How To Go Independent

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Brian Ruff - how this former Merrill advisor getting a 117% payout - by joining a team

InterviewsSean KernanComment

This is a transcript of HTGI podcast episode 9 (click HERE to check out that show) I did with Brian Ruff. It has not been edited to a final draft quality, so please excuse any hard-to-follow passages. You can also listen to the show using the media player to the right or below if on mobile. 

Brian and I have worked together for almost three years. He essentially serves as a junior financial advisor in my business and has helped me with quite a bit of work related to managing our advisor network that I helped put together as well. So he’s been a great asset to my team.

He actually came over, as you’ll hear, as independent advisor in the spring of 2013, so about three years ago as I record this. And then a few months later, I found myself in need of some extra help and so we worked out an arrangement for him to work with and for me and so I thought he’d have a unique perspective on what it means to go independent since he’s now basically an employee. But we found what I think some mutually beneficial arrangement and we’ve helped grow both of our business interests and we look forward to working together for a long time I think.

I thought this conversation with him would be very valuable to hear another way that things might work out. This kind of arrangement and partnership, so to speak, is something that you can develop if you’re not being held into other organization. That’s just one of the many many examples where I find being independent kind of allows you to have options that you didn’t know existed.

Brian Ruff transitioned 

So without further ado, we’ll begin with the interview. One thing I want to ask before we get into that is, I see the numbers in the show are going up and up, which is great to see, but I haven’t gotten much feedback yet so if you have the chance, shoot me a note at I’d love to hear your thoughts or any questions that you’d love to hear addressed in future episodes, as I’m here to help educate and enlighten as we go on. Here’s my conversation with Brian.

Sean: In in the interest of full disclosure, Brian is literally getting paid to be here so that’s something to keep in mind. We work together and so take that for what it’s worth but I think you’ll find a lot of good info from our discussion. So, Brian, I want to have you on because I think your situation and experience in the last few years can give people another option, probably, you didn’t think of this particular kind of option. I think most of us, if we come up in the traditional world at a big firm where you get trained and everyone is producing on their own, or they’re part of a larger team, the idea of having your own practice might be something that people are familiar with but the idea of kind of crafting something custom and unique is not necessarily out there. So I thought we’d have a conversation and hopefully people will find some value in it. So why don’t you first kind of tell us a little bit about what you did before you got into this industry and then why you ended up here and how you got into the business.

Brian: I started off just as a teacher and coach at a middle school back in my hometown and spent a lot of time at work - probably about eighty hours a week. The group I was with was a way to graduate-assistant-like where we get to spend so many hours analyzing sixteen, seventeen, eighteen year olds on the football field or we wouldn’t be able to win and (turns out we didn’t win anyway) but I got an annual review while I was a coach and basically told me that I needed to plug in a little more, spend more time out there.

And so that kind of got me looking around into other opportunities and I happened to find some kind of best companies to work for list that was out there and Edward Jones popped up. Apparently Edward Jones likes teachers ‘cause they can hopefully explain complex ideas to people and kids and if you can explain complex ideas to kids, then hopefully you can do that to adults as well. So the flexibility of the job kind of appealed to me as well. I was not very familiar with the investment world but was interested for sure. So, again, I like the flexibility of the financial advisor role. They kind of sold that to me but they did also tell me that I was going to have to work long hours, maybe even sixty hours a week to get started with my business and even sixty hours sounded pretty good to me. I also felt like I knew a lot of people around the town growing up being a teacher there and also growing up there and felt like I got a lot of contacts that may build to make my business successful.

So that’s kind of the thoughts that I had as going into the business and again, didn't probably have a lot of knowledge about what that was like besides what they kind of sold me when we did the initial interviews. But they were pretty good, Edward Jones has always been pretty good of telling you, “You know, this is probably going to be hard work in the beginning and build your business till the end.” So that’s how I got started in the business.

Sean: The context, what timeframe are we talking about that you started?

Brian: That was 2007.

Sean: Oh, good timing.

Brian: Yeah, exactly. Peak of the market.

Sean: Nothing exciting happened right after that.

Brian: Exactly.

Sean: Gotcha. And maybe if you don't mind, touch a little bit on your experience at Edward Jones and what went well, what didn't, and what was your next step?

