Anybody left Edward Jones and been sued for fees?
Alright, I’ve been planning and puzzling over this for months, and the final element in the equation is to decide:
- quit EJ and post my license with an independent (80% split, both brokerage and RIA and ability to run a hedge fund) outfit of like minded reps
or
- continue my independent, non orthodox methods of investment advice (actually having a view on macro-economic issues and being willing to state them clearly to clients, daring to do my own stock research, and horror of horrors - believing it is sometimes indicated to take a profit on a bond sale instead of holding it to term) until such time as EJ throws me out on my ear, with corresponding negative impact on my future U4/U5 listings.
I’d rather do the non-devious thing and just submit my resignation. Just not relishing the prospect to fight to lower the training reimbursement fees from the 70K that EJ claims it should be reimbursed in such cases. PS -> EJ had spent real training money, airline fares, and particularly start up costs to pay for an office assistant, minimum first year salary of around 24K , etc which they are entitled to recoup, I feel. However from that should be subtracted all profits I’ve generated for the company in the interim, which is not insignificant.
So anybody been through this? I’ve been with EJ for 17 months now, so I’m not free from the 3 year term after which I can leave the company with no fees to pay? How much did EJ hit you for? Did you fight it legally? Or negotiate it privately? What about clients you brought to the company (not those inherited from other brokers) who want to follow you?
Finally, if you do not solicit the client base, but those clients come to you, is it possible to take on those clients without opening up a huge legal battle?
Finally, if I do have to pay full 70K, what is maximum they can zap my paycheck for each month? Is this a percentage of earnings? Surely it must be a percentage of earnings so one can support one’s family.
BTW, I don’t really need to be told what’s best financially. My earnings now are about $3k a month. My earnings in the new setup will be comparable - and probably a bit higher - even if I assume I only bring over “my” clients (20 out of about 200). But the real bonus is on the ways and means that I’ll be able to run my business from there on in.
Look forward to your comments.
Screwing up your u4/u5 is always a good idea, do that!
F***ING ROOGLE.
Obviously everyones situation is different and this is a broad statement but I really think anyone that is hired and trained by Edward Jones and is looking to leave for another b/d within the first 3 years, should probably just get out of the busniss all together.
Obviously everyones situation is different and this is a broad statement but I really think anyone that is hired and trained by Edward Jones and is looking to leave for another b/d within the first 3 years, should probably just get out of the busniss all together.
I disagree. It only took me 10 months to realize I didn't belong.
Just wondering... Why would you have a negative comment on your U5? Are you using discretion on accts. without permission (not permitted at EDJ from what I know)or breaking some industry rules?
I left after 28 months and they never did a thing. I was meeting expectations, but I only took about 1 million in accounts. I have no clue why they contact some and not others. I told them I couldn’t pay my mortgage and had to find employment elsewhere. They asked if I was seeking employment in the same industry and I said I didnt know. They called me the very same day on my cell phone and said that I was leaving the firm in good standing and that I was welcome back at any time.
Damn Ron. What did you do for 28 months?!
?
I'm curious ... did you show the new employer your old (non-compete, non-solicit) contract? How do they feel about you reneging on the old agreement?
Secondly, I highly doubt you're "recouped" any profits for EJ in 17 months - especially considering you've locked Jones into a contract to lease that office space for another X months.What do you mean by "my" clients? Did you take over an office and have only created 20 clients/households of your own? That's my assumption from reading your comments.
