Your experiences with your B/D

19 replies [Last post]
LockEDJ's picture
Offline
Joined: 2009-07-06

I'm torn between a couple of independent firms, and I'd like a little feedback. My background: trailing 4, about 12K avg; 110 last 12. About 10-12 AUM in 28 months. These numbers make me about an average EDJ guy. I'm achieving, not exceeding targets. Why I'm leaving Jones, we'll leave as personal.

So the question is this: how important is brand name recognition on your business card? In one scenario, I literally will be able to have National/Fidelity on my card. Is that relevant? Existing clients will move with me because of our relationship - they won't be concerned if their assets are held at RJ, JPM or Pershing. But what about new clients?

And, when it's said and done, what impact does the b/d have on your life?

In order to obtain what I perceive as the "better b/d" - one that offers cachet right on my business card, and likely better service/bundled help, it's going to cost me around 10% - at least for a year.

I very much appreciate your input, and if you could be specific that would be great. For all the Jones guys, keep it to yourself. I've drunk the Kool-Aid and I know what I'm doing.

Squash1's picture
Offline
Joined: 2008-11-19

Depends how you market your business if you got most of your clients pitching EDJ first and you second then transitioning to an indy make cause problems with your prospecting ideas. Some people will only buy from brand name, other will look for the cheapest.. Your goal will be everybody else.
 
As an exjoneser(should be in dictionary) realize what ticket charges and other misc fees will cost you.  Payouts are one thing, but ticket charges, lack of asst, own rent and bills, will also take some getting use to.
 
I pitch my prospects differently than I did w/ EDJ... I tell them they are working with me but for their safety we hold their assets somewhere else so we aren't at risk for a Bernie Madoff type situation(don't bring that up but find ways to imply it)..

LockEDJ's picture
Offline
Joined: 2009-07-06

Thanks Squash - that's an interesting post. Let me know (pm?) who your bd is, if you don't mind, and how that's helped you. I've always marketed myself (as opposed to my firm) and focused on people that either didn't have a FA or weren't happy with the ones they had.

Worked well enough for me; by focusing on people that want to work with me I seem to do pretty well with referrals, so I'm happy enough. Anyways ... Let me know Squash.

Weddle Me's picture
Offline
Joined: 2009-07-19

Lock -- sounds like you'll be doing us a favor.  Hopefully a new guy will come in, keep most of your clients and actually produce.  As you know, Edward Jones is #1 and we'll keep most of your TINY book.   Enjoy your crap office with no assistant and a faded sign.  EDJ #1

LockEDJ's picture
Offline
Joined: 2009-07-06

Thanks ... good post ice. Part of the reason I'm leaving involves the huge cut EJ takes on VA. I know I'll only work with firms that will do the supervision until I get my S24.

Why would I want to put my life insurance through their grid?

LockEDJ's picture
Offline
Joined: 2009-07-06

Weddle Me wrote:
Lock -- sounds like you'll be doing us a favor.  Hopefully a new guy will come in,and actually produce.  ... your TINY book.   ...

I will be doing myself and my family a favor. And that's what really counts.

Honestly ... does anyone else get the impression this clown isn't even an FA?

deekay's picture
Offline
Joined: 2007-05-15

LockEDJ wrote:Thanks ... good post ice. Part of the reason I'm leaving involves the huge cut EJ takes on VA. I know I'll only work with firms that will do the supervision until I get my S24. Why would I want to put my life insurance through their grid?
 
If you go through your B/D's contract, you may get a higher net payout plus other benefits (FICA, pension, etc) than if you have your own.  OTOH, having your own contract means one less thing FINRA can mess with you about.  If you're only doing VAs, it's going to have to go through the grid, as I'm sure you know.

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

LockEDJ wrote:Thanks ... good post ice. Part of the reason I'm leaving involves the huge cut EJ takes on VA. I know I'll only work with firms that will do the supervision until I get my S24.

Why would I want to put my life insurance through their grid? It was not just on VA's that you were getting sliced on, you just don't realize it. I get 100% payout on life insurance biz.......

LockEDJ's picture
Offline
Joined: 2009-07-06

Noggin ... yeah, I know, I know. But doing a 1035 exchange of $300K and getting $2400 into my paycheck ... that really burned. I know my friend at LPL practically fell over laughing at me. Said he would have cleared $12,000 PLUS a 1% fee.
 
Sweet lord.

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

LockEDJ wrote:I'm torn between a couple of independent firms, and I'd like a little feedback. My background: trailing 4, about 12K avg; 110 last 12. About 10-12 AUM in 28 months. These numbers make me about an average EDJ guy. I'm achieving, not exceeding targets. Why I'm leaving Jones, we'll leave as personal. So the question is this: how important is brand name recognition on your business card? In one scenario, I literally will be able to have National/Fidelity on my card. Is that relevant? Existing clients will move with me because of our relationship - they won't be concerned if their assets are held at RJ, JPM or Pershing. But what about new clients? And, when it's said and done, what impact does the b/d have on your life? In order to obtain what I perceive as the "better b/d" - one that offers cachet right on my business card, and likely better service/bundled help, it's going to cost me around 10% - at least for a year. I very much appreciate your input, and if you could be specific that would be great. For all the Jones guys, keep it to yourself. I've drunk the Kool-Aid and I know what I'm doing.
 