Brian: Yeah. When I was with Jones, 2008 was not good obviously. I remember selling my first mutual fund to a family member for $250 in the October of 2007 and it was several years before I made any money. And so basically, everything that I sold, being a new advisor had gone down in value. It was pretty tough building a business and also on personal side, I went through a divorce and that wasn’t easy as well -- building a business and having to deal with that.

I was offered an office over in South Fort Worth. I took over that office but kind of learned that that wasn’t a great time to move, of course with the market but also that area was pretty high in foreclosures and found out that most of my clients as I was building my business weren’t actually on that location at all. So it didn't really make a difference where I built it but I would like to have that. As you know, at Jones you get out and you knock on doors and you build your business, you’re kind of a person that always is the face in the local community, that kind of thing, you’re kind of a town guy.

I found out that I probably should have stayed where I was, in my original location where I grew up in because I knew a lot more people there and it was not as tough as a time for that area as maybe where I took over the office. After a while, after getting that first early push of getting a lot of the people I knew, using a lot of my contacts, I started to accumulate some debt to cover expenses once the original salary came out and I kind of started looking around a little bit. I think originally, I sat down with Merrill Lynch branch manager. It was kind of one of those things that man, it was really going the dark side to go from Edward Jones to Merrill Lynch but I sat down with the branch manager. I had a lunch with him and even after that meeting I was thinking there’s no way I’m doing this. There's no way I'm going to Merrill Lynch. I had always moved a lot of accounts over from Merrill Lynch and was always kind of selling the clients that Edward Jones was different. But they offered some upfront money to move my book and with some bonuses on the back end if I was successful in moving my book over and that was a big kind of game changer for me.

Sean: When you say game changer, in what way?

Brian: It’s kind of almost an opportunity to restart my business. At that time, Jones was kind of going through a transition as well. I had been taught for years and years at Edward Jones to sell away from the fee-based account. That it was a bad thing. Fee-based account was not in the right investment option, didn't put the advisor in the right mind to service the client. So I’d moved a lot of fee-based accounts over from other firms, talking about A shares (A share mutual funds), that kind of thing.

In about 2008 or 2009, at one of the summer regional meetings, they started rolling out the advisory program, the AUM model and just like kind of maybe told me that there are possibly some other things out there that maybe they don't feel like it’s great now but if other people can offer them, maybe look into that as well and basically the upfront money just allowed me to, when I say it was a game changer it was because I could use that upfront money to kind of supplement my income while I try to build a fee-based business. I could see that that was kind of where the industry was going.

I also liked that that put me on the same side of the table with the client. If the client did well and their accounts grew, I would be rewarded for it. I make sure that I was doing what was in best interest. I always struggle with I don’t want to do anything for a client just to do something. That’s a whole different conversation of going into the AUM versus a transaction-type model. So anyway, I went to Merrill Lynch. The upfront money really helped me reset my focus on my business and kind of skip a lot of those upfront type payments when you have a new account and go to a fee-based model. I was pretty successful in doing that.

Sean: While you're on that topic, why don’t you touch on your largest client, kind of that experience of moving over and one of the benefits -- I think that’s probably a function of the brands of those two firms but it also, from my experience and observation, also it's a matter of sometimes when you're moving firms, regardless where you're moving from and to, I think clients will say, “Well I'm moving. I might as well move this, too.” Why don’t you touch on that? I think that’s an interesting anecdote about getting new money.

Brian: Yeah, that was something that kind of surprised me when I went from Edward Jones to Merrill Lynch. Some of the clients treated it as a promotion which I had not kind of looked at. I did have a large account that was more of managed with a board and that large account basically told me that (when I moved over) if he’s in front of a board or talking about investment options for this account, there’s only so much they can do at Edward Jones and that was a big kind of eye-opening moment. I kind of felt like - if this guy’s actually telling me that, then how many people that I’m with that I’m servicing now are not telling me that? Or how many prospects have I come across that felt that same way? And so that was kind of an eye opening thing for me that I was not prepared for. And then when I brought that account over, sure enough, the account almost doubled in size within the first year that I was at Merrill Lynch.

Sean: Gotcha.

Brian: So that was something I was definitely not counting on with my move but it really helped especially at Merrill Lynch, with a lot of the back end bonuses on how we’d done, admittedly most of those back end bonuses from that one account.

