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Email this2:08 pm
December 23, 2011
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GS. Yup that is my guess too. AND if it is a firm with multiple advisers I would bet the lowest on the totem pole adviser would be only privy to the lower dollar value portfolios and so on. Ie. the old advisers clients would be in a pool and be up for grabs based on the protocol of the office.
12:27 am
October 21, 2013
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I would want more evidence in order to assume that there is a financial transaction going on between old and new advisors. It's not like other professional practices where the professional owns the practice and indeed typically owns a corporation through which they manage it, and can sell it with its physical assets, records (subject to legal restrictions) and client list. In the case of Wealth Management branches of banks, all of that remains the property of the bank, as far as I know.
In this case, as I understand it, the advisors are employees of BigBank, which is quite a different matter. I can't envision the account of out of which one pays the other, if they are both employees.
I can, however, imagine that there is a system of seniority in place by which the more senior advisors get their first pick on bigger accounts, and so on down the line. My theory is that the new account would be handed to them, and that they would be expected not to exceed the usual rate of attrition of accounts in that firm.
I can imagine systems of bonuses etc through which those who manage the biggest amount of total assets and bring in new clients and money get rewarded. As I read in one book recently, all financial advisors, by whatever name, are fundamentally salespeople. Some know more and have more tools and are more honest than others.
Please ask them directly, Brian, and end our speculation if you can! You could start with asking if your advisor is a salaried employee of the bank, and take it from there. The age-old question which should be asked of all prospective advisors, "how do you get paid?" applies.
Someone here could also ask a what-if question of their own advisor, I suppose, if they have a full service person. The question should not be threatening when it is not immediately relevant.
5:36 am
June 29, 2013
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GS said above: "I continue to want to remind people that a 20% gain is good when the market is up 10% but is terrible when it is up 30%.
GS"
For me, I am quite satisfied with a 20% gain even if the market is up 30%. because I wish to limit my risk, and therefore I don't expect the maximum gain possible BUT I am still doing better than say investing in the 2% to 3% mostly available in the last few years, for buying GICs and other "guaranteed" investments these days.
Everyone has to decide on their level of comfort etc. etc.
In regard to the remuneration of the advisors, I will ask the question if and when I meet the replacement guy in the next few months who will be my new advisor, as my old advisor eases into his phase out period and then his retirement.
Thanks to all for their great comments and suggestions.
Brian
PS - I would be interested to learn how to get the 30% gains without subjecting myself to high risk!
10:28 am
April 6, 2013
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Loonie said
I would want more evidence in order to assume that there is a financial transaction going on between old and new advisors. It's not like other professional practices where the professional owns the practice and indeed typically owns a corporation through which they manage it, and can sell it with its physical assets, records (subject to legal restrictions) and client list. In the case of Wealth Management branches of banks, all of that remains the property of the bank, as far as I know.
In this case, as I understand it, the advisors are employees of BigBank, which is quite a different matter. I can't envision the account of out of which one pays the other, if they are both employees.
....
Do a Google.ca search for the title Merrill Gets More Generous With Broker Retirement Plan and click on the link for the January 2013 online.wsj.com article.
Unfortunately, the direct link to the article runs into their pay wall.
11:31 am
October 21, 2013
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Brian said
I would be interested to learn how to get the 30% gains without subjecting myself to high risk!
Wouldn't we all!
11:32 am
October 21, 2013
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Norman1 said
Do a Google.ca search for the title Merrill Gets More Generous With Broker Retirement Plan and click on the link for the January 2013 online.wsj.com article.
Very interesting article! Also, several other articles popped up along similar themes when I ran the search.
The gist of it seems to be that the big US investment houses whose practices have gotten us into the muddle we're in today have astonishingly good retirement packages for their advisors, in many cases awarding them higher income in retirement than they had while they were working, because they're afraid of losing their client lists if they don't. (My guess is that these are the very same folks who would say that defined benefit pension plans, which never come anywhere near being as generous, are an outmoded luxury for every other working stiff.) At the end of the day, there's only one group of people paying for these outlandish retirement packages - investors!
A parallel article for Wells Fargo, slightly different system, stresses again that the job of an advisor is all about bringing in income for the firm, not a whisper about fiduciary duty to clients. http://www.reuters.com/article.....AF20131219
Buyer beware. Your advisor is not your "friend". At best it will be a win-win.
My guess would be that the formula is not quite so rich for Canadian advisors, but the same principles and parallel systems might apply.
11:59 am
October 21, 2013
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Here's another article which I found interesting and helpful:
http://financecareers.about.co.....utGrid.htm
Some of it may not apply, as it's probably American.
However, note this: "...a firm may give special incentives to sell in-house mutual funds, or equity new issues that it underwrites. These exceptions and bonuses can be permanent or temporary. Temporary sales bonuses often might be referred to as "flavor of the month" promotions.
The concept of offering special sales incentives for certain products, especially in-house products, has come under increasing fire, since it undermines the financial advisor's fiduciary relationship with his or her clients. As a result, some firms have done away with such special incentives, and tout their 'open architecture' approach that leaves the financial advisor undistracted in seeking the best investment vehicles for the client."
9:07 pm
April 6, 2013
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Loonie said
Very interesting article! Also, several other articles popped up along similar themes when I ran the search.The gist of it seems to be that the big US investment houses whose practices have gotten us into the muddle we're in today have astonishingly good retirement packages for their advisors, in many cases awarding them higher income in retirement than they had while they were working, because they're afraid of losing their client lists if they don't.
....
Just to clarify: Those 100% to 160%, and up to 180% of their annual production payments mentioned to advisors for their book of business are one time. According to the article, UBS pays the amount in one lump sum at retirement. Merrill Lynch spreads the payment over four years.
I don't think any advisor will receive more after they sell their book and retire than they would if they continued to work.
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