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Dear Financial Advisors of Water Cooler

never happened 

"You want a quote? Haven’t I written enough already???"

RIP

Another reason I’m thinking of leaving my firm is this conversation I just had…

Sam: Wow, look at the market, it’s getting killed today!
Me: Yeah! Someone call Hank Paulson
Chad: Who’s Hank Paulson?
Me: You’re serious right now?

At least fake being passionate about finance if you’re going to work in the industry I say. 

#embarrassing.

¯\_(ツ)_/¯ It be like that sometimes.

The Merrill Lynch exam just asked me this question:

“Valley Bank is an organization that specializes in financial planning. At Valley Bank, all CFAs (Chartered Financial Analysts) specialize in economic modeling. All financial analysts are CFAs.

Based on the information above, which of these statements MUST be true?

1. All employees at Valley Bank who specialize in economic modeling are financial analysts
2. Some employees at Valley Bank who specialize in economic modeling are not financial analysts.
3. Some financial analysts have not specialized in economic modeling.
4. All employees at Valley Bank who do not specialize in economics modeling are not financial analysts.
5. No one at Valley Bank who specializes in economic modelings is a financial analyst.

What kind of cuckery is this? How on earth does this give them data about how good of an FA I could become?

¯\_(ツ)_/¯ It be like that sometimes.

cfa can be used as a noun now? thats ****in awesome

I love my cheese. I got to have my cheddar.

Nerdyblop wrote:

cfa can be used as a noun now? thats ****in awesome

This entire industry does without care. Even all those CFA’s call themselves CFA’s is what I’ve observed.

Play by the rules? Nah, that aint how you end up ahead. 

¯\_(ツ)_/¯ It be like that sometimes.

they should really change that rule. its just weird to say im a cfa charterholder.

I love my cheese. I got to have my cheddar.

I outsource all of my investment management to a TAMP. I’ve gotten sales calls and tell them to call my TAMP. I don’t pick any stocks and I try to avoid those conversations with prospects. I usually turn it into a discussion about goals. 

Financial Planner
BBA (Finance & International Business) 1998,
MBA (With a Global Perspective) 2011,
ChFC® 2018, CLU® 2019
Owns an Independent RIA/Insurance Agency
Series 65, Life, Annuities, Health (Expired 6,63)

Greenman72 wrote:

^I seriously doubt that Merrill Lynch will pay $100k in salary to an entry-level financial advisor with no book of business.  

My boss at Merril used to say you had to be really bad at the job to only make 100k. But that was 2009ish 

CEO10K-DAY wrote:

Another reason I’m thinking of leaving my firm is this conversation I just had…

Sam: Wow, look at the market, it’s getting killed today!
Me: Yeah! Someone call Hank Paulson
Chad: Who’s Hank Paulson?
Me: You’re serious right now?

At least fake being passionate about finance if you’re going to work in the industry I say. 

#embarrassing.

*upvote *

Financial Planner
BBA (Finance & International Business) 1998,
MBA (With a Global Perspective) 2011,
ChFC® 2018, CLU® 2019
Owns an Independent RIA/Insurance Agency
Series 65, Life, Annuities, Health (Expired 6,63)

I had to look him up to be sure haha

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

hpracing007 wrote:

I had to look him up to be sure haha

Damn millennials am I RIGHT?

¯\_(ツ)_/¯ It be like that sometimes.

gwoods wrote:

I outsource all of my investment management to a TAMP. I’ve gotten sales calls and tell them to call my TAMP. I don’t pick any stocks and I try to avoid those conversations with prospects. I usually turn it into a discussion about goals. 

In practice, how does this work?  This is a fairly normal conversation for me.  

Greenie:  “Hi!  I’m a financial planner!”

Prospect:  “Wow!  That’s awesome!  What stocks are you invested in?  What would you recommend?”  

Greenie:  “Ummm…that’s not really what I do.”  

Prospect:   ”……then what do you do if you don’t pick stocks?”

82 > 87
Simple math.

Greenman72 wrote:

Mike79 wrote:

Sweep the Leg wrote:

hpracing007 wrote:

Greenman72 wrote:

As an independent, my payout starts at 72% from dollar #1 and goes up from there.  And I get to brand my own business and run it the way I want.  

