EJ - GP & LP changes
Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated.
No more we’re all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs.
Just doesn’t seem right. What would Ted say?
Those at the top of the pyramid always make more than later joiners…this just makes it official (if true…?).
Well if you have 10 yrs there become 1 of 1 and go solo instead of 1 of 10,000
I’ve always felt the GP/LP was a ponzi scheme. I’m sure spiff will be on here in a few defending the changes.
I have no diea wht the changes are (don’t really care, actually). But I never quite got the “Ponzi Scheme” thing with regards to partnership. If you’re offered partnership, you buy in, you get your returns, and that’s it. I don’t know how it differs from any other professional partnership (i.e. accounting firms, law firms, etc.).
I don’t think there is a buy in with law firms…
eyes are starting to open to the way of the world
"give 'em the 'ol 1-2 punch"????Just doesn’t seem right. What would Ted say?
I can't see how they could justify making changes like that. Would it be based on tenure? Production? Does the GP over IS earn less than the GP over Mutual Funds? How about a guy like me who will have LP from both my home office time and my branch? The negative feedback from something like that would be huge. Ted would say that's a bunch of crap. If you're a partner in the firm, you're a partner in the firm. Period.Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated.
No more we’re all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs.
Just doesn’t seem right. What would Ted say?
Exactly. Partnership is usually something that is earned, not paid for. I guess I am a "partner" of Microsoft because I bought shares and now have a small ownership stake.I don’t think there is a buy in with law firms…
Spiff-
The ship is listing. Can you imagine the comraderie and togetherness this decision will have for the limited partners? Just one more nail... What's the message? The growth model doesn't work for successful FA's because in these times, they are losing at least 20% of their pay i.e., no bonus, and the firm still grows at their expense. This is a feeble attempt to get them some money back, paid by the lesser producing limited partners. If I were you Spiff, I would get my brethren together and voice your opinion...maybe you will get them to reconsider.Hmmmm. That would be great. I partnership where nobody has to invest capital into the business. I didn't realize that "law firms" was a generic business model, and no partners at law firms buy into partnership. So what if the business is struggling and you need to pay your staff? What then? Would a "partner" inject more capital into the business? That's right, law firms don't have partners put capital in. How do you start the business with no capital? Who buys out the retiring partners? Or is that just an accounts payable thing? Yes, there are some partnerships that will grant new limited partner shares on "sweat equity". However, this is more comparable to "profit sharing". But to make a general statement that law firm partners don't have to pay in is silly.I don’t think there is a buy in with law firms…
I can't see how they could justify making changes like that. Would it be based on tenure? Production? Does the GP over IS earn less than the GP over Mutual Funds? How about a guy like me who will have LP from both my home office time and my branch? The negative feedback from something like that would be huge. Ted would say that's a bunch of crap. If you're a partner in the firm, you're a partner in the firm. Period. [/quote] Since none of us know what the he!! he's talking about, it's hard to comment. For all we know, it may be an improvement. Maybe it's something more equitable. Who knows. I'd be interested to see the details.[quote=oneof10,000]Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated.
No more we’re all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs.
Just doesn’t seem right. What would Ted say?
I doubt it is better…I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through… For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP… Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
That actually makes sense. Maybe GP's now get SLP or something similar. The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary? Weddle's salary is only 250K I think. How they could separate basic LP I don't know.I doubt it is better…I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through… For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP… Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
Hmmmm. That would be great. I partnership where nobody has to invest capital into the business. I didn't realize that "law firms" was a generic business model, and no partners at law firms buy into partnership. So what if the business is struggling and you need to pay your staff? What then? Would a "partner" inject more capital into the business? That's right, law firms don't have partners put capital in. How do you start the business with no capital? Who buys out the retiring partners? Or is that just an accounts payable thing? Yes, there are some partnerships that will grant new limited partner shares on "sweat equity". However, this is more comparable to "profit sharing". But to make a general statement that law firm partners don't have to pay in is silly. [/quote] When I left Jones, that is exactly the type of arrangement that I joined. All costs which are shared are variable with the exception of assistant and healthcare. My portion has changed due to my sweat equity...[quote=chief123]I don’t think there is a buy in with law firms…
Well, can anyone confirm the existence of this supposed change?
[quote=chief123]I don’t think there is a buy in with law firms…
Hmmmm. That would be great. I partnership where nobody has to invest capital into the business. I didn’t realize that “law firms” was a generic business model, and no partners at law firms buy into partnership. So what if the business is struggling and you need to pay your staff? What then? Would a “partner” inject more capital into the business? That’s right, law firms don’t have partners put capital in. How do you start the business with no capital? Who buys out the retiring partners? Or is that just an accounts payable thing?
Yes, there are some partnerships that will grant new limited partner shares on “sweat equity”. However, this is more comparable to “profit sharing”. But to make a general statement that law firm partners don’t have to pay in is silly. [/quote]
Law firms are typically organized around partners, who are joint owners and business directors of the legal operation; associates, who are employees of the firm with the prospect of becoming partners; and a variety of staff employees, providing paralegal, clerical, and other support services. An associate may have to wait as long as 9 years before the decision is made as to whether the associate “makes partner”. Many law firms have an “up or out policy” (pioneered around 1900 by partner Paul Cravath of Cravath, Swaine & Moore[2]): associates who do not make partner are required to resign, either to join another firm, go it alone as a solo practitioner, go to work in-house in a corporate legal department, or change professions (burnout rates are very high in law[3]).
Making partner is very prestigious, especially due to competition at a large or mid-sized firm. Such firms may take out advertisements in legal newspapers to announce who has made partner. Traditionally, partners shared directly in the profits of the firm, after paying salaried employees, the landlord, and the usual costs of furniture, office supplies, and books for the law library (or a database subscription). Partners in a limited liability partnership can largely operate autonomously with regards to cultivating new business and servicing existing clients within their book of business. However, many large law firms have moved to a two-tiered partnership model, with equity and non-equity partners. Equity partners are considered to have ownership stakes in the firm, and share in the profits (and losses) of the firm. Non-equity partners are generally paid a fixed salary (albeit much higher than associates), and they are often granted certain limited voting rights with respect to firm operations. The world’s oldest continuing partnership is that of Cadwalader, Wickersham & Taft, founded in 1792 in New York City.
[quote=chief123]I doubt it is better…I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through… For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP… Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
That actually makes sense. Maybe GP’s now get SLP or something similar. The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary? Weddle’s salary is only 250K I think. How they could separate basic LP I don’t know. [/quote]
James D. Weddle 2006 $250,000 $11,682 $9,108,322 $9,370,004
2005 175,000 9,954 6,578,395 6,763,349
2004 175,000 8,508 4,053,790 4,237,298
The downsides of a partnership
Hill ranked No. 18 on the previous year’s list with a 2004 pay package of $1.8 million. That was the year he agreed to personally pay $3 million as part of a $75 million Edward Jones settlement with Securities and Exchange Commission and the U.S. Department of Justice. Hill was the highest ranking of five Edward Jones executives on the current Business Journal list. The investment firm’s other top executives – Rich Malone, chief information officer; Gary Reamey, principal of Edward Jones Canada; Jim Weddle, managing partner, and Norman Eaker, partner in charge of operations – filled out the No. 3 through No. 6 spots in this year’s ranking. Their large payouts came as a result of Edward Jones turning a $330 million profit in 2005, a record for the company.
