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Should I go Independent?

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Sep 10, 2010 1:42 pm

[quote=Sunchaser]

"Just a little fair warning that you might want to be careful divulging too much info on here considering the topic of your post."

If my company knew I was considering leaving, what are the consequences?  [/quote]

You DO NOT want to be on their monitoring radar.  How about this for a consequence.  The word gets out that you may be thinking about a move and Compliance Investigations starts watching every move you make.  Two days before you plan to resign they launch an "investigation" into your business practices.  It could be anything.  They could say that you submitted a high level of expenses in office supplies through paybills over the past twelve months so they feel the need to go back and review everything.  Then you would have big problems in resigning with an ongoing compliance investigation.  

If you decided to resign anyway your license transfer process would be slowed down.  If they found something "significant" it could affect your employment at your new firm.  I know that many of the high-browed Jones people will disagree with me here but it does not matter how high your ethical standards are, Compliance can find something if they want to. 

I can tell you for a fact that the higher ups at Jones are sick and tired of losing people to the independents.  They have increased their monitoring of boards such as these as well as the websites you visit at work.    

Sep 10, 2010 1:54 pm

Sun - You are correct that Advisory Solutions is built on a menu of funds and ETFs.  That's it.  I'm sure you've heard, like I have, that they are upgrading it to include other assets, including all of the ones you mentioned.  5 years ago Doug Hill was the Managing Partner.  Doug, like his Bachmann HATED fee based accounts.  Doug also hated annuities.  Today our clients have a choice whether they want to pay us a fee and hand the day to day management of their Advisory accounts.  So, if they want they can use Advisory, MAP, or the EDJ Trust Co. if they choose to go that route.  It's not like AS was the very first foray into the fee based world for Jones.  It's a startup program for the masses, unlike MAP and the Trust Co.  New management allowed it to happen.  Is it expensive.  Sure, it's more expensive than owning a few American Funds, but we could debate all day long about how much better is for those clients who have it.  This open architecture you desire, from what I've heard, is right around the corner at Jones. 

Look, I'm not trying to convince you to stay at Jones.  In fact, I'm pretty sure you've already decided to leave, you just need to get someone besides yourself to tell you it's OK.  You can't really call your RL and ask him whether you should go indy or go RIA.  You're not the first guy to come on here and ask for advice on leaving Jones.  At least you're not coming on here asking how to get out of repaying training costs or whether you should take deal X or deal Y based on the upfront bonus.  You actually have some legit thoughts on why another model might work better for you.  So, take the other guy's advice and just do it.  But make sure you do a ton of homework before you do.  And once you make the jump, please don't come on here for years afterwards telling everyone how bad a company Jones is. 

If you want the opinion of someone who has made the jump and is vocal about it, in fact I'm suprised he hasn't chimed in, you should PM BigCheese. 

Bob - the kool aid runs deep in my veins.  Along with the Coca-Cola and Mt. Dew.  And yes, I'm very happy at Jones.  Just waiting for the call from Weddle to ask me to come the home office and become the firm's first GP in charge of propaganda.   

Sep 10, 2010 2:00 pm

Spiff - i wish you the best. Keep your mind open. The possibilities are endless.  When i took my blinders off, i was blinded by the light.

Sep 10, 2010 2:10 pm

[quote=Spaceman Spiff]

What Suncatcher hasn't talked about is how he feels about the extra responsibilities he takes on when he goes indy or RIA.  Is the extra payout worth the work of being an actual business owner?  He mentioned that an independent B/D told him if all things remained the same, he'd net about 25% more.  Right now he gets to come into his office, turn the computer on and start his day.  No thoughts about payroll taxes, software integration, compliance, etc.   How good is he at hiring, real estate negotiating, payroll, computer hardware research, etc?  Those are all things that are part of being the actual business owner that he's not had to do at Jones.  Is that extra $25-30K worth the extra work?  That's assuming he takes enough clients/AUM to get back up to $300K next year. 

[/quote]

Is the extra payout worth the work of being an actual business owner?  An "actual" business owner?  I don't know too many guys that are willing to start at or close to zero every month to be an employee.  Most Jones guys already think of themselves as an "actual business owner".  We certainly take just about all the risk of a business owner.  Why not get the reward.

