Concerns About Edward Jones

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Jul 22, 2011 4:30 pm

After a long career at Jones (17 years), I am beginning to look outside the Green Zone because of what I see as some disturbing things happening at Jones.  Many people have heard about the recent changes to expectations at Jones, and that the new absolute minimum for experienced advisors (over 6.5 years) will be 22K gross per month. They have also begin adding additional "segments" to their production system (seg 1, seg 2, seg 3 etc.). Although this will not affect me, it concerns me as far as the direction of the firm.

Well, I have a good friend that is a Regional Leader (and GP) on the other side of the country. He has told me in no uncertain terms that Jones plans to begin paying people starting in year 3 on a wirehouse-like grid, and that the lowest grid will be in the 30% range for lower producers. They anticipate rolling this out 2 years from now.

Another interesting fact he shared is that they are planning to disband their research teams in favor of outsourcing this function. This is one of the primary reasons for booting Alan Skrainka - he was vehemently opposed to it (for obvious reasons). Their position is that based on their investment model (disciplined, traditional approach), they can utilize 3rd party research services for a fraction of what their current in-house research team costs. It will also help lower conflicst of interest in what the perceive to be a trend towards fiduciary duty.

For those of you that work at Jones, you know that they have tools to essentially create model portfolios for you (Advisory Solutions, Model Portfolio System, etc.). Last year they rolled out a system that will create and buy non-advisory models for you (A-shares, stocks, etc). The word is that at some point, this will become mandatory for new money, and that the only non-model assets that will be allowed in cleint accounts going forward will be legacy assets and exception assets (such as transfer assets with embedded gains). No word on WHEN this is going to happen, but he felt within a year or so.

There are some other annoyances that I have, but essentially, I feel like we are becoming the H&R Block of investments. I never really considered going independent or to another firm, but it seems like the right time to start looking. I welcome the views of others that have made the leap from Jones.

Jul 24, 2011 12:24 pm

What do you mean "in year three" the new payout grid is rolled out?  Year three from can sell, or what?  What about someone 7 years out at around seg 4 numbers, is my payout going to be cut?  That does not bode well for the firm, if they start tinkering with already-low payouts...

Aug 21, 2011 1:21 pm

I believe this post completely. IMO there is a fundamental shift in the firm to move it away from the "just run it legally, ethically, and profitably and we'll leave you alone", that I and many others signed up for. There are already good-sized losses in advisors lately and it's accelerating. I can't remember the number exactly, but I remarked to my BOA there was a net loss of 50-60 advisors in the firm just from May to June. Even during the recession, I don't recall seeing net losses of advisors per month that annualize out at around 5%.

Referring to it as the H&R Block of investing is about right. I think the single broker office model is on its way out, too - they are already running prototyle multi-broker "training centers" in larger cities (20 cubicles for calling, a couple conference rooms for appointments). Cookie-cutter "solutions" that keep the regulators away (and coincidentally maximize profit for the firm), are not far away.

Don't get me wrong; the firm has the right to be profitable and to reinvent itself in any way the GPs feel is best for future viability. That's their prerogative as the firm's leadership. I just believe there is a decent sized number of advisors out there who are starting to feel that the rug is being pulled out from under them, and are looking for the exits. Can't wait to see the RegRep's Advisor Satisfaction scores for 2012.

Jul 25, 2011 11:27 am

WOW!! All I can say is I am glad I left in September. I was a seg 4, and did not like the new production standards then...Please dont take this wrong Jones is a great company but it has changed ALOT!!!

Jul 25, 2011 2:53 pm

I also heard that Weddle is from Mars and is helping to plan the invasion as we speak....

Inland - you believe this post completely?  A bit naive, are we?

Frankly, it's overdue that they start raising expectations.  If a broker isn't making more than $20k a month 6 years out there are issues that need to resolved.  The only people that I hear voice concerns about the new standards are those that have gotten fat and lazy doing nothing but dragging down the ROI of the firm for the last decade.  Raising expectations will push brokers to work more to generate more revenue, thus increasing my bonus and LP distribution. 

down the road - I agree, a lot has changed, but just about all of it is for the better.

Anyone watch Burn Notice?  In the intro Bruce Campbell says Spies are a bunch of "whiney (sp) little b!tches".  I think it's fair to say that advisors are too. 

Jul 25, 2011 6:25 pm

I moved from Jones almost a year ago and never looked back.  So glad I made the transition and am now an independent with TradePMR.  Hulk is right for firms that want advisors making money, unfortunately I saw too many advisors push high commissioned products over other similiar products to increase their production and make more money.  Meanwhile they were calling themselves financial planners, the top sellers were selling annuities or UIT's to get the higher production numbers, yeah for them.  For struggling advisors we were told It's better to sell  Annuities, full load funds at minimum breaks, uits, and insurance(variable).  And when  you rely on commissions for your income and profitability levels the pressure becomes hard to resist.  You start justifying selling a bond UIT instead of an individual bond because you make more on a UIT .  Not that they weren't suitable but they are not always the best for clients, and I can't tell you how often annuities are missold.  It made me mad and although I was bringing in decent assets; I wasn't making enough money to suit the firm.  Nevermind that my colleagues were liquidating accounts at other firms then bringing in cash and reinvesting entire portfolios for their own gain, telling me and their clients that it was better to start fresh.

