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September 11, 2017

Behind First Republic’s Allure: 300% Signing Package and Referrals

by Jed Horowitz
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Behind First Republic’s Allure: 300% Signing Package and Referrals
"zhudifeng/iStock/Getty Images"

First Republic Bank has become one of the few games left in town for multi-million dollar brokers frustrated with wirehouse bureaucracy but unwilling to run their businesses without a big-name bank behind them, according to advisors and recruiters asked to explain the company’s hiring spree.

It also helps that the San Francisco-based bank is offering relatively fat deals at a time when Merrill Lynch, Morgan Stanley and UBS Wealth Management have been retrenching, they said.  

The signing bonus for brokers who have been generating $2 million or more in production is roughly 250-300% of the revenue an advisor or team has generated over the previous 12 months. About 200% is offered in cash as a nine-year forgivable loan, with the back-end remainder coming as various revenue hurdles relative to the previous year’s production are hit.

“Money isn’t the only issue,” said Alex Huang, a San Francisco-based recruiter who said advisors are attracted to a less bureaucratic structure than they’re finding at larger bank-owned brokerage firms.  

As First Republic began revving up its wealth management engine three or four  years ago, new advisors also benefited from an infrastructure of private bank associates, some of whom are somewhat ambiguously labeled as “investment or portfolio managers,” who would generate good referrals. However, the referrals appear to be thinning as the field gets more crowded, Huang said.

A First Republic spokesman declined to comment.

The recruiting efforts are led by former Merrill Lynch Private Banking and Investment Group executive Brian Riley on the West Coast and by Susie Cranston, a former McKinsey consultant who focuses on East Coast expansion. Neither official returned requests for comment.

The bank has branches in 68 U.S. locations, according to its website. The bulk are in California but First Republic has been expanding into wealthy urban areas such as New York and Boston, housing its offices largely with emigrants from wirehouses and foreign banks such as Credit Suisse that have closed their U.S. brokerage units.

The bank is expected to be recruiting advisors for new locations in New Jersey and in Seattle by year-end, according to two sources.

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Comments (35)
  • on Sep 11 2017, Deeann Griebel says:

    So they are loaning the money to the advisor and then forgiving the loan over a nine year period. That is a lot of debt to assume for a FA. Math: let’s say the loan is 4 million. The FA will have $444,444 of phantom income annually due to the loan forgiveness. If they are in the 43% top tax bracket plus say an average of 7% for state income taxes then they have to PAY in cash $222,222 of taxes annually due to the forgiveness of the $4 million loan. Meanwhile, the FA gets the $4 million in cash but since the LOAN also has an interest charge (let’s assume 4%??), that $4 million has to earn at least 6% to cover the interest cost on on after tax basis. So, if we assume they earn an internal rate of return of 6% on the 4 million and then pay taxes of $222,222 on the ‘forgiven loan amount’ of $444,444 then, after nine years the math MIGHT be $4 million minus $2 million in taxes = might have an increase of $2 million in their net worth after 9 years. Of course, this assumes they bring over all their clients (which they probably will). Of course, it assumes they INVEST the $4 million and not SPEND the $4 million on and cars and vacations. So, if all goes well the FA’s net worth might increase by $2 million by 2027.
    Seems like an awful small increase in net worth for all the risk and hassle. (The risks are that something bad happens at the new firm (similar to what happened to Advisors that joined Lehman Brothers in 2006) or that their investment portfolio declined in value instead of increases (such as what happened to many–but not all-advisors in 2008) or clients don’t follow them. The key will be if the the new firm has a GREAT operational platform that allows the FA to do more in less time—THAT is the key. Does anyone know who they clear through?/

    > Reply to Deeann Griebel
    • on Sep 11 2017, Yep says:

      Deeann- that is not how the interest component operates on an EFL. It is not charged to the FA, you do not physically pay interest in the loan, it too is forgiven. You do, however, pay income tax on the phantom annual interest component. A good CPA will write that tax off as imputed interest against taxable interest and dividends you hopefully generated with the cash you invested from the upfront part of the deal.

      > Reply to Yep
    • on Sep 11 2017, Yep says:

      And furthermore, getting cash upfront, that you wisely invest as opposed to spend while slowly paying taxes over a nine year period of time is great deal. This all Assumes it handled with discipline, which isn’t always easy for advisors

      > Reply to Yep
    • on Sep 12 2017, Rich says:

      My understanding is the loan isn’t technically forgiven. It’s paid for from dealer concessions not paid to the advisor. Concessions the new BD wouldn’t of had if they had not landed the new advisor.

