T R
HE
UMMAGE
R
EPORT
The “Sports Agents” Of The Financial Industry
Models We Work
With:
Wire Houses
Regional Firms
Large Banks
Small & Medium Banks
RIAs
Small Financial Planning Firms
Independents
Boutique Firms
Hybrid Firms
Discount Firms
Insurance Companies
Quote Of The Month
And in the end, it's not the
years in your life that count.
It's the life in your years.
~Abraham Lincoln
Tip Of The Month
Common
Misconceptions
Regarding
Independence
Payout comes out to about the
same as a Wirehouse after you pay
expenses.
This is not true. Most independents
will have a net payout between 7080% depending on their control of
expenses.
The Rummage Group is a Very Unique, nationally
recognized Career Consulting firm specializing in the
Financial Industry. We are the “Industry Experts” that
connect Financial Advisors with the hundreds of firms willing
to hire them. We are one of the only firms started and run
by a 20 year veteran of the Financial Industry. We are
the “Sports Agents” for Financial Advisors.
Everything we do is always 100% Confidential.
When a Financial Advisor decides to change firms or even
just look around, their first call should be to The Rummage Group. Most are
unaware there are over 1,000 firms that employ Financial Advisors and the
average advisor is only familiar with a handful. We save Advisors the heartache
of having to go it alone and rely on biased information. Since we do business
with most firms, we can provide unbiased assistance during this important
transition. The Rummage Group is truly a one stop shop that can help keep
Advisors from making a major career mistake by ending up at a firm or model
that does not match their goals.
What We Do For You:
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We help you negotiate the deal- We know the deals on the street as
well as "The Secret Deals"
We help you select the right firms by discovering all of your
options (Wire House, Regional, Independent, RIA, Bank, Boutique,
Insurance, Discount & Hybrid).
We know the REAL pros and cons of each firm - Unbiased
information.
We help you ask the right questions - We have over 50 questions
you should be asking each firm.
We save you time and frustration- We have relationships and
contacts at over 500 firms - We can get anything answered with a
phone call.
Rick Rummage
I will be on an island and have no
direction or support. I will have to
do everything on my own.
This is not true. In most cases your
broker dealer is there to help you
every step of the way. Your success
is their success. Think of being
independent kind of like a
franchisee. The big difference is
you have more freedom than a
franchisee.
I will spend too much time
handling compliance.
The average Independent Advisor
spends about eight hours a month
on compliance. There are also
solutions at most firms that will
assist you with compliance or even
do it for you.
For more information contact:
Rick Rummage
Managing Partner
The Rummage Group
Off 703.435.2822
Fax 757.299.4677
Cell 443.739.7866
[email protected]
www.therummagegroup.com
Areas Of Expertise:
Brokerage: Senior Level Managers, Branch Managers, Sales Managers, Financial
Advisors, Financial Analysts, Operations Managers and Compliance Officers.
Banking: Senior Level Managers, Commercial Lenders, Private Bankers, Wealth
Managers, Credit Officers, Portfolio Managers and Branch Managers.
For more information on Rick Rummage and The Rummage Group visit:
www.therummagegroup.com
http://www.linkedin.com/in/rickrummage
Featured Article
Is Independence Right For All Types Of
Advisors?
Many advisors are leaving Wirehouses, Regional Firms and even Bank based models to
go independent. Why Independence? Do I have the correct skill set or client base? If
I do move to an independent firm, will I be successful? How big does my book need to
be before moving independent? These are the questions many of advisors find
themselves asking. At The Rummage Group we find ourselves spending a lot more
time coaching and consulting on these very questions.
Let’s start out by comparing and contrasting the differences between a Wirehouse
Advisor and a Bank Based Advisor. For advisors moving from Wirehouses to
Independent Firms, this is usually an easy transition because they are used to hunting
for business and marketing themselves just like an independent advisor. In these
models there are no leads or referrals from banking partners, nor are there warm
leads to call. These advisors have had to learn how to market themselves or starve.
They must know how to go out into the big cold world and get in front of individuals
with money. They then have to convince these individuals they have the knowledge,
correct plan and trust worthiness to help them secure a sound financial future. This is
the most challenging task at a Wirehouse type firm and it is the reason 80% of advisors
fail in their first three years of production.
For the successful Wirehouse advisors, they usually do a pretty good job building
strong relationships, once their prospects become clients. When you work really hard
to turn a prospect into a client, you usually value them more and work hard to keep
them. This is also why, when an advisor leaves a Wirehouse or Regional Firm, they
typically take about 75 – 80% of their clients to the new firm. To build stronger
relationships, the good advisors will do things such as; take a Holistic Financial
Planning approach, call their clients at least quarterly, have regularly scheduled
portfolio reviews, send birthday and holiday cards, hold client appreciation events, get
to know the families and even hobbies. Again, not all Wirehouse advisors use all of
these tactics, but on average they do them a lot more than Bank Based Advisors. At a
Wirehouse, the advisors clients have become their friends and value them enough to
follow them anywhere.
