Well I guess you are pretty clever, then, not to mention articulate.

Seriously, it takes a hard-headed business person to evaluate all of the options, Fact is, I'm a damn good cold caller and haven't done it for about ten years. Wire house support could free me up and make me more productive and make my life simple. But then, you don't really know much about me, anyway.

Maybe I was too tough on you, however what you say doesn't make sense. I'm a solo indy, and I can assure you that I after expenses I'm making about 70% net. Where in the world are you coming up with 38%?? 

I don't do volume business, therefore I don't need to waste money on an assistant. I answer my own phone and I do my own paperwork. I will continue it this way north of 500 gross/year.

I would never dream of going back to a wire for more support, much less anything else. WAKE UP MAN!!

[quote=vbrainy][quote=GolFA]

[quote=Edward Pwns]What's all this nonsense about the little guy getting hurt if 12B-1 fees go
away? Like you give a shisa about the little guy. Trails are gravy, and you
don't want your gravy to go away.

I really hope you don't actually believe the PR put out by the mutual fund
industry. [/quote]

What are you talking about? C shares can be cheaper than A shares at 1% wrap. Maybe you don't give a shisa about the little guy - my point was, some little guys come to me and I help them because I am a nice person and do care.

If you think the way this industry offers to charge clients is just PR, I question whether you really have a diversified book and can relate to reality.

[/quote]

  Most little guys (under$50,000) are better served by staying in their 401k program or trading on line.

[/quote]

Most little guys MAY be better in a assett alocation fund, but trading online?  Do you really believe you can't bring one percent of value to the AVERGAGE little guy?  Profitably no, but if you are a "nice person"? Statistics say avg individual investor realizes 3-4%.  Gotta e able to beat that after fees.

[quote=ezmoney]

Maybe I was too tough on you, however what you say doesn’t make sense. I’m a solo indy, and I can assure you that I after expenses I’m making about 70% net. Where in the world are you coming up with 38%?? 

I don't do volume business, therefore I don't need to waste money on an assistant. I answer my own phone and I do my own paperwork. I will continue it this way north of 500 gross/year.

I would never dream of going back to a wire for more support, much less anything else. WAKE UP MAN!!

Alright, I recalculated and my payout on AUM is something like 44%, that's bottom line schedule C divided by AUM.  My wrap accounts are at 1%, have lots of C shares and certificates. And total GDC is about 275k 12 month trailing.

My Indy is not top paying, and I have a solo office, very comfortable with some part time help.

I'm just saying, if you are kind of laid back with the fees and money turnover, the payout ain't that hot. Payout on GDC is interesting, but ROI on AUM seems to just get hosed in any b/d scenario, so why not let them pay fixed costs and focus on asset gathering.

Part of me says, just move to Merrill and focus on cold calling, and the other part says screw the whole broker dealer thing completely. Or do nothing, just go play golf, probably not a bad idea.

 make that, four point four tenths of one percent per year of AUM.

One more comment, I net four point four tenths on one percent AUM and some guy is going around whining about 12b1 fees. And the common man needs help, needs me to take the stress of equity investing in good times and in bad, absorb the discomfort of making him take action today for tomorrow. Go figure.

I see now...you're phrasing things differently that we're accustomed to.  I'm pretty close to you...right at 275K pace this year, 36 million in assets, net about 68% of my gross, so if I run the calculation like you are, it looks like this...

275K/36 mil AUM = velocity of about 76 bps

.7639 X 68% net = 52 bps net on my book compared to your 44 bps

so, your AUM is a little higher than mine, but my velocity being slightly higher evens things out.

...and EZ...I'm using a part-time assistant now...once I get to 50 million AUM, I'm hiring another licensed assistant...I'd rather have a little help than all the money.  Even with 1.5 assistants. I'm still figuring on personally netting well over 200K per year...I can live on that.

Indy, nice to see the comparision, thanks.

I guess when you look at the net net, and recurring revenues, one thing you could say, life is good. The opportunity cost of switching indies appears limited, versus starting your own RIA firm or something. Still not sure about the exposure of going RIA, the only two solo RIAs I know may be slightly crazed ( probably just a coincidence).

