Deciding on Indy or Wirehouse?

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OhioAdvisor's picture
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I am a current semi-indy rep today with an I insurance B/D who is looking to make a change.  I have narrowed down to Commonwealth and ML or SB. 
I know the difference between the two are huge and personally I think I value the Independence much more but I can't help but not think about the the huge forgivable loan money ML and SB have thrown in front of me.
I understand the indy culture side and running a business since that's pretty much what I am doing today.  What I don't understand is the culture difference at a wire-house. 
The managers at ML/Sb have told me over and over that there are now quota's.  Both have said they only need to grow their branch's by around 10-15% and if I can just grow my business that much I would be fine.  Now, I do fairly well in the growth side and my GDC would be fine but it's still scary proposition to be working for someone else.  I don't know what I don't know.
Anyone have advice for me as to the diff in cultures between Indy and Wirehouse and would a fat up front check make up for the loss of Independence?

OhioAdvisor's picture
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OhioAdvisor wrote:
I am a current semi-indy rep today with an I insurance B/D who is looking to make a change.  I have narrowed down to Commonwealth and ML or SB. 
I know the difference between the two are huge and personally I think I value the Independence much more but I can't help but not think about the the huge forgivable loan money ML and SB have thrown in front of me.
I understand the indy culture side and running a business since that's pretty much what I am doing today.  What I don't understand is the culture difference at a wire-house. 
The managers at ML/Sb have told me over and over that there are no quota's, no one that's looking over my shoulder.  Both have said they only need to grow their branch's by around 10-15% and if I can just grow my business that much I would be fine.  Now, I do fairly well (above 300 GDC) in the growth side and my GDC would be fine but it's still scary proposition to be working for someone else.  I don't know what I don't know.
Anyone have advice for me as to the diff in cultures between Indy and Wirehouse and would a fat up front check make up for the loss of Independence?

Helter Skelter's picture
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OhioAdvisor wrote:
I am a current semi-indy rep today with an I insurance B/D who is looking to make a change.  I have narrowed down to Commonwealth and ML or SB. 
I know the difference between the two are huge and personally I think I value the Independence much more but I can't help but not think about the the huge forgivable loan money ML and SB have thrown in front of me.
I understand the indy culture side and running a business since that's pretty much what I am doing today.  What I don't understand is the culture difference at a wire-house. 
The managers at ML/Sb have told me over and over that there are now quota's.  Both have said they only need to grow their branch's by around 10-15% and if I can just grow my business that much I would be fine.  Now, I do fairly well in the growth side and my GDC would be fine but it's still scary proposition to be working for someone else.  I don't know what I don't know.
Anyone have advice for me as to the diff in cultures between Indy and Wirehouse and would a fat up front check make up for the loss of Independence?

You're a big girl, now, and you shouldn't need to go to the internet to make such important decisions. How the hell would WE know how you would react to "loss of independence" and how much money it would take to neutralize that reaction?

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OhioAdvisor wrote:Now, I do fairly well in the growth side and my
GDC would be fine but it's still scary proposition to be working for
someone else.  I don't know what I don't know.

How could it be "scary" going to work for one of the premier brokerage firms in the world?

The only reason to be independent is if you're a small hitter and need
the accellerated payout offered by an independent firm.  You
sacrifice by ending up working out of your car and/or a desk at
Kinkos.  You hide behind "Voice Mail" systems that give the
impression that you're a much larger organization and dream that
someday you'll be able to afford a real office.

Look at the major hitters in the business.  They're going to be at
the wirehouses.  If what was offered by an independent firm was
truly worthwhile do you think that the stars at Merrill would not be
opening their own shops and enjoying a 90% payout?

Helter Skelter's picture
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NASDY Newbie wrote: OhioAdvisor wrote:
Now, I do fairly well in the growth side and my GDC would be fine but it's still scary proposition to be working for someone else.  I don't know what I don't know.
How could it be "scary" going to work for one of the premier brokerage firms in the world?The only reason to be independent is if you're a small hitter and need the accellerated payout offered by an independent firm.  You sacrifice by ending up working out of your car and/or a desk at Kinkos.  You hide behind "Voice Mail" systems that give the impression that you're a much larger organization and dream that someday you'll be able to afford a real office.Look at the major hitters in the business.  They're going to be at the wirehouses.  If what was offered by an independent firm was truly worthwhile do you think that the stars at Merrill would not be opening their own shops and enjoying a 90% payout?

I'd rather be a major earner than a major hitter.

Greenbacks's picture
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How could it be "scary" going to work for one of the premier brokerage firms in the world?The only reason to be independent is if you're a small hitter and need the accellerated payout offered by an independent firm.  You sacrifice by ending up working out of your car and/or a desk at Kinkos.  You hide behind "Voice Mail" systems that give the impression that you're a much larger organization and dream that someday you'll be able to afford a real office.Look at the major hitters in the business.  They're going to be at the wirehouses.  If what was offered by an independent firm was truly worthwhile do you think that the stars at Merrill would not be opening their own shops and enjoying a 90% payout?
Newbie you know so little about the indy side! The wire houses are Dinosaurs.  <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

OhioAdvisor's picture
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So my question is this...
Do they have production minimums at ML or SB?  If I am producing around 300 GDC is that enough to keep me around?  Can I have the flexibility I ahve now with my job i.e. coming and going when I want, taking off whenever I want etc? 

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Greenbacks wrote:
Newbie you know so little about the indy side! The wire houses are Dinosaurs.  

