The point was not fully illistrated... The 1% net is after the B/d charge. Office expenses are running about 1500.00 mth or 18k year. With full time assistant  they are 53k year.  Going back to the the original example of 90k minus the 18k in expenses leaces 72k in gross profit.  Allow 15-18k for federal taxes and  8k in state taxes it leaves a single independent with 46k after taxes. Compare that to EDJ 54 minus 14k in Fed taxes and 6k in state taxes leaves the w2 employee at about 34k in after tax income.  Also what you have to remember the independent can defer  around 15,500 in 401k and additional 15-18k in company p/s match That puts his retirement contribution to 30,500.00. lowers his gross profit from 72k to 42k. Now you have less in takes and you net net income far exceeds w2 employee.  My self I actually only have 15,500.00 in taxable income my other income comes as dividends. (taxed at much lower rate. I defer all of my w2 income and have a 25% ps mathc. I put 32500.00 in retirement last year. I still had profit which is now sitting in by business account as profit and is MY equity. Not a firms equity. Hands down you do net net more after appling the tax advantages of self emlpoyment as indy

Get-hard??? Is that wishful thinking junior? You're a little young for viagra. Was successful before you were born. This is a supplement to my income. I can leave when I choose and still have a six figure income.

[quote=fedup]

The point was not fully illistrated... The 1% net is after the B/d charge. Office expenses are running about 1500.00 mth or 18k year. With full time assistant  they are 53k year.  Going back to the the original example of 90k minus the 18k in expenses leaces 72k in gross profit.  Allow 15-18k for federal taxes and  8k in state taxes it leaves a single independent with 46k after taxes. Compare that to EDJ 54 minus 14k in Fed taxes and 6k in state taxes leaves the w2 employee at about 34k in after tax income.  Also what you have to remember the independent can defer  around 15,500 in 401k and additional 15-18k in company p/s match That puts his retirement contribution to 30,500.00. lowers his gross profit from 72k to 42k. Now you have less in takes and you net net income far exceeds w2 employee.  My self I actually only have 15,500.00 in taxable income my other income comes as dividends. (taxed at much lower rate. I defer all of my w2 income and have a 25% ps mathc. I put 32500.00 in retirement last year. I still had profit which is now sitting in by business account as profit and is MY equity. Not a firms equity. Hands down you do net net more after appling the tax advantages of self emlpoyment as indy

[/quote]

Again, your whole point is that you can make sooooo much more as an independent. The fact is, you cannot. Even you are restating that the difference is between 46 and 34K - and that assumes that you were able to transition 100% of your assets. No reasonable person would chance his whole world on that marginal assumption. Read your original post: you asked where the difference between 90K and 54K might be? Well, it sure as sh!t isn't a $46K differential now is it?

Which is exactly the point I was making. And for GetHard, let me reiterate: no reasonable person would chance his whole world on that marginal assumption.

are you saying LockEDJ is not a reasonable person or the spread was MUCH more enticing?

[quote=LockEDJ]

Fuzzy math.

you are forgetting some simple pieces. Like the 10 to 25 bp the BD takes off the top, and that's before the 10% haircut (and I'm not so sure you're getting 90% payout if your history is $120000 a year). So you are netting a whole bunch less. And I run my office about as cheaply as you can, and technology, rent, association fees or whatever cost over $1500 a month. Minimum.

So your $90K just became more like $81K out of the gate, and you haven't paid the $18000 a year nut to keep the doors open. All told, you are jumping ship for the difference between $54K and ... $64?

And one last thing: if you were doing $10K in advisory solutions, there's absolutely ZERO chance you'll get a 100% rate of success bringing business with you ... OOPS. Now you're making less at your new office. Good luck with that.

[/quote]

Can you elaborate on that comment?

[quote=B24]

[quote=LockEDJ]

Fuzzy math.

you are forgetting some simple pieces. Like the 10 to 25 bp the BD takes off the top, and that's before the 10% haircut (and I'm not so sure you're getting 90% payout if your history is $120000 a year). So you are netting a whole bunch less. And I run my office about as cheaply as you can, and technology, rent, association fees or whatever cost over $1500 a month. Minimum.

So your $90K just became more like $81K out of the gate, and you haven't paid the $18000 a year nut to keep the doors open. All told, you are jumping ship for the difference between $54K and ... $64?

And one last thing: if you were doing $10K in advisory solutions, there's absolutely ZERO chance you'll get a 100% rate of success bringing business with you ... OOPS. Now you're making less at your new office. Good luck with that.