Sean: That’s great. Yeah, I remember you told me that story. That’s pretty interesting. Okay, and then as you got settled in, why don’t you kind of give us a little bit of how was your experience at Merrill and then how and when you decided to start looking for something else?

Brian: Yeah. I think I could tell immediately when I got there, there was a little different culture than Edward Jones. Edward Jones, as you know, is famous for their training and a lot of handholding that goes on there. I didn't really get that at Merrill Lynch, it was kind of like, “Here’s your desk, here’s your phone, good luck.” They kind of treated, like it was your own business, go find it. But there was definitely just a different culture there. There was a lot of turnover among trainees there. That was surprising that they would just really throw a lot of people out there and see what stuck. The biggest things that happened while I was there was a sales meeting, where they changed our payout grid and the account level we get paid on, right after Christmas. So that was Merry Christmas to us.

So, they dropped our payout by 2% and they also took $100,000 accounts and changed that $250,000 limit so if you had an account that was under $250,000, you weren’t paid on it. Merrill Lynch still got paid on it but you weren’t paid on it. Even though the client was still billed, Merrill Lynch still made their money. You weren’t paid on it. It was explained to me, the $100,000 limit when I came over, it wasn’t a big deal because we could basically household accounts. So if you had people that were at different places and they still, whether they lived at different spots, they didn’t know each other even but they worked at the same place, that can be considered a household. So a lot of those rules changed and they also upped that limit from 100,000 to 250,000 and then they removed all those householding rules so if somebody wasn’t a brother or sister or husband or wife or anything like that, they didn't have any blood relationship, you cannot household them and that changed a lot.

Luckily, most of my accounts there were grandfathered in but since (I've left) I believed that’s changed at Merrill Lynch and with that large account that I mentioned before, that was kind of the final straw in starting to look around a little bit. I was looking for more flexibility with that large account and wanted to move it to a fee-based. It was not like that when I was there and I couldn’t get the asset fee low enough to really justify moving that account over to fee-based. It just wasn’t what was best for the client and I really wanted them since there was a board-type structures that I wanted them to go to that board if there was ever a case of "why you’re in this fee-based account" and show them that I was actually saving their money.

So that was kind of the final straw that I kind of said, “You know what, I was a little tired of a corporate structure getting to change something whenever they wanted.” I got my assistant changed. I had a great assistant and they basically pulled her away and got somebody else and kind of plugged somebody in that wasn’t too interested in helping me. So that was a big deal that I kind of felt like they could change what was going on at any time. That was a big realization that I made that if you're not a huge corner office-type-producer, then you're not going to be able to make those type of changes or you're not going to be able to have any say in those type of changes. They're going to do what's best for the overall bottom line and that was big because I always wanted to be my own boss or I have my own company. So that’s kind of what made me make the move.

Sean: Gotcha. And as you started to look around, touch on kind of the options that came to mind and maybe go through your decision-making process and a little bit of how you ended up where you are.

Brian: I looked around a little bit. I was even considering getting out of the business as a whole. I basically just kind of wanted to find something that would even out my income a little more. It felt like I was with the draw and kind of how it works at Merrill Lynch is that I had a very good month and payback all my draw and then I’ve had a couple of bad months and it was basically just paying them back is kind of what it felt like. I didn’t see a lot of upside that I was always kind of just hanging on for those bonuses is what it kind of felt like. So I wanted something that’s kind of a stable income. I went to an interview at Fidelity. I was looking at possibly a manager role there. I turned that down more because I don't think going, I guess it was almost six years in the business at that time, so this is around late 2012 or 2013. Being able to set my own schedule was big for me. I enjoyed being able to pick my kids up from school if I wanted to do that or go and eat lunch, that kind of thing. So if I was working in an office in the north part of the DFW and I lived in southern part of DFW, you’re having an eight to five typical manager role type of job, it just didn’t appeal to me.

And I’ve heard a lot about it since and I’m glad I didn’t choose that route ‘cause there was a lot of management going on and I don’t think I would’ve been very happy. I also looked at taking a bank advisor type of job. I just found out there was a lot of micro-management in that, lot of morning meetings you gotta attend, lot of minimum amount of calls, that kind of thing. I think the biggest deciding factor that I made was, when I had that conversation with you about that book that I built was actually worth something and I was walking away from it. I started thinking about all of those doors that I knocked on to build that book and all that networking I did, just thought about well I'd definitely be walking away from that, I’m walking away from a lot of hard work if I just want somebody else in that. Those accounts are going to be scattered to the wind.