Statements like that would have more credibilty if you cited something. Don't you agree?

wanda's picture
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Newby darling, take your own advice. Or perhaps I missed it. Who exactly are you citing here?:
How could it be "scary" going to work for one of the premier brokerage firms in the world?The only reason to be independent is if you're a small hitter and need the accellerated payout offered by an independent firm.  You sacrifice by ending up working out of your car and/or a desk at Kinkos.  You hide behind "Voice Mail" systems that give the impression that you're a much larger organization and dream that someday you'll be able to afford a real office.Look at the major hitters in the business.  They're going to be at the wirehouses.  If what was offered by an independent firm was truly worthwhile do you think that the stars at Merrill would not be opening their own shops and enjoying a 90% payout?

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I'm asking for examples of why the wirehouses are dinosaures.  They can be anybody's point of view.

Indyone's picture
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OhioAdvisor wrote:...would a fat up front check make up for the loss of Independence?
No.  They don't pull this money out of the air...eventually, they'll get it back on the payout differential...and if you leave early, they'll get it back quicker.

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Indyone wrote:OhioAdvisor wrote:...would a fat up front check make up for the loss of Independence?
No.  They don't pull this money out of the air...eventually,
they'll get it back on the payout differential...and if you leave
early, they'll get it back quicker.

Why would anybody who was making a living leave a wirehouse?  I
refuse to believe it is so they can start to pay the matching FICA, pay
for their own yellow pads, pay for their own assistant, pay for their
own health insurance, pay for their own computer, software and so
forth, pay for their own office space, pay for their own furnishings,
pay their own phone bill, pay their own postage, pay for their own
advertising pieces, pay for their own..........I grow weary.

If being independent was attractive the wirehouse stars would have all gone independent.

If being independent was attractive the independent B/D management
would not be worrying about how to recruit brokers who were worth
having instead of simply bodies.

The only people who think Indy is better than a wirehouse are those who
could not get hired by a wirehouse, or those who were hired by them but
were about to be fired for lack of production.

It really is that simple, yet that complex.  But think
logically--why in the world would a corner office "star" at Smith
Barney in, say, Oklahoma City not form his own office and make more
money?

wanda's picture
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This may be true when you're comparing indy b/ds and wirehouses, but the other kind of "independence" -- joining or forming an RIA shop -- does offer some benefits in that you have more flexibility in terms of the kinds of products and services you offer and the way you charge for those services. You may also have less pressure on you from a large compliance bureaucracy...So leaving a wirehouse for an RIA can make a lot of sense for top producers who have an entrepreneurial bent, and want to do things their own way. That said, i think the wirehouses have caught on to this, and may have begun offering the really top top guys the flexibility they want ....

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wanda wrote:

You may also have less pressure on you from a large compliance bureaucracy.

Do you believe that a compliance officer's job is to make the sales force's lives miserable, or to keep them out of trouble?

wanda's picture
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of course it's to keep them out of trouble. I'm not blaming the compliance guys. But the end result, unfortunately, at the big firms, is inevitably reams and reams of paperwork. Compliance is not nearly as burdensome at an RIA.  

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wanda wrote:of course it's to keep them out of trouble. I'm not
blaming the compliance guys. But the end result, unfortunately, at
the big firms, is inevitably reams and reams of paperwork. Compliance
is not nearly as burdensome at an RIA.  

Reams and reams?  If compliance is not so "burdensome" it would
have to be because your broker/dealer is not as focused on keeping you
out of trouble.

It's ridiculous to think that wirehouse compliance departments do
things that are not necessary.  If your B/D is cutting corners you
can bet it is not in an effort to do what is right for you.

JCadieux's picture
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OhioAdvisor wrote:So my question is this...
Do they have production minimums at ML or SB?  If I am producing around 300 GDC is that enough to keep me around?  Can I have the flexibility I ahve now with my job i.e. coming and going when I want, taking off whenever I want etc? Congratulations on your decision to make a change!$300K in production is nothing to be ashamed of.    Additionally, you should expect your book to grow once you join a wirehouse because of improved cross-selling opportunities.I'd rather not get into particulars, since I've made placements with both of these firms.  But go ahead and ask your recruiter to go through the payout grids with you.  You'll notice that lower production means lower payouts.  However, $300K is no where near "penalty box" production levels.You should ask about time commitments during the interview process.  In general, you will enjoy great flexibility with a wirehouse. You will be required to come into the office occasionally for certain sales meetings and etc.  However, the vast majority of your time will be flexible.Good luck and let us know what you decide!

OhioAdvisor's picture
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My decision is made..
I am going to where I can control my enivornment, my staffing and my costs.  I think I was letting greed take over but I am convinced that after taxes on the up front money, fighting for staff resources, worrying about future layoffs that I am best served being a small business owner.
After all the majority of wealth in this country is from small biz owners.  Stock brokers enjoy rich cash flow but it's not the same as a small biz owner.
Greed is gone and common sense prevailed.

Malcolm's picture
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<300k at SB is where you will dinged.  It'll probably go up next yr also.  The big firms nowdays have bulls eyes on their backs so thus compliance is more of a problem.  Yes, it's to protect you but it is most importantly to protect them.  It's over done but it has to be that way right now given they get sued for everything imaginable.
Coming up, time clocks to punch and overtime pay for new hires.
Remember that big upfront check is taxable with an amortization schedule equal to your contract length. THey will take the taxes out of your account once a year.   If you can keep your business going with out dropping much in gross, it's a great thing even with the taxes.  Don't go nuts with the money.  You may need it to sustain your current lifestyle when "probably not if," your biz drops for awhile after the move. 
Your first year pay grid should be negotiated at the the highest payout regardless of your total gross.  After that, you're on your own.

