Episode Transcript
[00:00:01] Speaker A: Hello and welcome everyone. I'm Taylor Pankratz and this is behind the Breakaway. Together with my co host, Jason Barber, this show takes you behind the scenes of leaving your captive broker dealer firm and explores the world of RIA independence.
[00:00:20] Speaker B: All opinions expressed on the podcast by the hosts and guests are solely their own opinions and and do not reflect the opinion of Uptick Partners. This podcast is for educational purposes only and is not legal advice and should not be relied upon as a basis for any decisions.
[00:00:41] Speaker A: All right, welcome back. This is episode 20 of behind the Breakaway. Got Taylor here, we got Jason on the mics and today we wanted to talk about first little public service announcement. I'm sure many of you have probably heard of the Uptick Guarantee. That's something that we launched. Was it about a month ago? Yeah, about a month ago. And that's been a tremendous success in getting advisors to think more seriously about going RIA with Uptick Partners simply because one of the biggest hesitations that advisors are going to have and you listening, if you're an advisor listening and you're thinking about going, breaking away from your current firm, one of the big hesitations you're going to have is will my clients follow me? Am I going to just quit my nice paying job and then be homeless six months later because my clients don't come with me? And so what the Uptick Guarantee does is tries to give that advisor some confidence that says, look, if you go with Uptick Partners, number one, we're, we've have experience breaking people out of captive broker dealers. We broke away ourselves and so we know where the pitfalls are. We know how to get you from A to B successfully. Just follow in our footsteps. We'll lead you there, we'll show you, we'll white glove, get you where you want to go. But the Uptick guarantee basically says that until you get back to 100% of what you were making at your current firm, you will get 100% payout from uptick Partners. So what does that mean? A lot of times you go independent and you join and you join any of these independent broker dealers and they're going to take a pretty big override, Right? Right. And then you're going to be left with some amount that comes in and you're going to have to pay your bills and you're going to be left with 60% or 55% effective net payout. What Uptick Partners does is we want to take a, we want to give you 95% payout, which is tremendous. But until you get back to 100% of what you were making, you're going to get 100% payout. So truly, Uptick Partners is not going to take any override from you until you get back to where you were. Why are we doing that? Well, because we want to align our interests with you to say, look, we want you to go independent. We're so confident that you're going to get back to where you were that we're not even going to make any money on you until you do. So that's the uptick guarantee. And that's been wildly successful in getting advisors to start to look and go, do, do I want to take a big check? And today we'll talk about why you might not want to take a big check from some of these independent broker dealers. But for the advisor that doesn't want to take a big check but is worried about their clients following them and what that looks like for the economics of the first six months or first year, we're trying to make that a smooth transition for you because we know where you should end up. It's just, how do you get from A to B smoothly? And so that's what the uptick guarantee is designed to do, is get you from where you're at to where you know you want to end up without having to move your book twice. And so that's what the Uptick guarantee does, is guarantees that until you get back to where you were, revenue wise, we will not take an override. So that's been wildly successful in getting advisors to reach out.
[00:04:27] Speaker B: Yeah, absolutely. And so let's talk a little bit about our capacity for 2025 and capacity for 2026 and what we, what we think that looks like. So spring of 2025 is spoken for, first of all, because of the fact that we're offering this guarantee, we're only offering it to a limited number of people because we're putting our money where our mouth is. And so if we're going to do that, we are personally invested in making sure that this goes well. We're on every phone call with every vendor. We're dealing with the custodians personally. We're dealing with helping the website gets get made. We're making sure that the Yeti cups look good. We're making sure that the Internet at your building is hooked up. We're going to fly out to the location and make sure the phones ring and the printers. It's a very. You and I are bootstrapping this thing and we don't have $100 million of private equity money to go hire a whole bunch of people. And that buys, by the way, is why you're able to get a 95% payout. Okay. And because of that, we're only doing this three times in 2025. All right? Spring, summer, fall would be the idea. And we think we know for sure one of them is fully committed to. That's the spring. We think the fall is spoken for. We're going to find out here probably in the next two weeks or so if the fall is spoken for and the summer is open right now, essentially we've got one for sure opportunity to go in the summer. So if you're listening to this, you're wanting to break away, probably need to be reaching out sooner than later to make this summer happen. Takes probably what you think, conservatively, maybe two months to, to sort of get one of these things really rolling.
