[quote=vega74]If being independent is better, why is the number of them expected to drop, as indicated in the "Indie Existentialism" article? If being at a wirehouse is better, why do the regional firms score higher in the RR Broker Survey?[/quote]

I more or less said in an earlier post that none of the models is best for everyone.  For myself, there is no question that being indy is the best model for me.  I don't want or need a sales manager in the office telling me how to run my business.  Nor do I want a lot of expensive back office support.  I give away about 15% of my gross to LPL for their back office, which consists more or less of an excellent technology platform, trade clearing, statement generation, tax reporting and compliance.  Other than that, I'm responsible and I can make it as simple or complex as I want.  I choose to keep my operation pretty simple, although I set my office up with some of the best computer technology I could get, very nice furniture, a TV with CNBC, etc. in the corner and a Plantronics wireless telephone headset, all of which I'd recomment to anybody in the biz.  I like making all the decisions, and controlling the overhead.  That's me.  It's certainly not everyone, just like not every captive prefers the wirehouses over the regionals.

The surveys depend upon who you're asking and I'm not buying for one minute that the indy channel is on the decline.  I have many broker friends ask about it all the time, one of which went at about the same time as I did and loves it too.  There is no question about where I'll stay as long as I am in this business.  I'll be independent.  My guess is that if a broker can handle the chores of running an office (which I find pretty simple so far), there is no reason to ever go back to a captive situation...I sure won't.

I think what is happening in the Indy world is that the marginal or hobby (if you will) producers are going to be dropping out as expenses rise, regulation becomes more burdensome and it is just not worth it.  This can include the CPA who decided to add investments to his practice or the Insurance Agent who dabbles in VA and Mutual funds. I was discussing this with my OSJ the other day and she indicated that there were some marginal people in her region that she just didn't understand how they could be in business. 

The rising costs and the pain in the a@@ factor of compliance will drive some individuals completely out of the investment business and those that want to still continue, may find themselves doing more insurance or dropping the securities side entirely. (Until the regulators catch up to them there)

Zack is right on the smaller B/Ds consolidating for the above reasons.  This is an ongoing trend, nothing new here.

[quote=rightway]I got a recruiting letter from LPL and I saw a bunch of Jones people on a list they provided of people that have moved to LPL in 2005.  There were like 3 or 4 Merrill people out of like a list of 200, and 10 times that from Jones.[/quote]

That's in line with what my midwest LPL recruiter told me...he said that by far, Edward Jones has generated the most new LPL recruits for him this year.  My guess is that the reps staying at EJ are probably hearing a lot of negative things about going indy.

The scarry thing for Jones is that when one IR leaves all of his former buddies get some insight into reality.

I talked to guys that left before me, and many guys have been by my office since I left Jones...

...when will the dominos stop falling.

P.S.

I love some of the questions I get from guys looking at leaving Jones.

Do I have to print my own statements if I go Indy?

Your technology at LPL probably isn't as good as it is here, is it?

My personal favorite,

Q: How do you cover your overhead?

My Ans: Who covers yours now?

Question for the indy's-

How many of you have done basic financial planning on yourselves? Do you own both disability income and overhead policies should you go down or out of the business? Or have you partnered with someone who will cover or watch over your clients and pay you while you recover or agree to some form of buyout? What happens to your business if you die?

I read a statistic somewhere that 90% of all financial reps, don't or can't balance their own checkbook. The real question is are you eating your own home cooking? I hope the answer is that you did this homework before you transitioned to indy, my guess is that most may get around to it....sometime, when they can afford it. Maybe 95% payout will cover it.

7yr,  those are very important things to consider. However, you needn't be so smug about it. Given that I come from a lending background and  I am an anal person,to boot, the answer is yes.   I would guess that for many the answer is no. The biggest failing I have seen in all small business owners is the lack of attention to the small, yet important details.  If you don't keep track you have no idea if you are profitable or not. You also have no idea on where to cut back or increase spending.