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NASD Newby wrote: Indyone wrote:
OhioAdvisor wrote:...would a fat up front check make up for the loss of Independence?
No.  They don't pull this money out of the air...eventually, they'll get it back on the payout differential...and if you leave early, they'll get it back quicker.
Why would anybody who was making a living leave a wirehouse?  I refuse to believe it is so they can start to pay the matching FICA, pay for their own yellow pads, pay for their own assistant, pay for their own health insurance, pay for their own computer, software and so forth, pay for their own office space, pay for their own furnishings, pay their own phone bill, pay their own postage, pay for their own advertising pieces, pay for their own..........I grow weary.If being independent was attractive the wirehouse stars would have all gone independent.If being independent was attractive the independent B/D management would not be worrying about how to recruit brokers who were worth having instead of simply bodies.The only people who think Indy is better than a wirehouse are those who could not get hired by a wirehouse, or those who were hired by them but were about to be fired for lack of production.It really is that simple, yet that complex.  But think logically--why in the world would a corner office "star" at Smith Barney in, say, Oklahoma City not form his own office and make more money?
Your fist paragraph answered much of the question about why many capable people choose to stay in a wirehouse environment.  Then you go and say something stupid like "The only people who think Indy is better than a wirehouse are those who could not get hired by a wirehouse, or those who were hired by them but were about to be fired for lack of production."  There are about a hundred million-dollar producers at my indy B/D.  It's highly unlikely that any of these folks couldn't cut it at a wirehouse.
You make absolute statements like this instead of saying something like "MANY people who think...".  That's what ruins your credibility and makes you look like a clueless fool.  I would grant you that some independents are independent because they couldn't cut it somewhere else, but it's far from all of us.
Far from cutting me loose, my former employer begged me to stay and discussed stock options and grid improvement if I did.  I chose to leave because I was simply over-managed and fed up with being lied to, and dealing with an ever-changing grid.
What you are saying is kind of like me saying that since an assistant is capable of ordering paperclips, all wirehouse middle managers are just unnecessary overhead and should be fired.

Malcolm's picture
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One other thing.  If you are going to be doing 300kin gross and that is where you will be, I would NOT go to ML or SB.  Your payout will be so low "around 33%" that it doesnt make sense.  You need to get it up to 350k - 400k for it to make sense. 
Also, things just move slower at a wire.  There's channels, procedures etc. that can get frustrating for someone used to quick responsive help.  I share an SA with one other FC but there are guys at around 300k gross sharing an SA here with THREE other FCs. If they'er busy those FCs may have to wait a day or two or longer for something that you are used to getting done in one hour. 
Wires resources go to where the gross producers are dont forget that. Average assets under mgnt in my region are around 80 million and yours probably wont be much different so don't expect to be high up on the totem pole.  

troll's picture
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NASD Advocate wrote: wanda wrote:You may also have less pressure on you from a large compliance bureaucracy.Do you believe that a compliance officer's job is to make the sales force's lives miserable, or to keep them out of trouble?
Obviously their job it the latter, often the way they do it producers the former...

troll's picture
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"...their job IS.."

Mike Damone's picture
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This maybe a naive question, but why do the heavy hitters who you read about in trade magazines (minimum $1 million GDC) work at wirehouses?  Do they have golden handcuffs?  Treated like royalty?  Free afternoon BJs?

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Mike Damone wrote:This maybe a naive question, but why do the heavy
hitters who you read about in trade magazines (minimum $1 million GDC)
work at wirehouses?  Do they have golden handcuffs?  Treated
like royalty?  Free afternoon BJs?

Some have golden handcuffs, but many of them are senior enough that
they could retire--claim the gold.  Stay retired for a year or so
and come back as an "indy."

The reality is that they cannot see the economic benefit.

The typical indy broker underestimates a lot of expenses in order to
justify leaving the safety of a wirehouse.   Generally they
settle for a cheap office (which they pretend their clients don't
notice or care about), they do not mail as aggressively because they
have to pay their postage and buy whatever they're going to mail, they
"watch" their long distance phone calls, they have limited or no
support (many of them have nobody helping them, perhaps a wife or
daughter a few hours a week), they have to get their own technology
(often a TV tuned to CNBC is the focal point), they convince themselves
that their clients do not notice that they wear jeans and golf shirts
because their budget won't allow business suits, they have to pay their
own health insurance so they choose monster deductibles and opt to not
get things like dental coverage.

There is a reason why wirehouses keep so much of the gross--and that
reason is because they have to cover a lot of overhead.  It is not
all evil compliance officers and vice presidents who manage the entire
operation--it's branches and complicated computer networks, it's
clearing fees, it's hundreds of Fed Ex shipments per day, it's a very
attractive health care, it's very attractive 401(k) matches, and on and
on.

Bob Broker, the $1 million hitter in Austin knows that he's giving up a
lot of his gross--but when he looks at all the things that they don't
have to pay for they simply cannot justify making the move.

Most of them will say "I've got a corner office in a prestige
building.  There is a receptionist to greet you if you come to see
me.  I will send one of my three sales assisstants out to show you
back to my office.

