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Discussion Posts

    • Folks I need some guidance please

      • Posted by: Sam
      •  on  May 8, 2008 5:18 PM EDT
      I have been an employee Financial Consultant for my entire career working for two of the most advertised firms on TV. I have my CFP and have experience with financial planning.  I approached a local RIA about joining their group and they and I are both very interested.  The firm is super ethical and have been around for 20 plus years.  I like the partners a lot and feel that I would be a great fit.  My goal is to own my own clients and they are offering a turnkey platform, office space, compliance etc.  I asked them what would be my cost to join the firm. The response was that it would not be a matter of cost but how I would want the relationship to look. 
      a) run the client thru as turnkey
      b)become a partner as an equity owner or employee or some combination of both.

      My concern is that I am great at listening to clients advising them and sales but I do not know much about joining a firm in this capacity. What my payout should be, etc.
      Can you folks please help me think this thru?

      Thank you,

      Sam

       
    • Re: Folks I need some guidance please
      • Posted by: Lee-Bro
      •  on  May 12, 2008 2:32 PM EDT
      Sam,
      I think you need to take a step back and decide what you want long term...say 5 to 20 years from now. You mentioned you want to own your book of clients. So you need to answer what 'owning the clients' means to you. Can you take them with you if you leave the firm to start your own firm? What if the RIA makes policy or a directional change that doesn't fit your clients' needs or your philosophy?

      Do you want to be responsible for your own expenses, will you be using the firms name/branding to help build your credibility w/ prospects? You also need to understand in more detail how this RIA generates it's income -is it fee-only, fee-based, etc?

      They should allow you access to discuss basic questions with other advisors that have joined the firm and the basic structure of their agreements -you did mention "the firm is super ethical." Ethics like that should have a fairly open policy about what they want out of it and what they are offering you.

      You should also consider if the clients you expect to retain will be a fit for this firm. Just because you like the partners, doesn't mean the firm will want to continue to expend resources on clients that aren't in/near their typical profile. Who do they specialize in?

      Regarding payouts - there are so many variables in that w/ the diff't situations, it's hard to even begin to suggest a compensation structure. But be aware that the largest variable is previous production and portability of client base. Portability isn't defined just by a non-compete, but also by a client's current holdings (think proprietary product and surrender charges) may keep them from being able to follow you.

      Finally, leaving the Ameriprise & Edward Jones world to an independent RIA is a major leap, if you're doing it to leave the 'employee' side of planning. If not, then I don't think you're going to get out of it what you're anticipating.

      Good luck,
      Lee-Bro