"Right now he gets to come into his office, turn the computer on and start his day.  No thoughts about payroll taxes, software integration, compliance, etc.   How good is he at hiring, real estate negotiating, payroll, computer hardware research, etc?"

Payroll Taxes-you should already be using a CPA.  This is just one more thing for them to do.  You do not have to "think" about it.  Your CPA does that for you.

Software integration-You buy a computer, hook it up to the internet and log on to Branchnet or whatever your B/D uses.  Then you can add services and software as business conditions dictate.  Most of the software needed will be offered by your B/D. 

Compliance--At Jones you don't have to think about compliance?  The compliance picture does not change if you use a reputable B/D.  Your trades are still reviewed, you still get calls or emails if your compliance officer needs clarification and yes they may even reject an order.  The myth that if you are independent, you are on your own as it relates to compliance simply is not true.

How good is he at hiring--At Jones don't you have to interview the office administrator?  The one big difference if you are independent is that you can fire them if needed.

Real estate negotiating--It is pretty simple.  You find a property that you like and ask the owner, "how much is my monthly rent?".  From that point you either say "wow, that is cheap where do I sign", or you say, "would you be willing to take 'x'?".  From that point you write out check at the agreed upon time.

Payroll--This one goes back to your CPA.  You don't have to be an expert in payroll.

Computer hardware research--It is not as if this is something that takes part of your daily time.  You find a computer that you like and upgrade as new technology is available and needed.

Spiff, I didn't write all of this just to poke at you.  I have heard all of this stuff for years as the "reasons not to leave Jones" and have found that it is just not true.

Sep 10, 2010 2:13 pm

Drinking Kool-Aid with the boys in the dining hall is still a nice option, you gotta admit.

You wake up, go to the dining hall, go swimming and fishing, back to the dining hall, go take a nap, go to the rifle range and shoot some skeet, take the canoes out on the lake, go back to the dining hall for dinner, and hang out with your friends some more. I miss Kool-Aid.

Sep 10, 2010 4:15 pm

[quote=spamfilter]

[quote=Sunchaser]

"Just a little fair warning that you might want to be careful divulging too much info on here considering the topic of your post."

If my company knew I was considering leaving, what are the consequences?  [/quote]

You DO NOT want to be on their monitoring radar.  How about this for a consequence.  The word gets out that you may be thinking about a move and Compliance Investigations starts watching every move you make.  Two days before you plan to resign they launch an "investigation" into your business practices.  It could be anything.  They could say that you submitted a high level of expenses in office supplies through paybills over the past twelve months so they feel the need to go back and review everything.  Then you would have big problems in resigning with an ongoing compliance investigation.  

If you decided to resign anyway your license transfer process would be slowed down.  If they found something "significant" it could affect your employment at your new firm.  I know that many of the high-browed Jones people will disagree with me here but it does not matter how high your ethical standards are, Compliance can find something if they want to. 

I can tell you for a fact that the higher ups at Jones are sick and tired of losing people to the independents.  They have increased their monitoring of boards such as these as well as the websites you visit at work.    

[/quote]

That's chilling.  Another reason I hadn't thought of before for why I would never go to work for someone else in this business.

Sep 10, 2010 4:24 pm

spam - my point was that taking on the role of the business owner is going to involve more than what he does right now.  I didn't say any of it was difficult, but he doesn't have to think about any of it right now at Jones.  For some guys the extra 25% payout isn't worth the other things you might have to deal with.  I guess you can look at it as a fair trade for leaving Jones - no more Segment meetings, Summer Regional meetings, no more Div Trips, no more mentoring, no more volunteering.  So you do have that time to devote to other projects. 

I didn't take your responses as you making fun of me.   It's a legit conversation that I think someone leaving needs to have with people beyond the recruiter at whatever B/D they're looking at using. 

Sep 10, 2010 5:16 pm

Spamfilter speaketh the truth.

Spiff is correct that you will now have the time you've been spending volunteering to earn LP or attending regional meetings to devote to new responsibilities as an owner (which Spamfilter summarized 100% correctly) and just spending time doing whatever you want.

