EDJ Goodnight opportunity
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Sorry for the long post. For those of you unfamiliar with me, see the tagline at the bottom. I have been gone from EDJ for a couple years, which is why I need to ask these questions.
My licensed assistant is being offered a $10-20mm Goodnight from the local EDJ office. Setting aside my feelings toward him for a minute (he sat next to me at Rotary last week all smiles, and I just found out yesterday that he has been trying to talk my assistant into leaving for the last few weeks), I'm trying to help my assistant make a good decision. For a variety of reasons, I have mixed emotions about her leaving. I have spent a ton of time training her, with the ultimate goal of me doing some sort of unofficial Goodnight program myself. In the short term replacing her will be a PITA, but in many ways the person I have already lined up to potentially replace her would be a better fit with me long term. What kind of compensation can she realistically expect? She is being told $50-60m the first year. That's quite a bit more than she makes now, and her upside at EDJ is obviously more than it is with me. I have heard from some people with Goodnight's that it was a blessing/curse type of deal. What can she expect for the first few years? One negative for a new rep in this small midwest town is that EDJ has been here forever. The number of accounts the FA has must be huge, I talk to his clients every day. I wouldn't be surprised if 20% or more of my clients have an account with him, I get all of their new money but since it is a small town and they don't want to rock the boat by transferring their account away from the guy they sit next to in church. I would think that would be a big barrier for any new EDJ rep in the area. She wouldn't be able to try to poach off of his existing clients, which is where I get a nice piece of my revenue. I also don't know if she has the instinct to go for the sale, which is actually one of the reasons I wouldn't care all that much if she left. She is definitely a service assistant, not a sales assistant. However, she wants to be paid as a sales person, not a service person. That doesn't fit well with my long term plans for her. On the one hand, if a new EDJ office is going to come anyway, I think that she is pretty soft competition. The best situation for me would probably be if she is the new EDJ rep, but is producing just enough to not quit or get fired. On the other hand, she is early 50's, with not enough in retirement savings as it is, and a husband who is somewhat of a freeloader. I genuinely like her as a person, and don't want to throw her to the wolves to fail just so I can have weaker competition and try to poach more EDJ clients. Based on that limited info, what advice would some of you newer EDJers recommend to her?If she truly wants to get into sales, this is probably the ideal situation for her. A larger than average goodknight and she will probably go after your clients as well. Possibly taking a few. As we are all aware, being a boa and being an FA are night and day different.
I would fire her and then tell all your clients…“we had to get rid of thelma, I’ve been told by compliance not to give a reason, but after auditing all the accounts we feel secure in knowing all is well”…If she calls you from another investment office, let me know immediately…so we can investigate if any info had been stolen." "I just recently found out she had spent time in prison in her 20’s for check kiting…"I found alcohol in her desk drawer, along with client checks that haven’t beeen deposited…
From a personal point of view, that's my biggest concern. I think there are only a couple of clients I care about that would potentially go with her, but it is definitely a risk. I would be much happier if she got an unrelated job than opening up shop as my competition down the street.If she truly wants to get into sales, this is probably the ideal situation for her. A larger than average goodknight and she will probably go after your clients as well. Possibly taking a few. As we are all aware, being a boa and being an FA are night and day different.
Nice Spears
EDJnow- I think your instincts are pretty accurate. It looks like if she doesn't leave now, she may eventually. If she really gets a 10-20 GK, she will probably be fine. Unless her vet is a pr!ick, she will get some good training (in addition to what she got from you). As far as the competition/small town thing, I don't see that as a big deal. In fact a couple of the big CPA's in town here (the only good ones) really look out for each other, and even though they compete for some audit and corporate tax RFP's, it's all done very professionally. This could actually work to your benefit and hers. Wouldn't you rather have someone that will not badmouth you to potential clients versus a total newb or loser at a competing office? None of us can get all the clients in town, and frankly I much prefer the friends of mine in town that are FA's versus the creeps that switch annuities on old ladies every 4 years and lie to prospects. Also, I wouldn't harbor ill-feelings towards him for not telling you about the GK. He has an obligation to your assistant not to tell people (most of all her employer!)[quote=bspears]I would fire her and then tell all your clients…“we had to get rid of thelma, I’ve been told by compliance not to give a reason, but after auditing all the accounts we feel secure in knowing all is well”…If she calls you from another investment office, let me know immediately…so we can investigate if any info had been stolen." "I just recently found out she had spent time in prison in her 20’s for check kiting…"I found alcohol in her desk drawer, along with client checks that haven’t beeen deposited… [/quote]
I’m hoping that was sarcasm spears. Obviously that is a typical tactic at EJ when someone leaves - and probably many other firms - but to adopt that same slimy approach when an assistant leaves an independent shop to pursue a career path not open to her where she’s at? At least EJ had the the legal weight of a signed non-solicit contract behind them before they got dirty - can you say the same? Maybe that should be part of the deal with your next hire. But it’s too late for this one.
The truth is if a departing service assistant succeeds in taking any clients with her, you were probably going to lose them very soon anyway. If they would really prefer a totally inexperienced former admin assistant over an experienced FA they already know, then they don’t think very highly of you.
Show some class and wish her the best, then take the high road and stress the experience difference if the issue comes up.
