Goodknight Plan

A Jones rep will give you some nickel and dime accounts that he/she does not have time to manage to help get you started.

I was a Jones Goodknight and boy what a joke.  Little did I know how much crap the veteran (Regional Leader) IR was giving me.  It was the bottom scum of his book and if I generated any income, he got half of the net payout.  His monthly expenses were also reduced because I was paying half.  The Goodknight plan is not all it’s cracked up to be.  I left Jones after 4 years when I finally realized that the only folks making any real money were the GPs.  I have had two over $10K net months in a row since leaving and it feels very good to keep what I make instead of giving it all to Jones.  I recommend staying away from this plan unless you feel you can ride with JOnes for the rest of your career.

The Goodknight plan is Jones' way of letting a successful broker pass accounts that he's not servicing for whatever reason to a new broker.  There are tradeoffs of course.  One is, like FFJ said, if you generate commissions from those clients you share the commissions with the vet.  Another is that you generally get the smaller less meaningful accounts.  If the vet is willing to give them away, there is a reason. 

On the positive side, you're not starting from scratch.  You at least have people to talk with.  Maybe there are some diamonds in the rough.  You also work out of the vet's office for a while, usually 6 months to a year before you are in your own office.  Our RL did a GKN recently and the new IR loves it.  He said he gets to pick the RL's brain and bounce ideas off of him frequently. 

It's not a silver bullett to success at Jones because the vet is only going to give you either $5 or $10 million, unless you find a vet willing to do a larger than normal GKN plan with you.  I've heard of some that have done $20 million +. 

I don't know that I'd completely agree with FFJ that you should stay away from the plan unless you feel you can ride with Jones for the rest of your career.  It's an office to start in instead of your car, a small book to work, and a vet to work with.  If you are going to stick with Jones for the rest of your career it doesn't matter how you start as long as you do.  

Whining about a goodknight plan is like complaining when you are in the highest tax bracket. I started with 0 accounts and 0 assets. Accounts I have recieved through “right place, right time” I am thankful for even though I have fired clinets over the years. A goodknight is a head start but not a guarantee for success. If you have the opportunity, explore it and decide if it is the right scenario. At some point you will have made them worthwhile relationships or determined not to spend too much time on them. If you stay you will goodknight them again, if you leave you will forget to bring them.

Starting with something is usually better than nothing.  However, there are a couple pitfalls to avoid:

1) You can't get complacent just focusing on the Goodnight assets.  You only make half the commission of new business and those were accounts that the vet thought were rejects anyway.  You have to go out and generate new business.

2) Make sure the vet is someone you want to be associated with.  People will look at you as partners, so try and find out what their reputation in the community is.  A friend of mine did a Goodnight with a vet who had a poor reputation (both personally and investment wise).  It was a disaster.     

Just an FYI, starting 01/01/07, Jones bumps the House Account (GK) commissions 50% and splits them.  So you and the Vet get 75% of the commissions each.  That’s a pretty sweet deal.  But, again, be careful about who you do it with.  The two of yoo have to see eye-to-eye.  If you are starting from scratch with no experience, I don’t see how it could be worse than working out of your house/car for a year. But absolutely focus at least half your time on your own prospecting, or you will fail.

When Jones offered me a job and Goodknight as incentive, I would have been given the bottom quartile of a vet’s book.  It was 325 accounts, total assets just over $2MM.  Do the math, that is roughly $6,000 per account.  Now, how much commission can you generate off a $6000 account?  It’s almost like it encourages new reps to churn small accounts while elephant hunting for hidden assets within the 325 accounts.  Not to mention it teaches the new rep NOTHING about prospecting and marketing.  I would rather start with 0 accounts worth 0 dollars and build my business instead of handing me the cold tablescraps and instilling a false sense of accomplishment.

A $6K average would be more of a hindrance than a benefit...geeez...

1/1/2007, my new account minimum goes to $250K...anything under that going forward will be earmarked for my "goodknight" program...

