AGE's Offer
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It's all "found money" but for sub 300k I think it sucks. I'm a 3year old broker that just missed 300k last year. That means I'm on the fast track to all of the big production goals. Why the hell should I be lumped into the same category as the fat asses that have been here for 15 years doing 250k? Don't get me wrong I'm grateful for the free $ but would have hoped that the packages were based on length of service or had some extra $ for motivated employees. The other big issue we don't know yet is "how is this getting paid for" if they give you 200k today, and cut your payout by 250k over the next 5 years guess who wins the game!
And you had better read carefully if you think your extra bonus is all yours after 5 years. The way I read the info was that it was granted after five years, and after it was granted it has a 5 year vesting schedule!
Actually Mike, it isn't free money. That's the price you're selling your book of business to Wachovia for. After they give you that money it's their book of business, and they're going to continue to allow you to manage it. On Day 2 they can terminate your employment and redistribute your clients to other Wachovia advisors. Of course, that would be a silly thing for them to do, however it's well within their perogative.
Definitely something to keep in mind.
Let's see... If you stay where you are, doing $400,000 they'll give you a beach house and a car.
If you stay there you'll get two new cars in 5 years.
This sucks because?
If you stay where you are, they'll pay to put two of your kids through college. Then they'll give them a graduation present of a shiney new business, each.
Hmmmm..
If you stay where you are and you are a 35 YO guy. They'll give you a solid retirement (assuming you don't trade your own account) 20 years at 7.2% is 800,000 and call it 200,000 from the second round. $1,000,000 and you are only 55.
All you have to do is stay and they give you 400,000 (assuming 10% for the 5 years) to go and start up your own indy office with.
Don't take it and get 400,000 from someplace else, then spend 80,000 of the 400M to makeup for the shortfall in your earnings the first year. Spend another couple dozen thousand dollars getting your clients to move. So call it 300,000 left that grows at 10% (for 5 years) $483,153. Is 16,630 per year (about 3,500 per month in gross) really worth the risk of the jump?
Or, go Indy... Lets say they'll give you 20% up front (Finet is better, but that's not an option, so) So you have $80 to start with and let's pretend that you get back to $400M at the begining of year two.
You're getting a double net (after all B/D expenses) of 80% minus your office/health/help/misc charges of let's say 7,500 per month.
Year one you're in the hole by (we'll say the 80 took care of all your capitalized costs) 250,000 (90, for ofice, 160 because of your lost income). Lets be nice and say that you do 200,000 in production year 1. There's your 160,000. Your then netting 230,000 minus your 160,000 means you're better for four years at the annual rate of $70,000 equals $280,000.
This deal looks pretty rich to me!
[quote=pghkid]
Downunder - IMO even reps doing $500k-$750k could get a better deal either at another wirehouse or if they started their own practice. 60% + 20% over 5 years is nice, but not as much as they could get elsewhere considering the change they are going to go through. What is that, 12% a year over 5 years? If they went independent and netted anywhere between 55%-65% they would be better off because of the tax advantages to owning their own business and the fact that they own their book at the end of the day. Wachovia will own their clients just like any other wirehouse would.
I would hope that the A.G. Edwards reps continue to explore the other options available to them that they have earned by building their own business.
[/quote]Perhaps they could get a better deal elsewhere, but they also have to be willing to go through the work and risk involved in moving.
"Let's see... If you stay where you are, doing $400,000 they'll give you a beach house and a car." - after taxes, what type of beach house and car are you talking about?
Year one you're in the hole by (we'll say the 80 took care of all your capitalized costs) 250,000 (90, for ofice, 160 because of your lost income). Lets be nice and say that you do 200,000 in production year 1. - Do you seriously believe that a rep would only generate half of their previous year's production if they moved?
$400k rep starts his own practice, does $350k first year minus your $90k in local expenses and nets $190K. Year 2 does $400k and takes home $230k. Year 3 does $440k and takes home $262k. Year 4 - $500k in production leaves $310k net after expenses. Year 5 at $550k in production = $350k.
If there were more than one rep in the offices, the net obviously goes up due to shared costs.
I am not saying it's a that bad of a deal, I just think there are other good opportunities out there if they want to truly own their business.
Now just waiting to see the payout grid (I know subject to change in the future) and what if any negative affect on current client accounts…
Actually it is free money. It’s a forgivable loan without any no-compete language. So if you are willing to hike up your skirt and pay it back you can do whatever the hell you want to whenever you want to. I think it’s a great deal if you are the sort of broker that wants their clients to have incredible resources at their disposal
Yeah, pghkid. I do. I've seen plenty of guys move and do half their nums from that moment on.
Let's not deceive people here huh? Let's be honest and tell them that moving a book is a MAJOR bitch! It takes a whole lot of time and a whole lot of energy and most of the people that I know that moved have said "I won't do it again!" (not that they don't but then women have more than one baby too!)
It is not unusual for a broker (going to a wirehouse) to lose half his production in the first year. There is a whole new operating system to get set up and accustomed to, there is a whole several months that are involved with getting clients to transition (they may say yes right away, but until that paper has processed, there is no account to make commissions on). It's not exactly "Usual" but it's not unusual at all.
The exceptional rep might hit the nums you project (I did 100% of my T12 the first year, but I timed it perfectly and caught the commodity inflation wave, these aren't those times). Most won't.
I am swamped, so I’ll be brief. I am a recruiter working exclusively for MS nationwide. Great culture fit… Great platform… Great deals, in some cases double the upfront + back-end bonuses. You owe it to your clients and yourself to make the best educated decision you can regarding your future. PM or email me and I will do everything I can to help you become informed.
"I am swamped, so I'll be brief."
Translation.... AW shoot! I'd better cancel that Honda Prelude I ordered!
whatever tesla. I can hear the despair in the voices of the recruiters calling me.
What despair? If you are a $1MM+ producer, MS will pay you 100-140% up-front in cash! Plus 75% on the back end. And you don’t end up with a bank pushing proprietary products.
Look… what are your options? Regionals… if any regional wasn’t going to be bought out, it was AGE. So that’s out. Indy is the right option for some, but you end up on your own compliance wise and you only get one license. Plus all the back office stuff eating up your time. So your options are the wirehouses. Wachovia, Smith Barney, and UBS are banks. You’ll be pushing proprietary products. Smith Barney’s retail arm is only 6% of their bottom line and is run by lawyers. How much can the FA matter when they make decisions? UBS’s (Switzerland) US retail arm only accounts for 2% of their bottom line. You matter even less. ML is where all the bad things you heard about wirehouses came from. As far as I am concerned, MS IS your option. Regardless, you owe it to your clients to do your due diligence on all firms to find the best fit for the rest of your career.
Last time I heard, MS’s retail arm accounted for approx. 12% of MSDW’s bottom line. What’s really the difference?
Not forced to sell MS funds. Domestically owned investment firm top-to-bottom. Investment professionals making decisions at top…not bankers. The list goes on, but I am busy talking to people who are interested. Meet with your local manager. I think you’ll be surprised.
IF you are so busy talking to people who are interested then why are you trolling here... Go 'sell' them on Morgan Stanley. I wouldnt move there for 300% and anyone with a brain wouldn't either.