[quote=chief123] [quote=B24] [quote=chief123]I doubt it is better…I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through… For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP… Same for GP, my guess is that they are going to limit the type of GP to regional leaders.[/quote]
That actually makes sense. Maybe GP's now get SLP or something similar. The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary? Weddle's salary is only 250K I think. How they could separate basic LP I don't know. [/quote]
James D. Weddle 2006 $250,000 $11,682 $9,108,322 $9,370,004
2005 175,000 9,954 6,578,395 6,763,349
2004 175,000 8,508 4,053,790 4,237,298[/quote] Maybe I'm dense, but is this what this means? $250,000 (salary) + $11,682 (profit sharing) + $9,108,322 (GP) = $9,370,004
Yep… sorry when i copied it it king of messed thing up.
[quote=chief123]I doubt it is better…I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through… For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP… Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
That actually makes sense. Maybe GP’s now get SLP or something similar. The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary? Weddle’s salary is only 250K I think. How they could separate basic LP I don’t know. [/quote]
I think the RL would deserve a decent share of GP simply because not only is he producing for the firm, he is taking on a pain in the neck job. A good RL anyway.
[quote=BigCheese]
Spiff-
The ship is listing. Can you imagine the comraderie and togetherness this decision will have for the limited partners? Just one more nail... What's the message? The growth model doesn't work for successful FA's because in these times, they are losing at least 20% of their pay i.e., no bonus, and the firm still grows at their expense. This is a feeble attempt to get them some money back, paid by the lesser producing limited partners. If I were you Spiff, I would get my brethren together and voice your opinion...maybe you will get them to reconsider.[/quote] Can a ship list based on conjecture? Can an imaginary torpedo from a U-Boat sink a battleship? You're acting like the original posting is a fact. I personally haven't heard anything about GP or LP being reworked. Nobody promised a bonus to me when I joined. They said if we are profitable, there will be a bonus. Well, Jones wasn't profitable for the last few trimesters, so there wasn't a bonus. We will eventually get back into the good bonus brackets and probably stay there for a while. That's the way it works. It doesn't mean the system is flawed. It's just the way the system works. Your anti-Jones radar is working overtime these days, foot. We've all heard this rhetoric from you before. Everything Jones does is bad. Everything foot does is good. And you want me to open my mind and consider the alternatives?It makes TOTAL sense to pay bonuses, when you don't make any profit. Just ask AIG.
This whole topic is absurd. They won’t change the structure of LP/GP because they don’t have to. If they want a certain GP or LP in the field to profit more than another they do what they all ready do. Provide a larger share of partnership to said individual. Period. End of story.
Well, I don’t think this was pulled out of thin air. I am sure what he is saying is true, we just don’t know the details. I’m not sure how that translates into a “listing ship”, but hey, whatever. All I have to say is, if OUR ship is listing, there are a LOT of ships at the bottom of the sea right now. This is sort of like when everyone was calling for the demise of Jones 5 or 6 years ago.
I can't see how they could justify making changes like that. Would it be based on tenure? Production? Does the GP over IS earn less than the GP over Mutual Funds? How about a guy like me who will have LP from both my home office time and my branch? The negative feedback from something like that would be huge. Ted would say that's a bunch of crap. If you're a partner in the firm, you're a partner in the firm. Period. [/quote] I don't think they can justify it Spiff. You already own more partnership the longer you are here and the more profitable you are. So in a way it's already structured toward the tenured people, which is totally fine. They have worked harder than the dude out 2 years. I honestly don't feel like this is even anywhere near true. Rumor Mill as usual. Why in the world would ANY company, not Jones, but ANY company change something that NOONE is complaining about. Especially something that the whole company was built on. Bunch of Rumor Mill[quote=oneof10,000]Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated.
No more we’re all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs.
Just doesn’t seem right. What would Ted say?
This whole topic is absurd. They won’t change the structure of LP/GP because they don’t have to. If they want a certain GP or LP in the field to profit more than another they do what they all ready do. Provide a larger share of partnership to said individual. Period. End of story.
I'm not sure, but because it is a securities offering, don't they have to run that by the SEC? And they can't offer more in any given year, right? At least LP?
It might make more sense to structure the offerings differently, as Hulk says as opposed to changing the whole thing.
Maybe they want to change the guarantee? Or place a ceiling on the return of LP (causing the excess to go to the GP? Or some other fund?
There are only two explanations for this potential change.
1- The GP's are concerned about their own welfare. 2- The GP's are concerned about the 500k+ producer subsidizing the growth model and continuing to receive NO BONUS (which was at least 20% of their total comp). My feeble mind tells me that item #1 is more important. If they do in fact go through with the change, GP or LP envy will ensue breaking down the image that all will continue to work together for the greater good. However, Spiff will continue to mentor and train the newbies affecting his abitlity to make Seg 4 (where bonuses if they are paid hit the 10% of comp threshold) and strive for the original pot of gold....GP. Only now there will be levels of partnership. It just doesn't sound good, and believe it or not, I doubt they will go through with it. Too much downside, unless the ship is listing and they are becoming desperate.Because it is "foot"ball season!
[quote=BigCheese]There are only two explanations for this potential change.
1- The GP's are concerned about their own welfare. 2- The GP's are concerned about the 500k+ producer subsidizing the growth model and continuing to receive NO BONUS (which was at least 20% of their total comp). My feeble mind tells me that item #1 is more important. If they do in fact go through with the change, GP or LP envy will ensue breaking down the image that all will continue to work together for the greater good. However, Spiff will continue to mentor and train the newbies affecting his abitlity to make Seg 4 (where bonuses if they are paid hit the 10% of comp threshold) and strive for the original pot of gold....GP. Only now there will be levels of partnership. It just doesn't sound good, and believe it or not, I doubt they will go through with it. Too much downside, unless the ship is listing and they are becoming desperate.[/quote] Actually, I think #2 makes sense. If I were a 800K+ producer, and a large part of my income was reliant on the rest of the company, and on subsidizing growth (of the rest of that company), I would not be all that happy. Realistically, the change in income for a 800K+ prodcuer could be well over 100K per year. Between branch profit bonus, profit sharing, and LP (or GP) distributions, that adds up to a lot of dough. I don't think it affects smaller producers all that much.[quote=B24] [quote=BigCheese]There are only two explanations for this potential change.
1- The GP’s are concerned about their own welfare.
2- The GP’s are concerned about the 500k+ producer subsidizing the growth model and continuing to receive NO BONUS (which was at least 20% of their total comp).
My feeble mind tells me that item #1 is more important.
If they do in fact go through with the change, GP or LP envy will ensue breaking down the image that all will continue to work together for the greater good. However, Spiff will continue to mentor and train the newbies affecting his abitlity to make Seg 4 (where bonuses if they are paid hit the 10% of comp threshold) and strive for the original pot of gold…GP. Only now there will be levels of partnership. It just doesn’t sound good, and believe it or not, I doubt they will go through with it. Too much downside, unless the ship is listing and they are becoming desperate.[/quote]
Actually, I think #2 makes sense. If I were a 800K+ producer, and a large part of my income was reliant on the rest of the company, and on subsidizing growth (of the rest of that company), I would not be all that happy. Realistically, the change in income for a 800K+ prodcuer could be well over 100K per year. Between branch profit bonus, profit sharing, and LP (or GP) distributions, that adds up to a lot of dough. I don’t think it affects smaller producers all that much.[/quote]
I have to agree. At some point, these Seg 5 guys will start wondering why they are staying (so far there have been a few that are “exploring”).
