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Jul 18, 2009 1:51 pm

[quote=Borker Boy]

This really, really sucks. [/quote]   [quote=Borker Boy] Who said anything about HNW? [/quote]   Sorry your clients got hurt on CIT. (I got a little lucky, sold out of those positions when they got back up to almost 70 cents).  That really sucks and I fear for my elderly GMAC holders. They won't sell.   Mario DeRose has been banging the drum consistently that you shouldn't have people in individual bonds unless they either have or can see themselves growing to $100K. Using a simple formula of fixed income = 30-40%, then you shouldn't be selling bonds unless the client has a net worth of at least $250,000. N'est pas?   At the end of the day, that's not HNW (which I believe to be at least $500K)  but you're pretty close to the neighborhood. Personally my average household is <$50K; however, the top 20% of my book is >$400K. They own bonds.   And to get back to the original concept, I do believe that piece of business is going away. My presentations revolve around developing income plans, so I sell check-a-month.
Jul 18, 2009 2:34 pm

It does aggravate me that so many of the notes and bonds in inv,str

over the past few years have been the financial companies. I think this

has led to a lot of us being overweight in this sector.

Jul 18, 2009 5:10 pm

The Lehman and CIT bonds I’ve had to call about were sold by the previous advisor in this office.

  I'm making the death notifications for something he got paid on!
Jul 18, 2009 6:31 pm

[quote=LockEDJ] [quote=Borker Boy]

This really, really sucks. [/quote]



[quote=Borker Boy]

Who said anything about HNW?

[/quote]



Sorry your clients got hurt on CIT. (I got a little lucky, sold out of those positions when they got back up to almost 70 cents). That really sucks and I fear for my elderly GMAC holders. They won’t sell.



Mario DeRose has been banging the drum consistently that you shouldn’t have people in individual bonds unless they either have or can see themselves growing to $100K. Using a simple formula of fixed income = 30-40%, then you shouldn’t be selling bonds unless the client has a net worth of at least $250,000. N’est pas?



At the end of the day, that’s not HNW (which I believe to be at least $500K) but you’re pretty close to the neighborhood. Personally my average household is <$50K; however, the top 20% of my book is >$400K. They own bonds.



And to get back to the original concept, I do believe that piece of business is going away. My presentations revolve around developing income plans, so I sell check-a-month. [/quote]



You should never listen to Mario DeRose. He’s an idiot. Never listen to him.
Jul 18, 2009 8:01 pm

I'm obviously a slow learner. 

It took me several years to realize that he and Onion Head are both complete morons.
Jul 18, 2009 8:36 pm

I've got a little over 200k in CIT bonds on my book (not bad considering over 140 million in assets).  Sold around 50k on Thursday at .42 cents on the dollar and another 50k on Friday at around .49 cents on the dollar.  Considering the clients had these around 3-5 years, these clients took around a 30% loss on the bonds, about what a stock would have taken.  Never a fun call to make, but it had to be done.  Had only 30k in Lehman, but I do have a couple hundred k in GMAC's, most of which I have transfered in.   GMAC values have skyrocketed with the recent infusion of government cash, which may make for a good opportunity to trim some paper.

Jul 18, 2009 9:40 pm

Borker, I would never sell an individual bond to a client with under 50K, probably not even under 100K. I think your problem is that you take everything you hear as gospel at Jones. Just because someone says "hey, these bonds look attractive, that does not mean for everyone in your book. You REALLY need to learn to think for yourself. I am starting to get the impression that it is not Jones that’s the problem…

Jul 18, 2009 9:51 pm

Depending on what the minimum is, I think individual bonds are the best way to go for almost any client. Although 50k is getting pretty small.

Jul 19, 2009 1:14 am
B24:

… I am starting to get the impression that it is not Jones that’s the problem…



Look at the way we are trained; consider Eval/Grad. Mr. Client, there are three things I like about this bond -

On how many different levels is that wrong? Most times, the noobie doesn't really know the client. He's like to be pitching a 30 year bond, which on the whole is the most volatile of fixed income placements. If he gets the sale and especially if he hits it big, it's going to be a huge position in the clients portfolio. And from what my bass ackward FS tells me, heaven forbid if the investment is going to be in a self-directed IRA.