RJ as about as close to Jones as you can get and still be Indy if you like, in terms of more strict compliance and some form of "firm culture" (i.e. annuity cost control, etc) or LPL/RIA let's you be as free as a bird. I feel pretty free as a bird with RJ except for them looking out for themselves on things like annuity and RIA compliance, which I think is a fair trade, and I do receive some benefit from.

Also RJ would let you transition to RIA and still have them as a custodian, so it would be a transparent move to your clients. You could build your own brand as an Indy Contractor rep, then do RIA down the road if you wanted to without "switching firms."

Sep 10, 2010 5:56 pm

CIB - My understanding is that to transition to RIA with RJ we need $50MM in fee based assets. Comment?

I find RJ not too different from the wires in terms of compliance. It is a PITA but i will say, in the long run it probably protects me as well as the firm. And the support is great.

Sep 10, 2010 9:41 pm

I don't know the answer to your question because I am not RIA. That number wouldn't surprise me, though. RJ typically doesn't want small producers on their own.

For those lurking, when it comes to compliance I have never had something I wanted to do that has been disallowed because of compliance. And I certainly get FAR fewer inquiries than I ever did at Jones.

Sep 11, 2010 12:17 am

You guys are sissies.  Really?  "I don't want the responsibility of business ownership".  Which is crap, because when you joined Jones, you thought you would be running your own business.

Go RIA, it's really the only option.

All of it is easy.

Sep 11, 2010 11:57 am

Lovindaindy is right !  Stop whining..think about the people in your community that open a small business...are you not brighter than them...

Edward Jones is a joke.  It is the worst of both worlds.  You have the stress and loneliness of being alone and covering you local costs every month and a bunch in inbread idiots telling you what you have to pay for a paperclip. That model is dead and will be gone in a decade.   

Look at Wells Fargo Advisors FINET, Raymond James, or LPL.  You are already doing the hard stuff.  Finet will write the biggest check and you can use your own name or Wells Fargo Advisors for name recognition.  Raymond James has a great culture and LPL has great technology for planning (Emoney).  

Be careful with an RIA.  Make sure you use a platform that allows you dual relationship so you can keep your trails.

All those issues you scared about: payroll, staff, leasing, accounting, compliance are second nature after 6 months.  You have the tools to find and retain business.  That's all you need regardless of your BD.

Good Luck

Sep 11, 2010 1:05 pm

Trails and B/D's are dead.

If you are not on the fee-only bandwagon, you are a dinosaur.

RIA is totally the way to go.  Remove FINRA's foot from your throat. 

What people don't understand about the RIA model is that you can basically charge however you want (flat fee, hourly, AUM, fee per transaction) as long as it is disclosed on your ADV.

Wake up! Why let someone take 10-20% of YOUR revenue.  These indy B/Ds are no different.  They want to make money off of your work.  Screw them!

Sep 12, 2010 2:05 pm

[quote=Spaceman Spiff]Oh yeah, Sun - there are people that read this forum that can probably figure out who you are pretty quickly.  There aren't more than a few hundred CFPs in the field, fewer who started in 2001, and even fewer with $45 mil in AUM.  It might take a little work, but if I still had access and the time I could probably send  you an email on your @edwardjones.com address.  Just a little fair warning that you might want to be careful divulging too much info on here considering the topic of your post. 

[/quote]

Thank you Spiff ... for coming out and stating for me the single very reason for leaving Jones. Why in the world should someone - that has been in the field for ten years and is a valued producer at Jones ... need to be worried about being "called out"? Has he done something terribly wrong for opening his mind and thinking this might now be the right place for him? You are simply being an asshole, but the thing of it is, you are accurately reflecting a part of the culture for your company. Good for you.

Sunchaser, good luck in your future venture. You are going to make scads of money. I wouldn't be so quick to give up transactional, by the way ... it's been a boon to my clients and some of them really do need that venue. Not to mention, you won't believe what Big Green's been keeping from the insurance companies and redirecting out of your pockets. Leave Jones honorably, do the right thing and things will work out in ways you couldn't imagine. Feel free to pm.