BigCheese is the new username of the poster formerly known as footsoldier. How could you not know that?Why do people keep mentioning “foot?”
I think #2 makes sense also. In my area I have seen three seg 4/5 guys move in the last month, 7 in last 3 months, and 12 in the last 6 months… Those are producers that jones can’t afford to lose because the guys who are replacing them are seg 1/2 and that crushes profitbality
I would go back to what Hulk said. If they want to compensate those guys for being big producers, they'll give them more LP or GP whenever it comes out.
Why would you change a system that has worked for decades if you know the problem you are trying to solve is temporary? The firm isn't in any financial trouble. We're going to be, or at least should be, in a bonus bracket this trimester. We aren't hemmoraging Seg 4 & 5 guys. We've had 1 seg 4 guy in my region leave in the last 12 months (He jumped to some loser company called LPL). I believe it is the same all over the company. We're not losing more than average. I just won't believe the rumor is true until Weddle sends us an email telling us there is a drastic change.[quote=Spaceman Spiff]
I would go back to what Hulk said. If they want to compensate those guys for being big producers, they’ll give them more LP or GP whenever it comes out.
Why would you change a system that has worked for decades if you know the problem you are trying to solve is temporary? The firm isn’t in any financial trouble. We’re going to be, or at least should be, in a bonus bracket this trimester. We aren’t hemmoraging Seg 4 & 5 guys. We’ve had 1 seg 4 guy in my region leave in the last 12 months (He jumped to some loser company called LPL). I believe it is the same all over the company. We’re not losing more than average.
I just won’t believe the rumor is true until Weddle sends us an email telling us there is a drastic change. [/quote]
I don’t think Jones is losing Seg4/5 guys either. But my guess is some guys are “thinking about it” like Segment 3 guys do all of the time.
I think different regions perform differently. Leadership is one of the things that will keep some producing advisors put at Jones. But regions where there is bad leadership, or resentment… all bets are off.
But since we’re talking LP/GP - I have to agree with Spiff. Until Wind sends out that email, I won’t believe it.
[quote=Moraen] [quote=Spaceman Spiff]
I would go back to what Hulk said. If they want to compensate those guys for being big producers, they'll give them more LP or GP whenever it comes out.
Why would you change a system that has worked for decades if you know the problem you are trying to solve is temporary? The firm isn't in any financial trouble. We're going to be, or at least should be, in a bonus bracket this trimester. We aren't hemmoraging Seg 4 & 5 guys. We've had 1 seg 4 guy in my region leave in the last 12 months (He jumped to some loser company called LPL). I believe it is the same all over the company. We're not losing more than average.
I just won't believe the rumor is true until Weddle sends us an email telling us there is a drastic change. [/quote]
I don't think Jones is losing Seg4/5 guys either. But my guess is some guys are "thinking about it" like Segment 3 guys do all of the time.
I think different regions perform differently. Leadership is one of the things that will keep some producing advisors put at Jones. But regions where there is bad leadership, or resentment... all bets are off.
But since we're talking LP/GP - I have to agree with Spiff. Until Wind sends out that email, I won't believe it.[/quote] I had to read that twice before I caught that. That's hilarious!
The only people I have seen leaving the firm in my region have been
Seg 3 guys. I can’t think of one Seg 4 or Seg 5 guy leaving in the
past few years. I have to say our Region has great camaraderie and
leadership.
In the last 12 months 7 of us left EDJ in 1 region.
4 were Seg 5 5 were LP's 5 had greater than 10 years tenure at EDJ. 5 accounted for $400m in assets. It's happening. Maybe not to this extent in all regions, but there is an exodous.FWIW … in my entire region… not a single 5, a couple of fours and that’s it … since 2006. One three got a whiff from LPL, but he stayed with us.
In my old region, there are now 8 brokers with LPL that were with Jones. I believe of that 8, 6 were segment 3 and 2 were segment 4. I would expect Segment 3’s to go first then followed by Segments 4’s. I would say it is unlikely that Segment 5’s would ever move. I believe our total brokers in the region when I left was around 60-65. We did have some that went to Next financial also, I believe there were 3. Our region had some special issues with it so that transition rate may be higher than the norm.
The only people that ever leave our region are New, Seg 1, Seg 2, and rarely seg 3. We have not had a seg 4 or 5 leave in the 4 years I have been here. But we have a lot of complacent seg 4’s that are happy making 100-150K in second careers (many are in their late 50’s), and have no interest in leaving. Our seg 5’s are green machines - a few former RL’s (our region has been split/combined several times due to growth), they all have tons of LP, SLP and GP (current one). Our longest tenured FA must have close to $1mm in LP based on his years, production, and being a former RL. That’s kicked him an extra 200K or so each year. That’s a tough annuity to walk away from. And his business is mostly transactional, 1000+ households, can’t really take that with you. I think his business would get decimated if he left. Either that or it would be too much work to rebuild.
Some regions clearly have more turnover than others. My old region lost 4 Seg 4 brokers since 2006 and 2 Seg 5’s. The guy who took over my office left and I think he was Seg 3.
Brokers who produce expect bonuses and brokers who don't say it doesn't matter. If the firm is losing producing brokers, they had better do something to sustain them or the firm won't be able to maintain the growth that they had in the past. No one to pay for it and the GP's are not going to do it out of their pocket directly.We’re going to be, or at least should be, in a bonus bracket this trimester.
Remember Sir Spiffy, before there is bonuses, there is growth. According to your 10K which you claim to read cover to cover each quarter, FA growth is necessary for your firm. Are you guys growing or just maintaining head count these days. I know 3 years ago when I was there, it was 200 month new reps. And the headcount stayed about the same then...I believe you have 12K reps now, so obviously there is some net growth. BTW...Did you happen to notice that LPL advisors were noted as the most repected representatives by clients according to the JD Power survey which consistently names EDJ as the best firm... Apparently JD Power rates firm satisfaction and client satisfaction...Not bad for an independent firm.Until May of last year, only Seg 1-3 brokers left the region mainly from a lack of production. I laughed off the people who left because they honestly were a joke. I'd seen a million leave in my 11 years, so many that I quit learning their names. Most left before they were put on goals and fired. Few if any of these stayed in production after leaving.
When Seg 5's started leaving, of which I was one, then I began to take notice. It is a great firm, but depending on your specific situation there may be more profitable options. This is what led me down the path I took that led me to leave the only company I had worked for in my adult life.Why would a Seg 5 broker leave if you have it soooo good?
Because everyone is an individual. Each business is different. Each FA has their own unique circumstances. For some big producers, they could make almost as much with their deal at Jones (prodcution, bonus, profit sharing, LP/GP) compared to if they left. It also depends where you are in life. If you started at Jones at 22, and are seg 5 at age 35, there’s a good chance you are going to stay open minded. If you started at Jones at 45, and you are seg 5 at 55 or 60, chances are you are not leaving without a really good exit strategy and some serious energy. It also depends what got you to where you are. If you feel it is replicatable (word?) somewhere else, it’s easy to move. BUt as I stated earlier, our biggest producer has well over 1000 housholds, does stricly transactional business (about 25% MFDs, the rest indiv secur), has a boatload of LP and SLP (former RL), and does not have to work all that hard to gross 850K. He is in his mid 40’s. I can’t imagine trying to move a book like that. And he does not really believe in managed money very much, so he needs lots of clients. For him, staying put, doing Goodknights to shed unprofitable clients and have someone else pay his overhead and goose his profitability is probably worth more than the aggrevation of trying to move that entire operation.