Do you really think it's not Jones that's the problem?

We've met the enemy, and he is us.
Jul 19, 2009 1:27 am
LockEDJ:

[quote=B24] … I am starting to get the impression that it is not Jones that’s the problem…[/quote]

Look at the way we are trained; consider Eval/Grad. Mr. Client, there are three things I like about this bond -

On how many different levels is that wrong? Most times, the noobie doesn’t really know the client. He’s like to be pitching a 30 year bond, which on the whole is the most volatile of fixed income placements. If he gets the sale and especially if he hits it big, it’s going to be a huge position in the clients portfolio. And from what my bass ackward FS tells me, heaven forbid if the investment is going to be in a self-directed IRA.

Do you really think it’s not Jones that’s the problem?

We’ve met the enemy, and he is us.

  Yeah....Jonesies are the only brokers selling long term corporates....please...At eval/grad and the early part of a Jones broker's career we are basically selling $5-25k in these bonds.  Very rarely does a Seg 1 broker (other than Windy lol)...hit a jackpot and get a HNW client to put large sums of money into an account at their branch.  Hopefully, by the time they hit the higher segments, they learn how to properly ladder bonds and properly diversify a portfolio.
Jul 19, 2009 3:45 am

Sorry - you can’t be a Kool-aid drinker, talk sh*t about how great the training is, then say “we’re not alone in selling the wrong things to the wrong people”.



I don’t know how it works someplace else. I don’t need to. I only need to know that it’s wrong and Edward Jones does it. Don’t be an apologist by saying, “they do it too.” Our corporate culture tells brand new reps “everyone can use a 30 year bond” and then the chief fixed income strategist says, "sell bonds only when somebody has $100K to invest."



If you don’t see the disconnect here, yeah, you’ve had too much kool-aid.

Jul 19, 2009 4:49 am
June 12, 2009   [quote=rankstocks]I've only got around 5 million in MAP, 10 in advisory, and around 10 in C's.  That's on a book that is around 130 Million now.  I plan on doubling my advisory over the next couple years. Eventually, I'd like to be around 50-70% of my book wrapped in some manner.  I hope that helps.[/quote]   July 13, 2009   [quote=rankstocks]Let me see, 50 million in assets, 1 million in production, a spin ratio of over 2.0, all within two years, and those two years happen to be the worst two years since the great depression.  Let me do the quick math here, you are averaging 2.1 million per month in new assets starting from scratch.  Took me around 7 years to get 50 million under management working my tail off and still haven't cracked a million in production even with over 140 million under management.  I'm with DHK here.  Either you were given a big book and churned the hell out of it, or you are lying.   By the way, if FINRA bars you, you are F'ed. [/quote]   July 17, 2009   [quote=rankstocks]I've got a little over 200k in CIT bonds on my book (not bad considering over 140 million in assets).  Sold around 50k on Thursday at .42 cents on the dollar and another 50k on Friday at around .49 cents on the dollar.  Considering the clients had these around 3-5 years, these clients took around a 30% loss on the bonds, about what a stock would have taken.  Never a fun call to make, but it had to be done.  Had only 30k in Lehman, but I do have a couple hundred k in GMAC's, most of which I have transfered in.   GMAC values have skyrocketed with the recent infusion of government cash, which may make for a good opportunity to trim some paper.[/quote]   New to the forum and would like to say this is impressive. Whats you goal for the end of the year? How many households do you have?
Jul 19, 2009 9:03 pm

600 households.  My goal isn’t how much I can manage at the end of the year (market you can’t control), it’s how much I bring in monthly.  I have been averaging a little over 1 million a month for the last several years, but I did have a big slowdown from Oct. last year until recently.  I’m noticing a pick up in business, but money is still frozen, more so than I’ve seen ever, although a 6 month stretch in 2002 was similar.  Keep in mind that a week like we had last week where the market is up 7% translates to around a 4% hike in my book.  You can do the quick math and find that’s around a 5-6 million jump in a week, plus I transfered in another 500k.  It adds up quick.  My book will absolutely skyrocket over the next 5 years as this thing turns around.  And as you can read in my previous posts, I’ve been allocating more aggressively for the last 8 months and it is paying off.

