Jones to RJFS --THANKYOU!
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Oh Great, here we go again…I’ll bite, as usual…
Interesting thing about RayJay, many of their brokers work from home or out of a bank. I've got 3 RayJay bank brokers working for chop-shop local banks in my town. Been smeared by the whole Dennis Hurkula scandal as well. Funny how cuts in annuity payouts have pissed off their brokers. Why is it the median production at RayJay 100k?, lots of poor producers bring down the median....and I've brought over a ton of RayJay accounts so I know the quality of advice I'm seeing. On the RIA side, how about both sides of FICA? Affiliation fees? ticket charges? paying for assistant and her health care? Under 400k production it doesn't make sense. Over 400k, it makes great fiscal sense. The grass is always greener on the other side. Funny how every independent advisor is always hitting the ball out of the park. All I hear is, "I can't believe I didn't make the change earlier", or "My business has grown so much since I went independent", or "I can make so much commission on private reits, leasing contracts, and other non-coorelated assets, so I work half as much". Interesting thing though, is with most independents, their production is a joke. Why do you think the median gross at RayJay & LPL is around 100k? Why is it the last guy who was "balling out of control" when he went indy (RayJay) in my region ended up working for his dad in private real estate development (Oops!)? Another guy in a town near mine ended up working at LPL out of his home, his parents stopped my office and said they were excited because their son just picked up a used 1998 Lexus, his first "new" car in a decade. I know people like Zacho can buck the trend, but most don't. My buddy has his Jones office in another state. An independent broker that works in the same office complex keeps trying to get him to move, RayJay if I'm not mistaken. My buddy was talking to the indy one day, and told the indy he was averaging around 500k/month in new assets. The indy told him, "that's it, I've been averaging twice that, and I've been doing this almost 20 years." Turns out the guy manages less than 25 million and grosses less than 200k. Seems as though everyone that's indy has something to prove, I don't really get it.That being said, if I ever got pissed, I'd be at LPL or RayJay in a heartbeat.
[quote=iceco1d] Rank,The number you quote for RayJay counts all of their channels. Mind you, they have employee channels where they train newbs with $0 in production, just like EDJ or MER does. For the INDY RayJay model, you can’t join as your own OSJ without something like $250K T12. If you guys notice, most of the “Indy” guys on here, are their own OSJs (whereas, I’m at an Indy office, but I get my supervision from someone else because I don’t have an S24).Now, mind you, I started out fresh in the channel I’m in. $0. No salary. No benefits. I had to pay for all of my testing, licensing, E&O, etc. from the start. Do you think having a guy like me on board lowers the mean and median production at my b/d? I bet it does. Guys like me aren’t on here talking about “Whoa, the difference is sick!” The guys on here talking about being Indy vs somewhere else, have actually been somewhere else. In any case…I know you (rank) post a lot about Indy guys “working out of their car” - but seriously? You have some wierdos in your area I think. But of course, ALL of those people have to be Indy…where else can they go? certainly not MER. EDJ isn’t going to build out an office for a guy that wants to work 10 hours a week. And even still…how about that? Isn’t it refreshing to know that these control their own destiny to such a degree that if they basically want to work 1 day per week, they can make that call? If they don’t want to have an office. If they want to manage $14MM from home, and net $100K a year to work 10 hours a week, they are freet to do so. On the other side…what’s this discussion of AMT? Foot, can you quantify exactly the reasons you personally would be on the hook for AMT? I’m not saying that you don’t actually pay it…I’m saying, that it’s my understanding that it’s not simply related to your income, and you’re making it out as if that’s the case…
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you in no way control your destiny. your firm will slash your payout at the first chance they get. they will change the rules.you are srcewed.ban my ip good luck it’s not gonna happen. you are a twenty eight loser. get a life
A few facts:
Breakeven (in other words netting a 40% “payout”) happens for me at about 16k-17k gross/mo. Annualized that’s 200k/yr. Not sure where the 400k calculation comes from. Above assumes about $6,000/mo overhead, which will vary.
My portfolios look very similar to what they did at Jones except I receive an advisory fee now and can use some satellite funds or products where appropriate without the need to justify why I’m not hitting a breakpoint.