[quote=BigCheese]We’re going to be, or at least should be, in a bonus bracket this trimester.
Remember Sir Spiffy, before there is bonuses, there is growth. According to your 10K which you claim to read cover to cover each quarter, FA growth is necessary for your firm. Are you guys growing or just maintaining head count these days. I know 3 years ago when I was there, it was 200 month new reps. And the headcount stayed about the same then...I believe you have 12K reps now, so obviously there is some net growth. BTW...Did you happen to notice that LPL advisors were noted as the most repected representatives by clients according to the JD Power survey which consistently names EDJ as the best firm... Apparently JD Power rates firm satisfaction and client satisfaction...Not bad for an independent firm.[/quote] Yes, we are growing headcount. We ended 2008 at 12,155 FAs globally. At the end of July we were at 12,659. 4.14% growth in a market like this. We ended 2007 at 11,202. 1457 advisors added in the midst of a major market meltdown, shrinking profits, and general fear of all things monetary. The goal for the year is 7%, I believe. Looks like we're at least close to being on track. Who said I read the 10-k cover to cover every quarter? I read it from time to time, but not necessarily cover to cover every quarter. You're pretty good at putting words in my mouth. I saw the JD Power ratings. Congrats. I've never said that you indy folks were bad or that you weren't good at customer service. You should be. A bunch of you cut your teeth at and learned about customer service from...drumroll please...Edward Jones! Question for the wiser than wise Mr. Big Cheese. If EDJ wants to grow market share, how do they go about doing it in a substantial way? In my zip code there are about $6.5B in TLIA out there for everyone to split. If Jones wants to bump their market share from 2% to 4% how do they do it? Funnel more marketing dollars to existing FA's? Not put in any new FAs until the existing ones reach critical mass? How would you suggest they do it differently than they are doing it right now? The funny thing about Jones that you seem to be overlooking, or at least not mentioning, is that 90% of the time there is growth AND there are bonuses. How many trimesters while you were at Jones were there no bonuses? Three? Four? How many of those no bonus trimesters were due to new FA growth vs the market? Zero? You can knock the growth at Jones all you want. The majority of the time it works well within the business model. Only in extreme times like this does it not look so good.[quote=Spaceman Spiff][quote=BigCheese]We’re going to be, or at least should be, in a bonus bracket this trimester.
Remember Sir Spiffy, before there is bonuses, there is growth. According to your 10K which you claim to read cover to cover each quarter, FA growth is necessary for your firm. Are you guys growing or just maintaining head count these days. I know 3 years ago when I was there, it was 200 month new reps. And the headcount stayed about the same then...I believe you have 12K reps now, so obviously there is some net growth. BTW...Did you happen to notice that LPL advisors were noted as the most repected representatives by clients according to the JD Power survey which consistently names EDJ as the best firm... Apparently JD Power rates firm satisfaction and client satisfaction...Not bad for an independent firm.[/quote] Yes, we are growing headcount. We ended 2008 at 12,155 FAs globally. At the end of July we were at 12,659. 4.14% growth in a market like this. We ended 2007 at 11,202. 1457 advisors added in the midst of a major market meltdown, shrinking profits, and general fear of all things monetary. The goal for the year is 7%, I believe. Looks like we're at least close to being on track. Who said I read the 10-k cover to cover every quarter? I read it from time to time, but not necessarily cover to cover every quarter. You're pretty good at putting words in my mouth. I saw the JD Power ratings. Congrats. I've never said that you indy folks were bad or that you weren't good at customer service. You should be. A bunch of you cut your teeth at and learned about customer service from...drumroll please...Edward Jones! Question for the wiser than wise Mr. Big Cheese. If EDJ wants to grow market share, how do they go about doing it in a substantial way? In my zip code there are about $6.5B in TLIA out there for everyone to split. If Jones wants to bump their market share from 2% to 4% how do they do it? Funnel more marketing dollars to existing FA's? Not put in any new FAs until the existing ones reach critical mass? How would you suggest they do it differently than they are doing it right now? The funny thing about Jones that you seem to be overlooking, or at least not mentioning, is that 90% of the time there is growth AND there are bonuses. How many trimesters while you were at Jones were there no bonuses? Three? Four? How many of those no bonus trimesters were due to new FA growth vs the market? Zero? You can knock the growth at Jones all you want. The majority of the time it works well within the business model. Only in extreme times like this does it not look so good. [/quote] very well put........Cheezy, I think Jones is actually addressing some of those issues (other than the CD/UK thing). Yes, we do not offer a real competitive transfer package, but it is FAR better than it ever was. If I am not mistaken, it can approach 100% of T-12.
They are aggressivly extending Goodknight and Partner Plans. For the life of me, I still don't understand their reluctance to even have 2 or 3 person offices. I have never gotton a good answer on that. And it's nothing stupid like "one of the GP'S wives sells the prints that we hang in our offices". It's something fundamental, but I just can't figure it out. Unless they have proved over the years that it doesn't work (for their model), the only thing I can think of is the challenge they would have trying to manage teams. Maybe they are afraid of "team" exodus, I don't know. But overall, I think they are working to avoid the "scratch start". People always say they "love turnover". Throw em all against a wall and see what sticks. I don't believe that. I think they would much rather have 1000 - 1500 newbies make it every year, and be done with FA headcount growth in 5 years. They could disband the huge development and recruiting departments and focus on growing their advisors assets. One final thought...Jones is never going to have tons of huge producers. They don't market to the UHNW or even the HNW crowd. We appeal to "Joe Sixpack" for the most part. You can have a guy in every town in America service 400-500 clients and an average HH of $100K. Based on our model, that can work. You can't have 5-10 guys working in one town, servicing people across the entire county in our model. It defeats the purpose of having the "local guy". However, I think it could work in some urban markets, like STL. Not sure why you need 10 offices on every block. I'm done.Two things.
First, I thought it would only be a matter of time before an indy touted the JD Power at LPL. Spiff, kudos to you for not rubbing it in their face that people have bashed JD Power when Jones was winning everything. However, I will. You can’t bash EDJ for JD Power rankings and then try to claim it is some huge deal when LPL wins something.
Second, the TLIA statistics are incredibly flawed. In my area alone, you are talking $6.8 billion. Most is tied up in 401ks. They are counting those as investable assets, as well as banking deposits and often money that is generated by businesses in the form of loans (Factoring, etc.). The TLIA statistics are crap. A Jones office on every corner is not smart business.
B24 - I thought Jones one time tried 2 to 3 person offices and it didn’t work.
That is the model I’m going with. Seems to be working so far. I think if you have strong leadership, it can work.
Personally, I think EDJ will be fine and Weddle appears smarter to me now than he was when I was there. I think eventually he will be an unpopular MP, but will do what’s best for the future of the firm.
Yeah, I think years ago they tried it, and there are still some legacy multi-FA offices. Not sure why it didn’t work, but who knows, maybe Weddle will tackle that too. But he seems pretty adamantly opposed to it.
Yes, TLIA is flawed on one hand, but on the other hand, it is useful for relative measures. For example, one area has 3.0B, another has 10.0B - it doesn't mean you have an opportunity at capturing $10B, it just means that location "B" is much richer in assets than "A". I would argue that much of that 401K money indicates potential money in motion at some point. What do you mean by Weddle will eventually be unpopular? I'm not arguing your thoughts - just curious what makes you think this. I have always felt the exact opposite.[quote=B24] Yeah, I think years ago they tried it, and there are still some legacy multi-FA offices. Not sure why it didn’t work, but who knows, maybe Weddle will tackle that too. But he seems pretty adamantly opposed to it.