So 2026, however, if you're not in a big hurry, we're hopeful that the sort of the, the, the business plan, if you will, would basically be that 2025, we launched three, three advisors that is going to ultimately provide us with some revenue to uptick partners to go out and hire some more support, which is ultimately, we expect, going to allow us to potentially do five in 2026 or up to five. And that's, that's, that's the game plan anyways. So I would say that reach out if you want to talk about it or you want to get on the list or you want to subscribe to bbmonthly.com, follow us on YouTube, text us, text us. If you'd rather just send a text message, that's certainly an option as well, but, but we do have a pipeline that I think is starting to fill up, and I'm very confident that 2025 is going to be. I would be a little bit surprised if we weren't done with our three slots for 2025 by the time our first advisor launches in March is probably my expectation there. And so probably if you're listening to this and it's April of 2025, we're probably talking about moving you in 2026 at that point, most likely. So, which isn't a bad thing. It just gives you more time to get ready.
[00:07:31] Speaker A: Absolutely.
Yeah. So what we wanted to talk about today is this idea of should you take a large upfront check to go independent at any of these independent broker dealers that'll, that'll pay you one times revenue or something like that to go and Join them or does it make better sense economically over the next 10 years or whatever time frame you want to look at to instead of taking a big check, get better economics on your payout to go ria and instead of making a pit stop at the IBD channel, go full RIA and talk today about why somebody would do that if when they're weighing the options of do I want to go ibd, do I want to go ria, what's, what's best for me. Long term work. Obviously biased, but odds are you're probably talking to recruiters that aren't even putting the RIA option in front of you because they either they're ignorant of the RA channel writ large. Right. A lot of these, a lot of these recruiters weren't, aren't advisors. They just happen to kind of know the IBD space. They know which one cuts the biggest check. They kind of know a little bit about how, how they all work, but not really enough detail because they're just talking to the sales people on the IBD channel anyways. And so what I want today to be about is listening from the other side of the coin of people that are in the RA channel of why you're getting a ton of propaganda, if you will, of why you should go to the IBD channel. Because they want to. They think you want a big check because that'll close the deal and the recruiter will get paid.
[00:09:30] Speaker B: Which, by the way, how much do these recruiters get paid?
We should talk about that for a second.
[00:09:35] Speaker A: You know, let's talk about it.
[00:09:37] Speaker B: Yeah.
So it can vary, but typically I would say my expectation is that a recruiter is probably, sometimes they get paid on revenue and on assets under care. Sometimes they get paid on one or the other. But it's probably going to be somewhere in the 6 to 7% of your revenue or 5 basis points on the assets under care. Or it could be a combination of the two, might be all up front, might be some. And typically these are fees that are either paid by the custodian or by the firm that they are referring to. All right, so we want to make sure that we're crystal clear that these recruiters are right. I mean, if you're a $300 million firm, for example, these recruiters can be getting paid 150, $200,000 to refer you somewhere. Right.
[00:10:34] Speaker A: It's, it's, it's not, it's not an insignificant amount. And I'm not opposed to recruiters making money.
[00:10:39] Speaker B: Yeah, right.
[00:10:40] Speaker A: What I'm, what I want to get what I want.
[00:10:42] Speaker B: But the point is they want it to, they want to close the deal, right? Period. They want to close the deal in a bad way because there's a lot of money on the line. So that's my main point.
[00:10:52] Speaker A: That's very much a polarized either the deal closes or there's it doesn't. And that's the difference of a six figure check coming to the recruiter. And I'm not opposed to the recruiters making money. I love that idea. What I'm opposed to, I guess is that I wish that they would present all the different options that are available when somebody's looking to leave their captive broker, dealer and not just go, look, I probably only have a handful of, I only want to put a handful of options in front of this advisor because I want them to make a decision and I don't want them to go paralysis by analysis. So I'm only going to put in front of them the things that I think that they'll, that'll excite them. Which is probably if I said, hey, you get a million dollar check to go to Firm A or $850,000 check to go to firm B, which one do you want to do? I mean that sounds like a great idea to put those two options in front of the advisory because odds are they're going to be like, yeah, sign me up for firm A. What I wish they would do is go, hey, there's firm C. You're going to get less upfront money. Say you get 100 grand or 200 grand or whatnot. But the economics over the next 10 years and the enterprise value of your business 10 years from now is going to make the million dollar check look like chump change. But they don't because it's kind of like you're in sales mode, right? And it's like what do I think is going to get them to emotionally pull the trigger in the next few months instead of waiting a year? It's the idea of a million dollar check hitting their bank, right. So it's pull. It's like it's playing on these emotions in a way, not in a bad way.
