skeedaddy:30 YEAR bonds. Sorry, one too many drinks. 

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You're posting at 5:43PM and you've already had one too many drinks? 

[quote=Soothsayer]

I want to go back to what was posted by the origianl poster to clarify my stand on this issue in a less combative way.  Revealer said the gentleman was 89 years old.  He didn't say he was 89 years old with a ventilator jammed down his throat and on his deathbed.  He could very well live for another 5, 6, or 7 years.  I think one really has to decide if you want to tie up capital for that long because you don't want to pay capital gains tax.  Looney said, "Easy for you to say; you're not paying the tax."  At the time of the sale, set aside 15% of the proceeds, buy a short-term CD, and be prepared to pay the tax.

Another point:  The LT capital gains rate is 15% today.  You get a step-up in basis upon death as of today.  Last time I checked, there is an election coming up in 2008.  It is far from certain that either one of these factors is a constant.  Never, ever underestimate legislative risk.

Revealer stated there was a "large" capital gain.  As we all know, words like "large" and "small" are very, very relative in our business.  What stock was sold?  He didn't say.  Was it some dog like ConAgra?  Or something that's been in the ditch for several years like Bristol Myers?  Remember, if the stock retreated just 15.1% from its present value, then you screwed up.  Don't assume in a rather frothy market that the stock will continue to appreciate in value.  I don't care what stock it is. 

Rightway mentioned a very grown-up solution, the CRT.  But in my experience, those are for more sophisitcated and younger clients with estate tax problems as opposed to 89-year-olds doing business with Jones.  The bottom lines is that I'm in agreement with Zacko on this one.  A systematic sale would probably be the most prudent and defensive thing to do for a client in this situation.  And if the CPA wouldn't go along with that, I'd have a discussion with him/her with everything that I just covered in this post.  And if they don't acknowledge my point of view, and can't come up with a sound, objective argument of their own as to why that is not a prudent thing to do other than the fact that they think they are the captain of my boat, then it is game on.  My conviction in my beliefs and advice is ironclad, and I would not be afraid to make my case to the clients.  And finally, I have just short of 20 years of sales experience, and their CPA probably does not.  I like my chances.....  

Sooth: There’s also the STATE taxes on the sale. Happened to be a pharm.co. that was sold. The original question was,“Does buy and hold only work in the (jones) ads?” By pretended to be a proponent of “buy and hold”, jones very simply puts themselves in a position of “bait and switch”.If the client needed more income you sell a few shares off the position. The original question was,“I wonder how much the diversification trip cost the client?” 

Most of the “Diversification Trips” cost the clients who pay for them dearly.  No argument here.

[quote=doberman]

skeedaddy:30 YEAR bonds. Sorry, one too many drinks. 

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You're posting at 5:43PM and you've already had one too many drinks? 

Sooth.. Nice post...
Even if one was a stupid young Jones'er the Principal must sign off. For the most part if they decided on a money making deal there is lawsuit liablility??

Is it not reality that a Principal must sign off if a "young" RR?

Nobody signs off on anything, and no one else would be close enough to the situation to know or understand the capital gain/loss situation.  There is an incredible amount of latitude and discretion placed in the hands of brokers with very little experience.  I was one of those brokers once, but I’m not an idiot.  The same cannot be said for the current class of Jones newbies.  In my estimation, the level of talent that Jones has attracted in the past few years is considerably lower than it was in the late 90s.