I gotta peep in a  high place.

I am in a Profit Formula…there is nothing to this, to my knowledge. Some aspects of Profit Formula have been curtailed, like adding new recruits from other firms into an existing PF if they don’t qualify on a stand-alone basis. I don’t know of any changes in the FINET operation.

Is there no talk of just freezing the program, if you are in it you can stay?? Are they really talking about just shutting it down and putting those PF practices back into PCG??

Who is naive enough to believe that these programs are unprofitable for a firm? Neither program is “too good.” They both pass expenses to the FAs or charge administrative fees on managed accounts and ticket charges. The problem with PF is that it walks the fence and in a down market, you could get stuck paying a fixed % of branch costs decided by a branch manager and not you. Why do people think these models are not making $ for the firm? These are very profitable. The independent channel is no different than LPL, but in this case the parent gets to cross sell products and also retain FAs who would otherwise seek independence elsewhere. Very smart to keep the pure indy. In fact HD Vest has been around for a while too under this parent.



Profit Formula seems to pass fixed branch (propotionate) expenses that the FA does not control. It’s a neutral decision from an economic standpoint. This is more of a big bank culture muscling in on the PF guys to make the employee model less entrpreneurial and more bank controlled. If I were a PF guy, why in the world wouldn’t I go pure indy assuming they allow this? Is PF 1099?



If the firms didn’t make money doing these models, they would not do these models. Raymond does okay with multi channels too. This is smart from a FA centric firm, but maybe that is what’s changing…???

The parent may get arrogant and forget who cultivates the relationships.



How to you put a price tag and commoditize a relationship with a client when they are all unique and different? Regulate a 12b1 or diminish the stress an advisor deals with on the front lines? The ‘C’ level folks are so far removed from this and long since forgot the the value an FA brings to a firm. Lawyers and senior managers have muddied the waters and cannot begin to appreciate the bond between FAs and their clients; they want this bond! You can try to intitutionalize 'em boys, but you still need an FA guy on front lines explaining your agendas, fee structures and dealing with human angst from clients. Rationalize a new compensation grid, but know who holds your client’s hands. It the FA; workhorse of the industry and not some self righteous regulator or CEO.   



While it may make sense to dump the ‘hybrid’ PF deal, if they cut their pure indy, the indy folk would take a transition package from Commonwealth, LPL, or any other indy. You go independent, you know who is your real client and they work with you and not someone at headquarters no matter how hard a bank or firm wants this to change. Do you “own” your book under the Profit Formula?





It’s all about who OWNS the book now isn’t it?

according to corporate: PF remains strong–but the firm is not currently recruiting into the program. <span style=“font-size: 12pt; font-family: “Times New Roman”,“serif”;”><o:p></o:p>

That’s nothing new though, the firm stopped recruiting into the program last year, they seemed surprised I was even asking about it.

according to corporate: PF remains strong–but the firm is not currently recruiting into the program. <O:P></O:P>

That’s nothing new though, the firm stopped recruiting into the program last year, they seemed surprised I was even asking about it.

Gone Gone Gone

[quote=Ferris Bueller] [quote=staffwriter2] according to corporate: PF remains strong–but the firm is not currently recruiting into the program. <span style=“font-size: 12pt; font-family: “Times New Roman”,“serif”;”><o:p></o:p>That’s nothing new though, the firm stopped recruiting into the program last year, they seemed surprised I was even asking about it.



[/quote]



Wachovia stops offering profit-formula deals

Firm also incorporates brokers’ trailing three-months’ production into recruitment packages





By Dan Jamieson

      





Wachovia Securities last month stopped offering recruitment packages to potential recruits to its profit-formula platform.

Profit-formula representatives are employee brokers who work in branch offices of Wachovia Securities LLC of St. Louis. They pay a pro-rata share of branch expenses in return for a higher payout.



Sources said that Wachovia’s new owner, Wells Fargo Corp. of San Francisco, may be questioning the profitability of the program — particularly the practice of paying recruiting bonuses to bring on veteran producers.



“I’m sure it has to do with cost,” said Mindy Diamond, president of Diamond Consultants LLC, a Chester, N.J.-based recruiter who placed her last profit-formula client last month.