[00:12:36] Speaker B: Fear. Yeah. Playing on fear of am I going to bring my clients? Yeah, so maybe I need a million dollars if I, if none of my, you know, if I only going to bring a third of my book, well, by golly, I better get a million dollar check, right?
[00:12:49] Speaker A: Yeah. Or yeah, there. All those things play into this idea of the advisors that are use or leveraging recruiters typically are not getting the full landscape of what's out there. And I think that's a disservice. Personally, I, I have no ill will towards recruiters. I just think it's almost like in the business of financial advising, this conflict of interest between I could put you in this high commission thing and make 5% or I could put you in this fee based thing and charge you 1%. Like I'm. There's this weird thing where I might want to take a fat check and maybe that's best. So I don't like this idea of recruiters only putting two or three options in front of an advisor. And they all happen to be typically in the IBD space or let's say an LPL or something like that, that's going to write a fat check. Because what the advisor doesn't know because they're at a captive broker dealer and they're not experts in this space is that you are now beholden to one custodian, one place. You better love it because you're not going to want to have to write the million dollar check back to the firm to get out, right? That money's been spent five years into this thing, right? And they know you're going to spend it. That's why they know they have you for a very long time and you're not probably going to want to move your book again because it sucks to do it one time. You're not going to want to do it again. So they know that they can basically buy you for a very long time, probably forever with let's just make a number, a million dollar check. The value that you're leaving on the table in enterprise value is going to end up being more than a million dollars. When you go to try to sell your business to a buyer and they realize that this money is captive at this one custodian. So you're going to have less buyers. And everybody knows that less buyers equal means that the price is not going to be the best market price.
You have limited people bidding on the book. And so I think I'll stop there. Why don't you talk about this idea of being captive to a custodian for 10 years in the growth potential that you're leaving on the table by only having one custodian.
[00:15:32] Speaker B: I think I've got so much to say about it, but I think some of it is just, it's not even just 10 years. I don't want to be captive to a custodian for a day. I don't Want to be ever in a position where. Where I'm basically like, well, you know what? I don't really like what you're doing, but guess what? I can't do anything about it. Is that really even independent? Can you even really say that you're independent if you're like, actually, I am stuck here. I cannot change my custodian, no matter what. Because at the end of the day, it could be political reasons. They do something that politically that you don't like. It might be that their service, they said they were going to be the greatest service people in the world, and then it turns out it's terrible. It might be that I thought I was going to be able to do a SpaceX investment, but this custodian says they won't let me do that.
[00:16:21] Speaker A: Or they change the ticket charges or.
[00:16:23] Speaker B: They change the clients. Yeah, they change. Or they tell you that we're not going to charge any kind of fees on your statements. We're not going to charge any fees on your statements. But then all of a sudden, your clients start getting bill fees for statements. You have to have this leverage where you can say, you know what? I could just move, right? I could just move. And are you sure that you want to make that decision, custodian? Because I work for my client. I work for my client.
I do not have to stay with you. Okay? And so that I don't want to be. Because I don't want to be stuck for one day, much less 10 years. Can you imagine being 10 years and being like that? Seems completely crazy to me. So that's one thing. Second thing. Let me tell you a story, Taylor. I haven't even told you this story yet. Okay? I'm talking yesterday to an advisor that we broke away in Alabama yesterday. And he sends me a message. Actually was busy yesterday, but he sent me a message saying, hey. His primary custodian is pershing. And he sends me a message in the middle of the day, says, hey, can you help me open up an IRA account at Schwab? I need an IRA account at Schwab. I didn't see the message, but he got connected with somebody else on the team and ended up getting it all done. And I'm driving home and I'm like, why? Like, what happened? And he says, I had a prospect that had already initiated a rollover to another financial advisor that was going to custody the money at Schwab, and the check was literally already in the mail to Schwab. And then she chose to work with me instead. And then it was like, I guess I just need to open you up a Schwab Ira then.