      > Reply to Rich
  • on Sep 11 2017, Sneezy says:

    That’s the way deals have always been written Deann–as forgivable loans. Experienced FA’s know that. Not sure what country you’re in but the top marginal tax bracket in the U.S. is 39.6%. Let’s assume they invest the bulk of the assets and dutifully pay taxes (at 39.6% versus 43%). Likely a double on the upfront. A good trade for a smart FA with control of their clients.

    > Reply to Sneezy
    • on Sep 11 2017, Paul Spitzer says:

      Sneezy, you are either a recruiter trying to talk someone into this or just plain uninformed (did you forget about AMT?). But one thing is obvious, you’ve never lived through a 9 year EFL.

      > Reply to Paul Spitzer
  • on Sep 11 2017, Sneezy says:

    Written plenty of them Paul Spitzer and sounds like somebody had a bad experience. Meeting hurdles isn’t for everybody.

    > Reply to Sneezy
    • on Sep 11 2017, Paul Spitzer says:

      So I was right, you are a recruiter… written, but not lived through one… big difference my friend. I prefer the Indie RIA space… 85% net cash flow, 100% Enterprise Equity, S-Corp tax level (aka no AMT) and complete control over who my client is and what he owns. Get Happy, Go indie RIA!

      > Reply to Paul Spitzer
      • on Sep 11 2017, Sneezy says:

        …and a small house in San Diego. Show up for work at 9:00 in your khakis, waste 45 min. at Starbucks and wallow in your mediocrity. Works for you. I write deals as a manager junior and have for over 20 years.

        > Reply to Sneezy
        • on Sep 12 2017, Paul Spitzer says:

          No need to get snarky, sleezy, oops, I mean sneazy… the difference between you and an Indie Ria is you have a job. Ours is a business with value we sell at LT Cap Gains rates. We make the street compete for our clients business, you sell product, probably annuities, UITs and B Shares, right? You will never understand, just keep selling your snake oil to poor unsuspecting dupes!

          > Reply to Paul Spitzer
  • on Sep 11 2017, Deeann Griebel says:

    Tthe Affordable health care surcharge plus the phase out of deductions (at higher income tax brackets) etc. DOES make the incremental tax liability closer to 43% than 39%–check it out by having your CPA do a pro-forma calculation Plus, state income taxes in places like California is closer to 10% than the 7% I used. So, for many FAs the 50% is closer to reality. Also, does anyone know who First Republic clears through? For those out there that remember the struggles that Wachovia Securities and UBS and MS had when they changed clearing firms &/or ‘upgraded’ their platforms may realize that LOTS of bad stuff can happen in nine years. Those handcuffed with these loans can start feeling like 9 years is a life time of pain. Just an observation. For my 2 cents worth–it just doesn’t seem worth the hassle for such a small increase in one’s net worth (and the increase in net worth only occurs if one is successful at investing over that 9 year period–which, while I am quite sure they probably will be, sometimes some FAs run into a ragged period in which it is hard to be successful investing. I know one FA that used his money to buy farm land at $14,000 an acre in Southern MN and that land now appraises at $7,000/acre.—-he didn’t figure that corn would drop from $5/bushel to $3/bushel. So, now he has a negative rate of return–and has to come up with cash to pay the taxes on the “foregiven debt that is income”–and is in a real panic. Not saying this is frequent–but, it does happen. Another FA i know used his loan money to buy land in Arizona in 2006 and has seen that land drop 40% in value–so–another net loss with the funds. Of course, these are just some sad episodes–not reflective of the majority–but, then I find it strange that I don’t seem to hear many ‘success stories’ of successfully investing the loan proceeds. Usually good news spreads faster than bad news.. Just some ‘thoughts’ running through my head.

    > Reply to Deeann Griebel
    • on Sep 11 2017, Sneezy says:

      Based on my experience, the thoughts running through your head are good ones. The wirehouse arms race of the past 20 years has resulted in many casualties and considerable personal financial carnage. The focus on volume of recruits by wirehouses was irresponsible as not all FA’s are designed to make a move and hunker down for a year to move their clients. The money got so stupid that many FA’s were flying headlong into deals with their eyes closed, spending the money and didn’t have the production required to make the tax bill in some cases. Plus, so little difference between firms (outside of local management and culture) why and how is that good for clients? My previous point was related to the current context. The recent move makes sense–to focus on only top level performers who have scale, presumably have liquidity set aside to weather the storm and are experienced enough to know what they are doing. At the end of the day, stupid is as stupid does and there is a presumption of common (and business) sense.

