November 08 Production Numbers...

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Vin Diesel's picture
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Joined: 2007-04-18

How are your production numbers for November?
Speaking for myself and my firm - they are HORRIBLE

ezmoney's picture
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Joined: 2004-11-30

bad.thank god for fee based.

Hank Moody's picture
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Joined: 2008-11-10

Good. Thank God for Indexed Annuities. 

fritz's picture
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Vin Diesel wrote:
How are your production numbers for November?
Speaking for myself and my firm - they are HORRIBLE
 
AWFUL..Never seen so many ACAT's going according to Front Desk help..myself included unfortunately.  The managed money guys will probably not see the big hit until jan when new fees go out, but from what can gather the guys who were at 1 MM will do less than 400 next year, 50% drop from assets drop and another 10-20% from people who closed their accounts, and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high.  But its so bad you just have to ask yourself if you have any skills to switch careers, I have asked myself and not come up with a good answer yet.

YHWY's picture
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Joined: 2007-07-18

This may well be the cycle that tests the real validity of the fee-based advisory approach that has been aggressively "suggested" to all of us over the past decade or so. I have never been a believer nor practitioner of, but my T12 is taking it on the chin, none the less ( I never doubted that it was better for brokers (and especially their firms), I've just never thought it was better for clients). I am and have been targeting currently fee-based prospects with advertising asking whether those fees are really a good value or not and encouraging readers to look closely at fee costs now, more than ever. Let the pot-shots begin!

Squash1's picture
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Joined: 2008-11-19

Production remains stable, though I am re-amping my business after splitting with my partner. Finding a lot of accounts $250-450K range at wirehouses that are neglected.
YHWY, I came from a EDJ, home of the longterm investor, only problem is after 5-6 years they reup that sales charge by changing to another fund company.. My favorite is when they split between Franklin and American Funds, and tell them it was diversification, but the real reason was increased commission on less breakpoints...Anyways won't argue fee based vs commission, but I think if I can add stocks, alternative assets, uits, mutual funds, etfs, indexes and not have to charge the client for every single item, and beat a asset allocation of index funds by at least my fee, then it is better for my clients than them being on their own...

badmove?'s picture
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Joined: 2006-06-10

at 400k for year, less than 15k in for November...ugleeeeee. Goal was 450-500 for the year, going to be tough. More importantly not a whole lot in the pipe either.

Anonymous's picture
Anonymous

I should hit 70 this month. Took advantage of the dip in muni bond prices, some are trading 5% higher in value already.

fritz's picture
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Joined: 2006-01-12

badmove? wrote:at 400k for year, less than 15k in for November...ugleeeeee. Goal was 450-500 for the year, going to be tough. More importantly not a whole lot in the pipe either.
 
Least one honest person on the board.  I know its pretty important to stay positive, but my pipeline is so empty could see to russia on a clear day.  I barely have the energy to go in and can not imagine trying to get more clients now..Attitude going to have to change Jan or could be rough, already told the wife to quit spending money.  HOPE I am wrong but think this bear market going to a long painful event.  Seeing retail stock like Nordstrom, Macys, Saks, Ann Taylor all looking like BK is a real threat.  Dozens of restaurants look like BK also, could not look someone in the face now with a clear conscience and say" I am so excited about this economy and you should be too" 20% of S&P 500 stocks under 10.00 today, after crash 1987 it was only 30 names, this is serious stuff.

ABOM's picture
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Joined: 2008-11-01

Lots of cuts coming at all firms on many parts of a branch P&L. If a branch had 4 billion in assets at .75 roa they where doing 30 million. same roa on 2-3 billion means branch now doing under 20 million!!

not to mention the errors and legal line are killing branch offices.

Support staff cuts, marketing budgets, real estate, manager cuts, and low performing FA cuts will be coming very soon.

today1's picture
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Joined: 2008-05-07

last month was great and im looking to end the year strong.  i will admit my business has changed though.   mostly fixed income business buying intermediate muni's and short term corporates.  dont think i have done this much fixed income business in my life.  also did some fixed annuity business.  my revenue is up year over year.  these are the markets where the strong survive. 

HymanRoth's picture
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Joined: 2008-08-25

My business is up slightly, and new assets are starting to come in.