[00:18:06] Speaker A: That's awesome.
[00:18:07] Speaker B: Is that not the coolest story you've ever heard and that you're just. Can you imagine if you were like, you're gonna have to go back now and actually undo that and make it out to Pershing instead?
Or you could just be like, it's, it needs to be a Schwab done.
[00:18:22] Speaker A: Cool.
[00:18:22] Speaker B: Is that awesome or what? And, and so to me it's just like that being that ability to be multi custodial is just.
Even though you may not want to be multi custodial on day one, right? It may be six months, it may be 12 months, maybe never. Okay. But like just the ability to do it is imperative. I mean it's a non negotiable in my opinion. And I would say that to anybody. I think that if you become captive to one particular custodian, you're really not that much better off than being captive to a broker dealer, a W2 broker dealer. It's really not that much better and it's a real, real problem. Any other thoughts about that before we talk about kind of the whole like 30% of my businesses?
[00:19:07] Speaker A: I think that the growth potential from a, let's say a decade of opportunities of, of different investment options that you're going to have when you have truly different custodial options or you're in the true RIA space and you're not at the IBD channel, you're not at the, the ra, that, that really limits what you can invest your money in. Invest your clients money in the ability to, as a, for instance, the ability to put your money, put your client's money into private investments, private equity deals, private companies that they've heard about. Take SpaceX as an example. Clients wanting to invest their money in SpaceX, having the ability to invest their money in SpaceX, a great prospecting tool of going out and getting people with high net worth because you have something that's different than what they're able to get with their current financial institution. Take those little things and think how many, how much growth will I get over the next decade of new assets if I can offer these things that I'm not going to be able to offer at most of these IBD and some of these RA spaces. But mainly the IBD channel is not going to let you invest in any of these quote unquote cool things that high net worth people want access to. And so as you're thinking, okay, I want to Leave my captive broker dealer. Do you really want to go to a place that you, again, you're still limited by what you can offer your clients and the services that you can offer your clients? Or are you trying to do this whole thing just once and move up market to where you're never going to find somebody that can outgrow you? You're. There's not a lot of 10, 20, $30 million investors at these captive broker dealer places. They're just not. Unless it's like family money, right? A lot of them are at the RAs because they want in. House taxes, estate planning, private equity investments, et cetera.
By and large they're going these high net worth people where you want to move to, your. Move your business to, they're all going to the RA channel. So why would you go to the captive broker dealer place to take a check to limit your enterprise value and the growth potential that you're going to have over the next decade? Why? Why would you do that? And the answer is most of the time because the advisor is scared that their clients aren't going to follow them. So they feel like they've got to take a check so that if it hits the fan that at least they got paid. Right? At least they can look at their spouse and go, well, I screwed that up entirely. But at least we got this check and all this. And so I just feel like it's so short sighted. And if you had people that have left the captive broker dealer space and went full RA and you could plug into them and go, hey look, you guys are going to show me the way and do a ton of the legwork and basically make it to where I don't have to do that. I can get this independence but don't have to figure it all out myself and you can help me do that and then I can be playing in the big leagues, why would you not do that? And yeah, it's such a disservice by these recruiters to not at least give those people an option to be like, hey, do you know this exists?
[00:22:48] Speaker B: Yeah, I just think they just genuinely don't understand it to a large degree. A lot of recruiters don't even understand it and they don't even know, you know, another thing I think we might have talked about on a previous podcast, I can't remember, but this idea of that extra revenue that you're keeping that you can reinvest back into your business and how much, right? I mean imagine if you're literally like 10% more revenue, let's just say that you're going to have, which is probably a pretty good guess if you don't take the check and you say, man, if I had even 5%, if I was a million dollar producer And I had 5% more that I got to keep $50,000 a year.
And then you're like, what could I buy If I invested $50,000 a year more money into my business in Facebook ads or a four foot by four foot digital billboard in front of my office and I ran space X advertisements on it or whatever the thing may be.
