Advisory Solutions $50K

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May 5, 2009 1:32 am

Edward Jones has announced advisory solutions to be lowered to $50K.  That may help the books short term but won't it be easier to leave Jones once a good size book of advisory has been built.  If charging A share clients are less likely to want to move and pay again I would think.  This may open the door for easier defection not only from the client but from the advisor as well.  Think about it.  Charge 1.35% at Jones.  Move the book once it's built and charge less.  Advisory at 50K sounds good but is it?

May 5, 2009 6:18 am

You don't charge client the A share commission when you switch firms. 

May 5, 2009 9:36 am

Why would it be bad and who would it be bad for? 

 
How much time do you spend managing a $50K portfolio?  1-2 hours a year, maybe?  How often do you rebalance it?  Once a year or less?  I'd guess most FAs have a small group of funds that they like, probably called Checks and Balances or Founding Funds or something like that and anything in the $50K range gets put in there.  You wouldn't even think about using 20 different funds for $50K.  With Advisory Solutions you can use all the funds you need, rebalance whenever necessary without thinking about it, and still get paid to do the work for the client.  I'd guess for a lot of Jones guys dropping the minimum to $50K puts a ton of people in the funnel for Advisory. 
 
Is it easier to move?  Possibly.  Can you find it less expensive somewhere else?  Doubtful.  Will you get the whole Advisory Solutions group approach with another program?  No.  That program runs on autopilot from an investment standpoint once you put the money in.  If you go indy (which would be the only really logical place to go if you leave Jones) all those things that used to be automatic (including the research and fund selection if you use the models) you now have to do yourself. 
 
I think it's good for Jones, good for the FA, good for the clients who can now participate.
May 5, 2009 9:45 am

This is where you lose me... what is the point of wrapping mutual funds??? My idea behind the wrap account, is that you can add in other options, bonds, etfs, uits,stocks... why would i pay 1.35% to have someone rebalance my mutual funds(Isn't the point of active mutual fund management, to rebalance at the manager's discretion inside the fund, how does rebalancing 6-12 funds helps with that, and rebalancing based on a time period or % change is just pointless.. For example you would be selling constantly out of a bond fund over the last year and adding to equities, which continue to go down and down and down.)

May 5, 2009 9:57 am

Your statement tells me that you don't understand the purpose for or mechanics of Advisory Solutions at all.  Or that you may not really have a great grasp of investing in general.  Yes, if you use a mutual fund the money manager will buy and sell stocks or bonds inside that mutual fund.  However, a growth fund manager isn't going to buy bonds.  A bond fund manager isn't going to rebalance to equities.  Advisory Solutions is about asset allocation and picking some of the best money managers to build the portfolio.  Or I can use ETFs if I choose to go that route.  Yes, Ice, I know that's the route I should be taking.  It's not rebalanced on a schedule, but rather on a variation from the target percentages.  Let's not forget the CFAs who are building the models either.  I'd put their knowledge up against any FA out there. 

 
You may want to pull up your quote system and check the numbers.  As of this morning we're up 35%+ on the S&P since the bottom.   
 
 
May 5, 2009 10:13 am

I think the ETF route would be better (didn't know it was available)(Those "great money managers and FT killed the Founding Funds).

If we are 35%+ since the bottom that is great... But most clients didn't get in at the bottom. And if they did I think it was more luck than skill..and also your "great money managers don't own the S&P..
 
Ishares 500 is at around $90/share now.. up 35% in last month or so... still need 60% more to get back to may of last year ($142/share).. so if you got in last month or so great.. if you have been in for a while... ooops
May 5, 2009 10:23 am



This thread is pointless.  You can tranfer Advisory accounts to other firms if you want.  You can use ETF's if you want (Squash), and you can charge more OR less somewhere else. 


Squash, by the way, you are in the vast minority of people that don't agree with MFD wrap accounts.  They exist at every major firm.  Not everyone believes whole-heartedly in the ETF strategy (not that it's bad - I am just saying not everyone subscribes to that philosphy).  You are not paying to rebalance the funds.  You are paying to choose the RIGHT funds, that don't overlap, that have consistent results, blah blah, as well as the personal planning services of the FA.  So get it out of your head that it is all about MFD's vs. ETF's.

May 5, 2009 10:56 am

With companies dropping B shares, Advisory Solutions at 50K looks like an attrative alternative for many in the 50-100K range.

May 5, 2009 11:17 am

I think thats a great move for Jones. Some of the push back on the program when it was first released was from some of the dinosaur FA's. With a smaller account minimum maybe they will give it a try. Once they do they will like it.

May 5, 2009 11:25 am

How long does a client have to have owned A shares before we can toss them into Advisory without getting chargebacks on commissions?

