myths...fee-based...Ejones

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Jan 2, 2007 2:26 am

I wanted to quickly dispell a few myths being broadcast by "fee-based" "financial planners" with "CFPs" who "aren't salesmen" [to you CFPs out there...even though I am training for mine, we all know the game...mostly older established guys who are trying to box-out competition from younger guys...they know we cant compete on performance...and they know we all have access to essentially the same good products and info if we choose to use it...so why not compete based on something the newbies cant afford?...the time and cost required to get a CFP and all the additional hoopla...tell me, how much did a CFP impact ave. annual returns for your clients from 1997-2002?]


I have seen enough on this forum and generally on the internet of the digital pollution they spread that attacks the business of many respectable and honest "brokers" with 10 times more ethics than the rest...and as I work for Edward Jones I would like to also dispell similar nonsense that is being purported most likely by the same folks...


As the bible says: "let those who have wisdom understand..."


1) Fee-Based business is still business...any business has inherent conflict of interest with its clients as it depends on the client for survival...any situation of dependency becomes dangerous to the host (we know this even from science)...specifically with fee-based, the danger is COST-CUTTING...many (not all) fee-based folks are boosting their margins by putting clients in the lowest-cost(to the advisor) funds such as Vanguard and Fidelity ETFs, and are refusing to do any further management...why?...because additional transactions mean additional cost for the "fee-based" advisor...and that means less profit...with the dawn of the internet and online discount brokers it is ludicrous to me that I would pay 1-2% of my assets to a "fee-based" advisor who does nothing more than put me in a Vanguard ETF for the rest of my life...who is afraid to trade to protect my downside risk in a bear market because that cuts into his profit!!...I could have easily done that myself...at least a "broker" who is paid on transactional basis has an incentive to make every "transaction" the best possible as that is what guarantees that any future transaction will take place with that client...and knowing all this it drives me bonkers to see the devoutness with which these "fee-based" guys go out into the public forums to damage the image of anyone who is not also doing fees...


2) Edward Jones is moving towards an ideal model of some additional fee-based (we already have some managed account business) as well as preserving the traditional transactional approach...why is this ideal?...it gives consumers choices (the cornerstone of a free market), and it helps "brokers" "advisors" "fee-based planners" (i hate all the jargon b/c we truly are all in the same boat at the end of the day) to balance conflicts of interest with client from both sides...dont have to be too pushy transactionally...but dont have to be an idle asset-gatherer with limited value added either (i.e. just dumping clients in an index fund)...might as well work at the bank if you want to do the latter...


Jones door-knocking model is difficult, but ask yourself this...who would you be more responsive to with your life savings?...a guy on the phone who you have never met?...or a guy (or gal) who has made an effort to come to your door on numerous occassions, introduce themself in person (the classy old-fashioned way) and physically deliver you proofs in writing of all the ideas that have been pitched?...as well as being located in a visible office around the corner from you to add to credibility...i think these aspects of the door-knocking logic are untouchable (still not to say that the work is  not hard and the sales cycle sometimes slower this way...slower but sweeter)


And a final word to the independents...going independent is great...if you want to keep up with the constantly changing rules and regulations (that get stricter) every year in our industry...and you feel confident that you can monitor yourself against pursuit of your own best interest...at Jones we have a compliance department (best in the industry) that does all this work for you...why is that great?...lets try a little analogy...if you were the police looking for folks in the community who are likely to have violated the law, where would you crack down first?...the house on the street located right next to a police station and a retirement community?...or the house further down the street with no visible address markings, thats hidden under the shade of some trees, and that no one else on the street really knows the owner...independents look out...watcha gonna do when they come for you?...


yes its a big hoopla when Jones or a big brand name firm does finally get busted for just above a minor infraction (at least in comparison to some of the other stuff that goes on out there), but that is b/c it has the shock value of watching a nun get carted out of the convent for sneaking in a boyfriend for the night to celebrate new years...you'll never see a registered rep article for each and every indy firm that was busted for "serial axe-murder" of clients...

Jan 2, 2007 7:10 am

Come back and post in a few years when you have a clue as to what you are talking about.


