Could it be true

or Register to post new content in the forum

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jul 20, 2010 3:36 pm

I heard today from a former Joneser (like me) who made the claim that Advisory Solutions at Jones is a pay to play platform?

Can anyone confirm or deny the allegation. I would be astonished if that were true. They couldn't be that dumb...could they?

Today I fielded three calls from clients who received the class action letters regarding the vouchers. How much longer do they have to notify clients and ex-clients? I received four letters yesterday myself...

Jul 20, 2010 3:56 pm

It was true they were getting kicksbacks(revenue sharing) from the preffered funds family.. They sent out a letter almost a year ago saying how the charges would be increasing... This is old news

Jul 20, 2010 4:38 pm

If that's what you are referring to....

Yes, until about a year ago, Jones was still accepting revenue sharing based on any assets that got invested with preferred funds in AS.  However, that income was credited (from the beginning) 100% back to the client.  Jones has since stopped accepting revenue sharing altogether in AS, so the client no longer sees that credit.  There were never many preferred funds in the program anyway.  There are 50 fund families currently in the program (invluding ETF's, load-based, and no-load), so I doubt it is pay-to-play.

Jul 20, 2010 5:21 pm

It wasn't credited, jones just took that off the top of the fee... That is why the price of the program went up.

Jul 20, 2010 9:26 pm

[quote=squash2]

It wasn't credited, jones just took that off the top of the fee... That is why the price of the program went up.

[/quote]

You mean you don't have discretion as far as the fee to charge your client??

Jul 21, 2010 10:10 am

I wonder if LPL receives any kickbacks for their advisory programs?  I have always heard that they use those monies to lower our costs...but you have to wonder. When the bottom line is all that matters especially when they (I mean we...)go public all revenues count.

Good for Jones to do the right thing for the client...

Jul 21, 2010 10:34 am

[quote=I am legend]

[quote=squash2]

It wasn't credited, jones just took that off the top of the fee... That is why the price of the program went up.

[/quote]

You mean you don't have discretion as far as the fee to charge your client??

[/quote]

Other than a maximum, yes you have limited discretion to discount. Obviously if you are giving up 62% of your fee,  there isn't really alot of fat to trim off that meal ticket.

Jul 21, 2010 1:19 pm

[quote=BigCheese]

I heard today from a former Joneser (like me) who made the claim that Advisory Solutions at Jones is a pay to play platform?

Can anyone confirm or deny the allegation. I would be astonished if that were true. They couldn't be that dumb...could they?

Today I fielded three calls from clients who received the class action letters regarding the vouchers. How much longer do they have to notify clients and ex-clients? I received four letters yesterday myself...

[/quote]

No matter how it's sliced or diced, point shaving, revenue sharing/diversion is a big part of the game. If we only knew the details, think we'd all puke our guts out. One example; a prior firm was paying us 5pts for a single premium life product. Indy firms were getting 10, wires 8 on the exact same product.... When the product didn't sell, they upped the payout to 8%, after a couple years.

For fun, start asking wholesalers about this practice. You'll see them do the dance of a lifetime...

I checked out the annual report of a very large insurance company a couple years ago. The kickbacks they were giving money managers for "advice" was in the many, many millions of dollars, even though it was stated that they may not even be taking the advice.

The above, is a reason why I generally keep my practice pretty simple, with accounts owning a majority of general securities. I especially find UIT and VA products to be the most "mysterious" when it comes to performance/fee type pitfalls.

Jul 21, 2010 3:54 pm

I agree on the product thing.  I think that if the general public knew how much insurance and annuity agents were commissioned on their products, the revenue sharing deals, and the sales "gimmickry" that goes on, there would be a major uproar. 

If an insurance company could effectively create annuity and insurance products that were strictly provided through fee-only financial planners (and the only fees were paid by the client to the planner), it would be a game-changer.  No wholesalers to pay, no commissions, no surrender periods, no marketing, just black and white products.  Wonder what it would look like.  I wonder how much of the cost of insurance products is associated with marketing-related costs versus actuarial costs (i.e. actual payouts and guarantees, etc.).