And if you look at my B-D platform, I doubt that ML offers anything of value to the client that we don’t offer.  There may be some proprietary hedge funds or UIT’s or something, but I wouldn’t sell them to my clients anyway.  

from a client’s point of view, what happens if something happens to you, god forbid? How do you get around the objection of going with a small start up vs a large institution with redundencies in place?

It’s called succession planning and is a huge topic of every financial advisor conference over the last several years. Either you have a plan to sell to someone you like and trust, stay on part-time for a few years to be sure your clients are happy and retention is high; or, you don’t have a plan and your clients will get a call from either a random FA that picked up Greenie’s book or, more likely, some kid working the home office of Greenie’s BD trying to get them to stay. The clients will leave and find a new advisor.

Well this is part of the point that I’m trying to get across to Greenie. He wants to make the move into WM, but its a slow transition for a whole list of reasons. By going into a firm like ML, they have all the support in house, opportunities to take over from retiring advisors etc. He could get a base salary to help pay for his lifestyle costs, while he builds up some AUM in that first year or so. 

I’m with an independent firm as well. Ya my grid is higher, but I pay for all the overhead from the higher grid. At ML, they pay for the overhead. You need to actually sit down and list out what expenses are covered and what you have to pay for each broker dealer. 

If I got hit by a bus or fell out of an airplane–there is only one other Cambridge advisor anywhere close to here, so they would serve my clients while I was out.  And if I never came back, they would buy my book of business.  It’s in the agreement.

And like Sweep said elsewhere, when you’re with Merrill Lynch, you do things Merrill Lynch’s way.  When you’re independent, you do things your own way.  I like doing things my own way.  

I don’t mind paying for all my own overhead.  If I had every software tool known to man and had to pay for my own office, I could still get away with less than $30k in business expenses.  (That includes Microsoft 365, Morningstar Office, financial planning software, Thomson Reuters tax software, document management, AICPA dues, CPA license, travel, continuing education, rent, office supplies, license, tech fees, etc.)  If you’re on a budget, you can do it with less than $10k.  

So if you’re at $50m and charge a flat 1% = Merrill Lynch brings home $225k, and gets everything paid for.  I bring home $425k, because I’d be at an 85% payout.  Subtract my $30k in business expenses, and I make $395k per year.  I’d rather have $395 than $225.  I guess I’m funny that way.  

Ya I get the obvious difference in grid payouts.

The big issues that I think you actually need help with are in the areas that a program like ML could actually assist with (which is why I suggested you actually give that some consideration). I wonder if there would be any cost to reaching out to them to finding out more information? (Because you never know what can happen…)

^Already did some time ago.  And that’s what I uncovered.  They want to restrict me to asset management, won’t let me do comprehensive planning, won’t let me do tax returns, and would cut my payout by at least half.    

Basically, I don’t like anything about the wirehouses.  There’s no reason for me to go to Merrill.  Again–if I didn’t have my day job, then that might be a different story.  

I have trouble with “hourly vs. retainer”-type questions because I have the freedom to run my business the way I want to.  If I went to Merrill, I wouldn’t have those problems, because they’d dictate everything about how I do business.  

82 > 87
Simple math.

Greenman72 wrote:

^Already did some time ago.  And that’s what I uncovered.  They want to restrict me to asset management, won’t let me do comprehensive planning, won’t let me do tax returns, and would cut my payout by at least half.    

Basically, I don’t like anything about the wirehouses.  There’s no reason for me to go to Merrill.  Again–if I didn’t have my day job, then that might be a different story.  

I have trouble with “hourly vs. retainer”-type questions because I have the freedom to run my business the way I want to.  If I went to Merrill, I wouldn’t have those problems, because they’d dictate everything about how I do business.  

Is there not the option of shmoozing over the hot bank tellers at the branch though in hopes to build rapport so that when Little Timmy comes in with a half million check he recieved from his grandma dying she recommends him your way? This happens right? Basically, any prospect who walks into the bank and needs investment advice will be filtered your way if you play your cards right?

I have a GF though - so, obviously I would never cheat and bang a bank teller.

¯\_(ツ)_/¯ It be like that sometimes.