Jul 20, 2009 3:08 pm
LockEDJ:

[quote=B24] … I am starting to get the impression that it is not Jones that’s the problem…[/quote]

Look at the way we are trained; consider Eval/Grad. Mr. Client, there are three things I like about this bond -

On how many different levels is that wrong? Most times, the noobie doesn’t really know the client. He’s like to be pitching a 30 year bond, which on the whole is the most volatile of fixed income placements. If he gets the sale and especially if he hits it big, it’s going to be a huge position in the clients portfolio. And from what my bass ackward FS tells me, heaven forbid if the investment is going to be in a self-directed IRA.

Do you really think it’s not Jones that’s the problem?

We’ve met the enemy, and he is us.

  I used to believe that the training we got as EDJ guys was extraordinary.  However, after my third week in the field with my the first statement on my desk, I realized that I was well trained to knock on doors and call people and ask them for money, but ill equipped to structure a portfolio.  Jones does a phenomenal job of teaching us how to attract and get clients, but then there is this HUGE disconnect between that point and actually handling the client's assets.  OK, so the portfolio bar chart is a great visual aid, but it does nothing to help us explain why it might not be in a clients best interest to have 100% of their money in CEF's yielding 12%.    If there happen to be any GPs on here reading, here's my suggestion:  Scrap PDP - it's been watered down so much with product partners presentations that it's a complete waste of time.  Acceleration - really?  These new folks have like 3 clients.  Then you spend half of the week having the new FAs do call sessions.  News flash - if they haven't figure out how to do that by PDP, then they're screwed and we're wasting partnership dollars on them.    Instead - create a class called Theories - something cheesy like that - that is strictly investment focused.  Go ahead, bring in the product partners and have them talk about their product (annuities, LI, funds, etc), but lunch only.  If you can't understand an annuity over an hour lunch presentation, you're too stupid to offer it to your clients anyway.  No call sessions.  It needs to be intense asset allocation, MPT, bond laddering, diversification, etc type stuff.  Show of hands from the Jones guys on here - how many of you were taught what beta or alpha is by someone in a Jones training program?  (...crickets chirping...)   Teach the new guys how to get a statement from their prospects and rip it apart to see how it works.  Then teach them how to put it back together and make it work better.  Teach them how to create a bond ladder AND a monthly check for a client.  Teach them what overlap is and that if you use ONLY American Funds you'll get a ton of it.  Teach them where an annuity makes sense and how to figure out how much to use.  Teach them about the efficient frontier and why that top left quadrant is the best place to be.  Those Morningstar reports are great, but most Jones rookies don't understand anything past the returns.  Teach them why Advisory Solutions is built the way it is and why it should be a part of their business.  Teach them SOMETHING about investing before you throw them to the wolves.  What if we were not only the best SALES force in the business, but also the best INVESTING force in the business.    All week long you need to give these folks case studies to work on.  Teach them to use the FAST tools to break it down.  Teach them to use the Morningstar reports.  Teach them that while large cap value is a great place to be, there are other asset classes out there and they should be using them.  Teach them these things so that they don't have to learn them by trial and error on their clients like I have.  Teach them to use the tools we already have that can make us an investing force that can compete with anyone in the business.      Now, will our folks be CFAs at the end of the week?  Nope.  They won't even be able to pass the AAMS yet.  But, they'll be much better equipped to handle that first statement and be armed with some knowledge of what to actually do with it.    If you are one of those GPs that read this, PM me.  I'll give up my branch here in the shadow of the home office to build and run a program like that.  And I'd be happy to do it.  No GP title necessary for me (yet).   OK, rant over.    
Jul 20, 2009 3:12 pm
Spaceman Spiff:

[quote=LockEDJ] [quote=B24] … I am starting to get the impression that it is not Jones that’s the problem…[/quote] Look at the way we are trained; consider Eval/Grad. Mr. Client, there are three things I like about this bond - On how many different levels is that wrong? Most times, the noobie doesn’t really know the client. He’s like to be pitching a 30 year bond, which on the whole is the most volatile of fixed income placements. If he gets the sale and especially if he hits it big, it’s going to be a huge position in the clients portfolio. And from what my bass ackward FS tells me, heaven forbid if the investment is going to be in a self-directed IRA. Do you really think it’s not Jones that’s the problem? We’ve met the enemy, and he is us.



