New fee based platform at EJ

Where did you get this information? Has it been made public?

this month of reg rep magazine _ all jones reps have to have the 66 within 3 months and Weddle said at a regional meeting they were going to roll out a fee program

[quote=jamesbond]this month of reg rep magazine _ all jones reps have to have the 66 within 3 months and Weddle said at a regional meeting they were going to roll out a fee program [/quote]

Any ideas on the timeline or the details of the program?

We also have a GP that was tasked this year with heading up the fee based platform.  I've heard everything from first quarter to sometime in 2007 on when they are going to launch it.  It's coming, they just haven't told us exactly when. 

I've heard Jim say we are going to have fee based (fall regional last year).  I don't think it's as much backtracking on saying fee based is evil, just a realization that the environment is changing and we need to change too.  Jones is a company that doesn't change very quickly.  BTW, I've never heard anyone put a blanket statement on fee based that says it's evil.  I have heard it said that fee based is not appropriate for everyone like some firms tend to think.  There's a difference.

Not to rehash this debate (which is hard to do on this forum) , but my opinion is if you explain all the pros and the cons as honestly as possible to the client and let them choose, you can't go wrong. It's about options and perceived value. If the client likes to have the option of paying more in fees but getting to choose the best funds in each asset class, rebalance regularly with no concern of transaction costs, and to avoid front loads...then so be it. I've told all my clients that have chosen wrap that it is the most expensive way to inest but it's also one of the most flexible. The ones that choose it don't mind in order to gain the flexibility.

I am almost positive this won't be in place by the time I get to Jones. That will make for some difficult decisions for me and my clients.

Nole, are you moving to Jones? Where are you moving from, and why?

Just curious.

Spiff said:

BTW, I've never heard anyone put a blanket statement on fee based that says it's evil.  I have heard it said that fee based is not appropriate for everyone like some firms tend to think.  There's a difference.

I don't know if anyone ever said "evil", but Jack Cahill told me about a year ago that fee based accounts were wrong for the customer, and if EDJ was losing big producers because they wanted to use fee based accounts, the GP's had no problem letting them go.  He told a small group of us that if we wanted to have fee based business, we should go too.  It had nothing to do with fee based being appropriate for some people and not others, it was pretty clear that fee based was considered inappropriate in virtually all circumstances.  This fit with the party line I had been hearing since I started with Jones.

Shortly after that, Weddle started making noise about his fee based platform, but he said on Suggbox that the broker would make about 1/2 what they do at other firms,  which was all I needed to hear to let me know I would be happier elsewhere. 

I've heard the blanket statement many times.

Started about 2.5 yrs ago w/Jones and all I heard from trainers, visiting vets etc, was how fee based was such a rip off to the client and you should always do A shares. 

EDJ4-



I would imagine any fee based platform would have to be correlated

somehow to the current MAP program, which pays you comparably to

other firms. But then again, I have no idea what it’s really going to look

like. It may end up being comparable to some watered-down version of

preferred-fund C-shares.

[quote=Broker24]EDJ4-

I would imagine any fee based platform would have to be correlated
somehow to the current MAP program, which pays you comparably to
other firms. But then again, I have no idea what it's really going to look
like. It may end up being comparable to some watered-down version of
preferred-fund C-shares.

[/quote]

B24, the Jones MAP program doesn't even come close to payouts at other firms.  We had a Jones broker in an insurance CE class a year or so ago, and at every break he could be found touting the wonder that is Edward Jones.  When the subject of payouts came up, he said the same thing...that it was comparable.  When pressed for actual numbers, he was laughed out of the room.

I was not referring to payout %, just the % charge.  Can't compare actual payout to Indy, if that is what you are referring to (though if memory serves, you are at a wirehouse?).

Anyhow, MAP charges range from about 0.75% to 1.75% to the firm (plus 0.50-0.75% to the manager).  It's a convoluted sort of graduated scale, so it's hard to quote exact numbers.  With a large enough investment (several millions), plus the allowable discounts, I think the fee to EDJ can go as low as 0.50%, but that would be rare.  I think the average fee to EDJ is around 1% based on typical account sizes.  And of course our payout is only 40%.  I am not sure how that compares to other non-Indy firms.