[quote=entrylevelFA]When Jones offered me a job and Goodknight as incentive, I would have been given the bottom quartile of a vet's book.  It was 325 accounts, total assets just over $2MM.  Do the math, that is roughly $6,000 per account.  Now, how much commission can you generate off a $6000 account?  It's almost like it encourages new reps to churn small accounts while elephant hunting for hidden assets within the 325 accounts.  Not to mention it teaches the new rep NOTHING about prospecting and marketing.  I would rather start with 0 accounts worth 0 dollars and build my business instead of handing me the cold tablescraps and instilling a false sense of accomplishment.[/quote]

I'd say you missed the point of the Goodknight plan.  I'll bet no one at Jones promised you the moon when they offered you the Goodknight plan.  Every Goodknight IR that I've ever spoken with, except for one and he's no longer in the biz, knows that the Goodknight clients are the bottom of the book.  That's why the vet IR is giving them away.  They also know that those clients aren't going to generate enough $$$ to feed their families, never mind the Jones goals.  They know they have to basically start from scratch and ignore, for the most part, the accounts they share with the vet IR.  That means they have to learn about prospecting and marketing immediately just like every other new IR.  If they don't they won't be here very long.  

Your numbers don't add up to me.  You said that the vet IR was going to give you $2 million to start and 325 accounts.  The minimum a vet IR can give up is $5 million.  We call it Goodknight level 2.  So either you got a snow job from the vet IR or your memory is fuzzy.  Which one?  Are you sure they didn't offer you some assets from an IR who wanted to switch locations?

All I know is I sat down with the interviewer, he showed me his book, said he was unloading the bottom quartile to me through Goodknight if I would eventually accept the position.  His book was roughly $40MM, 1300 accounts.  I know the top quartile was about $28MM meaning the bottom quartile had no more than $4MM, but was pretty sure it was $2MM.  I could be mistaken, however, I asked not only him, but also my recruiter and final interviewer (not the one I would inherit assets from) to re-explain and they all pretty much said the same thing. 

My simple point is why try to entice prospective IR's with a program that the smart ones know is a waste of time anyways.  When I accepted the offer from a national wirehouse, Jones seemed surprised being that they were "giving" me assets and the wirehouse wasn't.

This guys entire book should be GoodKnighted!  My God, 1300 accounts and only 40 mil in assets!  What a nightmare!  I bet his phone is ringing off the hook with people muddling up all his time with nickle and dime time consuming stuff.

In my opinion however the Goodknight program is good for the new IR but it is CRITICAL that you do not let it stop you from doing the same work that any new IR does and that is a lot of doorknocking.  If you do the work you would normally do as a new IR and then look to the stuff that was given to you as a little boost then why not do it.  

So I don't think it is a waist of time to the new IR.  It's some accounts and some clients.  How can that be bad?   

[quote=entrylevelFA]

A Jones rep will give you some nickel and dime accounts that he/she does not have time to manage to help get you started.

[/quote]

When I was at EDJ, it was commonly referred to as the "pass the trash" program.  Veteran IRs were looked at more generously when it came to LP offerings, if they were participating in the Goodknight plan.

But, as it has been said, starting with something is better than nothing.  Some of these clients may have more assets, they probably just haven't been serviced properly.

You also can't look at account #'s, but total households.  I have plenty of accounts with zero in them, but the household has plenty of $$.

Again, as Spiff said, you're missing the point.  Your option is to start from scratch out of your house/car with 0 accounts/$0, or get a few hundred accounts with $5mm+ in assets.  The point of the accounts is that if you can uncover assets in some of those few hundred accounts, it's a bonus.  You didn't have to doorknock and dribble on them.  You just called your "client".  Many of those were probably accounts opened up early in the vet's career that he never went back to (sold a bond or stock, or CD).  Maybe that was 10 years ago and now that person is retiring, left a job, found some money, accumulated some wealth, etc.  The point is not that you're being given a book to sustain you (as you would if you BOUGHT a book), you are being given an office, a vet to help you, and a list of potential clients.  The fact is that the success rate of GK's is FAR higher than new/new's.  It's not a ticket to success.