When you come in you will be struck by the view.  I'll offer you a
seat on a $1,000 sofa and another assistant will ask if she can get you
something to drink.

They'll also tell you that being a Vice President of Merrill Lynch
carries more prestige than being the "Owner" of "Jones Financial
Planning and Nail Salon, Ltd."

The only reason to not join a wirehouse is because you can't get an
offer from one, and the only reason to leave one is because they're
going to fire you at the end of the year anyway.

Yes the hurdles are high, and yes there are a lot who fail--but it's
the major leagues where the going is always tough and the competition
is always keen.

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Soon 2 B Gone wrote:Mike Damone wrote:This maybe a naive question, but why do the heavy hitters who you read about in trade magazines (minimum $1 million GDC) work at wirehouses?  Do they have golden handcuffs?  Treated like royalty?  Free afternoon BJs?Some have golden handcuffs, but many of them are senior enough that they could retire--claim the gold.  Stay retired for a year or so and come back as an "indy."The reality is that they cannot see the economic benefit.  Bull.  Many can and some actually follow through and leave.  Economic benefit is not the primary reason most leave anyway...it's just kind of an icing-on-the-cake thing.The typical indy broker underestimates a lot of expenses in order to justify leaving the safety of a wirehouse.   Generally they settle for a cheap office (which they pretend their clients don't notice or care about), they do not mail as aggressively because they have to pay their postage and buy whatever they're going to mail, they "watch" their long distance phone calls, they have limited or no support (many of them have nobody helping them, perhaps a wife or daughter a few hours a week), they have to get their own technology (often a TV tuned to CNBC is the focal point), they convince themselves that their clients do not notice that they wear jeans and golf shirts because their budget won't allow business suits, they have to pay their own health insurance so they choose monster deductibles and opt to not get things like dental coverage.  This is so far from my reality that there's no sense in responding.There is a reason why wirehouses keep so much of the gross--and that reason is because they have to cover a lot of overhead.  It is not all evil compliance officers and vice presidents who manage the entire operation--it's branches and complicated computer networks, it's clearing fees, it's hundreds of Fed Ex shipments per day, it's a very attractive health care, it's very attractive 401(k) matches, and on and on.  The reality is that too much of the overhead goes to pay the bloated salary of the vice president of paperclips...who spends the excess time after the paperclips are ordered for the week to dispense unwanted and unsolicited advice to any office employee who makes the mistake of slowing down when they see his wake.Bob Broker, the $1 million hitter in Austin knows that he's giving up a lot of his gross--but when he looks at all the things that they don't have to pay for they simply cannot justify making the move.  Sure they can...were you always this poor at math?Most of them will say "I've got a corner office in a prestige building.  There is a receptionist to greet you if you come to see me.  I will send one of my three sales assisstants out to show you back to my office.When you come in you will be struck by the view.  I'll offer you a seat on a $1,000 sofa and another assistant will ask if she can get you something to drink.  A Pepsi on a thousand dollar sofa sounds pretty cheesy to me...how long has it been since you bought any furniture?  Oh that's right...you never got promoted beyond paperclips.They'll also tell you that being a Vice President of Merrill Lynch carries more prestige than being the "Owner" of "Jones Financial Planning and Nail Salon, Ltd."  That depends upon who you ask.  Did you tell anyone that it was vice president of paperclips?The only reason to not join a wirehouse is because you can't get an offer from one, and the only reason to leave one is because they're going to fire you at the end of the year anyway.  Right...you just stay there in fantasyland sipping your Pepsi on your thousand dollar couch and convince yourself that people like Ron Carson are just in your imagination.Yes the hurdles are high, and yes there are a lot who fail--but it's the major leagues where the going is always tough and the competition is always keen.  You know nothing of the major leages...you haven't produced for thirty years.
By the way...nice name...but it can't come soon enough for me.

Soon 2 B Gone's picture
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Indy, did you leave a wirehouse--or are you one of those who was never offered a slot in the major leagues?

Soon 2 B Gone's picture
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Ron Carson is an example of the exception to the rule.  For every guy who left a wirehouse there are hundreds who stayed.

None of them are fools.

Why do you think the biggest concern in the world of independent B/Ds
is how to attract quality producers instead of simply gathering bodies?

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Soon 2 B Gone wrote:Indy, did you leave a wirehouse--or are you one of those who was never offered a slot in the major leagues?
I know you'll find this hard to believe, but I've never lived or worked any closer than 50-60 miles of a wirehouse office, and thus, I've never approached a wirehouse office about a position.  Had I wanted to work in a wirehouse office, I'm confident that I could have gotten an offer if I'd sought one.  Part of being successful is having a feel for the optimum environment for personal success and I've never felt like the wirehouse was best suited for me personally, thus I've never pursued it.  That's hardly equivalent to being turned down as you like to insinuate.

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Soon 2 B Gone wrote:Ron Carson is an example of the exception to the rule.  For every guy who left a wirehouse there are hundreds who stayed.None of them are fools.
I'm not calling those who stay fools, but neither should you label those who leave as washouts.  I also don't believe your "For every guy who left a wirehouse there are hundreds who stayed." comment.  Prove it.  I know one thing for certain...independents sure aren't joining wirehouses, even though plenty of them could.

Greenbacks's picture
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I had a client in yesterday 27 million if I would have a three piece suite on and asked her to sit on a $1,000 sofa she would not be my client. Clients see all that waste! And they know who is paying for it!
I do not wear jeans but if clients had to choose between a suite and jeans they would perfer I would dress in jeans. No question about it!
Please note that I am in a small CO ski town and not NY.