You're dangerous because you don't know what you don't know. 

Jan 2, 2007 9:07 am

DC, you are an embarrasment to yourself and to our firm.  Do me, the other Jones IR's, and the rest of the folks on this forum a favor and never post again.  Whether or not there is any bit of truth in some of your statements is now irrelevant.

Jan 2, 2007 9:12 am

Well said, Broker24.



DCedjones has very ably demonstrated the ignorance and arrogance that

draws the ire of the rest of the industry. "10 times the ethics"

notwithstanding.

Jan 2, 2007 9:30 am

DC,


     If I were still at Jones, I'd be embarassed that you were on my team.  You quoted the Bible --- As the bible says: "let those who have wisdom understand..." ---  You need to understand that the reason there has been Jones bashing is because of folks like you who want to spout off.  The reason people hate Jones is because of full-page Wall Street Journal articles that hold Jones up as the keeper of the moral code while they are battling their own battle over to disclose or not to disclose revenue sharing.  If Jones folks like you would quit thumping their chests and saying look at me, then I sure the number of I hate Jones postings would dwindle. 



Grow-up!!!

Jan 2, 2007 11:01 am

And a final word to the independents...going independent is great...if you want to keep up with the constantly changing rules and regulations (that get stricter) every year in our industry...and you feel confident that you can monitor yourself against pursuit of your own best interest...at Jones we have a compliance department (best in the industry) that does all this work for you...why is that great?...lets try a little analogy...if you were the police looking for folks in the community who are likely to have violated the law, where would you crack down first?...the house on the street located right next to a police station and a retirement community?...or the house further down the street with no visible address markings, thats hidden under the shade of some trees, and that no one else on the street really knows the owner...independents look out...watcha gonna do when they come for you?...


Again the brainwashed line that Independent advisors are running wild, don't actually have compliance departments and poor us have to figure everything out on our own.  Get a clue.  I have more compliance rules and oversight now than ever when at Jones. And much better communications, memos etc with the compliance department. 


Plus I never have to listen again to that joke of a compliance presentation at a regional meeting put on by some shlub who was press ganged into being the "compliance guy".

Jan 2, 2007 11:30 am
DCedjones:

Jones door-knocking model is difficult, but ask yourself this...who would you be more responsive to with your life savings?...a guy on the phone who you have never met?...or a guy (or gal) who has made an effort to come to your door on numerous occassions, introduce themself in person (the classy old-fashioned way) and physically deliver you proofs in writing of all the ideas that have been pitched?...as well as being located in a visible office around the corner from you to add to credibility...i think these aspects of the door-knocking logic are untouchable (still not to say that the work is  not hard and the sales cycle sometimes slower this way...slower but sweeter)


As an investor and a client of an FA, I hate the idea of door-knocking, whether you're selling investments (from preferred fund families or MAPs with account minimums of $500k), your religion or the greatest carpet cleaner known to man.  I would rather answer a cold call from a broker and meet with them face-to-face in their office.  I like meeting with people in person - but it has to come from something else other than a knock. 


Plus, what if the door-knocking FA has a face for radio??? 


You're saying that fee-based advisors are biased for selling funds with the lowest cost to them?  What about selling from preferred fund families?  How is that different?  I like Clay Finlay and Oberweis' China Opportunities funds, respectively...Both of which have performed phenomenally this year.  The question I would have for you is a).  can you sell them, and, b).  would you sell them over a piss-poor Van Kampen fund?


I respect guys like Broker24 that at least can formulate a thought on their own (even though they may love the firm) as opposed to spewing the garbage you did, chief.  Best of luck. 


And don't come a-knockin' on my door. 

Jan 2, 2007 12:08 pm

Why do you assume that fee based accounts are never in the best interest of the client?


There have been many discussions between fee based and commission sales.


The client's needs are first.  Money comes with doing the right thing for people.


You can do that either with fees or comissions.


The problem with EDJ is that they try to control how their reps build their business.


I am sure there are many ethical people at EDJ.

Jan 2, 2007 12:14 pm

You're a company parrot...nothing more.  Come back when you learn to think for yourself.