Hedge fund? 17 months into the biz with EDJ and you see a hedge fund in your future? Interesting. I know zip about your financial knowledge or education, but it seems strange that if you were truly that well educated you would have ended up at EDJ. I would have guessed you would have started at a big wirehouse. BTW, none of the "unorthodox" methods of investment advice are really all that unorthodox. I think you'll find the longer you stick around EDJ that there are quite a few of us that aren't always marching lockstep with our FSD. When you say you're earning are $3K a month, is that what you gross or is that what you net? At 17 months in, I'd be shocked if it were branch profitability. Curious what that number represents. As to you leaving Jones - leave on your own, don't get fired. Either wait another year and a half and leave without any handcuffs, or own up to the fact that you signed an agreement and live with it. Sounds like you are, so kudos to you on that. Negative marks on your U4/U5 aren't worth it. If you're not satisfied with the way you are able to run your business at EDJ, then make the decision quickly and leave. You'll be happier in the long run. I'd send a PM to Moraen if I were you.Wet Blanket - maybe you can weigh in. Doesn’t the hedge fund operation have to be set up as a separate RIA (or Zach)?
I’m confused about the “hedge fund capability”.
I agree with Spiff - 20 Households in 17 months. Are you applying for an analyst position at this new firm. Definitely don’t get fired. The contract can be negotiated, and it steps down each year, so you’ll likely be at $50k or so. Plus, they usually negotiate. They may not even care.
I thought about opening up a hedge fund (my method of portfolio management lends itself to it), but you better be a prospecting genius. My guess is you are not, but that’s just a guess.
I wish you the best. Sounds like you know what you want. I used the time I had left at Jones to plan my exit. There is still a lot you can probably learn at Jones to be sure. Remember, their way of managing money is pretty smart, and fairly safe. You will find clients who are looking for that. You should be able to have the experience to service them.
Free - I don’t understand why you feel the need to leave to do a lot of the things you want to do. Anyone who knows me knows I am not a Kool-Aid drinker. Our firm has some short-comings, but it isn’t the worst place to work in the world either. I am very different than most advisors in my firm in terms of management style, and I am given a lot of autonomy. If you are open with your FSD about things and tell them what you are planning on doing and why, and you are doing profitable, ethical things, you can do a lot of things that are not standard-EDJ fare.
Most advisors that are paying attention (and there are some at Jones) have macroeconomic issues. Some even sell bonds at a profit and reposition those investments (I have), and I haven't really had any issues. I guess my point is that I believe that the grass may be greener elsewhere, but not for the reasons you are suggesting.
[quote=Spaceman Spiff]
What do you mean by "my" clients? Did you take over an office and have only created 20 clients/households of your own? That's my assumption from reading your comments.
[/quote] At 17 months, I don't think he has 200 clients of his own. He probably did a GK or took over an office, and the "20 clients" are his good clients that he would want to keep.[quote=SometimesNowhere]
I guess my point is that I believe that the grass may be greener elsewhere, but not for the reasons you are suggesting. [/quote] In my neck of the woods the grass is greener on the other side because that's where the cows poop.DCNew : The negative comment would be the firing itself, probably worded something like: "refuses to follow company policy and procedures". No , I'm not breaking any industry rules -- just EJ's philosophy.
Moraen you stated " I disagree. It only took me 10 months to realize I didn't belong" . Did you leave right then or
wait for the three year period to end?
lockEDJ - ". did you show the new employer your old (non-compete, non-solicit) contract? How do they feel about you reneging on the old agreement?"
Yes, I did show them the contract. I also explained to them that nowhere in the contract was I told that I had
to sell primarily mutual funds, that 80% of all investments had to be in the good old USA, and that I was
never to recommend a stock that was not followed by EJ. On the contrary, as long as I operated in a manner that
was "legal, profitable and ethical", I was free to run my own business. In all of my first five interviews with EJ,
as well as in the basic training, I brought up the issue of product selection, and the same mantra was repeated.
My basic reasons for leaving?
When I started this business, a very successful cousin of mine, who has $1.3 billion in AOM with Smith Barney,
told me there are two kinds of careers in finance: the "asset gatherers" and the "money managers". My problem is that my personality,
interests and qualifications fit more in the second category, but family reasons prevent me from applying for
positions in the large money centers in order to pursue the latter. So I've chosen to become what hopefully will be
a great "money manager" and a passably mediocre "asset gatherer".
And as an admittedly disinterested "door knocker", I need to find more efficient means of building the business.