Now let’s take a look at the typical situation for a Bank Based Advisor. In most
situations, these advisors spend most of their time closing business instead of hunting
for it. These advisors are working with already existing customers of the bank. These
customers may have relationships with several bankers within and outside of the
branch. If they are referred to the Financial Advisor, it is just one more relationship
they have at the bank. Typically the process is started with the Financial Advisor
getting a referral from a banking partner or they find the customer while canvassing
the banks database. The advisor will typically show up for the appointment and spend
an hour talking about a specific investment. If they are good, the client buys the
product and the advisor moves on to their next appointment. In most cases, the
advisor has very little interaction with the client after that first meeting and this does
not help build strong relationships.
Of course there are exceptions to every rule, but most bank based advisors do not
have the time, nor take the time, to establish strong relationships. There are many
reasons for this. At The Rummage Group we have spent a lot of time analyzing data
and have found, in most bank models Financial Advisors spend between 20 -30% more
time doing non sales activities. They are challenged by an over active Compliance
Department, too much paper work, sales meetings/ conference calls, outdated
cumbersome technology and little sales support. Again, this is not true at all banks but
rather most.
Most of the advisors we speak with in a Bank Based Model admit they would love to
spend more time getting to know their clients better and build stronger relationships,
but feel it is just not possible. Another really big issue is these advisors have too many
clients and their average account size is very small in comparison to the Wirehouses. It
is not possible to build strong relationships when you have 2,000 clients. In addition,
you will have to service these accounts and that becomes a nightmare. When we
coach Financial Advisors in any model, we teach them to have fewer clients with larger
accounts. In many cases, a client lies about their net worth, and the advisor does not
have the time to investigate further. If they could, they may find that the client has
more assets. The client may have the bulk of their assets with an advisor that has
added more value and gotten to know them better. This is business that the Bank
Based Advisor could have won.
The biggest producers in the industry know, a successful advisor should reevaluate
their books each year. They should get rid of the bottom 10 – 20% of their books. Say
goodbye to the smallest clients or the servicing nightmares. This will allow them to
spend more time with the upper 20% of their books. At a bank, this is easier said than
done. At most banks, they want you to service all account sizes. At one Wirehouses,
they are making the advisors get rid of any accounts under 250k or get paid very little
on them. An advisor in any model should want to upsize their books each year. At a
Wirehouse they make you do it through payouts and in a Bank Model they won’t let
you. There is a happy medium and all advisors in all models should be free to find it.
In a move to a new firm, a typical Wirehouse advisor will take 75% of assets, but in a
Bank Model that number drops to 20 – 40%. Again, there are a lot of variables that
come into play; How long have they worked with these clients? What have they done
to build strong relationships? How many clients make up their book? How strong are
their customer service skills? There are some bank based advisors we have worked
with that took 50 - 60% of their books to an independent model. This is also where we
spend a lot of time coaching our advisor clients. I have always said, an advisor is only
as good as their book of business and you can tell a lot about them by dissecting it.
If you move and your clients don’t, you are in big trouble, no matter what model firm
you come from. Of course this is why most advisors are scared to move to a new firm
or model. The truth is, an advisor should know which clients will move with them
before they even contemplate a move to a new firm. At The Rummage Group we
spend a lot of time coaching on the strategies of moving a book.
If you look at the math, it is pretty easy to figure out how big an advisor’s book needs
to be before they contemplate a move to the independent model. First you must
know the industry average return on assets (ROA) is one percent (1%). This means that
the average advisor generates about 1% in total revenue from the assets they manage.
Second you need to know the average net payout (revenue after expenses) an
independent advisor generates is about 70-80%.
For example, if a Bank Based Advisor has fifty million (50mm) in assets, then their gross
production will be about five hundred thousand dollars (.01 x $50,000,000.00 =
$500,000.00). Now we can just apply their payout to see what they get to keep. In a
Bank Model, the average payout is about 35%. This means that an advisor with 50mm
in assets, 500k in revenue and a 35% payout is making about 175k per year (500k x .35
= 175k). Using this same math, if the average Bank Based Advisor changes firms and
takes 35% of their assets, their payout will go up, but with fewer assets (.35 x
50,000,000.00 = 17,500,000.00) and (17,500,000.00 x .01 = $175,000.00) and
($175,000.00 x .80 = $140,000.00). In this example this advisor only took 35% of assets
but still made 80% as much income. It is pretty easy for an advisor to apply this math
to their own situation. You just need to know what assets will follow you, and then
how much revenue you expect to generate. Then multiply that number by a net
payout of about 70 – 80%.