I don't claim to know how everything works at other firms, so I welcome any corrections.

[quote=Broker24]Nole, are you moving to Jones? Where are you moving from, and why?
Just curious.[/quote]

I am about to have a meeting so I don't have a whole lot of time. However, currently I work for Ameriprise. There's a few reasons I am going to move to Edward Jones. The #1 reason basically surrounds fee based planning vs. commission based planning. Firstly, I think I could do better for myself and have a greater quantity of clients if I do not charge an annual planning fee. Some times, I don't even think the advice we/I give is even worth a fee (some of the smaller clients where you just set up roths, disability insurance etc.). Furthermore, I think that the majority of our comp at AMP doesn't come from annual planning fees but from commissions. So, I don't think we make as much in commissions from the planning fees as we lose in business from people who don't want to pay them.

Secondly, I don't really see the ethics of doing fee based and commission based planning. I might if one actually created financial plans for clients and gave them advice using products that you could and could not sell. I probably still would not because even then you might be influenced knowing that some products have bigger up front commissions than others. However, nobody does that. Nobody creates a plan for somebody with products that they can't sell so people are paying a planning fee for biased advice.

Thirdly, I want to create my own atmosphere. Whereas that's not entirely possible with Jones, it's more so the case if you have your own office than being in an office with 60 other advisors...many of them (but certainly not all) who know very little about financial planning. A bunch of young salesmen in suits. It can be a little greasy around here for me.

Jones contacted me so I am going to give them a shot. I know a lot about the pros and cons from talking to people who work there and people that don't. This forum has been very helpful. For me, I think Jones is a step up and I don't mind marketing door to door. It's better than doing lunch and learns in my book. I don't have to get reimbursed and I am offering free advice...essentially. Jones certainly isn't perfect, but I think it's better than what I am doing now. Plus, at Jones, there is a stronger focus on asset management...what I prefer doing. I don't mind selling insurance, but sometimes at AMP (formerly IDS life), it seems like there's not much else out there.

Nole Wrote:

However, nobody does that. Nobody creates a plan for somebody with products that they can't sell so people are paying a planning fee for biased advice.

It's called fee-only planning. Every meeting I put together plans with investments that I cannot 'sell'. That's the beauty, no conflict and I have a vested interest in protecting clients money and seeing it grow.

I charge either an hourly fee ($150) or AUM fee (1%-.55%) and have no strings attached.

[quote=EDJ to RIA]

It's called fee-only planning. Every meeting I put together plans with investments that I cannot 'sell'. That's the beauty, no conflict and I have a vested interest in protecting clients money and seeing it grow.

I charge either an hourly fee ($150) or AUM fee (1%-.55%) and have no strings attached.

[/quote]

Yes, and as an Indy, you can do that. At Ameriprise, I can't. And I am too young in the business to go indy.

[quote=EDJ to RIA]

Nole Wrote:

However, nobody does that. Nobody creates a plan for somebody with products that they can't sell so people are paying a planning fee for biased advice.

It's called fee-only planning. Every meeting I put together plans with investments that I cannot 'sell'. That's the beauty, no conflict and I have a vested interest in protecting clients money and seeing it grow.

I charge either an hourly fee ($150) or AUM fee (1%-.55%) and have no strings attached.

[quote=AllREIT] [quote=EDJ to RIA]

 I just can't imagine how A-share pushers live with themselves.
[/quote]

Frankly, that is the kind of crazy, stupid, elitist crap that breaks down reasonable conversation.

[quote=Nole32303]

So, I don’t think we make as much in commissions
from the planning fees as we lose in business from people who don’t
want to pay them.
[/quote]

AMP's flawed business model does not make EDJ's flawed model any better.

[quote]I probably still would not because even then you might be influenced knowing that some products have bigger up front commissions than others. However, nobody does that. Nobody creates a plan for somebody with products that they can't sell so people are paying a planning fee for biased advice.[/quote]

You realise that the future of this industry is towards fee based advice from disinterested advisors? There is a reason that Vanguard opens up 4000 advisory accounts a month.