For me that has always been to work hard at what I like to do, to service the hell out of existing clients, and
to rely on referrals and effective marketing to build the clientele.
In the department of "effective marketing", EJ can be wonderful IF YOU CAN STAND BY THEIR INVESTMENT PHILOSOPHY. Their marketing
pieces are really second to none in design, layout and timing. It's just that I don't agree with the message. I'm a lousy
salesman, and I can only sell what I believe in. Since I don't believe people are well served by EJ's "us-centric, broad diversification,
hold for 10 years and inflation is not a threat over the next 10 years" philosophy, that obviously poses an ethical and practical
dilemma.
If I "hang on" until my contract term expires in 1 1/2 years, these issues will affect my marketing efficiency:
- a blog and a newsletter, as well as a truly opt-in email list are three tools for diseminating information effectively, cogently and inexpensively to existing clients and potential clients. Blogs and emails are not permitted by EJ unless every word has been pre-written by EJ. Sometimes they'll produce a piece I can really use, but more times than not I disagree with its policy recommendations. Blogs are completely taboo.
- the internet has to be the greatest tool in history for acquiring or disemminating intelligence. I think it's ludicrous for EJ to tell use we cannot read financial blogs while at the office, or use any of a hundred of excellent tools for managing time (like google spreadsheets). It's ludicrous for EJ to tell me I cannot show ANY web site during a customer workshop or a seminar.
- Seminars and workshops allow you to communicate effectively with clients without repeating the same information to individual customers 40 or 50 times. Yet EJ will only allow you to "lipsync" pre-digested information. Either they trust their training program to produce a professional advisor able to provide effective information without stepping into an SEC landmine, or they need to change their advertising message emphasizing the independent thinking and high qualifications of their advisors.
Second, I'm very frustrated with the suppression of any level of independent thinking or any alternative methodologies
Essentially, if I visit 200 EJ offices, what I will get is 200 times the very same mutual fund recommendations,
presented with 200 times the same arguments.
Yet none address the basic issue that when the money system failed last year - every diversified portfolio suffered
to some large degree - except those based on shorts or those who had gotten out of the market. And as for buy and
hold always being the best way to go, tell that to any Japanese "buying and holding" stocks and bonds in Japan
over the last 15 years.
I believe its the "cool aid" mentality of never challenging headquarters or going against the corporate grain that is the real danger ; that's why the accounts I took over are riddled with Lehman Brothers bonds. Got a triple AAA rating, so they must be good despite the books and WSJ articles two years prior to the bankruptcy highlighting the risks in those CDO's and CMO's
and the outrageous leveraging at Lehman and Bear Sterns.
I confess it, deep down, I'm a speculator or a swing trader. I've generated a 17-22% return for all clients who started with me in July 2007,
just before the market tanked. Call me lucky but I've been doing that for myself and my family since 1998. That strategy, paying a lot of
attention to about 20 different investments and trading in and out of different positions, is what I like to do - and a means for differentiating myself from others to clients.
It's grown 200K into 600K over 8 years, a decent return.
For those who asked, the 3K+ is net, my gross is around 10k+. Yes I know that's a weak base to launch myself from,
but I think once I remove the EJ shackles I'll stumble around just a few months and then really hit my stride.
SometimesNowhere, you say " I don't understand why you feel the need to leave to do a lot of the things you want
to do. Anyone who knows me knows I am not a Kool-Aid drinker. Our firm has some short-comings, but it isn't
the worst place to work in the world either."
Probably, you were blessed with a more enlightened FSD than I am. I get along well with all my colleagues and the regional
leader. In fact, I will say it's about the best collegial environment I've ever worked in. But those folks cannot
change the fact that it is taboo to buy and sell a stock in under two months - no matter what the gains.
Except, of couse, if the stock is followed by EJ, who change the rating from "buy" to "sell"
Deep down, I believe, it comes down to what my FSD told me: "Our clients don't invest with us to make money. They
just want to make sure you don't lose them any money." I don't agree with that philosophy. If I did, I would have
become a local banker and placed people in CD's.