Good riddance performance charts and little dots!  Love my job as a true finanical planner, no incentive for me to sell anything except what's appropriate and good for clients.  I have support through TradePMR and other independents, and lowered my cost of doing business.

 The amazing part was as an independent fee only advisor, CPA's and attorneys respect my business more now(don't forget they get to see those 1099's and broker moves) .  I'm receiving referrals more frequently and consistently than I did working at Jones.

As a salesperson, Jones is a great world for you.  They make it easy, you don't need to know anything about planning, heck with the way they are going you don't need to know anything about investing.  I wish you the best because Jones is far better than other firms, they limit what is sold.  But don't knock those that have stepped out or are thinking about it, not everyone that leaves because of the changing climate at Jones is lazy.  I would argue it's the other way around.

Jul 25, 2011 6:25 pm

I moved from Jones almost a year ago and never looked back.  So glad I made the transition and am now an independent with TradePMR.  Hulk is right for firms that want advisors making money, unfortunately I saw too many advisors push high commissioned products over other similiar products to increase their production and make more money.  Meanwhile they were calling themselves financial planners, the top sellers were selling annuities or UIT's to get the higher production numbers, yeah for them.  For struggling advisors we were told It's better to sell  Annuities, full load funds at minimum breaks, uits, and insurance(variable).  And when  you rely on commissions for your income and profitability levels the pressure becomes hard to resist.  You start justifying selling a bond UIT instead of an individual bond because you make more on a UIT .  Not that they weren't suitable but they are not always the best for clients, and I can't tell you how often annuities are missold.  It made me mad and although I was bringing in decent assets; I wasn't making enough money to suit the firm.  Nevermind that my colleagues were liquidating accounts at other firms then bringing in cash and reinvesting entire portfolios for their own gain, telling me and their clients that it was better to start fresh.

Good riddance performance charts and little dots!  Love my job as a true finanical planner, no incentive for me to sell anything except what's appropriate and good for clients.  I have support through TradePMR and other independents, and lowered my cost of doing business.

 The amazing part was as an independent fee only advisor, CPA's and attorneys respect my business more now(don't forget they get to see those 1099's and broker moves) .  I'm receiving referrals more frequently and consistently than I did working at Jones.

As a salesperson, Jones is a great world for you.  They make it easy, you don't need to know anything about planning, heck with the way they are going you don't need to know anything about investing.  I wish you the best because Jones is far better than other firms, they limit what is sold.  But don't knock those that have stepped out or are thinking about it, not everyone that leaves because of the changing climate at Jones is lazy.  I would argue it's the other way around.

Jul 25, 2011 6:25 pm

I moved from Jones almost a year ago and never looked back.  So glad I made the transition and am now an independent with TradePMR.  Hulk is right for firms that want advisors making money, unfortunately I saw too many advisors push high commissioned products over other similiar products to increase their production and make more money.  Meanwhile they were calling themselves financial planners, the top sellers were selling annuities or UIT's to get the higher production numbers, yeah for them.  For struggling advisors we were told It's better to sell  Annuities, full load funds at minimum breaks, uits, and insurance(variable).  And when  you rely on commissions for your income and profitability levels the pressure becomes hard to resist.  You start justifying selling a bond UIT instead of an individual bond because you make more on a UIT .  Not that they weren't suitable but they are not always the best for clients, and I can't tell you how often annuities are missold.  It made me mad and although I was bringing in decent assets; I wasn't making enough money to suit the firm.  Nevermind that my colleagues were liquidating accounts at other firms then bringing in cash and reinvesting entire portfolios for their own gain, telling me and their clients that it was better to start fresh.

Good riddance performance charts and little dots!  Love my job as a true finanical planner, no incentive for me to sell anything except what's appropriate and good for clients.  I have support through TradePMR and other independents, and lowered my cost of doing business.

 The amazing part was as an independent fee only advisor, CPA's and attorneys respect my business more now(don't forget they get to see those 1099's and broker moves) .  I'm receiving referrals more frequently and consistently than I did working at Jones.

As a salesperson, Jones is a great world for you.  They make it easy, you don't need to know anything about planning, heck with the way they are going you don't need to know anything about investing.  I wish you the best because Jones is far better than other firms, they limit what is sold.  But don't knock those that have stepped out or are thinking about it, not everyone that leaves because of the changing climate at Jones is lazy.  I would argue it's the other way around.

Jul 25, 2011 9:25 pm

To the 2 "Roads":

What percentage of your clients followed you from edj and made the switch with you? and what difficulties did you encounter with the noncompete legal hurdles?

Aug 21, 2011 1:22 pm

@ Road:

Your observations about the firm are spot on.

I saw that with my own eyes, too. In fact, having the account transfer over in cash, instead of in-kind, was one of the first "tricks of the trade" taught to me in my region. I was told it makes things less complicated when dealing with field supervision.

