Ej money losing international operations

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Aug 28, 2009 7:47 pm
iceco1d:

Now, when will they stop trying to make those markets work?  I dunno.  How long will you chase the $1MM client?  How much will you spend?  How many dinner bills will you foot, before you cut the $1,244,204 rollover loose? 

We all have that decision to make, and all of our answers will be different.


Yeah it IS rhetorical for me to ask "When will they stock the muni inventory with other than 30 year bonds?" and "When will they staff up the trading areas even quasi-commensurate with the growth level of adding kindergarten level new FAs?" cause I don't really care about fixing Jones' model.  I care about taking care of my local clients and, oh, by the way I'll make a good living too.


We all have decisions to make and I'm not one to accept or dish out bitching/moaning/whining without using ones own spine to make a decision and act on it- basically man up and do something about it or STFU.  Life is full of choices isn't it?

Aug 28, 2009 9:51 pm
Moraen:


Juck - it's not about you. Why would it be? The purpose of any for profit company is ...

 
Moraen, please note that these two questions are specifically focused on my client, not " about me" so I can agree with you.  Duh. 
 
I'm not insinuating or alleging or  whining "Wah wah wah, they're taking comp away from me and sending it to negative cash flow operations across the golbe.".  No, I'm merely saying through these questions that these decade(s) long global conquests do not A) help my client in any way and B) do not even help me help my client.  I understand for profit companies etc.  I love free enterprise. 
 
It's just become so clear that Jones' priorities are not my priorities.
Aug 28, 2009 11:33 pm

Mr. Juck.

Simply, firm efforts in the UK or Canada don't help your clients. They help clients in the UK and Canada. They don't help you - they help the new and veteran FAs in the UK and Canada. Financial results in those two countries are not where anyone wants them (though the UK FAs are doing very well). That's why there is considerable effort underway to improve.



I'd suggest you worry about what you can control.    You may choose to start with your attitude.

Aug 29, 2009 11:21 am

Juck - Did you and your buddies at LPL, et al discuss what guidelines they are using to tell you that they have a full inventory of bonds to choose from?  As you probably know from your research, Jones won't just throw anything into the inventory.  It has to meet certain criteria before they'll put it in there.  So, while your buddy at LPL may be able to offer his client a non rated 7 year muni, Jones isn't going to put that bond in our inventory. You'll rarely, if ever, see anything BBB or below on a muni.  That may be one explanation. 


Is that the only thing you have to complain about in regards to the UK and Canada operations?  Because the times that you'd actually need to buy an intermediate muni can't come up all that often.  At least they don't in my office.   
Aug 29, 2009 12:15 pm
Spaceman Spiff:

Juck - Did you and your buddies at LPL, et al discuss what guidelines they are using to tell you that they have a full inventory of bonds to choose from? As you probably know from your research, Jones won't just throw anything into the inventory. It has to meet certain criteria before they'll put it in there. So, while your buddy at LPL may be able to offer his client a non rated 7 year muni, Jones isn't going to put that bond in our inventory. You'll rarely, if ever, see anything BBB or below on a muni. That may be one explanation.

Is that the only thing you have to complain about in regards to the UK and Canada operations? Because the times that you'd actually need to buy an intermediate muni can't come up all that often. At least they don't in my office.





I will back up Juck here. I'm not sure about LPL, but Schwab and Fidelity usually have A or better with several different maturities (they have others, but the search criteria I use is A or better). When Jones says that offerings are thin, it is their inability to get them.



You would be surprised at the incredible amount in inventory.

Aug 29, 2009 12:56 pm

The bottom line on the disaster and debacle disguised as an "expansion" into the UK and Canada is that it is the brainchild of the evil genius himself, John Bachmann.  Until he is pushing up daisies somewhere, they will continue to throw good money after bad paying homage to this very bad idea.  They will not abandon the idea, thereby dishonoring and disgracing Bachmann, while he is still alive.  Write this down: "After Bachmann dies, EDJ will begin the process of selling the UK and Canada operation within a year!" 