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If I had to choose between a suite and jeans I'd choose jeans too--when you put a suite on you look so big and boxy.

I used to own a ski rental shop in Breckenridge.  I know about ski towns.

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One other  note.
I would take my view of the snow capped rockies & CO blue sky, over any NY smog filled view of a sky scrapper any day!

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Was Sanford and Son a sky scrapper?

As for smog.  New York City is not a smoggy place.  It's the city so nice they named it twice.

JCadieux's picture
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Indyone wrote:I know one thing for certain...independents sure aren't joining wirehouses, even though plenty of them could.Sorry, IndyOne.  I've talked to a lot of independents who want to return to wirehouses.Some are escaping from bad partnerships.  Some have seen their production plummet for whatever reason.  Most underestimated the overhead costs and the hassles of managing a heavily regulated business.  I also hear a lot of complaints about clearing firms.Significantly, almost all of them commented on the value of a wirehouse brand.Several of these candidates have placed.  But many of them have broken their practices beyond repair.I'm not claiming that everybody is unhappy.  I know another recruiter who helps people go indy.  He has many happy clients.  So do I.Certain people on this forum get mad at me when I suggest that the world is not a series of binary value judgements.  That won't change reality.  Some people are happier owning a small firm.  Others are happier working with a major brand.Like Strauss said:  "Chacun à son gout."   (To each his own.)

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Soon 2 B Gone wrote:If I had to choose between a suite and jeans I'd choose jeans too--when you put a suite on you look so big and boxy.
Now, that's funny.   Suite    Suit 

Indyone's picture
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JCadieux wrote:Indyone wrote:I know one thing for certain...independents sure aren't joining wirehouses, even though plenty of them could.Sorry, IndyOne.  I've talked to a lot of independents who want to return to wirehouses.Some are escaping from bad partnerships.  Some have seen their production plummet for whatever reason.  Most underestimated the overhead costs and the hassles of managing a heavily regulated business.  I also hear a lot of complaints about clearing firms.Significantly, almost all of them commented on the value of a wirehouse brand.Several of these candidates have placed.  But many of them have broken their practices beyond repair.I'm not claiming that everybody is unhappy.  I know another recruiter who helps people go indy.  He has many happy clients.  So do I.Certain people on this forum get mad at me when I suggest that the world is not a series of binary value judgements.  That won't change reality.  Some people are happier owning a small firm.  Others are happier working with a major brand.Like Strauss said:  "Chacun à son gout."   (To each his own.)
Jeff, I'm not disagreeing with you...I should have qualified my statement by saying "for the most part" or something similar.  What I took issue with was "For every guy who left a wirehouse there are hundreds who stayed."  The insinuation is that virtually no one leaves a wirehouse to go independent, and that's just baloney.  I would further say that if the statistics are known (and someone probably has them), I would bet that there are far more people going from a wirehouse to an independent practice than vice-versa...just a hunch I have.
You've outlined several good reasons to go the wirehouse route, and I'm not here to tell you that you're wrong...you're not.  Neither am I.  Some people are better suited to the wirehouse model and some like me, are clearly better suited to the independent model.  What I'm here to combat is the statement that only washouts and never-weres go the indy route, and virtually no one at a wire would consider going independent.  That's just inflammatory baloney and Put Easy knows it.  Chacun à son gout back at you...

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No, what I've said is that virtually nobody who is a star at a wirehouse will bother to leave.

There are lots of mediocre brokers who leave rather than get shoved, or who get shoved and go the independent route.

Like Jeff I too have seen a lot of people returning to wirehouses after
flirting with the idea of being independent and realizing that it's a
mirage.

You have said you have never lived or worked within sixty miles of a wirehouse.  Does that mean you do not have a formal education?

Seeker15's picture
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JCadieux wrote:Indyone wrote:I know one thing for certain...independents sure aren't joining wirehouses, even though plenty of them could.Sorry, IndyOne.  I've talked to a lot of independents who want to return to wirehouses.Some are escaping from bad partnerships.  Some have seen their production plummet for whatever reason.  Most underestimated the overhead costs and the hassles of managing a heavily regulated business.  I also hear a lot of complaints about clearing firms.Significantly, almost all of them commented on the value of a wirehouse brand.Several of these candidates have placed.  But many of them have broken their practices beyond repair.I'm not claiming that everybody is unhappy.  I know another recruiter who helps people go indy.  He has many happy clients.  So do I.Certain people on this forum get mad at me when I suggest that the world is not a series of binary value judgements.  That won't change reality.  Some people are happier owning a small firm.  Others are happier working with a major brand.Like Strauss said:  "Chacun à son gout."   (To each his own.)No offense Jeff but wirehouses have the capital to pay recruiters and make the best upfront deals. So you might have a little more self-interest involved than objectivity. Even with this they are slowly losing the head count wars and for good reason. If you are a young person you build equity and if you are an older person you don't need foolish short-term clowns like NASD "Oldie" getting paid to tell you platitudes (that are false/dated for the most part) from your revenue.The fact that the major firm pay their people on "gross credits" which could be anything the firm decides is the first clue as to why you should go independent if you have no special reason to be at a better capitialized sweatshop. This is essentially a fraud activity by the way, but since it done to producers and not the public directly the NASD has nothing to say about it. As if this doesn't trickle down to the customers by creating the sleazy cut-throat wire-house dominated industry?Sure, if you are being offered accounts or access or other special capital resources (wirehouses are filled with cronyism for the few) it might make sense to join a  bank or wirehouse. The rule going in of course if 90-95% of the hires at large firms are fertilizer for larger interests right from the start. The retension raters speak for themselves and even if you succeed and get a reasonable advantage from big-eating-small culture you will always pay the premium for the opportunity.For the average person (client or broker), independent is better. The real discussion should be about which independent firms are closet wirehouses themselves and explore why brokers can't be regulated independent of the sleazy NASD firm system all together. Consumers and brokers win in that model and the wirehouse would vanish or reform themselves to a point your wouldn't recognize them from today or the recent 50 years.If I valued a recruiter it would be one that is closer to a brokers agent rather than a paid tool for a wirehouse or banks interest. This requires a higher level of skills than most recruiters have and a better system than exists today to support such a model. Brokers would be better off if they paid their agents directly rather than get a constant stream of snowjob from corporate recruiters who mosly represent a middle management systems that would be unemployed quickly in a free advisor system I've discussed.For the person who started this thread; you do better than any of the choices you mentioned.