I used to believe that the training we got as EDJ guys was extraordinary. However, after my third week in the field with my the first statement on my desk, I realized that I was well trained to knock on doors and call people and ask them for money, but ill equipped to structure a portfolio. Jones does a phenomenal job of teaching us how to attract and get clients, but then there is this HUGE disconnect between that point and actually handling the client’s assets. OK, so the portfolio bar chart is a great visual aid, but it does nothing to help us explain why it might not be in a clients best interest to have 100% of their money in CEF’s yielding 12%.



If there happen to be any GPs on here reading, here’s my suggestion: Scrap PDP - it’s been watered down so much with product partners presentations that it’s a complete waste of time. Acceleration - really? These new folks have like 3 clients. Then you spend half of the week having the new FAs do call sessions. News flash - if they haven’t figure out how to do that by PDP, then they’re screwed and we’re wasting partnership dollars on them.



Instead - create a class called Theories - something cheesy like that - that is strictly investment focused. Go ahead, bring in the product partners and have them talk about their product (annuities, LI, funds, etc), but lunch only. If you can’t understand an annuity over an hour lunch presentation, you’re too stupid to offer it to your clients anyway. No call sessions. It needs to be intense asset allocation, MPT, bond laddering, diversification, etc type stuff. Show of hands from the Jones guys on here - how many of you were taught what beta or alpha is by someone in a Jones training program? (…crickets chirping…)



Teach the new guys how to get a statement from their prospects and rip it apart to see how it works. Then teach them how to put it back together and make it work better. Teach them how to create a bond ladder AND a monthly check for a client. Teach them what overlap is and that if you use ONLY American Funds you’ll get a ton of it. Teach them where an annuity makes sense and how to figure out how much to use. Teach them about the efficient frontier and why that top left quadrant is the best place to be. Those Morningstar reports are great, but most Jones rookies don’t understand anything past the returns. Teach them why Advisory Solutions is built the way it is and why it should be a part of their business. Teach them SOMETHING about investing before you throw them to the wolves. What if we were not only the best SALES force in the business, but also the best INVESTING force in the business.



All week long you need to give these folks case studies to work on. Teach them to use the FAST tools to break it down. Teach them to use the Morningstar reports. Teach them that while large cap value is a great place to be, there are other asset classes out there and they should be using them. Teach them these things so that they don’t have to learn them by trial and error on their clients like I have. Teach them to use the tools we already have that can make us an investing force that can compete with anyone in the business.   



Now, will our folks be CFAs at the end of the week? Nope. They won’t even be able to pass the AAMS yet. But, they’ll be much better equipped to handle that first statement and be armed with some knowledge of what to actually do with it.



If you are one of those GPs that read this, PM me. I’ll give up my branch here in the shadow of the home office to build and run a program like that. And I’d be happy to do it. No GP title necessary for me (yet).



OK, rant over.

[/quote]



Spiff, there’s a guy named Weddle Me you can ask…What about suggestion box wire? Or ask Weddle?



That’s a great idea. One I suggested while I was at Jones. I’m sure I wasn’t the only one.



What I was told was this: that is stuff you can learn on your own, on your own time. There is no need to teach those things here.
Jul 20, 2009 3:29 pm

That guy “Weddle Me” is a troll trying to drum up anti-Jones spew.  Was that not obvious?