Sean: Gotcha. That was something that struck me was being at Merrill or even at Jones, or any firm that has sort of, “Hey, you better be at this number.” It’s easy to think that whatever production level you're at is not worth anything. You’re not meeting someone's standards then you realize you get out of the market place and there’s value. That was a big thing to me. And from my perspective, for those who don’t know, I have helped manage a network of advisors with independent large broker dealer and I was doing a lot of the recruiting at the time when Brian was looking at these options. This was early 2013 that we talked and we got to the point of the size of our network. We were still wanting to grow but we were getting, at least, personally I was getting a little more, “Hey, if you want to join us that’s great. If not, I’ll do my best to help you find the right choices.” It was sort of that point where you realize you don't need to add everybody and I like to think I was doing a good job helping people look at the choices before but you may have hit that feeling in life where you realize if you don’t need it, you sort of attract more type of thing. So I remember having that conversation with you and then with your wife that, “Here are the options” but in particular with you of, “Hey, I don't care what you do but man, don’t walk away from it ‘cause it got some value. Go somewhere, get some value for your book, so to speak, for your practice.” And then those manager jobs, we all have the rest of our lives to go work for someone else in the corporate environment if we want to. If we feel like we need to.

Brian: Right.

Sean: That's one thing but I got excited thinking about man, that's crazy ‘cause you got something that’s valuable and a lot of folks have built their businesses at least partially through collecting the scraps of people that leave and add it all up, if you had a million bucks.

Brian: Yeah.

Sean: So when we talked, I know it took you a while, at least several weeks before we got back together after the first conversation. I think from a production standpoint, you were in a point where you couldn’t hire a lot of people when you move over but hire staff or necessarily take down a lot of office space but how did you decide what the numbers would look like as you are analyzing that before you kind of went on your own as independent?

Brian: I looked at moving that large account over was a big deal. I’m making sure that I kind of run the numbers and you were able to help me do a lot of that. I ran the numbers and figured out, okay, if had to start out and go out on my own and without an office or get some kind of small corporate type, kind of a pay-as-you-go type of office as you need it. I looked into that where I could pay for client appointments but then I really looked at my business and I was kind of thinking that I spend a lot of at time at kitchen tables and restaurants and that kind of thing and that a lot of my clients are fine with that. They’re fine with me doing it. So what I kind of thought was I could start out working out of my house doing a lot of the admin type of work in the house and then if I needed something, an office, I can kind of see how everything came over, how the production was when I got over and then look at office space or a temporary type set up with an office as needed, that kind of thing. So that’s kind of how it started out. It was tight after the first couple of months.

Sean: Let me stop just to clarify that.

Brian: Go ahead.

Sean: Brian and I work together now but at this point (you and I know, obviously) you were setting up in kind of this independent advisor or network.

Brian: Right.

Sean: Just to clarify that, I partially said that about the initial conversations that we had but coming over to kind of be the man and have your own practice and so this was independent but having to deal with me, other than I helped put together the network but that was it.

Brian: Yeah. So that’s kind of how it started. I came over on my own and brought the accounts over, everyone that I wanted to bring over came over and that made it really easy. Most the numbers that I put together were pretty close to what I thought they would be but like you said, I didn’t have quite the revenue just to invest in help. Your group was instrumental in getting all those accounts over and that was a nice benefit but after that I kind of died down. I kind of thought, “Okay, where do I go from here?” And I did a lot of the paperwork myself. Honestly there wasn’t a whole lot of time just to go out and prospect. I probably could hang around and done it for a while but I really had kind of thought about what I wanted the business to look like and after a little while I was saying, “Okay I could do this for a long time and not really see the growth that I envisioned.” I had a lot of process that I’d like to get in place. You can't really do that stuff without some admin help or some time to do that. I didn’t feel like I could do that so that’s when I kind of, we started working together and figured out that that was a possibility going forward.