[00:23:46] Speaker A: Basically just think about what does it cost to acquire a client.
[00:23:50] Speaker B: Exactly. What does it cost to acquire clients?
[00:23:52] Speaker A: Could you. How much revenue if it was you acquire 5,000.
[00:23:55] Speaker B: If you had to spend $5,000 to acquire a client and so you're like $50,000. Okay, I could acquire just by literally like money whipping it. I could acquire $10 million clients just say, do you think that you could acquire $10 million of assets if you spent $50,000 trying to do it?
I think you could do, I think.
[00:24:22] Speaker A: You would do probably more way, significantly more than that just because of how efficient you can get your advertising. But if you just did 10, let's say it's an extra $100,000, $125,000 of revenue every year to the business, which.
[00:24:37] Speaker B: Is worth 3x in the end in terms of buyout. Right?
[00:24:42] Speaker A: So you're like, okay, this is worth 300 grand. So what did I do? I just leveraged 50 grand into $300. $300,000 of value.
[00:24:50] Speaker B: And that's not to account the actual, okay, maybe I'm going to profit half of that or 60% of that or whatever.
[00:24:57] Speaker A: But just taking the 50 and you're okay for a decade.
[00:25:00] Speaker B: Yeah, for a decade.
[00:25:01] Speaker A: That's $3 million of value. You're adding that each, each year for a decade. What is that? Yeah, that's crazy. The amount of value that you can.
[00:25:13] Speaker B: Add to your business or 300,000 a year. Right, for a decade. But then it's $3 million plus the cash flow that you got all on the way, all because you're like, I got 5% more revenue, for example. Right, because you don't have to. I mean, think about it. You're now, you now are a business owner. You are investing in private equity. So you're okay, I could take this $50,000 and go spend it every year, or I could take this $50,000 and give it to the broker dealer, or I could take this $50,000 and instead, directly infuse that into growing my business and how much could you grow your business and then what would that do in the long run? Just purely as a, an investment. If I invested $50,000 in Exxon, how much is it going to be worth? If I invested $50,000 into holistic planning, how much is that going to be worth?
[00:26:08] Speaker A: We think over a decade, we think it's 3 million more dollars value. If you did it 50, if you did 50,000 investment would be the idea.
[00:26:17] Speaker B: You'd be like, I could make a million now and take 3 million then.
[00:26:19] Speaker A: That's what we're talking about. When you're sitting here figuring out do you take a check or do you want better economics to be able to grow and to grow your business, better enterprise value. You're trading a million dollars now for $3 million ten years from now. And that's if you said you can only get $10 million on $50,000 of marketing. Yeah, that's asinine, right? You're going to get 25 or 30 million dollars of new business. If you spend $50,000 on Facebook ads. That'd be insane. I mean the people would be like, okay, stop, I can't take any more ads. Yeah, so it would be, it'd be like Trump, you're going to win so much. You're like, no, stop winning. But it really will, it really does start to. When you're going, okay, if I get a higher payout and I use that to invest in my business versus anywhere else, what. It's all up to you on what the ROI is on that investment. But it's going to be more money. At the end of the day, it just is. Than if you take a big check from the IBD channel and you're talking about a higher multiple on that revenue than you're going to get in the IBD world. You just are. Because you have more buyers, you have more people wanting your book because it's free, it truly is independent and you can layer on services to make those people sticky. Think about this. If you were offering, if you could offer tax planning and preparation to your book of business in the RA world, because you can't do that in the IBD channel. But if you could do it in the RA world, do you think somebody would be willing to pay more money for your book if you were also doing those clients tax return and prep? Because it's really hard to fire your financial advisor and your CPA at the same time. So I'm willing to bet if I'M buying your book and you're also doing your client's taxes that I'm expecting that revenue is going to stick around and have a higher likelihood of not buying this asset, this client, and then them acatting out. So what is that worth? Is it worth. What is the multiple on that revenue that someone's willing to buy? So the whole point is thinking longer term instead of short term. Oh, I have to make sure I take a check because my client. It all comes back to people are not confident their clients are going to come with you. If you were, you would never go to the IBD channel, I'm convinced. Yeah, not in this. Maybe 10 years ago when it was like the tech, you needed the technology or the back office or you needed the support because the fintech world of the RA space wasn't really where it needed to be.
