Edward Jones Settlement Checks

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Apr 30, 2007 5:49 pm

Am I the only one annoyed by this?  Almost all of my clients who were with me at Jones are getting checks ranging from $1 to $300.


So, instead of being on the phone and selling, I'm having to field calls on "I got this check for $5.98, what do I do with it?" 


For the regular accounts, I'm telling them to cash the checks and enjoy the cash.  For the qualified accounts, I'm recommending they put it back into their IRAs.  I'm assuming these are trustee to trustee transfers, anyone else doing it differently?


Apr 30, 2007 5:54 pm

Since the money came from a settlement fund, why would they have to put it back into a qualified account. Revenue sharing comes from the Mutual Fund company, therefore the client would not have ever received that money anyway... will the clients' be taxed on this money and does anyone know why?

Apr 30, 2007 6:08 pm
munytalks:

Since the money came from a settlement fund, why would they have to put it back into a qualified account. Revenue sharing comes from the Mutual Fund company, therefore the client would not have ever received that money anyway... will the clients' be taxed on this money and does anyone know why?



The check that I just got from EDJ is made payable to
"The Trustee of Babbling Looney IRA"   So I guess you do have to put it into a qualified account.   I supposed if I don't,I would be taxed.  But for a whole $12.94, not much of a worry.

Apr 30, 2007 6:12 pm

Update:   If I had read the letter that came in the envelope I wouldn't have to update....DOH


It has been determined that .66% of your distribution amount represents interest income.  If required, you will be issued a form 1099.  blah blah blah.... consult your tax advisor.

May 1, 2007 11:22 am

 These checks are laughable! I too have been feilding calls on what to do with themm. It is a waste but laughable none the less.


I get asked, "what are these checks for and why?" I let them know that the previous firm I was with was less than honest and this is money that they owed to "You" for their less than honorable activity! I remind them that the famed Doug Molehill always said "Our number one objective is firm growth"..... I remind the client that my number one objective is making sure that "they, my client" retire in dignity!

May 2, 2007 9:44 am

Teleman-


Thanks for the improved font size. I know I am in my midlife now. I like it!


As far as the checks, my assistant is going to need a mental day off after fielding many calls in the last two days regarding the settlement checks.


May 7, 2007 4:14 pm

 Footsoldier,


Oh yeah! This is such a great thing to share with these clients of mine. This has been yet another affirmation that leaving Ed Jones was the best thing I ever did. I would have been smarter to leave a couple of years earlier.

May 7, 2007 4:30 pm

So what are you people telling these clients about your current firm's revenue sharing practices?  Or are you leaving out the fact that Jones was absolutely NOT the only firm that did and continues to do revenue sharing?  Moving from Jones to another firm doesn't mean the revenue sharing stopped also. 

May 7, 2007 5:21 pm

Am I the only one annoyed by this?  Almost all of my clients who were with me at Jones are getting checks ranging from $1 to $300.


So, instead of being on the phone and selling, I'm having to field calls on "I got this check for $5.98, what do I do with it?" 


For the regular accounts, I'm telling them to cash the checks and enjoy the cash.  For the qualified accounts, I'm recommending they put it back into their IRAs.  I'm assuming these are trustee to trustee transfers, anyone else doing it differently?


Yes, i have the same problem.  I'm depositing the checking into their IRA/regular accounts.  And submitting a letter with it.  It holds my firm harmless.  I have to add.  EJ, what a firm?  It's great to be Indy.  Best of all, no regional meetings!


May 7, 2007 7:03 pm

Spiffy,


No RS at my firm but I was happy to share that I was the guy who made the checks possible.  Unlike Jones, every MFD wholesaler can call on me and they can tell me about ALL of their funds not just the ones on Jones list...not that I want to talk to them all. 


What exactly is the EJ company line on this?  They must have given you guys a script...but I'm sure you're too intimidated by EJ and embarrassed to share that with us.


Having said all that, you're one of the few EJ guys who still using his own brain...my hats off to you.

May 8, 2007 5:13 am

spiff -

problem is not rev shar but failure on part of incompetent legal/compliance to disclose.

small inconsequential checks indicative of overall edj experience -

catering to small inconsequential "investor".

no problem with that approach tho. somebody has to serve

the unsophistocated little guy.

May 8, 2007 11:45 am

I was told EDJ would prefer that the clients put these checks into the clients' IRAs, although they are not issuing 1099's, so no consequences if we don't.  My question is for clients maxing out their IRA, how do we add this additional $10 or whatever?  The mutual fund applications don't have a box to check for EDJ screwed up.


How is everyone else handling this?


Thanks.

May 8, 2007 2:56 pm

Just deposit them into the ira's. My client checks are running any where from the puny 10 to a few hundred. Many of these checks are in non qualified accounts. I tell them to spend it if they want or we can drop it in their account asnd put it back to work "THE RIGHT WAY" this time.


