Financial Advisors Considering Transition: MUST WATCH

Intro

Corey: hey everyone Corey whan managing partner bridgemark strategies firm it’s up over a thousand financial advisers objectively explore the broker dealer and raia Marketplace and help them find the firm with the right combination of feel fit and financials for them in their business

Our Value

Corey: when we first start working with a client they think a main part of our value is having a deep understanding of their business and helping align them with the firms that are going to best complement their wants their needs and their long-term goals and while that’s part of our value or another big part of our value is working alongside them throughout the whole process to help them ask the right questions to make a really good decision but more importantly not make a really big mistake understand where the skeletons are and the red flags are in the process before they make a transition and not after they make a transition to another firm and with upfront offers being higher than they’ve ever been both on the employee side and the independent side working with our clients we’ve seen a couple pitfalls that financial advisers can fall into that we just wanted to to to bring to light and make sure that you understand

Note Length

Corey: so the first one we’ve seen is around note length so as offers have gotten higher and higher both on the independent side and on the employee side deals have gotten longer and longer so I was working with a financial adviser the other day um was exploring a couple firms he looked at the at the offer and it looked like a 9-year deal for The Upfront offer um and as he continued to dig into it there was basically four years of backend incentives for him if he properly brought his practice over and grew at a certain clip that he would get backend bogeys but what he didn’t notice is every single one of those backend bogeys on year one year 2 year three and year four they also had 9-year notes attached to to them so basically if he hit his year four number he would have to stay at the firm not for 9 years but for 13 years in order to get the total economic incentive that the firm was offering him

Loan Forgiveness

Corey: the second thing we’ve been seeing is around loan forgiveness with 80% of firms out there if you sign a 10-year deal on10th of that deal is going to be forgiven every single year so if you are 5 years into a 10year deal and you decide you want to go to another firm you’ll owe half of that money back in order to leave if you stay for seven years out of a 10-year deal you would owe 30% of that money back in order to leave but what we’ve been seeing with a couple firms recently is they kind of have hockey stick forgiveness over that 10year time period so basically from the first year to the fifth year not much at All Is Forgiven um and in years 8 n 10 more than 70% of the not Is Forgiven so not understanding that and you taking a deal to go to a firm that doesn’t wind up working out if you’re five years into a 10 year note and you find out that you still need to pay back almost 100% of the money that was given to you that’s not a really good place to be in so just understanding what the amortization table looks like that’s definitely something we can help you understand the

Backend Incentives

Corey: third thing we’re seeing is uh with these really really large deals in order to make the deals look even more exciting there’s really large backend incentives once again if a financial adviser retains all of their business from their old firm and they’re growing every single year at a solid clip they could get an additional backend bonus that makes the total economic package even more exciting but with some of the firms out there the growth rates are you would have to have such exponential growth in order to hit all of those and unless you look really really carefully and understand you know what it takes to get those backend incentives they’re really really unlikely that you’re going to hit them and if you took those out sometimes they’re going to be much more comparable with some of the other firms out there in the marketplace and then

Upfront Incentives

Corey: the fourth thing that we’re seeing is especially on the independent side there are really really high upfront offers um but with some of the firms out there you are basically getting that upfront money and you’re sacrificing a lot of long-term payout to get that upfront money so I just talked about this in one of my most recent podcasts but I was working with an adviser a couple weeks ago and he got a million dooll upfront offer to make a transition to the independent side um but once we did the math and put everything on a spreadsheet he realized that if within two and a half years that broker dealer was going to make all of their money back because the payout was so low and then for the rest of his career he was going to be stuck with that really really low payout so we could work with you and from an

Conclusion

Corey: economic standpoint on a spreadsheet help you understand what the upfront money looks like how that impacts long-term economics and help you compare multiple firms side by side to make sure you’re getting the best combination of both upfront incentives and long-term economics as you can see just in the one small deal portion of this decision-making process there’s a lot of potential potholes and landmines um that you could potentially step on and that’s the value that we bring working alongside you to make sure you’re just asking the right questions and you know where those are before you make a decision and and and not afterwards uh our services are no cost to you and I I really look forward to connecting soon if you have any questions my contact information will be at the end of this video and it’s also in the about section of my YouTube channel or on the bottom of my podcast really hope this helped I hope you have a great day