To EDJ or not to EDJ?
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And…what about my other points? You seem to have bypassed them.
Remember, we are attempting to assist a man that is making a major decision for he and his family. Why don't you describe the EDJ health insurance that he will have for his wife and new baby.Not trying to argue here…my questions are valid as you have to factor in those things when looking at your bottom line. $300K gross with Jones is $114K net bet for taxes and with 60% payout with someone else is $180K before taxes. yes Jones is less but for some people its a better setup, like me I live in a town with no major brokerage firms I will have my own office location and a BOA that isnt paid for out of my $114K.
And for the health insurance…I pay under $400/month for myself with wife and one baby. That covers all regular checkups for all of us and shots for my boy with no out of pocket expense. Now if something major comes up I pay for the first $2000 then its 100% coverage. That price also includes vision, dental, increased life insurance and increased disability pay.
And for your other points…I have not noticed any lag in technology that everyone pins on Jones, and for events…explain? FAs are encouraged to attend two trips/year to attend meetings put on by the whole sellers at their home offices.
EyeT-Speaking of life insurance. When you sell a policy to a client, and the premium is $100 a month, how much and when do you get paid at EDJ?
Remember, we are trying to help someone make a decision that will change his life.When did you guys get email??
And for industry events, you have only described jones events at jones preferred fund family offices. These are not industry events. Jones isolates its reps from attending events that the rest of the investment reps in your area attend.Tattoo-
One thing you have to realize, strange as it sounds, we actually don't run very lean offices. Most Indy's expenses are less than ours (on a margin basis). I've analyzed our P&L's, and I know there are plenty of places where we are fat. The problem lies in the fact that to get consistency among 11,000 offices, there are a lot of systems and procedures built in to our environment that do not need to exist in a small, independant environment. I will give a few examples: - I found less expensive offices than I am in, but Jones would not approve them due to the expense of making modifications, having adequate space, ADA compliant, etc. And I could easily shaer my office with another advisor. - There are less expensive phone and IT solutions than we have. - Especially in the early years, I could be sharing a BOA with someone else. In the early years, we definitely get more out of Jones than they get out of us (they basically subsidize our training, salary and office expenses for a number of years). But as your production increases, your payout does not go up proportionately, since you still give up 60%. Yes, you get bonuses, but those do not become meaningful until you are producing north of $350K. Once you get to about 600-700K, the payout gets pretty good again, because your bonuses are now getting larger and larger (you move up in the bonus brackets, and your office expenses do not increase very much). At this point, your payout is in the 55-65% range. The problem lies in the fact that probably half of our prodcuers are in the 300-600K range, so so many of them are in that not-so-great deal range.ET - you’re wasting your time. This debate has been going on for a long time on this board. The math works out well in favor of the indy guys compared to the average Jones producer. B24 is exactly right in his numbers.
Indy - I hear that line about limited investment options all the time around here. If I recall my KYC class there are only two kinds of investments: Own and Loan. OK, maybe cash, so there's three. 95% of the people you or I are going to meet are NOT going to be UHNW people. So, stocks, bonds, funds, annuities, LI, disability, LTC, UITs, SMAs, soon to be fee based, 401Ks, SIMPLES, and SEPS, aren't enough for the averaga person out there? I have yet to meet someone who's needs can't be met by EDJ. Typical clients want to make 8-10% on their money. They want to own things they understand. They want to see companies they know on their statements. They want to keep things simple and easy. The tech at Jones has certainly been behind the curve. That is quickly changing. We can do virtually anything today that the other firms can do. There are a couple of things that I know Jones is "working on" that would be nice to have. But there isn't anything that I need today that is getting in the way of me doing my job. I need a phone and a computer with a quote monitor and a financial planning platform. Everything else is bells and whistles. Perhaps you have a whistle that would make my life easier? I will never agree with the "cult" term. We have a culture. We have a history we are proud of. We have a lot of people who are very loyal to the EDJ name. We like what we do and it gives us a great amount of pleasure to say we work for EDJ. So, if culture, history, and loyalty are what make us a cult, then so be it.EyeT-(notice I refrained from calling you ET), and Spiff-
The goal of this thread is to assist someone in making a career decision. Again, my advice is to find a local or regional firm. It's a much more proper balance between training, guidance and comp to your family. Spiff, the limited investment options is a serious one. Your reply is a quote I once rattled off in a response to edj critics. Ever have a client that needed to protect a position with puts?? Dont need to be HNW or sophisticated for that. You only need to be with a firm that will allow you to provide puts. When you have a client say, "I really like you and the way you've treated us, but I need to have "X"." And the account leaves. This will affect this man's ability to provide for his wife and new baby.I’ve never had ANYONE walk into my office and say “I really like you and the way you’ve treated us, but I NEED to have puts on my account.” Those “needs” are driven by another advisor/salesman (which includes all of us) telling the client he can build a better mouse trap. And I would disagree that you don’t need to be sophisticated for options trading. Trying to teach people who are in the industry how to trade options is difficult enough. Trying to teach the average investor who doesn’t even understand his 401K statement is next to impossible.