 
This is exactly the kind of small-minded nonsense that keeps Jones "culture" alive and well.  The interests and ego of the former Managing Partner are put ahead of the good of the company and the thousands of people who work there today.  The UK and Canada don't work, have never worked, will never work, and serve as a bottomless black hole of capital infusion funded by hard-working brokers in the U.S.  You Jones guys have a house payment, a car payment, a credit-card payment, and a Bachmann ego payment every frickin' month.  Sucks to be you! 
Aug 29, 2009 2:17 pm

Sooth,

 
"The UK and Canada...will never work..."
 
That's a pretty broad statement. EJ "works" in the US, why wouldn't it work elsewhere? Can you expand on your statement?
Aug 29, 2009 4:48 pm

Sooth, I have not been around long enough to understand the "Bachman" effect (he was before my time). But there may be some validity to your statement. I don't believe they are showing enough traction in those areas. If they were hiring a few hundred new FA's a year and they were sticking, or were getting a lot of transfer FA's with assets, it could work. But they need to ramp up much quicker to make it work. I think the transition happens before Bachman is gone. Weddle has shown the gumption to get stuff done.

Aug 30, 2009 10:39 pm
Spaceman Spiff:

Juck - Did you and your buddies at LPL, et al discuss what guidelines they are using to tell you that they have a full inventory of bonds to choose from?  As you probably know from your research, Jones won't just throw anything into the inventory.  It has to meet certain criteria before they'll put it in there.  So, while your buddy at LPL may be able to offer his client a non rated 7 year muni, Jones isn't going to put that bond in our inventory. You'll rarely, if ever, see anything BBB or below on a muni.  That may be one explanation. 


Is that the only thing you have to complain about in regards to the UK and Canada operations?  Because the times that you'd actually need to buy an intermediate muni can't come up all that often.  At least they don't in my office.   
 
Look, let me preface this saying this is not merely my bitch, moan, and whine board, nor a personal flamethrowing board.  I don't feel good about merely filling up space here if it could not be productive or beneficialal -perhaps truly educational- for someone else, perhaps another lemming out there. 
 
Spiff, your premise seems to me that "Big Green Daddy knows best" but LPL or it's advisors couldn't possibly know a good bond from a bad bond.  Anyway thanks for the layup question about LPL's non rated POS munis that Big Greenie just wouldn't speculate on in it's inventory.
 
Here's how the scenario had unfolded some half dozen times in the past 6-12 months... I call my buddy "Joe" at LPL saying, "Hey Joe, I'm feeling a bit frustrated.  Do me a favor.  Sort your muni inventory so it shows you all 11-13 year, AA or better, non-AMT, with a quantity of $50k or more available..."   FYI, I don't tell him that I only have $5k here or $10k there or most of the time I have NOTHING AT ALL under that criteria until after he shows me his 130 cusips available under that criteria and hundreds of millions of dollars of inventory available.   The [email protected] of it is that he's got way higher yields to the client and 1+ full point of gross for him verus me with 1/4 point gross on a wholly UNcompetitive yield!  Doesn't matter, I don't have sufficient quantities anyway.
 
99% of the Big Greenie's lemmings don't know what they don't know.  I didn't know it until I came to educate myself.  I'm feeling that what I've just described is not a function of availablility, IT'S A FUNCTION OF PRIORITY.  It's a function of priority of capital, sending dollars around the globe rather than rather than supplying us an appropriate NON-30 year muni inventory.  The priority of spending more capital on growth, growth, growth training kindergarten lemming advisors that will sell 80 year old clients the only thing we're choosing to inventory -thirty year "high quality" munis- without questioning the suitability or the benefit versus the risk.
 
Finally, let me come clean in the interest of full disclosure... I believe maybe he's gotta pay LPL a ticket charge -you know, that bogeyman they preach to us about occasionally at our regional meetings.  Oh yeah, maybe thats only at the seg 5 meetings.   You don't know what a joke that old ticket charge bogeyman is!  And again, you don't know what you don't know.
 
I aspire to pay those ticket charges! 
Juck Phones 
Aug 30, 2009 10:45 pm
Moraen:

 
When Jones says that offerings are thin, it is their inability to get them. 