The future of this business is fee-based done by RIA's. You can either try to fight the future, or be on the right side of it.

[quote]A bunch of young salesmen in suits. It can be a little greasy around here for me.[/quote]

That is true, AMP is very greasy.

[quote]For me, I think Jones is a step up and I don't mind marketing door to door. It's better than doing lunch and learns in my book. I don't have to get reimbursed and I am offering free advice...essentially.[/quote]

AMP's seminar based model is really the only thing going for them. RVS funds suck, IDS Life is overpriced.

[quote]Jones certainly isn't perfect, but I think it's better than what I am doing now. Plus, at Jones, there is a stronger focus on asset management...what I prefer doing. I don't mind selling insurance, but sometimes at AMP (formerly IDS life), it seems like there's not much else out there.[/quote]

EDJ shares 70% of the problems of AMP, because both of them are based on transactional business and pushing A-shares.

[quote=Nole32303]

Frankly, that is the kind of crazy, stupid, elitist crap that breaks down reasonable conversation.

AllREIT-

Maybe I should raise my hourly rate to eleventy kabillion!

[quote=AllREIT]

You realise that the future of this industry is towards fee based advice from disinterested advisors? There is a reason that Vanguard opens up 4000 advisory accounts a month.

The future of this business is fee-based done by RIA's. You can either try to fight the future, or be on the right side of it.

[/quote]

So, you really think that the future is going to be all RIA's, no commissioned FAs, no Merrill, Morgan, UBS, Jones, etc? 

Isn't the term "disinterested advisor" an oxymoron?  Simply by being an advisor aren't you "interested" in that client's accounts.  Aren't you going to form your own bias based on fund performance, stock preferences, etc? 

If we do away with the wirehouses, regionals, Indies and all that's left are RIA's don't you think the Vanguards of the industry will figure out a way to draw us to their platform vs Fidelity?  This industry is about two sets of people making money:  The clients and the advisors.   The question is who makes more the former or the latter?  

AllREIT-

I think you're missing the fact that not EVERYONE in America wants to pay 1% per year for investment services.  Some people just want you to invest their 401K rollover and be done with it.  I do realize that fee-based service is a huge piece of the business, and that firms (i.e. Jones) need to embrace it more.  But, I don't think commission-based service is ever going away completely.  Personally, I can't wait to do more of it.  But it is still a fact of life for the majority of the mainstream industry (not that I am basing that on any hard stats).

And I think Nole made the point that he would like to do it as well (more fee-based), but is still too early on to go out on his own, as many of us are.  And that is the unfortunate part - you can't just decide one day to go into this business and start doing fee-based business as an Indy.  Most people, at some point, had to work in a commission-based environment.

I just think, although fee-based is making a huge run, that it is not going to take over the entire industry as some think.  There will always be a mix of business models out there.

Hot off the press...

Investment Representatives at Jones are now called Financial Advisors.  Series 66. Change must be in the wind.

BTW, I think we are meaning 2 different things when we say fee based. I don’t mind doing fee based asset management in the sense of charging a percentage of assets under management. Most of my high value clients currently prefer that fee structure…as do I. However, at AMP, I am not allowed to engage in transactional business. In other words, somebody can’t simply come to me and roll over $500,000 and simply pay 1% to do so. At least in my market group (region), they must pay an annual planning fee (between $300 and $3,000) on top of any commission or asset based fee. That is the fee that I am talking about wanting to get away from.

I'll play devil's advocate here. Given the tenacity that EJ fought against fee accounts and now their eventual acceptance, in the normal course of business; something smelled fishy. Consider this scenario:

You're a GP looking for some extra revenue. You've currently got eleventykabillion dollars in MF assets paying you annual trails of .30%+/-. Yuck! Oh, I know, convert half (or more) of those MF assets to fee accounts at 1.0%, 1.5%, 2.0% annually and viola: more recurring revenue! Lots more!

Clip'em on the A shares, then flip'em into fees. Ahhhhh, life is good!

