November 08 Production Numbers
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[quote=Borker Boy]Thanks for the information. It’s very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
I was just wondering if an indy can charge fees on any account size.[/quote] Our firm's minimum for fee based is $25k. But I personally do C shares up to $100k.[quote=Borker Boy]Thanks for the information. It’s very difficult for me to implement our fee-based option with the $100K minimum; I need the upfront pop t-o-d-a-y.
I was just wondering if an indy can charge fees on any account size.[/quote] Borker, I use C-shares for most accounts under 100K, and any DCA money. I don't do it to annuitize my business - I really feel it's better for the client. It will take 10 years in some cases for the breakeven point, and many people have time horizons of less than 10 years. It's also a huge dis-incentive for a client to pay 4.5-5.75% upfront. So I find C-shares very useful. But you will make far less upfront, and it will take 3-5 years for your income to break even versus an A-share under 100K. Over 100K, I am trying to use Advisory on new money. But I usually stagger it with other things (fixed annuities, CD's, MMKT for short-term income).I am thanking god each day that I went indy 1 1/2 ago. With my payout and fee based I can weather this storm. But my income has been cut in half.
We (Wachovia) bill quarterly, but are paid monthly. So we’re being paid on account values a/o September. First quarter '09 will not be pretty
Jones pays monthy and clients are charged monthly. Most of us don’t do enough fee based for it to matter.
So, how does a fee only advisor survive when his income just got cut in half over the last two months? You can't possibly bring in that many new assets quickly enough. Isn't an environment like this one where a commission based advisor may not even feel the pinch? I know I haven't so far. In fact I had my best month of the year in Oct, followed by a marginal Nov, and the transfer paperwork calls for a stellar Dec. But, if I had a fee only biz with $20MM that is $10MM now, even bringing in $1MM a month won't get me back to even for the next year.< ="-" =“text/; =utf-8”>< name=“ProgId” =“Word.”>< name=“Generator” =“Microsoft Word 12”>< name=“Originator” =“Microsoft Word 12”><>
A little perspective re: Wirehouse v. Indy & fee-based v. commission. I left WB for LPL one year ago (today, in fact) and my business is 100% "traditional" commission-based. My 2008 income is already right about 80% of my 2007 full year income. Consider that this includes the actual transition (one never takes 100% of desired clientele, followed by the worst year (especially last @2 mo.) in most of our memories), not to even bring up the state WB is in and the proprietary effect that's had on WB brokers specifically. All things considered, I am happy as hell to be smoking a cigar poolside right now, having control over my business and branch (as OSJ) and having my income hold up so well, given the state of the markets. Couldn't be happier!
Thank God for a a few rich guys I make cash hand over fist with my strategy my stuff is onm track, month 15 and I hope to do $20k. Getting some good accounts with their friends.
Attrition; Of my class in the 70’s there are only 28 left. Of them I’m 3rd. My paycheck is just getting my over the hump. I can’t imagine how the other rookies are paying the bills. I’m LUCKY LUCKY LUCK. I’m not bragging and not really proud. Hard biz newbies. But I’m having fun doing it and think I’ll be here in the long run.
live within your means and when your fee based is cut in half you can manage. Live like a king and you’re dead. I doubt very much that comission brokers a barely feeling the pinch spaceman! They’ll be the first to fall. Trust me on that.
ez, if you think that the fee-based model is your salvation, then I believe you are misguided. Unless, of course, it is your contention that it is by far (and provable, beyond argument) best for your clients. Good luck with that argument.
I don’t think any fee-based advisors have had their incomes cut in half. If their book is fairly balanced, they are probably down 25%-30%. Let’s remember, most balanced portfolios will include bonds, govies, some cash, etc. If you are a pure equities advisor, yeah, you maybe down 40%+.
B24
I’d like to ask any fee-based former AGE Advisors doing under about $400-450k how their income has been and will be effected. I suspect that with the Dow down over 45% from last years’ high and the new Wach Sec hurdle grid going into effect, I suspect declines in income of 40%+ are likely. (For you wirehouse guys who want to scoff at $400-$450k, save it. Your @35-42% of whatever your “gross” is doesn’t impress me anymore)
maybe down 40% ARE you joking? Brandes, Lazard which have a few people in are down over 60% YTD. Do not believe any managed account unless counting cash and GOVT stuff is down less than 40%.. I am not a big believer in Managed Money, in fact I think it is bordering on criminal have a book of all clients in this stuff, but from the guys I see who have most/all their book in Managed Accounts they have pretty much had about 1/4 of the people close their account in the last 3/4 weeks. Think this business, if the market does not rebound will be very different in 12-24 months. The last stage of a true bear market is client despair, thats when people realize they are not getting even and paying 1.5-2% to watch you account go nowhere, tough sell.I don’t think any fee-based advisors have had their incomes cut in half. If their book is fairly balanced, they are probably down 25%-30%. Let’s remember, most balanced portfolios will include bonds, govies, some cash, etc. If you are a pure equities advisor, yeah, you maybe down 40%+.
Nothing Magical about 8000? That was new closing low on the DOW, after weeks of bouncing off 8000. That will usually create a lot technical selling, and psycological damage. Looks like it happened. Just a number yes, but it matters, just like it will if we dont hold 5000.[quote=fritz]… and the 500K guys will struggle to do 200K next year, even if we stay around 8000 on the DOW, if we break than all the above numbers are way to high. [/quote]
We broke 8,000 on the Dow just hours before you wrote that, with a close of 7,997. It may be ugly, and it may be a long time since we were below that level, but there’s nothing magical about 8000.
If you are still adding to your fee based assets, the pay cut is minimal. Another flaw in this thread is fee based accounts being down 40%. Not all accounts are down 40% just because the market is. This month has been my biggest month since May with a week to go.
icecold1d,
You can compare your business model to the dregs (MUCH more that half of mutual funds have ridiculous expense ratios and are complete rip-offs) and feel good about it. What you can’t do is try to compare total expenses to the best mutual funds (which any advisor worth his salt uses to the exclusion of those “dregs”). I just don’t want to have to re-sell my entire business model every quarter in a down market, but to each his own.
[quote=iceco1d]You sound like a bit of a toolbox fritz.
I'm nearly 100% fee-based (barring a few 529 plans), and my portfolios have lower avg. expense ratios than more than half of the mutual funds out there @ NAV - when INCLUDING my fee. [/quote] Sounds good, how are you doing this year for your clients? Let me guess if someone called you end of Sept you told them to stay in for "long term"? Right? that way your could continue to get your fee. Guess at what point would you get them out so they would not have to continue to lose sleep over their losses and put them in a CD or something to that effect? Pretty sure that type of thing not in your bag of tricks.ice, I am not challenging your business plan or model, but I thought that your quoted total expense to clients (including your .9%) of roughly 1.25% seemed off-kilter. I’m not a fee-based guy, but .35 bps internal expenses seems odd (i.e., not funds, nor discretionary EFT portfolios, nor private money management nor any other structure I can think of). My main concern has been to ask if a percentage fee is always in clients’ best interest as well as having to defend that line detail on statements every quarter during a down market.