Spaceman Spiff - You question the "hedge fund" due to 17 months of experience with EJ. I've got a fair share of investment
experience, having gotten my first broker's license in 1988. I've got a master's in economics and finance and have
taught economics on the collegiate level. I've run two successful businesses since then, and I've managed the portfolio of
a family endowment for the last 8 years. Besides a hedge fund, I don't really see how to "put my money where my mouth is". I like the idea of not charging
transaction fees for every trade - thus putting your incentives in line with the client's -
and only really being rewarded if my clients are outperforming the averages. As far as I know, the RIA route
permits the advisory fee of 1 or 2% , but does not permit a reward for outstanding performance.
Spaceman Spiff - "Some even sell bonds at a profit and reposition those investments (I have), and I haven't really had any issues. "
Just a month ago we received a system-wide notification about the practice of selling bonds "in the short term", meaning
under 1 year. We were strictly discouraged from doing this, and if we did, we would not be paid a commission on
the sale. You must have received this notice.
Presumably, you've been in this business for years, so your FSD cuts you some slack. Or again, maybe your FSD
understands that there are circumstances in which taking a 30% profit on a bond is justified in the short term.
Spaceman Spiff - I don't have branch profitability for every month, althouth I do have it for half of my last year.
I have always "exceeded expectations".
Spaceman - I agree. I'll file the resignation, after putting my reasons for departure in writing to headquarters.
But if they want to demand the full 70K I'll fight it tooth and nail, because I haven't cost them anywhere
near that amount. I'm willing to take over the office lease and hire my BOA, who would follow, so that really
only leaves build out costs and training fees.
So I'll get off my soapbox for a second, and repost my two main concerns:
- if a client contacts me from my EJ days - because I know a lot of them will - is is possible to move the account over?
- funny about the u4 / u5. I agree with the guys who says I'd be crazy to besmirch the records with a firing. Yet I talked
to five indies who all say they would not hold that against me in hiring me due to the reason for the firing: researching
stocks on my own and presenting these to customers even when not followed by EJ , and trading multiple times within
the year on these stocks if the profits warrant it. The way I see it though, if I ever do get really successful at this
activity, I'll run into the careful large institutional client who will look at the u4. So better to pay the 70K over time
and not suffer down the road.
Free - I waited. Left one month after my three years was up.
if a client contacts you?
Clients are free to go where they want. They cannot be obligated to do business with Edward Jones nor prevented from doing business with you.
[edit] … Jones will not fire you for buying and selling stocks based on your own research.
[quote=free2bgr8t]
DCNew : The negative comment would be the firing itself, probably worded something like: "refuses to follow company policy and procedures". No , I'm not breaking any industry rules -- just EJ's philosophy.
Moraen you stated " I disagree. It only took me 10 months to realize I didn't belong" . Did you leave right then or
wait for the three year period to end?
lockEDJ - ". did you show the new employer your old (non-compete, non-solicit) contract? How do they feel about you reneging on the old agreement?"
Yes, I did show them the contract. I also explained to them that nowhere in the contract was I told that I had
to sell primarily mutual funds, that 80% of all investments had to be in the good old USA, and that I was
never to recommend a stock that was not followed by EJ. On the contrary, as long as I operated in a manner that
was "legal, profitable and ethical", I was free to run my own business. In all of my first five interviews with EJ,
as well as in the basic training, I brought up the issue of product selection, and the same mantra was repeated.
My basic reasons for leaving?
When I started this business, a very successful cousin of mine, who has $1.3 billion in AOM with Smith Barney,
told me there are two kinds of careers in finance: the "asset gatherers" and the "money managers". My problem is that my personality,
interests and qualifications fit more in the second category, but family reasons prevent me from applying for
positions in the large money centers in order to pursue the latter. So I've chosen to become what hopefully will be
a great "money manager" and a passably mediocre "asset gatherer".
And as an admittedly disinterested "door knocker", I need to find more efficient means of building the business.
