Edward Jones Advisory Solutions

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Feb 26, 2010 12:27 pm

I had a conversation with another Jones person about the "real" cost of Advisory solutions.

 
First the client will pay 1.35% and then the average custom model has an expense of .70%.
 
So the real cost vs return seems to be this.
 
Clients pay about 2.05% for a product that manages money managers.
 
We take a managed product (mutual funds) pay .70% for someone to manage our clients money.
 
Then the client pays Edward Jones another 1.35% for them to manage the managers,....
 
To me it is a rip and is only sellable if your client really doesn't know what they are paying. (BTW the other guy didn't know there was any other fee other than the 1.35%, he thought that was it.  Like you are telling them that they are paying twice, but I would like other opinions about this.  Also let me know if I understand this differently please.
Feb 26, 2010 12:44 pm

EJ doesn't rebate 12b1 fees to the client in AS?

Feb 26, 2010 12:45 pm

I think you've got it right. It's more expensive than holding A share mutual funds. However, you should offset that by looking at being able to buy best of breed investments, automatic rebalancing and investment selection - as well as reduction in noise (tinkering with the account).


My experiences have been that my custom models have outpaced the S&P by 150 to 250 basis points. (OK - back off Gaddock/Morean/whomever ... I'm not bragging here). I don't sell performance, but I also think that is reasonable information for the client to have with the proper disclaimers.
 
Finally, if issues surface with the MF management style we can address it. What will you do when Lord Abbett/American Funds/Hartford's investment style blows up?
Feb 26, 2010 12:49 pm
LockEDJ:

I think you've got it right. It's more expensive than holding A share mutual funds. However, you should offset that by looking at being able to buy best of breed investments, automatic rebalancing and investment selection - as well as reduction in noise (tinkering with the account).

My experiences have been that my custom models have outpaced the S&P by 150 to 250 basis points. (OK - back off Gaddock/Morean/whomever ... I'm not bragging here). I don't sell performance, but I also think that is reasonable information for the client to have with the proper disclaimers.
 
Finally, if issues surface with the MF management style we can address it. What will you do when Lord Abbett/American Funds/Hartford's investment style blows up?



Brag away.  I am always interested in listening to what other people have.  Sounds like you got something that works.

I plan on getting together with Gaddock to bounce ideas off of each other.

Feb 26, 2010 12:52 pm
Wet_Blanket:

EJ doesn't rebate 12b1 fees to the client in AS?

They certainly say they do.  They are also supposedly using institutional share classes where available (lower expense ratio).  I thought this guy had been with Jones since 2003.  I would have thought he should know all this by now.  If not, one word---->JonesLink
Feb 26, 2010 12:56 pm

True Lock... If you have to choose between ONLY two choices. Either put all your money in one fund family at A shares or have your clients pay 2% per year for Edward Jones services in managing those mutual funds. I think those are both two bad options...

Feb 26, 2010 12:58 pm

joel - WTF- I could use joneslink but I want to be clear of my understanding. Btw idiot ass, AS just started last year so when I started at jones has no bearing.

 
Also the 12b-1 fees I believe are not part of that .70% which means that we must have found just high expense funds.
Feb 26, 2010 1:00 pm
RealWorld:

joel - WTF- I could use joneslink but I want to be clear of my understanding. Btw idiot ass, AS just started last year so when I started at jones has no bearing.

 
Also the 12b-1 fees I believe are not part of that .70% which means that we must have found just high expense funds.
Actually, it started in 2008.
Feb 26, 2010 1:29 pm

JONES FIGHT!

Feb 26, 2010 2:03 pm

OK, this is weird.  Advisory Solutions is jsut like every other MFD wrap program on Earth.  Client pays 1.35% max, plus there are mFD expenses (averaging about 65 bips on the active model, and like 25 on the index model).  They use ONLY ETF's, Index Funds, load-waived A-shares (for those that don't have institutional shares), and institutional share classes.  What little 12b-1's we receive get reimbursed directly back to the client's account.  We no longer accept ANY revenue sharing in Advisory Solutions (we used to rebate those back as well).  How is that different than most other MFD wrap programs?

