Is Jim Weddle Pro Fee Base or Not?

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Sep 23, 2006 11:50 pm

I have heard a lot of talk recently about Ed Jones offering fee based accounts other then their MAP program.  Here is a paragraph from an intervie Jim Weddle did with RR Mag a few months back:


Under Weddle, the firm's commitment to the middle market, through what it describes as long-term, conservative investments, isn't going to change, he says. The typical Jones rep is 43 years old, has been in the business for six years and has 863 accounts worth about $44 million. The typical client is 54 years old, makes $61,525 a year and has $106,415 invested through Jones. (By comparison, a Merrill Lynch FAs' average book size is around $95 million.) Asked about the competition's pursuit of high-net-worth clients, Weddle replies: “They're fishing in a very small pond.” And the trend towards wealth management and fee-based service models? “We have a managed accounts program with $500,000 minimums, but our clients are buy and hold,” he says. “The wrap pricing approach doesn't fit with that philosophy.”


So here is my question:  Jones stuck to their guns back in the late nineties by not offering on line trading when other firms gave in.  Will Jim go against their "philosophy" and give in to the pressures of IRs leaving because Jones does not offer fee based accounts? 


It has amazed me how many times I have seen Jones dismiss the option of fee based accounts in their company, but now they are talking about adding them.


Instead of an article or ad in the WSJ that says how they set themselves apart from other firms.  They will need one explaining why Weddle gave in and how they now think fee based accounts are good for clients like the rest of the industry.  They will also need a long explanation why they frowned upon these types of accounts in the past.


I think there wil be a lot of explaing to do in the media.


Just some thought let me know what you guys think.




Sep 24, 2006 12:22 am

I'm hearing they will have something fee based.  Like so many other things Jones does, you can bet that they will do something goofy with it that doesn't make sense.    


It will also be no more expensive than if clients had paid commissions instead.  Who knows.  


There is a "committee" of reps and GP's doing research on this right now and are due to come back with recommendations by the end of the year. It will happen, but what will it look like.....

Sep 24, 2006 12:30 am

I love it.  A "committee" of reps and GP's.  My guess on the outcome is an aggregated breakpoint schedule for all preferred funds with 50pb trail the "IR" gets something less than 40% of.  Its like fee based biz but with the kicker needed to keep opening offices with new reps.  And IR's can still liquidate funds and buy bonds to generate some commish.


I'm with Jonzed...they will do something goofy that doesn't make sense.  But the real humor will be in their rationale for the change.

Sep 24, 2006 10:21 am

They offer a managed account if the client wants it for $500,000 and up, they do it through Goldman Sachs.

Sep 24, 2006 10:24 am

Also to throw this in, I read somewhere, not sure if its true that
Merrill is making their firm more effective with smaller accounts. The
new brokers I guess have to have some and later those 100k accounts
will be 250k and 500k etc. 

Sep 24, 2006 2:45 pm

Hello One and All,



I have introduced myself before so I suppose it is not necessary to do it again.



I did not say anything one way or the other at church.  I am
thinking about the advice to not do business with friends, regardless
of how casual that friendship may be.



Now I am confused about what you're discussing.  Why would brokers
leave Jones because they do not offer a fee based approach.  What
is a non fee based approach?



Thanks,



Mike

Sep 24, 2006 3:41 pm

I think the statement "our clients are buy and hold" is pretty dumb.  If that were true, that would mean that all the Jones reps are just mindless robots.  Anyone can buy a good blue chip and hold it for 10 years, it doesn't make you a good advisor. Is Jones forcing their all their reps to give all their clients the same cookie cutter advice? Buy & hold is good for some clients, but not for everyone.


My advice to jones..... give the reps more platforms to choose from and let them really run their own practice.  Morgan & Merrill are making a killing on managed accounts because the minimum is $10,000 on Wrap and $100,000 on SMAs.  Fees don't really matter if performance is good.

Sep 24, 2006 10:53 pm
Jones Concerns:

Hello One and All,



I have introduced myself before so I suppose it is not necessary to do it again.



I did not say anything one way or the other at church.  I am
thinking about the advice to not do business with friends, regardless
of how casual that friendship may be.



Now I am confused about what you're discussing.  Why would brokers
leave Jones because they do not offer a fee based approach.  What
is a non fee based approach?



Thanks,



Mike



fee based- generally referring to an arrangement where the client pays for advice or transaction by paying a quarterly fee as a percentage of the total assets under management rather than paying a comission on every trade.

non-fee based-a more traditional arrangment where the client pays comissions on every trade

Sep 25, 2006 6:55 am

Joe, it's never a good idea for a registered rep to answer the questions of a consumer on a public bulletin board.  Regardless, as I mentioned in another thread, you are answering the questions of Putsy.  