For me that has always been to work hard at what I like to do, to service the hell out of existing clients, and
to rely on referrals and effective marketing to build the clientele.
In the department of "effective marketing", EJ can be wonderful IF YOU CAN STAND BY THEIR INVESTMENT PHILOSOPHY. Their marketing
pieces are really second to none in design, layout and timing. It's just that I don't agree with the message. I'm a lousy
salesman, and I can only sell what I believe in. Since I don't believe people are well served by EJ's "us-centric, broad diversification,
hold for 10 years and inflation is not a threat over the next 10 years" philosophy, that obviously poses an ethical and practical
dilemma.
If I "hang on" until my contract term expires in 1 1/2 years, these issues will affect my marketing efficiency:
- a blog and a newsletter, as well as a truly opt-in email list are three tools for diseminating information effectively, cogently and inexpensively to existing clients and potential clients. Blogs and emails are not permitted by EJ unless every word has been pre-written by EJ. Sometimes they'll produce a piece I can really use, but more times than not I disagree with its policy recommendations. Blogs are completely taboo.
- the internet has to be the greatest tool in history for acquiring or disemminating intelligence. I think it's ludicrous for EJ to tell use we cannot read financial blogs while at the office, or use any of a hundred of excellent tools for managing time (like google spreadsheets). It's ludicrous for EJ to tell me I cannot show ANY web site during a customer workshop or a seminar.
- Seminars and workshops allow you to communicate effectively with clients without repeating the same information to individual customers 40 or 50 times. Yet EJ will only allow you to "lipsync" pre-digested information. Either they trust their training program to produce a professional advisor able to provide effective information without stepping into an SEC landmine, or they need to change their advertising message emphasizing the independent thinking and high qualifications of their advisors.
Second, I'm very frustrated with the suppression of any level of independent thinking or any alternative methodologies
Essentially, if I visit 200 EJ offices, what I will get is 200 times the very same mutual fund recommendations,
presented with 200 times the same arguments.
Yet none address the basic issue that when the money system failed last year - every diversified portfolio suffered
to some large degree - except those based on shorts or those who had gotten out of the market. And as for buy and
hold always being the best way to go, tell that to any Japanese "buying and holding" stocks and bonds in Japan
over the last 15 years.
I believe its the "cool aid" mentality of never challenging headquarters or going against the corporate grain that is the real danger ; that's why the accounts I took over are riddled with Lehman Brothers bonds. Got a triple AAA rating, so they must be good despite the books and WSJ articles two years prior to the bankruptcy highlighting the risks in those CDO's and CMO's
and the outrageous leveraging at Lehman and Bear Sterns.
I confess it, deep down, I'm a speculator or a swing trader. I've generated a 17-22% return for all clients who started with me in July 2007,
just before the market tanked. Call me lucky but I've been doing that for myself and my family since 1998. That strategy, paying a lot of
attention to about 20 different investments and trading in and out of different positions, is what I like to do - and a means for differentiating myself from others to clients.
It's grown 200K into 600K over 8 years, a decent return.
For those who asked, the 3K+ is net, my gross is around 10k+. Yes I know that's a weak base to launch myself from,
but I think once I remove the EJ shackles I'll stumble around just a few months and then really hit my stride.
SometimesNowhere, you say " I don't understand why you feel the need to leave to do a lot of the things you want
to do. Anyone who knows me knows I am not a Kool-Aid drinker. Our firm has some short-comings, but it isn't
the worst place to work in the world either."
Probably, you were blessed with a more enlightened FSD than I am. I get along well with all my colleagues and the regional
leader. In fact, I will say it's about the best collegial environment I've ever worked in. But those folks cannot
change the fact that it is taboo to buy and sell a stock in under two months - no matter what the gains.
Except, of couse, if the stock is followed by EJ, who change the rating from "buy" to "sell"
Deep down, I believe, it comes down to what my FSD told me: "Our clients don't invest with us to make money. They
just want to make sure you don't lose them any money." I don't agree with that philosophy. If I did, I would have
become a local banker and placed people in CD's.