Now there is no reason from a technology platform, back office support, name recognition, there is not a reason to go ibd.
[00:29:29] Speaker B: Exactly. And now we have Raymond James on our RIA platform. That's a brand new information. We'll probably need to do a podcast actually, that we maybe we just talk just about that.
But we've got Raymond James coming on board, which is incredible. The advisor that is going to be launching with us in the spring was so close to going rjibd and he told me the other day he is immensely thankful that he did not make that decision and that he instead delayed and found us and is now basically getting the best of both worlds. I like the RJ name and my clients appreciate that. I want the RJ Trust company. I want like that name recognition. I feel like my clients are more likely to feel comfortable with that. But I now am free. I'm like on the ria. I can be multi custodial on day one, right? Multi custodial on day one if I want to be. And he's sitting here looking at people like the wait list of people that want to move from RJIBD to rjria.
[00:30:32] Speaker A: Get in line.
[00:30:33] Speaker B: There's a long wait list of people that want to do that. And he's sitting here like, I'm just gonna like skip right over that and just start in the RA world, the.
[00:30:40] Speaker A: List is literally everybody that's rjibd. Why would you not. Yeah, go. So why would you even want to go to a place where it's like you're walking into a restaurant and there's hundreds of people that are trying to leave and you're like, oh no, I want to eat Here? I, yeah, they're like, no, please let me out of here. And like, no, I like, please, can you guys step aside? I need to eat here. Why would you. No one would do that. It's insane.
[00:31:05] Speaker B: Yeah.
[00:31:06] Speaker A: And so that's what's happening though. And the idea of being like, no, I. They're going to. The restaurant's going to pay me like 50 bucks to eat here. And you're like, dude, it's not worth it. You're missing the short, the forest for the trees. Because you're taking such a short term approach to what should be. It's okay to take a short term approach to certain things, but when it comes to your business, in this thing that you've spent your life building and your career building and you want to have maybe pass it on to the next generation, to your heirs or whatnot, or maybe you don't and you just want to sell it, why would you take this short term approach and go, I want to go here because I think it's not going to be easier to move from captive broker dealer to IBD if you're using, if you're leveraging an uptick partners to help you do it. If you go do it by yourself, it's going to be harder to go RIA from captive broker dealer if you do it by yourself. But to if you're leveraging an R A platform like uptick or there's a bunch out there, it's not going to be any easier to just go full RIA than it is to go ibd. You're going to have the same conversations with your clients. You're going to have to send the same paperwork. Everything is going to be the exact same, except you are signing up to most likely have to do it again five years down the road, 10 years down the road. Why do I know that? Because look at all of the advisors that are currently leaving these IBDs to go RIA. You're not going to be any different to think that, oh no, this is, this is the home forever for me here. That's what everybody thought when they signed up to go to the IBD the first time too. No one signed up to move their book twice.
[00:33:01] Speaker B: And yet it happens.
[00:33:02] Speaker A: And yet it happens.
[00:33:04] Speaker B: Yeah.
[00:33:05] Speaker A: So why would you be like, oh, I'm different. No, you're the same.
You. It's just, when is it gonna hit? When are you gonna, when are you gonna hit that growth plateau where you feel like, I need to be able to add services to grow better, different investments? The compliance is Killing me. It's limiting my efficiencies, etc.
[00:33:24] Speaker B: Yeah. And it's. Wouldn't you think that if you're. If all you really wanted was a check, then, like, why not just go to another W2 and get a huge check? So it's. You, obviously, you want independence or you want the ability to grow. Okay. And like. Or. And. Or maybe legacy is somewhat important. You want to own the business. You want all of that. But then it's your. It's. There's this. Not. I don't. I don't want to be that. I don't want that much independence. And it's. Wait a second. Like, why not? Why not? Is it because. But I think it's just. They don't know. They don't know. Or they talk to the recruiter, whatever it may be, and it's. Hey, great, let me money whip you. Okay? And now you're owned by them. You are owned by them. And it's just, golly, you just gotta see what we see. And that's what we wanna help people do. That's why we. That's why we want you to contact us, so that we can tell you what's up and teach you and help you to understand why this is so important, why you don't need to have a broker dealer. Like, we were talking to the recruiter, and the recruiter is literally like, everybody that I talk to, 30% of their book is brokerage business.