As far as the $2mm Goodknight you were offered - there must have been some confusion - the rules about the plan are clear - minimum of $5mm.  I sat on the phone with the Goodknight coordinator and my Vet and she even said that if the total falls below $5mm before the plan starts day 1, the vet would have to find some more.  You may have been talking about a $1mm "Partner" plan.  It is $1mm minimum, no strings or other benefits attached.  You are just given the accounts from a vet - no sharing, etc.  This plan is not used all that often, since the benefit is much smaller for vet and GK IR.

1300 accts and 40AUM 

[quote=rook4123]1300 accts and 40AUM  [/quote]

That's what happens when the main thrust is to open 10 accounts/month, rather than look for quality prospects.

[quote=Starka]

[quote=rook4123]1300 accts and 40AUM  [/quote]

That's what happens when the main thrust is to open 10 accounts/month, rather than look for quality prospects.

[/quote]

Yeah, I'm sure neither of you guys ever opened an account with less than $100K in it at the beginning of your careers.  Actually if you think about that book, 1300 accounts is probably around 400 households.  If that's correct the average household is right at $100K.  I'll take those all day long.   For now. 

That's one of the reasons vets do GKN plans. Everyone opens too many accounts when they're new.  Accounts that they look at 4-5 years into the biz and ask themselves what were they thinking.  Accounts they'd just as soon not have.   A lot of brokers just ignore those clients, choosing instead to focus on their most important clients.  As it should be.  The new IR doing a GKN plan goes after whatever is left on the table that the vet IR didn't even take the time to look for.  It's good for the client's relationship with Jones and probably good for the new IR.

Maybe that was 10 years ago and now that person is retiring, left a job, found some money, accumulated some wealth, etc.  The point is not that you're being given a book to sustain you (as you would if you BOUGHT a book), you are being given an office, a vet to help you, and a list of potential clients.  The fact is that the success rate of GK's is FAR higher than new/new's.  It's not a ticket to success

Right and there really is a pony under all that horses##t. 

Everyone opens too many accounts when they're new.  Accounts that they look at 4-5 years into the biz and ask themselves what were they thinking.  Accounts they'd just as soon not have.   A lot of brokers just ignore those clients, choosing instead to focus on their most important clients.

This is one of the biggest advantages of being independent. You are not FORCED to open trash accounts just to say you did open the 10 accounts a month and get a really swell plaque with a golden (fake gold) shovel.  I have one of those plaques and it relates directly back to my pony comment.  I have it filed with the rest of the awards for production I received from Jones and the picture of Ted Jones with his horse and dog.  oohh aaah.

Do I still open small accommodation accounts? Of course I do.  But only because I want to.  When I moved to independent it was a good opportunity to not just "pass the trash" but also to prune my book.

Even so, a goodnight plan if there really are some jewels in the pile of you know what can give someone a better start than just opening a required number of accounts just so you will get your quota.

That's true, Babs, however you really cannot open an independent office without being at a level where you have the opportunity to pick and choose among potential clients.  If one WERE to join a local Indy office and be sponsored for licenses I would expect the OSJ to pass the exact same type of client over to the new rep for "practice".

When anyone first gets into this business I would imagine there's almost always SOMEONE telling them what they have to do, at least until they get their feet wet...

This is a great point.  Very few of those that are Indy could have done it cold with no mentor, no book, no training, etc.  There is always a starting point and some time to learn, adjust to the business, and establish a book.

Babs, do you really think you could have gone Indy without ever having done that first?

That’s on things I think most of us would universally agree upon.  It would take some very special circumstances to go indy from day one…I’m confident that I could not have done so.

