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February 21, 2012 at 04:57 AM
Some years ago, I was on a trip to somewhere that involved flying through Dallas (which doesn’t narrow my destination down very much), and got to talking with the guy sitting next to me. As luck would have it, he was a stockbroker from Houston. I don’t remember which wirehouse he was with, but he wasn’t bashful about telling me that he generated $1 million in annual gross commissions. With uncharacteristic tact, I apologized for prying, but asked if he didn’t mind telling me what his payout on that was.
“I’m one of one of their biggest producers in Texas,” he proudly told me, “so I receive our top payout of 50%.” I tried to resist, honestly I did, but I just couldn’t stop myself from following up with: “What could they possibly be providing that’s worth half a million dollars a year?” He hemmed and hawed and mumbled something about research, marketing support and a Shark machine, I think, but altogether, it all couldn’t have come close to $100,000 worth of stuff.
I was reminded of that conversation as I was recently reading about a new study by Cogent Research for Fidelity Institutional Wealth Services that found 76% of breakaway brokers say they are better off financially than they were prior to their move to independence—and 64% were better off after only six months. And despite all the attention that “breakaway teams” get in the trade press these days, some 80% of the 173 brokers surveyed made the leap by themselves.
Of course, that’s not a very large sampling, Fidelity isn’t exactly an unbiased observer, and like most “studies” in our industry, this was an “unaudited survey,” if you get my drift. Still, those are pretty striking figures, and perhaps even more surprising is the finding that 86% of the breakaways said “all or most” of their clients moved with them. I suppose that’s a testament to both the proliferation of professional assistance to make the move toward independence, and to today’s all-time low in the reputations of brokerage firms.