Let’s take a look at the reasons an advisor from any model firm goes Independent and
some of the common misconceptions.
Reasons To Go Independent
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Build your own brand or use the Independent firm’s brand – your choice.
Much higher Net Payout. Revenue – Expenses = Net Payout. Typically
70 – 80%
Freedom to market & build your business how you see fit.
Hire other advisors and profit from their production.
Freedom to make your own work schedule.
Can work from home, second home, vacation etc. – more time with
family.
Dress how you feel appropriate.
Create your own office culture.
Never go to another useless corporate sales meeting.
Design your own office.
Use whatever technology you want.
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No more pressure from management to sell products or services.
Manage your assets and clients how you see fit.
No more losing prospects because they already have an account at your
firm.
Build a legacy business for your children and family.
Never really have to retire depending on how you structure your
business. Work how and when you want to.
Hire and fire who you want – no more approvals, Select your own Sales
Assistant, cold caller or intern etc.
More tax deductions – most expenses become business write offs.
Can sell your practice for big $$$ - many buyers available.
No account minimums or discount sharing. Work with any size client,
charge what you want and get paid in full.
No more product haircuts. Full fees / commissions pass to you.
Get anything legal approved by compliance in a very short time – hours
or days instead of weeks, months or never.
Going Independent is not as difficult as you may think. There are ways
to go semi Independent.
Pride of business ownership.
In summary, Independence is not for every advisor. Some advisors are more
entrepreneurial and some are not. Some would like to build a business and some are
happy having a job. Some have done a great job building client loyalty and some have
customers that don’t even remember them. Some advisors are very good at hunting
for the business, and some feel they need to be spoon fed. All model firms are good
and all are bad, it just depends on the advisors goals and their strengths and
weaknesses. Being a Financial Advisor is one of the best professions in the world. It is
one of the only professions where you can build a loyal book of business that will
follow you anywhere, and pay you a fee each and every year, if you build it right.
There are advisors that understand that and the ones that don’t. Which one are you?
Benefits of The Rummage Group
We work very differently than other firms in the industry and truly are a
“One Stop Shop”. Whether or not you decide to utilize the Rummage
Group and its services, you will at least benefit from a better awareness
of your options. Some things to think about……….
“A Knowledgeable Partner To Help You”
Rick Rummage spent 20 years in the Brokerage Industry as a Top Quintile
Producer, Sales Manager & Branch Manager. He has hired, coached and
trained over 100 Financial Advisors. He worked at a Wire House, Regional
Firm and Bank Brokerage and has had first hand experience moving a practice.
Rick knows firsthand the challenges of being a Financial Advisor as well as
what it takes to move a book of business.
“How We Save You Time & Frustration”
Changing firms can be a full time job. Each market has anywhere from a dozen
firms up to hundreds and the average Advisor is only aware of a few. Each one
of these firms has strengths and weaknesses. Financial Advisors need to focus
on their clients at all times instead of researching which firms exist in their
market. We have spent hundreds of hours researching & building relationships
with many companies, so that you can focus on building your business.
“How To Get A Good Transition Package”
We know the mindset of the typical hiring manager, how recruiting affects
his/her goals, his/her negotiating flexibility, the approval processes, and how the
entire recruiting process is typically managed. This allows us to help you get a
very competitive transition package.
“The Real Pros & Cons Of Each Firm”
Because we do business with many firms on the street, we can give you
firsthand knowledge of each firm’s management, product offering, clearing firm,
technology, grid payouts, T& E allowance, administrative support, benefits,
culture, titles etc.
“Questions You Should Be Asking”
Transitioning your clients is the number one question during a move. There are
various strategies that can help you transfer more of your clients. There are
many things to think about: Should I have a business transition coach? Is my
firm part of the protocol? What will happen with my Non-compete or contract?
What should I tell my clients and how should I contact them? Who puts the
ACAT packages together and when are they mailed? Will clients get the same
margin rate and fees as they currently do? Should I have an Attorney and who
pays the fee? We can help you with these and many more important questions.
“How To Select The Right Firm For You”
Since we have relationships with many firms, we are unbiased about which
ones you consider. We can get you in front of multiple firms when necessary.
We work with Wire Houses, Regionals, Independents, Banks, Insurance
Companies, RIAs & Discount Firms. We can help keep you from possibly
making a big career mistake by ending up at a firm that does not meet your
needs. We don’t try to sell you, we try to help you. We build our business via
referrals from happy clients and we hope you become one soon.
.©2010 The Rummage Group
The Rummage Group
Off 703.435.2822
Fax 757.299.4677
Cell 443.739.7866
[email protected]
www.therummagegroup.com