EDJ back on top

But what if there is a solid fee-based investment for a client?  Should they walk away from another firm that can offer everything EDJ has, plus this, or invest with MF's and stocks that the FA (err, IR) will then have to let sit, or, in instances of money-motivated FAs (every firm has them, not saying you are one), churn the assets so they can make a paycheck. 

I am not against EDJ.  It's a fine firm for some and there is no perfect firm for all.  However, there is something wrong when an FA has $90M in assets and is only doing $350k in production.  He's frustrated because of the limited product offering.  If he were at a firm that had some type of fee-based business, this FA would easily be doing $800k.

It all boils down to ethics.  Yes, RJ screwed up, but much of that comes from "rogue" FAs that are self-serving and don't do what's in the clients best interest.  This is a big reason VAs and other fee-based business options get a bad rap. 

Just my .02.

good point

I have a lot of respect for Jones brokers.... I couldn't "Cold Walk" and prospect as hard as those guys.  I like how they can run newspaper ads and market themselves.  But I don't think the overall business model works  The Jones guys have to sell products constantly to make money and they pick and  chose individual stocks & bonds.

I see nothing wrong with managed money.  If the Jones guys actually had access to these types of services, I think they would be tough to compete with.

Do you really want the guy next door, (who managed a shoe store 3 years ago, but is now an "expert" in investments) picking and choosing stocks for you?  Or do you want a team of five P.H.D's doing it?

iconsult100- We have SMA at Jones. The overall business model is over 9000 individual 1 broker offices. Do they exist ? Yes. Does the model work? Umm yes. Is it for everyone? no. What is this about individual stocks and bonds? Isn’t that what is in a SMA?

I don't want to bash Jones, but rankstocks is missing the point.  Jones brokers FANATICALLY believe they are doing what is in the client's best interest.  Jones brokers are good people (hence the rankings derived from great relationships).  The self-righteousness, though, is way over the top and based on a false premise. 

The real reason EDJ frowns on fee-based biz is because:

1) Their GROWTH agenda is based on hiring newbies (most of whom an ability to overcome objections and close sales is their primary strength--car sales, etc) who have no AUM.  Brokers will starve and the firm will lose a lot of money if these newbies aren't selling 3pt bonds and 5pt funds.  Can't let Vets have fee-based because most of those newbies are going into towns where existing branches exist and no client in their right mind would work with a broker at Jones who isn't allowed to play with all the live ammo....

2)  As stated in the SEC settlement, 2/3 of the firms profit comes from revenue sharing.  Uncle Milty's greatest contribution to the firm was his ability to keep Jones brokers focused on the "preferred funds", thereby allowing him to twist the knife a little harder for more payola.  If Jones moves to fee-based, a significant portion of our assets would go to lower expense funds immune from Jones' normal shakedown, reducing the GP's/sub LP's 88% pool.

Let's debate these two points.  I am open to a change of opinion on this, but no kool-aid allowed.  I know of a GP in STL who in essence agrees that fee-based could make sense, but he won't risk rocking the boat. 

Jones reps--please read the SEC settlement and take your heads out of the sand!

EIA, no comment on point #1 (not saying you are right) But your point #2 is sooo naive.. Do you know how much profit the firm would put to the bottom line with fee based? We would quickly give up revenue sharing! And so would very other firm that is of any size if their reps sold as much fee based as you may suggest. As for the 88% pool, well, you are a bit off there as well.

Inconsult100, just what did you do prior to this career?

This Jones Koolaid party is mighty dull.  They obviously didn’t survey my clients…

Guest1,

Can't argue point 2 without addressing point 1...they go hand in hand.  I agree that the firm could make more on fees than revenue sharing, but not under our "healthy growth" model.

Re 88%, as I recall from the SEC settlement, GP's keep 78%, Sub LP's get 10% and the 6000+ LP's get 12%...please correct if I am wrong on this because it has me bent out of shape.

[quote=rankstocks]Once again, Jones is back on top. JD Power for the second straight time, #1 customer satisfaction. Kiplinger's and Smart Money ranks Jones #1 Full service. Jone's does what's right for the customer and avoids selling annuities that pay brokers 7% like the bank. They avoid mutual fund fee based money like Raymond James, and don't discriminate against avg net worth like Merrill. Ms, Ag, UBS, and Piper have become the bottom of the barrell. Good luck next year boys.[/quote]

If this is true, then why didn't Edward Jones return the fees to their clients?   

Why didn't they disclose to their client base what actually happen?  

Just let one of your clients read the WSJ January 22nd article and see how high you are rated by JD Lower, KipLickers or Fart Money yes,  Doug "3 Mil" Hill has to be your idol, pays 3 million to stay out of jail, also has to pay part of the 44 million paid out by the GPs what a great legacy ?  

The honest and hard working IR's and BOA's that have had to cover-up and not disclose this to their clients, and You are soooooo proud of FRAUD and this activity..............?  

Your arrogance only exceeds your dishonesty, but then again who do you work for?  Doug "3 Mil" Hill Fraud expert

Could someone more astute than me please confirm a couple of

items: 1) If I’m understanding the recent EJ 10Q, 2/3 of the firm’s
total revenue comes from open end mutual fund sales. In addition, 1/3
of total firm revenues come from one mutual fund vendor (I would guess

American Funds). Is this correct?  2) Also, can someone confirm
for sure the above-mentioned 78/10/12 GP/SLP/LP splits? Can that be
right?

I thought they had a few hundred GP’s and several thousand LP’s.

Thanks for any help.

Yeah...JD Power.  Same company that surveyed boat owners and gave bayliner the highest customer satisfaction rates several years ago.  It's because their customers didn't know any better.

If Jones customers are happy it is because of relationship they have with their advisor...oh excuse me "IR".  It has very little to do with the firm.  The GP's would have you believe otherwise though.  Don't let them trick you into beleiving they have anything to do with it.  Any firm can print statements and sell A share mutual funds.

Yup. Bayliners suck.

Zacko,

     You chose RJ over EDJ, and you'll have to live with the horrible reputation you and your ilk have developed.  You lost your right to comment a year ago when your ethics turned south. 

