Edward Jones 0% Bonus Bracket

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Mar 4, 2009 10:08 pm

I would like to know how your dealing with the fact that the 0 bracket makes you watch Thousands of dollars vanish right in front of you yet the growth montra is still very loud.  This is not a Jones bashing question but I would imagine "Profitable" advisors are hot.

Mar 5, 2009 10:39 am

I guess I don't see your point.  Th market is down 50% from peak, we have only now fallen into the zero bonus bracket, we aren't being laid off, bought out, hung out to dry in the news, taking TARP money, being indicted for fraud, you name it.....

 
I only make these comments in response to your comment.  Yes, it sucks to not receive a bonus, but most hald-inteeligent advisors understand the situation.  Nobody's complaining when we're in the 45% bonus bracket.
 
As for the "growth" mantra, that's how we become more profitable - by growing the company.  Why do you think all the wires now have 15-20,000 FA's?  Why don't they just stop at 10,000?  Why didn't they stop at 7,000?  I don't see how growth would be a detractor to profit.
 
 
Mar 5, 2009 10:51 am

Telling a company to stop growing in down market is like telling  your client to stop reinvesting dividends when the market is down.  Neither is a good plan for a long term business model. 

 
Profitable advisors aren't "hot".  Disappointed, yes.  Most of them have been through this before.  They know that soon enough the bonus bracket will be back in the normal range and their bonuses will be too.  So, you take the good with the bad.  Bonuses are just that.  They're not guaranteed.  So, those guys hopefully haven't set up their house payment based on the amount of bonus they're used to seeing. 
 
 
Mar 5, 2009 12:56 pm

Spiff-

 
If they take the trips away, then I would start to get nervous. If this market continues on its negative path for awhile, isn't it conceivable that GP's who  foot most of the bill for trips , if they have a choice between taking a few bucks out of their pockets for growth or a few bucks out for trips, one might be on the chopping block.
 
I just don't think that they understand that if an office isn't profitable and it has to be subsidized, that adding more brokers and more offices ultimately hits the bottom line...their pocket. The concept of continually adding offices (although the net number of reps hasn't appreciated much since I left almost 3 years ago) has to catch up at some point, especially in these markets.
 
Spiff...the rub in the ointment is the downturn of the market. If a recovery is out a year or more, although most believe the end of the year,  GP's aren't going to take it lightly if they don't make their number. Most firms are contracting in various ways...don't be suprised if something has to give.
Mar 5, 2009 1:57 pm

Foot, I don't disagree one bit.  I would be surprised if they KEPT the trips at this point.  I don't see the point of having them.  I don't know how much is paid by the firm vs. by product partners, but I am sure it is a bug nut.  I would think others might feel the same way.  Our numbers are WAY down.  It doesn't take a rocket scientist to see that.  Whether our firm is hurting more or less than other brokerages is irrelevant (I'm talking only the brokerage units of the wires right now).  Fact is, we are in "holy sh!t" land.

Now, financially, the company is solid, but that does not mean we shouldn't be tightening our belts.  Personally, I think we should also be limiting BOA hours also.  But that would be akin to layoffs.  Jones has done a decent job of weathering the financial storm, but there is still a ways to go in this mess.
Mar 5, 2009 4:55 pm

B24,

You make good points, but when I used to work at Jones it seemed obvious to focus on the health of the sales force (as it is referred to) as opposed to bringing on average 3 new reps to the same location/office in sequence, one failed after the other like dominos ( I saw this first hand in leadership roles).  My point is health vs. growth. 
Mar 5, 2009 9:01 pm

Tin, I agree 100%. Health has seemed to always be an issue at Jones. But I think they will struggle with that whether they grow or not. IMHO, the structure of our firm (the one-man office) leads to too much complacency. Not enough people breathing down your neck (or teaching you). And I can tell you from first-hand experience that many of us are learning (have learned) from some pretty weak FA's. The self-starters will excel, but the people that need too much direction fall on their faces. In addition, the grow-it-from scratch focus leads to turnover as well. But I agree, we need to improve the existing performance in the field. Too many average and below-average FA's out there. Here's the question, though. Does training really help that? There is no firm out there that has a great advanced training program. Most great wirehouse advisors learned it over many, many years, or from senior team members, not from training classes. So the last resort is simply raising the bar. And we all know how everyone on this board reacted to the increase from 14K to 18K.

