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First WB buys AGE...Eddie Jones next?

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Jun 18, 2007 6:45 pm

No, not yet.  I'm trying to figure out which awards to take down in order to put up the new ones.  Should the Doug Hill picture come down to be replaced by the John Bachman pic or should I just have them both up?

Yeah, regionals were this last weekend.  I didn't get much from the meetings, but had a great time anyway.  Tech is getting better, no, the GPs aren't going to up our payout, recruit, recruit, recruit.  Same old stuff.  But it's fun to get together with a bunch of people who do the same thing so we can talk shop all weekend. 

Jun 18, 2007 7:20 pm

[quote=Edward Pwns]Now_indy, what was your average real net %, after expenses, insurance,etc,
at Jones?

[/quote]

It's been a little over a year, so my numbers are a bit rusty. It fluctuated every month, but my monthly "nut" was about $1250 (family health ins., phones, toilet paper, office supplies, postage, Jones newsletters and postcards, Jones trinkets, PFO kits, Green Jones folders, etc.).  Oh, and don't forget the 1% "marketing" fee they take, making it really a 39% payout . Obviously, the better the month, the less of an effect this $1250 had on the net, but I don't think my true net to me (before taxes) was ever higher than 35%, it was usually around 30% before taxes.

I was never a big producer at Jones (I left at Segment 3), so I never hit a bonus. To be profitable, I think I had to average at least $28,000/month just to break even due to my rent, highly paid BOA, their crazy allocation scheme, etc.

Jun 18, 2007 8:14 pm

I tried to break into my old office just to get my Doug Hill picture back, but the extra key didn’t work.  I had my wife hand out my daughters softball trophies to me…just to stop the weeping and withdrawal I was going through…not getting a chance to hang with all you doorknockers…Maybe the trip to Napa Labor day weekend I just booked will help…who knows?

Jun 18, 2007 8:24 pm

Mr. Spiff is located in St. Louis. Thus, we understand his passion for the apple koolaid.

Jun 18, 2007 9:13 pm

So, it’s my location that drives my passion.  Now I understand my love of Jones.  Nothing to do with the great experiences I’ve had here, or the other FAs in the region that I enjoy working with (and sometimes against), or the opportunites that are in front of me.  I’m glad it’s something as simple as my location.  Thanks for clearing that up.

Jun 18, 2007 9:27 pm

Spiffmeister-

OK. I'll bite. Give us an example of how you enjoy working against a fellow Jones Rep.

This should be good.

Jun 18, 2007 9:51 pm

When the office around the corner loses another broker, he sucks in some of the assets. 

Jun 18, 2007 10:57 pm

OK, I’ve figured it out…Spaceman Spiff is…JIM WEDDLE!

Jun 19, 2007 1:54 am

Make sure to say hi to the Protective Annuity wholesaler for me. I remember one humbling comment by a client… who the hell is Jack Phelan and why do you have so many of his awards?

Jun 19, 2007 2:07 am

Spiff,

(below are a few questions I posted a few days back, I'd be    curious to hear your input)

Take a look at your current households and accounts, do you really see every client quarterly or semi-annually? What are the size of your avg households?  You will end up as many vets that were in my region if your as successful as you should be at 10-15 years in the biz, 3,000 accounts and 1,200 households (This is what the Jones Model is built to do).  You will have pages of bond calls which as a new IR you dream of however becomes a nightmare for a vet down the road. Can you honestly tell me your clients are benefiting from your advisory services?  Jones has those capabilities you listed above, my point is the way the model is devised you can't sustain seg 5 numbers and sit with all of your clients, and by the way your adding 10 more next month...so then you goodknight, which I did and it becomes an endless cycle of revolving door clients.  If you honestly read through your household list of clients your memory would start to fade on page 8.

Jun 19, 2007 2:24 am

I felt like a dope one night while I was proposing an IRA rollover from a former co-worker and friend.  I guess the "hamburger" got pretty drilled into me in training... 

My friend, in front of his wife who I was trying to impress, asked me why I kept saying "that's a great question."  I have since dropped that and will just be myself.  If that doesn't work so be it.