Jan 2, 2007 12:24 pm
Indyone:

You're a company parrot...nothing more.  Come back when you learn to think for yourself.





This has to be a troll. No one could be so stupid. I hope.

Jan 2, 2007 12:33 pm

I've looked at several firms including Jones, and am happy to say that I have decided NOT to go with Jones, and IR's like this one are a big reason why.  To think I could have OD'ed on this Kool-Aid too.

Jan 2, 2007 1:02 pm

Well, you just want to go to a firm that lets you PROSPECT the way you want and build your book the way you want.  From my understanding, EDJ does not let you do that.


Personally, I cannot see myself building a book by door knocking.  And, I would hate to have to sell A shares only.  I LOVE financial planning and I want to be with my clients for the long run.


With A shares only, EDJ seems limited.

Jan 2, 2007 1:35 pm
maybeeeeeeee:

Well, you just want to go to a firm that lets you PROSPECT the way you want and build your book the way you want.  From my understanding, EDJ does not let you do that.



Actually the door-knocking was one of the few things I like about EDJ.  I would rather get out in my neighborhood and introduce myself to people I have probably already seen out and about than trying to cold call hundreds of strangers a day, takes longer but I've already prepared the wife for 14-hour days for the next couple years, who the heck needs sleep anyway? 


You are 100% correct in my wanting to prospect any way I want, in addition I don't want to start at 0 every month, I don't want to be limited in what products I sell, and I DON'T want any of that dang kool-aid.  And as long as we've got Mr. EDJ quoting the bible....


"Of what use is money in the hands of a fool, since he has no desire to get wisdom." -Proverbs 17:16 

Jan 2, 2007 3:22 pm

I wanted to quickly dispell a few myths being broadcast by "fee-based" "financial planners" with "CFPs" who "aren't salesmen" [to you CFPs out there...even though I am training for mine, we all know the game...mostly older established guys who are trying to box-out competition from younger guys...they know we cant compete on performance.


Of course you have some generally valid points. I wonder if you are really close to being a CFP? A rep with experience, perspective, a holistic view of the industry could better argue your points.


How is the revenue sharing on mutual funds at EdJ morally superior to the fees chareged in wrap accounts? You'll never win that arguement.


EdJ is a good firm, better to see how it can fit in with all the other successful branded and independent models. Do yourself a favor and get your CFP license, for a start.

Jan 2, 2007 3:56 pm

By the way, DCed, as an Ameriprise franchise owner, I consider myself to be "independent". Why shouldn't I? No one bothers me here, and I don't have to sell any of their stuff. I can do ETFs in wrap, build individual security portfolios, and don't really care about selling insurance and annuities, so who a cares about "choice" there?


So, DCed, if you are established at Jones, and heading toward more "wrap", and like to charge commissions, and so on, why don't you start thinking of yourself as being independent. I am so sick of industry pundits trying to shape our thinking - our perception of ourselves, our self-image, with so many little labels driven by so much ego.


Last I checked, it was the bottom line, profit, that matters. If you get to run that through a schedule C, that's better for everyone. Maybe the real issue is how you are framing your thinking on the big picture.


I appreciate your post, if nothing else, for stirring the pot at the starting line of a new year. You get my vote for most interesting post. Happy new year.

Jan 2, 2007 8:06 pm
Broker24:

DC, you are an embarrasment to yourself and to our firm.  Do me, the other Jones IR's, and the rest of the folks on this forum a favor and never post again.  Whether or not there is any bit of truth in some of your statements is now irrelevant.



Hate to tell ya Broker, but he's basically touting the company line that we've seen in the past on this board.  He's probably your RL!

Jan 2, 2007 8:09 pm
babbling looney:

And a final word to the independents...going independent is great...if you want to keep up with the constantly changing rules and regulations (that get stricter) every year in our industry...and you feel confident that you can monitor yourself against pursuit of your own best interest...at Jones we have a compliance department (best in the industry) that does all this work for you...why is that great?...lets try a little analogy...if you were the police looking for folks in the community who are likely to have violated the law, where would you crack down first?...the house on the street located right next to a police station and a retirement community?...or the house further down the street with no visible address markings, thats hidden under the shade of some trees, and that no one else on the street really knows the owner...independents look out...watcha gonna do when they come for you?...