[quote=Broker24]

This is a great point.  Very few of those that are Indy could have done it cold with no mentor, no book, no training, etc.  There is always a starting point and some time to learn, adjust to the business, and establish a book.

Babs, do you really think you could have gone Indy without ever having done that first?

[/quote]

I've never said that.  In all of my previous posts I have stated that I would never have been able to do Indy even directly from a bank brokerakge.  I was basically being a smart a@@ about the potential gems in the rough that are passed to the goodnight rep.  Unless the new guy is fortunate enough to be related to the Goodnighting rep or related to someone with some juice, the accounts that are spun of are usually all poop and no pony.

Still something is better than nothing.

What are the “must knows” before taking a GKN plan?  Questions that have to be asked?

I'm an outsider, but I can't think of much downside to accepting free clients.  Whatever servicing you give them is probably more than they were getting.  If you find out they are not worth keeping, there are all sorts of ways to encourage them to leave...

I just can't see much of a downside to this kind of deal...there may not be much positive, but really...the obvious negatives that I can see can all be dealt with pretty easily...JMO...

I generally agree something is better than nothing.  But there are three potential downsides as I see it:

1)  You are associated with a vet.  This could be good or bad depending on their reputation in the community.

2)  I believe your sales quotas are higher than if you started with no assets.  (If you don't like the term "sales quotas" then substitute "meeting expectation levels")

3)  Wasting your time on problem clients.  You can ignore the accounts, but they might not ignore you.

[quote=vagabond]

I generally agree something is better than nothing.  But there are three potential downsides as I see it:

1)  You are associated with a vet.  This could be good or bad depending on their reputation in the community.

2)  I believe your sales quotas are higher than if you started with no assets.  (If you don't like the term "sales quotas" then substitute "meeting expectation levels")

3)  Wasting your time on problem clients.  You can ignore the accounts, but they might not ignore you.

[quote=vagabond]

I generally agree something is better than nothing.  But there are three potential downsides as I see it:

1)  You are associated with a vet.  This could be good or bad depending on their reputation in the community.  Agreed, but I'm guessing that more often than not, it's a good thing.  For some of the garbage I've seen out of some veterans I know, for the most part, they are still generally very well thought of in their respective communities.

2)  I believe your sales quotas are higher than if you started with no assets.  (If you don't like the term "sales quotas" then substitute "meeting expectation levels")  That's one I wasn't aware of, but it would make sense in my opinion.  On the flip side, someone receiving a goodknight SHOULD be able to produce more, so I'm guessing this is mostly a push.

3)  Wasting your time on problem clients.  You can ignore the accounts, but they might not ignore you.  True, but there are still ways to deal with problem clients, such as putting them at the bottom of the list for returning calls, and/or telling them that you are very busy and it may take 3-4 weeks to take care of their request.  You can also put simple requests on your BOA's rainy day project list.  It isn't hard work to gradually lower the expectations from these people through inaction.  Odds are, they weren't well served to begin with.  I've successfully done this in the past...you just put them at the bottom of the priority stack and take care of them when there's nothing left to do.  If they insist on rapid service, that is an opening to tell them that you are swamped and suggest they take the request to someone who can give them the service they deserve...

[/quote]

You've made some good points, but I still think that on balance, a smart rep can work these things to their advantage over time.

Some may consider the tactics referred to above as questionable, but sometimes you gotta do what you gotta do.  I'm not fond of just flat-out telling somone that I don't want their business once you already have it, although in some instances, I have.  My point is...sure, you may waste some time on these accounts, but if you're smart about things, you may find some real hidden gems.  We prioritize our clients and act accordingly all the time.  I see no reason why you can't familiarize yourself with the new clients received and intelligently work the book to good advantage.  Again, these clients probably aren't used to service anyway.  I transferred a Jones client last week who had just been goodknighted and he told me that his former rep never called him.  Between what I already had, and the transfer, he'll be about 150K and within the next few years, will probably be selling land valued at close to a million dollars.  That kind of potential makes up for a lot of crap in my mind...