And I'm sitting here. But you don't have to leave it.
[00:34:29] Speaker A: Yeah, ours was too.
[00:34:30] Speaker B: Ours was too. Right? Like, you don't have to leave. And these guys like, yeah, but I'm like, listen, okay, like, you tell me if I'm lying here, Taylor. Right? Like, I'm talking to the recruiter yesterday, and I'm like, so are you telling me that the advisor loves getting paid commissions? That's what they want. They're like, I don't want to stop getting paid commissions.
[00:34:52] Speaker A: Yeah.
[00:34:53] Speaker B: It's important to me.
[00:34:54] Speaker A: I don't want reoccurring revenue.
[00:34:55] Speaker B: Yeah. Like, I want to get this. I want my clients to pay me commissions. That's what I want. Is that what it is? And he's. No, they just don't want to leave the assets behind.
And I'm like. I want to grab him by the head and be like, what are you. Are you an idiot? Come on, man. This is not like this problem has been solved. This problem has been solved. It does not. It is not a problem. It isn't. Okay, you want to do Annuity. You want to move your annuities, no problem, right? Look up a firm called DPL Financial. They're great, right? Look, we can, we can work with them. We can serve as the agent of these contracts. The client still sees the annuity contract. Oh, you want to continue to be able to offer new annuities. Guess what? There's more annuities that they're better. And they're better okay, because they don't have commissions. And we can start and you can still get paid a 1% fee to manage these assets.
You want to continue to be able to offer long term care insurance and life insurance and etc. Great, we can do that. If you choose to do that. Okay, now you're going to get paid a commission, but look at your business right now, it's probably less than 5% of your revenue.
If that, if you're an advisor that would be seriously considering this. It just goes back to this lack of information and misinformation, misunderstanding, not getting it. And that's where it's, we have got to reach you and help you to understand.
[00:36:19] Speaker A: I don't even think it's misinformation. I think it's disinformation. I think it is big news. I think it is. This just gave somebody the option of hey, why don't you convert all of your brokerage or commission business, why don't you convert it to fee to fee based? And they'd be like, it's going to be two things. They're going to say, oh, my client would never do that. Or I don't even know, be like, do like, oh, I couldn't do that. Most of my clients have fee based accounts, but then they have this one brokerage account because it's a legacy asset or whatever and they'll never agree to pay me a fee or whatever. It is, whatever kind of head trash you've taught yourself of like, I have to have this brokerage business and I could never convert it to fee. And what we would tell you is that first of all you can move it over and just don't even charge a fee on it. Be like, hey, Mr. Klein, it's actually free.
[00:37:14] Speaker B: Yeah.
[00:37:14] Speaker A: So like the assets can come with you and you can just make it free. Or hey, I've got a lot of legacy a share business. Cool, bring it over.
Convert them to the institutional class and charge them 25 basis points on it so that they're paying the exact same as before. There's all of these ways to make it make sense for the client and for the advisor. And so it doesn't have to be a. Oh, my book. The makeup of my book prevents me from going ra.
[00:37:47] Speaker B: Exactly.
[00:37:48] Speaker A: It's more that the RIA space has evolved from when the recruiter that you're talking to got it. There's now firms like dpl, there's tons of them that exist now that are built to figure out this problem that was a problem and now they've solved for it. And so it used to be a problem. Now the last five years, maybe 10 years, it's no longer a problem. But people are still living in this. Oh, you're going to have to leave that, those assets behind, that revenue behind, their clients aren't going to follow that have any brokerage business. All that stuff is not, it's fake news. It's not true. Okay? And so much so that I think it's disinformation. Like I truly think the IBDs and these recruiters that are very connected to the IB channel, I truly think that they don't want to think that way or believe it or tell people about it. Because if you knew that your book of business would transfer over just the same and your revenue is not going to take a hit, in fact, I would argue your revenue could go up.