      > Reply to Sneezy
    • on Sep 12 2017, Tax Witch says:

      Non-qualified deferred compensation absolutely torpedoes those 43 – 50 percent tax estimates, especially if you set the payout over 10 years after you retire and move to a state without income tax. The trick is picking a safe company. But why live for tomorrow when you can blow it on a studio in San Fran!

      > Reply to Tax Witch
    • on Sep 12 2017, Diogenese says:

      Clears through Pershing, a wholly owned division of BNY Mellon.

      > Reply to Diogenese
  • on Sep 12 2017, Monty says:

    Wow. How do some of you even qualify as advisors? If someone offers you $10mm today and they give you 9 years to pay back $5mm (taxes), anyone that understands basic time value of money would take that offer.
    And then countering with rare “instances” where an FA invests the money poorly. How about the vast majority that don’t do anything stupid with the money? It’s like saying my aunt ate 20 servings of mashed potatoes to cure her headaches. Therefore, it must be better than Advil.
    Being stuck at a large firm for 9 years sucks but that’s why they pay you the money. But think of the amount of Indies that have closed or sold off. There was no compensation for having to repaper all your accounts.

    > Reply to Monty
  • on Sep 12 2017, Deeann Griebel says:

    Sneezy’s comments make a lot of sense!

    > Reply to Deeann Griebel
    • on Sep 12 2017, Paul Spitzer says:

      Sneezy is a recruiter who has honed his skills over 20 years. He gets compensated handsomely to bring you on board. What about AMT? Are you forgetting this 30% tax? The after tax on an EFL is someplace around 10-20 cents on the dollar. If Sneezy is so confident his formula works simply ask him for referrals… I’ve been in this business for 35 years and do not know one person who has ever taken the EFL that at the end of the deal thought it was worth it. Compare, over the same 9 year time period what your business looks like as an RIA… why do you think we’ve seen about $30B in assets leave the wires and go Indie RIA so far this year?

      > Reply to Paul Spitzer
      • on Sep 12 2017, Yep says:

        Well Mr. Spitzer, I took an EFL 9 years ago and it was a complete home run. Now you know one FA who doesn’t regret it for even a millisecond. so there you go. Who in there right mind operates in a world where the thought of getting a lump sum is bad because you have to pay taxes?

        > Reply to Yep
      • on Sep 12 2017, Yep says:

        And one day I’ll likely take my team independent with certainty more than “20-30 cents on the dollar” of my original deal money in my pocket from 9 years ago.

        > Reply to Yep
      • on Sep 12 2017, Sneezy says:

        Pauly, your logical is inherently flawed. You seriously don’t know one? A significant percentage of FA’s have taken more than one. Sorry you don’t have any friends working on the darkside. Monty makes the ultimate point–time value of money. You should work to break free of your bubble and really ought get out more. By the way, I’m a manager and actually know you.

        > Reply to Sneezy
      • on Sep 13 2017, Monty says:

        Are you sure you understand how AMT works? It doesn’t reduce the after-tax amount to 20%.
        Walk into any wirehouse or regional, at least a quarter of them came from another firm and will probably leave again.
        The difference between RIAs and wires are due to culture. You’ll never prove that it’s “financially” worse because the math isn’t there.

        > Reply to Monty
        • on Sep 13 2017, Paul Spitzer says:

          Monty, with all due respect, if you can identify one person, only one, that has transitioned from wire to Indie RIA (not a hybrid) and then back to wire I’ll buy you lunch! The reason so many guys are serial movers is they are all broke from the last deal… you and Sneezy and Yep obviously either are the same person or work together (in management)… I’ve worked in the wire, taken the deal and watched it ALL GO TO TAXES… no matter what you say, I know the truth from experience. I also know that owning your own business, having complete control of who your client is and what he owns plus retain 85%+ of revenue and have Enterprise Equity of 4-6 times EBITDA is infinitely better than “working for” a B/D. I’ll wait for the name of the guy that went back…

          > Reply to Paul Spitzer
          • on Sep 13 2017, Yep says:

            Paul- I don’t have any idea who these other folks are. My teams experience taking an EFL was big win for the clients and us. Our firm, smith Barney was sold and another wire was a better fit for us than Morgan Stanley. Case closed, I have every penny of my deal money. I’m not arguing RIA vs wire, I’m simply saying your blanket analysis of EFLs and those who take them are wrong.