 
Nope, Jones could get whatever they want in their inventory. IT'S JONES' CHOICE. They choose NOT to deploy capital on NON-30 year munis.  Their choice. Their prioritization. 
 
So, Juck Phones
Aug 31, 2009 8:37 am
Juck Phones:
Moraen:

When Jones says that offerings are thin, it is their inability to get them.



Nope, Jones could get whatever they want in their inventory. IT'S JONES' CHOICE. They choose NOT to deploy capital on NON-30 year munis. Their choice. Their prioritization.



So, Juck Phones





Juck - Why don't you leave? It's a serious question. If you are a Seg 5, I'm shocked that you would stay with that much jack.



Aug 31, 2009 10:07 am

That's what I was thinking.  If you aspire to pay those ticket charges and you truly feel that the Jones bond inventory is handicapping you in the business you do with your clients, then why don't you go join your LPL buddy?  I'm not saying that to be a smart aleck, I'm saying that because I believe it's true.  One of my previous RL's used to say that one of the reasons he believed you should leave EDJ is when you have an issue with the way they run the company.  It appears you do.  So, why not voice that concern to Weddle or Bob Beck or take matters into your own hands and leave Jones behind? 

 
As far as allocating resources go, if that is your complaint, you might want to ask Weddle why he's not spending more resources on an area that produces only 9% of the profit for the firm.  He may have an explanation for you.  I believe you are absolutely right that they believe that in the long run the Canada, the UK, and continued growth in the US will be more profitable for the firm than our muni trading desk.  So, it makes sense, at least to me, that if the bigger perceived payoff is in a different area, adding 3 or 4 more bond traders to put inventory in our system like you described is not a good allocation of resources.  I would guess that they'd tell you that they just don't have a huge demand for 11-13 year, non-AMT, AA or better munis.   
 
Just a question, I've not tried before because I've never had the need, did you call Jones and ask them if they could get one of the bonds your LPL buddy had?  I've always been told that if you ask them for something specific like that, they'll try to accomodate you. 
 
Also, don't hear what I'm not trying to say - I didn't say anything about an LPL advisor's ability to tell what a good muni bond is or isn't.  Their system is different than ours.  That's what I was trying to say. 
 
I have to tell you that I find it kind of funny that of all the things you believe Jones should spend money on instead of Canada and the UK, that you pick intermediate muni bonds.  Why not global account opening?  Doesn't it piss you off that you have to enter the client's name, address, phone, etc so many times just to get an account open?  Or how about better performance measurement?  How many stock positions do you have for clients that they purchased in different lots at different times?  Wouldn't you like to be able to tell them how each of those lots has been performing individually as well as as a whole?  Or how about that you still can't tell your clients how their portfolio has performed as a whole on a YTD, 1, 3, 5, or 10 year mark without a TON of hassle?  Now those are things I'd like for them to spend money on. 
Aug 31, 2009 10:43 am

Actually Spiff, there would be more demand for intermediate muni's if they were in inventory.  I don't sell a lot of 25+ year bonds, except for the clients that jsut want the highest yield, and don't care about the term (don't you LOVE those guys!). 

Actually, I don't think it's an allocation of resources, I think it has to do with the RIP.  Jones knows they would sell like hotcakes, so capital allocation might no be an issue.  But why would they want to sell a 15 year AA with a 1.5-2.25% RIP when you can get 3.0?  Jones knows nobody would sell 30 year muni's if they had a great intermediate inventory.  There is not much difference in yield between a 15 and a 30 right now (except half to 70% of the RIP), and most clients want the intermediates.
Aug 31, 2009 10:56 am
Spaceman Spiff:
 
... Doesn't it piss you off that you have to enter the client's name, address, phone, etc so many times just to get an account open?  Or how about better performance measurement?  How many stock positions do you have for clients that they purchased in different lots at different times?  Wouldn't you like to be able to tell them how each of those lots has been performing individually as well as as a whole?  Or how about that you still can't tell your clients how their portfolio has performed as a whole on a YTD, 1, 3, 5, or 10 year mark without a TON of hassle?  Now those are things I'd like for them to spend money on. 
 