Soon 2 B Gone's picture
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Joined: 2006-09-27

I've been in the business for thirty five years and I cannot understand a thing you're saying.

Indyone's picture
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Joined: 2005-05-30

Soon 2 B Gone wrote:No, what I've said is that virtually nobody who is a star at a wirehouse will bother to leave.There are lots of mediocre brokers who leave rather than get shoved, or who get shoved and go the independent route.Like Jeff I too have seen a lot of people returning to wirehouses after flirting with the idea of being independent and realizing that it's a mirage.You have said you have never lived or worked within sixty miles of a wirehouse.  Does that mean you do not have a formal education?
Yes, I have a bachelor's degree from a state university, and yes, there was a wirehouse office in that city.  Mea culpa.  I wasn't looking for a job in this industry at that time as I was an accounting major.  SINCE college, what I said is 100% true...I'm not a big city type person.
I don't believe anything you say about career migration...your views are as biased as anyone's.  I'll bet when the objective numbers are in, more quality advisors are going from wirehouse to indy than vice versa.  The only thing I'll give you is that the majority of quality brokers don't migrate either direction.  If anything, they may change firms, but most probably stay in the same channel due to comfort and familiarity issues.  Quite opposite of what you've said, I've met a lot of quality brokers who went wirehouse to indy and are doing very well for themselves, and again, I'm willing to bet that absolute quantity aside, more are coming my way than are going yours.

Soon 2 B Gone's picture
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Joined: 2006-09-27

Indyone wrote:I don't believe anything you say about career
migration...your views are as biased as anyone's.  I'll bet when
the objective numbers are in, more quality advisors are going from
wirehouse to indy than vice versa.  The only thing I'll give you
is that the majority of quality brokers don't migrate either
direction.  If anything, they may change firms, but most probably
stay in the same channel due to comfort and familiarity issues. 
Quite opposite of what you've said, I've met a lot of quality brokers
who went wirehouse to indy and are doing very well for themselves, and
again, I'm willing to bet that absolute quantity aside, more are
coming my way than are going yours.

I agree my views are biased, so are yours.

I am not saying, and I don't think Jeff is either, that there are more
brokers fleeing the world of the independent to return to a wirehouse.
The reason is because most of the independents who were once at a wire
were going to wash out if they didn't become an independent.

Remember, I spent more than twenty years reading, often writing,
reports about what was happening in my firm and in the industry.

I also know that managers in the independent channel are extremely
frustrated by the fact--as in FACT--that virtually everybody they
recruit is a cast off from a bank or a wirehouse.

I'll bet that when the biggest hitters at LPL first joined LPL they
were about to fail at a wirehouse--they bought themselves more time and
capitalized on it in spades.  Good for them--occasionally that is
exactly what is needed, more time.

I know that a major fault with the wirehouse model is the willingness
to cut somebody free who might be a "late bloomer," but the approach
has worked well overall.

You are in the position of defending your decision, yet it was the only
decision you could make.  That hardly makes you an impartial voice.

On the other hand I have no dog in this fight at all.  I can tell
you that if you were not afraid to live in a town large enough to have
wirehouses that you would make more money and have the joy of belonging
to a team of guys and gals who are fighting a common battle.

Sole proprietorships are not all they're cranked up to be.  There
are a lot of guys and gals who would trade the abilty to show up at
"the office" in their pajamas for the enjoyment of having somebody
across the way come and tell you a joke or ask if you've got time to
run over to Subway and chat over lunch.

