Great stuff, mplsindy...

On a separate note, below is most of a reply PM I did today from someone looking to take the plunge.  Although it's somewhat repetitive, since I made lots of keystrokes and took about a half hour out of my day, I thought I'd share since some may find it useful...

“What did you do to prepare and what would you do differently if you had to do it again?”<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

What I would have done differently is kept a better lid on my departure.  I got called out two days before I planned on leaving...I suspect from an employee at the office furniture place.  If I'd had my head on straight, I would have insisted on meeting with the owner only, after hours and done business in my corporate name only.  In the end, the two days wasn't a big deal, but it made for an uncomfortable confrontation that wouldn't have been necessary.  Bob Fragasso has a great book that if you haven't read, you should...ASAP.  Three months seems like an eternity, but it will come faster than you think.

“I have been looking at offices at LPL. One option is join an office of 2 brokers and be my own OSJ. The other is to join a large producer at LPL and get a 60% payout (my only expenses would be health ins, E&O ins and platform fees.  If I choose the 60% payout option he will raise my payout based on production (up to 80%).”

To be honest, the 60% doesn't sound bad to me, particularly if you can structure the set-up to allow for a peaceful exit down the road if you get to the point that you want to be your own OSJ.  Assuming 60% of gross, that's 15% less than LPL would charge you if they were your OSJ and they would expect at least 125K in annual production, although they'd give you time to get there, and based on your info, I don't see this as a difficult hurdle for you.  That 15% covers your telephone, rent, utilities, office supplies, use of copier and fax, etc.  Not a bad deal if you have a decent exit clause.  It also allows you to focus on moving clients, rather than setting up an office, which helps keep a lid on your plans.  I would be up front with the OSJ and tell him that you would like to structure the agreement so that a few years hence, you can move out to your own shop and seamlessly move your clients also.  You may decide never to do this, but you need the option.  Also, the 70 & 80% payouts seem very fair, particularly if they apply to all revenue rather than just what is over those thresholds.

“…how are you getting new clients?”

My new clients are coming from some unexpected sources (i.e., the bank president), but I would say mainly the following places: (1) client referrals - these have increased quite a bit since I left the bank.  I've made it a practice to tell clients that I can really use their help since the bank is no longer spoon feeding me (although like you, I made most of my own success...the referrals at the bank were 90% junk).  I think many clients take a sense of pride in helping me succeed.  I always reward the extra good referrals with a note of thanks and a $25 gift certificate to a favorite restaurant. (2) Referrals from my accountant friends.  Not as valuable as client referrals, but I've received several good fee-based referrals (since we can revenue share with them on that - I'd offer 10% of the first five year's worth of fees) (3) Business received from visibility in the community.  I do a mid-day and closing market report on the local radio station ($250/month with 12 second spots 3X/day with the local weather) and a business card-size ad on the weekly local stock page ($20/week).  I'm also chairing the local <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />United Way campaign this fall, am treasurer of their board, and am a past president of the local Kiwanis club.  I make it a point to attend chamber meetings and eat lunch a places that other community leaders frequent.  (4) Consolidation/new investments from current clients.  I have several clients that have either added to their holdings or took this opportunity to make me their exclusive advisor.

Looking back over the past year, these are some examples of new business I've booked; 1.5 mil in fee-based trust accounts I was working on before I left, 1.3 million from a guy I worked with on the United Way board, 600K from an out-of-state son who inherited an was told repeatedly by his parents what a good job I did for them, $500K from a client referral, $400K from a client referral, $270K from the accountant referral,$350K from a client referral, $220K from accountant referral,  160K client referral, and many other smaller accounts from various sources.  All in all, I probably had about $6-7 million in new business (most of it fee-based and L-share annuities), and brought probably $17 mil from my old book (book was $47 mil, but I only targeted about half of that...some was immoveable due to irrevocable trusts, and some was just garbage...fee too low, CD whores, etc.).  I figure to have more new business going forward since the transfer rush has slowed to a trickle (although some is still coming more than a year after I left...I'm only targeting half a dozen clients I left behind at this point, but others are coming unasked).