Mar 5, 2009 9:10 pm
B24:

IMHO, the structure of our firm (the one-man office) leads to too much complacency. Not enough people breathing down your neck (or teaching you). And I can tell you from first-hand experience that many of us are learning (have learned) from some pretty weak FA's. The self-starters will excel, but the people that need too much direction fall on their faces.





That's exactly what I've seen from EJ folks I know...they seem to puff out their chests because they have their own office, but when you figure out or hear how much they produce, it makes you really scratch your head. I think an increase in general standards would be a good fix for that over time. I don't think it is the structure so much as the expectations you set for rookies. ML ("old" days) newbies think they can be million dollar producers whether or not they had a clue--if they fell short, they were/are more likely to produce $500k, whereas at Jones you are a friggin' superstar or semi-legend if you hit $500k.

Mar 5, 2009 10:01 pm

There needs to be a longer internship period, as they do in other professions. A teacher has to student-teach for a year; doctors have internships, etc., etc. In my previous career, when I hired somebody, I worked with them every day, gradually giving them more responsibility.
At Jones, there is maybe two weeks of real training before you go live, and I have seen people go into the field who have never sat in on an appointment. The first time I made a 401k rollover call the client was sitting there watching me fumble my way through it. I've seen FAs who didn't know the difference between a Roth and a Traditional IRA. You've got 22-year-old FAs sitting down with retirees.
Right now Jones is a training ground for the banks and the independents. By the time you figure out how to do this, you just want to leave.




Mar 5, 2009 10:23 pm
B24:

Tin, I agree 100%. Health has seemed to always be an issue at Jones. But I think they will struggle with that whether they grow or not. IMHO, the structure of our firm (the one-man office) leads to too much complacency. Not enough people breathing down your neck (or teaching you). And I can tell you from first-hand experience that many of us are learning (have learned) from some pretty weak FA's. The self-starters will excel, but the people that need too much direction fall on their faces. In addition, the grow-it-from scratch focus leads to turnover as well. But I agree, we need to improve the existing performance in the field. Too many average and below-average FA's out there. Here's the question, though. Does training really help that? There is no firm out there that has a great advanced training program. Most great wirehouse advisors learned it over many, many years, or from senior team members, not from training classes. So the last resort is simply raising the bar. And we all know how everyone on this board reacted to the increase from 14K to 18K.

 
I agree. Our model forces FAs to learn the majority of the job on their own. That's not all bad, except for the fact that most of us spend the first two years experimenting with real people and real money.
 
I'd kill to have an experienced FA or two down the hall to bounce ideas off of: especially in a market like this.
Mar 6, 2009 10:36 am
Borker Boy:
B24:

Tin, I agree 100%. Health has seemed to always be an issue at Jones. But I think they will struggle with that whether they grow or not. IMHO, the structure of our firm (the one-man office) leads to too much complacency. Not enough people breathing down your neck (or teaching you). And I can tell you from first-hand experience that many of us are learning (have learned) from some pretty weak FA's. The self-starters will excel, but the people that need too much direction fall on their faces. In addition, the grow-it-from scratch focus leads to turnover as well. But I agree, we need to improve the existing performance in the field. Too many average and below-average FA's out there. Here's the question, though. Does training really help that? There is no firm out there that has a great advanced training program. Most great wirehouse advisors learned it over many, many years, or from senior team members, not from training classes. So the last resort is simply raising the bar. And we all know how everyone on this board reacted to the increase from 14K to 18K.