Indyone's picture
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Soon 2 B Gone wrote:I agree my views are biased, so are yours.  At last we have a civil debate.  Yes, my views are naturally biased, although I've said several times, that I don't fault anyone for choosing to stay at or go to a wirehouse...it's simply a different career path. (I stand by my signature line, though)I am not saying, and I don't think Jeff is either, that there are more brokers fleeing the world of the independent to return to a wirehouse. The reason is because most of the independents who were once at a wire were going to wash out if they didn't become an independent.  I won't argue that point...I simply don't have sufficient knowledge to say one way or the other.Remember, I spent more than twenty years reading, often writing, reports about what was happening in my firm and in the industry.I also know that managers in the independent channel are extremely frustrated by the fact--as in FACT--that virtually everybody they recruit is a cast off from a bank or a wirehouse.  Well, I was far from a cast-off, but again, I don't have anything except the anecdotal evidence from discussions from my recruiter, who had some wirehouse recruits, but by far and away in his midwest territory, his bread and butter was Edward Jones veterans.I'll bet that when the biggest hitters at LPL first joined LPL they were about to fail at a wirehouse--they bought themselves more time and capitalized on it in spades.  Good for them--occasionally that is exactly what is needed, more time.  That would surprise me, but again, I haven't taken time to conduct a study to determine if his were true.  The million dollar producers I spoke to sure seemed to have it figured out and it's hard imagining that any of them were ever on the verge of failure, although I'll allow that I didn't ask that question.I know that a major fault with the wirehouse model is the willingness to cut somebody free who might be a "late bloomer," but the approach has worked well overall.  That certainly seems plausible as publicly-traded companies by focusing on earnings would not have the luxury of waiting out the late bloomers.You are in the position of defending your decision, yet it was the only decision you could make.  That hardly makes you an impartial voice.  Well, although a wirehouse option wasn't available, I didn't make the only decision I could have made.  I could have suffered through the management stupidity where I was, gone to Edward Jones, Ameriprise, or another bank.  Well, on second thought, you might have a point on that one...On the other hand I have no dog in this fight at all.  I can tell you that if you were not afraid to live in a town large enough to have wirehouses that you would make more money and have the joy of belonging to a team of guys and gals who are fighting a common battle.  I think you have a mental dog in this fight.  You're proud to have worked for a wirehouse and over the years of looking through wirehouse glasses, you've come to the conclusion that they are far and away the best option.  Having not worked in that environment, I don't have that same bias.  I wouldn't class myself as "afraid" to live in a larger town...it's simply not my preference.  I'm happy to make the 90-minute drive to visit, but I don't want to live there.  No doubt I would gross more in a wirehouse setting.  The jury is still out as to whether I would net as much (I'm thinking no since I would have to nearly double my gross and I'm not sure if I'd want to work hard enough to do that).  Certainly, the "team" feel is not what it is at a wirehouse, and that's the complaint I hear as much as anything, but I'm more of a lone wolf anyway...not anti-social, but I don't crave company as much as others I've worked with.  Several of us new indies have established a network to shoot the breeze occasionally, but certainly, it's not on the level of a wirehouse or superregional office setting.  At the same time, it's a very small factor in my personal job satisfaction.Sole proprietorships are not all they're cranked up to be.  There are a lot of guys and gals who would trade the abilty to show up at "the office" in their pajamas for the enjoyment of having somebody across the way come and tell you a joke or ask if you've got time to run over to Subway and chat over lunch.  Well, other than my nine to midnight laptop work in front of the tv, I don't work in my PJs, and I do have a professional office.  The furniture in my office alone was over $12K and I have the best desk chair I've ever sat in (a La-Z-Boy Horizon, if you're curious).  I have the comraderie of the employees in the accounting office and I make it a point to eat out routinely with either someone from the office, a customer/prospect, or another local professional (and yes, I go to lunch with several of my competitors on occasion).  Honestly, I think I have a pretty nice set-up, but I will allow that many indies live a pretty quiet life.
You must be in a good mood today...

JCadieux's picture
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Joined: 2005-01-23

Seeker15 wrote:

No offense Jeff but wirehouses have the capital to pay recruiters and make the
best upfront deals. So you might have a little more self-interest involved than
objectivity.

<>

If I valued a recruiter it would be one that is closer to a brokers agent
rather than a paid tool for a wirehouse or banks interest.

I'm pretty open about my status as a recruiter.  My advice should be taken
in context, because my fees are paid by the hiring firms.  Then again, it
works the same way for my friend who recruits for independents.

Any brokerage would pull my contract if I did not consistently produce win-win
placements.  My job is to find a match, no matter who pays my fee.Successful brokers are very sophisticated and accomplished salespeople.  You can see a sales job coming a mile away.  The only way to succeed as a broker recruiter is to help both sides understand one another.  We make the decision making process more efficient for both the hiring manager and the candidate.
I stand by my record.  And I resent being called anybody's tool.

rightway's picture
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Joined: 2004-12-02

I have seen many people come into our complex from Indy, Banks,
regionals, and Wires.  Our average production is about 750k per
rep in the office.  Everyone is pretty happy.   Most people
that come in did less that that prior, but in a very short time they
are there.  I don't know what it is but it happens.  Maybe I
am just dumb, but I like what I see and succes builds success. 
Our complex and our firm represents the very top of this business and I
am proud to serve my clients as I do, at the firm I am with, adn the
manner in which they support.  If it changes, I will consider a
change but now?  Its just fantastic.  

Helter Skelter's picture
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Joined: 2006-09-19

JCadieux wrote:
Seeker15 wrote: No offense Jeff but wirehouses have the capital to pay recruiters and make the best upfront deals. So you might have a little more self-interest involved than objectivity. <>If I valued a recruiter it would be one that is closer to a brokers agent rather than a paid tool for a wirehouse or banks interest. I'm pretty open about my status as a recruiter.  My advice should be taken in context, because my fees are paid by the hiring firms.  Then again, it works the same way for my friend who recruits for independents.Any brokerage would pull my contract if I did not consistently produce win-win placements.  My job is to find a match, no matter who pays my fee.
Successful brokers are very sophisticated and accomplished salespeople.  You can see a sales job coming a mile away.  The only way to succeed as a broker recruiter is to help both sides understand one another.  We make the decision making process more efficient for both the hiring manager and the candidate.
I stand by my record.  And I resent being called anybody's tool.