May 5, 2009 1:11 pm
Spaceman Spiff:

Your statement tells me that you don't understand the purpose for or mechanics of Advisory Solutions at all. Or that you may not really have a great grasp of investing in general. Yes, if you use a mutual fund the money manager will buy and sell stocks or bonds inside that mutual fund. However, a growth fund manager isn't going to buy bonds. A bond fund manager isn't going to rebalance to equities. Advisory Solutions is about asset allocation and picking some of the best money managers to build the portfolio. Or I can use ETFs if I choose to go that route. Yes, Ice, I know that's the route I should be taking. It's not rebalanced on a schedule, but rather on a variation from the target percentages. Let's not forget the CFAs who are building the models either. I'd put their knowledge up against any FA out there.



You may want to pull up your quote system and check the numbers. As of this morning we're up 35%+ on the S&P since the bottom.



Let's not forget the CFAs who are building the models either.



Jones, and a lot of them are true, but the one thing I say for the rest of my life as long as they keep Alan Skrainka and Mario DeRose on is that those guys got their CFA's out of a cracker jack box. Jones has great people, great FA's and maybe even some great HQ people, but their analysts are crap. And I'll put my knowledge up against theirs any day of the week.

May 5, 2009 2:41 pm
Spaceman Spiff:

Why would it be bad and who would it be bad for? 

 
How much time do you spend managing a $50K portfolio?  1-2 hours a year, maybe?  How often do you rebalance it?  Once a year or less?  I'd guess most FAs have a small group of funds that they like, probably called Checks and Balances or Founding Funds or something like that and anything in the $50K range gets put in there.  You wouldn't even think about using 20 different funds for $50K.  With Advisory Solutions you can use all the funds you need, rebalance whenever necessary without thinking about it, and still get paid to do the work for the client.  I'd guess for a lot of Jones guys dropping the minimum to $50K puts a ton of people in the funnel for Advisory. 
 
Is it easier to move?  Possibly.  Can you find it less expensive somewhere else?  Doubtful.  Will you get the whole Advisory Solutions group approach with another program?  No.  That program runs on autopilot from an investment standpoint once you put the money in.  If you go indy (which would be the only really logical place to go if you leave Jones) all those things that used to be automatic (including the research and fund selection if you use the models) you now have to do yourself. 
 
I think it's good for Jones, good for the FA, good for the clients who can now participate.
 
Do you really believe that your pricepoint is lower??? You really should do your due diligence before you accept what the home office tells you......
May 5, 2009 2:53 pm

By the way, I think that Jones moving to $50k threshold is a good idea. They just need more flexibility in their program.



And new analysts.

May 5, 2009 6:06 pm

Morean - first, I want to compliment your ability to recognize a good move.  Second, I want to tell you that  you're full of it and you don't even know it.  Skrainka has nothing to do with Advisory Solutions.  Different GP, different leadership, different analysts.  If you ever looked at AGE's advisory program, you'll notice some similarities.  That's because the GP that runs AS used to work for AGE.  As did a lot of the analysts.  The AGE fiasco was a major coup for EDJ.  We picked up some of those folks that were analysts for them and moved them over here. 


As far as our stock analysts go, I tend to agree with you.  We've brought a ton of new ones on board and are covering a lot of stocks that we didn't before, but it's still not as robust as a lot of us would like to see.    

May 5, 2009 6:11 pm
noggin:
Spaceman Spiff:

Why would it be bad and who would it be bad for? 

 
How much time do you spend managing a $50K portfolio?  1-2 hours a year, maybe?  How often do you rebalance it?  Once a year or less?  I'd guess most FAs have a small group of funds that they like, probably called Checks and Balances or Founding Funds or something like that and anything in the $50K range gets put in there.  You wouldn't even think about using 20 different funds for $50K.  With Advisory Solutions you can use all the funds you need, rebalance whenever necessary without thinking about it, and still get paid to do the work for the client.  I'd guess for a lot of Jones guys dropping the minimum to $50K puts a ton of people in the funnel for Advisory. 
 
Is it easier to move?  Possibly.  Can you find it less expensive somewhere else?  Doubtful.  Will you get the whole Advisory Solutions group approach with another program?  No.  That program runs on autopilot from an investment standpoint once you put the money in.  If you go indy (which would be the only really logical place to go if you leave Jones) all those things that used to be automatic (including the research and fund selection if you use the models) you now have to do yourself. 
 
I think it's good for Jones, good for the FA, good for the clients who can now participate.
 
Do you really believe that your pricepoint is lower??? You really should do your due diligence before you accept what the home office tells you......
 