[/quote]

Can you elaborate on that comment?

[/quote]

My bone of contention is that if you had $10MM at Jones in fee-based business, you obviously can't transition all $10MM. So you probably are talking about getting $8MM in assets, which is about average. At $8MM, by time you're done paying the BD ($80k *.9 = 72K) and your monthly nut ($18K) you barely are making the same as Jones. And that's making some incredible assumptions (80% transition is normal, but not every BD gives 90% payouts on that sort of a T12).

The real elaboration is this - that you need to be sure you have some acorns set aside when you go AWOL. Sometimes posters paint this picture of independence  ... oh, you're only making $54000 when the indy's are making $90000 on the same business. It doesn't exactly translate that way.

Please tell me that you guys are making more than what the numbers are that are being used?  $34K-64K?  How long have you been in the business?  I'm not judging I'm asking as a newb trying to figure out what people are "actually" making out there especially in the first couple of years. 

Madman, there are three things people always lie about: 1. How much money they make; 2. How smart their kids are; 3. How big their d-ck is.

? Madman, the whole conversation was based on an arbitrary starting point of having $10MM in Advisory Solutions. I'm guessing there isn't 15 EDJ FA's in all of NYS that had that much in fee-based business at the end of 2009.

I've watched 5 people leave our region and either go independent or to a wirehouse in the past 18 months. I've kept up with what percentage of their assets they took with them, and it appears out of these cases, most of the FA's only took about 40 to 60% of their book. I don't know what the average is, but this is what I have witnessed in our region. I have never seen anyone in our area leave the firm and take 80% of their book with them.

Thanks Lock.  I see what you're saying.  I also look at some of the numbers that indies post on here with some skeptacism.  Specifically, I don't understand how you can run an indy shop with 20-25K in expenses.  I guess it's possible if you work out of your house with no assistant, and don't include a lot of stuff.  But you're not gonna do a heck of a lot of production that way.

I have looked at an indy setup, and figured at 250K production, taking home about 65%.  I could significantly increase that if my production goes up, but only until about 400-450K production, then another staff member might be needed.

[quote=Advisor238]

I've watched 5 people leave our region and either go independent or to a wirehouse in the past 18 months. I've kept up with what percentage of their assets they took with them, and it appears out of these cases, most of the FA's only took about 40 to 60% of their book. I don't know what the average is, but this is what I have witnessed in our region. I have never seen anyone in our area leave the firm and take 80% of their book with them.

[/quote]

With an EDJ book, it's not a question of what percentage moves; it's a question of what portion of the book has value in the independent channel. What to do with the loyal client that sends you $1000 a month to spread among five funds? The ticket charges alone makes them useless.

So if an independent runs out at 60% of their book, they've probably scored nearly a 100% victory of clients that make any sense. The average industry wide is close to 80%. I'd bet that the average - among targeted clients - is pretty close to that number.

Good luck to the newbie with all those wonderful DCAs and muni-bond/A share VA books, though.

I think the main point of going indy is not the conversion rate of the book or the percentage increase of the grid. I personally think it is the freedom from "shedding" the book which makes everything else seem so much better and in actuality it probably is.

Seriously when I think about going INDY it isnt about my personal greed to make more and more that will happen no matter if I stay or go. It is to not have to deal with the steady stream of BS that flows green.

Higher expectations, summer regionals, field training, new broker takes over 50 million and gets his d!#$ sucked.... that is what keeps me interested. For me it is just a matter if all that BS becomes too much.

I've done well; no need to clarify that point. But I would hesitate for anyone to go independent because of the money because it really isn't there. Like RW says, there's a ton of reasons but they damn well better be worth the uncertainty, the worry, and the loss of at least one if not two months of income. And the immense amount of work. Almost everyone knows me as a type-A guy, a workaholic. But the last two months nearly killed me.

It was worth it for me, but I honestly think I had it timed pretty darn good. I would advise caution to others and really good motivation.  

I get the impression from your pre-move comments vs your post-move comments that you had no idea how difficult the two month+ transition would be. Congrats on digging in deep and pulling it off! Reward yourself when things finally get in place and the chaos slows down.

True enough ND, true enough. ... [edit]

I have a mini-vacation planned for NYC/the North Fork for the holiday weekend. Boy do I need it.

Wow I've been off the treads for over six months...glad to hear that the regional meetings at Jones haven't changed much! 