 
Not asking for the moon here. Just what every other swinging d!ck has on the street. I asked about customer facing planning materials (Cashedge-enabled applications) and you'd have thought I was talking about technology that's decades away.
 
Weddle says most of this stuff's in the pipeline, so I believe him. My fear is that because of our "culture" we won't get into the eMoneyAdvisor technology for the same reason our web pages offer little interactivity with the client: we foster client-advisor interaction.
 
Thoughts from B, volt, Spaceman?
Aug 31, 2009 11:32 am
Spaceman Spiff:
1) ...why don't you go join your LPL buddy?  
 
2)... why not voice that concern to Weddle or Bob Beck or take matters into your own hands and leave Jones behind? 
 
3)...did you call Jones and ask them if they could get one of the bonds your LPL buddy had? 
 
4) Doesn't it piss you off that you have to enter the client's name, address, phone, etc so many times just to get an account open? 
 
5)...how about better performance measurement? 

1) Definitely will.  Wont say anything more right now.
 
2) Beause I'm sooo off the bus... I don't care. As you are rightfully insinuating, it's time for me to take my action of STFU.
 
3) Do you realize the frustrating inefficiencies going back and forth from my buddy LPL Joe to StL trading, to Client (do you have anything longer/shorter/better yada yada yada?) to Joe to StL to Client etc etc etc.   Way too frustrating for me to do somebody elses job of trying to procure adequate suitable inventory.
 
4) A non-factor for me.  Really my BOA does that stuff.
 
5) I know it's coming...elsewhere.
Aug 31, 2009 12:15 pm

JP-

 
Perhaps you could give us your perspective of the firm from a Seg 5 standpoint. What percentage was bonus of your income typically?
 
In case you haven't been reading, I have suggested that the Seg 5 producer like yourself is increasingly agitated with the growth montra, especially if your bonus's are being confiscated to help the outside operations and new US offices. I find it curious that your concern centers around lack of inventory (what is available on the street compared to what Jones allows for whatever their reasons).
 
Have you heard about any modifications to the partnership program? We are still waiting from Spiff, his sources apparently can't confirm or deny,  just laugh at the possibility.
Aug 31, 2009 12:43 pm
B24:

Actually Spiff, there would be more demand for intermediate muni's if they were in inventory.  I don't sell a lot of 25+ year bonds, except for the clients that jsut want the highest yield, and don't care about the term (don't you LOVE those guys!). 

Actually, I don't think it's an allocation of resources, I think it has to do with the RIP.  Jones knows they would sell like hotcakes, so capital allocation might no be an issue.  But why would they want to sell a 15 year AA with a 1.5-2.25% RIP when you can get 3.0?  Jones knows nobody would sell 30 year muni's if they had a great intermediate inventory.  There is not much difference in yield between a 15 and a 30 right now (except half to 70% of the RIP), and most clients want the intermediates.
 
Agreed.  The FA will sell something at 3 vs 1.5 all day long.  I'm not saying Juck is wrong and that we have a wonderful inventory.  I can't tell you how many times my branch has received a wire from our muni guy saying that the reason we don't have any munis in our inventory is blah, blah, blah.  That gets really old after a while. 
 
But why would Jones allocate more resources, whether it is the capital to buy them and get them into inventory or the manpower expenses that go along with beefing up the trading desk, for something that is only 9% of the bottom line?  I don't know if they did beef up that area if they would raise the YTB or not.  I wouldn't imagine the spread on them would be any more favorable if we bought more of them.  I would assume not enough for us to get 3 points on an intermediate muni. 
Aug 31, 2009 1:01 pm

 My opinion on my why they keep the branches in Canada and England other than the fact they can and think they will be profitable at some point,  is more to do with model integrity than anything.
 
The premise of Jone's entire model is a person with high drive and proper training can make it in the business knocking on doors.  There is tons of proof this model works and has worked in the past.  However I'd say there are some doubts in some circles this is a viable business model.  For example, most Jones reps today are either Goodnighted, Legacy, inherit a branch, or are handed accounts when someone leaves.  We all know this makes the probability of success much higher - door knocking is less important in these scenarios  In Canada and England I would imagine most Jone's reps. start truly new/new and since we are a US firm it's probably even harder to sell the history and culture.  If the Jone's model does not work in the present where we have no history it throws into doubt if our current methods back in the states are as effective as taught.
 