Yes, TLIA is flawed on one hand, but on the other hand, it is useful for relative measures. For example, one area has 3.0B, another has 10.0B - it doesn’t mean you have an opportunity at capturing $10B, it just means that location “B” is much richer in assets than “A”. I would argue that much of that 401K money indicates potential money in motion at some point.
What do you mean by Weddle will eventually be unpopular? I’m not arguing your thoughts - just curious what makes you think this. I have always felt the exact opposite. [/quote]
Your thoughts on TLIA are true. The problem is that Jones uses those numbers to determine HOW many FA’s they can put on a street. You are correct that it might be a better idea to have an office in an area that says 10b instead of 3b, but I think attempting to place ten (real case here) FAs on a SINGLE street that also has a Merrill office, an SB office and quite a few banks may be the wrong thing.
As for the argument that 401k money could be money in motion - this is true. But in my area, it seems that the companies here advise people they hire to roll their 401k into their new 401k before their advisor ever finds out about it (you could make the argument that if I talked to my clients more often that I would KNOW that they are going to take a new job, but sometimes clients don’t tell you stuff). The problem is timing, especially with prospects. Are you going to know when a prospect is moving jobs? Is their other advisor all over it? Who knows?
Weddle will be unpopular to some of the old vets who have been around FOREVER, I think. ytrewq and edjgp may disagree. I think that if he had his way, Weddle (not to be confused with WeddleMe) would have Jones with all kinds of really cool things. Update the GP/LP system so that more is invested in Growth and Health of the advisors. Put individual securities in a wrap program managed by the Advisory Solutions committee. I think he gets a lot of pushback and is attempting to do things that will help the firm adapt to the 21st century.
But then again, I’ve been gone a while now, and his popularity may be soaring. Quite a few good things have come about.
Oddly, this is exactly the demographics of my location. I have 6 guys in a relatively small town, outside a Top 20 demographic area. I market my business across five counties effectively (ok, relatively effectively. If it was effective, I'm be grossing 25K right now), in some cases to people where there is an EJ office 300 yards from their home. All I'm saying is the map changes so much across this country, no one model answers it all.… You can’t have 5-10 guys working in one town, servicing people across the entire county in our model. It defeats the purpose of having the "local guy…
On the topic of Top 20 demographic area… what do you use to consider that?
I actually agree with foot that there are some things that we can do to make the firm more profitable, but it would change the dynamics of the culture. Two or three person offices come to mind. GKN and Legacy offices are popular and being utilized a lot these days, but they’re temporary. They aren’t designed to be a long term cohabitation. Is it cheaper? Yep. But what happens to a Legacy FA’s assets if he leaves the firm? Same thing with a GKN. What about if I’m sharing an office with my buddy across the street and he decides to leave Jones or the biz altogether?
Do you share BOAs? What if you have a $500K producer in with a $150K producer. Who's P&L statement does the BOA hit? Do they split it by AUM, production, or actual usage. Do you have a BOA for each office? That would be confusing to a new client coming in for the first time. As for growing market share - nobody said that Jones is only trying to do it through growth. But, they realize that a region full of Seg 4 and 5 FAs isn't going to bring in as many assets as a region full of new FAs. Once a Seg 4 FA reaches $50-60MM AUM, he's not going to be out working as hard as he was before to bring on new assets. He's going to be wondering how he can do as little work as possible and still make the money he wants. He knows that through market growth and stuff that happens naturally like rollovers his book is going to continue to grow and eventually be where he wants it to be. He's going to stop reaching out to new clients. In essence he'll get complacent about growing his assets. So, you'll eventually cap out on the market share that a group of FAs will bring in. Sure, you'll have some that go on to get to $100-150MM, but when you're talking about Billions of dollars (even if the TLIA numbers are wrong) out there to get, $50MM isn't a significant percentage. Transfer brokers - this is an area where I agree with you. Jones has become more competitive, but not enough. Our region has a push to recruit more transfer brokers. You bring on market share instantly with a transfer, but you don't affect the new FAs who are doorknocking. There are absolutely some things that Jones could do to make itself more profitable. But they would do it at the cost of the culture. Ironically, it's the culture that keeps a lot of the old Vets here. Those are the ones you're suggesting will leave if the bonuses don't return. So, what do you do? I DON'T think screwing with the LP and GP is a great idea. That would potentially piss off not just the Vets, but the small potatoes guys like me, and the HQ people who are partners too. And can you imagine the outrage if it people figured out that the only reason they were doing it was to make sure the big producers are getting their bonuses? I'd hate to be Weddle's secretary that day. I think Weddle will continue to make changes. I think he'll try to sell those changes to the Vets as best he can. Some of them will buy in, some won't. I think that time will show that he was doing a good thing for the firm by making us more competitive with the other brokerage firms. It may change the culture some. Hopefully for the better.I know of at least one office on the East Coast that housed a husband/wife and prior it was a mother/daughter office (mom retired). They seem to be doing quite fine.
I keep scratching my head why Jones management feel one person offices are the ONLY model that works. 1 full-time assistant 25-35K, benefits5-7K, rent 12-18K or more, on and on. Newbies aren't profitable (or at least until year 3 years) Canada and the UK have never been profitable, is anybody wondering what's going on? Maybe Spiff and B24 can shed some light. I use excel and it just doesn't compute...Oddly, this is exactly the demographics of my location. I have 6 guys in a relatively small town, outside a Top 20 demographic area. I market my business across five counties effectively (ok, relatively effectively. If it was effective, I'm be grossing 25K right now), in some cases to people where there is an EJ office 300 yards from their home. All I'm saying is the map changes so much across this country, no one model answers it all. [/quote] Yeah, I hear you. I'm not saying it can't or doesn't work. I'm saying Jones would have to change its entire model to make it work correctly. The doorknocking thing, the "local guy" thing, the one-man office, the silent "territory" thing, all of it. I think they believe that one of their only competitive edges in the middle-market space is their office structure. In a rather commoditized industry, they are simply trying to utilize what little differentiating factor they have. I'm not saying it's right or wrong, but I think if we went down the other path, we are all of a sudden like every other brokerage firm (in the eyes of the public).[quote=B24]… You can’t have 5-10 guys working in one town, servicing people across the entire county in our model. It defeats the purpose of having the "local guy…
Spiff's response must have been telepathic...
??Huh?
B-
Spiff responded prior to me hitting the return key looking for more of his input. Great minds... the silent "territory" thing B- You reference of the silent territory...Now you are getting personal without knowing it. My former RL had a bug up his butt about an area that I wanted to prospect. He fought me until I realized what I fool I was even engaging with him about so I went around him and got the location approved. Ultimately I realized that I didn't want to bring EDJ to the area because I knew I wanted to go back to being indy. I was always under the impression there were no territories. What did you mean?I don't think the one man brokerage office really differntiates us in
the eye of the public. I believe we could merge offices, which in
turn would greatly cut costs and invest the savings in other things
such as growth and technology, and we would be a leaner more efficient
organization.
The coming payout changes in GP & LP are because of losses in the UK. My RL - a GP - tells me it north of $50 Million year. That’s a lot of money no matter where you live.
This is a great firm, but $50 Million a year in losses to be in a country that mandates 5 weeks vacation for even the most junior employees is just nuts.