Sean: Right. So on my end, this was probably six months or so, maybe a little less after you came over in spring of 2013, my business had kind of tipped over to a point where I didn't have a full time dedicated assistant. I shared someone. I realized either I needed a really good, dedicated assistant, or I needed kind of a junior advisor. Someone that can help me and understood the business and could do more than just what an assistant could do. And so I was kind of debating which of those options to go down. I kind of decided whatever I can find first, that’s kind of the route I’ll go. So I mentioned that to you and we kind of got deep into those conversations and my thought has always been if we can align something where everybody is clear on what's expected, you know, no arrangement is perfect. I liked the idea of working by myself and having no one else to consult or worry about when get back in the management, so to speak, but I had a need and I needed help with advisoral tasks and support. The business had grown and I’d acquired a couple of small practices and I had other responsibilities with the network, you obviously had the experience and I loved the idea that you had been on your own even if it was only for a few months. You have shown the willingness and ability to do that. Even if it does work out for someone, you can’t make it work. I think it shows something unless you’re looking back, obviously it wouldn’t work. But you're in a situation where it was a risk to take. Perversely, I like the idea of someone who’s willing to do that and so we started talking about the details and why don’t you talk about what was appealing to you from your standpoint as we talked about working together.

Brian: I think the biggest thing that was appealing was just the smoothing out the income. That was pretty big. When we went to Merrill Lynch, we paid a lot of that debt we’ve accumulated. We had done well but like I said before, we weren’t able to see any positive moves income wise. It was always kind of a catch our tail type of thing.

Sean: Catch your tail or just chase it?

Brian: Yeah, we were trying to catch our tail, I guess that would be better. The cliche there.

Sean: You jumped off.

Brian: Yeah, exactly. So the smoothing out the income was a big part of it. Basically we were able to put something together that worked for both of us as kind of a trial period and that’s what I really liked as well. We weren’t in any kind of contract. I didn't have to sell you my entire book immediately for us to work or you didn’t expect that I would just turn over every client relationship to you immediately. That was something I thought, well, we both kind of had a trial period and say, “Okay, we’ll figure out and see if this works, see if we can work together and go on.” I think the biggest thing that made both myself and my wife comfortable was we felt like we could have our questions answered early on from the very beginning. So if there's anything else that came up along the way that you’d be very honest with us about what we could do or what our expectations were going forward. And I think that’s what really appealed. And you had a staff. They’re with you. I was already familiar with everything and that was big for me because it took some of my paperwork headache off my plate. If there was some kind of project or some kind of prospecting idea I had, I felt like we could go after that and that was pretty big.

Sean: Right. In some ways I guess the model is very similar to the wirehouse -- the Merrill's team. That’s nothing new there. I think while we’ve set this up, especially early on, I liked to think, “Okay, if I was in this position what would be important to me?” And having the ability to get out of it with no harm, no foul would be huge. Also, the ability to continue to have that flexibility of where you work, how you work, and obviously, it was the first kind of experience for me having another advisor work directly for me and so making sure that you could do what I thought you could be able to was paramount. So I think it’s flexibility in both directions. And in being here, one of the big benefits we have being independent, we don’t have that third party mother Merrill or whoever in between that relationship. It’s very simple. Getting the paperwork setup was not a dent. It’s just we set it up, we come to the arrangement terms, kind of set expectations and you could never predict exactly what would happen but why don’t you touch a little bit on kind of the specifics of how our set up in terms of where the money flows and why and sort of some of the pros and cons of that. We can go from there.

Brian: Yeah. We set up originally where it was just basically my production went over into kind of joined with Sean’s production and he kind of paid me as 1099 employee starting out 1099 contract or I guess starting out just basically a little bit higher than what my book would produce. So that was nice for us that we could have predictable income and then we could kind of build a business together going forward. We started out like that and it worked well then we kind of decided that we wanted to go to more of a W-2 type employee and after we figured out it worked pretty well then we both kind of sat down and looked at the numbers at what my book was producing and both came up with a number that we’re both satisfied with and that was pretty easy. We didn't have to go back and forth in negotiating like that, it was a good relationship we had from that point so it was really easy to determine, “Okay, what’s fair for both of us and go from there.”

Sean: And so you get a big new client or an insurance case, what happens to the revenue?