On the topic of revenue sharing, for all you deep-diggers...where can we get the real DOLLARS in revenue sharing Jones received for any given period of time?

[quote=noggin]iconsult100- We have SMA at Jones. The overall business model is over 9000 individual 1 broker offices. Do they exist ? Yes. Does the model work? Umm yes. Is it for everyone? no. What is this about individual stocks and bonds? Isn't that what is in a SMA? [/quote]

According to the recruiting calls I've been getting, your SMA program has a minimum of $500,000 and less than 10% of the brokers use them.  There's no Mutual Fund Wrap program.  I can use SMA's at 60k and mutual fund wrap at 10.

Yes, everything boils down to stocks and bonds, but the difference is who makes the decisions to buy and sell.  That is why your model is broke.  Not everyone with a series 7 should be picking and choosing individual securities.

Again, I would recruit an established Jones broker any day and both the broker & the clients would make a lot more money using the fee-based platforms.

[quote=Guest1]

Inconsult100, just what did you do prior to this career?

[/quote]

I was a graduate student.  Joined a major firm in 2000 and been running a fee-based business ever since.

bengal,

Re point 1, you are correct...if anything you are low on the Am Fds portion of the biz....

Point 2---Yup....a few hundred GP/Subordinated GP's, 6,000+ LP's.  Sure makes that allocation a little tougher to swallow, doesn't it?  But we are all "owners" sharing the wealth.....guess  I should be thankful.

I realize I am confirming my original point, so maybe someone else can chime in.....

ICONSULT- Maybe I am oversimplifying things but the client and broker both make more money, wow…  The overall purpose of a wrap program is to provide the broker with a steady monthly paycheck from what I have seen…

Thanks for the replies. I am considering EJ and would like the Forum’s
thoughts on another matter too. My visits with EJ have confirmed that
the company is on a very aggressive recruiting effort. My immediate
area already has 3 Jones offices within a 20 mile radius. Questions: 1)
Why is their focus on growth so intense? It seems their radar screen is
only adding more reps to the exclusion of other concerns (products,
tech, etc.). 2) Can someone in or out of Jones explain exactly how more
offices in a small area actually benefit both the new and existing reps?

Thanks for any/all help and I’m not looking for any emotional rants here.

bengal,

I spent 4 years at the dealer in question (in H.O.)  the #1 reason for heavy recruiting is high turnover.  #2 can you say pyramid?  #3 they want to become the McDonald's/Wal-Mart of financial services (actually they already are) #4 It's (recruiting) all they've done for the last 20 years and don't know any better.  Check with the other firms in your area and compare. If you are absolutely new to the industry then EJ does have a good program for you (I'm not kidding).

rankstocks - you are absolutely correct, zacko will have to live with the fact that he is no longer associated with the "greatest sales force"  his loss ...........................

NOT!

Noggin - What is your deal with wrap acoounts, and managed money. There is a far better argument for manged accounts, than commissions. Yeah I really have faith in some newbies ability to select stocks from his living room on his laptop (until that is he gets enough clients to open an office).

and as far as being good for clients??? Oh...let's "A" share em! especially in this flat market environment. let's put em in the hole 6%, heck they'll show a gain hopefully in the next 2 years.

When I was at Jones I had  a couple of accounts come in with 400 - 500K. I put them in A share strategies with breakpoints, charging them 2.5. Well. now I have a client for the next 20 years, that I never get paid on again (unless you consider .25 trail yippeee). by the way, I'm guessing most clients at Jones don't sit for more than 3-4 years, before they need to be "reallocated" to a different fund family.

The 1% fee we get on business is a fair cost for what we do. It truly allows the advisor to make choices for the client based on investment strategy, and not desperation. And yeah, it sets up our business in a more consistant way, (has to be a win win). By the way, when we are discussing fees with clients, we tell them "the cost for this account is 1%"

EDJ used to have a plan that for every $600 million in assets in a community, it could sustain one office. (i.e. $2.4B = 4 offices)

If you think 3 IRs in onw town is bad, try 19 in a town of 40,000 people.

Rank,

You are so clueless...You think the focus should be on the firm.  RJ ethics are just fine...which is not my point. 

My point remains is that you think it's a battle of which firm is better or which firm has higher standards and neither really matters as all firms have to keep their ducks in a row to stay in business these days.  But, when you compare EDJ to any major independent--that's where the joke is.  And the joke is on you.

Thanks for participating.

They are recruiting aggressively, because they can't keep the brokers that they recruited for the last three years.

As far as having several offices in one town....hey we have 2 Merrill offices 10 miles from each other, with 80 Advisors. I would'nt sweat 1 or 2 other Jones guys, chances are they won't be there long.

7% annuities that the bank gets ?? Hate to break it to you, but the
same hartford annuites you get 5% on , everyone else gets 7, only EJ
keeps the 2% before taking their 60% of your 5% 

Maybe I don't get it,....but, Jones seems to almost force feed there office concept in areas that won't support that model. in my area, and others I know of, we have half a dozen branches that have all had 4-5 brokers in the last 2-3 years. This can't be helping there image.

So you're saying there were 6 branches that each had 5 brokers over the last 2 years? Wow. You're right. That's terrible for our image. If it were true, that is. I don't mind the odd exaggeration, but let's get real here. Now if you had said 5 branches that had 4 brokers over 2.5 years..well, then...thats a different story altogether. Or maybe 8 branches with 3 brokers over 3.25. THAT I can believe. But ^ branches, 5 brokers and 2? Not likely.

Moneyadvisor- You missed my point, the fact of the matter is that a good 30-35% of my Mutual Fund business is in C shares. My point was simply that the wrap programs were primarily developed as a way to smooth revenues for brokers and NOT because they are in the clients best interest…

[quote=noggin]Moneyadvisor- You missed my point, the fact of the matter is that a good 30-35% of my Mutual Fund business is in C shares. My point was simply that the wrap programs were primarily developed as a way to smooth revenues for brokers and NOT because they are in the clients best interest.....[/quote]

How is a C-Share better for a client than a wrap program?  With the wrap you can use several fund families and rebalance as needed.  You don't need special approval to move out of Putnam and into Fidelity. 

