LPL Drops 401(k) Match and merit increases
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10% of bad employees being trimmed sounds good in theory, but the reality is that there will be good ee's leaving too as the benefits have all but disappeared (no merit increase, no bonus, no tuition reimbursement, and most visibly: no 401k match). I'm very concerned with the level of support we'll be receiving going forward.
My assistant and I have resigned ourselves to multi-tasking while on hold for support. I can’t imagine it will get better unless enough of us bitch and moan…again. See Spiffy, I can rag on my current firm too! LPL ain’t perfect, but going in I realized there would have to be something that was sacrificed to get the appropriate payout.
I was talking to a buddy at Jones yesterday and we were comparing numbers. His gross 347 mine 302. His net was 121, mine 210. I can buy alot of software, computers, etc for the 89K NET difference. Maybe throw in a trip to Hawaii too.Good for you.
Did you take things like your assistant's salary, her benefits, payroll taxes, rent, electricity, trash removal, paper, postage, etc out of your $89K? I'm sure you're still on the positive side compared to your buddy, but it's probably not as much to the positive as you suggest. Perhaps I'm reading your paragraph incorrectly and you meant that your net after expenses is $89K higher.[quote=Spaceman Spiff]
Good for you.
Did you take things like your assistant's salary, her benefits, payroll taxes, rent, electricity, trash removal, paper, postage, etc out of your $89K? I'm sure you're still on the positive side compared to your buddy, but it's probably not as much to the positive as you suggest. Perhaps I'm reading your paragraph incorrectly and you meant that your net after expenses is $89K higher. [/quote]Do you know what "net" means?
Spiff, I think he was talking about his net AFTER expenses. The net is a big difference in the lower-production tiers, because your overhead is not that high as an independant. Once you get into the 500K+ range, then msot indies start hiring more staff, have bigger office, etc., and Jones/wire reps start earning higher bonuses, etc. But at the lower gross levels, indies can net/net/net FAR more than we do at Jones.
Spiff, think about it, look at your expenses - rent, BOA, utilities, etc. I am in a very expensive area, and have a very large office. If I took all my expenses, excluding the fat check to Jones, it's about $84,000. And that assumes that I would pay for EVERYTHING that hits my P&L at Jones. I would trim back some stuff (i.e. technology), but then other stuff would be more expensive (stuff that Jones gets better deals on than "local prices" due to size). And Jones pays for some out-of-pocket stuff (marketing, seminars, etc.). So by-and-large, my expenses, if I kept the same space and the same BOA, would be about the same (these numbers include a depreciation number over 5 years for the buildout and furniture as well). Yeah, I might have to pay someone to troubleshoot laptop or printer problems or whatever that gets picked up through our Tech allocation, but it's likely small in comparison to the total number. So, the first few years, I am making money off Jones - not a deficit, but could not stay in business at my production level as an Indy. The few years after that, Jones is making money off me - my expenses have stayed the same, while my production has grown significantly (and they are taking 60% of it). Once I hit big numbers and the bonuses start to kick in, then my payout starts to increase again. Over $1mm gross, if you organize your business right, your payout can be very high at Jones (well over 50%). One of my closer friends in the region does about 800K and nets about 50%. But he only has 1.5 BOA's and a very small office that is paid for (i.e. no depreciation), he does no marketing, etc. But then there are $1mm producers with 3 BOA's and big offices and lots of activity. Their bonuses are much smaller due to overhead. I just think it is very hard to ever compare apples-to-apples when comparing indy shops. You have to look at all the details of the specific operation and compare to your own situation. In other words, nobodfy can say "you will net X as an indy in all cases".B24, I think you are off base. If your profit is skyrocketing at Jones when your production goes up, it means you are keeping overhead low. If you do the same at Indy, Jones can’t compete on payout. I really believe that with the greater flexibility to invest in technology as an Indy (if the advisor is inclined) we can be more productive with a smaller staff (all things being equal).
If I keep expenses relatively fixed, and continue to get 90% of my top line, profit really moves upward quickly in the higher gross revenue brackets.I am afraid Sir Spiffy others are correct. The NET is the difference between income less expenses. I run 70% utilizing one person half time. And that person is my wife. So it comes back home. I don’t include her in my calculation other than expense. If I did it would be close to 80%. Everything is factored in, except the additional tax savings that I get every year as a self employed individual versus employee.
The numbers are right on and if you would like to see them PM me. In California, the reps out here are not at the same % you are.Luv, as I also said, there are wide variations among indies, and that you cannot compare apples-to-apples across the board. I think I also made the point that you WOULD make more as an indy, but that at higher production levels, the % payout gap closes (but I did not say “meets”). But you’re right, generally better technology can help you leverage your operation better.
[quote=Hank Moody] [quote=Spaceman Spiff]
Good for you.
Did you take things like your assistant's salary, her benefits, payroll taxes, rent, electricity, trash removal, paper, postage, etc out of your $89K? I'm sure you're still on the positive side compared to your buddy, but it's probably not as much to the positive as you suggest. Perhaps I'm reading your paragraph incorrectly and you meant that your net after expenses is $89K higher. [/quote]Do you know what "net" means?
[/quote] Thus the "Perhaps I'm reading your paragraph incorrectly" statement. I knew that I may be reading it one way and foot was meaning it another. Either way, good for you. You folks will notice that I'm not the Jones is better than indy guy. I like being at Jones and I don't believe it is the evil place most of you people make it out to be. That's my perception. If I were indy, I'd probably like that too. I'm not, so I don't know that for sure. So, if you are trying to goad me into a spitting match about Jones vs. Indy, you're wasting your time.
That's why I said "all things being equal". To get into nit-picking, though, I don't know that you can accurately say the gap does close, because in order for it to close Jones would need to be distributing 90% out -- 40% through the net, and another 50% in bonuses, LP, and profit sharing? If you can explain why the gap closes, I'm truly interested in hearing it, but I just think it continues to widen-again- ALL THINGS BEING EQUAL. ETA: RJ does pay a premium over 90% into a deferred comp type plan for anyone grossing around 500k-600k and up also (up to 100% at around 2million+ I think-less ticket charges). This too makes them very tough to beat.Luv, as I also said, there are wide variations among indies, and that you cannot compare apples-to-apples across the board. I think I also made the point that you WOULD make more as an indy, but that at higher production levels, the % payout gap closes (but I did not say “meets”). But you’re right, generally better technology can help you leverage your operation better.
Spiff-
Go home and tell your wife that you have decided to give EDJ 1,283,712.32 more than you have to. That is what 89K at 7% over 10 years means. You are paying a tremendous premium to start this business. Get profitable and consider your options.Sorry if you feel that it is goading. It’s real world and its out there for you if you want it.
[quote=footsoldier]Spiff-
Go home and tell your wife that you have decided to give EDJ 1,283,712.32 more than you have to. That is what 89K at 7% over 10 years means. You are paying a tremendous premium to start this business. Get profitable and consider your options.[/quote]Beautiful.