How many clients will come w/ me?
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I left a firm earlier this year with my team from a firm that was imploding as well. I am currently at 80% of assets transferred and 70% of households. I am still chasing the paper around so it seems I will get to 85% of assets and around 72-73% of households. Believe me that after 15 years at one firm I was very hesitant to make a move, but in the end it was definately the right move. It’s a great deal of work, but if you truly have deep relationships with your clients you will be surprised on the upside of what will come. I had 8 households that completely shocked me that didn’t come, but in the end still well worth the efforts.
[quote=Gordon Gekko]
Ryedog, did the brokers from your old office hammer your book? I don't agree with brokers who aggressively push themselves on a departed broker's' book. I also agree with the regional comment.
[/quote] Yes they did. Some were brutal (i.e. temp slashing advisory fees, brokers insinuating that I was fired, comments of disbelief of my poor investment approaches, etc.) but some were and are class acts. It is ironic that the class brokers from my prior office are the only ones who kept any of my clients. Regarding the benefits of being with a regional, I just think it's great to be large enough to have our own inhouse strategists and analysts, but small enough to have personal access to them with our clients.Yes. IMO, any place is better than a large wirehouse.Would you guys who feel going to a regional is a positive, say the same thing about going to a Regional on their indie platform?
Ryedog, I agree - if they were smart (and decent people) they’d take the high road and not do what they did to you. In my case it wasn’t what was said, it was the frequency of the broker contacting my clients that infuriated me. They ended up coming to me anyway, the guy just blew up any chance of us remaining friendly.
[quote=HAAIC]Why don’t you use some common sense, CommonSense?
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I am a little confused by this. I am simply trying to get a rough idea of what guys in the trenches are seeing in their WS branches when an advisor leaves. I would think that looking before you leap is using common sense, but what do I know.
[quote=nestegg]
I left in Jan, and I have 80-90% of assets over at this time…it was much easier than I had expected it to be with the market etc. Only 3 A clients didnt move and 2 of those are due to health issues that cropped up after my move, so in time they will move.
Alot depends on your relationships and of course where you move…if you gor from WS to BAC/ML or MC/SB I wouldn’t expect the skeptical ones to move…if you go to a regional or Indy I think you will have more follow, your reasoning for moving makes alot more sense in teh latter case.
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Thanks for the quality response. This is the kind of info I am looking for. Our two top choices are 1) Stifel, and 2) Indy.
[quote=Gordon Gekko]I think Merrill is the hardest to leave and retain large persentages. Wells Fargo is a trainwreck in most clients’ eyes if they were originally AGE clients (there was that intermediate stop at Wachovia) so that might be the easiest move in the history of moves. [/quote]
From your lips to Gods ears…
Alright, so some of you have given good feedback that you have taken 70-90% of your assets w/in a few months. That is about what I would expect. I realize that it is based on your relationship w/ your clients and I think that we are in good shape there (although you never know until you pull the trigger).
So, what about the people who are too ashamed to brag about their success on the forums? Has anyone seen the 30-40% client conversion train wreck? Has anyone seen an advisor leave to a protocol firm and get sued or slapped w/ a TRO? My partner is our manager, so we have to be extra careful to avoid ‘branch raiding’ problems. Any horror stories?
You will of course have a surprise or two but overall your clients will follow. You should also view this as an opportunity to leave behind the clients that drain you financially and emotionally.
I have seen Merrill as the toughest to leave because of their clients’ attachment to the firm. Also, if you left and your partner stayd behind, that might be bad and a tro might be coming. If you both leave, problem solved.
There are a number of factors regarding your success conversion when you leave. The #1 reason is “you”. If you have taken care of your clients, serviced them, and made decisions based by putting their needs first, you will move most of your assets. If you have a high return on assets, pressure people into making decisions, and have been only taking incoming calls in this crappy market, you may be in for a reality check when you hit the bricks.
Next factor is where and why you are moving. You need to answer the "what's in it for me?" that clients will ask you. The better the response, the more success you will have. If you go to another wirehouse for a check, there's no benefit to the customer unless you are upgrading firms. If you go to an independent platform, you will need to communicate the unique benefits of the firm you join and why it is good for the customer. It could be pricing flexibility, research, better money markets, no product pressure, or freedom to make all decisions based exclusively on what you think is best for the customer as examples. On the independent side, make sure you have a solid clearing firm to utilize as that is where accounts will be carried and people want to know that their money is safe because clients will be making their checks payable to the clearing firm. Third, who is left behind to take over your book of business? Have you seen other reps leave your branch? What happened to their book? Merrill has done a great job of putting reps into teams and it is part of the reason they have higher retention rates than most firms when reps leave. They sell the total Merrill concept and make the rep more invisible if they were to go because the products are mostly Merrill products. Prior to being bought by Bank of America, they bragged about 60% plus retentions. I sincerely doubt those numbers still apply. Fourth. What do you have for products and services when you get to your new destination? Is it better or worse than what you have now? If you decide to make the move, make sure you provide exceptional service to every client you want to come with you for a few months prior to resigning. I would get the book Going Independent at www.cantella.com if you are considering a switch regardless of where you are going. Best of luck to you.broker in our region left and and went to mother merrill (before the bac thing). Only took about 20 percent of his book. He’d been w/EDJ for over 10 years. OOPS ! Didn’t last long at ML after his book didn’t come with him.
What are thoughts on the dollar value of assets that need to transfer to be successful at an independent, with a 90% payout?