Anonymous's picture
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Hmm.  I'm all fee-based, so I won't have any production again until Dec. 31. 
 
I've spent most of this month working on "getting in front of" teachers at the schools where my BD has payroll slots for their 403B plans.  So far this month I have 3 new clients (1 of them being aforementioned 403B), appointments next 2 weeks to sign up 5 more 403B participants, and few others in the pipeline looking for an initial appointment (some 403B, some "good" clients, lol). 
 
Have some clients putting a few bucks in here & there (new money), but nothing major ($5K, $12K). 
 
All in all, I'm find this environment enjoyable for prospecting, but frustrating for meeting my AUM goals (that I set for myself).  Then again, I don't have 400 households to service eitheer...if I did, I'd probably find this climate much more difficult.  With a limited number of clients, it's pretty darn easy to make sure I'm holding hands with my A & B clients on a monthly basis. 

Morphius's picture
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Joined: 2007-07-21

fritz wrote:... and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997.  It may be ugly, and it may be a long time since we were below that level, but there's nothing magical about 8000. 

Hank Moody's picture
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Joined: 2008-11-10

fritz wrote:badmove? wrote:at 400k for year, less than 15k in for November...ugleeeeee. Goal was 450-500 for the year, going to be tough. More importantly not a whole lot in the pipe either.
 
Least one honest person on the board.  I know its pretty important to stay positive, but my pipeline is so empty could see to russia on a clear day.  I barely have the energy to go in and can not imagine trying to get more clients now..Attitude going to have to change Jan or could be rough, already told the wife to quit spending money.  HOPE I am wrong but think this bear market going to a long painful event.  Seeing retail stock like Nordstrom, Macys, Saks, Ann Taylor all looking like BK is a real threat.  Dozens of restaurants look like BK also, could not look someone in the face now with a clear conscience and say" I am so excited about this economy and you should be too" 20% of S&P 500 stocks under 10.00 today, after crash 1987 it was only 30 names, this is serious stuff.Why can't you change your attitude on November 20, 2008?

anonymous's picture
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Joined: 2005-09-29

"Why can't you change your attitude on November 20, 2008? "
 
Early in my career, I learned an important lesson about attitude.  It's very, very difficult to have a positive attitude without a full pipeline.  The negativity feeds on itself.  Anyway, what I learned is that activity comes before attitude. 
 
If you wait to get a good attitude to do the things that are needed to fill your pipeline, you're screwed.  If you do the things that are needed to do to succeed despite your attitude, your attitude will immediately improve.

Anonymous's picture
Anonymous

Morphius wrote: fritz wrote:... and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997.  It may be ugly, and it may be a long time since we were below that level, but there's nothing magical about 8000. 
 
C'mon Morph, surely you know the Technical implications of Dow 8,000!  [insert heavy dose of sarcasm]

buyandhold's picture
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Joined: 2008-09-23

Disappointing results. Three years in, I need to bring in at least 300k investable per month to survive and it's not happening. 

But have had good conversations with prospects lately. Dropped the EDJ 'sun will come up tomorrow/if you diversify everything will be OK/we didn't see any of this coming but believe what we're saying now' spin and have been leveling with people. It's bad and it's going to be bad for a while. Here's what we can do.
Have not lost any clients and only two have liquidated. Having their confidence feels good.
 

Greenbacks's picture
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Joined: 2004-12-21

Interesting topic.
Thank God I am indy.
My numbers are down and I am thankful for fee based and C-shares.

I hired a marketing professional to go after the wire house accounts in my area. I will see how that goes going forward into the first quarter of 08. I do not need that many more fee-based accounts and my practice will be at full capacity for me.  

Borker Boy's picture
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Joined: 2006-12-09

Ice--

 
Since you're 100% fees, I assume you're charging fees on a wide variety of account sizes.
 
At Jones, there's a $100K minimum for our fee-based account. Can an indy charge fees on any sized account?

UNDERMINDED's picture
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Joined: 2008-10-14

bad bad production month, started to pick up this week finally but I need more new assets.

Anonymous's picture
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Borker Boy wrote:Ice--

 
Since you're 100% fees, I assume you're charging fees on a wide variety of account sizes.
 
At Jones, there's a $100K minimum for our fee-based account. Can an indy charge fees on any sized account?

