Ain’t bberg like 20k a year? coincidentally i interned for a person with 600m in assets b4 at 1 of the bbs. i then worked for a consulting co and had access to pay data… liek every person. so it was pretty interesting.
i also have a buddy that generated 2m/year for one of hte major banks as an advisor (but he told me 70% of biz was from slinging mortgages). i think his payout was about 1m. and he prolly netted 500k.
never happened
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.
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?
What kind of cuckery is this? How on earth does this give them data about how good of an FA I could become?
cfa can be used as a noun now? thats fuckin 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.
they should really change that rule. its just weird to say im a cfa charterholder.
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.
My boss at Merril used to say you had to be really bad at the job to only make 100k. But that was 2009ish
*upvote *
I had to look him up to be sure haha
Damn millennials am I RIGHT?
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?”
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.
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.
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:
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?
Clients actually need comprehensive planning. The value that they’ll get from “real” planning dwarfs any value they’ll get from security analysis.
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.
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 :
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.
I agree, and agree. Next point.
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.
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.
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.