A C-Share gives the broker the same 1% payout as the wrap program, only now you are hiding it from the client.  Sorry, but I don't mind telling a client what I make on their account.  I think they should know what they are paying, and why.

How is it hidden from the client? Don’t you (all of us) provide a prospectus @ point of sale? I’ll tell you what the wrap programs vs. c shares are good for…it’s good for the firm and ties the client to the firm making it harder to move if you so desire. Go ahead and be an indentured servant if you want, I’ll sell the C shares and go to the page in the prospectus where the costs are compared to A,B and C shares. I have YET to have a client say, “Yep, give me some of those A or B shares” when the costs based upon time held are FULLY explained. I’ll let the guys next to the Subway sell those A shares. 

Inconsults…Thank you  - right on! Noggin, we’ll have to agree to disagree. The wrap does not insure assetts will stay at the firm. If a client wants to leave his wrap account…they leave. Face it, the firms are trying to get the money management away from the advisor. right now if your ML, you have 14,000 advisors managing money a different way!!! In a perfect world, You manage money in the form of professional money managers, not salesman. you generate a fair ongoing fee, you save some of the 200 million that you paid in legal fees last year (defending brokers and arbitration), and you have the sales  force gather assetts.

FYI:  On both confirms and client statements, RJ list the clients fees for non wrap mutual fund tranactions.  That's full disclosure.

Jones pays a payout of 30% on C shares 35% on B and 40% on A shares.  And lets not forget 39% on A share bond funds.   Is that really fair to either the IR or the client?  You have a clear incentive to shove A shares down the clients throat when another share class may suit your clients need better.  And NO JONES BROKER will ever disclose that to their client.

In contrast, my firm pays me 90% on A, B, or C shares so I am free to choose what I feel is best for my client and my practice.

While I tend to lean to C shares, I can look the client in the eye and tell them I have no additional incentives to suggest one particular share class over the other.  As a Jones broker, you cannot say that.

ALSO: The differnce in annuities gross comm is not 2 points jamesbond.  It's 75bps to 150bps depending upon carrier.  Jones keeps the difference.  You are right on that.

I'm going to take zacko's back and say that Raymond James runs a pretty ethical business, much like Merrill, SSB, UBS, others.  However, ever heard of the analogy that a few bad apples ruin the whole bunch (or whatever the hell it actually is)?

The fact that Raymond James has a few "rogue FAs" that decided they were going to do business unethically is a moot point.  How many other BDs have the same thing, or, consequently, how many EDJ IRs churn assets for their clients when it's NOT in their best interest so they can make a buck since they can in essence, only operate transactionally.  It happens everywhere.

RJ was up-front about things and they've complied.  When an FA was found skimming money off the top of his clients' accounts for years, what did RJ do?  Not run, they faced the problem and followed the letter of the law the whole way through. 

Every firm has its cancers.

[quote=noggin]Moneyadvisor- You missed my point, the fact of the matter is that a good 30-35% of my Mutual Fund business is in C shares. My point was simply that the wrap programs were primarily developed as a way to smooth revenues for brokers and NOT because they are in the clients best interest.....[/quote]

I really disagree with your last line comment about wrap accounts, but given how you feel, just why do you think C shares were invented? How could they ever be in the interest of anyone other than the broker?

My view on C shares

C shares are fine for the client.  It takes six years or more to break even on fees versus full A share at max offer.  So, as an advisor I take a pay cut for six years...which incidentally, is probably longer than half of you have even been in the business.  In the long run, I am rewarded if I can help grow the clients money.  Also, myincome drops if the clients account declines.  If a fund underperforms I can switch cross-family without charging a load to do it.  My goal, since I am getting paid on the assets will be the same as the clients.  There is also often less duplication of equity positions when you invest cross family rather than stay with one family.  Clients also like to see their advisor's compensation tied to how their account performs.  Even if they have to pay a little more to do it.

The difference in fees A vs C is only .75% and not 1% which many people often forget.  When you make your living off of new money coming into the office..you will be forced to sell A shares.  So that's where your focus will be.  What about the current clients on your books?  If new money pays the bills, then what incentive do you have to service your current clients?  The ONLY argument against the C share is if clients invest a large amount of money in one family, that they will be cheaper in the long run than if they had bought a C share. 

On wrap accounts, my piliosphy is very much the same.  Many people don't like to pay commissions and simply like the compensation structure on a wrap account as it relates to rewarding the rep for account performance.  When you don't have a wrap program (JONES) or when you are practically forced to sell A shares (JONES), your views will be tainted.

That's half the reason to go indy is to have the ability to take your business in the direction that best serves your clients and yes...YOU too.

well said Zack.

My observation was not against C shares of which I do a good percentage but rather pointing out the fact that i think a C share serves the interest of both client and advisor more equally than does the wrap account. Does that make sense?

Fine, put a client in C-Shares.....

Do they actually read the prospectus?......  Doubt it.

Do they see your 1% commission each year on their statement?...NO (that's why I say its hidden from the client).

Do they get performance reporting?   NO

Do they get A shares or Institutional shares at NAV?  YES

A client can call me and in 30 seconds I can tell them they are up 4% vs their bench mark and we probably should rebalance because XYZ fund is up dramatically.  "Where should we go with those profits?"  We spread it over the other funds.  Wrap accounts are systematic, it keeps you on track, and now you're consulting instead of selling.

The people who are against them, either don't have access to them, or they're arrogant enough to think they can manage money better than a team of P.H.D's.  Sorry, but if you're not going this route with a good portion of your book, then you're days are numbered in this business.  The only thing constant is change...adapt or retire.

N O T....

WHAT A JOKE..

Some one at Edward Jones must have  been having a FLASHBACK, to pre-Doug "3 Mil" Hill days

When they told their clients all the FACTS, not missrepresentaions of the TRUTH..........

We provide performance reporting on all account above 250k and on ALL Accounts if I access it manually.

I'm not saying C shares are better than a wrap account...no no.  I'm saying they have many advantages over A shares when paying a sales charge.  And, I personally like them better.

You can still do well with A shares these days (in fact better in many cases) and I doubt any ethical hard working broker's days are "numbered" regardless of what direction they choose. 