          • on Sep 14 2017, Monty says:

            Mr. Spitzer, not management but an FA (that has never moved, by the way). The mass FA exodus from wires to indies that everyone predicted never happened. Not because wires are superior to indie but because the wire FA mentality is very different than an indie FA’s. And finding the name of a “guy” that does a singular act proves nothing about the general population of licensed FAs in the country.
            Wire FAs move in large part because of the check. If they are broke, it has to do with poor money management but the move didn’t CAUSE them to be broke. There may be correlation (I don’t think data exists so the observed behavior is purely anecdotal) but taking the check didn’t turn them into horrible money managers. You are observing divorced people and saying that marriages cause them.
            And again, the math isn’t there for the money to ALL GO TO TAXES. 50% at best, if you add in AMT, local and state taxes. Comparing it with indie numbers doesn’t disprove the amount of taxes that are paid on the upfront check.

          • on Sep 14 2017, Monty says:

            Edit: To clarify, I’m an FA and not a recruiter. Didn’t mean to imply that I know Mr. Spitzer.

  • on Sep 12 2017, Diogenese says:

    First Republic clears through Pershing…

    > Reply to Diogenese
  • on Sep 13 2017, Deeann Griebel says:

    What I have found strange–is that I’ve been in this business since 1984 and the financial advisors with the LARGEST NET WORTH tends to be nearly always the FA that has STAYED PUT. Meanwhile, the deal chasers–those that have taken 3 deals in 30 years–they seem to be the ones with defaulted mortgages, etc. In just observing the ‘world’, it seemed like the ones that borrow money to move to another firm spend too much of it and invest too little of it. Now, my universe of observation has been the Thomson Mckinnon Securities whose FAs got bought by Prudential Bache after TMSI bankruptcy in Aug of 1989–then Prudential Bache changed its name to Prudential Securiites which then got bought out by Wachovia Securities which then got taken over by Wells Fargo. So, my universe here in the Maricopa county ‘major market of Phoenix” has included Prudential and Wachovia and WFA that have been among the largest front-loan providers so I have probably observed a couple hundred FAs. Yet, out of that relatively ‘decent size’ universe, my observation is that the FAs in the office with the highest net worth were the ones that had never borrowed money in order to change firms. Instead, they STAYED PUT and grew their business and stayed focused on adding clients and growing their cients assets rather than lose 12 months every 5 or 9 years bringing over clients. So, while not a ‘national wide’ survey I have wondered to myself often–why that is. Taxes do matter. Self discipline to INVEST the loan proceeds is required. Also, borrowing money to join another firm and then investing those loan proceeds is LEVERAGE. And—leverage investing has its downside if one doesn’t get it right.

    So, I like Monty’s observation that what matters is the Integrity of the company’s management team–is the press writing about ‘yet another fraud’ at that firm or is the company’s name in the press linked to good news. Pershing is a very good clearing firm so First Republic might be just the place to work–might be fine–BUT, then, THAT BEGS the question–why do they have to offer such high loans to attract FAs.So, somewhat a complex moving-parts equation.

    FINALLY, on my staff is an individual that worked several years overseaing the support staff for Smith Barney and she just told me that she knew of MANY advisors that had STRUGGLED greatly to come up with the CASH for the TAXES on the income reported as the result of the loan forgiveness. Since she brought up the subject, I asked if she knew of any FA that had the office’s highest net worth AND had borrowed money to change firms–she laughed and said that “in Maricopa county” the FA with the highest net worth was the one that stayed put UNLESS the firm they had been at had a massive ethical breach and their firm was in the press nearly daily with lots of articles about fraud at the firm–she said, those brokers that joined were joining NOT for the loan–but to get away from an unethical or failing firm.

    In fact, that is why I left Thomson McKinnon Securities in March 1988–because I had reviewed their financial statements and it was CLEAR they were going to go bankrupt. …which they did in Aug of 1989. I did NOT want to borrow money to make the change so I declined the front money. Check with John Fenwick, my BOM that I worked for at Prudential Bache if you are curious. By the way, the change to the firm (Prudential Bache) saw my business grow from $166,734 trailing gross in 1987 to
    $227,597 in 1988, $350,808 in 1989, $524,857 in 1990, and $719,357 in 1991, and $748,826 in 1992.
    I finally hit a $1,044,232 in 1998 which became $3,455,047 in 2004—etc.