Brian: Basically, it goes to you and that could be a con is that you could work on a lot of case. It’s a nice benefit to a senior advisor but the smoothing out the income was far more than that. I mean, I have the relationship and I think this goes back to having a good relationship with the senior advisors that you work for is that if a huge case were to come in and I was landed, I have no doubt that you'd probably say, “Okay, well, maybe you can adjust your income going forward” or something along those lines.

Sean: Right.

Brian: So that’s again, that's just who you work with and how comfortable you feel with them.

Sean: Yeah. That’s right. I think like most of the things that you do, the trust factor is 90% of it in a lot of ways. My thought there when we set this up in particular was to have alignment, to make sure that there’s not this “mine,” “yours” and “ours” ‘cause we all know over time, if I’m getting 90% on something and 50% on something and 0% on something, I know the order that I’m naturally going to focus my time and energy. I hope you bring in so much in the business that it’s ridiculous for me to not double or triple your income, so to speak. But for most of us if we’re going to be on that kind of growth path where you already would have, me included, I think it worked out well. We started mistaken, the latest go around which has been a couple of years now. I think the way we got that was partially, “Hey, here’s kind of where I need to be to break even and not have to worry about my income.” I felt good that that was an adjustment up a little bit from where we started but if working together, I know that feeling. I remember not too long before that being in the position of kind of trying to get to that break even number and how nice that would be if I didn't have to sweat it and get your focus on getting stuff done. It’s just the right thing to be doing. So, to me that was a great meeting point. And again, it’s a lot of art more than science because the way we set up your kind of plan, a lot if it you pay for yourself. But what is that worth? Because on your own your payout was less than being plugged on to my little team.

Brian: Right.

Sean: But if you’d go working for the man somewhere, it’ll be hard to replicate that income so that’s where each advisor or each team has to decide how they’re going to approach things. I found this has been phenomenal, caught middle ground even though it’s not really middle ground for you ‘cause we’re working together and your income month to month is going to go up based on your output but hopefully, over time you kind of build enough momentum to that. There’s growth as we’ll touch on, we’ve got some advisors that will buy out and that will help grow the pie, so to speak. What about the idea of being locked into an income, I think you kind of said, “Hey if I can get to this level for two or three years, that’s all I need for now.” Have you ever regretted that or worried that, “Oh man, I’m stuck. I don’t have the upside that I used to have.” Has anybody in your house, for example, mentioned that? Or does it come up very often?

Brian: No, it hasn’t. I think at least in our relationship and a lot of the couples that we deal with, as long as your spouse is comfortable with the current situation, they understand what’s going on, I don't think if I brought a (I told her about it) huge case, I don’t think she’d ever feel like, “Wow, I wish you’d had that upside” because the month to month piece that she has, I guess, with knowing that everything’s getting taken care of on regular basis, I think that far outweighs it by any case that come up. We definitely haven’t regretted that and I take it also helps in the sales process as well because there’s no pressure to close someone right then. And I think that's part of human nature. As I’ve had friends and family that are still at other companies that’ll say, “How’d your month go?” And I’m thinking, “I have no idea when is the month over. I really don’t know.” That takes a lot of pressure off me but I’m thinking I can do a lot better overall ‘cause clients can sometimes sense that. I’m not ever going to push anything because for any other reason than it’s what right for them.

Sean: Right. And I think we all hope for doing that anyways but it’s just natural that sips in. I’ve gotten to a point where I don’t feel too bad about, you know, if it’s delayed it’s delayed and if it’s the right thing, the client will see that, or I ask the right questions, they ask questions and rearticulate things. But talking about kind of the upfront money, I remember when I got the money when I moved to Morgan Stanley, that same feeling, “Okay, I don’t need to worry about how much I produce in a given month from an income standpoint anyways because I’m okay, I got money in the bank, significant amount in the bank.” It just changes your outlook and that’s a nice place to be. When you talk about the spouse relationship, it’s funny. I think if my wife had really seen the fluctuations involved in my income early on in my career, there’s no way I’d made it this far because she’d also very much value stability and predictability. And that’s just not something we usually get in our business, really any sales, you know, incentive compensation business early on.

Brian: Right.

