Unique Opportunity to independent and would like feedback

5 replies [Last post]
BrokerR22's picture
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Joined: 2014-05-10

Hello Everybody-
I have a unique opportunity on the table to go independent and I was wondering if you all could provide some feedback.  
I have over 7 years experience in the industry and started out as a financial advisor but have been with a mutual fund company for the last 4 years. (I have a series 7,66 and just finished my CIMA) I want to get back on the advisor side and move closer to my family so my good friend who is an independent advisor and has offered me and incredible opportunity.  He's willing to let me work out of his office with virtually zero overhead costs other than a small $200 monthly rent after the first six months.   He's also going to provide me with a salary of 2k a month for the first six months and access to an assistant.   I've managed to save up 9 months living expenses as a buffer for when I make the jump.  I will be starting with zero clients which is a little concerning but I'm confident in my work ethic and ability to build relationships. 
Current Expectations set for myself
Average 5 new accounts per month after month 3.  
100k of new assets AUM per month for months 2-6 
300k of new assets AUM for months 6-12
I'm hoping to have at least 2 million AUM in my first year.  
I've built a business plan with client aquisition strategies needed to hit these numbers. 
 
What are your thoughts?  Is this realistic?  Should I think about staying and saving up more money? Any feedback would be greatly apprecaited.  

buyandhold's picture
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Joined: 2008-09-23

Those are reasonable expectations. And that seems like a good offer, although you haven't indicated what your net will be (should be at least 90 percent.)
After six months you should know if you are going to make it work or not.

BrokerR22's picture
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Joined: 2014-05-10

Thanks buyandhold. You're correct it's a 90% payout. Most people I talk to say I should have more runway money. Currently my monthly bills are 4300 and I have enough saved up for 9 months. Then there are others that say just jump and learn how to fly on the way down. Use that fear as motivation to sell more.

buyandhold's picture
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Joined: 2008-09-23

One way to look at this:
You would need at least $10m in fee based to make your current living. If you can't reach that, and you likely won't unless you are a superstar or have connections, then you're going to have to sell a Variable Annuity every month in the early years.
It's almost like needing two income streams -- a long-term, fee-based client based business and a side business of conservative, low-service clients you can protect with annuities.

BrokerR22's picture
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Joined: 2014-05-10

That is a good way to look at it. I've sold insurance products in the past and feel confident in my understanding there. If I wait 6 more months I'll be able to collect a sizable bonus from my current firm that will extend my runway to 1.5 years of income saved. I don't want to wait six months though, I have such an itch and deep desire to do it now. Thanks for the perspective.

Mike Langford's picture
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Joined: 2014-05-21

Hi BrokerR22,

$2M in AUM in year one is very attainable.

The biggest challenge is making sure you are building your book for today and beyond. It's always tempting to take on every client who comes your way but the most efficient and profitable way to build your practice it to focus on a specific target market. Ideally, you want a niche that you enjoy working with, one that is affluent, and that you can access regularly with limited competition from other advisors.

Our first class on finservMarketing focuses defining, identifying and getting face time with your target market. http://www.finservmarketing.com/your-target-market/

You will also find the blog helpful as you explore your new practice. http://www.finservmarketing.com/blog/

Let me know if I can be of assistance in any other way.

Best,

Mike

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