The profit-formula platform “was a great recruiting tool for [Wachovia], especially for large producers, because they got the best of both worlds — being independent, but with support” from a large firm, she added.



Only brokers producing $1.25 million, or teams doing $1.75 million or more, qualified for the profit-formula program.



Payouts start at 80%, recruiters said, a bit lower than other independent firms where reps typically get 90% or more of their production.



There are about 350 brokers in the program.



Until last month, Wachovia was “doing a standard [recruiting] deal” for profit-formula brokers, said industry recruiter Rick Peterson, president of Rick Peterson & Associates of Houston.



Ms. Diamond, on the other hand, said that profit-formula recruitment offers were a “little lower” than Wachovia’s regular package.



END OF THE LINE?



The end of the recruitment deals has sparked some speculation that Wells Fargo might want to get rid of the profit-formula platform entirely, which could lead to an exodus of big brokers, observers said.

The platform was an interim step created in the mid-1990s to retain top producers who were thinking about going independent, said Keith Gregg, a former national sales director with Wachovia Securities Financial Network LLC in Richmond, Va.



“At the time, it worked out fine,” he said. “But my guess is that it’s no longer the pacifier” the firm needs to retain brokers, since Wachovia now offers an independent channel through Wachovia Securities Financial Network LLC.



Finet is still recruiting brokers, sources said.



In a statement, Wachovia Securities spokeswoman Teresa Dougherty said the firm is “scheduling transitions” to profit formula for existing advisers now that the firm is completing its technology conversion. She declined to comment further.



One Wachovia rep, who asked not to be identified, said the firm stopped internal transfers to profit formula after the firm merged with A.G. Edwards & Sons Inc. of St. Louis in 2007.



TIGHTENING UP OFFERS



Separately, Wachovia has tightened up on its recruiting offers by factoring a broker’s trailing three months’ production into the deal.

The firm is looking at a recruit’s trailing three months, and multiplying by four to project the next year, recruiters said. If that figure is less than 85% of the actual trailing 12 months, Wachovia will use the lesser amount as the basis of a deal.



“If [the recruit] is falling off a cliff like a lot of people are, the deal [will be less],” said recruiter Bill Willis, president of Willis Consulting Inc. in Palos Verdes Estates, Calif.



“If the losses are nominal instead of catastrophic,” Wachovia will use the trailing 12 months’ production to structure a package, he said.



Brokers who are experiencing more severe drop-offs in business might see a Wachovia recruitment package with more incentives on the back end, Mr. Peterson said.



Recruiters say that retail revenue in the industry is off 20% to 30% from last year.



First-quarter comparisons are even tougher, Mr. Willis said, with revenue down about 35% across the industry.



Recruiters say that other firms aren’t yet using trailing three months’ production in setting re-cruitment deals.



But “everybody is looking at the trailing three months, not necessarily to calculate a deal, but trying to understand the nature of business they’re getting,” said recruiter Mark Elzweig, president of Mark Elzweig Co. Ltd. of New York.

nothing new here…these rumors have been going on for a long time…

The press release that Shania posted is from a year ago.  PF is going nowhere.  In fact, most practices are extremely profitable to the firm.  The problem is, is they bastardized the meaning of profit formula by letting too many brokers join teams to take advantage of a higher payout.  The “teams” don’t operate as teams; they simply try to job the system by grabbing extra bps on the back of the acquired brokers.  The firm needs to clean some of this stuff up.  Additionally, staffing and management is an issue.

[quote=Cloudy] The press release that Shania posted is from a year ago. PF is going nowhere. In fact, most practices are extremely profitable to the firm. The problem is, is they bastardized the meaning of profit formula by letting too many brokers join teams to take advantage of a higher payout. The “teams” don’t operate as teams; they simply try to job the system by grabbing extra bps on the back of the acquired brokers. The firm needs to clean some of this stuff up. Additionally, staffing and management is an issue.

Nope.  PF going nowhere.  Someone is clearly jerking your chain.  Sorry you don't qualify.  Enjoy the grid.

Nope. PF going nowhere. Someone is clearly jerking your chain. Sorry you don’t qualify. Enjoy the grid.