Qualified Prospects
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[QUOTE] In your original statement you said cold calling opening up 1%
accounts all day. The person will likely fail out of the business starting
out 100% fee based. I know you know a guy who made it and I am sure
there are a few but the fact is the firms are building up a nice revenue
streams while recycling motivated rookies who are good to bring in 5 or
10 million and drop out becuase they are broke, burned out and learn
there are better opportunities to get rich quick. It ain’t the old days, no
porsche at 25! 10 mil at 1% is 100K broker is making about 35K when he
loses his salary yeha [/quote]
This is what happens when I try to skip some steps. I over simplified the
process to get the point across that cold calling is not fruitless.
To be clear I’m not talking about using fee biz to open accounts. We open
on product. My opinion is, unless a newly minted rookie opening fee only
accounts gets lucky, they are not going to make it. Too long a lead time
to reach critical mass. That they bring in 10 to 15 million in fee biz before
they pack their bags fits perfectly with Majors business plan. Thank you
very much failed rookie for giving us more fees to collect, we’ll handle it
from here, don’t let the door hit you on the way out. And, for the slow
learners out there, I don’t believe fee business is always in the client’s
best interest. Interestly, Elliott Spitzer agrees.
As a trainee, your ROA will be higher than that of an established FA. It will
reduce as you add assets. For example: If a newly registered FA lands
million dollar annuity with a 4% payout on their first day, their ROA is 4%.
OTOH, when we added a million dollar annuity earlier this month,
practically speaking, it didn’t move the ROA scale. So the 1% number I
used is what the book will return overall after 5 years. That number could
be significantly higher, say 1.5% or even more depending on product mix.
As for burnout, it happens. The key is to stay focused and to stop doing
every product/program in the book. Find something you like, tax free
bonds for example, know them cold, totally focus and go for it. Bring in
10 million over the next twelve months doing only bonds with 2 points
and that’s $200,000 gross and $80K net at most houses. Then do it again
next year adding in new money added from accounts you opened this
year. Just shooting out some possiblities here , say 10 mil from new and
3 mil from existing, all at two points, now we’re up to $260,000 gross
with 100k net. The next year, you know the drill, and the gross goes
north of $300k. By year four, bonds from year one may start to be called
this will only increase every year, think of it as a business annuity. Add in
ancillary biz, clients calling with special needs, or your branching out into
other product area and working to penetrate the book. It all adds up.
Maybe the Porsche in 5 years is out. When I came up as a rookie opening
20 to 30 accounts a month was the norm for those who worked their
butts off. I opened 72 accounts one month. My best friend opened 90 in
his best month. Today that number is between 8 and 15 accounts a
month for a focused trainee. That number is being achieved by top
trainees in my branch. If your results are less, time to reevaluate what you
are doing.
"In your original statement you said cold calling opening up 1% accounts all day. The person will likely fail out of the business starting out 100% fee based. I know you know a guy who made it and I am sure there are a few but the fact is the firms are building up a nice revenue streams while recycling motivated rookies who are good to bring in 5 or 10 million and drop out becuase they are broke, burned out and learn there are better opportunities to get rich quick. It ain't the old days, no porsche at 25!
10 mil at 1% is 100K broker is making about 35K when he loses his salary yeha "
If all you do is fee-based or C-shares, as somone starting out you will starve. Unless of course you land a couple whales and you can fee up $40M at 80 BP's.... The key is to have a business mix, using several products that fit the clients needs.
Take 500K. Put 350K in C-shares or a SMA at 2%. That kicks off 7K/year if you go the SMA route. Add in 50K into an AI program, possibly a managed futures fund. That kicks in 500-1000 in transactional production. With the remaining 100K, perhaps a Step Up Bond if the client wants income and higher interest rates than a CD. That adds production, perhaps 2000 PC's.
What you have done is add value for the client, placed them in the best investment ideas you have that is appropriate for them, and you have created a nice mix of production for your business.
Win Win...