 
I'm sure that varies from firm to firm Borker.  My B/D has no minimum for fee-based biz.
 
Someone wants to start a 403B next month and put in $25/pay?  No problem, I can do it fee-based.
 
Someone wants to start a ROTH IRA and DCA $50/month?  No problem, I can do it fee-based.
 
SIMPLE IRA?  SEP?  IRA?  All the same.
 
But that may be because about 85% (so they tell me) of their business is 403Bs...it would be tough for them to do ANY fee based if they made minimums in the $50-$100K range.  So my situation may be a bit more out of necessity due to their business model than anything else. 

Borker Boy's picture
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Joined: 2006-12-09

Thanks for the information. It's very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
 
I was just wondering if an indy can charge fees on any account size.

Anonymous's picture
Anonymous

Like I said...Indy fee-based minimums are going to vary.  It is my understanding that MOST indy platforms have minimums (I know RayJay does, as does ING Financial Partners).  
 
Kind of funny.  A guy in my branch was telling me the other day that when my firm first starting doing fee-based (back in the late 90's), they weren't doing A shares @ NAV.  They were A shares @ POP!  So FAs got 5% up front (or whatever the breakpoint was), then quarterly fees on top of it, from day 1!  I was like "WTF!"
 
You missed the boat I guess Borker.  That would have solved your problem!

Borker Boy's picture
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Dang it!

snaggletooth's picture
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Borker Boy wrote:Thanks for the information. It's very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
 
I was just wondering if an indy can charge fees on any account size.
 
Our firm's minimum for fee based is $25k.  But I personally do C shares up to $100k.

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Borker Boy wrote:Thanks for the information. It's very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
 
I was just wondering if an indy can charge fees on any account size.
 
Borker, I use C-shares for most accounts under 100K, and any DCA money.  I don't do it to annuitize my business - I really feel it's better for the client.  It will take 10 years in some cases for the breakeven point, and many people have time horizons of less than 10 years.  It's also a huge dis-incentive for a client to pay 4.5-5.75% upfront.  So I find C-shares very useful.  But you will make far less upfront, and it will take 3-5 years for your income to break even versus an A-share under 100K.
Over 100K, I am trying to use Advisory on new money.  But I usually stagger it with other things (fixed annuities, CD's, MMKT for short-term income).

ezmoney's picture
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Joined: 2004-11-30

I am thanking god each day that I went indy 1 1/2 ago. With my payout and fee based I can weather this storm. But my income has been cut in half.

Anonymous's picture
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Just curious, how are some of the firms out there paying out for advisory/fee-based?  Our clients get billed quarterly, and we subsequently get paid quarterly...anybody out there have clients getting billed quarterly, but FAs getting paid out monthly, etc.?

willbbetter's picture
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Joined: 2008-10-22

We (Wachovia) bill quarterly, but are paid monthly.  So we're being paid on account values a/o September.  First quarter '09 will not be pretty

Spaceman Spiff's picture
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Joined: 2006-08-08

Jones pays monthy and clients are charged monthly.  Most of us don't do enough fee based for it to matter. 
 
So, how does a fee only advisor survive when his income just got cut in half over the last two months?  You can't possibly bring in that many new assets quickly enough.  Isn't an environment like this one where a commission based advisor may not even feel the pinch?  I know I haven't so far.   In fact I had my best month of the year in Oct, followed by a marginal Nov, and the transfer paperwork calls for a stellar Dec. 
 
But, if I had a fee only biz with $20MM that is $10MM now, even bringing in $1MM a month won't get me back to even for the next year.   

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A little perspective re: Wirehouse v. Indy & fee-based
v. commission. I left WB for LPL one year ago (today, in fact) and my business
is 100% "traditional" commission-based. My 2008 income is already right
about 80% of my 2007 full year income. Consider that this includes the actual transition
(one never takes 100% of desired clientele, followed by the worst year
(especially last @2 mo.) in most of our memories), not to even bring up the
state WB is in and the proprietary effect that's had on WB brokers
specifically. All things considered, I am happy as hell to be smoking a cigar
poolside right now, having control over my business and branch (as OSJ) and having my
income hold up so well, given the state of the markets. Couldn't be happier!