This guy's ability to provide for his family depends much less on the products that he has to offer than it does the training and support he's going to get. If he can't make learn how to gather assets in those first couple of years, he's not going to have to worry about what net commission dollars he's making. Is it possible to get good training somewhere besides EDJ? Yes. Should he discount EDJ because we don't offer a product he shouldn't be offering right now anyway? No. Put Jones on the short list. Interview with some other firms. Ask them what their success rate is for their new FAs. Go to the place that matches what you need the best. Indy - how many clients have you REALLY lost because you couldn't offer options?I think the indy/regional model is a great place to start, PROVIDED that you can get good training and mentoring. That is a big if. Could happen, but you could step into a situation where you are basically on your own, which means you will probably fail eventually, but not without hurting alot of clients on your way down.
FYI - Trading options and buying puts to protect a position are very different animals, but EDJ doesn't make the distinction. Say I have $1,000,000 in restricted stock of my employer, a start up company that really took off, but is still a risky venture at this stage. This represents the majority of my net worth. At virtually any non-EDJ firm, I can buy puts to protect myself. Alternatively, I could sell covered calls. Both of these are low risk propositions, in fact they are managing the risk of having the majority of my net worth tied up in my employer's stock. EDJ will not allow it. I saw one of the "up and comers" in my region lose a $1mm client for this reason. The client was apologetic, but didn't feel like he could afford the risk (he was correct, the stock tanked a year later) so he moved his account to a full service firm. In the grand scheme of things, this client wasn't that important to the broker. But seeing one of your top clients leave when you are only a couple of years out puts a bad taste in your mouth, especially since this was a trade that would have lowered risk, not increased it. He left EDJ within a year, taking most of his book with him. By and large, the clients you can land the first couple of years don't need anything fancy, but this is a silly restriction that is done solely because they don't want the supervision hassles. I still think EDJ is a good place to start, but I am certainly glad I'm not there anymore.Spiff,
You probably don't see it in your practice, but I see it in mine. I have two very large employers in my area that overdose on options and Restricted stock awards. I have some clients with over a million dollars, plus who knows how much in options some day (they are currently all under-water). Because most of my client's stock is currently trading at a loss to where they picked it up, the tax issue is no big deal. But, when teh day comes that the stock comes back (and it will - I won't get into why), I am going to need to figure out how to hedge those positions that I can't easily sell (due to tax issues - most are in the 30%+ tax brackets including state). So it is not a big deal right now, but eventually it will be. I would love someone to give me a strategy that can hedge against a large position, not kill them in taxes, and can be done at Jones. It's not something I would do often, but sometimes those are the best options. Right now, it's sell or keep, no in-between. And there are a LOT more potential clients in my area in this situation.I’m halfway through the EJ interview process and IMO, they are one of the few firms that I’ve found to be the best place for a newbie to start. Why? Because of the training, support and patience they have with new FAs. The alternative, and possibly better training, are the larger wirehouses which have stricter and larger production hurdles. Indy might be better, but where is the recruiting, training and support of new FAs?
Brkr24-
Thanks for keeping your eyes and mind open. These hedging strategies are necessary, even if only 3 to 4 times a year.[quote=lambda]I’m halfway through the EJ interview process and IMO, they are one of the few firms that I’ve found to be the best place for a newbie to start. Why? Because of the training, support and patience they have with new FAs. The alternative, and possibly better training, are the larger wirehouses which have stricter and larger production hurdles. Indy might be better, but where is the recruiting, training and support of new FAs?[/quote]
Uff da. If you haven’t even been hired yet, how can you possibly judge the actual training and support EDJ provides, much less what others provide?
Lambda–You would have to get hired by a local Indy, because you can’t walk off the street and open your own Indy business. So you would pick Jones because of the lower hurdles? Sounds self defeating to me. I believe every top firm would have great training, support and patience, as long as you’re doing the work and getting results. Even Jones expects something for its 75k in training.
BrokER24--You are starting down a very slippery slope my friend...your attitude is starting to show in your posts. I suggest injecting more juice...Or call you local LPL recruiter...