I like it here but I did get a little creeped out when at a regional meeting the RL had us recite some Jones saying.  I was wondering the whole time if I was the only one that thought this was strange.  I wasn't - another broker who I can be open with and that went through training with me agreed.  Whew!

Jun 19, 2007 2:56 am

The protective wholesaler says hi, and does he have a living benefit rider for you!

Go ahead, do what's right for the client. That means calling on a thirty year bond and pushing for the order.

Jun 19, 2007 5:06 am

[quote=advisor28]

Spiff,

(below are a few questions I posted a few days back, I'd be    curious to hear your input)

Take a look at your current households and accounts, do you really see every client quarterly or semi-annually? What are the size of your avg households?  You will end up as many vets that were in my region if your as successful as you should be at 10-15 years in the biz, 3,000 accounts and 1,200 households (This is what the Jones Model is built to do).  [QUOTE]

To keep sane in this business you generally want to target about 100-200 accounts in total, which suggests you want a typical account to be 250K+.

Even then, the comissioned model basicly means churn or ignore, so FA's chase after new assets to keep getting the 4.5% cut on new money.

Without discretionary authority it is a nightmare calling up clients to get permission to trade accounts, hence you can't do any real investment management.

Thus its GFA/CIB for everyone!!!!

Jun 19, 2007 1:57 pm

The top producer in my region does have a counter to the 1200 household model and many other Jonesees are following suit.  His goal (which is quickly being accomplished) is to do a goodknight as often as possible to pass on smaller accounts to newbies.  Once he got to about 500 accounts he started to goodknight.  Each time he does one he wants to reduce his accounts but maximize his AUM.  Right now he is at about 250 accounts worth 100 Million.  His goal is to goodknight down to 100 accounts worth 100 million.  This gives newbies in the area a better start with some decent clients (not just the throw aways) and lets him work only a couple of days a week.  Again, he is a top producer so he has some very big accounts but his personal minimum new account size keeps getting bigger and he is doing a great favor (at very little gain to himself) by giving away some good clients.  Just an example of how to efficiently streamline your business at a big firm and be compensated by both more time and more money.  He now focuses exclusively on the 500k and 1m rollovers instead of the 800 monthly bond calls. 

Jun 19, 2007 2:39 pm

[quote=advisor28]

Spiff,

(below are a few questions I posted a few days back, I'd be    curious to hear your input)

Take a look at your current households and accounts, do you really see every client quarterly or semi-annually? What are the size of your avg households?  You will end up as many vets that were in my region if your as successful as you should be at 10-15 years in the biz, 3,000 accounts and 1,200 households (This is what the Jones Model is built to do).  You will have pages of bond calls which as a new IR you dream of however becomes a nightmare for a vet down the road. Can you honestly tell me your clients are benefiting from your advisory services?  Jones has those capabilities you listed above, my point is the way the model is devised you can't sustain seg 5 numbers and sit with all of your clients, and by the way your adding 10 more next month...so then you goodknight, which I did and it becomes an endless cycle of revolving door clients.  If you honestly read through your household list of clients your memory would start to fade on page 8.

[/quote]

The simple answer to your question is no.  The people who are really important to my business, I do make a point to meet in person with them semi annually.  I agree that at some point the business model at Jones will control the FA, instead of the other way around.  My goal at the beginning of this career was 100 clients with $1 million per.  I think that's shooting a little low given my age and rate at which I know I can bring in assets plus natural growth of the book. 

Just like any other business I have clients I see frequently, some I see maybe once a year, and others that I've not seen since we opened the account.  Not from a lack of trying on my part to see them more often.  Some people are just as happy talking with you on the phone. 

I'm in the process of really working through the advisory process with any client who wants to do it.  Again, some don't want to. 

Managing 1200 relationships is impossible.  Thus the Goodknight.  The vets who have made the Goodknight program work are the ones who did it more than once.  I think you have to be willing to take off a little meat when you trim the fat.  Some vets aren't willing to do it.  The do the GNK just to get the kudos and subsequent LP, but not really to make their businesses better. 