I do have a disability policy on myself, even though it is a stretch for me right now. However, I suspect that I am somewhat older than the rest of you, so have a better grip on my own mortality and fragility.  I had a hell of a time getting a liablity policy for my office.  Not E&O, which I already carry, but for some reason the PnC guys didn't want to insure a "financial firm".   Go figure.   My Indy B/D got a deal for us all in the recent past that helped on premiums.   Since I have been Indy only a few years and am like Indyone, in an area where there aren't a lot of reps I don't have an associate.  My eventual plan is to bring on an associate who will be able to help grow the business, upon whom I can take an override and eventually transition into selling/taking over my book so I can retire.

What happens to your business at EDJ (I believe that's where you are) when you die.  If you have a life insurance policy your spouse can survive long enough to find another breadwinner(most of the EDJ wives I met were basically low-rent Stepford Wives.  Just an observation of the women in my former region. Don't take this personally since I don't know you as anything other than pixels on my computer screen.). Then after a decent time, a week or so, your book of business is carved up like this years Thanksgiving turkey.  And since you don't own your own book of business, you spouse gets nada.

How many of you have done basic financial planning on yourselves?

I have completed extensive financial planning both while I was a captive and when I was planning the transition.

Do you own both disability income and overhead policies should you go down or out of the business?

Disability yes, overhead, no.  My overhead is minimal and much of my practice is fee-based, so I believe this is overkill in my situation.

Or have you partnered with someone who will cover or watch over your clients and pay you while you recover or agree to some form of buyout?

I haven't yet, but given the business I've got started, I don't think it will be a problem finding someone, as I am an OSJ for another rep in a nearby office.

What happens to your business if you die?

That's the beauty of my business...it can be sold after I'm gone and my heirs reap the benefit.  How about yours?

I read a statistic somewhere that 90% of all financial reps, don't or can't balance their own checkbook.

I have no problem with balancing a checkbook.  If you can't add and subtract, do you really have what it takes to be an investment advisor anyway?  Perhaps these are the people who should stay in a captive setting, unless their production is large enough that they can keep a CPA on staff.

The real question is are you eating your own home cooking?

Yes I am...how about you and all your mates?

I hope the answer is that you did this homework before you transitioned to indy, my guess is that most may get around to it....sometime, when they can afford it. Maybe 95% payout will cover it.

You know, even at just over two months in, the payout DOES cover it...ALL of it.  And I'm pretty sure I'm still above 40% payout even at this early stage of the game.  Don't think for the minute that at 40% there's not a lot of money left on the table to feed those up the ladder on the food chain above you.  I hope all the "camraderie" is worth the difference in payout.

A post like this just underscores what I said above..."My guess is that the reps staying at EJ are probably hearing a lot of negative things about going indy."  Your post sounds like it comes right out of St. Louis.

Drink up...there's plenty more Koolaid where that came from.

Basic financial planning is what told me that it was time to move up from Edward Jones.

Indyone-

If your overhead is minimal. Your business must be too. I remember someone who taught me long ago, the best investment I will ever make is IN my business.

Just for the record....I think anyone who uses the "Kool-Aid" analogy as a joke needs to do some soul searching. I think we can have a serious or friendly discussion without ugliness. There really is no other word for it.

One of the worst mistakes a GP ever made was that comment. He will never be forgotten for it.

7yr,

1) Why is someone's business minimal if he or she is good at controlling expenses?  My overhead is less than $5K/month, which is 20% of a $25K month, and not the 60% that you're paying.

2) Just for the record, the "Kool-Aid" analogy is completely appropriate, and anyone who can't see that, must be a dolt.

3) A civil discussion can be had with Jonesers when Jones loses the "holier-than-thou" attitude, admit that they are no more moral than other firms, and that anyone who leaves Jones is not a) incompetent and b) the spawn of Satan.

In short, the ungliness of which you speak has originated at Jones, not the rest of the investment community.

If your overhead is minimal. Your business must be too.

That is a ridiculous statement and shows your complete lack of business dynamics.  The entire point of business....all business, is to reduce overhead and maximize income while still producing a product that will be desired.  Throwing money at the wall to see how much sticks is not a prudent business plan.  Spending money where it counts, advertising, seminars, office furniture and ambiance and education is what is important.   Flashy car, flashy office and a flashy office assistant do not necessarily make a successful business.

