Just an observation

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Mar 22, 2007 2:15 am

I have seen a significant trend lately.

    I have seen very few decent producers leave Jones the last several years.  It happens, at a rate of around 3% annually, but it is relatively rare.  I have, however, seen an almost limitless supply of Segment 2 and low 3 brokers leave to go to banks, credit unions, or indy.  When I see brokers out 3,4,5,6, or 7 years leave, I feel this is for the better, both for the advisor and Jones.  Without growing their business, these young brokers are dead weight at Jones, but fit in well at the 3 business models mentioned previously.  So before I put much weight in the "I'M SO HAPPY", OR "I SHOULD HAVE DONE THIS MUCH SOONER", OR "EDWARD JONES IS A CULT", I had to understand (and it took many years of observation) that the VAST majority of these posts were from lower-end Jones brokers that the model just didn't work for. 


    When someone is done trying to grow their business, there is a lot of motivation to look for other opportunities.   I don't know exacly why so many brokers around the 15 to 25 million mark stop growing, but I can understand the reasons for looking elsewhere.  The median broker at LPL grosses less than 100k, but if you can limit your expenses, I guess some people can live off that.  The Indy, Bank, or Credit Union model works much better for this type of advisor, and I wish these brokers the best of luck.

Mar 22, 2007 2:38 am

Some insightful thoughts. Elsewhere on the forum today, it was pointed out that some wirehouse advisors never stop marketing and really zero in on servicing what they have. At some point, if you really focus on your clients, and get a better payout or lower your costs, you can make a good living, work less hours, work by referral only ...being efficient at any platform is critical to keep us happy.


One can generate a lot more than the median $$$ you mentioned in a lot less than fourty hours, using a part time assistant at a good payout rate in a solo office.

Mar 22, 2007 1:28 pm

Rank - what you didn't think there were enough posts about Jones on this forum already? 


BTW the answer to your statement about brokers not growing past $25 million is only one thing: determination.  People are, as a general rule, lazy.  It's a lot of work to continue to bring in new assets and continue growing. Then they start to do the math.  Indy - fee based - take 80% of my $25 million @ 1% annually = $200K gross.  They leave right when the fruits of their labor start to show at Jones.  If those people would keep pushing, they'd be great.  However, they typically either get termed or take the path of least resistance. 


I've decided I don't really care what they think about Jones.  They don't work for Jones anymore.  If you and I want to complain about Jones, great.  An outsider complaining about his former employer is just sad.


Good luck with this thread.

Mar 22, 2007 1:28 pm
rankstocks:

I have seen a significant trend lately.

    I have seen very few decent producers leave Jones the last several years.  It happens, at a rate of around 3% annually, but it is relatively rare.  I have, however, seen an almost limitless supply of Segment 2 and low 3 brokers leave to go to banks, credit unions, or indy.  When I see brokers out 3,4,5,6, or 7 years leave, I feel this is for the better, both for the advisor and Jones.  Without growing their business, these young brokers are dead weight at Jones, but fit in well at the 3 business models mentioned previously.  So before I put much weight in the "I'M SO HAPPY", OR "I SHOULD HAVE DONE THIS MUCH SOONER", OR "EDWARD JONES IS A CULT", I had to understand (and it took many years of observation) that the VAST majority of these posts were from lower-end Jones brokers that the model just didn't work for. 


    When someone is done trying to grow their business, there is a lot of motivation to look for other opportunities.   I don't know exacly why so many brokers around the 15 to 25 million mark stop growing, but I can understand the reasons for looking elsewhere.  The median broker at LPL grosses less than 100k, but if you can limit your expenses, I guess some people can live off that.  The Indy, Bank, or Credit Union model works much better for this type of advisor, and I wish these brokers the best of luck.



Where did you get your stats on the LPL brokers...oh yeah...you made it up.  BTW...EJ's stocks are RANK.  I was Seg. 4 when I left and 6 other EJ guys I know were Seg. 4 when they left too.  You are a moron...get a clue, buy a vowel...do something besides drink the Kool-aid.