And then they are going to reduce the minimum returns on my LP. So I guess not only am I subsidizing all the NY TARP banks but now I’m subsidizing clerks in the UK so they get their 5 weeks of vacation.
Only in America folks, only in America.
I guess we’ll have to just wait and see how things roll.
One of the challenges I always felt when I was with Jones, was the partnerships offered to non-producers. It didn't seem or feel right at the time. While I am willing to acknowledge that without back office support a firm can't grow, I really never reconciled why the producers were comp'd the same. I am sure Spiff can shed some light as to whether or not he has found out if the rumors are true about the change in compensation.
Maybe now the firm is doing its best to differentiate the producers from the paper pushers.I really hope this revelation about the home office folks at EDJ is just a way to bait me into a heated discussion about LP and the HQ associates and not what you .
Well, it worked. I'm tempted to use a phrase that I used previously to describe what I think about you. However, I won't. I'll just think it and not type it. As a former paper pusher non producing employee of EDJ, I take offense to your opinion that my contribution to the firm while you were producing was any less important than yours. Are you so thick headed that you simply don't understand that the HQ associates aren't simply there for growth, but to actually run the business of the firm. Every trade that is placed, every document that goes out, every form you fill out, every i that is dotted and every t that is crossed is done so because a non producer gave you the ability to do so. We are useless without them. Whether at EDJ or ML or LPL. EVERY company has to have back office support in order to survive. They are the ones who allow you to be the big producer that you are. How pompous and self-absorbed do you have to be to not understand that? Why should home office employees LP be set up any different than an FAs? FAs get more of it than home office folks do, so why should the payout be different? Are you so blind to the way that EDJ works that you don't realize that? Or are you just so adamant that everything they do is so wrong that you just refuse to see it? The reason you couldn't ever reconcile it was that you never appreciated it. My guess is you were one of those FAs who would have used the phrase "I pay your salary" when talking with an HQ support person. I used to love to get guys like you on the phone. Your file would quickly go from the top of my stack to the bottom. And you'd suddenly need a couple of new signatures or documents before I could finish. Something difficult that you couldn't just fax over. Even the high and mighty can be slowed down by the lowly non producer.Wowwwwww there Silver! Spiff, don't get your panties all in a wad. I can see his point, but let's look at this a different way. But to see what I'm saying, Foot, you need to think about Jones as the partnership, not as some big giant corporation.
Let's say you own your own firm (you DO! GOOD!). Let's say you decide to hire, I don't know, a CPA, or a lawyer, or (if you grow enough) a non-producing CEO to manage the growth and operations, and a VP of Marketing. OK. You hire them, and all of a sudden, you're growing like CRAZY. You double your assets and production within 2-3 years. You do this because you no longer have to worry AT ALL about marketing, finance, operations, compliance, etc. This team you built is indispensable. Now they come to you one day and say "we want in." What do you say? Maybe you say "go take a hike, I can hire 100 of you guys tomorrow." Or maybe you say "you're right", and you give them a little slice of the pie.
OK, it's not exactly apples-to-apples, I know that. But conceptually, we're talking about the same thing, but on a much grander scale. Personally, I don't know what the criteria is for LP or GP in STL (and the satellite offices). I hope there are some hurdles in place. But I do know (Spiff, please correct me if this is wrong) that most LP's in a home office would probably take "partnership" more seriously than just getting a paycheck and an occassional "ataboy". So I don't think LP for support staff is wrong as a blanket statement, but I think there needs to be definite hurdles in place to make it an "achievement".Spiffster-
You think I am a moron or an idiot again...I am shocked. Why should home office employees LP be set up any different than an FAs? According to 1 out of 10K, a GP said a change is imminent. Now if it is true do you think home office employees are going to be paid the same as the producing FA who isn't receiving a bonus (I am assuming your bonus is so small if any that it doesn't matter yet)?. In my feeble mind, I am thinking you should be referring to your wonderful management in those glowing terms...idiot...moron. Because my fine friend (I am thinking you are shooting the messenger) the GP's are trying to protect themselves first and then the people that create those huge payouts when times are good...the 500K producer and above. Somewhere way down the list is home office employees. And of course that comes after growth. I am sorry if I struck a nerve, and I hope they keep good soldiers like you from looking at alternatives, and don't affect your financial situation too much. If it were me, I would expect the worst and be pleasantly suprised if the supposed changes aren't quite as bad. I.e., maybe the changes will only affect new partners. Every trade that is placed, every document that goes out, every form you fill out, every i that is dotted and every t that is crossed is done so because a non producer gave you the ability to do so. If there are no orders...there is no paper to be pushed (fixed). Funny thing at LPL we are responsible for our paperwork...getting it right. We do get notices if we missed something, but it's still up to us to fix.Spiff-
One last point. I always appreciated help from home office whether it was from Jones or LPL. The difference is now its totally up to me to get it right and when we don't I pay for it with delays. I am not immune to mistakes or further requirements, and I now have for the very first time excellent competent staff to fix the problems. Maybe I should bonus my staff. Oh yeah it's my wife...The moron/idiot within me would say she is overpaid!But we’re not discussing now, in your current situation. When you went to LPL you chose to take on more responsibility. You chose to do all those things that I have a back office to help me with. For your extra responsibility you are compensated. My reaction was to your comment about not understanding why home office LPs are compensated the same way FA LPs are and, as I took it, a somewhat negative attitude towards the HQ associates.
Now if it is true do you think home office employees are going to be paid the same as the producing FA who isn't receiving a bonus (I am assuming your bonus is so small if any that it doesn't matter yet)?. You don't get it do you? You know who else isn't getting a bonus? Those home office employees. And for them LP is very meaningful. They don't get to go on trips or go to regional meetings or have vendors take them out to lunch or any of the other perks of our job. They don't have the ability to just work a little harder and give themselves a raise. And few of the average home office employees make as much as your run of the mill Seg 3 FA. So, in times like this when salaries are frozen, bonuses non existent, and many areas working short staffed due to a slowdown in hiring, you think it's OK to compensate the home office employee less than the $500K producer? Seriously? Even when things get back to normal you think there is some justification for segregating the associates in regards to LP? I think it's a mistake to change it, especially if it means that home office associates aren't going to earn as much on their LP. IF Jones makes a change to the LP/GP payout structure I would certainly hope that they've thought through all of the variables involved. I can't imagine being Weddle sitting in front of a group of folks in STL trying to justify why he's taking more money out of their pockets. I just can't see any situation where he could sell that to them and have them walk away with a good feeling. In my feeble mind, I am thinking you should be referring to your wonderful management in those glowing terms...idiot...moron. If Jones makes a change to the LP that negatively impacts the average home office LP, I will certainly be using those same terms for them. Until then, I'll keep them exclusively for you. Don't you feel special now?If Jones makes a change to the LP that negatively impacts the average home office LP, I will certainly be using those same terms for them. Until then, I’ll keep them exclusively for you. Don’t you feel special now?