YHWY's picture
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Sorry about the annoying font up there.

Gaddock's picture
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Joined: 2007-02-23

Thank God for a a few rich guys I make cash hand over fist with my strategy my stuff is onm track, month 15 and I hope to do $20k. Getting some good accounts with their friends.

Gaddock's picture
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Joined: 2007-02-23

Attrition;  Of my class in the 70's there are only 28 left. Of them I'm 3rd. My paycheck is just getting my over the hump. I can't imagine how the other rookies are paying the bills. I'm LUCKY LUCKY LUCK. I'm not bragging and not really proud. Hard biz newbies. But I'm having fun doing it and think I'll be here in the long run.

ezmoney's picture
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Joined: 2004-11-30

live within your means and when your fee based is cut in half you can manage. Live like a king and you're dead. I doubt very much that comission brokers a barely feeling the pinch spaceman! They'll be the first to fall. Trust me on that.

YHWY's picture
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Joined: 2007-07-18

ez, if you think that the fee-based model is your salvation, then I believe you are misguided. Unless, of course, it is your contention that it is by far (and provable, beyond argument) best for your clients. Good luck with that argument.

B24's picture
B24
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I don't think any fee-based advisors have had their incomes cut in half. If their book is fairly balanced, they are probably down 25%-30%. Let's remember, most balanced portfolios will include bonds, govies, some cash, etc. If you are a pure equities advisor, yeah, you maybe down 40%+.

YHWY's picture
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B24 I'd like to ask any fee-based former AGE  Advisors doing under about $400-450k how their income has been and will be effected. I suspect that with the Dow down over 45% from last years' high and the new Wach Sec hurdle grid going into effect, I suspect declines in income of 40%+ are likely. (For you wirehouse guys who want to scoff at $400-$450k, save it. Your @35-42% of whatever your "gross" is doesn't impress me anymore)

fritz's picture
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B24 wrote:I don't think any fee-based advisors have had their incomes cut in half. If their book is fairly balanced, they are probably down 25%-30%. Let's remember, most balanced portfolios will include bonds, govies, some cash, etc. If you are a pure equities advisor, yeah, you maybe down 40%+.
 
maybe down 40% ARE you joking?  Brandes, Lazard which have a few people in are down over 60% YTD.  Do not believe any managed account unless counting cash and GOVT stuff is down less than 40%..  I am not a big believer in Managed Money, in fact I think it is bordering on criminal have a book of all clients in this stuff, but from the guys I see who have most/all their book in Managed Accounts they have pretty much had about 1/4 of the people close their account in the last 3/4 weeks.  Think this business, if the market does not rebound will be very different in 12-24 months.  The last stage of a true bear market is client despair, thats when people realize they are not getting even and paying 1.5-2% to watch you account go nowhere, tough sell.

fritz's picture
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Morphius wrote: fritz wrote:... and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997.  It may be ugly, and it may be a long time since we were below that level, but there's nothing magical about 8000. 
 
Nothing Magical about 8000?  That was new closing low on the DOW,  after weeks of bouncing off 8000.  That will usually create a lot  technical selling, and psycological damage.  Looks like it happened.  Just a number yes, but it matters, just like it will if we dont hold 5000.

troll's picture
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Joined: 2004-11-29

If you are still adding to your fee based assets, the pay cut is minimal.  Another flaw in this thread is fee based accounts being down 40%.  Not all accounts are down 40% just because the market is.  This month has been my biggest month since May with a week to go.

skbroker's picture
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Joined: 2007-06-16

not 8000 but 7800 the previous intraday low

Anonymous's picture
Anonymous

You sound like a bit of a toolbox fritz.
 
I'm nearly 100% fee-based (barring a few 529 plans), and my portfolios have lower avg. expense ratios than more than half of the mutual funds out there @ NAV - when INCLUDING my fee. 

YHWY's picture
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Joined: 2007-07-18

icecold1d, You can compare your business model to the dregs (MUCH more that half of mutual funds have ridiculous expense ratios and are complete rip-offs) and feel good about it. What you can't do is try to compare total expenses to the best mutual funds (which any advisor worth his salt uses to the exclusion of those "dregs"). I just don't want to have to re-sell my entire business model every quarter in a down market, but to each his own.

fritz's picture
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iceco1d wrote:You sound like a bit of a toolbox fritz.
 
