his platform demo and gives you a good overlook of the platform.I signed up with TradePMR a month or two ago and everything so far so good. 

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