Just another spin on it... (i really have no idea and simply don't care)
 
With respect to  Bond inventory ... It's very tough for me to find anything sub 20 years in any quantity.  No idea what firms are like but sometimes it's tough to win with one hand tied behind your back.
Aug 31, 2009 1:43 pm

Volt - on the bond comment - are you kidding?  It's very tough to find ANYTHING sub 20 years?  I just took a quick look at our muni, fed, cbd, and CD inventory and found plenty of things sub 20 years.  How many $50K individual bond orders are you trying to fill with under 20 years of maturity?  In fact there are currently 59 MBD positions with more than $25K in them with maturity between 10 and 20 years.  There are 31 muni positions 0-9 years.  Now, I didn't sort them for AMT (very small percentage of the US population have to worry about AMT), rating (I figured Jones did that for me already), or by state so you would obviously reduce those positions if you added those things.  But don't give me this bull of I can't find anything under 20 years.  BTW, there are 34 CBD positions 0-9 years.  Are you sure you can't find anything 20 years or under, or are you looking for something 20 years and under AND 2-3 points?


I don't believe that EDJ thinks for a second that doorknocking doesn't work.  Even with so many advisors out there who are inheriting assets, getting GKNs, or Legacy offices, the mantra to the majority of them is make face to face contacts.  They do want to make sure that everyone has the opportunity to get some assets right out of training, but that's just to try to give everyone as much of a chance for success as they can.  It's not the silver bullet, but it's certainly a help.  That doesn't mean, in any circles other than those consisting of FAs griping about doorknocking, that there are people who believe that our business model isn't viable. 
Aug 31, 2009 1:46 pm
Spaceman Spiff:
B24:

Actually Spiff, there would be more demand for intermediate muni's if they were in inventory.  I don't sell a lot of 25+ year bonds, except for the clients that jsut want the highest yield, and don't care about the term (don't you LOVE those guys!). 

Actually, I don't think it's an allocation of resources, I think it has to do with the RIP.  Jones knows they would sell like hotcakes, so capital allocation might no be an issue.  But why would they want to sell a 15 year AA with a 1.5-2.25% RIP when you can get 3.0?  Jones knows nobody would sell 30 year muni's if they had a great intermediate inventory.  There is not much difference in yield between a 15 and a 30 right now (except half to 70% of the RIP), and most clients want the intermediates.
 
Agreed.  The FA will sell something at 3 vs 1.5 all day long.  I'm not saying Juck is wrong and that we have a wonderful inventory.  I can't tell you how many times my branch has received a wire from our muni guy saying that the reason we don't have any munis in our inventory is blah, blah, blah.  That gets really old after a while. 
 
But why would Jones allocate more resources, whether it is the capital to buy them and get them into inventory or the manpower expenses that go along with beefing up the trading desk, for something that is only 9% of the bottom line?  I don't know if they did beef up that area if they would raise the YTB or not.  I wouldn't imagine the spread on them would be any more favorable if we bought more of them.  I would assume not enough for us to get 3 points on an intermediate muni. 
 
You might have answered your own question.  I think it's only 9% of business because we don't have the right bonds in inventory.  Not saying it would increase the YTB, I am saying that they would be an easier sell for advisors, but Jones wants the 3%.  And I doubt we would need to icnrease the Bond Desk staffing to do it.  I mean seriously, how much effort does it take to buy a block of bonds?
FWIW, I don't think most other wirehouses have much better of an inventory than us, as I compare occassionally to Merrill  and MSSB (I know guys there).   Although I don't know about MS when it was just MS - I was familiar with SB.  Often we would get a better muni inventory than them.  I have no idea on Wachovia/AGE/WFA.
 
Bottom line, 30 year muni's are not neccesary in most cases, and more often than not, shorter maturities are more appropriate as they are less volatile (and it's what clients want!!).