With that said, I think Jones does a great job in teaching those who are willing to listen how to manage a lot of  households.  The acceleration program when followed religiously works great.  I'm sure we're not the only firm that has a program like that.  But I get the impression that a lot of places just ignore a lot of people.  

Lastly, I think you're wrong about not being able to sit down with all of your clients and sustain Seg 5 numbers.  I can think of 20+ people that I know personally from the St. Louis area alone that do it all the time.  I'm sure there are hundreds that have figured out how to get it done.  The thing about financial planning is that it doesn't have to be recreated every time you sit down.  Once you get the plan in place it's a matter of monitoring and making small adjustments.  The FAs who hit Seg 5 numbers have figured out how to manage that process really well.  Maybe your idea of planning is more time consuming on an ongoing basis than mine.  Thus the need to charge a client 1% a year for your "services". 

Jun 19, 2007 2:49 pm

[quote=AllREIT] [quote=advisor28]

Spiff,

(below are a few questions I posted a few days back, I'd be    curious to hear your input)

Take a look at your current households and accounts, do you really see every client quarterly or semi-annually? What are the size of your avg households?  You will end up as many vets that were in my region if your as successful as you should be at 10-15 years in the biz, 3,000 accounts and 1,200 households (This is what the Jones Model is built to do).  [QUOTE]

To keep sane in this business you generally want to target about 100-200 accounts in total, which suggests you want a typical account to be 250K+.

Even then, the comissioned model basicly means churn or ignore, so FA's chase after new assets to keep getting the 4.5% cut on new money.

Without discretionary authority it is a nightmare calling up clients to get permission to trade accounts, hence you can't do any real investment management.

Thus its GFA/CIB for everyone!!!!

[/quote]

AllREIT - I think you're confusing investment management with Financial Planning.  I think they are two different things.  It's the difference between a CFP and a CFA.  I don't want to be a CFA, but I do plan on becoming a CFP. 

BTW - a $50K of AGTHX and $50K of CAIBX last 10 years averaged 11.75%.  Tripled in that time.  Only down 17.5% peak to trough 00-02.  I think my clients would have been well served with that mix. 

Jun 19, 2007 3:56 pm

[quote=Spaceman Spiff]Maybe your idea of planning is more
time consuming on an ongoing basis than mine.  Thus the need
to charge a client 1% a year for your “services”.  [/quote]



If your plan it take a M* printout, and say "Your target allocations to
GFA and CIB are on target, If anything I recomend buying more of each. " what you say works.



Spiff, part of what skews your understanding is that people who want
in-depth planning services or have serious investment management needs
don’t go to EDJ in the first place. I’m not saying they shouldn’t. But
if you had $1M in investable assets would you want to be Spiff’s
1099’th client?



One of the good things you could do is to take a week to go over your
book account by account and sort it into A/B/C clients and also by
account size and time spent. See if you can find A/B clients who
haven’t been contacted, and then go contact them.



Life is so much simpler when you are working off of a book of 100-200 names @ $1M each vs 1000-1200 names @ 100K each.

Jun 19, 2007 5:33 pm

Who says they don't?  Are they flocking to the local indies, Morgan, Merrill?  What if in the town I'm in the local Morgan Stanley office has a really bad reputation?  Might I at least go talk to the local EDJ guy first?  I would guess in many towns across the country the local EDJ guy is THE guy to go to with ANY financial concerns.  And in some places it's the local Merrill guy.  I believe the firm you're with is only a part of why people work with you. 

Do you really think that clients know how many other clients we have?  Unless we tell them, I don't know how they'd know.  As long as they're getting the service they want and returns they expect I don't know that they'd care if I have 100 clients or 1000.  I would.  They probably wouldn't. 

Seriously, how much time does it take to run 200 portfolios and do the planning for them.  Especially if you don't have to talk to them to make decisions.  It's not like you have to really crunch any numbers, since all of your software is SOOOO much better than mine.  What do you think?  3 hours per day?  4 maybe?  Is that time spent on actually evaluating each portfolio or just searching for new investments?  How much better would your income be if you could work with 400 $1 Mil accounts?  Would it really double the work to double the client base?  My guess is no.  