The other thing about the GK program is that while he is not officially a "branch manager," I can see the vet becoming just that.  When I finally got in my office (not because of lack of production, but because of a lack of decent space in my town), it was just me.  If I wanted to come in at 10am, and stay until 8pm calling, that was fine.

I had a friend who did a GK, and the vet always wanted him to do things "his" way.  My friend didn't have the freedom that I did, which is a big part of going with Jones.

That being said, being handed a $5M book vs. more freedom is not an easy choice.

Remember, it's only for your first year.  If you are talented and established, a GK does not make sense.  But if there is a chance that you might not make it on your own, why would you not do it??  I don't know many people that started in this business from scratch that were a "lock" to make it on their own.

Suck it up for a year, take the gems (not all $5mm+ is junk), and move on.  If nothing else, you get to see a much bigger picture early on your prospecting days.

I think you all have to think back to day 1 in the business and decide if you would have taken it if you had NOTHING else, a car and a bedroom to work out of, and an empty book.

Is it true that very few Jones brokers last more than 1 year if they do not Goodknight or take over an office? 

Is it also true that to get a Goodknight or take over an office worth taking, you need to be connected in some way to an established broker?

Ultimately if a vet does a GK, and who they do it with is the vets decision, and in many cases it is someone that they personally recruited.  There are times when it is strongly encouraged for the vet to do a GK and a recruit may be suggested by another vet. 

Taking over an office is somewhat more of a timing issue.  First dibs on larger offices usually goes to entice transfer brokers, although I haven't seen this happen to often.  More often a recruit or new IR in the pipeline in a nearby community is asked to fill the office.  Larger offices then have the assets split among a few of the area reps.  All this is done by the Regional Leaders recommendations so they will tend to offer opportunities to reps/recruits that they know, like, and/or think will succeed.

Like anything else in life, who you know (in this case the Goodnight vet or the Regional Leader) gives you a big leg up.  If you are coming from the outside it is much more difficult and more a matter of luck and timing.

If you are new to the industry and are interested in Jones, they will encourage you to apply and get accepted.  They won't want to talk about open offices because by the time you've become licensed everything will have changed.

As far as how long people make stay at Jones, I don't know any real statistics, however, my personal experience is that if people leave in the first year it is usually in the first few months when they realize that door knocking is not what they are cut out to do.  After that I think that in the third year resignations pick up again, either due to lack of livable income and/or other offers from competitors.

I’m tempted to take an offer from Jones.  I’m just not convinced that I could go door to door for very long without feeling like a complete loser.  Also, it seems like all of the non-senior brokers drive 10 year old Hyundais.  Whats up with that?

[quote=RecordGuy]I’m tempted to take an offer from Jones.  I’m just not convinced that I could go door to door for very long without feeling like a complete loser.  Also, it seems like all of the non-senior brokers drive 10 year old Hyundais.  Whats up with that?[/quote]

Because they aren’t making any money…

How many rookie brokers at any firm are driving Lexuses? 

Not rookies....brokers several years in. 

I met with a broker who has been with Jones for 6 years.  Met him at a restaurant.  He gives me the usual spiel..."$100,000 income in 3 years, two trips a year."  Walk outside and the dude gets in his 10 y/o Hyundai.....WTF?  lol.

The questiont of how long it takes to ramp up an income is an interesting

discussion. Our industry doesn’t have much of a professional apprentice

model that allows a commensurate income in the first several years.



ReocrdGuy–your arrogance is interesting. You are not up for building a

business from scratch yet apparently use the care someone drives as a

measure of their success. If you enter this business, hopefully you’ll come

to understand that one’s vehicle indicates how much one is spending, not

necessarily how much they are earning. EJ guys seem to be particularly

insensitive to style points–some are undoubtedly scraping by, but others

are the millionaire next door types.

I would argue that most of the millionaire next door types are men (and a few women) over 50 who have been with Jones at least 15 to 20 years. 

