2010 Edward Jones Summer Regional meeting

Just got back from my regional meeting. It was worthless. I came out with one good idea and that was from a seg 3 comment outside the meeting. All kinds of talk about recruiting(right!). I guess they'll be needing it. Meetings were all about the 5 step process, boring and redundant. Presentations were rote. Hotel was nice, but of course jones didn't pay for parking or saturday lunch. I know at least three of us seg 2's that have resumes out. Will all most likely switch industries.

I think we did a region-specific award for all FA's.  It was at the spouses/FA meeting on Day 1, not at the awards dinner.  Pretty hoakie, since msot of the enw accounts by the veterans are just Advisory Solutions acounts for re-positioned assets, not "true" new households.

Actually, we have always gone to VERY nice hotels - resort-type destinations around New England.  I can't really complain about that.  But yes, I think the 0-10 crowd (or more likely 2-10 year crowd) is getting increasingly bitter.  Tired of the kool-aide, have seen a few people leave for other firms this year (we have had VERY few leave for other firms in the past few years), and are just plain tired I think.  The 10+ crowd are either happy as clams because they net 200K in bad years and don't have to work very hard, or are lazy, old slobs that barely keep their heads above water grossing 250K on trails and a few maturing bonds each month.

I hear you guys on the resort style places, however my region this year is going to a 3 star hotel. I have stayed in the same hotel before and I pricelined it for $65. Whatever.

Navet- Man leaving the industry... that is a tough pill to swallow. What is your situation, is there anything I can help with?

As far as the meeting, I am almost ready to explode so I hope that things are done very well without the standard BS or someone might get their head ripped off and I might not have a job on Monday.

Love people, love the intellectual challenge, hate prospecting. These knees wouldn't allow me to door to door even if I was willing. I have a nice 7 figure nestegg and will retire in 5 years no matter what. I just don't see the sense in working this hard just to give my book away when it is just starting to pay off. I can make more money than I'm currently pulling in in a couple of different industries, get better bene's and some time off. I really don't like jones, kool-ade and the born agains in my region. So, this obviously not the place for me. It works for younger people who are good at schmoozing and think $50k is good money. What I've learned about investment management has been invaluable. Unfortunately, none of that was actually taught by jones. It bothers me that jones hardly seems to care what you put peoples money in(within the relative range of mf's, bonds, and recommended stocks), just wants you to gather assets. I wouldn't let 95% of the FA's I've met at Jones touch my money. That being said, I do respect jones history. A nice , conservative middle america house that caters to rural america in a personal manner. It will only get so far using that business model, but it performs that particular function well. But as for me, after some family illness issues I getting ready to draw down, downsise and destress. Like a wise man said, "I've never seen these words on a gravestone: I wish I'd spent more time at the office".

We're headed to ours this weekend.  The worst place we've ever stayed has been a hotel in Louisville, KY.  Most people would think it's a great hotel, but once  you've traveled a few times with Jones, you start to recognize good and great hotels.  Ours this year is a brand new one (to Jones and physically), so it should be great. 

I think I've been to 9 Summer Regional meetings now.  I always seem to come away with one good idea.  I hate the recruiting stuff.  I've already got about 20 other EDJ guys whose offices I can almost walk to in about 30 minutes.  Enough with the recruiting.  The most interesting thing about the awards banquet is seeing how much alcohol that one table will consume.  It's normally a lot. 

I hate the two day format.  Seems like a complete waste of time to drive for 4-5 hours for 8 hours of meetings. When they were three days it was at least a really nice long weekend and you had some free time to relax. 

I can't wait to hear more about the 5 step process.  I'm really looking forward to that.  (insert sarcastic emoticon here) 

hey spiffy,  how many of those 9 summer regionals have you attended as an FA, and how many as a stl observer?

your firm's business model is built on constant growth due to canabalism and failure within the industry. .... JUST LIKE every other firm.

navet's statement about not trusting his own money with basically any FA within the firm is very telling....but from my years at your firm I'd say if anything those numbers have gone down.  navet seems like the typical 10+ year vet. Pissed off and feeling used and abused.......can you say transfer broker?  

I've never been to one as a home office observer.  So, all of them have been as an FA.

navet is a new FA who is looking for a reason to hang it up here at Jones.  He's admitted that he's got a million in the bank and is just biding his time in the industry until he can retire or find something else to do until he does retire.  He won't become a transfer broker.  Unless he moves to a bank for some reason. 

I don't know much about his money management skills, but I would venture a guess to say that his opinion of the other Jones FAs in his region is more about his own ego than their abilities. 

B - I agree that most of the 5-10 year guys in our region are just plain tired.  If you started 10 years ago, you've got bookend financial meltdowns on your record.  Dealing with one of those is bad enough, two would be mind numbing.  We're going on two years and a half years of overall negative returns.  So, if you've been out for 5-7 years, around half of your career has been spent apologizing to clients or hand holding nervous folks while they see their retirement savings try to claw it's way back to what it was before.  We keep getting told that prospecting should be really easy right now with all of the changes in the brokerage industry and the disgruntled clients out there, but I don't believe very many of us are seeing that actually be the case. 

If most of those folks are like me, they'd like to take about a 3 month sabbatical.  A week in Tortola or New Zealand is nice, but it's not long enough to fully recharge the batteries.  It's kind of like charging your dead cell phone for 3 minutes.  It'll get things going again, but pretty soon you'll need to recharge again. 

I don't like the two-day format either.  Too far to drive and bring the family for two days.  Seem to just rush from one thing to another, always just hoping to get out of the meetings.  This year we had one awesome speaker (he was a LTC attorney) who was obviously a professional speaker.  The 5-step process was so useless.  I honestly think half the people at Jones think that Jones invented that process, like it's something revolutionary. 

Navet-why would you have joined this industry so late in life as a new/new?  I don't blame you.  I can't imagine being in this industry less than 10 years and retiring (unless you had been hired to work an existing book).  I only know one guy that is doing it well.  Most come and once they realize how hard it will be and how long it will take, leave.  But this one guy actually started at age 58, and got to segment 4 in about 2.5 years.  He averages about 30K per month (he's 5 years in now), and started totally from scratch.  He just has a very good work ethic, a very good process, is very diligent and responsible, and is actually one of the few people I know at Jones that I would trust my money with.  He spent like 25 years in the insurance industry (none of it in sales) in operations, accounting, etc.  He worked at Aetna or Hartford or something.

Spaceman,

You took the thoughts right out of my head.  I keep telling myself I am not going to take the crappy side of this job just to throw in the towel in time for some other guy to reap all the benefits.  Though I am not the "5-10 year guy" you mentioned (I'm out 3 years), I feel the grind.  I love the job but need some time to get my mind fresh.  Some days the phone weighs a ton and I don't feel like going to see prospects.  3 months doing anything else would be great, it just wouldn't pay the bills.   Hearing of 5-10 year guys feeling this way is not reassuring.  What positive ways do you deal with these thoughts? 

As for the regional...I am indifferent toward going to this one.  This will be my fourth but the first which I am not looking forward to attending.  I am in a very mature region (Seg 5 is the largest segment.) So, you would think there is a lot of good things to be learned.  It seems to me most of the vets who do show up are merely there to socialize with the other long-timers. The no-shows have "done their share of summer regionals."   

Spaceman- How many assets did you take over?

[quote=RealWorld]

Spaceman- How many assets did you take over?

[/quote]

Not enough. 

It started at about $9 mil, but about $2-2.5 mil transferred out or moved to another branch in the first couple of months. 

It was just enough that I knew I wasn't going to put a $0 on the board in a month, but not enough that I could live off the the trails and the bond calls. 

[quote=navet]...I have a nice 7 figure nestegg and will retire in 5 years no matter what...[/quote]

[quote=iceco1d]

Navet, what region/area/state are you in?  Feel free to PM me...