[00:38:59] Speaker B: If you knew that like these legacy variable annuities that you have that you're like, I'm only getting a quarter of a percent trail on and I can't ever 1035 it because there's not anything else better or the income base is high or whatever the thing is. But if you knew that you're like, actually there are better products that are out there that like even if the income base is high, that like you could 1035 that the client gets an income increase and you start getting paid 1% instead of a quarter percent.
Everybody wins.
[00:39:32] Speaker A: Everybody, right?
It's crazy, right? It's crazy. Everybody wins, but who loses? The custodian, right? The custodian. The, the, the broker dealer is going to lose out because they're going to not get the ticket charges and the cash sweeps and all this stuff from having your clients assets on their broker dealer platform. And so what we're saying is you should care more about your own personal business and your clients than you care about trying to make the broker dealer money. Because that's the only reason that you would do it is because you think the clients aren't gonna follow you and you're like, oh, I'm worried they will.
Let's talk about the uptick Guarantee we already did. They will follow you. You'll bring those assets over. The clients are gonna be happy that they're getting better service, better investments, all this stuff. Like the clients are gonna move with you. I promise they will. You're not gonna leave those brokerage assets behind. And there's probably a better thing out there for your clients to be in anyways. And so it's just crazy how I just can't say enough. You cannot take the short sighted approach.
Listen to the salespeople that are just trying to sell you on moving to the IBD channel. Do yourself a service and start to kick the tires on these other things that are out there. It's not going to be perfect for everybody. It might, the RA space might not be right for you, but it's not going to be because it's too difficult to go Ria. Your clients won't follow you. Whatever it's going to be. Look, I like to be an employee. Right. That's going to be. The thing is, look, I like being an employee.
[00:41:17] Speaker B: I'm a low risk taker.
[00:41:18] Speaker A: Right?
[00:41:19] Speaker B: Right. I'm a low risk taker. I want all the. Yeah, I would rather take a salary and a lower cut. Then you know what I'll take. Bet on me. I'll take no salary and more of the skin in the game.
[00:41:35] Speaker A: Yeah.
[00:41:35] Speaker B: And so you have to, you do have to believe in yourself. You know, you do have to believe in yourself and you have to believe that you are capable of great things, I believe to really thrive in this environment. But I think that's what like if you don't then why are you even doing this?
[00:41:54] Speaker A: You shouldn't be in a situation where you're in a kind of sales related or like functioning as not a salaried position.
[00:42:04] Speaker B: Yeah. Or, or why don't you take the 400% check from a different W2. Like why would you not do that if you were like really low risk? That's what I'm saying.
[00:42:15] Speaker A: There is no reason to go ibd. It's either you want to be an employee or you want independence. The this is five years from now, maybe that's 10 years from now for sure. I truly don't think there will be an IBD. Like people will not go IBD. It'll just be like either an employee or RIA. Everybody that's currently at the IBDs are going to either move RIA or they're going to be pushed towards the employee version of the thing. And these, in these current broker dealers, the RJs of the world are going to take. They're going to make more money. If you're an employee, they're going to either force you over there or they're going to. Or they're going to try to make a little bit of money on the RA channel, but they're not going to. There's not going to be this independent light because nobody is going to stay there at the IBD channels. And so the IBD channel is not going to put their resources and everything in there to support that that has, that doesn't have the scale that it used to. And so I'm telling you, it's not going to be this like there's three this. The RA space is building out enough resources and fintech and technology and platforms that it's either going to be an employee or you're going to be full independent. And the current IBD places are going to, if they haven't already, they're going to add the RAA channel as a way to try to keep those assets there or they're going to bulk up their employee side and offer some things to the employee channel like a higher payout etc to get to try to make that appealing to the people that are currently in the IBD space that don't want to go ria. Okay. It's just, that's just how they're going to try to make some money. I mean, they're on the path where it's not a sustainable thing to just have people leaving RAA the IBD channel and going raa. That's why there's a wait list now at most of these IBD places because they're publicly owned and they don't. That's not good for shareholders to make less money.
[00:44:18] Speaker B: But. All right, I think that's it.
[00:44:21] Speaker A: Anything else? Thank you for listening. We hope you enjoyed the podcast. Please subscribe to our channel. You can find more of our episodes on YouTube, Spotify and Apple Podcasts. And check us out at uptickpartners.com where you can learn more about how we help breakaway advisors just like yourself find independence.