One of the things to consider....and I don't know how many indies experienced this.  I have had a few clients transfer to me from a friend of mine that went indy early this year.  I assumed most would move with him because he is a good stand-up guy.  Not big accounts (he didn't have many big accounts), just regular sort of people.  I know for a fact that he always "sold Jones" when he prospected, which is something I never do for obvious reasons (unless there is some indication from the prospect that it would help my case).  So this hurt him a bit.  But two of the clients that came to me (and no, I didn't prospect them, they are out of my market, and they just looked for the next closest office) stated specifically that they were concerned because this guy now "was on his own with nobody backing him up".  I forget the exact words used, but it was more about him being a firm unto itself, not about not having a physical backup like a BOA.  My point is that I don't know that he did a very good job of making it clear that Cambridge was his firm, and he was just allowed to brand it himself.  I think if I were to ever go indy, I would make it VERY clear that "B24 Financial" is not the firm.  It's a branch office name of LPL or Commonwealth or whatever.  I would compare it to Jones and explain that we are just allowed to give ourselves a "local office" name or something to that effect.  But these clients seemed genuinely concerned about the safety of their assets.  Since I really didn't care about getting those clients (and this guy is still a good friend), I actually explained all that to them.  They still felt strongly about staying with Jones (nobody had repalced him yet in his office).
 
So just be aware of the fact that this is many clients' life savings you are talking about, and most will have more allegience to their assets than to their advisor.  So it's important to make them feel safe and secure with a move to a new firm that has no brand recognition.  It all has to do with how you position your new firm from the clients' perspective.
 
And actually, in the beginning, you may want to play up the B/D name more than your own DBA name for a while (at least to the clients that have concerns).

SometimesNowhere's picture
Joined: 2008-12-22

LockEDJ wrote: Weddle Me wrote: Lock -- sounds like you'll be doing us a favor.  Hopefully a new guy will come in,and actually produce.  ... your TINY book.   ... I will be doing myself and my family a favor. And that's what really counts. Honestly ... does anyone else get the impression this clown isn't even an FA?
 
I get the impression that he's the Sacha Baron Cohen of the RR boards.

LockEDJ's picture
Offline
Joined: 2009-07-06

B24 wrote:
....So just be aware of the fact that this is many clients' life savings you are talking about, and most will have more allegience to their assets than to their advisor.  So it's important to make them feel safe and secure with a move to a new firm that has no brand recognition.  It all has to do with how you position your new firm from the clients' perspective.
 
And actually, in the beginning, you may want to play up the B/D name more than your own DBA name for a while (at least to the clients that have concerns).
 
This is great, great advice. I appreciate it, and the tone.

Squash1's picture
Offline
Joined: 2008-11-19

B24, I completely disagree. I think it depends on the business you run, but i think the biggest pitch for independence is that you are no longer attached to a firm(their products, their fees, their reco's)... I think the best way to explain it, is the relationship between yourself,b/d and custodian(if different than b/d). For example my b/d is pershing, so if a client is scared about brand name, Pershing is a monster compared to Jones in terms of assets. I tell them that we have a 3rd party custodian for their benefit. I make the recommendations and trades, but Pershing holds the money for both your protection and mine.... Now with LPL it's a little different because the b/d is the custodian.. So i would sell LPL, especially if I was coming from JOnes.. It's essentially Jones in the indy format..

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

Squash, I agree to an extent.  I think you and I are sort of saying the same thing.  But you have added the "we're neutral" clause in your explanation to the client, which I totally agree with.  I think clients like the idea of moving to a "neutral" firm (if there really is such a thing!), they just need to be educated on what "independant" means or (more importantly) doesn't mean.
 
I guess my point was that many clients don't understand broker/dealers, custodians, RIA's, etc.  So they just need to know that "B24 Financial" doesn't have custody of their assets - that there is a much larger firm holding their assets, and that we simply provide the advice and the legwork to make it all happen.  Many individuals think you can just hang out a shingle and have people write you checks. 

Squash1's picture
Offline
Joined: 2008-11-19

I think some people explain it poorly. I tell me clients that they will never write a check to my firm or b/d... only to the custodian.. I tell them I still get paid for what I do but only once the custodian has the assets not before.
 
And for my protection I like the idea that all the checks are made out to Pershing. Not to me or my b/d...
 
Depending on why you left your firm you should point out those reasons... better tools, wider variety of investment options, no pressure to sell, no forced products, no firm owned products, better technology, fewer clients with a greater concentration.. whatever works(if money is the only reason you are leaving, your clients will see right through it, so tell them that you receive a better compensation)

Sportsfreakbob's picture
Offline
Joined: 2008-08-24

B24 wrote:Squash, I agree to an extent.  I think you and I are sort of saying the same thing.  But you have added the "we're neutral" clause in your explanation to the client, which I totally agree with.  I think clients like the idea of moving to a "neutral" firm (if there really is such a thing!), they just need to be educated on what "independant" means or (more importantly) doesn't mean.
 
I guess my point was that many clients don't understand broker/dealers, custodians, RIA's, etc.  So they just need to know that "B24 Financial" doesn't have custody of their assets - that there is a much larger firm holding their assets, and that we simply provide the advice and the legwork to make it all happen.  Many individuals think you can just hang out a shingle and have people write you checks.  You are right B, clients have no clue about b/d, custodian, or any of the other terms we use.
When i made the switch from wire to indie, i played up the RJ name.
Talked about them being listed on the NYSE, profitable, etc. But at the
same time i mentioned that i own the branch, and i work for the client,
not for RJ. I also talked to everyone about the B/D's mission being to
assist independent advisors in giving independent advice to their
clients.

I had a few people who were a bit skittish at first, but in the end, i brought over pretty much my whole book

borei's picture
Offline
Joined: 2009-07-24

Look at Woodbury, strong backing and no OSJ over-ride.

Squash1's picture
Offline
Joined: 2008-11-19

Woodbury is an insurance company..

Please or Register to post comments.

Industry Newsletters
Investment Category Sponsor Links

 

Careers Category Sponsor Links

Sponsored Introduction Continue on to (or wait seconds) ×