[/quote]

How funny Ice. You're DKing a Jones guy onlline! Get that 7 figure ACAT paperwork started early.

[quote=navet]Love people, love the intellectual challenge, hate prospecting. These knees wouldn't allow me to door to door even if I was willing... [/quote]

Navet - Think about it, pray about it and make the best decision for you. Good luck and God bless

Typical Regional:  (Segment = meeting/ dinner)

1.  Cheerleading segment  (The firm is the greatest firm in the world)

2.  Smoozing Segment   (I Bleed Green and I will help the RL any way possible)

3.  Growth Segment  (We need to grow to gain scale and lower costs!! Humm $1300/month P&L charge for Computers??) 

                   Did I buy another new computer this month?

4.  Drinking Segment (Whoooo hooo, Free drinks!)

5.  Hotel Room Segment (FA telling Wife how much he hates most of the FA in the Region)

6.  Dinner/Awards Segment (Great I get a plaque for production, nic nac for mentoring and upset stomach from the new guy telling me "He got a guy" who has a million and he is about close the deal and move segments.

7.   Drive home Segment (Think about trying to find another million dollars this month to keep alive and meet production goals.  

8  Monday Segment: (Right back to the Grind)

9.  Wake up Segment:  (After 4 of the above meetings)  (Build a business for yourself and not for someone else)

10:  Easy Math Segment:   (using 10M for example: Bigger numbers = bigger difference)

                                          10 Million @ 1% = 100k  (90% pay out) = 90K net

                                         10 Million @ 1.35 =135K (40% pay out)=  54K net (81K -- disappears, who took it?)

90K vs 54K  (Prettty easy choice)  ----If you this is how you run your own business, you might want to do something else

--------------------------------------------------------------------------------------------------------------------------------------

Holy Crap Fooled no more... that actually may be the most genuis post I have read on here. Pretty much got it right in terms of how the regional meeting is going to go.

Spaceman - That is probably what made you make it here. Got enough to not commit suicide but not enough to not work your #!$ off. Good for you.

Fooled - Your depiction of a typical Jones summer regional meeting is pretty funny.  Also, accurate. 

I really hate to get this conversation started, but I'm going to anyway. 

You're math, while correct, isn't technically accurate.  I'll give you props for at least getting the numbers right.  Here's where I disagree:  Do you even get to keep $90K if you're only grossing $100K at an indy?  I'm not sure you do, but I'm sure someone will correct me pretty quickly.  But let's just assume you do. 

What do you spend on your business out of that $90K.  Rent, technology, assistant (maybe), postage, marketing, insurance, etc.  Now, I realize you're not going to spend the whole $36,000 ($90K-54K) that you got paid out above what the Jones guy did, but you're certainly not going to take home $90K.  The question then is how  much do you take home and how much extra work do you put into your business for that extra money.   

I'm not arguing the merits of Jones vs indy.  I am fully aware that there are some advantages and disadvantages to both.  But if you're going to do the math, at least make it an apples to apples comparison.

Fuzzy math.

you are forgetting some simple pieces. Like the 10 to 25 bp the BD takes off the top, and that's before the 10% haircut (and I'm not so sure you're getting 90% payout if your history is $120000 a year). So you are netting a whole bunch less. And I run my office about as cheaply as you can, and technology, rent, association fees or whatever cost over $1500 a month. Minimum.

So your $90K just became more like $81K out of the gate, and you haven't paid the $18000 a year nut to keep the doors open. All told, you are jumping ship for the difference between $54K and ... $64?

And one last thing: if you were doing $10K in advisory solutions, there's absolutely ZERO chance you'll get a 100% rate of success bringing business with you ... OOPS. Now you're making less at your new office. Good luck with that.

duplicate comment.

Why make $64k when you can make $54k good point.

From: http://forums.registeredrep.com/forums/rookies-trainees/gethardgetraws-2009-2010-cold-calling-journal?page=10#comment-2242461

[quote=navet]Just what I would be looking for. Some 20 something who doesn't know sh-t, calling me wasting my time. Go somewhere for 10 years and get some experience junior. The only money you're going to get is a few "I feel soory for the little prick" dollars.[/quote]

Then:

[quote=navet]

... These knees wouldn't allow me to door to door even if I was willing.

... I just don't see the sense in working this hard just to give my book away when it is just starting to pay off. I

... So, this obviously not the place for me.

... It works for younger people [/quote]

Navet, you're a tool. And you failed.

The point was not fully illistrated... The 1% net is after the B/d charge. Office expenses are running about 1500.00 mth or 18k year. With full time assistant  they are 53k year.  Going back to the the original example of 90k minus the 18k in expenses leaces 72k in gross profit.  Allow 15-18k for federal taxes and  8k in state taxes it leaves a single independent with 46k after taxes. Compare that to EDJ 54 minus 14k in Fed taxes and 6k in state taxes leaves the w2 employee at about 34k in after tax income.  Also what you have to remember the independent can defer  around 15,500 in 401k and additional 15-18k in company p/s match That puts his retirement contribution to 30,500.00. lowers his gross profit from 72k to 42k. Now you have less in takes and you net net income far exceeds w2 employee.  My self I actually only have 15,500.00 in taxable income my other income comes as dividends. (taxed at much lower rate. I defer all of my w2 income and have a 25% ps mathc. I put 32500.00 in retirement last year. I still had profit which is now sitting in by business account as profit and is MY equity. Not a firms equity. Hands down you do net net more after appling the tax advantages of self emlpoyment as indy

Get-hard??? Is that wishful thinking junior? You're a little young for viagra. Was successful before you were born. This is a supplement to my income. I can leave when I choose and still have a six figure income.

[quote=fedup]

The point was not fully illistrated... The 1% net is after the B/d charge. Office expenses are running about 1500.00 mth or 18k year. With full time assistant  they are 53k year.  Going back to the the original example of 90k minus the 18k in expenses leaces 72k in gross profit.  Allow 15-18k for federal taxes and  8k in state taxes it leaves a single independent with 46k after taxes. Compare that to EDJ 54 minus 14k in Fed taxes and 6k in state taxes leaves the w2 employee at about 34k in after tax income.  Also what you have to remember the independent can defer  around 15,500 in 401k and additional 15-18k in company p/s match That puts his retirement contribution to 30,500.00. lowers his gross profit from 72k to 42k. Now you have less in takes and you net net income far exceeds w2 employee.  My self I actually only have 15,500.00 in taxable income my other income comes as dividends. (taxed at much lower rate. I defer all of my w2 income and have a 25% ps mathc. I put 32500.00 in retirement last year. I still had profit which is now sitting in by business account as profit and is MY equity. Not a firms equity. Hands down you do net net more after appling the tax advantages of self emlpoyment as indy

[/quote]

Again, your whole point is that you can make sooooo much more as an independent. The fact is, you cannot. Even you are restating that the difference is between 46 and 34K - and that assumes that you were able to transition 100% of your assets. No reasonable person would chance his whole world on that marginal assumption. Read your original post: you asked where the difference between 90K and 54K might be? Well, it sure as sh!t isn't a $46K differential now is it?

Which is exactly the point I was making. And for GetHard, let me reiterate: no reasonable person would chance his whole world on that marginal assumption.

are you saying LockEDJ is not a reasonable person or the spread was MUCH more enticing?

[quote=LockEDJ]

Fuzzy math.

you are forgetting some simple pieces. Like the 10 to 25 bp the BD takes off the top, and that's before the 10% haircut (and I'm not so sure you're getting 90% payout if your history is $120000 a year). So you are netting a whole bunch less. And I run my office about as cheaply as you can, and technology, rent, association fees or whatever cost over $1500 a month. Minimum.