I'm nearly 100% fee-based (barring a few 529 plans), and my portfolios have lower avg. expense ratios than more than half of the mutual funds out there @ NAV - when INCLUDING my fee. 
 
Sounds good, how are you doing this year for your clients?  Let me guess if someone called you end of Sept you told them to stay in for "long term"?  Right?  that  way your could continue to get your fee. Guess at what point would you get them out so they would not have to continue to lose sleep over their losses and put them in a CD or something to that effect?  Pretty sure that type of thing not in your bag of tricks.

Anonymous's picture
Anonymous

I swear, you're just too dumb to live...How am I doing?  GREAT!  How's this...I charge 90 bps for the portfolio I'm talking about - roughly 1.25% all in.  Man, I'm a flippin' criminal!  I use almost exclusively Vanguard funds, but you could implement a similar strategy using a variety of ETFs and have similar expenses. 
YTD, I've lost 1 account - not to another FA, but to liquidation to prevent a foreclosure.  I have zero clients that are in any type of trouble, and none to my knowledge that are losing sleep (although, I'm sure there is general anxiety about the economy for EVERYONE, even those invested in CDs).  I couldn't care less if this market stays for another 3 years.  Heck 5 years.  Whatever.  The time to implement a plan to deal with this type of market is BEFORE it happens, not bailing to CDs after you've had enough of it. 
And before you contort that into something it's not - no, I don't time the market, and no, I didn't "see this coming."  Also, no, almost none of my clients are up, overall, on the year.  I can assure you though, my portfolios are well designed, and build on very sound strategy.  I'd share with you, but I'd rather doubt you'll follow along. 
 
And no, I haven't had any clients call me and ask to bail to CDs.  They know what we are doing, and why we are doing it, and I'm pretty confident that they are onboard with it (which is probably why I have referrals coming out of my ears).  Not saying at all that there isn't a cash component to my portfolios, but no more or less now than there would be in a bull market - I don't play the market timing game. 
 
Besides, if my clients want to trade in and out of the market, and run their own strategy in lieu of my advice, they should go to eTrade; I can't compete with eTrade's pricing anyway. 
 
Oh, and FWIW, the 90 bps (which is maximum - that drops to 60 bps on a $1MM account) is dictated to me by my B/D as the fee I can charge (no more, no less).  But if I were at a B/D that allowed me to pick my own fee, I'd probably start out charging 1.25% - and I'd still sleep just fine with total expenses in the 1.6% range. 
 
My fee, is my fee.  If a client doesn't like it, they are free to go down the street to EDJ or Janney, or even a bank.  I think it's very reasonable for what I do (which is much more than just portfolio management for most clients - but that's neither here, nor there). 

Anonymous's picture
Anonymous

[Edit for duplicate post]  Sorry..

YHWY's picture
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Joined: 2007-07-18

ice, I am not challenging your business plan or model, but I thought that your quoted total expense to clients (including your .9%) of roughly 1.25% seemed off-kilter. I'm not a fee-based guy, but .35 bps internal expenses seems odd (i.e., not funds, nor discretionary EFT portfolios, nor private money management nor any other structure I can think of). My main concern has been to ask if a percentage fee is always in clients' best interest as well as having to defend that line detail on statements every quarter during a down market.

Anonymous's picture
Anonymous

YHWY - My last post wasn't directed at you (yes, I realize that may not have been evident).  As far as the fee goes - as I mentioned, I'm still not uncomfortable with 1.6 or 1.7% TOTAL expenses (if I had my way).  Of course, for an all fixed-income portfolio, the fee would be less. 
I think my POV for fee-based is different than yours (and maybe others).  I made the decision from day 1 to build my business on fees.  I feel very strongly that I would like to go fee-only RIA someday.  That is just the business model that I think I can deliver the best value to my clients under.  That may, or may not, be your opinion.  And that's OK.  I don't sit down with each client and figure out which business model I can minimize my pay...I sit down with each client, and explain to them what my fee is, and what it covers.  Then they either agree to work with me under the fee arrangement, or they don't. 

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ice, I respect your decisions, make no bones about it. Always interested in other points of view.

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