Financial advisor father

I have another forum about this but nobody seems to respond anymore so I decided to try a new post. I am trying to decide between working with my dad and his 250$ aum at a B.B. and trying to get into investment banking. Which would have more money and be more worthwhile?

 

I worked with several father-son teams when I was with one of the largest Broker-Dealers on the street. If your father has 250M in AUM, then depending on his fee and whether he's an independent or is on a team, you could easily be walking into a goldmine. These days, at the place I was, nepotism is about the only way anyone made it any longer. Either that, or when a woman wanted to sell her book to another female.

If your old man is offering to take you under his wing, go out and get your Series 7, 63 and 66 along with your insurance license and let your dad teach you how to become a millionaire.

 

I am pretty sure the 250 is his clients but I also have to consider he charges a discount to his clients he told me so taking that into consideration should I still purse working for my father and eventually taking over his business or trying to make it to Wall Street? FYI I go to a state school in the Midwest

 

With a built-in client base, you have essentially been able to bypass the most difficult part of the entire job, and the part that takes most FAs 10 - 15 years before they really start to cultivate serious relationships. The place I worked where the father was grooming his son was very upfront to his clients about it. He made certain their clients knew that he would still be intimately involved in their accounts even after he was officially gone, that his son would continue to seek out counsel from his father regarding his existing clients, that would continue to learn from his father, etc.

For whatever reason, you seem to have reservations about the opportunity. If you have shit with you father, either get over it or move on. Just realize, if you choose to walk, that you could easily be walking away from a very lucrative career with little training other than listening to your father and begin learning the fundamentals of equities management.

 

Saw your other post. Answer remains the same, follow your dad. $250 AUM assuming 75 bps fee which I'm guessing is a little low with 40% firm payout is roughly $1.125MM / year. Enjoy college. Enjoy a relatively stress free life compared to your IBD pursuing counterparts. As long as you get along well with your dad, do everything you can to get that book.

Cultivating mass and wealth since '95
 

Money doesn't matter if you don't have the time to enjoy it. IB will have you on lock 70+ hours a week. Pops probably much closer to 40 with the opportunity to wane in your early 40's. The opportunity you have in front of you is the perfect balance of both of both. You might not have enough to get your own PJ (of which, no one really needs), but you will have plenty to do nearly everything else one could want to do in a lifetime. Just remember how fortunate you are, work hard, and don't let it go to your head.

Cultivating mass and wealth since '95
 

Alright I think it is worth noting that not all of his clients have stocks and some have mutual fund, he said it was a mix of the 2. He won’t tell me how me he makes but I would assume in the 200-300 range because we live in a 500,000 house and he is cheap but I could be way off

 
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check my series on PWM. father/son teams can either crash and burn or flourish, I've seen both firsthand. PWM is a great business if you do business the right way and have an eye towards the future. the industry will get gutted over the next several years and your only chance at success is to be cutting edge and actually work hard (not coast and hope markets bail you out while charging 150-200 bps like guys in the 90s and 00s did). first, find out what your dad's AUM is, his ROA, number of clients, and business mix. that will tell you all you need to know, but maybe these scenarios will help. alternatively, if he's at ML/MS/UBS, you can guess based on his title. you want SVP and above ideally (including director, ED, MD).

assume it's 250mm AUM with an ROA >=60bps (which is good). this means his production is in the 1.5mm range so he makes 6-700k per year. this is plenty of room for him to take a paycut to groom you. I know a producer in my office personally who lives in a house that size and is cheap, you can't judge a book by their cover. the most extravagant spenders in my office are underperformers. when you find out his business mix and # of clients, this is where you could see opportunity. if he has under 300 clients, that's a good thing. anything more than that and your main job would be trimming the fat and doing business overhaul, because if he's carrying that many relationships, he's likely neglecting the top end of his book to some extent. either make it scaleable or get rid of lower end clients. also, this assumes his business mix is someone annualized, meaning it's fee-based by and large with recurring revenue. if he's still a transactional advisor, that model is dying more by the minute, again not a reason to say no, but just something to be aware of.

now, if it's 250 clients, I'd ask what his average client size is. if he's dealing with millionaires, you're in better shape than if most of his households are in the 250-500k range, more scaleable, better referrals, stickier assets, etc

I would probe him more on his business, because I've seen practices out there that are dead ends (shitty investments, poorly serviced clients, all elderly, etc) that you wouldn't want to touch., and I've seen others that are the ideal scenario: guy's built a great practice, just needs help scaling, managing the book, growing, etc. if your dad is in his 50s, you won't get full ownership for 10 years, but you've got a long enough runway to learn the business and grow into a wonderful situation.

TLDR - get more intel, it's too complicated of a question to just answer yes or no

 

Could one make the argument even if its a poorly ran practice, it is still a suitable enough to be a baseline to jumpstart your career? Run with it the way pops does things till he phases out, then make the desired transitions and changes to better gear the practice.. Personally, if it is $250MM AUM, I'd say run with it regardless.. but what are your thoughts?

Cultivating mass and wealth since '95
 

it's all relative. what are the other career options? is the father open to a revamp? is the father at a firm with good resources (ML/MS/UBS versus edward jones/stifel)? it's so dependent, it's hard to say.

I can think of quite a few people who have practices in need of a revamp, and would be worth it, just like I can think of several people who if they approached me to buy their practice, I'd turn them down regardless of the AUM

 

I'd try to do something else in finance first for 2-5 years before joining your dad. Will give you some credibility and something to talk about with current and prospective clients. Nobody likes to feel like their $$ is being managed by some kid who just inherited his fathers business, a good name brand on your resume will help make people think that you are competent. My buddy who is an FA worked in fixed income sales for 5 years before becoming an FA and he sells his "first hand markets experience" to clients and they seem to buy it.

 

This is a great point. I have a friend who is working with his father as an FA focusing largely on institutional and UHNW clients with the understanding he will eventually take over the book of business. He worked in NYC doing FoF and sales (I think) before coming home and it seems to have helped build his credentials in the eyes of clients.

"Give me a fucking beer", Anonymous Genius
 

You would definitely have a much better work-life balance. However, you need to have a tolerance for dealing with clients and their personal lives. Assist them through divorce, plan for kids going to college, etc. This isn't a "project based" atmosphere. You're dealing with these people for (hopefully) decades.

Something important to consider is the average age and demographic of your dad's business. If they skew older you need to be confident you have business development skills to grow the assets inorganically.

Finally- you need to what's best for you. Running a business that you aren't interested in is a slippery slope, especially in a world where there are thousands of FAs at wire houses or RIAs.

Good luck, hope this helps.

 

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