How many changes really need to be made on a daily basis in an account?  Does the buy and hold philosophy not exist or hold true anymore besides at EDJ?  It wasn't too long ago that if you traded daily in an account it was called churning.  Of course those were the days before fee based accounts, which legalized churning for a lot of firms. 

See, the funny thing about my accounts is I don't need to do what you're suggesting.  I KNOW when I last contacted my clients and when I'm going to contact them in the future.  My computer keeps track of it and my BOA and I have a system for adding new clients to the mix.  I'll never lose an account because of the lack of service.   

Jun 19, 2007 8:46 pm

[quote=Spaceman Spiff]Do you really think that clients know
how many other clients we have?  Unless we tell them, I don’t know
how they’d know.  As long as they’re getting the service they want
and returns they expect I don’t know that they’d care if I have
100 clients or 1000.  I would.  They probably
wouldn’t.  [/quote]

You're starting from the assumption (probably enchanced by personal experience) that EDJ services a clientele that wouldn't recognise better service if they got it. After you have your GFA/CIB what else do you need but more GFA?

You as a one/two person office can't do a deep job with clients. Now I don't know if clients care, but I assume that if they were fully informed they would prefer to be part of smaller practice.

[QUOTE]Seriously, how much time does it take to run 200 portfolios and do the planning for them.  Especially if you don't have to talk to them to make decisions.  It's not like you have to really crunch any numbers, since all of your software is SOOOO much better than mine.  What do you think?  3 hours per day?  4 maybe?  Is that time spent on actually evaluating each portfolio or just searching for new investments? How much better would your income be if you could work with 400 $1 Mil accounts?  Would it really double the work to double the client base?  My guess is no. [QUOTE]]

No, it would less work for equal pay. That's the whole point of having a bigger deeper book. Since the marginal return on New money is the same as on old money, I'm not a constantly looking for new money. I could scale the business if I wanted too, but I don't have to, and don't think overscaling it would be in the best interests of clients.

Its the same reason why Tweedy Browne/First Eagle and many other mutual fund companies have closed mutual funds to new investors. Vs AF which is always open for business.

For myself, once we've built up the book to where we want it. The main focus is doing the best job on investments and building a deeper realtionship with clients. I have no desire to grow this business past the point where I can't invite all my clients to house party.

As for time spent on investment management, its a fair amount. During earnings season, alot of time, during slack periods somewhat less. But thats what you're paid to do.

[quote]How many changes really need to be made on a daily basis in an account?  Does the buy and hold philosophy not exist or hold true anymore besides at EDJ?  It wasn't too long ago that if you traded daily in an account it was called churning.  Of course those were the days before fee based accounts, which legalized churning for a lot of firms.[/quote]

There is buy and hold because its the right thing to do, and there is buy and hold because you don't know any better or don't have the time to watch and follow up on your investments.

Not all stocks improve with time, so for example I've been selling back positions in equity REITs and buying other REITs. Other times stocks go up in value and you need to sell them/trim them back.

E.g when SFC got taken out, that lead to a round of client calls. And it was a sad call, because SFC was a nice company. All the good REITs are taken.

The whole EDJ model is set it and forget it, because if the IR's actually had to be stewards of their clients money, they would never have time for selling.

BTW, If anything a fee based account discourages trading, since trading costs come out of the fixed fee.

[QUOTE]See, the funny thing about my accounts is I don't need to do what you're suggesting.  I KNOW when I last contacted my clients and when I'm going to contact them in the future.  My computer keeps track of it and my BOA and I have a system for adding new clients to the mix.  I'll never lose an account because of the lack of service.   

[/quote]

Spiff, you'd have a hard time knowing if you lost accounts because of lack of service, since you see them so rarely.


Jun 19, 2007 9:52 pm

I do miss the contact manager…It was always nice to see what I was trying to shove down their throats two months ago…just to make sure I switched it up every now and then…