Spaceman Spiff - You question the "hedge fund" due to 17 months of experience with EJ. I've got a fair share of investment
experience, having gotten my first broker's license in 1988. I've got a master's in economics and finance and have
taught economics on the collegiate level. I've run two successful businesses since then, and I've managed the portfolio of
a family endowment for the last 8 years. Besides a hedge fund, I don't really see how to "put my money where my mouth is". I like the idea of not charging
transaction fees for every trade - thus putting your incentives in line with the client's -
and only really being rewarded if my clients are outperforming the averages. As far as I know, the RIA route
permits the advisory fee of 1 or 2% , but does not permit a reward for outstanding performance.
Spaceman Spiff - "Some even sell bonds at a profit and reposition those investments (I have), and I haven't really had any issues. "
Just a month ago we received a system-wide notification about the practice of selling bonds "in the short term", meaning
under 1 year. We were strictly discouraged from doing this, and if we did, we would not be paid a commission on
the sale. You must have received this notice.
Presumably, you've been in this business for years, so your FSD cuts you some slack. Or again, maybe your FSD
understands that there are circumstances in which taking a 30% profit on a bond is justified in the short term.
Spaceman Spiff - I don't have branch profitability for every month, althouth I do have it for half of my last year.
I have always "exceeded expectations".
Spaceman - I agree. I'll file the resignation, after putting my reasons for departure in writing to headquarters.
But if they want to demand the full 70K I'll fight it tooth and nail, because I haven't cost them anywhere
near that amount. I'm willing to take over the office lease and hire my BOA, who would follow, so that really
only leaves build out costs and training fees.
So I'll get off my soapbox for a second, and repost my two main concerns:
- if a client contacts me from my EJ days - because I know a lot of them will - is is possible to move the account over?
- funny about the u4 / u5. I agree with the guys who says I'd be crazy to besmirch the records with a firing. Yet I talked
to five indies who all say they would not hold that against me in hiring me due to the reason for the firing: researching
stocks on my own and presenting these to customers even when not followed by EJ , and trading multiple times within
the year on these stocks if the profits warrant it. The way I see it though, if I ever do get really successful at this
activity, I'll run into the careful large institutional client who will look at the u4. So better to pay the 70K over time
and not suffer down the road.
Tell EJ to kis* your as*. What a weak company. They wanted you to fail so they could take over your accounts and make more in the long run. They have the by far the weakest advisors in the business. You’ve done your clients a great service. Find a way to sue EJ if you lose pay it back it’s that simple. You did right thing. If you lose tell investors how much of a scam A shares pushed by EJ is.
Kudlow - Yes, EDJ is such a weak company. Darn A shares. Yes, EDJ wanted him to fail. They hired him with the specific agenda of getting him to fail. They spent firm capital, time, and energy getting him to sign on the dotted line, only to piss it away and do everything in their power to force him to fail. Even going so far as to pit him against an evil FSD that is getting money on the side from the compliance department for every FA he can figure out a way to force out of the firm. Kind of like a legal bounty hunter. They will bend over backwards to keep his 20 accounts that he’s created through his only referral approach to the business. They’ll severely miss his $10K gross a month not being added to the bottom line. I think I just felt the trimester bonus drop down a notch. You’re an idiot.
