So this is a podcast regarding a monster trend that we’re seeing of traditional advisors that big banks and brokerage firms moving to start their own independent operations.

The reason why we’re seeing this mega move and mega moves at all these big banks are because of the ease of creating your own independent operation and your own name on the door through what are firms that specialize in turnkey, independent models. These firms do everything for you. Systems Operations technology, help you choose a custodian from Fidelity, Schwab, and Pershing a price out everything for you. And so essentially, you can start day one, managing a client’s assets just like you do today at your current firm except for your names on the door. And you’re relying upon just like you like rely upon your systems, operation, your technology at your current firm is supported in that kind of platforms do everything for you, including bill pay, everything.

 

What’s the difference?

So almost it’s identical to the delivery of service that you’re offering today at your current firm to what is now your firm. What’s the difference? The difference is your payouts are between 60 to 70%. And that’s your business so it’s 1099 income you’re not working for anybody. It’s your firm. The other big difference is the valuation. Today you can get a valuation from moving from house A to house B big bank A to big bank B and get approximately 350% of your teeth well rough the plus-minus so call it a three and a half million dollar $3 million producer. It’s about a $10 million deal. Well, you have a front end and then you have a back end you have hurdles and importantly you’re locked in for 10 years or so. And it’s all ordinary income.

 

Actual valuation

Well guess what you started own independent platform tomorrow, immediately day one, that $3 million business is easily worth $20 million and it would be long-term capital gains, by the way, there are lots of firms are interested in taking a piece of equity of your independent firm day one, there’s firms willing to take a 10% stake a 20% stake a 40% stake because these firms know that the value today is going to be worth a lot more tomorrow. Now, you may not be interested in selling in equity day one because that’s probably your lowest valuation. But in order to join also these independent support independent platforms, they will actually give you money to join their ecosystem a $3 million producer could get a check for upwards of $4 million. By the way that’s 1099 income and it’s not a note you have to stick around for you know decades and that’s for years to keep it is incredibly lucrative. There’s many platforms have different nuances that offer different capabilities from family office services are great lending platforms to excellent investment platforms, but it is a booming industry and one that we can educate you more on of which firms offer how much how do you get to this valuation and something that we highly encourage you to explore.

 

Thank you for listening