So your $90K just became more like $81K out of the gate, and you haven't paid the $18000 a year nut to keep the doors open. All told, you are jumping ship for the difference between $54K and ... $64?

And one last thing: if you were doing $10K in advisory solutions, there's absolutely ZERO chance you'll get a 100% rate of success bringing business with you ... OOPS. Now you're making less at your new office. Good luck with that.

[/quote]

Can you elaborate on that comment?

[quote=B24]

[quote=LockEDJ]

Fuzzy math.

you are forgetting some simple pieces. Like the 10 to 25 bp the BD takes off the top, and that's before the 10% haircut (and I'm not so sure you're getting 90% payout if your history is $120000 a year). So you are netting a whole bunch less. And I run my office about as cheaply as you can, and technology, rent, association fees or whatever cost over $1500 a month. Minimum.

So your $90K just became more like $81K out of the gate, and you haven't paid the $18000 a year nut to keep the doors open. All told, you are jumping ship for the difference between $54K and ... $64?

And one last thing: if you were doing $10K in advisory solutions, there's absolutely ZERO chance you'll get a 100% rate of success bringing business with you ... OOPS. Now you're making less at your new office. Good luck with that.

[/quote]

Can you elaborate on that comment?

[/quote]

My bone of contention is that if you had $10MM at Jones in fee-based business, you obviously can't transition all $10MM. So you probably are talking about getting $8MM in assets, which is about average. At $8MM, by time you're done paying the BD ($80k *.9 = 72K) and your monthly nut ($18K) you barely are making the same as Jones. And that's making some incredible assumptions (80% transition is normal, but not every BD gives 90% payouts on that sort of a T12).

The real elaboration is this - that you need to be sure you have some acorns set aside when you go AWOL. Sometimes posters paint this picture of independence  ... oh, you're only making $54000 when the indy's are making $90000 on the same business. It doesn't exactly translate that way.

Please tell me that you guys are making more than what the numbers are that are being used?  $34K-64K?  How long have you been in the business?  I'm not judging I'm asking as a newb trying to figure out what people are "actually" making out there especially in the first couple of years. 

Madman, there are three things people always lie about: 1. How much money they make; 2. How smart their kids are; 3. How big their d-ck is.

? Madman, the whole conversation was based on an arbitrary starting point of having $10MM in Advisory Solutions. I'm guessing there isn't 15 EDJ FA's in all of NYS that had that much in fee-based business at the end of 2009.

I've watched 5 people leave our region and either go independent or to a wirehouse in the past 18 months. I've kept up with what percentage of their assets they took with them, and it appears out of these cases, most of the FA's only took about 40 to 60% of their book. I don't know what the average is, but this is what I have witnessed in our region. I have never seen anyone in our area leave the firm and take 80% of their book with them.

Thanks Lock.  I see what you're saying.  I also look at some of the numbers that indies post on here with some skeptacism.  Specifically, I don't understand how you can run an indy shop with 20-25K in expenses.  I guess it's possible if you work out of your house with no assistant, and don't include a lot of stuff.  But you're not gonna do a heck of a lot of production that way.

I have looked at an indy setup, and figured at 250K production, taking home about 65%.  I could significantly increase that if my production goes up, but only until about 400-450K production, then another staff member might be needed.

[quote=Advisor238]

I've watched 5 people leave our region and either go independent or to a wirehouse in the past 18 months. I've kept up with what percentage of their assets they took with them, and it appears out of these cases, most of the FA's only took about 40 to 60% of their book. I don't know what the average is, but this is what I have witnessed in our region. I have never seen anyone in our area leave the firm and take 80% of their book with them.

[/quote]

With an EDJ book, it's not a question of what percentage moves; it's a question of what portion of the book has value in the independent channel. What to do with the loyal client that sends you $1000 a month to spread among five funds? The ticket charges alone makes them useless.

So if an independent runs out at 60% of their book, they've probably scored nearly a 100% victory of clients that make any sense. The average industry wide is close to 80%. I'd bet that the average - among targeted clients - is pretty close to that number.

Good luck to the newbie with all those wonderful DCAs and muni-bond/A share VA books, though.

I think the main point of going indy is not the conversion rate of the book or the percentage increase of the grid. I personally think it is the freedom from "shedding" the book which makes everything else seem so much better and in actuality it probably is.

Seriously when I think about going INDY it isnt about my personal greed to make more and more that will happen no matter if I stay or go. It is to not have to deal with the steady stream of BS that flows green.

Higher expectations, summer regionals, field training, new broker takes over 50 million and gets his d!#$ sucked.... that is what keeps me interested. For me it is just a matter if all that BS becomes too much.

I've done well; no need to clarify that point. But I would hesitate for anyone to go independent because of the money because it really isn't there. Like RW says, there's a ton of reasons but they damn well better be worth the uncertainty, the worry, and the loss of at least one if not two months of income. And the immense amount of work. Almost everyone knows me as a type-A guy, a workaholic. But the last two months nearly killed me.

It was worth it for me, but I honestly think I had it timed pretty darn good. I would advise caution to others and really good motivation.  

I get the impression from your pre-move comments vs your post-move comments that you had no idea how difficult the two month+ transition would be. Congrats on digging in deep and pulling it off! Reward yourself when things finally get in place and the chaos slows down.

True enough ND, true enough. ... [edit]

I have a mini-vacation planned for NYC/the North Fork for the holiday weekend. Boy do I need it.

Wow I've been off the treads for over six months...glad to hear that the regional meetings at Jones haven't changed much! 

I've been indy for over three years now after being at Jones for 14 years.

I only recruit for my own business...

I only answer to my OSJ....oh that's me!

Listen Spiff is right about the numbers...you have contract fee's...bonding...Error issurance ect.

But don't think you can't lose those advisory accounts at Jones...I've taken some from you guys already.  Plus I can keep stocks, bonds, ETF.s, Partnerships, Private Reits and most mutual funds in my own SAM accounts.

If you are thinking about pulling the plug at Jones...get your ducks in a row.  But please don't think you are going to find the garden of eden in Indy world.  If you're not enjoying this business...then do something else and enjoy your life.

Roadhard Lives!

You make more as an indy.  Wait till you file your taxes Lock, you'll be pleasantly surprised.

You can run an indy (even RIA) office VERY cheaply, even not working from your home.  Jones spends a lot of money they don't need to.

B24, you have talked about how straightforward the P&L is at Jones.  And it is.  However, the costs don't line up with real world expenses.  A true business owner nickels and dimes that stuff.

I have a four person office that costs me half of what my two-person office at Jones cost me, and it is in a more affluent area in a busy office park.

If you are into convenience and not taking chances then Jones would be the place. From a true business perspective  Magician is spot on.. It is an absolute no contest for an indy vs a wirehouse or Jones.  Jones is nice place to be comfortable and get pampered while the hungry elephant eats the steak and leaves the sides. There are a couple of points about people at Jones (myself included)

1. When you are new...You have to make it...come hell or high water

2. If/When you do make it..SEG 4 or 5 you are so burned out..that the thought of change scares the crap out of you

3. The firm continues to reinforce that idea because they know how to stroke your ego..you're now a veteran. You can now have the "opportunity" to give back in hopes of a large partnership allocation(which is so political) and your family is spoiled by the Jones vacations.

4. You forget about the actual business decision of the fact that "YOU" had to do most of not all of the work to get this business off the ground (I give credit where credit is due) using the backing of Jones' name and marketing material

Once you're to that point and say you have 40-50 million grossing 350-450k the math of being indy is huge. Most Jones reps don't have two boa's at that level... So let's talk some approximate numbers for the heck of it

You have 50mm you take 70% which is what I took..

35 million in AUM you can get 1/2 fee based the other stays transactional ( you charge 120bps avg on F/based)

and you make 60 bps on your transactional stuff.