Feb 26, 2010 2:12 pm
RealWorld:

True Lock... If you have to choose between ONLY two choices. Either put all your money in one fund family at A shares or have your clients pay 2% per year for Edward Jones services in managing those mutual funds. I think those are both two bad options...

 
??? As opposed to ... ??? Buying all C shares? Which certainly is BY FAR more expensive to the client? Or by buying A shares across multiple fund families ... thus truly lacking flexibility? Or would you prefer using individual stocks and bonds - which Jones is uniquely poorly qualified to do?
 
As B24 suggests, this is a typical mutual fund wrap program and has been endlessly covered here. I feel AS is about as inexpensive as you'll find in the marketplace. If you think we're excessive I'd suggest you ask what Ameriprise is up to, and be sitting down when you hear it.
 
At the end of the day, my buddy said it right,"The price is the price." It's up to you to see the value in it and present it to the client. But I can tell you, the competition isn't doing it cheaper than us.
Feb 26, 2010 2:18 pm
LockEDJ:
RealWorld:

True Lock... If you have to choose between ONLY two choices. Either put all your money in one fund family at A shares or have your clients pay 2% per year for Edward Jones services in managing those mutual funds. I think those are both two bad options...

 
??? As opposed to ... ??? Buying all C shares? Which certainly is BY FAR more expensive to the client? Or by buying A shares across multiple fund families ... thus truly lacking flexibility? Or would you prefer using individual stocks and bonds - which Jones is uniquely poorly qualified to do?
 
As B24 suggests, this is a typical mutual fund wrap program and has been endlessly covered here. I feel AS is about as inexpensive as you'll find in the marketplace. If you think we're excessive I'd suggest you ask what Ameriprise is up to, and be sitting down when you hear it.
 
At the end of the day, my buddy said it right,"The price is the price." It's up to you to see the value in it and present it to the client. But I can tell you, the competition isn't doing it cheaper than us.
That was kind of the point I was getting at.  If I had to guess, Real World is probably holed up in his jammies going through the Study for Success program and is trying to figure out Jones products during his down time, since he doesn't have full access to JonesLink yet.
Feb 26, 2010 2:34 pm

Some people just like to bitch. AS provides a level of diversity at a reasonable price. I have a wealthy client primarily in AF's. I would like to switch him to Adv Sol, or better yet to the MAP when they revamp it. It will give us the flexibility to use "best in class", low expense funds in a reasonably priced platform. My long term concern for my clients is that if something happens to them, will their spouse or progeny be able to understand and maintain their investments. 1% to 1.5% is a very reasonable amount to pay for that level of service. And having our managers manage other groups of funds adds a level of safety much needed in this post-Madoff time.

Feb 26, 2010 2:37 pm
RealWorld:

I had a conversation with another Jones person about the "real" cost of Advisory solutions.

 
First the client will pay 1.35% and then the average custom model has an expense of .70%.
 
So the real cost vs return seems to be this.
 
Clients pay about 2.05% for a product that manages money managers.
 
We take a managed product (mutual funds) pay .70% for someone to manage our clients money.
 
Then the client pays Edward Jones another 1.35% for them to manage the managers,....
 
To me it is a rip and is only sellable if your client really doesn't know what they are paying. (BTW the other guy didn't know there was any other fee other than the 1.35%, he thought that was it.  Like you are telling them that they are paying twice, but I would like other opinions about this.  Also let me know if I understand this differently please.

I agree and disagree with you...
 
I have no problem with someone charge 1.35% plus investment fees(MFs, ETFs, etc) for actually doing something..
 
But for EDJ platform, you can't do anything as the advisor(move to cash, reallocated, etc) without signing brand new paperwork... that makes the account a rip..
Feb 26, 2010 2:50 pm
RealWorld:

joel - WTF- I could use joneslink but I want to be clear of my understanding. Btw idiot ass, AS just started last year so when I started at jones has no bearing.

 
Also the 12b-1 fees I believe are not part of that .70% which means that we must have found just high expense funds.