C shares @ a 31% payout are tough but I’m doing it as well as my wrap accounts for the long term. Sure hurts the gross.

EZ- It’s even tougher at 30% but if it is right for the client that is where you gotta go…

Zacko..... I hated to make that comment, but truth hurts.  You can be an ethical & hardworking transactional broker and it won't matter.  Margins are being squeezed pretty hard industry wide.  A lot of firms pay you less for individual transactional business.

And I would bet that most transactional brokers can't beat the performance of a good managed account.  By the way, if you are calculating their performance manually, you are wasting valuable time that you could spend promoting your business.

Iconsult, the big indys have unbelievable technology.  I have the ability to calculate and graphically display performance of an individual account or group of accounts by YTD, trailing twelve, since inception or pretty much any metric I want, and once it's set up for a client, I can generate this report in 15 seconds.  I'm sure Zacko has something similar.  With this kind of technology at hand, one can review a significant number of portfolios in a very short time.

Frankly, a transactional broker can beat the money managers pretty handily in many cases.

What's the TOPIC?

Topic: EDJ back on top

Let's see, they pay their IR's 38% depending on the type of share, could be as low as 30%....GP's get paid way too much.......They have still never told their clients the TRUTH about Doug "3 Mil" Hill, and how the GP's ripped off their clients, but they are on top of covering-up?

Back on Top of what?

According to Doug "3 Mil" Hill"Our clients don't read the WSJ, they are just good hard working folks" Translation: They are "stupid" !

 But, does that mean you can take advantage of them, it seems so to Edward Jones IR's, except the ones that are leaving............

What percent of Jones IR's have less than 3 years experience?  Looking a lot like the National Banks Brokerage business, hire inexperience they will sell & buy whatever you tell them, if not fire and hire.

There is an office every 5 to 10 blocks, usually within a half mile of each other, they never get lonely that way, but they are getting market share.

Who has more locations, Edward Jones or 7 Eleven?

Is there a difference?

And they are on TOP of what?

EDJ Legends in their own minds...A mind is a terrible thing to waste..............................but they keep coming on here bragging about being on TOP , how superior and ethical they say they are? It's called "HYPOCRITE" 

As long as they keep doing it,  I will keep calling them out

The TRUTH will set you FREE.............

Other than you, Player, who cares?

[quote=Starka]

Frankly, a transactional broker can beat the money managers pretty handily in many cases.

[/quote]

Come back to planet earth will ya...  Are you that arrogant to think you can do better than teams of P.H.D's?

In a word, yes.

[quote=iconsult100][quote=Starka]

Frankly, a transactional broker can beat the money managers pretty handily in many cases.

[/quote]

Come back to planet earth will ya...  Are you that arrogant to think you can do better than teams of P.H.D's?

[/quote]

I regularly do MUCH better for my clients than the "P.H.D's".  You must mean the CFA's.  Either way, it doesn't matter.  There is so little originality of ideas and thought coming from that gaggle of Wall Street groupthink, it is not all that hard to significantly outperform them on a regular basis.

Sooth, you must be pretty good. Can I send you 500 or so? You must be doing better than my def comp…Outpacing all the CFAs at Captal, wow, that is impressive, Where do I send my check ? And your fee ?

iconsult: PHDs?? You old enough to remember Long Tem Capital “Management”. Not only PHDs, but Nobel Laureates. Damn near wrecked our economy in 1998 until Greenspan excersised on of his “puts” to save the system. I DO NOT want PHDs touching MY money.

Professional money managers are little more than mutual funds with individual equity holdings in the client's account.  You can just as easily screw up allocations there as you can with mutual funds.   You gain some tax advantages and the "institutional style" management we like to gloat about. 

[quote=Guest1]Sooth, you must be pretty good. Can I send you 500 or so? You must be doing better than my def comp..Outpacing all the CFAs at Captal, wow, that is impressive, Where do I send my check ? And your fee ?[/quote]

Actually, I am very good.  I don't know if you remember other threads about H&R Block's financial services unit, but I have said several times on this forum that I am short that stock (HRB)--not because of the financial services business, but because of their sub-prime lending business.  I first shorted the stock at $54, then doubled down at $59.50.  The stock briefly went above $60 on news that it was splitting 2 for 1.  Check out the price today.  Meanwhile, the PhDs, CFAs, and whoever else continue to be long.  Many of my clients have benefitted from this "falling star."  This is just one example. 

BTW Guest, did you catch the data point on Friday that Annaly Mortgage (NLY), one of the oldest and best run mortgage REITs slashed their dividend by 64%.  If you caught that, you're ahead of the PhDs.  Go back and read their comments about just how tough the mortgage business is right now.  In addition to HRB, I have been short Accredited Home Lenders (LEND), New Century Financial (NEW), and NovaStar Financial (NFI) for more than four months now.  Go check out those charts, and see how me and my clients are doing.  There are still plenty of opportunities in those shorts with the exception of LEND.  I am having to cover parts of most positions right now simply because the stock cannot be borrowed.  So, the PhDs are sniffing out the problems with the stock at 37.  I sniffed them out at 50.  I guess they missed the easy 26% return that was sitting on the table.  I do not know of a single analyst who recommended a short or had a "Sell" rating with the stock at or near its highs.  In fact, many had "strong buy" ratings.  So, as the herd arrives to the realities of LEND and is dumping the stock in an all out panic, they pass me and my clients already riding out of town with a rather tidy (and fat) profit.  I could go on, and on, and on about other present holdings, but you will beg for all of the times I have screwed up.  There has been one that stands out in my mind.  I shorted Apple (AAPL) in the Fall of '04, and covered in December, and got whipped pretty good.  But on the whole, I have had far more winners than losers. 

I’m shorting Soothsayer and going long on Guest1 with a hold on Zacko. And yes, I’m good too!!

[quote=noggin]I'm shorting Soothsayer and going long on Guest1 with a hold on Zacko. And yes, I'm good too!![/quote]

Go ahead and long my shorts, and short my longs.  You'll have your head (noggin) handed to you my friend!