210,000 f/b +105,000 transactions 315,000 gross 90% payout 283,500 -90,000 assistant+taxes+rent etc

Around here a decent BOA makes 35k+18k rent/utitlies+30k taxes+7k ticket charges e/o fees etc..

Here's how you get around the taxable income issue that you cannot do as an employee

$16,500 401k, $25,500 profit sharing, 70-80k cash balance pension (done by actuaries I'm mid 30's) in retirement every year $110-120k

90k business deductions+other stuff like mileage business meals etc..but even skipping that out of the $193,000

I took home I was only taxed on 73-83k and I am putting away a milliion every 8.5 years..and I own it!

 At jones grossing 350-400 means I have a taxable income w/o 401k of 130-145. Assuming you max the 401k b/c your not netting enough to do deferred comp, ( 200k+ to participate) means you are forced to do after tax savings?(Great!!) The point here is control I can control how much income I make from 73k-193k impossible as an employee for the most part. You can depreciate many things or write them off.. The tax advantages are HUGE!!

I wouldn't mess around with being indy unless you have assets more than 10-15 million. The numbers make better sense for someone with a larger book instead of just 10 million. If you are at that point I wouldn't  change unless you had a couple of other people coming with you to split costs and an assistant.

It's funny watching the people who are at Jones trying to defend a business argument based on emotions and comfort and not logic. I have respect for a personal decision to stay, but please don't fool yourself about it being logical.  Most people who start businesses want control of their own destiny. What is so ironic about the path at Jones is eventually you are taught that having all of that control again ( like you had doorknocking) is really not worth the effort. This is because you have now "arrived". You have arrived alright... to the place that Jones wants you to be..Worn out, tired, lacking creativity, and in a snare that is hard to break free. Not to be taken the wrong way but it is sad to look bad to see how caught up I was in the company culture...It's crazy it's done on purpose and I hope more people really take a good hard honest look at thier career.  I wish someone would have sat me down as a business person and said. Look here it is all the facts no B/S. Franklin T-chart this baby and tell me what you come up with...

Now that is the post Spiff and B ought to print out and laminate. The other side, the one where you look at things truly objectively. I couldn't agree more. Out 4 years, I had my best year ever two years ago and this year looks like I might eclipse it. You glossed over something very important...You own your biz and you can sell it.

I am currenlty negotiating a buyout of an indy FA who has 70M AUM. He grossed 500K and is looking for 1M. LP or ownership. Hands down its the best ROI out there, I'll take ownership anytime.

I don't think B24 and I have participated in this indy vs. Jones conversation thus far.  I don't disagree that being indy has some advantages over EDJ.  I don't believe I've ever argued that point.  I don't believe B has either.  He's very open and clear about how he feels on the indy vs. EDJ discussion.  And I don't believe he's 100% pro-Jones.   

So, Cheesey, how about you quit trying to put words in my mouth? 

So, Cheesey, how about you quit trying to put words in my mouth? 

Spiffy-

Why such an angry overtone? I just suggested you print and laminate. That way you could readi it without editing...if that constitiutes putting words into your mouth my sincerest apologies.

Silly me...I thought you had the ability to form your own sentences...

Holy crap, let me sidebar this Indy vs Ejones argument. (somehow I feel like we have had this debate 1,000,000,000,000,000,000,000,001 times) ...

My God - my summer regional was very miserable this year. I am frankly disappointed in how it was set up. For those of you who went was your hotel/resort a cheaper version of the the last few years?

I personally really let me review eat about the regional. We didn't accomplish much.

a. 30% of time talking about recruiting

b. 25% of time getting products pitched by wholesalers

c. 20% of time watching video from home office or listening to their speakers.

d. 15% of time listening to some idiot ass talk about something he clearly doesn't understand.

e. 10% of the time getting great information from really good vets, as well as talking strategy,etc.

Imagine how much money the firm would save if they just had webex's. If every FA saved 90% of the headaches and got 10% of the good stuff...maybe a higer bonus bracket or bonus...Hey maybe they'll give you guys LP for going to summer proproganda train.

Spiff would be happy...somethin for nothin. AAAAhhh the Edward Jones regionals....Sure do miss them. I remember when I thought they were a vacation....

It was the first jones meeting I ever went to that I didn't get a good idea. I did get one outside of the meeting, but I get more than that every day at this site.

[quote=RealWorld]Holy crap, let me sidebar this Indy vs Ejones argument. (somehow I feel like we have had this debate 1,000,000,000,000,000,000,000,001 times) ...

My God - my summer regional was very miserable this year. I am frankly disappointed in how it was set up. For those of you who went was your hotel/resort a cheaper version of the the last few years?

I personally really let me review eat about the regional. We didn't accomplish much.

a. 30% of time talking about recruiting

b. 25% of time getting products pitched by wholesalers

c. 20% of time watching video from home office or listening to their speakers.

d. 15% of time listening to some idiot ass talk about something he clearly doesn't understand.

e. 10% of the time getting great information from really good vets, as well as talking strategy,etc.[/quote]

Funny that you said that you needed to sidebar the indy vs EDJ conversation when it was the actually the sidebar.  You're just getting us back on track. 

Our venue was one of the better ones we've had.  New hotel, great area, lots for us to do.  The downside is that it's only a 2 day meeting, which doesn't lead to very much time for anything of any consequence to be discussed.  I didn't bring much home from it as far as new ideas go.  I did bring back a realization that FAST is the way the firm is headed and if you're not on board, you're going to be a dinosaur.   There was also a direct correlation between the big producers and FAST adopters.  My big takeaway was to get more involved with that tool.  Quickly. 

The two day meeting format is a waste of time.  They should put the firm update online for viewing before the meeting.  Anyone who really cares about it, already knows how the firm is doing.  They put that info on Jonesnet all over the place.  We spent an hour of an 8 hour meeting doing nothing but intros.  You know, it seems like a waste of time to meet the new people.  And the vets already know each other.  Let's just skip that and talk about something more meaningful.  We get weekly updates on technology from Vinny Ferrari in our inbox, so skip that.  I don't need to hear about recruiting.  The wholesalers don't need an hour to do their presentation.  1/2 hour tops. 

Not one discussion about the changes in minimum expectations.  That would have been a great topic to cover.  It would have been nice to have the RL explain it some more and let us ask questions. 

The one that got me was the compliance session.  Shades of Gray?  Are you kidding me?  My kids could have figured out that both of those folks did something wrong.  How about making us think next year? 

My final gripe - The Pioneer award.  Why do we give out an award for keeping your job for 12 months? 

OK, I'm done. 

Do you have to go to the regional meetings?

The Pioneer Award...

Looking for gold in all the wrong places....

That would be the Ted Jones Prospecting Award. 

 Now there is a good use of those hard earned profit dollars...

If you jump ship before you have 500 households and are grossing about 400k, you are nuts.  You NEVER pull more than 75% of your book, and if you get close, the extra time and paperwork you have going indy is not worth it.  I do like the post by navet where he is doing this to supplement his income.  Right...  You make six figures outside EDJ and are doorknocking?  You are either lying or a knucklehead!  Way back when I did that, I was worth about $1,500, jumped ship about three years ago with a gross around 600k.  I would NEVER go backwards.

Back to the regionals, as someone who used to be in charge of putting them together, let me tell you that they are no bag of donuts.  When regions were larger and we never could get together, they were a bigger deal, but from what I hear from my friends still at EDJ, you guys have a meeting every other Thursday!  AND, I understand that you have a dinner for just about everything!  Recruiting, Performance, whatever.  I think the summer regionals have lost their thunder!