RJFS does compliance, unless you are an RIA. I think many here with RJFS have RJ do their compliance. It is similar to Jones standards, in some caces easier, in some caces more difficult.
AMT is calculated when someone has wage income and high deductions. A business owner nets his or her expenses from gross revenue for a net revenue figure, which then becomes his or her wage income for tax purposes. This is why a Jones employee has far more potential to hit AMT.
RJ does not allow branches to run from a home location. It’s their mandate.
Do not confuse RJA (described above-employee division) with RJFS.
Rank, in defense of the indy numbers, there are a lot of indy “producers” that are really just licensed assistants, CPA’s, attorneys, insurance agents, etc where brokering securities is not their only or primary revenue source. So using the “average” production numbers is not really relevant in the indy world. Just like the RIA world. There are lots of RIA’s out there that generate very little in AUM fees, but derive revenue from other sources (this again is typical with attorneys). Because if you are going to throw the “average” numbers out there, you have to throw in American Funds, PIMCO, First Eagle, Fidelity, etc. into the mix. They are, after all, RIA’s.
To be honest, I think the "working out of their garage" thing is also overblown. Yes, the indy channel is home to many lowly producers. Guys that would have been fired at any captive firm they were at. They are holding on simply because they can meet the indy minimum at their current firm. And I don't think production should be the benchmark. I have one friend in particular that is an RIA. He does about 250K in production, has about 40 clients. Has a very nice (small) office in a nice part of town. It's much more attractive than many of the Jones "Subway shop" offices I see. No assistant (doesn't need one). He nets just over 200K. That's after everything other than personal income taxes. He works maybe 25-30 hours per week just managing money. Loves his job, loves his life. Doesn't take any new clients under 500K. So he's a small, indy producer, netting about as much as a 450-500K producer at Jones, with a MUCH easier lifestyle and work life. I'm just not sure how that qualifies as a bad thing. Just saying. On the other hand, my regional leader grosses about 450-500K, has over 1,000 households and about 85mm AUM. Took him 10 years to get to that (he just started as RL). You know how much work that took to get there? I know you do. Most people just don't want to work that hard for that long. And then you have to manage 1000 households. Our former RL has about 1500 housholds and 175mm AUM. The guy grosses about 850K (plus lots of SLP and LP). 18 years in. Won't even take a day off to go golfing. Too much to do. Too many calls to make. Works about 45 hours a week. He's a "stockbroker". But he makes a lot of money. If I laid out all these scenarios in front of someone, which one do you think they would pick? Just saying. I'm not sure how many successful indy advisors you know, but a I know several, and I would consider them all successful in many ways.I can't speak for Ray Jay, but as an LPL rep, they have 12K reps and gross roughly half of Jones reveunes. I think LPL had revenues of 2.5B last year. To be your own OSJ you have to have at least 125K gross...not very much. Half as much as Ray Jay. So it wouldn't suprise me if 30-40% of the reps were less than 125K.
My hat's off to guys like Rank who have done it themselves (I believe that to be the case). B24's point should be reitereated. Which is better? A rep who grosses 500K and NETS 200K vs. a rep who grosses 300K and NETS 200K. I realized long ago, for me, scenario 2 was the right option. By the way these are my numbers. I work out of an office, have two part-time assistants and work about 35 hours a week now. I have 161 households and closing in on 40M. I contribute 65K (my wife and I) a year to a retirement plan and have tremendous tax advantages since I left Jones. Speaking of taxes. This is an item that is overlooked when comparing employee vs self employed. AMT, thankfully, was defined by Luv. I am not an accountant. Suffice to say that AMT originally was designed to tax the wealthy. My understanding is that AMT is an alternative method of calculating tax not additional. The rub is that the thresholds have dropped and it is now affecting middle income earners. I know of several reps that left Jones because they couldn't get around AMT and were paying much more than ordinary income tax. Maybe RANK could share with us his experience. As Spiff is so quick to remind us, neither is better just different. Zacko,Luv, myself would more than likely contend that life is better as an independent for a variety of reasons highlighted many times preivously.Rank, no disrespect, because you are a smart guy and your many posts prove that. But in this case, you are talking out of your arse and need to check the facts.