Wasn’t there some PhD who thought the Dow would be at 36,000 by now?  How do I get that guy to run some of my money?

[quote=noggin]My observation was not against C shares of which I do a good percentage but rather pointing out the fact that i think a C share serves the interest of both client and advisor more equally than does the wrap account. Does that make sense?[/quote]

Not to me. Unless your client is buying tiny nibbles A shares are cheaper to own and even B shares at least have a conversion feauture. I see no reasoning for C shares being "good" for any client with reasonable assets.

A wrap account, otoh, allows for shifts across fund families and buys A share or even institutional level management fees. Most return any 12b-1 fees to the client.

[quote=Starka]

Frankly, a transactional broker can beat the money managers pretty handily in many cases.

[/quote]

Sorry, I'm not buying that one. Brokers have too many other things to do to beat, year in and year out people who can focus exclusively on money management. You have the further problem of style definition.

Styles go in an out of favor, and who knows when. Are you a large cap growth manager, a small cap vaule guy? An interest-rate sensitive bond buyer. Or do you, possibly worst of all, abandone one style and shift to the next on a whim? Can a great first baseman be a great catcher AND pitcher AND left fielder? It's possible, but I wouldn't bet money on it. 

Not to be insulting, but I prefer style pure managers in asset allocation models I can taylor.

It doesn't matter whether you "buy" it or not; it's still true.

[quote=Starka]

It doesn't matter whether you "buy" it or not; it's still true.

[/quote]

So what are you? A mid-cap growth manager? Small cap value? Are you telling me there’s no difference there? Are you a Graham and Dodd guy? A momentum player? Are you GARPy?  How do you allocate portfolios across caps and styles, or do you think that doesn't matter? Seriously, what are the odds, given everything else you do and the complexity of the various investment styles and disciplines that you can be a master at all of them?<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

It’s not that I don’t give you credit for skill and talent, it’s just that I wouldn’t give the entire ball of wax to any one manager, much less one that has sales as his primary responsibility. I mean, Kareem was a great player, but I wouldn’t have him bringing the ball up court….

Mikebutler- Are you a bank broker??

[quote=mikebutler222][quote=Starka]

Frankly, a transactional broker can beat the money managers pretty handily in many cases.

[/quote]

Sorry, I'm not buying that one. Brokers have too many other things to do to beat, year in and year out people who can focus exclusively on money management. You have the further problem of style definition.

Styles go in an out of favor, and who knows when. Are you a large cap growth manager, a small cap vaule guy? An interest-rate sensitive bond buyer. Or do you, possibly worst of all, abandone one style and shift to the next on a whim? Can a great first baseman be a great catcher AND pitcher AND left fielder? It's possible, but I wouldn't bet money on it. 

Not to be insulting, but I prefer style pure managers in asset allocation models I can taylor.

[/quote]

Style box, schmyle box.  Who the hell gives two sh*ts of a rat's ass?   Invest in things that make money.  Avoid things that lose money.  I am totally with Starka on this one.  You and all your style boxes and your tired ass asset allocation story.  I can take accounts from that school of thought as fast as you can show can show them to me.  "Asset Allocation" is a big pile of steaming doo as far as I'm concerned.  Oh, and learn how to spell "tailor".

Starka & Soothsayer,

I think you are both full of it.  I'd want to see proof.  I have  managed portfolios that have a 5 year over 10%, low beta, low std. div, low downside capture, and high upside capture.

I highly doubt you can beat them and take less risk, based on your "Asset Allocation" comment.  I like dealing with clients, not crunching numbers and trying to reinvent the wheel. 

As for the profanity... grow up, act like an adult.

WOW, how boring..................

Does anybody have a comment on Edward Jones being back on TOP, since it's is the TOPIC?

Any Clones or Drones want to debate the subject?

[quote=iconsult100]

Starka & Soothsayer,

I think you are both full of it.  I'd want to see proof.  I have  managed portfolios that have a 5 year over 10%, low beta, low std. div, low downside capture, and high upside capture.

I highly doubt you can beat them and take less risk, based on your "Asset Allocation" comment.  I like dealing with clients, not crunching numbers and trying to reinvent the wheel. 

As for the profanity... grow up, act like an adult.

[/quote]

Once again, what you think is meaningless.  You want proof?  Give me your client list, and let's see how many I take away from you.

Beta, blah, blah, blah.  Standard deviation blah, blah, blah.  Upside capture, blah, blah, blah.  Dude, this is not a video game.  This is your clients’ hard earned money.  I’m not trying to be an a-hole, but you are too much about the science, and not enough about the art.  Stop putting CFAs, and PhDs on pedastals.  If I wanted a CFA, I’d have one in less than 12 months.  I’ve met many, many jack-offs with CFAs.  I wasn’t all that impressed.  I’m with Starka.  I would start off by asking your client’s what your function is as an advisor–to bottom line it.  After about five minutes of open-ended questioning, we would all be in agreement that it is not to plug money into “style boxes.”  Monkeys can do that.  After five more minutes, you’d be damn lucky to still have the account.  Again, clients who have been “asset allocation” lab rats are very easy prey for a sharp guy with a sharp mind who isn’t afraid to use a sharp tongue in critiqueing someone else’s work.   

[quote=Player]

WOW, how boring..................

Does anybody have a comment on Edward Jones being back on TOP, since it's is the TOPIC?

Any Clones or Drones want to debate the subject?

[/quote]

Sorry Player, but Starka and I already know that Jones is not for us.  Been there, done that, got the T-Shirts which now are used for cleaning up oil spills in my garage.

[quote=noggin]Mikebutler- Are you a bank broker??[/quote]

No...