Sean: Okay, good. So I think we’ve touched on a little bit of the transition and how we started to work together. Our team has evolved just like any team in terms of what we do and we’ve added some pieces here and there. But let’s talk a little bit about the nuts and bolts of an advisor who’s looking at maybe going independent. And the other reason I want to have you on is I think the bout to be an independent advisor might not consider all these other opportunities that might pop up just by being independent. Again, it’s hard to predict what those would be but your situation is a great example of, “Hey, this has worked out pretty well. There's no way you could have predicted this or counted on it when you weren’t independent.” I think it’s a fuzzy concept that’s important to touch on. So how do you handle health insurance? How’s your family at health insurance? We have a big corporate insurance plan, right? That you get to use.

Brian: No, we don’t. A lot of people kind of figure out what they’re actually paying for that. I’m sure you can help people with those numbers about health insurance but it can be a big expense when you don’t have a corporate structure but I think the difference in the independent payout far outweighs that. That's something that you just have to figure out on an individual basis with your family. Figure out there's a lot of different options out there. It’s nice if you have a spouse that’s working that you can jump on their plan because typically it’s a little cheaper but the important thing is you have to find something that works where we did a couple of different options since then we’ve gone with private health care. It was expensive but I think the difference in payout far outweighs that. We’ve looked at more of a corporate type structure for health insurance and it just wasn’t right for our business and so we kind of found out a middle ground where it’s kind of a pooling type plan now that works for us. That’s a lot cheaper than private health insurance so there’s a lot of different options out there. We don't go to the doctor a lot or have a lot of visits, knock on wood, I guess. There’s an occasional sick kiddo or anything like that but I think if you talk to a lot of the independent advisors that are out there and kind of figure out what they're doing and what works with them, I do think there’s an option that works even though we don’t have the subsidized corporate structure health insurance.

Sean: Gotcha. We might have a separate conversation at some point about the specifics of what you use now ;cause that might be an interest to people as an alternative to the more traditional what-we-all-think-of options. Okay, one question I didn't touch on earlier was, how did your clients take it when you left Merrill? Obviously that’s a brand everyone’s familiar with. Moving twice, was that an issue? It sounds like you already kind of spill the ending here or there when you moved but did anyone say, “Hey who’s this company you’re going to go with? I’ve never heard of them.” What was the reaction like from your clients?

Brian: You know, I felt like by that time, my clients knew me. They didn’t really care what logo was on the statement. They did joke on me a lot and asked where I was going to go next ‘cause that was two moves but I looked now that the biggest thing I want to stress to them when I moved is that it’s still me. It’s still the same process. It’s still me that’s going to come see them. They’re not going to have to go to my house to meet with me or anything like that. I can still come to them, still give them the same statement -- alright excuse me, same treatment -- that I had before and nothing’s going to change for them. I think they kind of got that after the first move that it’s still going to be me. It’s still going to be me taking care of them. They felt as comfortable as they did but at the first place as they did at the second. They definitely do. Just to spill the ending a little bit, everybody did come with me and they are still with me today. I guess that’s another question is how that change and my role with my clients didn’t really change. You've been on a couple of client meetings but I never felt like, “Okay you need to be the lead point (point person) on this relationship” or anything like that. My daily activities from my own book didn’t really change but that was something that was nice that I didn't feel like you are ever going to come in and swoop in and want to take the lead on maybe this relationship I’ve had for years. That’s another thing that’s pretty important to do when you're looking for somebody to partner up with.

Sean: Yeah, I guess the benefit to me was I certainly didn’t want more work, that was more people, kind of going backwards but I had to make sure that you felt like you had capacity to spend time helping me with what I needed help with and I think certainly that’s been the case.

Brian: Right.

Sean: And there are some things that if you specialize from a role standpoint on a team, you can apply that knowledge across everyone’s clients. And there are some things that are obviously going to be one-on-one conversations or meetings. You can’t scale those. So from my perspective, there was no reason for me to change how you dealt with your clients. We’ve shared ideas, you’ve been very open to new stuff and I’ve tried to be as open. I’m not the most flexible person but certainly, I don’t claim I know everything, that’s for sure. Okay, good. We don’t need to get in the details of your income or anything but I was doing the math and it seems to me that if someone asks you what’s your payout, that’s kind of a weird question, too as well, right? It’s your own salary but if you were to compare it to your income, I came out with somewhere about 117% payout, is that about right?

Brian: Yeah, it’s a pretty sweet deal.