Free - time to go. Pick up your things, exit the building, and don't look back. You are obviously WAAAY too smart to be an EDJ drone. Don't worry about outlining your reasons for leaving to the home office. They don't care. Weddle's inbox is littered with letters from former EDJ guys like you who are obviously above it all. I find it funny that you think that you can't trade stocks here. I know of quite a few stock traders at Jones who make a very good living doing EXACTLY what you're talking about with your stock business. I did receive the notice. What you took as "you can't do what you want to do" I took as your FSD will probably ask you to explain why you are selling a long term investment in a short amount of time. It's a commission issue, not a money management issue. Let's say you bought that bond last year with 3 pts in it. You sell it today and reinvest in another bond at 3 pts. That's 6% in the last year that your client has paid. They're not looking at the historic changes in muni bond prices between last Oct and today. They're looking at the potential conflict of interest. If you're averaging $3K net, exceeding expectations or not, you don't have any branch profitability. Period. Just so you know, Location Margin isn't the same as branch profitability. I know it looks like it on your P&L, but my guess is until you're grossing around $20K you won't even be breaking even. I don't know about anyone else, but the phrase "I've got a master's in economics and finance and have taught economics on the collegiate level. I've run two successful businesses since then, and I've managed the portfolio of a family endowment for the last 8 years" scares me. You clearly don't belong at Jones. For a variety of reasons. Good luck with your future ventures.Free,
I can agree with some of your points. Some of them are a weakness of the "captive" model, which are the same at all wirehouses. Try using blogs or your own custom marketing literature at Merrill or MSSB. It just ain't gonna happen. What they are doing is not all that bad. I will agree, the investment model is a handcuff, but not to those that believe in it. That's why it's generally a mid-market providor, because we can provide much better investments and services than what most of our clients could receive elsewhere. Clients with $250K don't get much attention at Merrill. At Jones, that's a decent client. And the investement philosophy at Jones (if you REALLY follow it) is going to be better than what they would get by being ignored at Merrill for ten years. I'm not downing Merrill, I'm just using them as an example. That's also why Jones works so well in rural/suburban areas - because there is less wealth and fewer options. I think an RIA environment would probably serve you well. But don't cut off your nose to spite your face. Jones has not "harmed" you. If you play by the rules and make money, they leave you alone. And the whole "Jones wants us to fail" arguments are probably the silliest suggestions about Jones that I continuously hear on these boards. Jones would love nothing more than for the next 5000 FA's to stay and be successful and allow them to divert so much capital away from training and towards more important things.I can’t believe I am saying this but I side with Spiff…
Free... You claim to have all this experience but then you choose a platform that doesn't emphasize what you do? Everyone knows what EDJ is. Mutual Funds, Blue Chip Stocks and bonds... They are good at what they do. Having been at EDJ I understand the restrictions but they aren't anywhere close to where you say. Having a blog is an issue where ever you go, same with seminars, it's called compliance, you can't just say, "as a swing trader I have made at least 17% gains every year" you have to show audited proof in order to tell people about it... Every model has it faults: wire,jones,indy,ria... But I think in this case the fault lies with you. Either you aren't what you claim or your incompetent.Sorry I missed this. I'm not even a novice at Hedge Funds, but my understanding is that they exist through loop holes in existing regulations. They don't have to be, normally, registered as a RIA - but if he is a FINRA member running one, it would be disclosed as an outside business activity - and more than likely not allowed. But just as RIA's are exempt from The Investment Company Act through Rule 3a-4, Hedge Funds are exempt if they meet the criteria under 3c1 (100 or fewer investors) and 3c7(qualified purchasers). Additionally, they get their shares to market through Reg D filings. This is my understanding of the regulatory structure of your typical hedge fund. One of our PMs used to run a Hedge Fund, I'll ask him next time I see him.Wet Blanket - maybe you can weigh in. Doesn’t the hedge fund operation have to be set up as a separate RIA (or Zach)?
[quote=Spaceman Spiff]
... I did receive the notice. What you took as "you can't do what you want to do" I took as your FSD will probably ask you to explain why you are selling a long term investment in a short amount of time. It's a commission issue, not a money management issue. Let's say you bought that bond last year with 3 pts in it. You sell it today and reinvest in another bond at 3 pts. ... [/quote] And if you don't invest it into another bond? If you just sell it to take the gains; sell it to take advantage of movements in the marketplace; sell it because you can reposition the bonds into, say a newly available, better, similar investment like taxable munis? I wholeheartedly disagree with your take on this. In my mind it is a money management issue; because EJ only sees a buy-and-hold strategy as the only possible outcome of any purchase. Some of these assets have gained nearly all their potential upside in a significantly short time period. Holding onto them ignores the TVM, and taking away my commission penalizes me for no good reason. Of course, other than immunizing the company from any future lawsuits at an expense to no one but me.Lock, that’s not true. I have gone over this with my FSD. He made it clear to me, they did not need a switch letter, and were not going to question the trade (or if they did, just an explanation of the profit taken would be sufficient to document it). They did say that it is because of FINRA’s limitations on commissions that can be charged within given time frames. Basically, they said commissions cannot be charged in relationship to the value of the profit made. This is not specific to Jones - it is industry-wide.