[quote=Soothsayer]Beta, blah, blah, blah.  Standard deviation blah, blah, blah.  Upside capture, blah, blah, blah.  Dude, this is not a video game.  This is your clients' hard earned money.  I'm not trying to be an a-hole, but you are too much about the science, and not enough about the art.  Stop putting CFAs, and PhDs on pedastals.  If I wanted a CFA, I'd have one in less than 12 months.  I've met many, many jack-offs with CFAs.  I wasn't all that impressed.  I'm with Starka.  I would start off by asking your client's what your function is as an advisor--to bottom line it.  After about five minutes of open-ended questioning, we would all be in agreement that it is not to plug money into "style boxes."  Monkeys can do that.  After five more minutes, you'd be damn lucky to still have the account.  Again, clients who have been "asset allocation" lab rats are very easy prey for a sharp guy with a sharp mind who isn't afraid to use a sharp tongue in critiqueing someone else's work.    [/quote] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Sorry, no sale. You have no long term audited track record, no definition of operations, no discernable, definable, repeatable investment philosophy. No bench, no structure. You’re a local guy pumping a lot of hot air about being a stock jock. That and $3 will get you a cup of coffee.

You have no lengthy list of institutional clients. Your promise to “buy things that go up” isn’t enough to garner the attention of sophisticated HNW investors. They’re as concerned about stability and predictability as they are gains. They have no interest in earning this money again and no interest in a guy who believes he’s an expert in every segment and style of investing. If you think asset allocation and risk avoidance is all about “plugging money into style boxes” you haven’t the slightest idea what you’re talking about.

You could rip down your “how I kill in the markets” and I’d turn to the client and ask, “Was Mickey Mantle a great baseball player?” and when they said “of course”, I’d ask why he didn’t pitch. They’d get the message and you’d be on to pitching the “I’m a market king” speech to the next sucker.

[quote=Starka]

It doesn't matter whether you "buy" it or not; it's still true.

[/quote]

I find myself in agreement with you on many issues. On this one we may have to agree to disagree.

Butler222-

You mentioned something about 10% net performance over the last 5 years.  If I saw a client who had gotten that with all of the blah, blah, blah, I'd send him or her right back to their advisor.  But, let me tell you what I have seen in the last few months:

A married couple who recently sold their business.  $1.4 million in assets, 1.5% fee, -1.0% perfromance over the last 5 years.  (Client down 5%, advisor up 7.5%)--Smith Barney

A retired airline pilot with $2 million being charged 1.25%.  40% of money was in the money market account, and had been for almost 2 years.  5 year performance was positive 1.1%--Zions Bank Private Asset Management

A husband and wife commercial real estate team with 300K of qualified money in a mutual fund wrap program.  5 year performance was -4.1%--Wachovia

A retired doctor with a $4 million+ portfolio with top advisor in the wirehouse branch.  In fact, the branch manager.  The doctor's wife has her 300K account with me.  (Second marriage for both of them).  5 year number for my client is 12.6%  Doc is -2%.  Doc coming to see Sooth next week.--Merrill Lynch

The next time I see 10%, I'll PM you and give up.  I'm not a "stock jock".  I just use my head a little bit.  I'm done talking about this.

Butler222-

"You mentioned something about 10% net performance over the last 5 years."

I didn't make that comment, but most every balanced SMA portfolio I've seen lately can show those sorts of numbers. They're really NBD. Small Cap, Deep Value and International managers have done increadbly well the last few years and have carried diversified portfolios.

"  If I saw a client who had gotten that with all of the blah, blah, blah, I'd send him or her right back to their advisor."

Then you'd be sending back everyone that had an advisor who really practiced asset allocation.

"A married couple who recently sold their business.  $1.4 million in assets, 1.5% fee, -1.0% perfromance over the last 5 years.  (Client down 5%, advisor up 7.5%)--Smith Barney"

I'd love to see how any reasonably assembled portfolio could have achieved that performance, but, there are duds in plenty of seats in this business... 

BTW, would you like me to share the horror stories I've seen of accounts coming over from both wirehouses and one-man shops where the advisor made big bets on hot sectors, didn't balance an account and blew up clients?

"The next time I see 10%, I'll PM you and give up. "

Sure you will..... Let me give you some help here. If you see a portfolio with Brandes (domestic and/or international) or NWQ small/mid cap, just to name two, hand the statement back the client, save yourself some time, and move to the next opportunity.

" I'm not a "stock jock".  I just use my head a little bit."

Golly, and no one else in the business besides you does?

" I'm done talking about this."

Fair enough.

I run my own equity and bond portfolios - you are wrong about hnw
clients, they don’t care if you or xyz is running their money, as long
as you produce. If xyz loses 20%, they blame you, not the manager you
helped pick.  Running you rown portfolios also makes the client
stickier and more loyal to you. I would, however not recommend it for
someone with less than 5 years of stock picking experience   

[quote=jamesbond]I run my own equity and bond portfolios - you are wrong about hnw clients, they don't care if you or xyz is running their money, as long as you produce. If xyz loses 20%, they blame you, not the manager you helped pick.  Running you rown portfolios also makes the client stickier and more loyal to you. I would, however not recommend it for someone with less than 5 years of stock picking experience   
[/quote]

You sell performance alone, you lose accounts on performance.

If there's an easy pick-off of accounts it's where your have a prospect with an account with a guy running his own portfolio. I simply ask people in that position if they have some audited returns, what happens to their account if the broker gets hit by a bus, who are the broker's institutional clients, what's his AUM, is he a value manager, growth guy, international? What were his worse three quarters in the last down market. Would they mind firing him and having to start the process of finding an advisor all over again if he slumped. If he's talking to you, opening accounts and having any sort of a life, who's running the account at the very moment?

I wouldn't be so sure that a client is more loyal to you if you're personally running the money because you're only as good as last quarter's numbers. If I have an SMA manager fall flat, he's replaced without cost, the client's still with me. In fact, I've never lost a client over performance, not one.

It's all about perception.  Some advisors can do a poor job for the client and because they (client) like and trust that advisor--retain the relationship.  Other clients can be doing fantastic with another advisor but, because they feel something is missing from the relationship they move their account.

This is a FAR more important fact than which method of investing might be better than another as far as performance, value..etc, as the "typical" client does not notice the difference nor does he care.

This business is almost entirely about the realtionship between the advisor and his/her client.  Performance is one component--but I will argue that's it's far from most important.

Zacko has a very valid point. (sorry to be agreeable). Anyone who has been in this business for any length of time, and has lost, gained and worked with clients, has to agree.