Ok, thanks for sharing. 

For hourly vs. retainer - I’m still sticking with my original position (i.e. neither); just charge a % on total AUM on a sliding scale as AUM increases, and include the investment mgt and financial planning services all in. Charge for the tax return prep as a separate fee.

I know at least two other firms that do this in our branch, and it works really well. 

^Here’s my beef with that:  

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

2.  Clients actually need comprehensive planning.  The value that they’ll get from “real” planning dwarfs any value they’ll get from security analysis.  

3.  Clients need to know that you’re actually doing the planning for them.  If they think (rightly or wrongly) that all you’re doing is managing investments, then they’ll run to the next sales schmuck who’s able to smooth talk them into their “high return, low risk” products.  

4.  There are a lot of people who need the help, but have relatively little in the way of investable assets.  This includes the proverbial HENRY’s of the world, but also those who have a lot of assets that aren’t publicly traded.  (EG - my tax client who has a 3000-acre ranch worth $20k per acre, or my other client who cashes oil & gas royalty checks of $2.5m per year.)  Planning for these assets deserves some kind of fee, but I obviously can’t charge an AUM fee if I’m not managing the assets.  

I’m pretty strongly of the opinion that financial planning, investment management, and tax prep are three different skill sets, and deserve three distinctly different fees.  That said, if a person had $10m in assets and I was netting $60k in AUM fees from him, I could probably discount his financial planning fees.  I might discount it from $5,000 down to $500, but I want him to pay the $500.

And to be honest, I don’t care about the $500.  I just want him to acknowledge what I’m doing for him.  I want him to know that he can’t get this type of service from the wirehouse.  And if he leaves here, he’s either not getting the service, or he’ll have to pay dearly for it.  (same thing with tax prep fees)

82 > 87
Simple math.

Greenman72 wrote:

^Here’s my beef with that:  

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

2.  Clients actually need comprehensive planning.  The value that they’ll get from “real” planning dwarfs any value they’ll get from security analysis.  

3.  Clients need to know that you’re actually doing the planning for them.  If they think (rightly or wrongly) that all you’re doing is managing investments, then they’ll run to the next sales schmuck who’s able to smooth talk them into their “high return, low risk” products.  

4.  There are a lot of people who need the help, but have relatively little in the way of investable assets.  This includes the proverbial HENRY’s of the world, but also those who have a lot of assets that aren’t publicly traded.  (EG - my tax client who has a 3000-acre ranch worth $20k per acre, or my other client who cashes oil & gas royalty checks of $2.5m per year.)  Planning for these assets deserves some kind of fee, but I obviously can’t charge an AUM fee if I’m not managing the assets.  

I’m pretty strongly of the opinion that financial planning, investment management, and tax prep are three different skill sets, and deserve three distinctly different fees.  That said, if a person had $10m in assets and I was netting $60k in AUM fees from him, I could probably discount his financial planning fees.  I might discount it from $5,000 down to $500, but I want him to pay the $500.

And to be honest, I don’t care about the $500.  I just want him to acknowledge what I’m doing for him.  I want him to know that he can’t get this type of service from the wirehouse.  And if he leaves here, he’s either not getting the service, or he’ll have to pay dearly for it.  (same thing with tax prep fees)

My comments : 

1. I agree. That’s why you get to set what services you provide and who you want to work with. You define your business model, and have some presentation that you walk a prospect through, which outlines what you do, and what you don’t do. You filter out the prospects that don’t fit into your service model / investment philosophy. 

2. I agree, and agree. Next point. 

3. You need a presentation that walks them through all the planning issues and opportunities that need to be addressed as part of a plan. So, let’s do an exercise - pick Tax Planning : list out all the issues and opportunities that a typical client would need help with as part of their financial plan. 

4. Hmm. Tricky one. Lots of future potential upside on AUM, but very little in current revenues. To me, it would depend on a couple of factors: how much time do you have to spend on said planing work? Can it be bundled into an Accounting fee (probably what I would do now)? Do you treat them like a prospect (meaning, that you simply outline all the issues that actually need to be addressed, but you don’t actually provide any of the advise. These people, don’t know what they don’t know. By taking the time to list out all the points they need to be thinking about, you show you care, you thought about them, their situation …). 