Compliance isn’t an exact science. I contradict myself on occasion (but usually due to new developments / information) - that’s the nature of the beast.
I look at Compliance kind of like a football referee. He knows the rules, the players know the rules, but at some point he has to make a call that is questionable. Best he can do is trust his eyes and his gut. Not everyone agrees with him all the time, but for the most part everyone knows he's there to make sure guys don't get hurt.
[quote=LockEDJ]
Mia culpa. My FSD did ask for switch letters. Then again, he also instructed me to never make a recommendation on a self-directed retirement. I could only present options (minimum: two) and let the client decide without bias on my part. [/quote] In your defense, I have heard that some FSD's are stricter than others. When I asked my FSD WTF this "two options" thing was for IRA's, he sort of bit his lip and read me the Compliance requirement. He asked me to explain my process, and after I did he said "you're fine. So you're basically explaining to them that they could do this or that, RIGHT?" He said the firm (and others) are getting pressure from the SEC (or IRS or FINRA or NAFTA or whoever) on the the Pension Protection Act requirements. All that stuff has been in place for decades, but for some reason they are starting to come down on it. As far as switch letters, I get asked for them occassionally, but usually for good reason. But most of my "switching" is within fund companies, so no commissions. Not sure how it would go with active trading. I would suggest a conversation with your FSD. I know of some guys that do active trading, but their FSD is OK with it because they have explained their process to them (and they are not pompous d!cks to their FSD ).Rants aside, to answer your questions: yes, they will go after you. After 17 months of employment at EJ, my guess is that they will sue you for around $50,000.
Fear not, though. All you really need is a good attorney experienced in these matters. I know someone who left EJ, was sued for about $70K, and settled on $1,500 (+ $1,000 in legal fees).
Kudlow that is one of the dumbest things I have ever seen posted on this site. And I left Jones. STFU.Tell EJ to kis* your as*. What a weak company. They wanted you to fail so they could take over your accounts and make more in the long run. They have the by far the weakest advisors in the business. You’ve done your clients a great service. Find a way to sue EJ if you lose pay it back it’s that simple. You did right thing. If you lose tell investors how much of a scam A shares pushed by EJ is.
LOL, just trying to get a rise out of you. By the way how are those American Funds A shares doing for you? I guess when the opportunity comes around you can buy or sell options and maybe buy a stock less than $5. Ooops maybe not.
If you want to get out now, without worrying about paying money, go straight to RIA and don't affiliate with a BD. EJ's contract hasn't been updated yet to exit in that fashion...it's their current "exit" loophole. Use it before they fix it.
From what lawyers have told me, it is different industry/career practice and thus is unenforceable. Has held up in court in several states, so a legal precedent has been somewhat set already. Get an attorney, review it, and move on. Writing a check to your lawyer will be cheaper than writing a check to EJ.
You people really need to look at the dates of these posts. This conversation is almost a year old.
The only reason it popped up again is because the moderator's software can't catch the real spammers.
I am also looking to leave Jones, no hard feelings, it is just time to make some money. I do not feel it is helping them or me by staying. I am looking to hear from people who have left. What was your attorney able to negotiate? I do not want to leave with hard feelings for a place I worked at. It is great for some people, just not everyone. Once you blow thru your savings, it is time to move on.
Is it reasonable to expect an attorney to get you down to $1000 or so, plus fees?