EZ, I think most of us find that having an assistant takes us to the next level - mentally, if nothing else. No man is an island.

[quote=aldo63]we all will be hurt by this. that is why i am a big first trust,Van kampen and claymore uit producer. just trying to stay ahead of the ball of s**t[/quote]

Indeed!  Gotta love UITs -- those ugly red-headed stepchildren of the investment world!  I do and my clients certainly do as well.  Great point, Aldo!

About 35% is managed money, 40% VA and the balance is stocks/bonds and mutual funds. Using the lpl platform, I really don't see how one can justify an assistant until north of 500k. Again we (indies) for the most part are not doing a volume business.

Can you really justify an assistant grossing 300k? I have plenty of hours in the day to prospect, meet clients, and run my business.

When I do hire an assistant it will be my wife(cheap labor) She is also part of my sucession plan. She will get licensed so if anything happens to me she can take over the business which currently pays reccurring income of approx. 120k net. on 16 mill aum.

You’re doing fine, sounds like a nice plan for  you. Don’t forget, as your money grows, your fixed costs diminish as a percentage of gross and every new dollar is profit. Spending a little on labor can mean a huge increase in your own quality of life. Clients like it too - a lot of good comes from having that " third party" sounding board in your practice. I have been fortunate to have a stable, caring assistant work for years at about 16 hours per week, four - four hour days. My wife tried it, she hated the paperwork, overexposure to me, and relatively low wages. A smart person without a college degree can work really well for the role.

I just went Indy a few months back and  have a full time assistant in my office. With the transfers, she is obviously great help, but as I become more in tune to processes within the LPL system, I see a less need for her here fulltime.  I recently asked her to make a list of what she feels she is responsible for here in our office.  She made the statement about being able to do everything in about 2hrs per day so I’m hoping to put her on a 4hr, 5 day schedule very soon. So, basically I’m glad to hear other opinions on this, especially GolFA.  It makes me feel better about reducing her hours.  I love the LPL system, and how in control of the situation I have become. 

That's great. As far as an assistant, the consistency factor - working part time, being positive, motivated, high energy - plus the specialization and experience factor, means for us ( me and my wife as non participating co-owner) paying a better hourly wage, and now I am paying a quarterly bonus, based on new clients aquired through referral from client-bring-a-friend appreciation events (golf lesson lunches and lunches for non golfers). Bonus is also based on achievement of things like mastery of Morningstar Workstation " planning" tools, pulling together Allbridge reports for client reviews, making the files look nice for wrap account compliance reviews - and basically managing all of compliance.

The return you get from a great assistant ( even unlicensed) is bigger than a buck. And of course, reinvesting in the business compliments taking money out that gets taxed at 40%, or whatever. The key is to try to get the right person and align interests, just what we try to do with our clients I guess.

[quote=vbrainy]

What in the world will you guys do when the SEC gets rid of your

12-b-1 fees?  Starting every year from square one has got to hurt.

C shares are just another choice among many for the client. Wrap accounts are more complicated, have minimums and the b/d gets paid more than the broker and can be more expensive to the client. On smaller accounts, there are numerous features - advantages -benefits to be consider. Not just black and white, unlike reality.

[quote=GolFA]C shares are just another choice among many for the client. Wrap accounts are more complicated, have minimums and the b/d gets paid more than the broker and can be more expensive to the client. On smaller accounts, there are numerous features - advantages -benefits to be consider. Not just black and white, unlike reality. [/quote]

Exactly HOW does the b/d get paid more on wrap accounts?  Educate me please…

C shares pay 1% GDC to b/d, b/d takes regular haircut, rep gets regular " payout ".

Wrap account at 1%, b/d takes regular haircut, minus " admin fees", and the net is lower than C shares. At least, that's how it works in my situation.

[quote=GolFA]

C shares pay 1% GDC to b/d, b/d takes regular haircut, rep gets regular " payout ".

Wrap account at 1%, b/d takes regular haircut, minus " admin fees", and the net is lower than C shares. At least, that's how it works in my situation.

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