I certainly admire your conviction in wanting to charge separately for the AUM and financial planning. Unfortunately, its historically been that the investment and planning advice is bundled together based on the AUM fee %. Whether clients have actually been receiving the planning advice they have been paying for - is another thing. 

Greenman72 wrote:

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

Hold up. Name something, in the world of asset allocation, that you can do, that a computer can’t do for a fraction of the cost? In the world of investment returns (which lets face it, should be the ONLY think a retail investor or retirement saver cares about) computers, and algorithms are KING.

¯\_(ツ)_/¯ It be like that sometimes.

CEO10K-DAY wrote:

Greenman72 wrote:

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

Hold up. Name something, in the world of asset allocation, that you can do, that a computer can’t do for a fraction of the cost? In the world of investment returns (which lets face it, should be the ONLY think a retail investor or retirement saver cares about) computers, and algorithms are KING.

A computer can not talk to my grandmother and explain to her why certain funds have higher returns than others.

She thinks it’s ‘dumb’ and that she needs to speak to someone who knows what they’re talking about it.

A computer cannot convince her otherwise, and there’s a long list of people who would be happy to accommodate her.

Schopenhauer wrote:

CEO10K-DAY wrote:

Greenman72 wrote:

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

Hold up. Name something, in the world of asset allocation, that you can do, that a computer can’t do for a fraction of the cost? In the world of investment returns (which lets face it, should be the ONLY think a retail investor or retirement saver cares about) computers, and algorithms are KING.

A computer can not talk to my grandmother and explain to her why certain funds have higher returns than others.

She thinks it’s ‘dumb’ and that she needs to speak to someone who knows what they’re talking about it.

A computer cannot convince her otherwise, and there’s a long list of people who would be happy to accommodate her.

That’s not at all what I’m talking about though - I asked, implicit to the investment process, what he can do, a computer can’t.

¯\_(ツ)_/¯ It be like that sometimes.

CEO10K-DAY wrote:

Schopenhauer wrote:

CEO10K-DAY wrote:

Greenman72 wrote:

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

Hold up. Name something, in the world of asset allocation, that you can do, that a computer can’t do for a fraction of the cost? In the world of investment returns (which lets face it, should be the ONLY think a retail investor or retirement saver cares about) computers, and algorithms are KING.

A computer can not talk to my grandmother and explain to her why certain funds have higher returns than others.

She thinks it’s ‘dumb’ and that she needs to speak to someone who knows what they’re talking about it.

A computer cannot convince her otherwise, and there’s a long list of people who would be happy to accommodate her.

That’s not at all what I’m talking about though - I asked, implicit to the investment process, what he can do, a computer can’t.

Part of the process is dealing with old people, like Oma Schopenhauer

CEO10K-DAY wrote:

Greenman72 wrote:

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

Hold up. Name something, in the world of asset allocation, that you can do, that a computer can’t do for a fraction of the cost? 

In the world of asset allocation?  Nothing.  I have zero value to add.  All investments (and the associated returns) are commoditized.  

Outside the world of asset allocation?  Everything.  What algorithm shows you the benefit of a QCD, how to report it on a tax return, how it bypasses the itemized deduction test, doesn’t get counted toward AGI for purposes of refundable tax credits, Social Security taxation, or medical deductions?  Do you know what a QCD is?  Do you know whether it applies to you?  Do you know how much it will save you?  

I only bring this up because a client just left my office.  He was eligible to use  $45k worth of QCD, but didn’t, because he didn’t know it was available.  This would have saved him an estimated $11,000–risk free and tax free.  On a $1m portfolio (and I have no idea how big his portfolio is) that’s a 1.1% freebie.  What algorithm can give him a risk free, tax free, additional 1.1% return?  

82 > 87
Simple math.

CEO10K-DAY wrote:

Schopenhauer wrote:

CEO10K-DAY wrote:

Greenman72 wrote:

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

Hold up. Name something, in the world of asset allocation, that you can do, that a computer can’t do for a fraction of the cost? In the world of investment returns (which lets face it, should be the ONLY think a retail investor or retirement saver cares about) computers, and algorithms are KING.