[quote=jamesbond]I run my own equity and bond portfolios - you are wrong about hnw clients, they don't care if you or xyz is running their money, as long as you produce. If xyz loses 20%, they blame you, not the manager you helped pick.  Running you rown portfolios also makes the client stickier and more loyal to you. I would, however not recommend it for someone with less than 5 years of stock picking experience   
[/quote]

I'm with Bond all the way.  You and the manager can keep charging the fees and telling the asset allocation story.  But, at some point in time you're going to have to deliver the groceries.  It sounds like you are.  However, I think you are in the minority.  I didn't say "exception to the rule" or anything like that.  I think it may be something like 55/45.  But, if you think most people with asset allocation wrap portfolios have done 10% annualized over the past 5 years, you're not out prospecting enough.

You either don’t feel confident in your ability or do not want the
responsiblity.  As for growth value etc , all of that is hooey.
When does a growth stock become a value stock and vice versa?? Your
growth and value managers hold both. I don’t pigeon hole myself. I go
where I think the best bargains are at that time. Some months there are
many trades, other months hardly any. I never said I sold
performance,  that seems to be your hangup, I sell me. As for your
witty retorts ( which I doubt work), the same lines can be used against
you. Each of us has to do the type of business we feel most comfortable
with, there is no right or wrong way.  

Jamesbond and Soothsayer are not the same person.  I just think they happen to see thing much the same way.  I love the one about, “Did Mickey Mantle pitch?”  No, Mickey Mantle was the best athlete on the team.  Pitchers played every fourth day back then.   Centerfielders play every day.  Did you ever hear of Magic Johnson?  6’9’’ and could handle the ball, pass the ball, and score.  Could play any position on the floor.  Even filled in at center one time during the NBA finals.  Played pretty good defense, too. 

[quote=Soothsayer]Did you ever hear of Magic Johnson?  6'9'' and could handle the ball, pass the ball, and score.  Could play any position on the floor.  Even filled in at center one time during the NBA finals.  Played pretty good defense, too.  [/quote]

And in the history of the NBA how many Magic Johnsons have there been? Exactly one. Care to make a guess what the odds are that YOU'RE that ONE in this business?

BTW, Mantle didn't pitch because he couldn't. 

[quote=zacko]

It's all about perception.  Some advisors can do a poor job for the client and because they (client) like and trust that advisor--retain the relationship.  Other clients can be doing fantastic with another advisor but, because they feel something is missing from the relationship they move their account.

This is a FAR more important fact than which method of investing might be better than another as far as performance, value..etc, as the "typical" client does not notice the difference nor does he care.

This business is almost entirely about the realtionship between the advisor and his/her client.  Performance is one component--but I will argue that's it's far from most important.

[/quote]

[quote=jamesbond]You either don't feel confident in your ability or do not want the responsiblity.  [/quote]

There's a third option you didn't mention, that I'm certain that I can hire others who do absolutely nothing else to do it better while I do what I do best (and what's I'm paid to do).

[quote=mikebutler222]

Butler222-

"You mentioned something about 10% net performance over the last 5 years."

I didn't make that comment, but most every balanced SMA portfolio I've seen lately can show those sorts of numbers. They're really NBD. Small Cap, Deep Value and International managers have done increadbly well the last few years and have carried diversified portfolios.

"  If I saw a client who had gotten that with all of the blah, blah, blah, I'd send him or her right back to their advisor."

Then you'd be sending back everyone that had an advisor who really practiced asset allocation.

"A married couple who recently sold their business.  $1.4 million in assets, 1.5% fee, -1.0% perfromance over the last 5 years.  (Client down 5%, advisor up 7.5%)--Smith Barney"

I'd love to see how any reasonably assembled portfolio could have achieved that performance, but, there are duds in plenty of seats in this business... 

BTW, would you like me to share the horror stories I've seen of accounts coming over from both wirehouses and one-man shops where the advisor made big bets on hot sectors, didn't balance an account and blew up clients?

"The next time I see 10%, I'll PM you and give up. "

Sure you will..... Let me give you some help here. If you see a portfolio with Brandes (domestic and/or international) or NWQ small/mid cap, just to name two, hand the statement back the client, save yourself some time, and move to the next opportunity.

" I'm not a "stock jock".  I just use my head a little bit."

Golly, and no one else in the business besides you does?

" I'm done talking about this."

Fair enough.

[/quote]

I made that comment about the 10%.... check out this mix. Van Kampen, Congress, Madison, Kayne Anderson, and NWQ.   Great numbers.

Obviously the accounts you swiped has a bad manager... not every manager is good... take a look at Berkley Capital, Seneca, and Roger Engamann, they were horrible.

And HNW clients don't really want some stock jock calling them every week with a product to peddle.  They want a solid portfolio.  "I can do better" doesn't make people want to do business with you.  Anyone with some sense wants facts and figures as well.  "Trust me, I know what I'm talkin about" might work if you sell cars, not investments.  I don't gamble with people's money, I take calculated risks.

I'll gladly send you any info you want on a solid portfolio, I doubt you know of the risks associated with the recommendations you are making.

[quote=iconsult100][quote=mikebutler222]

Butler222-

"You mentioned something about 10% net performance over the last 5 years."

I didn't make that comment, but most every balanced SMA portfolio I've seen lately can show those sorts of numbers. They're really NBD. Small Cap, Deep Value and International managers have done increadbly well the last few years and have carried diversified portfolios.

"  If I saw a client who had gotten that with all of the blah, blah, blah, I'd send him or her right back to their advisor."

Then you'd be sending back everyone that had an advisor who really practiced asset allocation.

"A married couple who recently sold their business.  $1.4 million in assets, 1.5% fee, -1.0% perfromance over the last 5 years.  (Client down 5%, advisor up 7.5%)--Smith Barney"

I'd love to see how any reasonably assembled portfolio could have achieved that performance, but, there are duds in plenty of seats in this business... 

BTW, would you like me to share the horror stories I've seen of accounts coming over from both wirehouses and one-man shops where the advisor made big bets on hot sectors, didn't balance an account and blew up clients?

"The next time I see 10%, I'll PM you and give up. "

Sure you will..... Let me give you some help here. If you see a portfolio with Brandes (domestic and/or international) or NWQ small/mid cap, just to name two, hand the statement back the client, save yourself some time, and move to the next opportunity.