    So, being at the RIGHT firm is the key—and the largest loan provided does NOT define the RIGHT firm. Rather, ethical culture–good management team–excellent tools -stable clearing firm–THOSE are the key to a FA being successful—not the size of the loan to join. So, culture is vital, competent management team is vital—then, the FA can focus on building their business rather than explaining to their clients why the most recent LA Times article about the latest discovery of bogus accounts, etc does not, in theory, ‘impact’ the client.

    > Reply to Deeann Griebel
    • on Sep 13 2017, Paul Spitzer says:

      Deeann, you nailed it! The main reasons so many qualified advisors are moving to the Indie RIA channel are cash flow, enterprise equity, taxes and control. If you have a business that is generating say $5mil in fee business and you take 90% of that to the bottom line (less owners compensation) that business is worth North of $20mil on the street today. Structure the Succession Plan properly and you’ll pay long term Cap Gains rates on the entire sale plus retain some cash flow. I recommend you speak with Becca Knauss at TheRIAWorks.com. She has transitioned 10’s of billions of dollars from the wires to Indie RIA for HighTower and Dynasty. She can give you advice that is conflict of interest free… she is not compensated by me, a custodian or a broker/dealer: 646.315.3478

      > Reply to Paul Spitzer
    • on Sep 13 2017, Yep says:

      Deeann- do tell, did you decline all of those ” retention EFL’s” offered throughout your career as your wire house was gobbled up by another before moving to an independent shop? Did you say “no thanks” to the one Wells gave you when they bought Wachovia in 2008? I’m guessing you probably didnt decline. It certainly helps to stay in your seat when you were given a retention seemingly every 7-10 years over your career. Stop pontificating and stop the talk of being “above all that” as your firms were essentially playing the role of serial jumper throughout your stay in the wires.

      > Reply to Yep
    • on Sep 14 2017, Monty says:

      Correlation is not that same as causal. “Observing” wealthy FAs doesn’t mean that they are rich because they stayed put. Ice cream sales and murder rates are correlated but Mister Softee isn’t spiking their custard to cause violent behavior.
      Citing anecdotal evidence is meaningless in our industry. A hundred of my friends own smartphones and none were attacked by grizzly bears. Therefore, smartphones must be an anti-bear device.
      Bad investment behavior occurs whether you’re an FA taking a check or an irresponsible lottery winner. That has nothing to do with the math behind the deal (or accepting the lottery winnings).
      If wirehouses “have” to offer large deals to attract advisors, then why do indies “have” to offer high payouts to do the same? Deals and payouts are a function of profitability. These firms are not junk bonds that need to offer high yields to attract investors.
      Again, the main difference between the two channels are culture. You want to save money and change the light bulb yourself, go indie. Too lazy to do it, then pay the wirehouse to change it.

      > Reply to Monty
      • on Sep 14 2017, Paul Spitzer says:

        If you think giving up 60% of your production to have someone else change a light bulb is worth it than correct, stay put (talk about lazy)… Indie RIAs are a business… working for a wirehouse (not your client) is a job. This isn’t about culture… the culture at AGE, WB or WFC when I worked there was NEVER about my client, never about me and ALWAYS about them… the bottom line is simple… your clients pay significantly less in fees and you, as the advisor make, at the very least, double what you do at a wire house plus you have a real asset that’s worth real money to sell when you retire (not some insulting 40, 40, 30, 20 to grid Sunset deal). If you like your “job” stay there… make your manager rich… for me and the $30 Billion in AUM that has moved to the Indie RIA channel THIS YEAR its all about our clients and our firms, not about the Mega-Bank we work for! Get Happy, Go Indie RIA!

        > Reply to Paul Spitzer
        • on Sep 14 2017, Monty says:

          Oh, Mr. Spitzer, when the math is no longer convenient, then opinions are used as a battering ram.

          If an indie and wire FA both charge a client 1% in a fee-based account, the client pays the same fee to both firms. The grid or payout doesn’t affect the client (it affects the FA). However, 12b-1s do affect the client (if a wrap account has mutual funds). Wirehouses started refunding 12b-1s back to clients at least five years before any indies made it a policy. So actually, the wirehouse client would have paid less in fees (although it’s standard now for all firms to use institutional shares and refund 12b-1s but the wirehouses were the ones pushing for this change).