Spiffy- Aren't we getting a bit bitter now...it's just a forum for discussion. Like B said maybe you might want to take a ZANAX calm down, no need to get your panties in a wad. I never said that the Parternship is changing. I only commented on the rationale behind it. Do you really think the GP's care about the home office staff? You don't get it do you? You know who else isn't getting a bonus? Those home office employees. Spiff...here comes the business owner in me vs the employee mentality. I will couch this by saying I don't intend to upset you further. This is just my opinion...The home office employees should be thankful that they have a job with good benefits paid by the profit makers. I wouldn't expect the employees to receive bonuses especially in these challenging times. And if I were a GP who was used to making double the income that I was getting, I wouldn 't expect the staff to expect it either. I will admit that I do agree with you Spiff, that Weddle will have an uphill battle to calm the nerves of LP's if they change the program. Time will tell. Does my post show balance or am I denegrating Jones further in your "special" eyes? I understand how difficult it is for you to continue to defend the firm. Incidentally, have you been able to confirm or deny the changes that 1 in 10K has mentioned with any GP?So, in times like this when salaries are frozen, bonuses non existent, and many areas working short staffed due to a slowdown in hiring, you think it’s OK to compensate the home office employee less than the $500K producer? Seriously? Even when things get back to normal you think there is some justification for segregating the associates in regards to LP? I think it’s a mistake to change it, especially if it means that home office associates aren’t going to earn as much on their LP.
Spiff- It really doesn't matter what I think, apparently this change is being directed by the GP's. But since you ask...I would bet the farm that the GP's don't share the same concern for home office employees and are worried about making their country club dues payments. They are used to making big bucks and if they are bleeding in the UK, Canada and new offices something has to give. Usually its the employees that take the brunt, and I can understand why you are so adamant that this is sending the wrong message to the people who are underpaid and over-worked. Ted probably would disagree... GP's of his era are long gone or a faint voice of reason.[quote=Spaceman Spiff]
As a former paper pusher non producing employee of EDJ, I take offense to your opinion that my contribution to the firm while you were producing was any less important than yours. [/quote]Your contribution as a non-producer was less important. Without the FA you had no job. Without you, the FA would just have to work harder or hire someone and not give them an equity stake in the company. Back office lives for one reason, to serve the producer.
right right, and the FA is the only “profit” center
[quote=voltmoie] [quote=Spaceman Spiff]
As a former paper pusher non producing employee of EDJ, I take offense to your opinion that my contribution to the firm while you were producing was any less important than yours. [/quote]Your contribution as a non-producer was less important. Without the FA you had no job. Without you, the FA would just have to work harder or hire someone and not give them an equity stake in the company. Back office lives for one reason, to serve the producer.
[/quote] And without the non-producers the FA can't do his job. Not at Jones. Not even at LPL. Some non producer somewhere has to create everything that we use to do what we do. So, the next time you log onto your computer, just think about the non-producers who aren't getting a bonus that make that thing run for you. The next time you place a trade for a bond or a stock, think about the non-producer who gave you the ability to do it. The next time you look at the door to your office, the chair you sit in, the pictures on the wall, the carpet on the floor, even the desk you have those client meeting over, think about the non-producers who put those things there or arranged for them to be there so that you wouldn't have to and so that you can do your job more effectively. Heck, without a non-producer, you'd have never been hired at Jones. Someone had to put your information into a computer so that EDJ (more specifically a recruiter (non-produer)) knew you wanted a job. The word you should have used is support, not serve. Serve would give someone the impression that you believe you are somehow superior to those non-producers. Support means we have a symbiotic relationship and we work in PARTNERSHIP for the betterment of the firm as a whole. I can see that you and foot are cut from the same cloth.
[quote=Spaceman Spiff][quote=voltmoie] [quote=Spaceman Spiff]
As a former paper pusher non producing employee of EDJ, I take offense to your opinion that my contribution to the firm while you were producing was any less important than yours. [/quote]Your contribution as a non-producer was less important. Without the FA you had no job. Without you, the FA would just have to work harder or hire someone and not give them an equity stake in the company. Back office lives for one reason, to serve the producer.
[/quote] And without the non-producers the FA can't do his job. Not at Jones. Not even at LPL. Some non producer somewhere has to create everything that we use to do what we do. So, the next time you log onto your computer, just think about the non-producers who aren't getting a bonus that make that thing run for you. The next time you place a trade for a bond or a stock, think about the non-producer who gave you the ability to do it. The next time you look at the door to your office, the chair you sit in, the pictures on the wall, the carpet on the floor, even the desk you have those client meeting over, think about the non-producers who put those things there or arranged for them to be there so that you wouldn't have to and so that you can do your job more effectively. Heck, without a non-producer, you'd have never been hired at Jones. Someone had to put your information into a computer so that EDJ (more specifically a recruiter (non-produer)) knew you wanted a job. The word you should have used is support, not serve. Serve would give someone the impression that you believe you are somehow superior to those non-producers. Support means we have a symbiotic relationship and we work in PARTNERSHIP for the betterment of the firm as a whole. I can see that you and foot are cut from the same cloth. [/quote] Classic chicken vs the egg conversation. The non producer would never have been hired without the revenue being paid from the producers revenue. The producer could never have made the sale without the support from the non producer. Which is more important?
[quote=Spaceman Spiff] [quote=voltmoie] [quote=Spaceman Spiff]
As a former paper pusher non producing employee of EDJ, I take offense to your opinion that my contribution to the firm while you were producing was any less important than yours. [/quote]Your contribution as a non-producer was less important. Without the FA you had no job. Without you, the FA would just have to work harder or hire someone and not give them an equity stake in the company. Back office lives for one reason, to serve the producer. [/quote]
And without the non-producers the FA can’t do his job. Not at Jones. Not even at LPL. Some non producer somewhere has to create everything that we use to do what we do. So, the next time you log onto your computer, just think about the non-producers who aren’t getting a bonus that make that thing run for you. The next time you place a trade for a bond or a stock, think about the non-producer who gave you the ability to do it. The next time you look at the door to your office, the chair you sit in, the pictures on the wall, the carpet on the floor, even the desk you have those client meeting over, think about the non-producers who put those things there or arranged for them to be there so that you wouldn’t have to and so that you can do your job more effectively. Heck, without a non-producer, you’d have never been hired at Jones. Someone had to put your information into a computer so that EDJ (more specifically a recruiter (non-produer)) knew you wanted a job.
The word you should have used is support, not serve. Serve would give someone the impression that you believe you are somehow superior to those non-producers. Support means we have a symbiotic relationship and we work in PARTNERSHIP for the betterment of the firm as a whole.
I can see that you and foot are cut from the same cloth.
[/quote]
Couple of points.
When I left Jones, I did EVERYTHING myself. RIA’s don’t have the luxury of any sort of back office support. Custodians make a small attempt, but really, it’s all on you.
My current support staff has freed me to do all kinds of other things (like post here). And they deserve recognition and compensation.
That said, a producer can continue to produce without support staff up to a CERTAIN POINT. Support staff cannot.
My support staff is great. But, I took the chance. I took the risk. They get paid based on how much they work. While they may contribute (maybe even more than me), they did not assume the risk. Classic, risk v. reward scenario.
Spiff, I have no doubt that you made a contribution and that the contribution is worthy of firm ownership. From my perspective, your time in the home office was less risky than someone in the field. You got a salary. Maybe a bonus. A guy in the field takes on a lot of risk (notwithstanding the fact that Jones pays for your office and assistant and a number of things while you start up - you pay for that in your net). You can do your job, but if you are not producing enough to put food on the table, then something has to give. Ever had a bad month and all of the sudden you needed new tires, a radiator and brake flush as well as your kid’s private school tuition, and a chargeback(true story, month 13)? If that happens as a home office salaried employee. You simply charge it, and budget to payoff the credit card. Much harder on variable income.
I don’t feel that support staff are servants, but they expenses. When I was in security, we constantly had to justify our reason for being there. And so, we pulled a lot of “value added” scenarios to show that we were worth $14 million a year. I’m sure you could do the same thing at home office support.