Sean: I know I told you that before. That’s good. If anybody you talk to is like, “Hey, what’s your payout as an independent?” “I don’t know 120%” something like that. If nothing else, that will get their attention.

Brian: Right.

Sean: Results may vary. Don’t try this at home.

Brian: Right.

Sean: And obviously, you do sometimes, I guess, the downside if I were in your shoes would be, hopefully I’m reasonable but sometimes if I have a question, I know you’ll answer it when it might not be the most convenient time to answer -- or if you’re in the middle of putting the kids in the car, the wife and kids are going somewhere -- I know we’ve joked about that. We love little kids in the car. Our wives just stay at home, we appreciate that.

Brian: Yeah.

Sean: Occasionally, somebody has to wait, either me or her and usually it’s better if it's me and I get that but other times when you’re an employee you have to be ready to be on-call, so to speak. So that’s different. I don’t want to make it sound like it’s not different but the trade offs or I think where you work, when you work, not having to sit in traffic, or put on a uniform/suit, just to sit. I love the idea of going to downtown office in a suit, go to the fifteenth floor just to make phone calls and email, that cracks me up. But anyways, okay, we’ll make that the title of this episode. Something about 117% payout. That sounds like a good advertising.

Brian: Oh, right.

Sean: And it’s true. You have to clarify a little bit. So what about not having a Christmas party? How are you going without those kinds of things?

Brian: I should've added that to my cons list. I forgot about that part. That’s pretty big deal.

Sean: Our water cooler is kind of far away.

Brian: That’s right.

Sean: I guess I’ll kind of close or give you the lead and the close with, if someone was kind of where you were, I guess three years ago now, three and a half years ago, kind of stuck or starting to feel stuck in the traditional wirehouse model, or if they just want to look at what else is out there and maybe they don't think they have the production to have their own independent practice or no one’s going to want them, so to speak. What would you do if you talk to someone that was kind of somewhat in your shoes from three and a half years ago? How would you tell them that, your situation is not ideal for everybody but how would you tell them to go about, what would you have them do? I guess that’s my question.

Brian: I think first of all, in this business, we seem to build a pretty good network of people that we know. I think that’s where I’d start is just reach out to those people you trust and see what options are out there. I can just think of about ten people off hand at different spots that I started with would be at Jones or at Merrill Lynch and reaching out to them and seeing what they like about their situations and especially reaching out to a lot of those people that are independent and finding out what works for them. Something may come up an opportunity and they may hear of somebody that’s looking for more junior advisor or is looking for somebody to fill that type of role. Sometimes you might feel like it’s a waste of time but as long as you’re making those connections, something may come up and again, like you said before, I didn’t know that this type of partnership was going to come up when I moved over. I kind of took a leap and it was what was best for me at the time but I think if you get all those kind of numbers, get someone to go over the numbers with you. And I think that’s the only way you can effectively evaluate your next move is what it’s really worth to you, finding out what those numbers are is what’s really worth to you. So that’s probably what I would tell people to do.

Sean: Good. I think that’s a good advice. Networking can consume all your time but having people that you can trust their judgment and know they’ll introduce you to what they think are decent potential opportunities is a huge huge benefit and certainly you can’t create that network overnight if you don’t have it but I think almost all of us even if we’re kind of reclusive have at least a few people whose opinions we trust. And again, I’m hoping our podcast and our website is a resource for people. I’m biased a little bit but then again, in this context my main goal is education. There are times when I think people shouldn’t move, I think that will be a great podcast episode of when you should not leave your current firm or when you definitely should not go independent ‘cause I’ve seen cases where it didn’t work out or I know if people had moved, it wouldn’t work out. We all know someone who knows someone who’s left the big firm feel. And again, I called a lot of people when I was looking around six or seven years ago so it’s amazing. We all like to talk about our own situation so most financial advisors, I think, are willing to share their input and insights of you reach out to them.

Brian: Exactly.

Sean: Okay, is there anything else we should touch on? I think we’ve covered it. Any final thoughts you have?

Brian: I think everybody’s been revided by this interview.

Sean: Almost certainly.

Brian: I think we covered it and if people want to reach out to me I’d be happy to give them my two cents as well if they want something to look on the other side, I will be happy to help.

Sean: Okay, very good. Thanks again for coming on to have this conversation, Brian. I really appreciate it.