And yes, annuities are pretty common. I was told you really can't advance the segments unless you continually "deepen the client relationships" i.e. sell more things to your current clients.

That isn't planning. That's bait and switch IMO.

@ Hulk

Naive? Hardly my friend. I don't know if you are at Jones or when you left, but those of us talking here have seen significant changes in the firm just recently, that make it a fundamentally different place. And I don't really mind - like Curious, it just made me finally step up and take on the challenge of going indy.

Jul 26, 2011 8:33 pm

OK enough thinking for yourself.  Just go sell some more American Funds.

Jul 29, 2011 4:40 pm

I've been at jones for a decade.  Again, I agree lots of things have changed.  Again, I say for the most part they are positivies.  Apparently you disagree.  I don't really care one way or another.  As far as the naive comment, I stand by it.  If you really believe that Jones is only going to allow us to sell prepackaged portfolios then you are naive.  No more Muni bonds, really?  What are they going to do with all those "key" plaques?  No more corporate bonds, really?  So, no estate feature bonds for my clients anymore?  Another guy said that all we do is push annuities.  If that's the case then how does that fit in here?  I believe naive is an appropriate description.  I thought better of using other less flattering descriptions.

Oh and Clarence, it's not American funds anymore.  Keep up, for heavens sake.  It's Advisory.  Or is this where I say start thinking for YOURself rather than use a tired worn out - and out of date - comment.

Jul 29, 2011 8:36 pm

OK enough thinking for yourself.  Just go sell some more Advisory. 

Aug 21, 2011 1:24 pm

@ Hulk - I never said "all" investing would be modeled, and neither did Curious. He specifically mentioned A-shares and stocks. The equity models are already up and running. And you can go get a "model" with fixed income right now - they're just calling them pre-determined bond ladders, but in my opinion, the all-model program is already ramping up.

With the fiduciary standards changing on the broker/dealer side, and with the general distrust Jones has for any decision the FA makes, I can definitely see them replacing brokers calling on a hot stock with a model system. Why not? Advisory Solutions is already the 2011 Playmate of the Year.

The upside of models is Jones could slash tons of back office positions. Probably reduce Field Supervision by half. Along with the entire research department being sent to pasture. The GP's will be sipping some expensive stuff at the open bar at the next round of Div Trips.

Of course Jones will always be bond sellers, and I'm sure will remain very healthy sellers of annuities. I think Curious explained well that the individual securities (ie those that can't have the fiduciary standard pushed off to another firm like annuities are), will be modeled.

And who gives a damn about their Key plaques? They'll just give them away under a different award system. Like, "Congratulations! Your T12 qualifies for you New Level 3! You're KEY to our success! Go get 'em, killer!"

I'm curious what you think about the multi-broker "training centers"?

Aug 1, 2011 11:08 am

The training centers, from my understanding are just that...training centers.  Once the broker is up and running he moves out to his own office.  When you're trying to penetrate a dense market that has been dominated by the"big boys" for decades, you have to try something different.  There are no 10-20 year vets in those markets to provide the typical Jones support network. I don't know if it will work or not, but again back to a previous comment about all the "change" going on, it's nice to see someone think outside the box and try a different angle. 

But, again, I think you are mistaken to think Jones will make all new money go into a prepackaged product.  It won't happen unless the entire industry is forced into it.

Aug 3, 2011 6:33 pm

I left Jones earlier this year after being there for five years.  I felt like I was with a completely different firm from the one I began with. Too many changes and none of them in favor of the advisor. I haven't looked back and wish I'd left sooner.

Aug 3, 2011 8:02 pm
Incredible Hulk:

The training centers, from my understanding are just that...training centers.  Once the broker is up and running he moves out to his own office.  When you're trying to penetrate a dense market that has been dominated by the"big boys" for decades, you have to try something different.  There are no 10-20 year vets in those markets to provide the typical Jones support network. I don't know if it will work or not, but again back to a previous comment about all the "change" going on, it's nice to see someone think outside the box and try a different angle. 

But, again, I think you are mistaken to think Jones will make all new money go into a prepackaged product.  It won't happen unless the entire industry is forced into it.

Aug 3, 2011 8:06 pm

Hulk, the original poster stated that his good friend who is a regional leader shared that it will happen, for mutual fund buys and stock buys.  Do you really think that a regional leader would just make this up?

Aug 4, 2011 2:38 pm

[quote=LoveInvesting]Hulk, the original poster stated that his good friend who is a regional leader shared that it will happen, for mutual fund buys and stock buys.  Do you really think that a regional leader would just make this up?[/quote]

Oh, the "friend" of an anonymous poster on a public website is a regional leader and says it's so.  Gosh, my mistake.  I'm sure it's Gospel then.... 

Aug 4, 2011 8:28 pm

OK....well so much for trying to ask you a sincere question. You are quite a big man, talking so tough and sarcastic over the internet like this. Wish we could meet in person, bet I would kick your pencil neck weak A$$.

Consider actually reading all the replies on this post, and you may realize how much of a pompous moron you appear to be. You are green, but you are not incredible.