Mar 22, 2007 2:30 pm

Rank-


I was a Seg 4 broker also when I left. Had 38M and brought 60% with me. Still working on 10% more.


Mar 22, 2007 3:50 pm

rank ,about a year ago 3 of us left-all 3 top producers for over 20 years with about 37 years between us.OH BY THE WAY ABOUT 600 MILLION IS ASSETS.All three of us have more assets than when we left.  You have no clue about platforms or services that you do not have until you leave.Keep up the battle because edj has lost the war.

Mar 23, 2007 2:56 am

uwec86,


    If you weren't blinded by your own ideology, I think you would catch my main point.  But just to prove you wrong, take a look at this link: http://209.104.135.85/investmentnews/bdprofile/edit/2007/pro file.asp?bdprofileid=54


Now that we know who the true "moron...get a clue, buy a vowel...do something besides drink the Kool-aid." is, I hope you can go back to your below average production.

Mar 23, 2007 9:25 am

Rank,


You got me on that one...however...you make many many claims about who leaves Jonestown and what type of broker they are.  The fact is, you don't have a clue.  When I make comments, they are based on facts about Jones, you on the other hand make stuff up based on a data set that you don't have a clue about.  How many of the Jones brokers who have left in your region have you spoken to?  You haven't seen the work outside Jones so I'd suggest you get some facts before shooting off your uneducated mouth.

Mar 23, 2007 11:26 pm

I'm guessing that most of those below $100K are producing assistants, junior brokers, etc.  I'm confident that these are not single broker offices since LPL won't give you an office without at least $125K production.  If a producing assistant gets a base salary plus an override, yeah, they can probably live off that since most would be second incomes anyway.  I'm running about $25K/month in my second full year of independence and most producers I talk to do that and more, so I'm guessing that the typical  producing 24 does a lot more than $100K/year, but that's just a guess.  My assets are not what they were just yet, but the trajectory is good...by my second anniversary this summer, I should be around $40 million assuming normal market conditions.  I may not be, but I feel like I am a typical new indy as far as LPL goes.


Sure, some folks leave because they aren't cutting the mustard, but there are plenty more that leave becaue they are sick of being used.  It's all about perspective...I think anyone getting less than half his/her gross is being used.  You on the other hand, apparently see value in what EDJ provides and are satisfied with a lower payout...to you, I say, "chacun à son goût".  I'm glad you're happy and successful with the model you've chosen, but I think it's a stretch to assume that most who leave do so because they are unsuccessful...just look at the other posts here...plenty of successful advisors leaving the ship.


I did notice and appreciate the new and improved tone of your post...perhaps someday we will learn to coexist...

Mar 23, 2007 11:41 pm

I have noticed in my 4 years that all the people that leave for a competitor go to either RJFS or LPL with the exception of when UBS was paying 150% to 200% of trailing 12's. In my experience, they have all been Segment 2 or 3, the terminated ones are usually Segment 1 or 2. I believe the point is valid as until a broker is consistently producing 250K or more they must not be considered a veteran broker. I knew a guy that went to LPL with 6M AUM from EJ....Needless to say he washed out......

Mar 24, 2007 10:03 am

And I agree with you both.


I've met several guys from EDJ looking to go indy with north of 100MM AUM, so it's not all flailing brokers who go indy from Jones.


Jones lends itself to the Indy paradigm. I've heard it said (and seen it in practice) that Jones is the worst of both worlds, You get the shoulder sitting of the wirehouse and the single man office expenses of an Indy. I personally think it is the nation's STOOPIDEST business plan. It goes against every bit of synergistic thought and efficiency of scale.


The cost structure of EDJones at least justifies the individual office paradigm. They'd be able to make twice as much money if they put TWO guys into one office!


How many doctors work in one man offices these days? Virtually ZERO! Even Dentists ae turning to the multi man office idea.


OTOH, as has been my usual course. I am against anyone coming into the Indy platform that doesn't have the production and the experience to be indy. And I don't see the one man branch Indy as being particularly worth the effort either. If nothing else, hire in a couple of the seg 2's and give them a decent payout (say 30%) and take the other (net) 40% to your own bottom line.


