bengal,

I spent 4 years at the dealer in question (in H.O.)  the #1 reason for heavy recruiting is high turnover.  #2 can you say pyramid?  #3 they want to become the McDonald's/Wal-Mart of financial services (actually they already are) #4 It's (recruiting) all they've done for the last 20 years and don't know any better.  Check with the other firms in your area and compare. If you are absolutely new to the industry then EJ does have a good program for you (I'm not kidding).

rankstocks - you are absolutely correct, zacko will have to live with the fact that he is no longer associated with the "greatest sales force"  his loss ...........................

NOT!

Noggin - What is your deal with wrap acoounts, and managed money. There is a far better argument for manged accounts, than commissions. Yeah I really have faith in some newbies ability to select stocks from his living room on his laptop (until that is he gets enough clients to open an office).

and as far as being good for clients??? Oh...let's "A" share em! especially in this flat market environment. let's put em in the hole 6%, heck they'll show a gain hopefully in the next 2 years.

When I was at Jones I had  a couple of accounts come in with 400 - 500K. I put them in A share strategies with breakpoints, charging them 2.5. Well. now I have a client for the next 20 years, that I never get paid on again (unless you consider .25 trail yippeee). by the way, I'm guessing most clients at Jones don't sit for more than 3-4 years, before they need to be "reallocated" to a different fund family.

The 1% fee we get on business is a fair cost for what we do. It truly allows the advisor to make choices for the client based on investment strategy, and not desperation. And yeah, it sets up our business in a more consistant way, (has to be a win win). By the way, when we are discussing fees with clients, we tell them "the cost for this account is 1%"

EDJ used to have a plan that for every $600 million in assets in a community, it could sustain one office. (i.e. $2.4B = 4 offices)

If you think 3 IRs in onw town is bad, try 19 in a town of 40,000 people.

Rank,

You are so clueless...You think the focus should be on the firm.  RJ ethics are just fine...which is not my point. 

My point remains is that you think it's a battle of which firm is better or which firm has higher standards and neither really matters as all firms have to keep their ducks in a row to stay in business these days.  But, when you compare EDJ to any major independent--that's where the joke is.  And the joke is on you.

Thanks for participating.

They are recruiting aggressively, because they can't keep the brokers that they recruited for the last three years.

As far as having several offices in one town....hey we have 2 Merrill offices 10 miles from each other, with 80 Advisors. I would'nt sweat 1 or 2 other Jones guys, chances are they won't be there long.

7% annuities that the bank gets ?? Hate to break it to you, but the
same hartford annuites you get 5% on , everyone else gets 7, only EJ
keeps the 2% before taking their 60% of your 5% 

Maybe I don't get it,....but, Jones seems to almost force feed there office concept in areas that won't support that model. in my area, and others I know of, we have half a dozen branches that have all had 4-5 brokers in the last 2-3 years. This can't be helping there image.

So you're saying there were 6 branches that each had 5 brokers over the last 2 years? Wow. You're right. That's terrible for our image. If it were true, that is. I don't mind the odd exaggeration, but let's get real here. Now if you had said 5 branches that had 4 brokers over 2.5 years..well, then...thats a different story altogether. Or maybe 8 branches with 3 brokers over 3.25. THAT I can believe. But ^ branches, 5 brokers and 2? Not likely.

Moneyadvisor- You missed my point, the fact of the matter is that a good 30-35% of my Mutual Fund business is in C shares. My point was simply that the wrap programs were primarily developed as a way to smooth revenues for brokers and NOT because they are in the clients best interest…

[quote=noggin]Moneyadvisor- You missed my point, the fact of the matter is that a good 30-35% of my Mutual Fund business is in C shares. My point was simply that the wrap programs were primarily developed as a way to smooth revenues for brokers and NOT because they are in the clients best interest.....[/quote]

How is a C-Share better for a client than a wrap program?  With the wrap you can use several fund families and rebalance as needed.  You don't need special approval to move out of Putnam and into Fidelity. 

A C-Share gives the broker the same 1% payout as the wrap program, only now you are hiding it from the client.  Sorry, but I don't mind telling a client what I make on their account.  I think they should know what they are paying, and why.

How is it hidden from the client? Don’t you (all of us) provide a prospectus @ point of sale? I’ll tell you what the wrap programs vs. c shares are good for…it’s good for the firm and ties the client to the firm making it harder to move if you so desire. Go ahead and be an indentured servant if you want, I’ll sell the C shares and go to the page in the prospectus where the costs are compared to A,B and C shares. I have YET to have a client say, “Yep, give me some of those A or B shares” when the costs based upon time held are FULLY explained. I’ll let the guys next to the Subway sell those A shares. 