RJA has 5500 brokers, of which a grand total of 500 work in banks. 1000 are employees and the rest are RJFS (Indie). The average RJFS advisor grosses $270k as of last months T-12 (or close to that, i dont remember the number). They require you as Ice Stated to be at 250k in order to be your own OSJ. If you fall below 240, you are charged a monthly "maintenance fee" which effectively forces you to ramp it up or move into the office of another OSJ. Dont know where you are, but in the NY area I've looked at a lot of FA's set up with RJ before i came over, and none of them work from home. As far as indy vs wire, i dont really want to get into that, because its old and has been beaten to death on this forum. But i'll just say two things. 1. I am clearly making more money as an Indie, even with employer FICA, in addition to having more control over my own tax situation. 2. Even if i was making the same money, or less, the lifestyle change is huge. People actually comment on how much more relaxed i seem to be. To the poster who stated that RJFS can cut our payout in a heartbeat and we have no control, they are much smarter than that. With 75% of their brokers being Indie, with a contract that says they own their book, trust me, it aint gonna happen. Lastly, i have to say, RJFS support is tremendous in every area, from product, to financial planning, to practice management. I have everything i had at the wire, except for the people who knew nothing about the business being up my ass to sell checking accounts and mortgages.Zacko, welcome back. I’ve enjoyed your posts in the past and respect the move you’ve made to be independent. My experience leaving a bank program to go independent has many of the same elements your move did (although on a “slightly” smaller scale). IRRC, at one point in your posting history here, you mentioned some elective surgery for your wife…I trust that all went well….
At any rate, thanks for all of the informative and yes, often entertaining posts. We'd be glad to see you back more often, but I understand that time here is not time spent making money and taking care of your clients...which is why I post much less than I used to.I’m having some fund at a few Indy’s expense. Had a couple c***tails last night. If you saw my last sentence, I will be moving to RayJay or LPL the minute I don’t feel like Jones if the right place for me. Right now I am very comfortable, enjoy my aquaintences at Jones, and feel like Weddle is guiding the firm in the right dications. Independent has it’s benefits, and I remember Zacko talking about his transition a few years back. Zacho is a great resource, and I respect his posts, as I feel he is very objective. If I ever move, I might even try and get ahold of him for some advice…but for now I’m very happy.
I think you meant to say “guiding the firm in the right direction”, not “dictations”
Are you sure those c***tails were last night and not tonight?> LOLThat is not entirely accurate...Jones takes 75 to 125 bps from your VA commission before you even see it. When I was there I signed up for 40% not 40% after they take a slice first. Just another EJ half truth. Why is EJ keeping 95% of the revenue sharing dollars and not the brokers? Shouldn't you get 40% of that too, bonus bracket or no bonus bracket? The fact is: I'd rather be at EJ than another wirehouse because of the one-man office thing but NOTHING compares to Indy. The increased risk you talk about is NOTHING compared to the benefits...it's not even close...not even worth mentioning. The expenses you pay as an Indy are FIXED...the more you make the more you keep...the exact same reason any W2 broker is leave and be 1099. It's not 10 - 15% better is 30 - 40% better net. You're doing the exact same job, why work harder and give those dollars to the GP's or the stockholders? Be your own stockholder! We haven't even talked about the ability to sell your book...can any W2 broker do that? If you die, does EJ give your family a check valued at what your business is worth or do they just ask for the key to the office? Spiff, this is about math...do some! If you think it's about work environment...are you suggesting that working for yourself would be worse? I know my boss is an a$$hole but that just me...no really...it is me.Jones pays me what they said they were going to pay me. Nothing more, nothing less.
[quote=Spaceman Spiff] If I read the RJ website correctly you are responsible for your own benefits, staff, their benefits, your own retirement plan, your own compliance, your own systems, etc. I, as an employee of EDJ, am not taking the risk of being the owner and therefore am not compensated in the same way you are. You have more risk than I do. So do you get paid more than me? Yes. I’m not sure what else you want me to say.