I think what is happening at Jones is a slow deliberate change in my old region since I left what I hear is there are a lot of people who just aren't happy. You are right regionals used to be fun it was something you could look forward to you weren't getting charged to take kids (that's a joke) and there was more time to talk to other FA's. Things were inspiring and interesting.  I think with all the changes both to product (advisory solutions etc..) and with the changes to expectations, and what's happened in the market. etc.. Jones has just had ton of negativity going on over there..John Bachmann was at least interesting, Doug Hill was kind of a country boy, Jim Weddle is polished and professional but has an undertone of arrogance. Regionals used to really fire me up and I had the chance to talk to a couple of friends who were more than disinterested in going. In fact a few were trying to get out of going.. I am sure they are working on getting things back in order..Losing Skrainka, Peter Drucker, and then hiring Jim Collins was probably not a good move..Peter Drucker and John Bachmann nailed it in my opinion use regionals as a tool to reinforce the culture and bring excitement somehow they have gotten away from that and it will hurt the firm

[quote=Remo Gaggi]

If you jump ship before you have 500 households and are grossing about 400k, you are nuts.  You NEVER pull more than 75% of your book, and if you get close, the extra time and paperwork you have going indy is not worth it. ....[/quote]

You are so wrong it's ridiculous. So what you are saying is that you should continue to fill the Edward Jones funnel with your hard work? Look, I left Jones and realized that prospecting wasn't behind me. It's just that every contact I make right now is about returning money into my pocket.

Yeah, if you want to continue to sit on your fat a$$ and do nothing ... wait until you have $400K and 500 households.  Then you can do even more nothing as an independent and be paid even more handsomely for doing nothing for your clients.And I didn't want more than 75% of my book. None of us do.  

There's this misconception that having a "name" means you can't succeed. Are you kidding me? If I was going to succeed after three years in this business, I was going to succeed with or without Jones' name behind me. Get busy living, or get busy dying and stop bullshitting me about how many clients or assets I need.

I always had everything I ever needed. It was between my ears.

Well said Lock.  I come into my office everyday with goals and a passion to be successful.  Being Indy makes the payoff that much sweeter and I will never look at being anything but Indy.  Everyone says don't go just for the money, but I did and am happy I did so.  Every $ I invest in MF's, L shares, Advisory...just builds my equity.  It took me 3 years to be back to my original asset level...but my production level has always been more.  The only reason I can come up with is its about working for myself and my family...not someone elses. 

Remo, if clueless was a virtue, you'd be a saint. I don't do door to door. I figured that if I was going to manage my own money, why not get paid to manage others. My timing wasn't the best but I had no control over the bear. Six figures isn't that much now a days. And I got bored at home. My biggest issue now is that, like you, most people I meet don't have a pot to piss in.

Come on Guys,  Some of the people on this post can't read!  I wrote use bigger numbers = More $$.   I used the math to make it easy!  65K, 45K, 10K it is the point about the difference in fee base pay out.  I also used 10M because most of my old war buddies has less than 10M in Advisory.  Some of the people on this post only want to pick the numbers apart, look at the concept not the numbers!  I moved my book and took about 67% of my assets.   Don't believe a neighborhood "Mr. Rodgers" when he comes to your regionals and tells you that you will take 20% of your assets (That number is Mistaken!!!! Unless you are a terrible unethical broker!

Think of Indy as the "Ultimate Reverse Goodnight on Steroids". You get to pick where your office is, What your rent is, How much you pay Admin. Most importantly you get to pick the clients you get to work with!  The thought that the person who takes over my old office will begin with my hand-me-downs makes me laugh.  I wish that person all the luck in the world.  He will say anything to try to keep the clients.  But, the clients see right though that sales pitch!

Anyway,  Don't think so small when I use a number of 10M.  Use 100M if you want do the math and decide for yourself!

PS:  I have been in 8 Countries this year on my own "Diversification Trips". (I have and would never sell somone a stock, bond, mutual fund, credit card or new account to "win" a category to "win" a trip. (I wonder what FINRA would think about something like that?) I went on my own dollar and had  No Meetings, No one making sure I don't drink too much, and No one telling me I have to hang out with them!  That's what I call a vacation.  Oh yeah, it didn't cost me $3000 in taxes to take! Humm how is that a free trip if I paid tax on it?!  (Just a few things to make you go hummmmm?)

[quote=LockEDJ]

Fuzzy math.

you are forgetting some simple pieces. Like the 10 to 25 bp the BD takes off the top, and that's before the 10% haircut (and I'm not so sure you're getting 90% payout if your history is $120000 a year). So you are netting a whole bunch less. And I run my office about as cheaply as you can, and technology, rent, association fees or whatever cost over $1500 a month. Minimum.

So your $90K just became more like $81K out of the gate, and you haven't paid the $18000 a year nut to keep the doors open. All told, you are jumping ship for the difference between $54K and ... $64?

And one last thing: if you were doing $10K in advisory solutions, there's absolutely ZERO chance you'll get a 100% rate of success bringing business with you ... OOPS. Now you're making less at your new office. Good luck with that.

LockEDJ,

Real payout is about 84% after all charges! I used smaller numbers to make the math easy, but your also forget that you actually have other clients besides Fee based.  You still get trails on A share mutual funds (84% of 25 bps is better than 40% of 25bps).  You still have DCA's, Annuities and new money comming in. I run a really inexpensive model.  I spend about $20,000 a year out the door.  Ok, lets talk about some of the stuff you forgot! How many business expenses do you write off? Oh, none because you are a W2 employee.  I can write offf all of those expenses and I can also do more funding in my retirement accounts than you can. I also build equity in my business everyday which I will be able to sell for as much or as little as I want. At, the end of the day it is my equity not someone elses. Also, before you say we can get Partnership,  You don't anything, execpt the abiltiy to invest in edj.  You also get some have to pay ordinary income tax plus capital gains as phantom income till it's paid off!  Once your earning have paid off the principal, now you get to claim K-1 income on your taxes as long as you own it.  It's been a while, but the last time I checked there are many good quality growth & income investments that have performed better on a net after tax basis after your partnership.  Food for thought, how often do you get the opportunity to invest in the company? 

Fooled, most people here know that I am a former Joneser.After I went indy, I made success for myself in a smaller cubbyhole than anyone else here I think could imagine. I believe you can make it with limited numbers.

That said, what you are suggesting glorifies going independent to the extent of being unrealistic. For instance, very few FAs get a 90% payout without some considerable handcuffs if they've done less than $150K T12. And if that's the case, no - you simply do NOT get to an 84% payout. For pete's sake Cambridge won't even touch someone without $200 T12 and that gets them an 87%. Triad is 85; ICC is roughly 88. LPL pays 93, but then you have huge monthly fees. You'll find a couple at 90 but they generally are nabbing you on the backend.  I notice you never address this point.

[quote=Fooled No More]PS:  I have been in 8 Countries this year on my own "Diversification Trips". (I have and would never sell somone a stock, bond, mutual fund, credit card or new account to "win" a category to "win" a trip. (I wonder what FINRA would think about something like that?) I went on my own dollar and had  No Meetings, No one making sure I don't drink too much, and No one telling me I have to hang out with them!  That's what I call a vacation.  Oh yeah, it didn't cost me $3000 in taxes to take! Humm how is that a free trip if I paid tax on it?!  (Just a few things to make you go hummmmm?)[/quote]

I deleted the rest of your post because I don't disagree with your math. 

I'm curious though, how much did your trips cost? 

I have and never will sell anyone a stock, bond, mutual fund, credit card, or insurance product because of a trip.  I actually missed my last trip because I needed 500 more points in the income non taxable category.  I had a guy with $50K going into his JT account the day before the contest ended.  His tax bracket wasn't high enough for me to justify putting it into a muni bond or muni fund.  We bought BABs instead.  It was the right thing to do for him.  It saved me $1500 in taxes, but cost me a trip. 