“…how good a relationship did you have with your clients?”

I would say that my relationship was pretty good.  Some had known me since I was a child, a few were family, but many have only worked with me for 4-5 years.  I noticed that clients who were newer tended to be more hesitant to move.  My contact with them was similar to yours and I did very similar stuff before I left (taking fee-based clients to lunch, etc.).  If I was your inspiration on the contact ramp-up, you've made my day<?:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" /> . Some you expect to come with you will surprise you and stay.  Some whom you expect to stay will surprise you and leave.  Life is an emotional roller coaster for awhile, but you won't believe how refreshed and invigorated you'll feel after you make the move.  I'm happier than I've been in years.

Last, but not least, have an attorney advise you on permissible activity/contact with former clients once you make the transition.  LPL has a staff of attorneys that will give you some unofficial advice based on how your non-compete reads.  If it is a particularly messy contract, you may want to spend the extra dough an have your own attorney advise you.

That's quite a rant, but hopefully I got through all your questions.  If you need clarification, please feel free to PM me.  I feel blessed in this career, and blessed in my particular situation and I get a lot of satisfaction helping others navigate the same waters I did in 2005 (thus, the numerous posts...).

If you find all this helpful and want to express thanks to those who've been helpful along your journey, consider posting about your transition experiences for the benefit of others who are considering taking the plunge.  Good Luck...

Cool post Indy.  You’ve clearly done a great job, and are an inspiration to the rest of us!

[quote=mplsindy]

NASD Newbie - are you communicating via a time machine from the year 1985? 

I have worked in many environments in my 20 years in financial services.  I have friends in the wirehouses, in the banks, regionals, you name it.  I had lunch yesterday with another friend who, like me, is now with LPL.  We met at his new building (brand new development in the Western Suburbs of Minneapolis) and he gave me a tour.  Brand new everything - plasma screens, walnut and granite receptionist desk, large board room.  Not only was it some of the nicest space I've ever seen, HE OWNS IT!

It is the height of arrogance and denial to think independence is only for wash-outs from the wirehouses.  Large producers are jumping too, and they're only jumping one way.  It's not about failing somewhere else - that may have been true in many cases 20 years ago but no longer.  It's about wanting 100% control with NO branch manager overhead/meddling and absolutely no research or product bias.  This is what folks like you don't get - it about the advice model, not just the economics.  

You're right that it's not for everyone.  You need to have an entreprenurial gene in your body, you need to be OK with being a business owner and managing the phone bills, etc.  (Or find a colleague who will do this and partner with them.)  However, you are as wrong as a person can be about independence being the Alamo.  It's more like leaving home and finally living your own dreams.  I'll never go back.       

Monthly "scrim" update...just under $28 million at the end of September.  I think I can get to that $30 million goal by the end of the year if a couple of things hit.  There's a lot in the pipeline...not as much got pushed through in September as I'd hoped...just over 20K for the month, but the beauty of this business is, most of it comes out eventually so October is looking like a very good month by my standards.

Once I hit the end of the year, I'll have to sit down and try to develop some reasonable goals for next year.  I'll probably put my AUM goal at around $40 mil, and production of at least $275K, which is what it will take to get back to national conference on LPL's check.

A lot can happen to derail a plan, but at least I control what the budget and my goals look like.

If you are looking at them and not looking at Wachovia FINET, you are sellling yourself out my friend. Just my opinion and I’ve talked to all 3.

Wachovia didn’t look like a true indy broker to me…others have called it pseudo-indy.  What did you like so well about them?

I am hearing good things about brokersxpress. www.brokersxpress.com. I think it is worth a look. High payouts, good platform.

This thread was doing so well until these two clowns chimed in with their advertisments…

Fine Freedom, I will let that go. I am still at a wire house and was looking for feed back.



Is LPL the way to go?