[/quote] RJ or any BD that an Indy uses does the compliance, not the broker. The biggest risk ALL brokers have is centered around client complaints...PERIOD. I have none but clients can twist thing around and even an honest guy doing a great job can get caught up in a complaint. Do you have E&O with EJ...NOOOOO. Does EJ protect you or EJ....EJ!!!!! They will trash the broker to protect the firm (all firms will do that) in a heart beat...EJ is not out there protecting you. If you need an attorney to represent you...who pays...NOT EJ...you do...just like an Indy. The risk you talk about for Indy's is too small to mention. If you do a good business and plan to be around, the cost and time to run an office is CHEAP compared to giving away 60%+ to EJ (and you still pay some office costs too with EJ)[quote=uwec1986][quote=Spaceman Spiff] If I read the RJ website correctly you are responsible for your own benefits, staff, their benefits, your own retirement plan, your own compliance, your own systems, etc. I, as an employee of EDJ, am not taking the risk of being the owner and therefore am not compensated in the same way you are. You have more risk than I do. So do you get paid more than me? Yes. I’m not sure what else you want me to say.
[/quote] RJ or any BD that an Indy uses does the compliance, not the broker. The biggest risk ALL brokers have is centered around client complaints...PERIOD. I have none but clients can twist thing around and even an honest guy doing a great job can get caught up in a complaint. Do you have E&O with EJ...NOOOOO. Does EJ protect you or EJ....EJ!!!!! They will trash the broker to protect the firm (all firms will do that) in a heart beat...EJ is not out there protecting you. If you need an attorney to represent you...who pays...NOT EJ...you do...just like an Indy. The risk you talk about for Indy's is too small to mention. If you do a good business and plan to be around, the cost and time to run an office is CHEAP compared to giving away 60%+ to EJ (and you still pay some office costs too with EJ)[/quote] You have none what? Clients or complaints? You are correct. Jones will cover themselves first, the FA second. As an employee of Jones, they are on the hook for a much bigger dollar amount that I am. I certainly wouldn't expect them to provide a defense attorney for me if I decided to start doing something illegal. But, they will provide me with legal assistance if EDJ, by way of my office, is named in a suit or subpoenaed. Had buddy in town who got a letter from the court because a former client had stolen a bunch of money from his mom and dad's trust accounts. Jones did their internal investigation and figured out that my buddy hadn't done anything illegal, so they hired a big fancy attorney to assist him with the case. It was a mess, but he's not out of pocket a single dime. This is what the RJ website says if you are an IC - "As a branch manager, you'll be responsible for ensuring compliance with oversight and support from our sales management and internal compliance teams, so take steps to make sure this important area gets teh attention it deserves." LPL makes it sound like they have some people that will give you assitance and guidance, but essentially you are on your own. At least that's what their recruiting website makes it sound like. If that's not the case, then some of you folks need to tell them to rewrite that part of their recruiting page. Compliance issues are only one small part of the pie. You guys have a lot of your own capital on the line. Some more than others no doubt. Like B24's friend it might only be capital for leasing space, buying computers, and software to do what he wants to do. For others it's assistants, benefits, other FAs, etc. You get a higher payout so that LPL doesn't have to worry about having a group of people that do nothing but make sure that your office is ready to go when you walk in. I get it. If you can keep more that higher payout, then you're all the better for it. I'm not trying to argue that the independant model is better or worse than EDJ. I know you might like to think that I am. What I'm saying is that it's just simply a different business model. It works for you. Jones works for me. It's pretty simple.[quote=uwec1986] Yes…Eau Claire…1986 grad…Go Bluegolds![/quote]
Eau Claire freshman 1976
(dorm was 1078 Towers)
I cant remember my phone number, why do i remember that?
finished Madison
seems like it was 1576 now
1983 UWEC Grad. I don’t think I had a dorm room…lived on Water Street. I can still remember those freakin cold days crossing the bridge.