I would also not listen to anyone who is spouting the 3 years to $100K crap.  Most Jones guys who have been out less than five years are not netting $100K, UNLESS they took over a decent office (over $20M) or they are the only brokers in a small community.  I said most, there are a few exceptions.

The new/new Jones broker who opens an office in a metropolitan location two miles down the street from another Jones office is lucky to still be there five years from now, much less netting $100K.

Agreed on all counts above.  I just meant that as a new broker you can’t afford to pass up a PROSPECT just because he or she is driving a old car, even if it is a Hyundai.  However, a smart new EJ guy may drive the old car just so they can afford to start in the career, which doesn’t pay all that well no matter where you are.  A 10 yr old Lexus or Caddy or something may be better because it implies quality (vs. a Hyundai eg) and perhaps frugality without hopefully looking as much like the owner is struggling financially.

I agree with you Cowboy.  One of my decent clients (about $600K with me) lives with his mom (he’s over 50) and doesn’t make over $40K/year, but he has almost NO expenses so he socks it all away.  Looking at this guy and his car, you would not think he has over $500K in mutual funds.

A 6 year vet is considered "starting his career?"  YIKES.

You need perspective if 6 years sounds like a long time. i am 12 years into my career in this business, i am 38. Do you think i am thinking about retirement? Do you think I am thinking how do i transition to the 25 year old getting into the biz? wow! wake up. myself, and people like myself are not going anywhere for 25 years. so i am still starting my career but would certainly be considered established. btw, a good friend of mine still at Jones owns and drives a 15 year old Toyota and he has been to the top producers meeting with jones on a couple occasions. never judge a book by it's cover. good luck to you.

Record: f-ing a, man. The point is, the broker’s old care doesn’t tell you

that much about him. If that’s what you’re all about, there is no way in hell

you can afford to waste your time trying to make a go in this industry. It’s

too hard if knocking on doors is going to make you “feel like a complete

loser” enough to prevent you from doing it. I have felt like crap many times

in building the foundation of my business, but that’s what happens when

you try to build something from the ground up.



The Goodknight plan alleviates some of that, but as others have said, it can

be a false sense of security… you are calling “your” “clients” but if someone

gave them away, there is a reason. Now, if you have that AND you bust your

tail to develop your own clients (no quotes needed in that case)—that’s a

recipe for doing quite well.

Cowboy, I didn't mean to offend you for driving a Hyundai.  Nothing wrong with that car at all.  I think you missed the point of my post.

Here's one of the interesting things to consider...most of the top wirehouse producers cater to HNW and UHNW individuals.  You make SERIOUS coin, and you have to LOOK like it to run with that crowd.  Most EDJ, AGE, Indy brokers cater more to the millionaire next door types, that are not real concerned about your car or how plush your office is.  They drove a '94 Buick to their last appointment, not a $100K Benz.  You can make a serious living catering to the $500k-$1mm crowd, and drive whatever you feel like.

Most of my clients are "blue collar" engineers, worked for the same local firm for 20-30 years.  They wear jeans and flannel shirts to work, make around 100K, and have 500K-1.5mm in their 401k's, in addition to 40K a year pensions that they will collect.  Most of them will have incomes north of 100K in retirement.  Most of them drive pickups.  I will take these people all day long, and drive an '88 Escort to work if I feel like it (not that I have ever had one, but you get the picture).

I get your point about the EJ IR's, but I think that it is a bit of a generalization as well.

As far as the GK plan, Cowboy hit it...it's a nice thing to have at the beginning of your career.  It helps teach you how to deal with clients, how to call "qualified" prospects, gives you some potential income, all of those things.  Nobody said (no, not even Jones) you could live off those accounts.  In fact, the prospecting requirement for GK brokers is the same as new/new brokers with no book.  They strongly caution against spending any more than 50% of your time on those accounts.  The REAL benefit is having the office, the vet to work with, and the practice.