  Anyway, has anyone actually READ the Jones guidance on bonds vs. bond funds?:   "If investors don’t anticipate building over time a portfolio of 10 or more bonds totaling at least $100,000, we generally recommend considering bond funds instead of, or in addition to, individual bonds. It would be difficult to achieve sufficient diversification by maturity and industry type with fewer than 10 individual bonds if those are the only fixed income investments in a portfolio. Of course, the number of bonds that is appropriate depends on the allocation of an investor’s overall fixed-income portfolio, the credit quality of the bonds owned and an investor’s acceptable level of risk.  For example, if an investor owns individual bonds and bond funds in a portfolio, fewer than 10 bonds may provide adequate diversification as long as no single bond makes up more than 5% of the overall portfolio."   This was  just one small excerpt.  Makes sense.   Problem is, most guys just go out "bond slingin' " without regard to peoples' needs.  This is OK when you are just starting out selling 5K bonds at a time.  But c'mon, can't Jones people open their eyes and see that even JONES has good bond guidance to follow?  Sometimes I can't believe how dumb some people can be.
Jul 20, 2009 3:31 pm

[quote=B24] That guy “Weddle Me” is a troll trying to drum up anti-Jones spew. Was that not obvious?



Anyway, has anyone actually READ the Jones guidance on bonds vs. bond funds?:



“If investors don’t anticipate building over time a portfolio of 10 or more bonds totaling at least $100,000, we generally recommend considering bond funds instead of, or in addition to, individual bonds. It would be difficult to achieve sufficient diversification by maturity and industry type with fewer than 10 individual bonds if those are the only fixed income investments in a portfolio. Of course, the number of bonds that is appropriate depends on the allocation of an investor’s overall fixed-income portfolio, the credit quality of the bonds owned and an investor’s acceptable level of risk. For example, if an investor owns individual bonds and bond funds in a portfolio, fewer than 10 bonds may provide adequate diversification as long as no single bond makes up more than 5% of the overall portfolio.”



Makes sense.[/quote]



You thought I was serious about “Weddle Me”?



Jul 20, 2009 3:34 pm

OK, I take it back.

Jul 20, 2009 3:44 pm

[quote=B24]That guy “Weddle Me” is a troll trying to drum up anti-Jones spew.  Was that not obvious?

  Anyway, has anyone actually READ the Jones guidance on bonds vs. bond funds?:   "If investors don’t anticipate building over time a portfolio of 10 or more bonds totaling at least $100,000, we generally recommend considering bond funds instead of, or in addition to, individual bonds. It would be difficult to achieve sufficient diversification by maturity and industry type with fewer than 10 individual bonds if those are the only fixed income investments in a portfolio. Of course, the number of bonds that is appropriate depends on the allocation of an investor’s overall fixed-income portfolio, the credit quality of the bonds owned and an investor’s acceptable level of risk.  For example, if an investor owns individual bonds and bond funds in a portfolio, fewer than 10 bonds may provide adequate diversification as long as no single bond makes up more than 5% of the overall portfolio."   This was  just one small excerpt.  Makes sense.   Problem is, most guys just go out "bond slingin' " without regard to peoples' needs.  This is OK when you are just starting out selling 5K bonds at a time.  But c'mon, can't Jones people open their eyes and see that even JONES has good bond guidance to follow?  Sometimes I can't believe how dumb some people can be.[/quote]   I think that's crap -  they say one thing and do something different.  Why are we trained to pitch bonds and ask for the order.  Why not bond funds?  I asked this question during eval/grad and was told "why wouldn't a good bond help someone, it's not going to hurt them"  .. That was the extent of our product training.    Most people do what they are trained to do. (follow the recipie) I can't belive how DUMB some companies can be. That is CYA guidence if I've ever seen it. 
Jul 20, 2009 4:01 pm

For what it’s worth … I’ve brought this concern to GP’s at the corporate level. The solutions they have planned really are extraordinary. I won’t suggest more because this is an open forum and I don’t know the level where I’m giving away information I shouldn’t.



But I’ll say this: I can tell you no other independent firm offers anything even vaguely like it. It represents a quantum leap in technology meeting compliance and portfolio management. Probably a year away.