The fund expenses are pretty high on some of these Advisory solutions(I had a buddy fax me a copy.... it is dated but looks like some of these are just high expense funds.. (for example Keystone Large Cap Growth 1.50%.. who the fk is that?)
Feb 26, 2010 2:50 pm

The thing that bothers me with Adv Sol is that it's the only platform we sell. There are a number of good fee based platforms out there and I would like my pick of them. Plus, we were told that one of the best things about Jones is the lack of proprietary products.  But even with that being said, I would like to ask the original poster what a "reasonable fee" is? And what great and unique service does he provide his clients? And finally, if he can't see any value in a product like advisory solutions, maybe he just doesn't know enough about this business.

Feb 26, 2010 2:52 pm
B24:

OK, this is weird.  Advisory Solutions is jsut like every other MFD wrap program on Earth.  Client pays 1.35% max, plus there are mFD expenses (averaging about 65 bips on the active model, and like 25 on the index model).  They use ONLY ETF's, Index Funds, load-waived A-shares (for those that don't have institutional shares), and institutional share classes.  What little 12b-1's we receive get reimbursed directly back to the client's account.  We no longer accept ANY revenue sharing in Advisory Solutions (we used to rebate those back as well).  How is that different than most other MFD wrap programs?


BS.... you kept that... that is why when you discontinued revenue sharing in AS, you had to raise the fees across the board.... somebody fckd that one up..
Feb 26, 2010 3:00 pm
LockEDJ:
RealWorld:

True Lock... If you have to choose between ONLY two choices. Either put all your money in one fund family at A shares or have your clients pay 2% per year for Edward Jones services in managing those mutual funds. I think those are both two bad options...

 
??? As opposed to ... ??? Buying all C shares? Which certainly is BY FAR more expensive to the client? Or by buying A shares across multiple fund families ... thus truly lacking flexibility? Or would you prefer using individual stocks and bonds - which Jones is uniquely poorly qualified to do?
 
As B24 suggests, this is a typical mutual fund wrap program and has been endlessly covered here. I feel AS is about as inexpensive as you'll find in the marketplace. If you think we're excessive I'd suggest you ask what Ameriprise is up to, and be sitting down when you hear it.
 
At the end of the day, my buddy said it right,"The price is the price." It's up to you to see the value in it and present it to the client. But I can tell you, the competition isn't doing it cheaper than us.

Except you are limited on funds...and changing the portfolio...
Feb 26, 2010 3:02 pm

I thought you Jonesers could opt for the canned approach or build a custom model?

Feb 26, 2010 3:06 pm
LockEDJ:
RealWorld:

True Lock... If you have to choose between ONLY two choices. Either put all your money in one fund family at A shares or have your clients pay 2% per year for Edward Jones services in managing those mutual funds. I think those are both two bad options...

 
??? As opposed to ... ??? Buying all C shares? Which certainly is BY FAR more expensive to the client? Or by buying A shares across multiple fund families ... thus truly lacking flexibility? Or would you prefer using individual stocks and bonds - which Jones is uniquely poorly qualified to do?
 
As B24 suggests, this is a typical mutual fund wrap program and has been endlessly covered here. I feel AS is about as inexpensive as you'll find in the marketplace. If you think we're excessive I'd suggest you ask what Ameriprise is up to, and be sitting down when you hear it.
 
At the end of the day, my buddy said it right,"The price is the price." It's up to you to see the value in it and present it to the client. But I can tell you, the competition isn't doing it cheaper than us.
 

 


 
That's what Ameriprise is up to... and personally, I do a hell of lot more than some mutual fund wrap account. So yes, I suggest you do sit down to know I'm not just sitting here picking funds with the highest Morningstar rankings. Some of us don't use mutual funds but prefer etf's, individual stocks, preferreds, bonds (muni and corp), equity-linked cd's, structured products, UITs, closed ends, and yes, you better sit down for this one, option strategies.
 
I'm sure there are plenty of Ameriprise guys that charge more than I do for a lot less. Just as there are plenty of EJ guys that roll A shares every 4 years into a different fund family (seen it, guys that consistantly grossed $80,000/mo were doing it; not here to pick a fight on that crap).
 
One thing you should focus on is not the cost, but the value. Maybe you run across one of my clients and you see I'm charging 1.5% and for the same size account, you could charge 1.0%. Sure, you're 0.5% "cheaper" but maybe, just maybe, I'm providing more value in that 1.5% than you possibly could in that 1%.