Again the brainwashed line that Independent advisors are running wild, don't actually have compliance departments and poor us have to figure everything out on our own.  Get a clue.  I have more compliance rules and oversight now than ever when at Jones. And much better communications, memos etc with the compliance department. 


Plus I never have to listen again to that joke of a compliance presentation at a regional meeting put on by some shlub who was press ganged into being the "compliance guy".



Babs-

You forgot the part about how they need "the best compliance department on the street" because they have the least experienced, least-educated sales force sitting out there in those one-man offices....

You "graduated", and I suspect you and other top quartile ex-jones'ers are the exceptions that prove the rule in Kool-Aid country.....

Jan 2, 2007 8:56 pm

Joe, say it ain't so!  The truth is, I am sure there are some people like this in our firm.  In my experience, many IR's relly enjoy working for the company, and acknowledge that there are "weaknesses" in the model.  However, I have never met anyone that would actually talk about other firms, or better yet, an entire facet of the industry the way this punk did.  Most of the people I am close to would think this guy was a complete lunatic if he started talking like that.  Sure, plenty of us exchange stories like ...."oh I got this client that was with XYZ firm who's portfolio was a disaster, blah, blah, blah...".  But honestly, few of us really bash other firms as a whole (OK, disclosure, I bash Primerica - I have yet to see a halfway decent portfolio come out of one of their "offices").  Like every single firm out there, indy, regional, wire, whatever, there are good advisors, there are poor advisors, and there are some borderline criminals.  But it should not really be a reflection of the entire firm.  I am not sure a few knuckleheads on this forum are a proxy for the overall picture of any single firm.


I think this guy is really just trying to get a rise out of us...

Jan 3, 2007 12:03 am

Broker24- I like you work for Jones. I like you think that there are more of us than there are of that DCED or at least I hope at our company.

Jan 3, 2007 10:03 am
maybeeeeeeee:

Well, you just want to go to a firm that lets you PROSPECT the way you want and build your book the way you want.  From my understanding, EDJ does not let you do that.


Personally, I cannot see myself building a book by door knocking.  And, I would hate to have to sell A shares only.  I LOVE financial planning and I want to be with my clients for the long run.


With A shares only, EDJ seems limited.



Your understanding is a little clouded if the only info you get about Jones is what you get on this board.  There's as much anti-Jones kool-aid here as there is Jones kool-aid. 


The doorknocking is the way we start our businesses.  It works and gets us people we have actually met to talk to.  However, beyond the initial training period there is no rule that says we have to prospect.  I know lots of brokers who built their book by cold calling, buying lists and mailing seminar invites, or simply joining chamber and networking.  As long as the production numbers are there no one is going to question where you get your prospects.  


If you've ever walked into a business and asked to see the owner, you've doorknocked.  Translate that same concept to a house and you get the picture of what doorknocking is like for us.  Don't knock it until you try it.  


Once we get the prospects in the doors we can sell whatever we want.  Stocks, bonds, funds, etf's, uits, VA, FA, etc.  Our choice, not the firm's.   In my office my preference is funds, but that's my choice, not the firms. 


Where did you get the impression we have A shares only? We can use A, B, or C shares with any given client.  Just like everywhere else, the share class has to be appropriate for the client.  We get a little high and mighty at times because there is so much abuse of B and C shares out there.  For instance, I have a prospect who works with Ameriprise.  $300K+ account, all B shares.  Broker keeps switching from one fund family to another starting the CDSC fees over again.  That's just wrong.  Have the guts to explain how A shares work or put a wrap on his account.  Don't dodge the "I get paid to do what I do" issue with B shares. 


I love Jones, but the guy who started this thread is mental.  Some points have a bit of validity, but the attitude is all wrong.  The only thing missing in the post is the link to the article he put in his local paper that says "ALL OTHER BROKERAGE FIRMS SUCK!!" 


Happy New Year to you all.