A word to Spiffy- The word independent means, "NO PREFERRED FUND FAMILIES" It means, I can use anyone I want. Revenue sharing is heavily employed by Ed Jones as their "Shelf space fee". Ej has a desirable distribution channel and most of the fund families will prostitute themselves to this extortion method by Jones. Even  their sacred American Funds.

May 8, 2007 3:32 pm

Spiffy-


All along you have been right on the mark that EDWARD JONES is not alone when it comes to kickbacks.


Today in the WSJ, Chevron while admitting no wrongdoing admitted to participating in kickbacks to Saddam Hussein in the United Nations food for oil program. Revenue sharing is in most industries, and ours is no different.


Maybe its time to own up to our indiscretions, instead of implying that since everyone in every industry does it, it is OK.


I am sick of revenue sharing and all that it brings. I say lets ban the practice and throw the jokers in the pokey if they participate. Let's clean up our house so others don't attack us (are you listening Mr. Spitzer?). And most of all let's be adults and show some integrity and police ourselves better so that the lawyers go elsewhere to make their dough. It's greed that got us to this point, hopefully someone smarter than me can figure out how to clean it up. Spiffy are you ready to leave Jones to champion our cause!!!

May 8, 2007 4:14 pm

I'm still not clear on this.  If I have a client who has already put $4,000 in for 2007, and he puts in another $20, won't that trigger a notice to the IRS that he put in $20 over the contribution limit for 2007?

May 8, 2007 5:02 pm

I code them as transfers, which, is what they are.

May 8, 2007 5:21 pm
Teleman:

A word to Spiffy- The word independent means, "NO PREFERRED FUND FAMILIES" It means, I can use anyone I want. Revenue sharing is heavily employed by Ed Jones as their "Shelf space fee". Ej has a desirable distribution channel and most of the fund families will prostitute themselves to this extortion method by Jones. Even  their sacred American Funds.



So Morgan, Merrill, AGE, RJ, LPL, Schwab, UBS, SB, and a host of others aren't using this same tactic?  I think it was Smith Barney, I could be wrong, who has on their website a list of fund families who have broker access because they revenue share and a list families that revenue share but don't have broker access.  Why do you think that is?  I honestly don't know, but I'll bet it has something to do with the amount of money the families kick back.  Now you tell me if that's a list of "preferred fund families" or not.  


I had a client who left me when the revenue sharing thing hit the papers here in STL in 2004.  Said he was going to Schwab because they don't revenue share.  They were above that.  His words.  The account ACAT'd the next day and I spent 5 minutes searching Schwab's website for their revenue sharing disclosure statement.  I think there was something like 70 different fund families that did revenue sharing with them.  I printed it and mailed to it the guy with that paragraph highlighted.  Your attitude is the same as his and it reeks of hypocrisy. 


I'll agree that Jones should have disclosed it more, but at the time we were in compliance with all of the regulators.  The rules changed midstream and we got caught in the cross hairs. 


I don't know who you work for, LPL or Ray Jay I'd guess, but before you start telling your clients that Jones did something evil, I'd push a copy of your own disclosure statement across the desk at them.  I'd hate to see you have to come back later and tell them again that yet another company that you used to be affiliated with did something wrong. 


BTW, fix the font.  That's really annoying.  

May 8, 2007 5:22 pm

Oh, and another thing for Spiffy regarding rev share......Your firm is the only one writing checks. No other firms are doing this because no one else does this quite like the boys in STL.


 Son, "Here's your sign!"

May 8, 2007 5:25 pm

Spiff, Jones didn't get slammed because they were the only one with revenue

sharing...they got it because of the 'holier-than-thou' letter in the WSJ.

Bachmann should have kept his yap shut.

May 8, 2007 5:32 pm
midtown:

spiff -
problem is not rev shar but failure on part of incompetent legal/compliance to disclose.
small inconsequential checks indicative of overall edj experience -
catering to small inconsequential "investor".
no problem with that approach tho. somebody has to serve
the unsophistocated little guy.


No, the checks were a result of trying to split $75 million between 2.1 million people.  What kind disclosure did anyone do before Jones got hit?  None that I saw or heard.  Does that mean everyone's legal department was incompetant? 


Can you send me a list of your clients that have "inconsequential" money invested with you?  Would that be anything under $250K, $100K or $50K?  Would you actually use the word "inconsequential" with them or tell them they're not sophisticated enough to work with you?  Do you give them a test before you sit down with them?  Some of the largest accounts I've seen belong to people who don't know what their doing letting brokers do whatever they feel like to their accounts.  Pitiful. 


My philosophy...everyone needs help.  The uneducated are only uneducated because they've been snubbed by the "advisors" who are chasing the HNW crowd.  Some of my biggest referrals have come from some of my smallest accounts who I choose to not ignore.  People like you piss me off.  See that thing you're sitting on.  It's called a high horse.  You need to climb off of it.