Does size matter?

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OldDog's picture
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Joined: 2005-07-21

Looking for some info here. We all know that if someone changes firms only for the biggest up-front deal they're asking for trouble. That said, recruiting firms salivate over people who say they're looking for the right fit, not the biggest deal- not only because that may be a good recruit but because they might save themselves some bucks as well (ok, call me cynical.)
That said, what do the deals look like now? I've been hearing that in the $500,000 plus range a minimum expectation is 1X gross, and that at least one firm is offering 1.8X gross or more. It's hard to imagine paying that much without decimating the office P&L, but who knows? Any experience out there in this area?
Also, if one goes indy, is there any assistance in terms of funding start-up expenses, etc? It would make sense that in going indy one mightn't expect much (if anything) in the way of an up-front payment.
On the other hand, if firms are actually paying 1.8X revenues to recruit an employee then why should anything else make sense?

peanutbroker's picture
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Joined: 2006-04-06

Good questions OLD Dog...I am curious to read posts.

Indyone's picture
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Joined: 2005-05-31

I haven't checked since I jumped ship last year, but the deals for indys at RJ/LPL ranged from 3-5% of trailing 12 for start-up costs plus an optional loan for 10% of trailing 12...interest-free for 3-6 months.
I was always suspicious of big up-front deals and viewed it as a form of indentured slavery.  One way or the other, your new firm will find a way to get that money back from you...I'll never believe otherwise.
Good luck, OldDog...let us know what you end up doing...

BrokerRecruit's picture
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Joined: 2005-04-19

OldDog - MS is offering the biggest deals I've been seeing out there at almost 200%, but it is a graduated structure so that it doesn't kill the P&L.  It will usually be for $1M+ producers and be 100-120% up-front, plus additional payments made annually to get to that figure.  UBS has a similar structure.  SB, ML and Wach are all still doing the standard deal for the most part (with some exceptions, of course).  The big difference with SB is that their deal is over 7 years. 
Now, if you're looking at getting 200% up-front, I brought someone to SB a few years back who was doing $750k and did get a 200% up-front check, but they signed him on for 14 years!
Independents will have their standard deals as well.  Indy is pretty accurate in his stats with LPL/RJ.  There are others that will customize a deal for you and some will even make it a forgivable if you are a big enough hitter (big fish, small pond type of scenario). 
There are even a couple that will sign you on as an indy, but reduce payout to 40-50% for the first year, but cover all expenses and give you a 10% bonus.  After the first twelve months expire, you then go to the higher indy payout and begin covering expenses.  It's a great way to go if start up costs are a concern.
PM me if you need any specifics.

troll's picture
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Joined: 2004-11-29

OldDog wrote: I've been hearing that in the $500,000 plus range a minimum expectation is 1X gross, and that at least one firm is offering 1.8X gross or more. It's hard to imagine paying that much without decimating the office P&L, but who knows?
I couldn't swear to it now, but I know at times the recruiting money hasn't come from the office itself, and didn't count against the office's P&L, as the source was national.

BrokerRecruit's picture
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Joined: 2005-04-19

I believe that ML has it come from a nationalized budget while SB, for example, sees that hitting the branch. 

Incredible Hulk's picture
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Joined: 2006-03-24

BrokerRecruit wrote: OldDog - MS is offering the biggest deals I've been seeing out there at almost 200%, but it is a graduated structure so that it doesn't kill the P&L.  It will usually be for $1M+ producers and be 100-120% up-front, plus additional payments made annually to get to that figure.  UBS has a similar structure.  SB, ML and Wach are all still doing the standard deal for the most part (with some exceptions, of course).  The big difference with SB is that their deal is over 7 years. 
Now, if you're looking at getting 200% up-front, I brought someone to SB a few years back who was doing $750k and did get a 200% up-front check, but they signed him on for 14 years!
Independents will have their standard deals as well.  Indy is pretty accurate in his stats with LPL/RJ.  There are others that will customize a deal for you and some will even make it a forgivable if you are a big enough hitter (big fish, small pond type of scenario). 
There are even a couple that will sign you on as an indy, but reduce payout to 40-50% for the first year, but cover all expenses and give you a 10% bonus.  After the first twelve months expire, you then go to the higher indy payout and begin covering expenses.  It's a great way to go if start up costs are a concern.
PM me if you need any specifics.

Point #3 -

"PM me if you need any specifics" -

Looks like you're soliciting to me Mr. Ambulance Chaser.

BrokerRecruit's picture
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Joined: 2005-04-19

PM OldDog and ask if he knows me, moron, and he will tell you that he does. 

troll's picture
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Joined: 2004-11-29

Incredible Hulk wrote: BrokerRecruit wrote: OldDog - MS is offering the biggest deals I've been seeing out there at almost 200%, but it is a graduated structure so that it doesn't kill the P&L.  It will usually be for $1M+ producers and be 100-120% up-front, plus additional payments made annually to get to that figure.  UBS has a similar structure.  SB, ML and Wach are all still doing the standard deal for the most part (with some exceptions, of course).  The big difference with SB is that their deal is over 7 years. 
Now, if you're looking at getting 200% up-front, I brought someone to SB a few years back who was doing $750k and did get a 200% up-front check, but they signed him on for 14 years!
Independents will have their standard deals as well.  Indy is pretty accurate in his stats with LPL/RJ.  There are others that will customize a deal for you and some will even make it a forgivable if you are a big enough hitter (big fish, small pond type of scenario). 
There are even a couple that will sign you on as an indy, but reduce payout to 40-50% for the first year, but cover all expenses and give you a 10% bonus.  After the first twelve months expire, you then go to the higher indy payout and begin covering expenses.  It's a great way to go if start up costs are a concern.
PM me if you need any specifics.

Point #3 -

"PM me if you need any specifics" -

Looks like you're soliciting to me Mr. Ambulance Chaser.
So what if he is?Seems to me you jones boys spend most of your daylight hours soliciting folks door to door......but when BR does it's bad?  Hmmm......

OldDog's picture
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Joined: 2005-07-21

I do know BR. He is not overbearing like many in his business. I value his insight and knowledge.
Back to the topic at hand- if anyone has any information, specifically, about what kinds of deals are around, please let us know.

BrokerRecruit's picture
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Joined: 2005-04-19

Thanks, OD.  I appreciate the back-up.

Biasedrecruiter's picture
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Joined: 2006-04-04

I would like to add my 2cents worth to BrokerRecruit.
The best offer I have seen recently from Smith Barney for producers in the $500K to $700 range is 150%.
Nine year deal.
100% upfront cash.
 
After 14months up to  50% in Citi stock based on assets moved.
 
Smith Barney is currently in negotiations with a number of $1million + producers with offer of 180%. 120% Cash upfront.
 
Morgan Stanley appears to be best on the street especially for producers doing $1million and fee based.
 
Wachovia Independent had a big push end of last year. They offered 50% of Trailing 12 in upfront cash for producers doing $1million.
 
The above I know to be true not just talk.

Ready2Jump's picture
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Joined: 2006-05-30

Man, I need to get to $1M...

BrokerRecruit's picture
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Joined: 2005-04-19

Thanks for the backup.  I haven't recruited on the wire side in a while, so most of mine was estimation.  MS is still continuing to blow the other offers out of the water.

Biasedrecruiter's picture
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Joined: 2006-04-04

Smith Barney deals are about to get better!!!
 

BrokerRecruit's picture
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Joined: 2005-04-19

They need to.

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