A Wirehouse Adviser, Regional Firm Broker, and a Boutique Firm Adviser
are sitting with me for dinner. None of them are particularly happy with their current firms. Having trained together many years ago at the same wirehouse, they have stayed close friends. Though they all wish that they somehow could work in the same place together again, it's become clear that their individual businesses and what they want out of their prospective new firms will make that impractical.
Boutique Firm Adviser: “My turn, Sarch.”
Sarch: “What is important to you in a new firm?”
“The wirehouses are embroiled in some type of scandal or bad news with every downturn. In my mind, being so big means that there are always going to be bad brokers. They know that too. So they then have to manage their brokers oppressively, compliance-wise, in order to protect their franchises. The Boutique firms, like mine, have not avoided all the scandals by any means. My biggest problem, though, is that we truly do not have the same capabilities of the wirehouses on a day to day basis. I suspect that this is because I'm part of a much larger organization and retail brokerage ultimately is just not a significant part of the corporation's revenue. And I don't think going independent is for me. I feel that the industry has just shrunk and shrunk with fewer options for guys like me.”
“There are actually more models and options than ever before. I know you don't want to go fully independent, but we can spend some time digging down into what you actually like to do every day and what you want your firm to do for you. Look at the retail brokerage world as a continuum with wirehouses on one side, independents on the other, with regional firms and boutiques in the middle. There are a few relatively new firms, and more coming, that are recruiting Advisers just like you. They are not setting brokers and advisers up to be fully independent, but are giving them a hybrid model, that has some elements of both support and independence.”
“Well I like the idea of having control and responsibility for my own P & L. If I want to give my assistant a raise, and it's out of my pocket, then nobody should care. If I want to discount a trade because I know it's necessary for that client at that point of time, for any one of a dozen reasons, I should be able to do it. I'd like to be able to market myself. But I don't want to worry about negotiating leases, about whether the copy machine is broken.”
“All that can be done. Now it's a matter of trade-offs. Highest payout, or some up front money? With support, having your own LLC, or being an employee? Having a traditional Branch Manager on site who is also a stakeholder in the entity or just an ops manager to clear up your problems? There are a bunch of other questions we need to go over too. We need to have a much longer conversation without boring your buddies too much.”
“You're still paying?” [More laughter….Sarch is paying the check as we finish]
Missed any of the previous posts in this series? Check out
Part 1,
Part 2, and
Part 3.
Next week: Part 5, summing it all up.