 
I agree. Our model forces FAs to learn the majority of the job on their own. That's not all bad, except for the fact that most of us spend the first two years experimenting with real people and real money.
 
I'd kill to have an experienced FA or two down the hall to bounce ideas off of: especially in a market like this.
 
Um...you do.  During my first year in the field I had my mentor, some of the Visiting Vets I'd worked with over the years, and my RL on speed dial.  I NEVER gave a presentation for the first 6 months without going over it with one of those folks.  Just because you don't have a 20 year vet in the office next door, doesn't mean you don't have access to them.  If you don't know what to do, call someone.  Don't just muddle through hoping for the best. 
 
I wouldn't equate the number of FAs who are struggling right now with a failed system.  Now, if things were like they were 2003-2006, then maybe.  When you have very capable 10-15 year vets who are suddenly hitting numbers they haven't seen in 5-7 years, it's not the training, it the environment.  Does Jones need more training on investments, processess, and planning?  Yes.  Does it mean our current system is broken?  No. 
Mar 6, 2009 12:08 pm
buyandhold:

There needs to be a longer internship period, as they do in other professions. A teacher has to student-teach for a year; doctors have internships, etc., etc. In my previous career, when I hired somebody, I worked with them every day, gradually giving them more responsibility.
At Jones, there is maybe two weeks of real training before you go live, and I have seen people go into the field who have never sat in on an appointment. The first time I made a 401k rollover call the client was sitting there watching me fumble my way through it. I've seen FAs who didn't know the difference between a Roth and a Traditional IRA. You've got 22-year-old FAs sitting down with retirees.
Right now Jones is a training ground for the banks and the independents. By the time you figure out how to do this, you just want to leave.

 
BH, that's not a Jones thing.  That's the whole damn industry.  Goddamn welders need to spend more time as an apprentice than we do in this business.  That's scary.
Mar 6, 2009 10:12 pm

So, how have you Jones guys hedged your clients' portfolios throughout the last 6-9 months?  How you been buying puts, or adding an S&P short position such as SDS?  Just wondering......

Mar 6, 2009 11:38 pm

yeah right Sooth. All we do is ask if their goals have changed and then watch another 10%disappear. If anything we hedge equities with bonds and hedge bonds with more equities. heck yeah....snappin necks and cashin checks baby haha whatever i hate these damn restrictions what a joke

Mar 7, 2009 7:00 am
B24:

Foot, I don't disagree one bit.  I would be surprised if they KEPT the trips at this point.  I don't see the point of having them.  I don't know how much is paid by the firm vs. by product partners, but I am sure it is a bug nut.  I would think others might feel the same way.  Our numbers are WAY down.  It doesn't take a rocket scientist to see that.  Whether our firm is hurting more or less than other brokerages is irrelevant (I'm talking only the brokerage units of the wires right now).  Fact is, we are in "holy sh!t" land.

Now, financially, the company is solid, but that does not mean we shouldn't be tightening our belts.  Personally, I think we should also be limiting BOA hours also.  But that would be akin to layoffs.  Jones has done a decent job of weathering the financial storm, but there is still a ways to go in this mess.
 
My $.02
 
Trips won't go away.  They are self correcting.  A portion of commissions is set aside to pay for them.  In times like this more FA's have commission set aside yet they do not qualify for the trip so it is a revenue generator but not a cost.  If they did not KEEP the trips 20 yr Vets like me that are producing the same (BME in February) but working 6 10-12 hour days a week would burn out.  I have taken a six figure pay cut because of 0 bonus bracket.  I understand that.  I wouldn't understand no vacation.
 
I 100%+++ agree with the BOA hours.  There are multiple branches in my Region that produce 30% to 50% less than me that have 2 to 2 1/2 BOAs.  I have one.  She works as hard as me and I don't need 2.  Multiple BOAs is just an ego thing for the FA.
 
Only my opinion.
Mar 7, 2009 10:13 am

I have taken a six figure pay cut because of 0 bonus bracket.  I understand that.  I wouldn't understand no vacation.