A computer can not talk to my grandmother and explain to her why certain funds have higher returns than others.

She thinks it’s ‘dumb’ and that she needs to speak to someone who knows what they’re talking about it.

A computer cannot convince her otherwise, and there’s a long list of people who would be happy to accommodate her.

That’s not at all what I’m talking about though - I asked, implicit to the investment process, what he can do, a computer can’t.

With enough time and some resources, quite a bit more than a computer, I’d wager. Whether it’s asset allocation or picking individual securities, quant sucks. 

CEO10K-DAY wrote:

The Merrill Lynch exam just asked me this question:

“Valley Bank is an organization that specializes in financial planning. At Valley Bank, all CFAs (Chartered Financial Analysts) specialize in economic modeling. All financial analysts are CFAs.

Based on the information above, which of these statements MUST be true?

1. All employees at Valley Bank who specialize in economic modeling are financial analysts
2. Some employees at Valley Bank who specialize in economic modeling are not financial analysts.
3. Some financial analysts have not specialized in economic modeling.
4. All employees at Valley Bank who do not specialize in economics modeling are not financial analysts.
5. No one at Valley Bank who specializes in economic modelings is a financial analyst.

What kind of cuckery is this? How on earth does this give them data about how good of an FA I could become?

You just spent this whole thread boasting about how great you are relative to people around you, and then choke on and complain about the unfairness of having to take an easy intelligence screen. Are you sure your problems are caused by extrinsic factors?

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

Greenman72 wrote:

CEO10K-DAY wrote:

Greenman72 wrote:

1.  You get what you pay for.   Maybe your firm is different, but for the vast majority, if you’re only paying for investment management, you’re only getting investment management.  And if clients are only paying for asset management, then what incentive does the advisor have to give any other advice?  

Hold up. Name something, in the world of asset allocation, that you can do, that a computer can’t do for a fraction of the cost? 

In the world of asset allocation?  Nothing.  I have zero value to add.  All investments (and the associated returns) are commoditized.  

Outside the world of asset allocation?  Everything.  What algorithm shows you the benefit of a QCD, how to report it on a tax return, how it bypasses the itemized deduction test, doesn’t get counted toward AGI for purposes of refundable tax credits, Social Security taxation, or medical deductions?  Do you know what a QCD is?  Do you know whether it applies to you?  Do you know how much it will save you?  

I only bring this up because a client just left my office.  He was eligible to use  $45k worth of QCD, but didn’t, because he didn’t know it was available.  This would have saved him an estimated $11,000–risk free and tax free.  On a $1m portfolio (and I have no idea how big his portfolio is) that’s a 1.1% freebie.  What algorithm can give him a risk free, tax free, additional 1.1% return?  

I don’t know. TurboTax makes me think an algorithm will know it quite well with time 

ohai wrote:

You just spent this whole thread boasting about how great you are relative to people around you, and then choke on and complain about the unfairness of having to take an easy intelligence screen. Are you sure your problems are caused by extrinsic factors?

Is that a no on the fishing trip? I think you’re reading too much into things I don’t actually mean with any sincerity. 

¯\_(ツ)_/¯ It be like that sometimes.

CEO10K-DAY wrote:

The Merrill Lynch exam just asked me this question:

“Valley Bank is an organization that specializes in financial planning. At Valley Bank, all CFAs (Chartered Financial Analysts) specialize in economic modeling. All financial analysts are CFAs.

Based on the information above, which of these statements MUST be true?

1. All employees at Valley Bank who specialize in economic modeling are financial analysts
2. Some employees at Valley Bank who specialize in economic modeling are not financial analysts.
3. Some financial analysts have not specialized in economic modeling.
4. All employees at Valley Bank who do not specialize in economics modeling are not financial analysts.
5. No one at Valley Bank who specializes in economic modelings is a financial analyst.

What kind of cuckery is this? How on earth does this give them data about how good of an FA I could become?

Is it 2?

hei.so wrote:

Is it 2?

I don’t think so. I think the answer is number 1. At least that’s what I put - which lead to an interview. 

¯\_(ツ)_/¯ It be like that sometimes.

Why don’t you just draw a venn diagram or something?