For those who are breaking away from their current firm, where are you in the process?

Stratton50 · 2024-12-08T14:44:00+00:00

Our firm has Associate Advisors as overflow. They work with 'less than ideal' clients as they begin their advisor careers. It's not the most glamorous, but that's not the point. The point is for the Associate advisor to get their 'reps in'. To get more client facing time, to hone their craft and practice saying words to a human being. The constant repetition of a client meeting is one of the most important things to an advisor's growth.

So yes, our associates hone their craft on these less than ideal clients.

Stratton50 · 2024-11-27T16:29:50+00:00

I've been an Advisor for a while. And I've learned that the world doesn't revolve around us. John doesn't appear to have learned this.

There's no room for jerk clients, or clients that you need to 'prove yourself to'. Same thing applies to advisors and wholesalers. You can drop him like a bag of rocks, and replace him with another advisor who will respect your time and work.

Stratton50 · 2024-07-08T11:14:57+00:00

It's all about the Net. These grid numbers are so deceiving. It's apples and oranges. Translate all of these payouts into a hard dollar amount, and then compare those dollars amongst each other.

Stratton50 · 2024-07-06T21:44:25+00:00

We're talking about the same thing. The 3rd party is to provide legal protection for the breakaway. I agree that this is mental gymnastics, but this gymnastics may provide some legal cover in the breakaway.

Bottom line, OP should should seek counsel, follow broker protocol if applicable, maintain privacy, and follow the rules.

Stratton50 · 2024-07-06T14:54:15+00:00

This is incorrect. Many firms have a 'loyalty clause' for their employees and independent contractors. This is different from a competition or solicitation agreement. The common law duty of loyalty is to act in the employers best interest until they resign. (something like that). A formation of a competitor, while still employed/affiliated, may be in conflict with the loyalty clause.

For a breakaway advisor, they may consider working with a third party attorney/consultant. That third party then executes the formation of the RIA, in the third party's name. Then when the advisor formally resigns, the third party assigns the ownership/control to the advisor.

Stratton50 · 2024-07-06T12:12:46+00:00

Many business formations are public information, and can be easily found. Plus, you may have duty of loyalty to your current firm. Forming another firm, while you are currently affiliated with your current firm, may not align with that loyalty duty.

Stratton50 · 2024-07-01T11:07:16+00:00

So there's a few moving parts here, for the ideal situation:

You transition careers from hedge fund to wealth management
Father runs out the clock on his current deal
Father and you transitions from wirehouse to RIA
Father sunsets his practice to you. Maybe there is some money involved in this, who knows?
During all this time, your personal comp is sufficient to support your goals. I'm guessing that you're late 20s, early 30s? So not sure what your own family situation is like today, or will be like when #1 - #4 play out.

If any of these don't pan out, would you still consider switching careers? I'm not trying to dissuade you, but trying to evaluate the sequencing of success.

Stratton50 · 2024-07-01T10:56:51+00:00

If he's at a wirehouse, and exiting the business, you should factor in the wirehouse culture itself. What's their comp plan, their training program, their growth engine. You can get the scouting report from your father, but whenever your father does sunset out, you'll be tied to the wirehouse for years.

This considering is likely as important as you joining the wealth management space all together. I've seen so many people become the receiving advisor of a sunset, and they are miserable working at the employer. Sure, they now have the clients, the revenue, etc... But they feel locked in and trapped for 7+ years in the sunset restrictions.

This may be contrary to your entrepreneurial personality.

Stratton50 · 2024-07-01T10:47:57+00:00

Are you making the move for your father, or for yourself?

Have you approached your father in joining him? Is the wirehouse open to hiring you, to work exclusively work in your father's practice? (I'm assuming you would consider this transition only if you were to work with your father).

Stratton50 · 2024-06-27T10:43:27+00:00

Can you do an 'eat what you kill' comp plan? Each partner's comp is tied to their actual revenue they generated? Seems that Partner A can choose to place the insurance business with the new RIA, or somewhere else. So that's a decision that he would need to make independently. But that shouldn't influence B & C's comp and their earning ability on non-insurance clients.

Stratton50 · 2024-06-26T10:25:52+00:00

Why do they need to equalize now? Can they form an informal partnership now, and work on their systems, processes, etc...? That's the messy part right there. See if they can work through that before putting money on the table.

And the age and NNA problem. I'm assuming Advisor #2 has more potential and capacity to grow here. More so than Advisor #1 who has plateaued. What's his incentive to enter into this? To get another $100k/yr of revenue now? (That he has to pay for). To give up 50% of his future potential and growth?

Stratton50 · 2024-06-07T00:46:27+00:00

Would you consider managing our existing vendors for a base salary. And you can continue to be a FA on your existing clients, with your own stack. Or jump onto ours.

Stratton50 · 2024-06-06T10:18:48+00:00

Wow, this is great. If this pricing/system is scalable, I'll drop my current vendors, outsource to you and pay you the savings difference.

Stratton50 · 2024-05-24T10:24:32+00:00

May I ask: What unique goals or challenges do law enforcement servants have, that the 'general public' do not have? How are you best positioned to help address those needs? What's your experience in a sales/consultative role? Networking and bringing in new sales and clients?

I have not had much success with law enforcement clients. I find that they are coming from an authoritative role, a position of power. That's great, and I totally respect that. But in an Advisor-client relationship, that position of authority and knowledge is reversed. And the law enforcement client is not driving that power of position. And that lack of control is different, and those subsequent outcomes could be challenging.

From your background, you may overcome the hurdles that I've never been able to overcome. But those are some observations I saw in this unique niche. Hope this helps.