          An indie FA doing the same production as a wirehouse FA will take home more money. However, average wirehouse FA production is significantly higher at over $1 million while the average independent FA produces less than half of that. In fact, in FA magazine’s 2016 Broker Dealer (indies) survey, only 4 out of the 48 firms have an average FA annual production over $400,000.

          Let’s use facts, not emotions. I’m not a recruiter, I work at a wirehouse, and I have never moved. I see merits in both platforms.

          > Reply to Monty
          • on Sep 19 2017, Paul Spitzer says:

            Most statistics are pulled form thin air… like yours… where on earth did you assume the RIA has lower production? (or who cares?) Plus, we can make the street compete for our clients business and get better pricing, better terms and better services… you are stuck selling the products that are most profitable for your firm. We get paid to “sell away”, you get instantly terminated. The bottom line is simple… after AMT, FED & State Taxes, all at W2 rates you are not left with much… compare that on the same time line, say 9 years to the value of an RIAs business at 4-6 X EBOC… now, ALL TAXED AS LONG TERM CAP GAINS… This is why Cerrulli projects more total assets on the RIA chassis by 2022 than in the wires… (think travel agents) where will your clients be?

  • on Sep 15 2017, Jackson says:

    I fail to see the argument that taking an upfront deal is bad because you have to pay taxes on the money. Don’t you pay taxes on your income?
    I looked at the RIA model, it was certainly a higher payout but also required running a business and signing a lease and hiring and supervising employees. I am sure some of you want to do that but I don’t.
    I transferred 100+% of my book in 90 days, my production is up 30% (thank you good market).
    I moved to a regional firm have already received my year 1 back end will easily qualify for year 2 and year 3. Have invested the proceeds from my notes and made another 25% (again good market).
    My current payout is 46%, DC equal slightly over 4%. My first 9 year note adds 16.57% for 9 years, my second note adds another 3.34% for 9 years and my next 2 notes will add 2.8% and 2.8%. So my actual payout is between 70-75% for 9ish years.
    Who gives a crap about the taxes, I don’t understand how you think this is a bad deal, or that your way is better.
    Maybe it’s a bad deal if you go buy a new house and the fastest Porsche and spend all the note and have nothing left but the tax, but that’s not my situation.
    We should all be grateful that we have the skill set to do this job and benefit from the comp plans. But you need to quit dissing what some are doing just because you went another route.

    > Reply to Jackson
    • on Jan 29 2019, Stuart Arakelian says:

      There is not a right or wrong answer between wirehouse with the higher upfront bonus and lower payout over time versus the independent model with lower upfront bonus and higher payouts. Obviously the corporate leaders developing these packages are not structuring them in a way that they are losing money. I came from the wirehouse side and went independent a few years ago. The argument that independent advisors are somehow inferior to wirehouse advisors is simply not true. The inverse of this is also not true. It is a personal decision where the wirehouse advisor simply wants to focus on being a financial advisor without the distraction of being a business owner. Whereas, the independent advisor enjoys the control, flexibility and entrepreneurial spirit – and is willing to deal with the challenges that come with owning their own business. Also, the significant additional compensation and business valuation that comes with owning your own business. I would add one important fact that I find advisors taking these long term packages do not seem to factor into their thinking or equation. They are assuming that their GDC revenue is going to stay static over this 10 year period. This indeed will not be the case. The wirehouses are locking their advisors into a 45% payout on an increasing revenue stream with no way out. For example, $1,000,000 of GDC grows to $2,000,000 over 10 years. This means that they paid you the bonus on the lower amount but are gaining their split of 55% (100$-45%) on the larger amount over time. In the independent channel advisors will earn a net revenue stream after all expenses of about 65% (20% higher than the wirehouse advisor) on an increasing income stream. This comes out to significantly more revenue over the 10 year period than the 250-300% upfront. Plus, the increase in business valuation – plus the significant tax advantages that come with being an independent advisor. Again, there is not a right or wrong answer. It is a personal decision. I do believe though that over time there is no doubt the independent model will have a richer outcome. The question is doe the wirehouse advisor want to deal with the distractions of business ownership. It is certainly worth the effort for me.

      > Reply to Stuart Arakelian

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