" I'm not a "stock jock".  I just use my head a little bit."

Golly, and no one else in the business besides you does?

" I'm done talking about this."

Fair enough.

[/quote]

I made that comment about the 10%.... check out this mix. Van Kampen, Congress, Madison, Kayne Anderson, and NWQ.   Great numbers.

Obviously the accounts you swiped has a bad manager... not every manager is good... take a look at Berkley Capital, Seneca, and Roger Engamann, they were horrible.

[/quote]

Some guys simply abuse the SMA process and instead of using some rational asset allocation model have clients back up the truck with a single manager with recent hot numbers. When that investing discipline falls out of favor and the manager's numbers decline, they get whip-sawed. Usually said geniuses then call their clients, blame the manager (not their failure to allocate) and move everything into the newest hot-dot. Wash, rinse, repeat....

[quote=Soothsayer]

[quote=Guest1]Sooth, you must be pretty good. Can I send you 500 or so? You must be doing better than my def comp..Outpacing all the CFAs at Captal, wow, that is impressive, Where do I send my check ? And your fee ?[/quote]

Actually, I am very good.  I don't know if you remember other threads about H&R Block's financial services unit, but I have said several times on this forum that I am short that stock (HRB)--not because of the financial services business, but because of their sub-prime lending business.  I first shorted the stock at $54, then doubled down at $59.50.  The stock briefly went above $60 on news that it was splitting 2 for 1.  Check out the price today.  Meanwhile, the PhDs, CFAs, and whoever else continue to be long.  Many of my clients have benefitted from this "falling star."  This is just one example. 

BTW Guest, did you catch the data point on Friday that Annaly Mortgage (NLY), one of the oldest and best run mortgage REITs slashed their dividend by 64%.  If you caught that, you're ahead of the PhDs.  Go back and read their comments about just how tough the mortgage business is right now.  In addition to HRB, I have been short Accredited Home Lenders (LEND), New Century Financial (NEW), and NovaStar Financial (NFI) for more than four months now.  Go check out those charts, and see how me and my clients are doing.  There are still plenty of opportunities in those shorts with the exception of LEND.  I am having to cover parts of most positions right now simply because the stock cannot be borrowed.  So, the PhDs are sniffing out the problems with the stock at 37.  I sniffed them out at 50.  I guess they missed the easy 26% return that was sitting on the table.  I do not know of a single analyst who recommended a short or had a "Sell" rating with the stock at or near its highs.  In fact, many had "strong buy" ratings.  So, as the herd arrives to the realities of LEND and is dumping the stock in an all out panic, they pass me and my clients already riding out of town with a rather tidy (and fat) profit.  I could go on, and on, and on about other present holdings, but you will beg for all of the times I have screwed up.  There has been one that stands out in my mind.  I shorted Apple (AAPL) in the Fall of '04, and covered in December, and got whipped pretty good.  But on the whole, I have had far more winners than losers. 

[/quote]

Hey Butler and Guest, did you see how my basket of shorts did late in the week?  Yet another big "Come to Jesus", this time from NEW.  How did your clients' fare?

I think you are right on regarding the subprime lenders.  I would also include many of the builders in that.  Knowing how to short is a terrific thing that can greatly enhance your benefit to the client. If you understand technicals, it sure helps because often you will be shorting stocks the big Wall Street firms are recommending. 

Of course, they are often simply trying to unload their inventory so they will keep their buy recommendation on a stock and screw the average investor/advisor who doesn't know what the hell is going on.  Builders is a good example of that now.  Just watch what happens to them along with some of these stupid lenders as rates rise. 

I'm not so sure that rates will rise very much.  The government is promising to pump significant amounts of money into the Gulf region, and do so without raising taxes.  That will probably mean larger than average floats on Treasuries.  Even if the Fed is raising rates, liquidity will be added by the bond auction, thereby negating Greenspan's efforts at tightening. 

The Fed is indeed powerful, but it's power is minor when compared with economic forces.

What the heck are you talking about Starka?  Do you know who controls over 25% of the flow on the ten year? Pimco.  Economic  forces?  What a joke.  The fed is keeping this ten yr yield artifically low and they won't be able to do it forever.  Even with Pimcos help.  What has it been, 11 rates increases?  So you are already wrong.  Low rates have lead to the artificial rise in home values.  Rates are going to continue to go up.  Bet on it.  And when they continue to do so, watch what begins to happen to housing prices, subprime lenders, and builders.     

Now, if I am wrong on the home builders and I get stopped out it wont be the first time.   There are always other opportunities.   I'll bet I am right though.

I don't really subscribe to conspiracy theories, Greenhills.  That said, Pimco could not control 25% of the 10 year if clients didn't keep putting money into the fund.

The Fed has thrown out 11 rate increases, yet yields remain low.  Why?  Because the economy wants yields low.  Wrong?  Hardly.

I don't know whether high end home builders will prosper or not from the coming reconstruction of the Gulf Coast.  I do think, however, that the large industrial constructors will be VERY busy in the coming months.  Building materials will benefit as well.

Right now, the technicals are telling us the home builders are done.  I am all ready up on all of those short positions.  You have home builders breaking key supports all over the place. You see, that's the nice thing about learning technical research.  It doesnt lie, Wall Steet does. 

So you go long and keep listening to all the crap you hear on CNBC or from your firm or who ever.  Idiots putting buy recommendations out on these stocks and they haven't a clue.  I'll stay short until I am happy with my profits or get stopped out.   

As far as the Pimco is concerned, that is no conspiracy theory, it is correct.  It is a fact and it is a big deal.  You think for one minute that the Fed is not in contact with Gross?  Give me a break.  When the ten year finally goes over 4.5-4.6% like it wants to do if it wasent being artificially held down, you watch what happens to this market.

When did I say I was long home builders?  When did I say I was guided by CNBC?

Look, if you want to have an exchange of ideas, fine.  If you'd rather handle both sides of the discussion, I'm fine with that too.  But don't make assumptions on what I recommend to my clients.  As it is, you are in fact, incorrect.