Guess I'll have to fork over my own dollars to take my wife to Transylvania.  While I saved $1500 in taxes, that trip for the airfare and hotel alone will cost me $2960 (expedia.com - roundtrip STL to Bucharest and a week in Sept at the Athenee Palace Hilton).  But, I won't have to sit in a meeting for 3 hours.  I won't have to go to any dinners with new friends I've met that week.  And I'll get to drink as much as I want, as long as I pay for it myself. 

Or, I could use one of the timeshares I own.  My maintenance fee is $600.  Flight to Bucharest would run about $1000 per person.  Still no meetings, no dinners, and drinks on my Visa.   

You can dog the Jones trips all you like, but you can't argue that the Jones trips are cheaper than you can do it on your own if you want to stick with the same kind of quality.     

Spiff, I hope you bought those timeshares online. Never pay retail for a timeshare.

Spiffy-

Great call. The trips are THE only thing my wife misses about EDJ. I ididn't really care but because she did, I went out of my way to have the best trip ever two years ago. For me, it felt better knowing I could provide the same experience. No doubt I paid more for the trip. It cost me 12K (took 4 friends and family at my expense) and it illustrated that when we are profitable I need to share it with those that took the leap of faith with me to the dark side. One problem that is consistent no matter where you hang your hat...Once they get used to the great treatment, they expect it year after year.

Kudo's to you for not caving into the trip nonsense and do what is right for the client. Jones should just have a revenue goal  and let the reps do their job. I never understood why Credit Cards were important to the bottom line...

[quote=Spaceman Spiff]

I have and never will sell anyone a stock, bond, mutual fund, credit card, or insurance product because of a trip.  I actually missed my last trip because I needed 500 more points in the income non taxable category.  I had a guy with $50K going into his JT account the day before the contest ended.  His tax bracket wasn't high enough for me to justify putting it into a muni bond or muni fund.  We bought BABs instead.  It was the right thing to do for him.  It saved me $1500 in taxes, but cost me a trip.   

[/quote] You have been braggin about these for a while. Must be a lot of lower tax bracket guys walking thru the door lately huh?

I remember how my RL "coached" me on various ways to qualify for trips. I liked the trips in full disclosure but looking back they sure do have conflicts inherent in them if you aren't careful those last few days of a contest. My wife says the trips were the best thing at Jones and I mean diversification trips and not the regional "team buliding" meetings.....

[quote=N.D.]

[quote=Spaceman Spiff]

I have and never will sell anyone a stock, bond, mutual fund, credit card, or insurance product because of a trip.  I actually missed my last trip because I needed 500 more points in the income non taxable category.  I had a guy with $50K going into his JT account the day before the contest ended.  His tax bracket wasn't high enough for me to justify putting it into a muni bond or muni fund.  We bought BABs instead.  It was the right thing to do for him.  It saved me $1500 in taxes, but cost me a trip.   

[/quote] You have been braggin about these for a while. Must be a lot of lower tax bracket guys walking thru the door lately huh?

[/quote]

Two reasons for the BABs.  One, I can put them in IRAs which opens them up to a lot of people who otherwise wouldn't be shopping for municpal bonds.  So now I not only have corporate bonds and bond funds to utilize, but I've also got munis.  Just another diversification tool.  Two, while I do have my share of muni buyers, with rates where they are, 7% on a BAB sounds great whether you need tax free income or not.  They're great conversation starters. 

[quote=navet]

Spiff, I hope you bought those timeshares online. Never pay retail for a timeshare.

[/quote]

I bought those timeshares when I was much younger and much more, um, dumb.  Now I hold onto them because friends like to rent them from us and use the weeks for vacation.  But you're correct, if you want to buy a timeshare, buy it in the secondary market, not from the resort. 

Wow, I take a week off, and a good ole' Jones-Indy shootin' match starts.  Nice!

A few comments...

* Thanks Locked for your candid comments on indy vs. Jones.  I think you're like the ONLY guy I have seen that has been even marginally honest about the challenge of going indy and the true costs.  I think at larger asset/production levels, the cost/income issues are far more tilted in your favor (indy), so keep plugging along.

* The Jones Regionals are really just mini-diversification trips for those that don't qualify.  And as we all know, the sole purpose of the D-Trips is to entice you to stay.  They suck your spouse into the Jones culture, and make it very difficult to consider leaving.  It seems half the veterans I talk to, that's all they talk about (D-Trips).  Seriously?  I mean, they are wonderful, no doubt, and most of us would not go through as much as Jones goes through to cover all the little details, but in reality much of it is overkill.  And the Regionals are meant to do the same thing, just on a smaller scale.  That's why the content is often lousy.

* My buddy went to Cambridge like 18 months ago.  He's a small producer (maybe 100-125K at this point?), and his payout is about 65%.  Not sure if that included the tech fee or not.  He works out of his house, so his net is probably like 55-60% (5-10% for overhead).  If he had an office, it would probably be 30-35%.  This is where larger numbers matter if going indy.  However, msot of the folks I have talked to have been able to gether assets FASTER since they left Jones, so if you can finance the move, it will likely be worth it to leave sooner than later.  If you can also do some financial planning for a fee, that could add a few thousand per month NET to your income.  I know guys that have gone indy with 5-10mm and made it work.

* It seems that 35-60mm AUM is sort of the "sweetspot" for an indy if you just want a basic office and maybe one assistant.  Beyond that, you might need to add more staff.  Obviously depends on your client base, avg account, and services offered.

* Jones will never change the LP structure.  Partnerships (in all professions) generally don't "give away" partnership shares.  Dilutes the other owners with no capital infusion to grow the business.  So unless there is some REAL value to the firm in issuing partnership shares, there's no point. 

* Weddle is taking Jones in the right direction.  He is very forward thinking and is quickly making Jones and the infrastructure "relevant" again.  I am guessing there is going to be a lot more to come in the next 3 years.  They are slowly trying to swim upstream, and you can see that with some of their commentary.  They are positioning themselves well for pending legislation on our industry.

* Jones is creating a much bigger divide between the "haves" and the "have-nots" at our firm.  If you are a big producer, transfer broker, or got a big office/Goodknight, you are a "have".  They are making it much more difficult for scratch starters to make it ("have-not").  This will become a double-edged sword for them.  How they manage the new standards and aggressive growth at the same time will be challenging. 

B24- You can't really be serious about the mini diversification trip right?

I do however agree with you about the divide between the have's and have not. Well put. However I also disagree with your assessment that this divide will somehow spit the firm out on the other side in better standing. I think it is a short sided view that hurts our only chance at real growth and that is the new FA in a town gathering up assets. Kill that and you kill "real" growth.

I've never viewed the regional as a mini diversification trip.  Neither has my wife and she's attended both.  It's especially not a mini div trip with the two day format. 

I agree with RW on the new FA gathering up assets in town.  Once a vet FA gets to a comfort zone, he's not going to be as hungry about gathering assets any longer.  Those new FAs gather assets a lot quicker than most vets.  They're the bread and butter of the firm. 

I don't get the impression that Weddle wants to abandon the growth focus through new FAs. I do get the impression that he's finally figured out that if you can get a middle of the road Seg 3 guy to do Seg 4 numbers, the firm makes money. 

B24 ... thanks for the props. I'm one of the ones that left with a trail under $200K,with lesser AUMs.

I've said this numerous times: look at the slope of your sales line. Unless it's definitively and doggedly upward sloping, you will get killed out here. But if you are doing the work, what's the difference if you do it for yourself or someone else?

OTOH, I know guys do $20K a month at Jones (for the last 3-5 years) couldn't make the jump. It's not about expenses, because they can be fixed. It's about production, and sloping upward.

Hey, WTH do I know? I've only been at this independent thing for 3 months and giving financial advice for 3+ years. Only this: in the three months I've been independent, I managed to go out and find money enough to pay off all my considerable debts developed working at Jones for three years. In 90 days.