It was full of sarcasm…and funny as hell. You could say you found her one day curled up in a ball on the floor, speaking chinese with the lights off and you offered her rehab…and she said…no no no…and next thing you know she’s working for Ed Jones…Go figure…crazier things have happened.
EDJ4now, after playing around I thought long and hard about what I would do if my assistant brought this to me. I think I would just tell her…I support your decision either way, but knowing you have an opportunity to possibly leave my office, I need to bring in another assistant to train. 1 of 2 things will happen…If she is having any hesitation this will become immediately visible and may sway her away from taking it. 2…this will push her to make the decision to take it and I would have her quit immediately. We know it will take 4-6 months before she is even ready to go…so by that time you will have a new person to take over and meet your clients. This is your business and you have the responsibility to your clients to have a stable ongoing concern and having someone privy to info that she will undoubtebly use will only hurt you. If she gets upset…oh well…its a business decision…just as she is about to make a business decision.
The few clients I think may follow her are the ones who like to “chat” with her. A lot. One of those guys generates probably close to $3m in fees a year, not tons, but not one I want to lose either. On the other hand, I also don’t want to devote an hour a week to talking to him about what his grandkids are doing, which is what she does to keep him happy.
He has also known her longer than me, albeit in a service assistant capacity. What does everyone think about her chances for success? And what should she be expecting in pay (including out of pocket expenses that she will need to bear)? While it would be good for my business to see her go out and fail, it would not be so good for my karma. And that pesky conscience that keeps me from selling 15 yr surrender EIA's to 75 yr old widows also doesn't want me to see her blow her life savings on a doomed effort.From a person about to enter the Financial Services Industry and currently a Manager that deals with " client relationships " , in my experience it would be best for : 1) your clients , 2) you and 3) the assistant to proceed with the departure process. Dealing from a position of strength versus from a position of weakness. In one of the other posts…the assistant will eventually leave means that you have simply put off the process of hiring and training the next person and will cost you in the long run…business , time and money.
[quote=Broker24]Nice Spears
EDJnow- I think your instincts are pretty accurate. It looks like if she doesn't leave now, she may eventually. If she really gets a 10-20 GK, she will probably be fine. Unless her vet is a pr!ick, she will get some good training (in addition to what she got from you). As far as the competition/small town thing, I don't see that as a big deal. In fact a couple of the big CPA's in town here (the only good ones) really look out for each other, and even though they compete for some audit and corporate tax RFP's, it's all done very professionally. This could actually work to your benefit and hers. Wouldn't you rather have someone that will not badmouth you to potential clients versus a total newb or loser at a competing office? None of us can get all the clients in town, and frankly I much prefer the friends of mine in town that are FA's versus the creeps that switch annuities on old ladies every 4 years and lie to prospects. Also, I wouldn't harbor ill-feelings towards him for not telling you about the GK. He has an obligation to your assistant not to tell people (most of all her employer!)[/quote] Good points. Currently the situation that I have with the EDJ rep and the independent in town are similar to what you describe for your local CFP's. My ill feelings are not towards him for not telling me about the GK, I wouldn't expect him to tell me something that could get her fired. I am annoyed though that he is trying to recruit her. If I poached his BOA or the assistant of the indy in town, I would expect them to be annoyed. I am also concerned that he has picked her because she is licensed so that will shorten the startup time, but she also lacks the sales skills and drive to succeed. If she fails then he gets the benefits of the GK, and gets back the assets. Even if she makes it, she doesn't really have the potential to grow into serious competition. Maybe I'm just being paranoid.EDJ-
I hear you. My guess is that if she gets even a $10mm GK, she should make at least 50-60K starting out. She will get a salary her first year, plus income from the GK accounts, plus anything she brings from (sorry!) your office, plus anything she brings in on her own.
Given that, no amount of starting salary and GK assets can save someone if they just don't have it in them. My guess is that the other EJ advisor wants her to succeed. The structure of the program is such that she needs to be EXCEEDING expectations at the END of the program in order for him to collect the large back-end bonus (it would be like 15K). The program for a 10mm+ GK plan is 18 months. So he has incentive to make sure she succeeds. And the hurdles for a 10mm GK after 18 months are not low. I want to say she has to be producing around 14K/mo. at 18 months to be EXCEEDING expectations. Not an easy task in 18 months. But if she hits those numbers, she is likely going to be fine. Hope that helps.If the EDJ guy in town were just recruiting her to be a new/new FA, then I’d worry much more about her success. GKNs are successful more often than not. They have a lot of pressure on them to succeed. If they don’t it makes them look bad, plus it makes the vet look bad. He has more on the line than the back end bonus. He loses some credibility if she doesn’t make it.
Actually she does have the ability to grow into serious competition. If she's only mid 50's with no real retirement plan to get her out of the workforce at 60, she could definitely become a force to be reckoned with in 10-15 years. $100 mil books have been built faster than that. Especially if she's the lone female FA amongst all of you guys. Some people will just gravitate toward her because she is a female. Another way to look at it is that if she is going to put some serious money away for retirement in the next 10-15 years, she needs to make some serious money. As your assistant she won't make as much as she could as an FA. I think the upside for her is a lot better than the downside. Who knows, maybe 5 years from now she starts posting on RR and she goes indy (isn't that the way it works). If she's thinking about it, get her to make a decision and move on. The longer she thinks about it, the less productive she is for you. That doesn't help you or her.