I've been indy for over three years now after being at Jones for 14 years.

I only recruit for my own business...

I only answer to my OSJ....oh that's me!

Listen Spiff is right about the numbers...you have contract fee's...bonding...Error issurance ect.

But don't think you can't lose those advisory accounts at Jones...I've taken some from you guys already.  Plus I can keep stocks, bonds, ETF.s, Partnerships, Private Reits and most mutual funds in my own SAM accounts.

If you are thinking about pulling the plug at Jones...get your ducks in a row.  But please don't think you are going to find the garden of eden in Indy world.  If you're not enjoying this business...then do something else and enjoy your life.

Roadhard Lives!

You make more as an indy.  Wait till you file your taxes Lock, you'll be pleasantly surprised.

You can run an indy (even RIA) office VERY cheaply, even not working from your home.  Jones spends a lot of money they don't need to.

B24, you have talked about how straightforward the P&L is at Jones.  And it is.  However, the costs don't line up with real world expenses.  A true business owner nickels and dimes that stuff.

I have a four person office that costs me half of what my two-person office at Jones cost me, and it is in a more affluent area in a busy office park.

If you are into convenience and not taking chances then Jones would be the place. From a true business perspective  Magician is spot on.. It is an absolute no contest for an indy vs a wirehouse or Jones.  Jones is nice place to be comfortable and get pampered while the hungry elephant eats the steak and leaves the sides. There are a couple of points about people at Jones (myself included)

1. When you are new...You have to make it...come hell or high water

2. If/When you do make it..SEG 4 or 5 you are so burned out..that the thought of change scares the crap out of you

3. The firm continues to reinforce that idea because they know how to stroke your ego..you're now a veteran. You can now have the "opportunity" to give back in hopes of a large partnership allocation(which is so political) and your family is spoiled by the Jones vacations.

4. You forget about the actual business decision of the fact that "YOU" had to do most of not all of the work to get this business off the ground (I give credit where credit is due) using the backing of Jones' name and marketing material

Once you're to that point and say you have 40-50 million grossing 350-450k the math of being indy is huge. Most Jones reps don't have two boa's at that level... So let's talk some approximate numbers for the heck of it

You have 50mm you take 70% which is what I took..

35 million in AUM you can get 1/2 fee based the other stays transactional ( you charge 120bps avg on F/based)

and you make 60 bps on your transactional stuff.

210,000 f/b +105,000 transactions 315,000 gross 90% payout 283,500 -90,000 assistant+taxes+rent etc

Around here a decent BOA makes 35k+18k rent/utitlies+30k taxes+7k ticket charges e/o fees etc..

Here's how you get around the taxable income issue that you cannot do as an employee

$16,500 401k, $25,500 profit sharing, 70-80k cash balance pension (done by actuaries I'm mid 30's) in retirement every year $110-120k

90k business deductions+other stuff like mileage business meals etc..but even skipping that out of the $193,000

I took home I was only taxed on 73-83k and I am putting away a milliion every 8.5 years..and I own it!

 At jones grossing 350-400 means I have a taxable income w/o 401k of 130-145. Assuming you max the 401k b/c your not netting enough to do deferred comp, ( 200k+ to participate) means you are forced to do after tax savings?(Great!!) The point here is control I can control how much income I make from 73k-193k impossible as an employee for the most part. You can depreciate many things or write them off.. The tax advantages are HUGE!!

I wouldn't mess around with being indy unless you have assets more than 10-15 million. The numbers make better sense for someone with a larger book instead of just 10 million. If you are at that point I wouldn't  change unless you had a couple of other people coming with you to split costs and an assistant.

It's funny watching the people who are at Jones trying to defend a business argument based on emotions and comfort and not logic. I have respect for a personal decision to stay, but please don't fool yourself about it being logical.  Most people who start businesses want control of their own destiny. What is so ironic about the path at Jones is eventually you are taught that having all of that control again ( like you had doorknocking) is really not worth the effort. This is because you have now "arrived". You have arrived alright... to the place that Jones wants you to be..Worn out, tired, lacking creativity, and in a snare that is hard to break free. Not to be taken the wrong way but it is sad to look bad to see how caught up I was in the company culture...It's crazy it's done on purpose and I hope more people really take a good hard honest look at thier career.  I wish someone would have sat me down as a business person and said. Look here it is all the facts no B/S. Franklin T-chart this baby and tell me what you come up with...