Color me: wish I did it sooner, but satisfied I fulfilled my contract.

[quote=RealWorld]

B24- You can't really be serious about the mini diversification trip right?

I do however agree with you about the divide between the have's and have not. Well put. However I also disagree with your assessment that this divide will somehow spit the firm out on the other side in better standing. I think it is a short sided view that hurts our only chance at real growth and that is the new FA in a town gathering up assets. Kill that and you kill "real" growth.

[/quote]

Actually, I am serious.  And I did not mean that I viewed them this way (Regionals).  Jones views them this way,  Out of the mouth of a GP.  I think they stink, but Jones thinks it sucks the new guys and the rookie spouses in just enough for them to want more.

As far as the other comment, I only think the firm will come out better if Weddle can truly execute this strategy.  I think they are banking on Goodknight and Legacy Plans, Transfer Brokers, and raising the bar on existing advisors.  Yes, they will continue to recruit newbies, but if you actually put real numbers to it, the number of new/new's recruited that ultimately make it and produce well are a vast minority, but represent the vast majority of the new brokers in terms of total numbers recruited (if that makes sense).  In 2009, they added 4000 new brokers - 1000 trainees left (pre can-sell), and 2200 licensed FA's left, for a net of like 800 more FA's for the year.  But to get 4000 new FA's, they get like 140,000 inquiries and 60,000 applicants.  In reality, almost ALL of the 800 that are left as new for the year were either transfer brokers, joined a Goodknight or Legacy Plan, or took over an existing office.  I am sure the numbers exist, but I would guess that less than 100 new/new's (with no GK/Legacy/Transfer/takeover office) make it each year (they may make it for a few years, but ultimately fail out or leave).  Again, the have's and the have-not's.

B24- So are you saying that Weddle recognizes that new / new isn't really the bread and butter of the firm?

I have thought about this often and wondered if they realize all this and don't care as long as the AUM of the firm goes up.

[quote=B24]

Wow, I take a week off, and a good ole' Jones-Indy shootin' match starts.  Nice!

A few comments...

* Thanks Locked for your candid comments on indy vs. Jones.  I think you're like the ONLY guy I have seen that has been even marginally honest about the challenge of going indy and the true costs.  I think at larger asset/production levels, the cost/income issues are far more tilted in your favor (indy), so keep plugging along.

* The Jones Regionals are really just mini-diversification trips for those that don't qualify.  And as we all know, the sole purpose of the D-Trips is to entice you to stay.  They suck your spouse into the Jones culture, and make it very difficult to consider leaving.  It seems half the veterans I talk to, that's all they talk about (D-Trips).  Seriously?  I mean, they are wonderful, no doubt, and most of us would not go through as much as Jones goes through to cover all the little details, but in reality much of it is overkill.  And the Regionals are meant to do the same thing, just on a smaller scale.  That's why the content is often lousy.

* My buddy went to Cambridge like 18 months ago.  He's a small producer (maybe 100-125K at this point?), and his payout is about 65%.  Not sure if that included the tech fee or not.  He works out of his house, so his net is probably like 55-60% (5-10% for overhead).  If he had an office, it would probably be 30-35%.  This is where larger numbers matter if going indy.  However, msot of the folks I have talked to have been able to gether assets FASTER since they left Jones, so if you can finance the move, it will likely be worth it to leave sooner than later.  If you can also do some financial planning for a fee, that could add a few thousand per month NET to your income.  I know guys that have gone indy with 5-10mm and made it work.

* It seems that 35-60mm AUM is sort of the "sweetspot" for an indy if you just want a basic office and maybe one assistant.  Beyond that, you might need to add more staff.  Obviously depends on your client base, avg account, and services offered.

* Jones will never change the LP structure.  Partnerships (in all professions) generally don't "give away" partnership shares.  Dilutes the other owners with no capital infusion to grow the business.  So unless there is some REAL value to the firm in issuing partnership shares, there's no point. 

* Weddle is taking Jones in the right direction.  He is very forward thinking and is quickly making Jones and the infrastructure "relevant" again.  I am guessing there is going to be a lot more to come in the next 3 years.  They are slowly trying to swim upstream, and you can see that with some of their commentary.  They are positioning themselves well for pending legislation on our industry.

* Jones is creating a much bigger divide between the "haves" and the "have-nots" at our firm.  If you are a big producer, transfer broker, or got a big office/Goodknight, you are a "have".  They are making it much more difficult for scratch starters to make it ("have-not").  This will become a double-edged sword for them.  How they manage the new standards and aggressive growth at the same time will be challenging. 

[/quote]

Why and how do you feel that they are making it much more difficult for scratch starters to make it? I thought they were trying to do away with the new/new philosophy.

To RW and Golf,

Couple of things:

Yes, I think Weddle realizes that in this day and age, you cannot plaster the frontier with untrained newbies starting from scratch and expect them to develop into seg 3/4 brokers very quickly.  In the transactional days of the 80's and 90's, you could do that.  You did all commission stock/bond/fund biz, you had no DNC list, no online brokers (for the most part), and no internet to educate the consumer.  Today, consumers are MUCH more educated and savvy (or more to the point, they are more skeptical of "advisors").  So it's not as easy to pound out calls and sell stocks and bonds over the phone in Jones' model.  On top of that, the media pounds the "fee-only" principle into consumers heads these days, so you also have that to contend with.  It doesn't make business any "worse", it just makes the process longer.  If you have a book of 250-500 clients already, you have a ready-made prospecting list to ad products to, to convert to fees, to mine new assets, whatever.  That's why transfer brokers and Goodknight Plans are so effective at our firm (or any firm).  Between those two concepts, in addition to newbies taking over existing offices, the cost to getting someone up and running is lower, and you churn through fewer recruits to get there.  There's also fewer resources allocated to recruiting and training.

On top of all that, they are raising the standards to push out under-performers.  As I look at the perfromance chart in my region, it is quite evident that the new/new's struggle far more than any other segment of broker, until you get to about 10 years in the biz.  The problem is that the burnout factor is much greater.  As a new/new you have to scratch and claw for every new dollar for the first 5 years at least.  When you have an existing book or take over existing assets, there is lots of untapped potential in the books to mine (not always, but often).

In addition, at Jones they make it virtually impossible for newbies to build a fee-based business because of the commission hurdles.  Personally, I have added $3.5mm in Advisory in 6 months (about 6 NEW households), and it has killed my production.  That is probably 70-80K in production that is non-existant over the last 6 months.  Yes, I will make up for it in the long-run, but it really kiils my production screen in the short-term.  And Jones does NOT care.  My opinion is that they want to newbies to pound out production while they last, and then absorb assets that are left over when they fail out, or get converted to some sort of fee program if the legislation goes as is anticipated. 

Your last sentence has a lot of truth in it.  I think that was spelled out pretty well by Weddle in his response to a question in this week's suggbox.  He said they supported the Dodd-Frank financial reform bill.  That one caught me a little by suprise.  I'm still not quite sure what to make of it, but it does make me think that Weddle, et al wouldn't be terribly disappointed if legislation got passed that said everything had to be fee based. 

I don't think the bill says that everything has to be fee-based, just that there would be a Fiduciary Standard on all transactions/accounts.  It would be a great excuse for firms to convert transactional clients to fee-based managed programs, however (and avoid FINRA challenges on the swap).

The next 24 months will be quite interesting in our industry.

If we were pushed into a 100% fee based world, (don't think that will happen) it would have a big effect on the EDJ business model. It would also have a big effect on all of the broker dealer's business models. I think in a fee only world, that we would see the organic growth model at Jones killed or at the very least curtailed. If those new FA's are not generating commissions, it would take a long time for the fees collected to pay for their training, new offices, etc....    I do think we will have an interesting 24 months ahead of us, and I for one would be happy to see some changes in the Jones model, such as focusing more on the FA's in the field and less emphasis on growing the number of FA's. More emphasis on the quality rather than the quantity of FA's. We are seeing that now to some extent with the higher production standards. I also think at some point we could see a consolidation of Jones offices to lower our expenses and make us more profitable.