[quote=Spaceman Spiff][quote=AllREIT]

You realise that the future of this industry is towards fee based advice from disinterested advisors? There is a reason that Vanguard opens up 4000 advisory accounts a month.

The future of this business is fee-based done by RIA's. You can either try to fight the future, or be on the right side of it.

[/quote]

So, you really think that the future is going to be all RIA's, no commissioned FAs, no Merrill, Morgan, UBS, Jones, etc? [/quote]

Pretty much, Mostly because assets will convert one direction only and less new money will flow in to the commision channels.

[quote]Isn't the term "disinterested advisor" an oxymoron?  Simply by being an advisor aren't you "interested" in that client's accounts.  Aren't you going to form your own bias based on fund performance, stock preferences, etc? [/quote]

Disinterested from a financial perspective. I.e I don't get paid extra for pushing a preferred fund. I do have a slight interest in clients not losing money since that lowers AUM.

OTH if I sell you bunch of A shares of Van Wagoner Emerging Growth, and it falls 40%, I don't really care that much since I've made my 3%.

[quote]If we do away with the wirehouses, regionals, Indies and all that's left are RIA's don't you think the Vanguards of the industry will figure out a way to draw us to their platform vs Fidelity?  This industry is about two sets of people making money:  The clients and the advisors.   The question is who makes more the former or the latter?  

[quote=Broker24]

AllREIT-

It won't go away completely because it is so profitable. This is same reason that VUL gets sold. It's rarely in the best interests of the clients but it sure is the best interests of the agent. So people keep plugging away at it. 

[quote]And that is the unfortunate part - you can't just decide one day to go into this business and start doing fee-based business as an Indy.  Most people, at some point, had to work in a commission-based environment.[/quote]

[quote]I just think, although fee-based is making a huge run, that it is not going to take over the entire industry as some think.  There will always be a mix of business models out there.[/quote]

And there is still a small market for leaded gasoline.

 The race is not to the swift, nor the battle to the strong, but that's the way to bet them.

[quote=Nole32303] However, at AMP, I am not allowed to engage in
transactional business. In other words, somebody can’t simply come to
me and roll over $500,000 and simply pay 1% to do so. At least in my
market group (region), they must pay an annual planning fee (between
$300 and $3,000) on top of any commission or asset based fee. That is
the fee that I am talking about wanting to get away from.[/quote]



We all know that AMP is lame.



Fee-based, means you earn no comissions from sales of products, all
your compensation comes from fee’s directly charged to the client. How
you charge those fee’s is up to you.

[quote=doberman]

I’ll play devil’s advocate here. Given the tenacity

that EJ fought against fee accounts and now their eventual acceptance, in

the normal course of business; something smelled fishy. Consider this

scenario:

You’re a GP looking for some extra revenue. You’ve currently got

eleventykabillion dollars in MF assets paying you annual trails of .30%+/-.

Yuck! Oh, I know, convert half (or more) of those MF assets to fee

accounts at 1.0%, 1.5%, 2.0% annually and viola: more recurring revenue!

Lots more!

Clip’em on the A shares, then flip’em into fees. Ahhhhh,

life is good!

When I was at Jones I had several clients who went from A-shares to MAP within 2 years. FSD just had me document that it made sense from a tax standpoint and that they'd made up their sales charges. These clients should have been in MAP all along (it's exactly what they wanted) but our RL railed against anything fee-based at every regional meeting.

Nole,  I'm a franchisee with Ameriprise.  You're obviously a corporate trainee, as you mentioned working with 60 "young, greasy" trainees. 

I can work in a Fee-only capacity, a Fee-based, or transactional/commissioned capacity.  I've never heard of being forced to sell plans with all clients.  But at least it starts a process of getting all of thier info to help them plan COMPREHENSIVELY instead of just dispensing random free advice.  If you're going to use that series 66, you might as well take a holistic approach.  The client will see the value (or they can get their fee back from corporate).

Anyway, you act like you're forced to plan.  I'm not.  You can own your client base by becoming an Ameriprise franchisee, or you can be an employee.