Inconsults…Thank you  - right on! Noggin, we’ll have to agree to disagree. The wrap does not insure assetts will stay at the firm. If a client wants to leave his wrap account…they leave. Face it, the firms are trying to get the money management away from the advisor. right now if your ML, you have 14,000 advisors managing money a different way!!! In a perfect world, You manage money in the form of professional money managers, not salesman. you generate a fair ongoing fee, you save some of the 200 million that you paid in legal fees last year (defending brokers and arbitration), and you have the sales  force gather assetts.

FYI:  On both confirms and client statements, RJ list the clients fees for non wrap mutual fund tranactions.  That's full disclosure.

Jones pays a payout of 30% on C shares 35% on B and 40% on A shares.  And lets not forget 39% on A share bond funds.   Is that really fair to either the IR or the client?  You have a clear incentive to shove A shares down the clients throat when another share class may suit your clients need better.  And NO JONES BROKER will ever disclose that to their client.

In contrast, my firm pays me 90% on A, B, or C shares so I am free to choose what I feel is best for my client and my practice.

While I tend to lean to C shares, I can look the client in the eye and tell them I have no additional incentives to suggest one particular share class over the other.  As a Jones broker, you cannot say that.

ALSO: The differnce in annuities gross comm is not 2 points jamesbond.  It's 75bps to 150bps depending upon carrier.  Jones keeps the difference.  You are right on that.

I'm going to take zacko's back and say that Raymond James runs a pretty ethical business, much like Merrill, SSB, UBS, others.  However, ever heard of the analogy that a few bad apples ruin the whole bunch (or whatever the hell it actually is)?

The fact that Raymond James has a few "rogue FAs" that decided they were going to do business unethically is a moot point.  How many other BDs have the same thing, or, consequently, how many EDJ IRs churn assets for their clients when it's NOT in their best interest so they can make a buck since they can in essence, only operate transactionally.  It happens everywhere.

RJ was up-front about things and they've complied.  When an FA was found skimming money off the top of his clients' accounts for years, what did RJ do?  Not run, they faced the problem and followed the letter of the law the whole way through. 

Every firm has its cancers.

[quote=noggin]Moneyadvisor- You missed my point, the fact of the matter is that a good 30-35% of my Mutual Fund business is in C shares. My point was simply that the wrap programs were primarily developed as a way to smooth revenues for brokers and NOT because they are in the clients best interest.....[/quote]

I really disagree with your last line comment about wrap accounts, but given how you feel, just why do you think C shares were invented? How could they ever be in the interest of anyone other than the broker?

My view on C shares

C shares are fine for the client.  It takes six years or more to break even on fees versus full A share at max offer.  So, as an advisor I take a pay cut for six years...which incidentally, is probably longer than half of you have even been in the business.  In the long run, I am rewarded if I can help grow the clients money.  Also, myincome drops if the clients account declines.  If a fund underperforms I can switch cross-family without charging a load to do it.  My goal, since I am getting paid on the assets will be the same as the clients.  There is also often less duplication of equity positions when you invest cross family rather than stay with one family.  Clients also like to see their advisor's compensation tied to how their account performs.  Even if they have to pay a little more to do it.

The difference in fees A vs C is only .75% and not 1% which many people often forget.  When you make your living off of new money coming into the office..you will be forced to sell A shares.  So that's where your focus will be.  What about the current clients on your books?  If new money pays the bills, then what incentive do you have to service your current clients?  The ONLY argument against the C share is if clients invest a large amount of money in one family, that they will be cheaper in the long run than if they had bought a C share. 

On wrap accounts, my piliosphy is very much the same.  Many people don't like to pay commissions and simply like the compensation structure on a wrap account as it relates to rewarding the rep for account performance.  When you don't have a wrap program (JONES) or when you are practically forced to sell A shares (JONES), your views will be tainted.

That's half the reason to go indy is to have the ability to take your business in the direction that best serves your clients and yes...YOU too.

well said Zack.

My observation was not against C shares of which I do a good percentage but rather pointing out the fact that i think a C share serves the interest of both client and advisor more equally than does the wrap account. Does that make sense?

Fine, put a client in C-Shares.....

Do they actually read the prospectus?......  Doubt it.

Do they see your 1% commission each year on their statement?...NO (that's why I say its hidden from the client).

Do they get performance reporting?   NO

Do they get A shares or Institutional shares at NAV?  YES

A client can call me and in 30 seconds I can tell them they are up 4% vs their bench mark and we probably should rebalance because XYZ fund is up dramatically.  "Where should we go with those profits?"  We spread it over the other funds.  Wrap accounts are systematic, it keeps you on track, and now you're consulting instead of selling.

The people who are against them, either don't have access to them, or they're arrogant enough to think they can manage money better than a team of P.H.D's.  Sorry, but if you're not going this route with a good portion of your book, then you're days are numbered in this business.  The only thing constant is change...adapt or retire.

N O T....

WHAT A JOKE..

Some one at Edward Jones must have  been having a FLASHBACK, to pre-Doug "3 Mil" Hill days

When they told their clients all the FACTS, not missrepresentaions of the TRUTH..........