Sep 25, 2006 7:21 am

Hi One and All,


Why is it not a good idea to answer questions on a public bulletin board?  Is this different than a public seminar?


Thanks,


Mike

Sep 25, 2006 10:49 am

http://www.nasd.com/EducationPrograms/OnlineLearning/Webcast s/NASDW015624


Whether Jones Concerns is an actual consumer who reached this board or is a troll that we all know (and 'm pretty sure it is the one and the same troll), we should not be answering questions of this type.  I refer you to the above link.


We don't know who this is.  We are not allowed to give investment advice to people who we do not know.  KYC y'all.  We are not allowed to give advice to people we do know who reside in States we are not licensed.  Any material that can be construed to be given to the public, and I don't know how much more public this could be, is supposed to be compliance approved. 


I know, I know....if we all complied strictly by those rules we may not be able to open our mouths in public, but still we need to be careful.


BTW: Put/Nasd Newbie.  If you are going to try to disguise your postings I suggest you get your wife to compose them for you as your style is too distinctive.   (because I know you like these )

Sep 25, 2006 10:49 am

It has seemed to me, for at least a few years, that Jones implemented the MAP program to make it seem like they are at least trying to compete in the fee-based arena.  The flip-side of that is that the accounts have a $500k minimum whereas the competition will have much smaller minimums.  Jones has claimed for years that their business model is tailored for "Middle America" - the average investor - who will typically not have $500k to invest in a fee-based platform, thus, these clients are looking at other firms that target this demographic and do have the capabilities to handle fee-based programs (Ameriprise, for example).  It seems like a disconnect for me.

Sep 25, 2006 11:26 am
babbling looney:

BTW: Put/Nasd Newbie.  If you are
going to try to disguise your postings I suggest you get your wife to
compose them for you as your style is too
distinctive.   (because I know you like these )





What do you mean by "style?"

Sep 25, 2006 11:35 am
iconsult100:

I think the statement "our clients are buy and hold" is pretty dumb.  If that were true, that would mean that all the Jones reps are just mindless robots.  Anyone can buy a good blue chip and hold it for 10 years, it doesn't make you a good advisor. Is Jones forcing their all their reps to give all their clients the same cookie cutter advice? Buy & hold is good for some clients, but not for everyone.


My advice to jones..... give the reps more platforms to choose from and let them really run their own practice.  Morgan & Merrill are making a killing on managed accounts because the minimum is $10,000 on Wrap and $100,000 on SMAs.  Fees don't really matter if performance is good.


What kind of wrap can Morgan and Merrill offer for $10,000? I thought the minimums were much higher.

Sep 25, 2006 11:43 am
downtown:

Buy & hold is good for some clients, but not for everyone.





When would it not be appropriate for an individual investor to buy and hold good companies?

Sep 25, 2006 12:16 pm

What's a good company NASDY?

Sep 25, 2006 12:43 pm

Fortune Brands comes to mind.

Sep 25, 2006 1:28 pm
NASDY Newbie:
downtown:

Buy & hold is good for some clients, but not for everyone.




When would it not be appropriate for an individual investor to buy and hold good companies?


When their time horizon has changed from the original purchase.


When their investment objectives have changed.


When there are changes in the industry sector, in the economy as a whole or when there are political/worldwide events or changes that may affect that position.


When they have had a sufficient run up in gains to warrant taking some or all of those gains from that position and buy another position that has more growth potential.


When they need to utilize gains against losses for tax purposes.


When the dividends that are generated on the position are not sufficient to meet needs if the client has changed to an income need versus growth and income.


When the portfolio is out of balance, assuming we are allocating either along industry sectors or market capitalization, and want to bring the investment portfolio back into balance.


More?

Sep 25, 2006 1:30 pm

Is it a good idea to offset losses with gains, or to use the losses to offset ordinary income?

Sep 25, 2006 1:32 pm
babbling looney:
NASDY Newbie:
downtown:

Buy & hold is good for some clients, but not for everyone.




When would it not be appropriate for an individual investor to buy and hold good companies?


When their time horizon has changed from the original purchase.


When their investment objectives have changed.


When there are changes in the industry sector, in the economy as a whole or when there are political/worldwide events or changes that may affect that position.


When they have had a sufficient run up in gains to warrant taking some or all of those gains from that position and buy another position that has more growth potential.


When they need to utilize gains against losses for tax purposes.


When the dividends that are generated on the position are not sufficient to meet needs if the client has changed to an income need versus growth and income.


When the portfolio is out of balance, assuming we are allocating either along industry sectors or market capitalization, and want to bring the investment portfolio back into balance.


More?


Are you sure you should be posting investment advice here?  What if this person is a member of the public?