I am well over the initial office set up costs of furniture, interior decoration, equipment and software to mention just a few costs.  It was very expensive in the beginning, however those were all bottom line write-offs.  This  year isn't over yet but I believe I am sitting at a net payout ratio to expenses of about 75 to 80%.    If I amortize the cost of set up into the net/net I am at about at 60%  payout.  Still not bad. And I am not even accounting for tax deductable items yet. Of course, I will have to pay my own FICA, but some creative accounting can help bring those costs down to a minimal amount too.  Compare that to  your 35 to 40% payout from which you also get to have payroll taxes deducted.  Even if I made half as much in gross commissions as I did at EDJ, I am still 100% ahead!!

Minimal doesn't always mean bad.   Remember "it ain't the meat it's the motion."

[quote=7yrvet]

Indyone-

If your overhead is minimal. Your business must be too. I remember someone who taught me long ago, the best investment I will ever make is IN my business.

Just for the record....I think anyone who uses the "Kool-Aid" analogy as a joke needs to do some soul searching. I think we can have a serious or friendly discussion without ugliness. There really is no other word for it.

One of the worst mistakes a GP ever made was that comment. He will never be forgotten for it.

[/quote]

7yr, in my opinion, I was responding in kind to your pointed questions, which were obviously designed to attempt to show all the pitfalls of the indy channel.

The Koolaid comment is my opinion, but it's obviously shared by many, including a lot of people who have left EJ and now see what the other side looks like.  Just search the archives here...there is a ton of sentiment from Ex-Jonsers that indicates they felt they were mislead and even brainwashed while they were at EJ.  Your posts and comments I've heard from other happy Jonsers have me thinking you and your brethren must be drinking something.

As far as being ugly, if you'll read back in this thread a bit, you'll see that I clearly stated that indy is not for everyone, and neither are the wirehouses, regionals and EJ.  The only negative I put in this thread before you spouted your sanctimonious questions for indys, was acknowledging that I too had hear that a lot of EJ reps were migrating to the indy platform this year.  That's not slander...that's what my recruiter told me this summer and apparently, it's accurate as indicated by Rightway's post.

As far as my business being minimal, there is a grain of truth to that, but remember, I just started completely over a bit over two months ago.  In two months, I've built up $15 million AUM and have much more than that in the prospect and former customer pipeline.  My last commission check for a two-week period was just over $10,000.  Since I'd already spent the money for top-flight office furniture and technology, I pretty much pocketed the money, except for a few bills such as cell phone, cable and newspaper advertising...all total much less than $1,000.  Where exactly do you suggest that I spend the money in a manner that will cost-effectively generate more revenue?  I'm listening and ready to implement any suggestions you have that make sense.  I can tell you that my office and technology are nicer than what the local Jones reps have as I was presiously pitched Jones and saw the office setup...and was unimpressed, particularly by the lack of technology tools available.

You're welcome to defend your business model, but don't be surprised if I poke a few holes in it when you insist in poking at mine.

Starka, Looney, thanks for getting my back.

Does anyone have any statistics supporting full-time indy production? If the question is, “Is the avg rep better off independent, at a wirehouse, or at a regional brokerage?”, then answering, “Being independent is better because it is better for me”, is not a good answer. Some data or evidence would be more convincing than personal assertions. Just repeating the personal assertions doesn’t prove the case, and adding the putdowns doesn’t add anything. I’ve given evidence of higher turnover, flat to reduced employment growth, and possibly lower gross and net production. I’d love to see objective, third party, published evidence supporting the indy case.

Vega,

All I have at my fingertips is my own personal numbers, which show an average of about $3,800/month in expenses.  This covers everything...office, assistant (part-time), supplies, advertising, insurance, etc.,etc.,etc.  As my business grows, I may get up to Starka's figure of $5,000.

As far as gross, while I'm not there yet, I have no doubt that my production will improve as an indy, mostly because I no longer have to deal with the crappy CD referrals I used to get at the bank.  I'm now focusing on clients who are looking for more than the best CD rate.