[quote=Advisor238]

If we were pushed into a 100% fee based world, (don't think that will happen) it would have a big effect on the EDJ business model. It would also have a big effect on all of the broker dealer's business models. I think in a fee only world, that we would see the organic growth model at Jones killed or at the very least curtailed. If those new FA's are not generating commissions, it would take a long time for the fees collected to pay for their training, new offices, etc....    I do think we will have an interesting 24 months ahead of us, and I for one would be happy to see some changes in the Jones model, such as focusing more on the FA's in the field and less emphasis on growing the number of FA's. More emphasis on the quality rather than the quantity of FA's. We are seeing that now to some extent with the higher production standards. I also think at some point we could see a consolidation of Jones offices to lower our expenses and make us more profitable.

[/quote]

For compliance reasons, you will not see office consolidation.  The only way we get away with no onsite OSJ is due to the one-man setup.  As much as   woudl like to see it, it ain't gonna happen.  However, there is a greater emphasis on Goodknight and Legacy setups, so they may consider extending the time period one spends with another broker, which would get the new broker closer to profitable before building a new office.

If we do move primarily to fees, Jones would just change theri focus for new hires to an asset-based goal rather than commission-based goal like some of the wires (for the early years), and extending the salary.  Actually, this would be far more profitable for Jones, as any assets left behind by failed brokers would at least be productive assets (fee-based).

I think they're already anticipating the move to more asset based goals.  They told us at the Summer Regional that they were working on a system to track new dollars coming into the branch.  I don't think it's ever really been a focus before.  If it was, I think we'd have a lot more advisors over the $100 mil mark in AUM.  We've got a ton of 10-15 year FAs sitting on $50-70 mil in AUM.  To me that just screams that we don't focus on gathering assets.  I think we talk a lot about it, but we're not trained for it.

Agree with what you all said completely.... My only sidebar is that I feel like new/new low asset getters are almost on the chopping block in this scenario.

I know how Jones does things and I am confident it will be something changed to all the NEW new/news not someone who has been at it for 2 yrs. I feel like that advisor is at an extreme disadvantage.

Someone else said that Jones doesn't care. I agree, they push FAST and Advisory but if you have little assets and need to make 15K per month, how are you supposed to do FAST with everyone and then sell them a product that makes nothing towards that 15K?

Really they could use a little compassion in that group of people. I feel like when they make these decisions, they almost say that losing these advisors is worth it, given the other effects of their changes.

I think they they see it very much like a General views a battlefield.  He's got an objective to take, a career to build, and the force of thousands of people in green uniforms at his command.  He knows that in taking that objective he's going to lose some grunts.  Actually, a lot of them.  He's going to lose a few higher ranking officers from time to time too, but if at the end of the day, he's taken his objective, the campaign and his command of the campaign will be considered a success.  Here's another star (or Ferrari).  Job well done. 

The problem is that the objectives are changing.  We've trained for the invasion of Omaha Beach, but we've been dropped into Iraq.  The tactics have to change.  There will be some casualties at all levels.  But we'll eventually get the right kind of training to start taking objectives again. 

Generals can't afford to be compassionate, BTW.  It makes them seem cold hearted and ruthless, but it's out of necessity that they have to make decisions for the good of the whole even if it means morale temporarily drops and people start going AWOL. 

[quote=B24]

[quote=Advisor238]

If we were pushed into a 100% fee based world, (don't think that will happen) it would have a big effect on the EDJ business model. It would also have a big effect on all of the broker dealer's business models. I think in a fee only world, that we would see the organic growth model at Jones killed or at the very least curtailed. If those new FA's are not generating commissions, it would take a long time for the fees collected to pay for their training, new offices, etc....    I do think we will have an interesting 24 months ahead of us, and I for one would be happy to see some changes in the Jones model, such as focusing more on the FA's in the field and less emphasis on growing the number of FA's. More emphasis on the quality rather than the quantity of FA's. We are seeing that now to some extent with the higher production standards. I also think at some point we could see a consolidation of Jones offices to lower our expenses and make us more profitable.

[/quote]

For compliance reasons, you will not see office consolidation.  The only way we get away with no onsite OSJ is due to the one-man setup.  As much as   woudl like to see it, it ain't gonna happen.  However, there is a greater emphasis on Goodknight and Legacy setups, so they may consider extending the time period one spends with another broker, which would get the new broker closer to profitable before building a new office.

[/quote]

We already have mutli FA offices in some metro areas across the country.

Spiff - I couldn't agree more with your assessment. I think at this time I wish that I wasn't a grunt !!!

[quote=B24]For compliance reasons, you will not see office consolidation.  The only way we get away with no onsite OSJ is due to the one-man setup.  As much as   woudl like to see it, it ain't gonna happen.  However, there is a greater emphasis on Goodknight and Legacy setups, so they may consider extending the time period one spends with another broker, which would get the new broker closer to profitable before building a new office.[/quote]

Ameriprise does not have an onsite OSJ. The OSJ is in constant contact with all the offices in his/her region but our OSJ lives two hours away and comes to the office once a quarter. We have six licensed and three non licensed individuals. The OSJ has nothing to do with it.

[quote=Advisor238]

[quote=B24]

[quote=Advisor238]

If we were pushed into a 100% fee based world, (don't think that will happen) it would have a big effect on the EDJ business model. It would also have a big effect on all of the broker dealer's business models. I think in a fee only world, that we would see the organic growth model at Jones killed or at the very least curtailed. If those new FA's are not generating commissions, it would take a long time for the fees collected to pay for their training, new offices, etc....    I do think we will have an interesting 24 months ahead of us, and I for one would be happy to see some changes in the Jones model, such as focusing more on the FA's in the field and less emphasis on growing the number of FA's. More emphasis on the quality rather than the quantity of FA's. We are seeing that now to some extent with the higher production standards. I also think at some point we could see a consolidation of Jones offices to lower our expenses and make us more profitable.

[/quote]

For compliance reasons, you will not see office consolidation.  The only way we get away with no onsite OSJ is due to the one-man setup.  As much as   woudl like to see it, it ain't gonna happen.  However, there is a greater emphasis on Goodknight and Legacy setups, so they may consider extending the time period one spends with another broker, which would get the new broker closer to profitable before building a new office.

[/quote]

We already have mutli FA offices in some metro areas across the country.

[/quote]

It's a significant minority, and most are older arrangements or exceptions.  By general rule , they are not setting up multi-FA offices .  We actually have a few in our area as well.  As of 2009, we had 12,600 FA's, and 11,100 offices.  If you exclude the FA's located at the home office, doing Goodknights, doing Legacy's, and working out of their homes, you see that there are VERY few permanent mult-FA offices.  I would estimate the number to be about 100-200 company-wide.

I'm not saying I agree with it, just that it's their general policy.

[quote=N.D.]

[quote=B24]For compliance reasons, you will not see office consolidation.  The only way we get away with no onsite OSJ is due to the one-man setup.  As much as   woudl like to see it, it ain't gonna happen.  However, there is a greater emphasis on Goodknight and Legacy setups, so they may consider extending the time period one spends with another broker, which would get the new broker closer to profitable before building a new office.[/quote]

Ameriprise does not have an onsite OSJ. The OSJ is in constant contact with all the offices in his/her region but our OSJ lives two hours away and comes to the office once a quarter. We have six licensed and three non licensed individuals. The OSJ has nothing to do with it.

[/quote]

I don't know Ameriprise's arrangement with FINRA.  I only know Jones'.