Minimum AUM for Independence?

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KUIT's picture
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Joined: 2012-01-27

Looking at a couple of options and eventually would like to go independent, however I am only a couple of years in the industry and was hoping to get some feedback on how much is enough to make the leap to independence. I'm leaving EDJ and am thinking about going to a bank for a couple of years. Any suggestions on AUM?, what b/d? I understand that there are different minimums for different independent b/ds but if you can throw out some suggestions they would be greatly appreciated. The reason for the delay is I need to annuitize the book and build more assets, have only about 6M portable, and majority in A-shares. Please let me know your thoughts.

Bodysurf's picture
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Joined: 2008-08-02

We would love to speak with you.  I'll send you a private message and introduce myself.Good luck!

KingBobby's picture
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Joined: 2011-10-03

KUIT wrote:Looking at a couple of options and eventually would like to go independent, however I am only a couple of years in the industry and was hoping to get some feedback on how much is enough to make the leap to independence. I'm leaving EDJ and am thinking about going to a bank for a couple of years. Any suggestions on AUM?, what b/d? I understand that there are different minimums for different independent b/ds but if you can throw out some suggestions they would be greatly appreciated. The reason for the delay is I need to annuitize the book and build more assets, have only about 6M portable, and majority in A-shares. Please let me know your thoughts.0 AUM or anything above are all great places to start. Considering that payout is higher going indy, it's silly to think that a certain level needs to be achieved prior. I doubt the wires slip you accounts without using your personal ability.

Element's picture
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Joined: 2011-12-28

This is a loaded question.  It's alot like retirement.  There is no set number that anyone here can tell you.  Basically you need to determine what your expenses will be indy and then back into the number of assets you'll need to make a living.  Two examples:1. Me:  When I went Indy I wanted an assistant, office, two phone lines .. basically a functional office.2. Sam: Sam didn't mind doing his own admin work and was cool to work out of his home.  I of course needed a bigger asset pool to pay for my overhead.    Soooo, figure out your fixed costs and you'll figure out what you need to go Indy.

KingBobby's picture
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Joined: 2011-10-03

Element wrote:This is a loaded question.  It's alot like retirement.  There is no set number that anyone here can tell you.  Basically you need to determine what your expenses will be indy and then back into the number of assets you'll need to make a living.  Two examples:1. Me:  When I went Indy I wanted an assistant, office, two phone lines .. basically a functional office.2. Sam: Sam didn't mind doing his own admin work and was cool to work out of his home.  I of course needed a bigger asset pool to pay for my overhead.    Soooo, figure out your fixed costs and you'll figure out what you need to go Indy.Exactly. ^^ The only thing is if Sam also wanted an assistant, two phone lines and a functional office, he could progress to that down the line. (Provided he had a basic understanding/plan of how to consistently grow his business)

Independent's picture
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Joined: 2006-08-15

You really need to first figure out how much money you need to pay your bills to survive.  Someone that has a financial cushion can struggle for a couple of years while they build their business. If you have no financial cushion, you could be in trouble or even dead before you even get started.  Most business fail just as they are about to become profitable.  Owning your own financial services practice is one of the cheapest businesses to start.  It's not like a restaurant where you might need a million just to furnish the place and build out a kitchen.  You can do a basic model with computers, phones, printers, letterhead, and a basic web site.  For under two grand plus registration fees, you are in business.  The biggest costs are going to be sales assistants and rent. Can you do this? Step 1)  What's my monthly nut to live on?Step 2) What will it cost to run my practice?Step 3)  Objectively, what will I generate in monthly net revenues to pay my bills?Step 4) When will I be making more than my fixed costs for both living and running the business?Step 5)  Do I currently  have the financial cushion to get to that point where I have positive cash flow? If the answer to #5 is no, go to plan B; work in a bank or perhaps go in with another independent.  Also, consider sucking it up and staying where you are.  The fewer changes you force clients to make during  your career the better.  A couple of observations.  Working in a bank, a good amount of business comes to you, but it is nowhere as loyal to you if you leave.  Working at Jones is going to be closer to the reality of being independent.  You might be somewhat limited in what you can sell compared to being independent, but you are on an island by yourself just like being independent and can only look in the mirror to see the person who is or is not geting it done.Best of luck and I hope you choose the right path.

Trying Hard's picture
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Joined: 2012-01-09

If you have an opportunity at a bank take it. There are plenty of million dollar producers who sat at a bank for years, and took their book to the highest bidder. 

braveheart's picture
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Joined: 2005-01-06

why are you leaving EDJ now?  you may want to stay put, gather more assets and build more client relationships, then weigh your options.  There are many options for going independent, I work with advisors considering going independent and would be happy to speak with you about options when you are ready.  Victoriawww.GoingIndie.com

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