Spiff,
You're right...I have no clients...if that was a serious comment... you're a dumba$$. Try not acting like a 2 year old. I'm try to help you...because you need it. All my trades are reviewed by compliance just like EJ...there really isn't any dif. (the rules may be dif. but very close) I'm not on the hook any more than you are if a complaint is filed...it's exactly the same risk. EJ paid for your buddy's attny because they didn't want EJ's name tarnished so they were looking out for the firm and NOT your buddy...I really hope you aren't that dull as to not see that. The capital to start an Indy office can be as low as $3k to $5k...without an assistant. I'll be happy to email you a spreadsheet so you can plug in your own numbers and you'll see exactly what the dif. is. You do the same job I do, you really don't need any help from EJ at this point and you get paid way less...why would you defend that system. EJ is a great place to start but there is NO reason to not go Indy after 3 years. Risk is not a factor...your biggest risk is your clients and as I said above and it's EXACTLY the same risk. I have not a dollar more in exposure than you. Renting office space these days is very cheap...check it out...start up cost should not be an issue. After the first 4 - 6 weeks of moving your clients, you are doing the same thing you did before at EJ with a much higher payout and EXACTLY the same risk. You'll make up your startup cost in one month. You need to put in more time thinking before you spout the Kool-aid line. Going Indy from EJ is a much easier process than going from MS or ML because you already work alone. Do you have any comments about how EJ gets a big chunk of your VA commission before you see it? Why don't you get 40% of the rev. sharing dollars...you did the work...not EJ?I lived next to the Holiday gas station on Water and later on Main St. I did everything I could to avoid that bridge...got a lot of parking tickets back then. Even fought one in court and won!1983 UWEC Grad. I don’t think I had a dorm room…lived on Water Street. I can still remember those freakin cold days crossing the bridge.
I've looked for the info on the VA commissions before and I can't seem to find anything that proves you are correct. I have a MetLife A share annuity prospectus on my desk and quickly skimmed through it. The only thing that I can find that would even come close to validating your assertation is a comment that says that MetLife pays up to 7% in commissions, but that some firms choose to lower their upfront commissions and take a trail instead. Since it doesn't break it down any further than that I can only assume that you're going to say "See, I told you Jones keeps a big chunk of commission before you see it. It says so right there." I may be way off base, but I don't believe that's what it says at all. Perhaps you should educate me on where I can find that information other than the prospectus.
As to the revenue sharing dollars...You ask a good question and I don't know that I personally have a defendable position on it. The fact that many offices aren't anywhere near profitable enough to support themselves would lead me to believe that Jones has to come up with money to run the firm somehow. I know that revenue sharing is a major part of the budget and without it, we'd be up a creek. I think that will change drastically over the next 5 years or so with advisory fees going up every month. We'll probably trade one for the other. I fully understand that Jones is covering their butt first in any sort of litigation and that the reason they paid for the attorney is that they have to protect themselves first. So, if I'm with LPL or RJ and my office get's the nice letter telling me that I have to report to Dewey, Cheatem, and Howe's legal office for my deposition on Dec 25 and that I need to supply all account docs from 1990-now immediately, who pays for the attorney? I'm not trying to be a smart aleck, I just don't know. And yes, the client comment was a joke.Thanks for the post Zacko and for your contribution to the forum over the years. We’re glad to have you back.
Spiff,
It is true that EDJ takes at least 2% of a VA, and then pays you your % from the balance. It also happens on at least some Insurance contracts. The best way to validate it is ask a wholsaler who happens to call on independents.[quote=Spaceman Spiff]
I've looked for the info on the VA commissions (see above)...
[/quote] Try to find a VA wholesaler who you have a good relationship with and sees other firms besides Jones...they know. You may be able to get the info out of HQ but you'll be throwing up red flags so I wouldn't advise it. Trust me...it happens...I've seen it brought up in meeting. EJ gets a piece of the pie before you see it...did you sign up for 40% of the pie or 40% of the pie they decide to show you? Have I made up any other details since I left in 2003? NO! Why would I make this up? I'm guessing that EJ keeps about 90 - 95% of those Rev. Sharing dollars for the exact reasons you state...this is wrong...you should get your 40%. Until EJ allowed fee based accounts, there was not much of a way to annuitize your biz...but EJ sure annuitized theirs...that's hypocrisy where I come from. Do you agree with my risk assessment...I have the same risk as you do? Actually...In some ways I have less...EJ can fire you for ANY reason and lock you out of THEIR office. RJ can fire me but has to give me 30 days to move my clients to a new BD (this does not include criminal actions...we'll assume we are both ethical). RJ will not call my clients either. If you have a few too many c***tails at an EJ function and pi$$ off a GP they will have you locked out before you get back to the office and they will fight you for YOUR clients. Please don't tell me this doesn't happen...it does. If a GP wants his kid to take your office...he can. That seems like a lot of risk to me...how about you?