I have done my due diligence and for the type of program it is, there aren't many programs that compare in price.  And none of them work exactly like AS does.  Now, you as an indy may choose to only charge the client 1% to manage their portfolio, but you're not going to do the level of research, allocation, and rebalancing that the AS team does.  Especially at the $50K level. 
May 5, 2009 6:34 pm
Spaceman Spiff:

Morean - first, I want to compliment your ability to recognize a good move. Second, I want to tell you that you're full of it and you don't even know it. Skrainka has nothing to do with Advisory Solutions. Different GP, different leadership, different analysts. If you ever looked at AGE's advisory program, you'll notice some similarities. That's because the GP that runs AS used to work for AGE. As did a lot of the analysts. The AGE fiasco was a major coup for EDJ. We picked up some of those folks that were analysts for them and moved them over here.



As far as our stock analysts go, I tend to agree with you. We've brought a ton of new ones on board and are covering a lot of stocks that we didn't before, but it's still not as robust as a lot of us would like to see.





I never said that Skrainka was in charge of Advisory solutions. But he is the face of the research department. They are still the same underpaid, crappy analysts.



And I like how everybody talks about the great people that you got from AGE. Wasn't the person who was the lead on the Financial Planning software (can't remember the name - Sungard or something) from AGE too? That software was worthless.



As an owner of an RIA, I get 100%. Not to mention, I could probably charge 70 bps and get paid more than a Jones guy. I don't, because I think that my research is better and that I offer much more value to my clients than Jones reps.



Spiff, you need to let the armor rust a little. The shine is blinding you, my friend.



Also, I think that Jones should bring the threshold down to $25 or even $10k. And they need to add equities.



I know that some people think that managed mutual fund accounts are the way to go, but I am adamantly opposed to them.

May 5, 2009 8:12 pm
Spaceman Spiff:
noggin:
Spaceman Spiff:

Why would it be bad and who would it be bad for? 

 
How much time do you spend managing a $50K portfolio?  1-2 hours a year, maybe?  How often do you rebalance it?  Once a year or less?  I'd guess most FAs have a small group of funds that they like, probably called Checks and Balances or Founding Funds or something like that and anything in the $50K range gets put in there.  You wouldn't even think about using 20 different funds for $50K.  With Advisory Solutions you can use all the funds you need, rebalance whenever necessary without thinking about it, and still get paid to do the work for the client.  I'd guess for a lot of Jones guys dropping the minimum to $50K puts a ton of people in the funnel for Advisory. 
 
Is it easier to move?  Possibly.  Can you find it less expensive somewhere else?  Doubtful.  Will you get the whole Advisory Solutions group approach with another program?  No.  That program runs on autopilot from an investment standpoint once you put the money in.  If you go indy (which would be the only really logical place to go if you leave Jones) all those things that used to be automatic (including the research and fund selection if you use the models) you now have to do yourself. 
 
I think it's good for Jones, good for the FA, good for the clients who can now participate.
 
Do you really believe that your pricepoint is lower??? You really should do your due diligence before you accept what the home office tells you......
 
I have done my due diligence and for the type of program it is, there aren't many programs that compare in price.  And none of them work exactly like AS does.  Now, you as an indy may choose to only charge the client 1% to manage their portfolio, but you're not going to do the level of research, allocation, and rebalancing that the AS team does.  Especially at the $50K level. 


I would waste my time discussing this with you because you don't know what you are talking about. We have 5 different levels of fee based accounts with several (that means more than one) that run in the same way as AS.

You really should investigate something before you open your mouth and erase all doubt.....

May 5, 2009 8:19 pm

Geez and just a few years ago 95% of jones reps were railing against c shares because they screwed the client, my how things have changed

May 5, 2009 8:35 pm

A-shares are the best thing for clients. The best. We believe that. We truly believe that. Oh, wait we're losing market share to other firms. Advisory solutions is a great fit for a lot of clients. Remember how you sold against advisory accounts for so long.... well, now you get to sell them and talk about how ours is better than theirs b/c we have a board of people who rebalance it and guess what? You get to use the same funds you were selling people before, so it's easy. We are moving from product-based selling to solutions-based selling. We're awesome. Our advisory platform is the best. If you don't use that for your clients, use the robust MAP program. Which is also full of lots and lots of awesomeness.



We are offering clients all kinds of stuff now. We won't help protect them from severe market loss, but we'll move them into this new solution that will help you annuitize your business and focus on less clients, more service.





May 5, 2009 9:56 pm
I believe Advisory is a great new tool in our quiver but I also know it was introduced to annuitize the business.  Lowering it to 50K just helps us do it quicker.  GP doesn't like no bonus bracket.  You've got vets living in big houses and big lifestyles with a serious pay cut this year.  Check yourself boys and girls.  Make sure your moving clients into this for the right reason.