Wow. Didn’t mean to write that much.
Support staff is important
Sales staff is critical
Therefore sales staff is MORE important
If you can’t see the logic in this then I hope you are never in a leadership position, Spiff.
Support means we have a symbiotic relationship and we work in PARTNERSHIP for the betterment of the firm as a whole.
I can see that you and foot are cut from the same cloth. Spiff- I really struck a nerve, that wasn't my intention at all. I think you ought have these discussions with people that may care to listen and perhaps persuade upper management what a mistake it would be to follow through with a change in the LP program. What will you do if they change the LP floor or allow for more profit to higher producers or keep it with the GP's who take on all the risk of the firm? You are an employee, whether at home office or as an FA, and as such, you are expendable. Your concept of partnership and the GP's may not be what you hope it to be. You really aren't a partner in the sense of equity, you have no vote, and if they change things you can only react to their decisions.Maybe that's what is bugging you the most. The cloth you refer to is the mindset of a business owner. By the way you mentioned LPL back office...can't hold a candle to yours. Our office montra is we tell them what to do, or we tell how what we want to get accomplished, and we follow-up relentlessly. We need them, but they know intuitively without us they don't have employment.
[quote=B24]
Bottom line, support staff in any business should be entitled to as much ownership stake as the owners see fit. Owners don't cut in staff out of the goodness of their hearts. They do it to get buy-in and increase retention. If the owners don't want to do it (offer ownership), they must live with the potential consequences (employee morale, turnover, disinterest, etc.). It just depends how valuable the staff is to the owner. IMHO, Jones believes that the culture they foster at the home office (partially leveraged through LP participation) has a positive enough impact on the firm, that they continue to offer it. Think of it this way...with all of Jones quirks, what would FA retention be if we had a really sh!tty back office? I mean, I have nothing to compare to (except other industries), but I am very pleased overall with the support I get. Just a different perspective.[/quote] At Jones the owners have entitled support staff to be treated as equals when it comes to LP. Historically, the only differentiation in the way FAs are treated has been in the amount of LP they are offered. I would guess that the average associate who is offered LP at the home office is offered somewhere around $10K-20K, whereas the average FA is probably offered twice that. Jones has never before made a distinction between whether or not you were an FA when it comes to payout. You get paid 7.5% guaranteed and then whatever LP earns above that. End of story. What irks me about the conversation with foot, and now volt, isn't specifically their opinion on where they rank on the food chain at EDJ (BTW Volt, you're not as high as you might think yourself to be), but their attitude that home office people are a somewhat lower class of people. Now, that's my interpretation and if I misinterpreted, my apologies. The fact that I used to be one of those folks certainly puts me a bit on the defensive.Spiff-
I will take a bet that if you query 100 brokers, 90 of them will feel exactly the way volt and I have expressed it. What irks you...is deep down...you know we are spot on when it comes to this topic. Ask a GP, and I would bet you off the record, they would set you straight. They can't really care about employees...they are owners.[quote=Spaceman Spiff][quote=B24]
Bottom line, support staff in any business should be entitled to as much ownership stake as the owners see fit. Owners don't cut in staff out of the goodness of their hearts. They do it to get buy-in and increase retention. If the owners don't want to do it (offer ownership), they must live with the potential consequences (employee morale, turnover, disinterest, etc.). It just depends how valuable the staff is to the owner. IMHO, Jones believes that the culture they foster at the home office (partially leveraged through LP participation) has a positive enough impact on the firm, that they continue to offer it. Think of it this way...with all of Jones quirks, what would FA retention be if we had a really sh!tty back office? I mean, I have nothing to compare to (except other industries), but I am very pleased overall with the support I get. Just a different perspective.[/quote] At Jones the owners have entitled support staff to be treated as equals when it comes to LP. Historically, the only differentiation in the way FAs are treated has been in the amount of LP they are offered. I would guess that the average associate who is offered LP at the home office is offered somewhere around $10K-20K, whereas the average FA is probably offered twice that. Jones has never before made a distinction between whether or not you were an FA when it comes to payout. You get paid 7.5% guaranteed and then whatever LP earns above that. End of story. What irks me about the conversation with foot, and now volt, isn't specifically their opinion on where they rank on the food chain at EDJ (BTW Volt, you're not as high as you might think yourself to be), but their attitude that home office people are a somewhat lower class of people. Now, that's my interpretation and if I misinterpreted, my apologies. The fact that I used to be one of those folks certainly puts me a bit on the defensive. [/quote]You lost this argument the moment you became emotionally invested.
I rank NOWHERE. I'm simply a new guy trying to make my way however I have a bit of exp. outside of Jones that makes qualifies me to have an opinion on the value of production vs. backoffice. Within a sales related business your sales force is ALWAYS the most important unit. To think otherwise is foolish. I know you are not a fool so don't insult our intelligence trying to say the value of support staff is equal to that of sales. It's buffoonery.
They are NOT lower class. The are hard working, honest, smart people ... but they do not pay for their salaries. YOU DO. We make the business go ... not them, not ever - they simply greese the gears.
I also agree with you that they deserve LPs. I imagine its quite a source of pride form them to get one and one heck of a recruitment/retention tool.
Do me a favor and don't put words in my mouth there Spiffy, read what I wrote and have written.
Spiff,B or any other Jones rep-
Can anyone confirm 1 in 10K statement that changes in the partnership plan are coming?What does it matter to you? If you used to work for Jones call some of your old associates.
I’ll confirm that it was posted by a guy on this board for a week. I can’t confirm or deny the claim, but it sounds absurd on its face.
He has just as much ownership as you do!!!What does it matter to you? If you used to work for Jones call some of your old associates.
That’s actually pretty funny noggin.
I called a couple of folks at HQ that I know and none of them have even heard about it. Now, they're not GP's so they may not have any more insight than I do, but they would certainly have the opportunity to bump into more GPs than I do on a daily basis. Both of them chuckled when I mentioned it.Jeez, this is easy: Support staff guy quits, you look through a stack of resumes and find a guy who can read and write and you train him a little bit and then you're back in business. $500k producing sales guy quits, you look through a stack of resumes, you have a 1 in 10 chance you find someone that can produce what you just lost, train him for a while, hopefully within 3-4 years he can produce the amount that just left. Quite a different dynamic there, and quite a different amount of risk the company takes on when looking at the 2 types.What irks me about the conversation with foot, and now volt, isn’t specifically their opinion on where they rank on the food chain at EDJ (BTW Volt, you’re not as high as you might think yourself to be), but their attitude that home office people are a somewhat lower class of people. Now, that’s my interpretation and if I misinterpreted, my apologies. The fact that I used to be one of those folks certainly puts me a bit on the defensive.
what is a "500k producer"
are they making 500k for the firm, or is that how much they make for themselves for the year?
$500,000 gross production. It could be $600,000 or $400,000, I was just using the number as an example.what is a “500k producer”
are they making 500k for the firm, or is that how much they make for themselves for the year?
Try to understand that there are 3 buckets of owners at Jones: GPs, LPs, SLPs. A GP at Jones earns whatever the return on capital is for the GP bucket - plus a salary. The GP earnings pay taxes, GP retention, and either loan or cash. The only tinkering they could do is change retention - which does not affect the other owners or the employees. There is only 100% of GP capital - no more is created.
Your point, Noggin? I could careless what happens to EDJ partnership agreements. Thanks for making my case.
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