1970, I have no idea which firm is the best for you.  There are a lot of people on here who'll tell you this firm is better than that, or indy is better than wire (or vice versa).  Ultimately, I know guys who are financial advisors with all these different types of firms, are all making good money, are perfectly happy and have happy clients.

Beyond that, what really matters?  Talk to any firm you're interested in, compare the things that are important to you, and make the jump.  Or decide you're better off where you are.

[quote=indy1970]Fine Freedom, I will let that go. I am still at a wire house and was looking for feed back.

Is LPL the way to go?[/quote]

If you need someone else to tell you where to go, you are "dependent" and shouldn't even think about going "independent."

What is amusing is people who appear to be making life changing decisions based on what complete strangers tell them on an Internet message board.

This is for you, five bucks, but at long as I'm here, I'll provide my periodic "Scrim" update...

As of yesterday, AUM is $30.9 million and YTD production $211K.  I'm a little disappointed where my production ended as a few things I expected didn't hit, but I've got a lot in the hopper for next year, I guess.

What is your net payout % after expenses?

68%

I just saw Scrim's update which inspired me to dust this thread off and share how the first third of 2007 has gone.  AUM is now $35.5 million, aided somewhat from a good four pretty good months and some rollover/transfer/new money activity.  Every time I think there are no more former clients coming, another one calls for an appointment.  To his credit, my successor has been classy about the defections and we continue to get along well for competitors.  Gross for the first four months was just over $84K, although that number is really starting to pick up as I'm already pending just over $26K for May.  I should be able to hit goal of $300K this year, which still isn't where I was when I left the bank channel in summer '05, but I've been more focused on building recurring revs than hitting big numbers this year.

If I do hit my numbers this year, I'll net over $200K for the first time in my career, which is well beyond my expectations for this stage of my independence.  The only goal I've set is to be at $50 million by the end of 2008 and have a velocity of at least 70 bps.  Without a major market setback, these shouldn't be all that difficult to attain.  In a world of million dollar producers, I'm just a small fish, but I'm a happy fish.

IndyOne -

Just a short to let you know how much I appreciate your efforts on this board.  I just read this entire thread from start to finish.  It has been extremely insightful and helpful.

I am at a wirehouse firm and considering the indy route.  I have narrowed my consideration down to LPL, RJ and Wachovia.  I know several posters were negative to Wachovia, but they have made very impressive strides in the last couple of years and are worthy of consideration.

I must admit, LPL was #3 on my list until I read your posts here.  As I dig into this a bit more, I will most likely PM you for more insight.  Your time and efforts are greatly appreciated.  Keep up the good work and GOOD LUCK!

[quote=gateway]

IndyOne -

Just a short to let you know how much I appreciate your efforts on this board.  I just read this entire thread from start to finish.  It has been extremely insightful and helpful.

I am at a wirehouse firm and considering the indy route.  I have narrowed my consideration down to LPL, RJ and Wachovia.  I know several posters were negative to Wachovia, but they have made very impressive strides in the last couple of years and are worthy of consideration.

I must admit, LPL was #3 on my list until I read your posts here.  As I dig into this a bit more, I will most likely PM you for more insight.  Your time and efforts are greatly appreciated.  Keep up the good work and GOOD LUCK!

Joe,

UVEST, our B/D, has been acquired by LPL last year.  We have been integrated into the LPL platform.  They are no longer focused strictly on the indy adviser.

Gateway - thanks for the kind words and you're welcome.  It has been an interesting and rewarding trip thus far.  While there are moments of aggravation (I had a compliance email the other day accuse me of not completing a VA form, which I had to waste time responding to even though it was already signed and in the file), I've yet to regret any aspect of my decision.  Aside from the B/D's you've referenced, I'd take a look at Commonwealth...they seem to get pretty good press.  Take your time and carefully plan your move.  Keep the circle as small as you possibly can.

BFC - I know nothing about the UVEST platform, but I'm curious what you think of LPL's thus far, and if you are using the same platform as us indies (or did they modify it for your channel?)