Y-
 
How hard is it to book a 7K vacation on your own? But you can tolerate no bonus but watch out  if they took away your taxable vacation it would difficult to comprehend?
 
If you are as big a producer as you claim...multiply .25 X your production and see if you can cover the trip or not. If my calcs are close your February commissions (congrats on the BME in this market) alone would cover both trips.
 
100% bonus bracket at my office and I pay for my own trips and I too have been working many more hours than before the market.
Mar 7, 2009 12:22 pm
footsoldier:

I have taken a six figure pay cut because of 0 bonus bracket.  I understand that.  I wouldn't understand no vacation.


Y-
 
How hard is it to book a 7K vacation on your own? But you can tolerate no bonus but watch out  if they took away your taxable vacation it would difficult to comprehend?
 
If you are as big a producer as you claim...multiply .25 X your production and see if you can cover the trip or not. If my calcs are close your February commissions (congrats on the BME in this market) alone would cover both trips.
 
100% bonus bracket at my office and I pay for my own trips and I too have been working many more hours than before the market.
 
You do not have to be a million dollar producer (and I am not one) to earn $100,000 in bonus at Jones in good/decent bonus brackets.  You have to have low expenses, high revenues (asset fees, LOC loans, credit cards, etc.) and a decent firm bonus bracket.  Obviously, you can't be a producing 400,000 to 500,000, but you do not have to be a Top Producer either.
 
Yes I can afford to pay for my own vacations.  As a matter of fact we do pay for our trips.  It is set aside from gross commissions and we pay taxes on it.  Once again, we pay for it...it is not free.
 
I understand (I did not say I LIKE) no bonus.  I knew the rules for bonus.  They are fair and reasonable.  I agreed with them and gladly took the job.
 
Trips (which once again we pay for) also have set rules.  If I meet the rules I earn (not given) the trip.  The rules are fair and reasonable.  I agreed with them and I took the job.  Changing the rules would tick me off as I am sure it would tick you off too!
Mar 7, 2009 12:36 pm

[/quote]

 
BH, that's not a Jones thing.  That's the whole damn industry.  Goddamn welders need to spend more time as an apprentice than we do in this business.  That's scary.[/quote]
 
I hear you.
Mar 9, 2009 6:00 pm
buyandhold:

There needs to be a longer internship period, as they do in other professions. A teacher has to student-teach for a year; doctors have internships, etc., etc. In my previous career, when I hired somebody, I worked with them every day, gradually giving them more responsibility.
At Jones, there is maybe two weeks of real training before you go live, and I have seen people go into the field who have never sat in on an appointment. The first time I made a 401k rollover call the client was sitting there watching me fumble my way through it. I've seen FAs who didn't know the difference between a Roth and a Traditional IRA. You've got 22-year-old FAs sitting down with retirees.

 
I agree with you here, its ridiculous to have college kids with no experiance being responsible for peoples life savings.
 
Luckily EDJ does have an apprentice program that puts them in an office with a vet for 4 months to have exposure to everything before they even start their studying but this is unfortunately a small % of new FA's that are hired that go through this program.  The industry as a whole would be better if there was a longer learning and prep period, but everyone wants producers that bring in money asap even though a huge % end up failing...
Mar 9, 2009 7:50 pm

I can speak from experience that the training provided by EJ doesn't provide you with the necessities needed to provide financial advice. I can admit it is an industry wife problem. I think back on first initial appointments, scary, at least I can admit it. I remember going to my health leader and asking for his opinion on an prospect I ran into with a $400k portfolio. Without asking me one question in terms of pension income, retirement lifestyle, he told me verbatum "put all of their money into a growth and income mutual fund and run a 6% SWP, works like a charm".

 
This is for ytrewq, for someone with 20 years experience, you can't be serious about the trips being worth at least $100k. I'm speaking as someone who has been on one, we booked a last minute trip to Mexico and enjoyed it more than the Jones trip we went on.