Financial Advisors

How realistic is it that in the event of all wirehouse firms ending protocol they soon begin to drastically slash financial advisor compensation? Is this fear mongering or an inevitable reality?

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In 30 years I've never seen comp go up at the wire house... kinda a no brainer to go Indie RIA and pocket 85%+ pretax.

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I don’t think they’ll “drastically “ slash comp but they will obviously have a little more power with no protocol. Think about why they’re doing this though. I think (but don’t have the facts to back it up) that the rate at which FA’s are moving has edged up. I’m guessing that the new problem is that fewer are opting for another wire house and they’re skipping Indy brokerage and going straight to RIA or hybrid. I think that’s what they’re spooked about and they should be. Their model is broken. They know it and this is them panicking. I think.

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Reality, if you ask me. I don’t know if “drastically” is the right term. I see them going to salary, and bonus structure.

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Sickle you are wrong RIAs can sign up for the protocol. We just did. Wirehouses are bleeding assets and this is one way they can slow it down. Compensation always goes down since grids always increase even in down markets, bonuses will get smaller, and everyone is forced onto a team. Those that aren’t close to retirement are going to get screwed. Go indie RIA before it’s too late

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Well if an advisor goes indie or RIA, they aren’t in the protocol and can be sued anyways.

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It’s both.

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I hate to break this to you, but they don’t think of you as an asset. It’s not like a ball player. They believe the clients are the firms clients, not your clients. At least that is the goal. Your “practice” is a real thing to management. It is a firm and you are just a “book manager”. That book (in their eyes) can be worked by anyone with the right licenses. I don’t agree with it, just saying that’s their belief. To prove my point, you can’t find one wire house that pays any advisor (no matter their GDC) getting paid 51%. The firm always gets the bulk. When they advertise, they don’t put a local advisor, they make a company wide commercial with actors so it works for anyone (there now or who they put in your chair after you leave). “When they show you who they are, believe them.”

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Know your worth. Picasso was sketching on a park bench one day. A woman came over and recognize him and elated begged him to draw a picture of her. Being nice took a quick few minutes and drew her a picture in the park. She looked at it and spent minutes talking about how people in a hundred years would love this drawing. She asked him how much he wanted for it. Picasso said, $5000. The woman was mortified! “How can you possible expect 5k for just a few minutes of work?!?!? How could you possible expect 5k for just five minutes of work?!?!l” Picasso said, “No, madam, it took me my entire life.” Robo advisors aren’t our competition. You are your own competition if you don’t know your worth.

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If you do 400k gross at a wire house you are probably getting paid around 140k. As a business owner, I would guess it would translate to 100k salary with quarterly bonus of 10k tied to net rev flow in and out.

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I don’t know anything about Wells. But I was at a different one. My problem was I didn’t buy into the company “culture” and was tired of answering questions of why my firm was in the news (because something stupid happened 100s or 1000s miles away). I was lucky to “get” to pay them over 250k a year to be lumped in with idiots in NYC. But my business card was nice, just not 250k nice.

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But what of the incentive to grow the practice? That can work the other way too. By going to a straight salary with meager bonuses thrown in does that not kill the ambition of the advisor to add clients thereby hurting the bottom line of the firm?

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I would think that of all the wirehouses Wells Fargo Advisors would be the last to implement such a vile scheme...or would they be the first?

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Interesting.

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Sickle, we are opening a branch in Tampa in January, we should meet for a drink! You can tell we’re to cool places are!

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The point (in my view) is to make advisors at wire houses feel they are even more “employees”. Like when most of them start incentiving moving to a team. Sure you weren’t forced to but you bonus structure was increased as a team. That just makes it harder for them to leave and take their clients unless everyone on the team left together. If you are getting a salary, they are betting you will become comfortable on that salary and will be less likely to want to go indy or switch firms.

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All of you should look at what Schwab & Vanguard are doing. Hire someone good on the phone, pay them just enough salary to keep them from wondering and make them manage huge books. Add to the Schwab franchise RIA, then look at what Vanguard is already doing for almost no money and ask yourself what in the heck are you doing sitting there and wasting time for? The sooner you get out of your comfort zone and start building your own brand the sooner you will be able to compete. But know the wirehouse model is in meltdown and they will try to convert as many assets as possible to the Schwab/Vanguard model. Control Your Future; Go Indie RIA!

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We kinda got off the Protocol subject... don't worry about Protocol, worry about the NDAs you signed to get that last bonus... NDAs are impossible to defend, if you have one and have enough AUM to cause them grief you can expect a TRO. Control Your Future: Go Indie RIA!

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Just saw the "Wells Fargo launches automated advisory service" on Linkedin... is anybody concerned about the future of WM yet? HELLO?

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That’s just for small accounts

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When we speak of changing advisor comp to salary and bonus what kind of salary are we speaking of? For example if I am doing $400k gross at a wirehouse and all of a sudden we become “salaried” how do you feel that would translate insofar as annual income?

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