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frumhere's picture
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Joined: 2005-02-22

Any MS fa's here?  LAst year Gorman did one of those slips talking about 300k producers.  has anyone heard any grumblings about cutting under 300k guys w/i a certain tenure?

troll's picture
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Joined: 2004-11-29

Nope. A year ago it was all the rage here, "it's coming".

AllREIT's picture
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mikebutler222 wrote:Nope. A year ago it was all the rage here, "it's coming".

Won't do it, just like none of the other firms are going to do it.
Advisor productivity tends to follow a power law, so you have a fairly
long tail of low producing producers and a few hot shots. Given how
bouncy the GDC is, its much too risky to cut out people around the
minimum.

troll's picture
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Joined: 2004-11-29

If they were smart, they'd force those guys to team up with better producers.

blarmston's picture
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Joined: 2005-02-26

I used to chuckle when I heard a prospect had MS... Now... Not so much anymore.. A close friend just jumped over there (with a huge check to cash at the bank) and he says nothing but great things... At this point, I think its say to say that Gorman is the MAN... What he has done to turn the boat around is remarkable...

troll's picture
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AllREIT wrote: mikebutler222 wrote:Nope. A year ago it was all the rage here, "it's coming".Won't do it, just like none of the other firms are going to do it. Advisor productivity tends to follow a power law, so you have a fairly long tail of low producing producers and a few hot shots.
Just to be clear, by the "here" in "the rage here" I meant this forum. Given the distribution of production among brokers, I never saw a serious threat directed towards 300k producers. Gorman's used a carrot approach to moving people up in production, the stick talked about so much here never showed up.
 

AllREIT's picture
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mikebutler222 wrote:AllREIT wrote: mikebutler222 wrote:Nope. A year ago it was all the rage here, "it's coming".Won't
do it, just like none of the other firms are going to do it. Advisor
productivity tends to follow a power law, so you have a fairly long
tail of low producing producers and a few hot shots.

Just to be clear, by the "here" in "the rage here" I meant this
forum. Given the distribution of production among brokers, I never saw
a serious threat directed towards 300k producers. Gorman's used a
carrot approach to moving people up in production, the stick
talked about so much here never showed up.

That's the point I was making. Production is very bouncy, if you were
to cut out the solid people around ~300K, and wait for the hot shots to
come back to earth, you wouldn't have very much left.Meanwhile, you'd
be missing on a chance that the ~300K producers get lucky/develop, and
move up a notch. Gorman isn't stupid.

In general it doesn't pay to remove the bottom end of producers, if that bottom end is people with GDC of $300K.

OTH the smart thing for a good number of those people is to go indy,
and get a high payout. IMHO MS"s brand equity isn't as strong as MER's
so its not as much of a loss.

xbanker's picture
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Joined: 2007-01-21

Just curious why MER over MS? I'm not at either but would probably consider them similar from a branding standpoint, with the expception being that people associate MER with retail business more and MS with their banking arm primarily, which could be seen by some as more prestigious. I will say I've ACATed away MANY more MS accounts, which says a lot since they have significantly fewer FAs overall. I believe this has more to do with fees and the fact that it tends to be easier to get cut at MS as an FA, leading a lot of newer clients unloyal to the firm and it's pricing. (Not implying it's a cakewalk to get by or that people stay much longer at MER either, but I don't get their accounts...)

troll's picture
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Joined: 2004-11-29

AllREIT wrote: OTH the smart thing for a good number of those people is to go indy, and get a high payout. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I really don't see someone who's peaked at 300k in a wirehouse environment going Indy for the payout. At that production level, unless you're willing to come down a long, long way in the standards in terms of office space appointments, administrative support, etc., your NET (which is all that matters) isn’t significantly higher. No, in my  mind a long-time rep who leaves a wirehouse at $300k is doing it to survive, not prosper with that “higher payout”.
 
 AllREIT wrote:
IMHO MS"s brand equity isn't as strong as MER's so its not as much of a loss.
I think that depends on the type of client you’re talking about. In the middle market, you may be right. With HNW types, MS has significant brand equity. In fact, my experience is that it’s seen as being closer to GS than MER is, and if you’ve noted my posts in the past, I have a lot of respect for MER, being a product of Mother Merrill myself.
 

troll's picture
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Joined: 2004-11-29

xbanker wrote:..... people associate MER with retail business more and MS with their banking arm primarily, which could be seen by some as more prestigious. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
That's exactly how many of the HNW investors I come across see it these days....
xbanker wrote:..... I will say I've ACATed away MANY more MS accounts, which says a lot since they have significantly fewer FAs overall. I believe this has more to do with fees and the fact that it tends to be easier to get cut at MS as an FA, leading a lot of newer clients unloyal to the firm and it's pricing.
That "get cut" thing may have been true a couple of years ago. Perhaps you benefited from the turmoil after the cuts of under $225k/over 11 years in the business reps that Gorman brought with him. I don't see that as the case today. In terms of fees, MS isn't at a disadvantage to other wirehouses.
 

AllREIT's picture
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Joined: 2006-12-16

mikebutler222 wrote:
AllREIT wrote: OTH the smart thing for a good number of those people is to go indy, and get a high payout. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I really don't see someone who's peaked at 300k in a wirehouse environment going Indy for the payout. At that production level, unless you're willing to come down a long, long way in the standards in terms of office space appointments, administrative support, etc., your NET (which is all that matters) isn't significantly higher. No, in my  mind a long-time rep who leaves a wirehouse at $300k is doing it to survive, not prosper with that higher payout?AllREIT wrote:
IMHO MS"s brand equity isn't as strong as MER's so its not as much of a loss.
I think that depends on the type of client you’re talking about. In the middle market, you may be right. With HNW types, MS has significant brand equity. In fact, my experience is that it’s seen as being closer to GS than MER is, and if you’ve noted my posts in the past, I have a lot of respect for MER, being a product of Mother Merrill myself.

Dunno, when I got started in this business (was it really that long ago?), my Mom was amazed that I wasn't going to work for Lehman Bros. So prestige is in the eye of the beholder.
I'm not sure that among very HNW types, the major wires have a big advantage over various family office type things. Your $10M doesn't move the needle at MS, it does at a smaller house.

Broker24's picture
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Joined: 2006-10-12

I don't think Mike is talking about "family offices" that handle hundreds of millions or billions in assets.  I think (correct me if I'm wrong) he is referring to the former wirehouse guy that opens a little solo practice with 300K in t-12.  That is not exactly the hotbed of HNW investors.
However, you might go Indy for the payout if you are not serving highly affluent individuals.  If you are just serving middle-market (typical 6 to low-7 figure retiree), this scenario might help your bottom line if you set up a cheap shop.

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