Jeff, you're not anybody's tool. Everybody's tool? Sure, but not anybody's tool.

Seeker15's picture
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Joined: 2006-06-20

I stand by my record.  And I resent being called anybody's tool.

Jeff, you work for firm fees in the same way real estate brokers work for the most part work for property owners. Investment Brokers (IBs) are like potential property buyers and both (IBs and property buyers talking to selling real estate agents) would be very foolish to forget  that people represent who pays them.This is reality in the dealer system; Your clients are the firms and brokers themselves are items to be processed by firms.All I stated Jeff is that in a better system you would be a paid agent of producers and compliance would not be tied to firms. Similar to the RIA model but extended to commission activity.You should embrace my point since you would benefit, if you used a higher skill level that would required in an open producer system apart from dealer captivity. The current system isn't good for producers, the public or in fact potential broker agents who are captive themselves. Of course you are firm tool in the current system. This is an abstact reality in the same way you might say I'm a client or dealer tool, while truthful there was no malice in my statements of fact. You consult for a fee to security firms and the individual brokers interests often are secondary when the actual process is going on.Would you recruit the same broker twice from the firm you represent? 

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Jeff's clients may be the firms but he has to ensure that the brokers he places are well suited to that firms environment.  If he simply pushes reps at firms where they're unsuitable those firms won't accept his candidates anymore.
And to say that the current system isn't good for producers is ludicrous (sp?).  What's good for producers is that there is a large variety of career paths in the Financial Services industry.  Wirehouses, Regionals, Banks, Indy's, RIA's, Insurance B/D's all have their place.  Advisors thrive under different models, so the more options there are the better off people will be.

Seeker15's picture
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FreedomLvr wrote:Jeff's clients may be the firms but he has to ensure that the brokers he places are well suited to that firms environment.  If he simply pushes reps at firms where they're unsuitable those firms won't accept his candidates anymore.
And to say that the current system isn't good for producers is ludicrous (sp?).  What's good for producers is that there is a large variety of career paths in the Financial Services industry.  Wirehouses, Regionals, Banks, Indy's, RIA's, Insurance B/D's all have their place.  Advisors thrive under different models, so the more options there are the better off people will be.Before using a word like ludicrous you might consider some facts;Must doctors, lawyers or accountants be registered as employees by definition to collect particular fees?? How do you think they would feel being forced to be "employees" while they take on potentially every other business risk and expense?Brokers are designed scapegoats, subjected to scaled legal and management system that is highly exploitive. Look at the turnover rates, litigations and conflicts and even judge your trade publications. It's all about conflict and unhappiness on a large scale. Look at these boards.I haven't said anything negative about Jeff, I've simply pointed out reality among the twaddle sales pitch that recruiters paid by firms are even handed brokers in a human resource function. As for the industry from the brokers view the risks and potential abuse has never been greater and you live in dreamland if you think firms aren't the ones lighting the fires they get paid to put out.  Their own gratious posturing in the regulatory process is pathetic. Licenses free of firms would be much better progress and phony qualities of luke warm "independence" of today. 

JCadieux's picture
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Seeker15 wrote:
JCadieux wrote:
I stand by my record.  And I resent being called anybody's tool.

You should embrace my point since you would benefit, if you used a higher skill level that would required in an open producer system apart from dealer captivity. If you feel that an employee-paid recruiting firm would do well, then feel free to open your own business.

BrokerRecruit's picture
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Joined: 2005-04-19

The recruiting industry used to be funded by CPFs (candidate-paid fees).  Alan Shonberg, founder of MRI was one of those that helped change the way in which the industry functioned and now it is driven by EPFs (employer-paid fees).
Obviously each recruiter will have their handful of key accounts that they will work on that can serve as a "cash cow".  Most of these instances are built by relationships.  I, too, have worked for wirehouses, regionals and independents.  While I worked for Smith Barney, for example, I have found that it is not the right fit for everyone and only represent a handful of offices (3-4) throughout the country where I feel there is a good relationship and I'm not telling a story about Smith Barney, but a story about a specific office or branch manager. 
Our group has been around for 37-38 years and we have had many relationships throughout the industry that we have maintained throughout that time.  While I think that it is helpful to have key accounts, it is such an advisor-driven business in this day and age (with all of the players in the industry looking for the same producers) that I think recruiters can't ignore the needs of a specific advisor and understand that they may not be buying what we're selling. 
Personally, I try to find out what it is that an FA is looking for to see what firm/office may be the best fit for them.  If that is a client of mine, great.  If not, I may have a relationship with another firm/office that they may be a better fit with.  My career is built by maintaining relationships, much like an FA.  If I simply try to slam a square peg in a round hole all day, I will not be successful.
When I am working with my mutual fund managers/analysts, for example, I will take a strong candidate into the marketplace (with their permission, of course) to try to find them the right opportunity as opposed to simply selling them on what I'm working on today.  It keeps a constant flow of new client acquisitions coming across my desk and I'm still able to recruit on the open positions I have with other clients.
Each industry and recruiter is different.  I tend to agree with both Jeff and Seeker that you have to be a consultant for not only the client, but the professional that you are working with, and that may require taking that info out into the marketplace and seeing what else may be the right opportunity for them.

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