I know that you're looking for objective third party evidence and while I believe that it is out there, I don't have it.  I'm sure that independent broker/dealers such as Raymond James and LPL keep such statistics, but I don't know how easy it would be to get that information, and it may or may not be "objective".  I'm not sure that even if you have it, you'll have your answer.  Your article doesn't fit my personal experience at all, which is why I earlier tried to offer some plausible reasons why the statistics are most likely flawed.  Your best evidence is to seek out advisors with practice characteristics similar to yours who have gone indy, and see how they've fared.

If you want to talk to someone who's been there for while and has some experienced insight, you might PM Starka and see if he would be willing to share some insights as to how it really works.  He was a valuable resource when I was considering my move.

Hopefully this proves that I can carry on a meaningful conversation without insults and putdowns...I'll try to behave...

Starka wrote....For the record, the "Kool-Aid" analogy is completely appropriate, and anyone who can't see that, must be a dolt.

How can you take anyone seriously who is willing to put this in print.. Maybe some of you remember that 900 people died following a maniac. The analogy is an ugly reminder that many authors of this forum have a clear bias, and are willing to write anything to propogate their disdain.

Certainly, the indy crowd can find a credible spokesman who doesn't see the need to remind us of a terrible tragedy to get his point accross. If I bought this argument, then calling indy's lepers (isolationists) would be equally appropriate. IT IS NOT. Stop the craziness and lets have good productive discussions. Maybe we can learn something.

Does anyone see the EJ write-up they sent through the company late last year/early this year - “Is the Grass Really Greener”?  Pretty interesting stuff.  Full of crap and tons of propaganda, but interesting on how they spin things.

[quote=7yrvet]

Starka wrote....For the record, the "Kool-Aid" analogy is completely appropriate, and anyone who can't see that, must be a dolt.

How can you take anyone seriously who is willing to put this in print.. Maybe some of you remember that 900 people died following a maniac. The analogy is an ugly reminder that many authors of this forum have a clear bias, and are willing to write anything to propogate their disdain.

Certainly, the indy crowd can find a credible spokesman who doesn't see the need to remind us of a terrible tragedy to get his point accross. If I bought this argument, then calling indy's lepers (isolationists) would be equally appropriate. IT IS NOT. Stop the craziness and lets have good productive discussions. Maybe we can learn something.

[/quote]

I was personally in attendence at a meeting where a GP made the statement that "Edward Jones is not a culture....we are a cult!", and received a round of applause for it. 

The Kool-Aid analogy is appropriate as it illustrates the propensity of true believers to rush to do the GPs bidding, much like lemmings rushing towards the cliff.

As i read this back and forth banter...I realize how lucky (and smart) I was to be able to go indy and leave Edward Jones.  If one honestly thinks Jones can EVEN compare to indy on any level, then they are completely clueless and probably need to remain at Jones.

When you defend Jones or try to knock being independent--you all sound ridiculous.  There are two reasons that vet brokers stay at Jones:

1.  They are brainwashed into thinking they are at "someplace special"

2.  They are afraid to leave

Which are you?

7yr...Get a clue...buy a vowel...do something to open your eyes.  "Kook-aid" is right on the mark.  It wouldn't surprise me if Rev. Jones was the one who started the "The Firm" in the first place.  Jones IR's have NO exposure to the rest of the world and believe exactly what they are told.

I'm guessing that those of us who left (2.5 yrs ago for me...started in Oct. 1998 with EJ) have a much better understanding of both EJ and Indy than someone who has only seen Jones.  I've said it before...Jones is great place to start but get out after about 3 years.  GP's lie and take advantage of the very people that pay them their exorbitant salaries.  Did I mention that the technology sucks yet Richie gets about $5 mil./yr.?

Just from the financial side, I'd be happy to send you a spreadsheet that will allow you to see if going Indy is a better financial decision for you.

Does anyone have a copy of “is the grass greener” that they can post? I’ve heard of it, but have never actually seen it. I’d be very interested in the “spin” as you put it.