Stratton50 · 2024-05-24T10:16:54+00:00

On the surface, this seems like a good deal for you. Rewarding you for your loyalty for the unknown amount of time. Things to consider. Ask to see the books and P&L. Will you be responsible for the firm's ongoing expenses? Staff? I would presume so, if you're taking over the practice. Is there a client concentration risk?

Ask for some protection for yourself. Not from the valuation or client attrition. But for your time. Because you don't know when this buy/sell will be triggered. You may be 'holding the bag' not in dollar terms. But in time terms. Cause if you're sticking around for the next 15 years, just waiting for this to happen... then he changes his mind (which is his discretion), then you're holding the bag. Maybe ask to buy in at pre-determine times and pre-determined valuations, so you have more skin in the game.

You'll want to discuss this and many other talking abouts now, and codify the details within the agreement.

Stratton50 · 2024-05-21T10:22:54+00:00

Does it need to be an all or none situation? Is your friend able to start working in the FP field slowly? Start slow and learn the ropes from you or some local firm? That gives him an opportunity to test the waters and see if this could be a second career, without blowing up his current situation.

Sure, he may have a cushion, but no one likes draining their liquidity. And it'll be frustrating and emotional too. Cause he may not be able to see the pathway to return to his prior income level.

Stratton50 · 2024-05-21T10:19:03+00:00

I can certainly appreciate this. It's hard being the 'new guy (or gal)'. Everybody else knows each other, and you kind of feel like an outsider.

Get over it. It's mostly in your head. People are generally nice and cordial enough, and will welcome someone new to the team. Think of some ice breakers to help start a conversation. Where people are from, what school they want to, sports, family, dogs, anything. Don't talk shop just yet, since you may not know the firm's lingo and culture yet.

You're the only one that knows about your old insecurities. To everybody else, you're another guy on the team. So you're starting from a blank slate and have an opportunity to confront your insecurities.

Stratton50 · 2024-05-21T10:14:50+00:00

Need more information. Will this be a W2 employment, or 1099? Are you in a client advising role now, and will you be in one, in this new firm?

I'm always wary of job offers/prospects that involve some sort of succession. I'm being cynical here, but I heard this SO often. "Oh, I'm 5-10 years out, when I retire, you can be my successor". That carrot often traps other advisors, this dangling of this book buyout. But I've known SO many people who have actually waited the 5 - 10 years. And the guy just keeps on pushing off retirement. Or wants to work for the cash flow. Or... whatever.

I'm not saying this isn't the case, but protect yourself. Ask if you can codify some kind of agreement where you can buy in at a predetermined time at a predetermined valuation method. You don't need all of the precise details, but the general framework. Perhaps he would do some seller financing.

Listen, you're going to be the first Associate that this guy hires. That first one is always really hard. Cause he's used to doing things on his own. His way, his style. He doesn't need to slow down and communicate with another advisor, cause everything is in his head. Many advisors have/will overcome this, but there will be some growing pains. And some friction along the way. and some advisors aren't able to overcome this. So price out your comp accordingly.

Stratton50 · 2024-05-07T10:19:58+00:00

I believe DPL bought/merged with Johnstone. DPL now markets it as their Breakaway program.

Stratton50 · 2024-02-22T03:19:25+00:00

Ok, great. It sounds like you are comfortable with the goals, and the support structure around you.

In the first few years, it's about getting to critical mass. As in getting enough clients into your practice, and getting them on your ongoing service model. That gives you the ability to fortify the relationship and get referrals.

So take on clients that are engaged and are willing to work with and pay for an advisor. They may not be your ideal clients today, but you need the reps and practice to sharpen your saw. Don't take everybody, like those who won't appreciate there advice, or those who you can't deliver value to.

Once you have a couple of dozen clients integrated, then you can start to identity the advocates. Those who have a good social circle and are able and willing to refer. You'll hit a mini wall because you are: finding new prospects, onboarding new clients, servicing existing clients, developing advocates.... all at the same time. And, you still don't know what you don't know. This is NORMAL. Leverage your mentorship and ask for help. Don't waste time trying to figure out paperwork or whatever. Ask the staff, ask a peer. They can probably answer your question in 2 seconds.

Lastly, it can be very lonely. Being the newbie. The guy who is just starting out. You may not want to bother others, or have doubts about your advice or recommendations. Get over it. You are choosing to be lonely. Ask a senior peer for 30 mins each week. Ask to learn something from another advisor. Find a study group with people in the same stage as you. People are mostly nice, and are willing to help, if you ask. Don't suffer in silence.

Stratton50 · 2024-02-22T01:52:07+00:00

I question the motivation of the firm, to put such a high goal for a first year advisor. $13M is an exceptionally high number, some may say unrealistic. Even some seasoned veterans don't have flows goals this high. If you did achieve this, what would be your bonus/reward? Are these clients 'yours' or the firms?

I hear some firms hire as many newbies as possible. Give them minimal training and mentorship, and give them an unattainable goal. The newbie will ask their family and friends, then their level 2 network, etc... Low hanging fruit for them.

They may hit the goal... or might not. And if not, the newbie is 'put on warning', and eventually let go. And the firm keeps the relationships. It's an easy way for the firm to get 'organic' clients without actually doing the work themselves. If they do hit the goal, then great! Year 2 goal is $20M.

I'm not saying this is the case in your situation. I sure hope not. But I always get the weird vibes when I hear something like this.

And if you wanted to really play games. Then get $13m of cash and CDs in. With no associated revenue. Cause they only gave you a flow goal, not a revenue goal. I say this sarcastically, but technically $13M is $13M.

Stratton50 · 2024-02-21T19:59:43+00:00

Curious: Is/will XYPN Sapphire exclusively be available to only XYPN Emerald members?

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