Too many variables. You can buy an office building in some parts of the country for $75,000, while in other parts of the country $3,000 a month is going rent for a decent office. The other big factor is sales assistants as it may be your biggest expense. What is your return on assets? Some people generate under 1% while others are stock traders. You need to work backwards to get to your answer. First; how much do you need to pay your bills for living expenses? Then establish a reasonable budget for your business expenses. Look at your current return on assets to get to your needed asset number.
Here's an example. Take a $400,000 producer with a wirehouse. Payout might average, say 35%, or $140,000 a year and their book is $40 million. If they went independent and hired an assistant at say $30,000 per year, running an office could be anywhere from $60,000 to $80,000. You will have transaction fees as an independent, so bump your 90% down to 83% (ballpark). Therefore, you would need to move over about $24 million, to keep your same pay check if you have $60,000 in office expenses or $26.5 million at $80,000 in expenses. If you worked out of your house and had no sales assistant, you might only have $20,000 in annual expenses and you would only need to move $20 million. That's an extremely oversimplified formula. You may now be paying health insurance as an example on the negative side for independence and on the plus side all of those expenses are now deductible on your taxes, so it is not truly a dollar spent is a dollar gone as you would be in the 28% federal bracket plus state taxes make two thirds of your business expenses a closer estimate of your true cost. A good independent firm will be able to help you with this calculation. Give them your production run, your cost of living to pay your bills, run through estimated costs for the type of office you are planning to build and let them give you a more accurate number. Good luck.In terms of client retention, there's a lot of bravado but very little hard statistics quoted in the forum. We kept fairly detailed notes and here is where we are after leaving ML this past fall:
Top 1/3rd of clients - we kept 92% of the relationships. Middle 1/3rd - we kept 80%. Bottom 1/3 - we kept 52%. Overall - we kept 73% of the total relationships, but some 90% of the fee-based assets and fees. Although I was pleased, I sense in a better market we would have done even better. Several top clients, for example, used our departure from the wirehouse to simply go to cash and move their $ to a bank. Likely when the dust settles they will come back to us. The poor retention with the "C" clients didn't really bother us. In this category were mostly inherited, transactional accounts. It is a ton of work to move, so please don't consider it unless you are ready to work like a rookie again. And it goes without saying that your relationships with your best clients should be more than solid.I work for a bank program and when the guys leave, it has been between 15% and 50
% of assets that transferred. I assume I would be able to take about $7-11million(25%-35%) in assets as a mid range guess if I use these numbers. Around $3m-$4m would be at 1% fee based. The bank makes the clients a little more sticky. I feel I have a good relation with my top clients, but this market has shaken the confidence they have. Since the downturn began in October 2007, I have been extremely aggressive in working my top clients and reducing the equity exposure during 2008, resulting in no "A" clients lost during the market downturn. But I still anticipate losing some of these clients. I have looked at it multiple ways and at $300,000 in production you would make the same as $105,000(no I do not want to do only $105,000 in production) as an independent, even factoring all the expenses on both sides. Additionally, you would have to bring in fewer assets due to huge haircuts and referral fees from the bankers. I looked at $10m(3%) vs. $2.1m(5%) in new assets, not including recurring revenue. So, my conclusion would be that even after losing 2/3 of my book due to bank stickiness, I would be better off independent. I just want to see if I am missing something here. I know that I will have to go back to my ML days when I first got in the business and work my tail off to rebuild, but am prepared for that.There are only a handful of ML advisors in each office who aggressively go after a departing advisor's clients. No one is going to turn away business, but most advisors try to handle the process pretty professionally. I do believe that ML does still have very strong retention rates, and it has very little to do with proprietary products. I would say a very strong advisor could get 70-75% of assets from ML, but I've never seen any more than that. I don't care about % of households b/c it's the % of ASSETS that matters. I've seen a team take the vast majority of households, but could not bring a $63M relationship with them. That household alone was 30% of their production, and that's going to take a long time for any advisor to replace.
lol at several comments…
1. assets only matter because the recruiting deals are based on you bringing them over…if there were no asset hurdles, just production, then you would care more about bringing over a % of your production, which would leave behind many non-paying assets that many of us don’t care about
2. the ML office near me has lost 30 - 40% of the office advisors. A large group of us managing nearly $2billion in assets total left ML last year, and believe me, clients were ready to exit. Each of us had two asset hurdles to meet, 50 and 75%, and each of us has met them both
3. sounds like every ML office is the same. there were advisors who were POS’s that made the same slanderous claims as referenced above, and ultimately looked desperate, unprofessional, and sleazy trying too hard to retain accounts…now we’re laughing at them and telling the tales of their lines of B.S. through the area - to the point where it has reached the ears of enough people that it has impacted their reputations. Others were very professional, and if I ever get the chance to act the same way toward them, I will - good solid guys who called the clients, said “so and so left the firm, your account was reassigned to me. I would like to meet if your inclined to do so, please let me know what I can do to help” and left it at that…
4. I don’t know if there were any advisors that left in our area to other firms who didn’t say “i’m not taking that client on purpose”…so we all leave behind some assets that we are ok with
5. Ultimately, nearly every book is 80/20 or even more like 90/10…most of the production comes from a few. The losing firm says they are “retaining the majority of the assets”, but even if they retain 1/2 they usually are watching a lot of revenue walk out the door
6. ML has stated for years that people that leave only take 30 - 40% of their clientele with them. I know at least 30 advisors who have left ML throughout the country, and none - ZERO have taken less than half…and most have taken 75 - 90%.
Not all deals are asset deals, mine had no asset requirements. Upfront was based on TT, and backend on production once at the firm.This enabled me to leave all my problems behind and also non producing accts