Sep 12, 2010 2:28 pm

Post script:

I believe in Edward Jones. (Anybody that says a model that continues to grow and win awards is "broken", has chosen to spew venom without thought.) I believe that they don't monitor these sites to "out" or prevent advisors from leaving; while they surely monitor these sites it strikes me it's more likely for research. Maybe Spamfilter is right and I'm just too naive for words, but it seems from the perspective of tracing the whereabouts of 12000 employees this would be a pretty poor source of information.

However, you can aggregate data like the whereabouts of 12000 computers and get significant usable information about your staffing. I don't think anyone in HR would get any promotions preventing one Seg three guy from leaving Edward Jones. Notably, I've never seen a really big producer lurking on these sites asking questions about leaving Jones; it's always newbies and $300K people. Hardly what keeps St. Louis awake.

Like I say, I believe EDJ is a good model; I think they honestly try to do what is honorable and extend that to their employees so long as their employees don't do wrong. At this point in my life, it just turned out to be not the proper fit for me.

Sep 12, 2010 4:36 pm

I agree with Lovindaindy commnents about fee only consultants and RIA's.  It's just that many of us former BD employees want to have some support (compliance, technology, advertising,  and are willing to pay 15% for it).  It's a business decision that free's up our most precious resource ...time.   The transition to RIA will eventually come.

To see what a bunch of clowns you work for ...leave Jones and see how they act.  They will chase down every client with vengence and you old peers cary out there wishes.."The Firm" with a dash of "Amway"..

Sep 12, 2010 9:06 pm

[quote=LockEDJ]

Post script:

I believe in Edward Jones. (Anybody that says a model that continues to grow and win awards is "broken", has chosen to spew venom without thought.) I believe that they don't monitor these sites to "out" or prevent advisors from leaving; while they surely monitor these sites it strikes me it's more likely for research. Maybe Spamfilter is right and I'm just too naive for words, but it seems from the perspective of tracing the whereabouts of 12000 employees this would be a pretty poor source of information. Reviewing this forum is only one of the tools that they use. The main tool that they will use is what filters back through other FAs, BOAs and the like.  They are listening and are looking for cues that someone may be looking for an exit.  You never know what innocent statement will get you "under review".

However, you can aggregate data like the whereabouts of 12000 computers and get significant usable information about your staffing. I don't think anyone in HR would get any promotions preventing one Seg three guy from leaving Edward Jones. Notably, I've never seen a really big producer lurking on these sites asking questions about leaving Jones; it's always newbies and $300K people. Hardly what keeps St. Louis awake. While it may not keep them awake, they do not like to lose the $300K people.  Especially when they lose several in one market.  You must remember that a $300K producer is pretty close to average at Jones.

Like I say, I believe EDJ is a good model; I think they honestly try to do what is honorable and extend that to their employees so long as their employees don't do wrong. At this point in my life, it just turned out to be not the proper fit for me.

[/quote]

Sep 14, 2010 12:57 am

Reviewing this forum is only one of the tools that they use. The main tool that they will use is what filters back through other FAs, BOAs and the like.  They are listening and are looking for cues that someone may be looking for an exit.  You never know what innocent statement will get you "under review".

Maybe so. I know that they had ample reasons to consider I was leaving, and nobody got me "under review" . I suppose I prefer to not live my life paranoid or you might say, blissfully unaware of the dangers.

Sep 20, 2010 6:14 pm

Hi Sunchaser,

It looks like you have the base to go independent and build from there.  Many Jones reps have too many accounts to truly service and provide value, whereas you have kept your numbers in line to where moving your book would be doable.  I never could figure out how a rep could do a good job for over 1,000 people with only a couple thousand hours to work each year. 

Whether you decide to affiliate with an independent broker/dealer or go the full RIA model is up to you.  The cost to register in all 50 states is a bit over $5,000, so you might be looking at half that amount for registration fees.  I would look at a few different firms, have them run an analysis of your expected net pay based on your current production levels and make an educated decision.   

One of the best informational sources out there is a book called Going Independent that is free at www.cantella.com  There are some worksheets in the book to help you figure out the cost of this whole process to see if it makes sense for you.     If you do decide to hit the bricks, make sure the top half of your book receives exceptional service prior to asking them to join you.