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Ryan N. Shanks, Founder & CEOFinetooth Consulting, LLC
Crucial Considerations Before Leaving A Wirehouse
• A non-independent broker working for a wire house firm, or a firm with multiple branches such as a national brokerage house. A wire house broker is typically a full-service broker, offering research, investment advice and order execution. By being affiliated with the wire house, the broker gains access to the firm's proprietary investment products, research and technology.
* Investopedia
What is a Wire House Broker?
Your Past
* All logos are protected by copyright laws
Your Future
Wirehouse to IBD
0
200
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600
800
1000
1200
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1600
200820092010
Going Independent
* Data provided by
• How can you avoid a breach of contract with your current employer?
• Should you start your own firm or join an existing one?
• How do you start the broker dealer and custodian selection process?
• Will you hire legal counsel and if so, then who?• How much capital do you need to get started?
Steps to Independence
• Understand Broker Protocol– http://thebrokerprotocol.com/list-of-protocol-members
• Contract Review– Look for restrictive covenant & non-solicit language– The clients DO NOT belong to you or the firm
• Monetary Review– Do you owe money under a current contract
• Privacy– Your intentions to move should stay with you
• Client Rights– Your clients can follow you if they choose
Avoiding Trouble
Finetooth Tip: Never assume you know the answer; seek outside counsel.
• Ownership traits:– Business Interest– Management– Organization– Sacrifice– Positive Attitude– Leadership
Ownership or Affiliation
• Plan for the following expenses:– Office Lease & Utilities– Staff– Professional Services– License Fees– Insurance– Furniture– Equipment– Supplies– Print/Collateral Material
Ownership Track
* Some costs are one time and others are ongoing
$500,000 Producer
Broker Dealer OverrideOwners CompensationOperating ExpenseNet Profit
Ownership Track
* Data provided by Finetooth Consulting, LLC
• If you choose to join an independent firm, know what questions to ask:– Payout– Client Ownership– Branding– Support Staff– Transition Help/Mentoring– Contract– Upfront money– Succession plan
Ownership or Affiliation
Finetooth Tip: Negotiating ends when you affiliate; leave nothing on the table.
$500,000 Producer
Broker Dealer OverrideOwner OverrideAdvisor Compensation
Affiliation Track
* Data provided by Finetooth Consulting, LLC
Wirehouse Owner Affiliate0
20
40
60
80
100
120
BD OverrideSupport CostNet Payout
Payout Comparison
* Payout % at Owner & Affiliate levels are averages, based on research by Finetooth Consulting, LLC.
• Independent Broker Dealers• Over 2,000 to choose from *100
– Boutique– Regional– National
• Institutional Custody Platforms• Over 10 to choose from *20
– National
Choosing your Business Partner
* Research hours to decision based on research data from Finetooth Consulting, LLC
• Business Profile• Client Needs• Advisor Needs• Wish List• Business Translation• Hire Experts• Request References• Identify Path• Compare Options• Pause before Deciding
Knowledge & Mapping
$500K+ Producers as percentage of advisor headcount
CommonwealthWilliams Financial GroupLPL FinancialGirard SecuritiesTriad Advisors
Peer Evaluation
* InvestmentNews 2010
Number of Advisors
CommonwealthWilliams Financial GroupLPL FinancialGirard SecuritiesTriad Advisors
Quality over Quantity
* InvestmentNews 2010
• Get Legal Advice if:– You owe money and plan to leave– You want to setup your own RIA– You+1 colleague plan to leave together– You think you can tell your clients about your move– You are doing more than $2,000,000 in GDC
Legal Guns
MIDWEST EAST COASTScott C. Matasar, Partner Brian S. Hamburger, FounderCalfee, Halter & Griswold LLP Hamburger Law Firm LLCCleveland, OH Englewood, [email protected] [email protected] 216.622.8387 201.705.1200
WEST COASTPatrick J. Burns, Jr., OwnerLaw Offices of Patrick J. Burns, Jr., PCBeverly Hills, [email protected] 310.275.5059
Legal Advice
• Office Lease & Utilities - $7,200• Owner Income - $40,000• Staff Income & Benefits - $23,600• Professional Services - $4,400• License Fees - $620• Insurance - $1,000• Furniture - $1,200• Equipment - $8,250• Supplies - $500• Print/Collateral Material - $2,500• TOTAL: $89,270
Startup Capital Required
* Based on 4 month expense factor from Finetooth Consulting, LLC
Thank You
wwom
www.finetoothconsulting.com
