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Choices for financial advisors seeking an independant home

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Choices for financial advisors seeking an independant home

  1. 1. Kruse Asset Management Choices for Financial Advisors
  2. 2. Agenda • Current Advisor Environment • Downfalls of Advisor Program • p Advisor Choices for Independence • Registered Investment Advisors can offer • KAM Unique Compensation Offerings • KAM Differentiator • Future Environment • About KAM • Contact
  3. 3. Current Advisor Environment Client Wire house/Bank/Trust Company $1,000,000 Deposit Registered Financial Advisor Banker Representative
  4. 4. Current Advisor Environment Client Client gets charged A minimum of 1% = $10,000* Wire house/Bank/Trust Company $1,000,000 Deposit Registered Financial Advisor Banker Representative * Some institutions charge higher fees
  5. 5. Current Advisor Environment Client Client gets charged A minimum of 1% = $10,000 Wire house/Bank/Trust Company House keeps $6,000 $1,000,000 Deposit Registered Financial Advisor Banker Representative Advisor keeps $4,000
  6. 6. Current Advisor Environment Client Client gets charged A minimum of 1% = $10,000 Wire house/Bank/Trust Company House keeps $6,000 $1,000,000 Deposit Registered Financial Advisor Banker Representative Advisor keeps $4,000 Most advisors are capped at 40-50% payout range pp p y g
  7. 7. Where does the remaining 50% revenue go? • Advisor gets a very small p g y portion in the form of: – Health and other benefits – Office infrastructure – 401k program – Stock options – Products – Operations infrastructure House keeps the majority in the form of profits!
  8. 8. Downfalls of Advisor Program • Constantly have to sell/defend firm to clients – I economic d In i downturns t – If your product recommendations does not perform • Transaction based relationships (even in managed accounts) • Focused on quantity rather than quality of relationship • Reactive to clients (due to large numbers) • Li it d compensation (h Limited ti (house t k b lk of revenue) takes bulk f ) • Product set determined by corporate HQ • Pressured to meet corporate sales target p g • Middle man between client and investment team • Brokers don’t own clients – Firm does • Brokers don’t own any equity in their book of business don t
  9. 9. Advisor Choices for Independence Wire house Advisor/Bank Broker 1) Set up own shop •Find and secure office space •Register Firm (legal and accounting fees) •Attract and retain quality staff •Cover Compliance •HR issues •Research and create product offerings Research •Transferring clients to new firm •Find new clients and establish marketing
  10. 10. Advisor Choices for Independence Wire house Advisor/Bank Broker 1) 2) Set up own shop Join another RIA •Find and secure office space Join an established group •Register Firm (legal and accounting fees) who has already done all •Attract and retain quality staff the homework •Cover Compliance •HR issues •Research and create product offerings Research •Transferring clients to new firm •Find new clients and establish marketing
  11. 11. Advisor Choices for Independence Wire house Advisor/Bank Broker 1) ) 2) ) 3) Stay and do nothing Set up own shop Join another RIA •Find and secure office space Join an established group •Register Firm (legal and accounting fees) who has already done all •Attract and retain quality staff the homework •Cover Compliance •HR issues •Research and create product offerings Research •Transferring clients to new firm •Find new clients and establish marketing
  12. 12. Registered Investment Advisors can offer ff • Better client relationship and management strategies – Quality and not quantity – Proactive client communication – Ability to own client relationships • Much higher M h hi h compensation and payout rates ti d t t • No pressure to sell and push products • Flexibility of working from home y g • Direct access to investment team • Ability to build equity from book of business • Not bound by geography to gain clients (unlike current Advisor environment competing with other offices) • Ability to save clients a lot of money
  13. 13. KAM Unique Compensation Offerings 1) ) Producer •Higher payouts •Business Development support p pp •Marketing support •Participate in investment board •Run your own business plan •Grow your clientele •Flexibility of working from home * Will vary on book of business and subject to negotiation!
  14. 14. KAM Unique Compensation Offerings Producer? $2M Producer Year1 Year 2 Year 3 Year 4 Year 5 Total 5 Yrs KAM $1.36M $1.36M $1.36M $1.36M $1.36M $6.8M Wire house $1M $1M $1M $1M $1M $5M * Will vary on book of business and subject to negotiation!
  15. 15. KAM Unique Compensation Offerings 1) ) 2) Producer Veteran Advisor ready to retire •Higher payouts •Had enough of industry? •Business development support p pp •Transition book to KAM – 2 yrs y •Marketing support •Get paid 3/5 extra years – never •Participate in investment board show up to office* •Run your own business plan •Grow your clientele •Flexibility of working from home * Will vary on book of business and subject to negotiation!
  16. 16. KAM Unique Compensation Offerings Veteran Advisor Ready to Retire? $2M Producer Full retirement by end of 2nd Yr (or earlier if client relationships have been secured) Year1 Year 2 Year 3 Year 4 Year 5 Total 5 Yrs@ KAM $1.36M $1.36M $1M $800k $600k $5.1M Wire house $1M $1M $0 $0 $0 $2M * Will vary on book of business and subject to negotiation! y j g @ $200M+ assets will also earn another $400k in Year 6 and $200k in Year 7.
  17. 17. KAM Differentiator • Putting clients first • Don’t ll D ’t sell mutual f d ( t l funds (control of fees and taxes) t l ff dt ) • Solve financial and “money” problems to add value – Aim to deliver highly specialized and advanced investment and financial planning strategies – Ri k reduction & i Risk d ti improve return where appropriate t h i t – Save unnecessary investment fees • Don’t pretend to be specialists in ALL areas – Work with CPA’s on taxes (don’t share revenues) – Work ith t t l W k with estate planning attorneys on legal matters (don’t share revenues) i tt l l tt (d ’t h ) – Refer insurance business out to an established entity (don’t share revenues) – No fee mortgage program (don’t share revenues) – Utilize ishares 529 (saving more money for the child) • Grow by client referrals through professionals ONLY G b li f l h h f i l • Client educators
  18. 18. Future Environment • Massive bank and wire house losses – Increased pressure to sell more products • Bank and wire house managed accounts expensive: – M t l fund wrap accounts cost over 1.5% Mutual f d t t 1 5% annually (expense ratio, turnover and management fees) g ) – Stock wrap accounts well over 2% annually • Destruction of well known Wall Street brands Save your clients money cause if you don’t another advisor will! don’t,
  19. 19. About KAM • A boutique family office based out of Chicago with clients q y g nationwide. We operate as a fee only registered investment advisor focusing on investments only. Our clients include a number of wealthy families, small y business's, corporate executives and small foundations. We use strategic partners to address most of our clients non investment related issues (such as taxes, estate ( , planning, budgeting, mortgages and insurance). We do not share revenues with these non-investment p professionals. We remain clients main advisor for investment selection, implementation and act as their "serious money" consultants. We are seeking to add a few individuals to our office (have space for a team). ( p )
  20. 20. Contact Details • Amir H Rafizadeh MBA – Managing H. Rafizadeh, Director of Client Relations – 312 890 5340 312-890-5340 – amir@kruseassetmanagement.com

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