Is your financial advisor churning your accounts?

Matt

Administrator
Staff member


Advisor signup bonuses have now topped 400% of ‘production’. Production is the annual revenue that advisors generate from selling their clients products. Think of it like you are a cow, and your advisor is milking you each year. Whenever they need some more production revenue, they head on over and sell you a new product, charging a new fee for the transaction.

To give an idea on the value of a client to a firm (aka the value of you, the cow) the 400% bonus which was recently seen at Barclays WMS works out like this:


Upfront signing bonus for bringing the cow to market: 175%-200% of annual production, followed by 5 yearly payouts of up to 40% of the production number. Note that this is in addition to other compensation, and is just a ‘bonus’.

In order to get the full bonus your milker has to ensure that they overachieve on annual production levels. In the case of the Barlcays deal that means asset hurdles kicking in at 75%,95%,105%,115%,125%. Clearly the incentive here is to be an all star. Which means, unfortunately that your udders are going to get chaffed.

Churning is a great way to boost production. Basically you take a client out of one position and into another. Because commissions are transaction based, you can ‘refresh’ your production revenue every time this happens.

I’m sure that when you embark on a financial relationship you do so with hope and enthusiasm about this trusted person who will guide your way through the twists and turns of life… just remember that some of them aren’t actually guiding you the right way, and instead are trying to figure out how they can churn over your account in order to hit their next bonus.




The post Is your financial advisor churning your accounts? appeared first on Saverocity Finance.
 
Top