Mar 24, 2007 2:30 pm

Not all who leave Jones are low production FA's from Jones, and to be fair Rank said most were, not all were.  I would not fall into the low with >100AUM seg 4, but I am not at the highest production either. 


I just don't see the need to have them hold my hand and take 61% before my own business expense.  Not all Jones folks trade in old annuities and trade out of non preferred funds.  That is how I gathered up the 100 AUM over a 14 year period.


Edward Jones has many fine qualities about the business model and then it has some areas it lacks.  As far as the Indy model, it is a good transistion from Jones.  It is not for everybody!  If you having a hard time making it at Jones (Financial/Production), don't go Indy!  Life is about choices we all make, you make the choice to succeed or the choice to fail--it is still your choice no matter what platform  you decide to start with. 


When a FA leaves a firm and goes indy how many of their old "Friends"  still call on him/her.  I have friends at many firms and I still respect them all.  I can tell you that they are all ethical, professional, and above all else--still my friends.  Friends still go out to supper, to a game together, call on each other when one is sick.  My observation in 14 years at Jones is when one leaves the nest--you are a trader...Jones is a job that you might love--it is still a job!  You receive a W-2, if you died tomorrow the RL would tell everybody what a great gal/guy you were--then they would replace you.  A Indy is a owner of the business!  When they die, their family knows in advance who is going to takeover and when they retire--they know who is going to take over.  I had a great time at Jones and so did many of the folks who went Indy--Jones gave me what they promised and I returned the favor--Now it is time to move on!


Mar 24, 2007 3:04 pm

One of the things that causes so much riff in brokers going Indy (either

from Jones or elsewhere) is the WAY they go. The industry basically

backs them into a corner, and forces them to leave quitly in the night,

and then there is a duel over the next few months to see who can eek out

the most assets from the existing branch. So it forces people to do

things/say things they normally wouldn't want to. I have seen it at Jones

already. The one guy in my region that left for another firm (Merrill) has

done some pretty unethical things (both while with Jones and during his

transition). I actually heard that the pressure was on him, which was why

he left. He was a typical Seg 3 broker who took about 20mil out of the 30

or so that he had. Now he is bad-mouthing his replacement to his former

clients - some pretty awful stuff, too.



My point is, the way he left is why people will no longer respect him. If he

left on good terms, and took his business in an ethical way, I personally

wouldn't have a problem with him. I am sure the RL would either way

(just as a BOM would in a wirehouse), but it's his job to retain people.



It is unfortunate, but that is the nature of our business, and there is

nothing that can change it really.

Mar 24, 2007 3:07 pm
Broker24:

One of the things that causes so much riff in brokers going Indy (either
from Jones or elsewhere) is the WAY they go. The industry basically
backs them into a corner, and forces them to leave quitly in the night,
and then there is a duel over the next few months to see who can eek out
the most assets from the existing branch. So it forces people to do
things/say things they normally wouldn't want to. I have seen it at Jones
already. The one guy in my region that left for another firm (Merrill) has
done some pretty unethical things (both while with Jones and during his
transition). I actually heard that the pressure was on him, which was why
he left. He was a typical Seg 3 broker who took about 20mil out of the 30
or so that he had. Now he is bad-mouthing his replacement to his former
clients - some pretty awful stuff, too.

My point is, the way he left is why people will no longer respect him. If he
left on good terms, and took his business in an ethical way, I personally
wouldn't have a problem with him. I am sure the RL would either way
(just as a BOM would in a wirehouse), but it's his job to retain people.

It is unfortunate, but that is the nature of our business, and there is
nothing that can change it really.


Do you think he cares what you think of him? Did someone tell you that this business wasn't nasty?

Mar 24, 2007 3:23 pm

Doesn't mean people have to be nasty. Would you be nice if you had a couple of million in your own account parked in tax exempt munis, with the taxes paid up? At what point do you wake up and look around at reality? Or do you just get nastier and nastier.