Jones secrets revealed, part 6

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Oct 31, 2007 5:13 pm

Because I haven't done a Secrets Revealed Topic in awhile I thought you might want to hear from the horse's mouth the Secrets (Brutal Facts) that Edward Jones is currently facing.

 
The Executive Committe (Doug 3Mil Hill, John Bachman, Jim Weddle, etc) believes these brutal facts must be addressed in order to move Edward Jones forward.
 
1.  Increased pressure from competitiors to recruit our financial advisors.
2.  High attrition rate of new financial advisors.
3.  Financial advisor growth has been slower than planned since 2002.
4.  International operations are NOT profitable.
5.  Low market share and low brand recognition.
6.  Dated technology and infrastructure.
7.  No formal long-term planning process.
8.  We are late to offer financial planning.
9.  Product pricing and financial advisor compensation are out of date.
10.  Clients are more aware of markets and investments
11.  Thin Management depth.
12.  Escalating competition for the client.
13.  High-Cost business model.
14.  Highly regulated industry. 
15.  The firm is getting sued much more now than ever before.
16.  NO diversity in key leadership positions
17.  ONE PRODUCT REPRESENTS 60% OF NET REVENUE 
 
This is straight from the upper management at EDJ.
 
Oct 31, 2007 5:52 pm

You know you're a loser when you are quoting current internal memos from a firm you haven't worked for in years.



BUT, thank you for pointing out how proactive they are in addressing their issues. If only Mother Merrill and UBS had been so forward thinking.....



And another thing....not sure that an internal memo sent to 50,000 employees is exactly what they deem a "secret". Nobody is real concerned about who reads it. Actually, I was waiting to see who would be the first to comment on that in these forums...I figured it would be Spears! I guess you beat him to it...

Oct 31, 2007 5:58 pm

Broker24, are the points true?

Oct 31, 2007 9:15 pm

they are true- give them credit for this: often leaders pretend there are few Brutal Facts--or at least they never acknowledge them! This is a big step forward, but the last one should be first.

Oct 31, 2007 9:49 pm

Well the turnover rate pretty much tells you all you need to know, and I dont think it is turnover due to reps getting fired.  Would anyone else agree with that statement?

Oct 31, 2007 11:12 pm

Hopefully they will luck out and get bought before they go under lol..maybe BAC wants EJ to try to compete w Wach/Edwards!

Oct 31, 2007 11:52 pm
spikedkoolaid:

Because I haven't done a Secrets Revealed Topic in awhile I thought you might want to hear from the horse's mouth the Secrets (Brutal Facts) that Edward Jones is currently facing.

 
The Executive Committe (Doug 3Mil Hill, John Bachman, Jim Weddle, etc) believes these brutal facts must be addressed in order to move Edward Jones forward.
 
1.  Increased pressure from competitiors to recruit our financial advisors.
2.  High attrition rate of new financial advisors.
3.  Financial advisor growth has been slower than planned since 2002.
4.  International operations are NOT profitable.
5.  Low market share and low brand recognition.
6.  Dated technology and infrastructure.
7.  No formal long-term planning process.
8.  We are late to offer financial planning.
9.  Product pricing and financial advisor compensation are out of date.
10.  Clients are more aware of markets and investments
11.  Thin Management depth.
12.  Escalating competition for the client.
13.  High-Cost business model.
14.  Highly regulated industry. 
15.  The firm is getting sued much more now than ever before.
16.  NO diversity in key leadership positions
17.  ONE PRODUCT REPRESENTS 60% OF NET REVENUE 
 
This is straight from the upper management at EDJ.
 
 
The sad part is that all these points have been known and discussed ad naseum on this forum at least the past 6 years.  (just like the field was suppose to get email back in '98).
 
If these problems so long why is the EC only admitting to it now?
How will they address international operations (sell them off) will they sell, will they merge
will they cut GP payouts (you the reader decide which will occur first)????
Nov 1, 2007 1:09 am

Compliance Jerk,

 
I was going to mention that these points have been made several times in these forums but I didn't want to taint the responses from the kool-aid drinkers.
 
I find it very interesting that when we were pointing out these "Brutal Facts" in these forums, people like Broker24 and others would try and make comments arguing their validity.
Now that the "Brutal Facts" have been let out of the bag by the "Executive Committee" they are somehow received as "hitting the problem head on."  Very interesting.  I am amazed at the denial of some of the experienced FA's at EDJ.
I also want to see them put these brutal facts in their recruiting brochures.
 
One last point it's only been 1 1/2 years since I left Guyana.
Nov 1, 2007 7:48 am

RUL- I am a Jones guy who sees a lot of problems, and I will not last here. HOWEVER, of all the issues, turnover is NOT one of them. This is not correct, as compare to competitors. Net # of FAs is over 11000 now. EVERY firm has turnover--Jones #'s are actually quite good.

 
I just want folks to stick to actual problems, not mythical ones.
Nov 1, 2007 8:19 am

OK I'll bite...what is the product that produces 60% of EJ's net revenue?

Nov 1, 2007 8:26 am

Did I miss something....I did not see fee based platform on the list. Must be  a low priority to the committee.





 
See the problem. The big boys say they want to implement, but when the rubber meets the road, it doesn't even make the list. So the FA's continue to be sold the future.
 
I wonder what the motivation was to publish the memo. It only illustrates that they know they have a problem. Change has never been easy at Jones.
Nov 1, 2007 8:52 am

Okay...newnew..so the exec committee is wrong on the turnover??  Hell, I've been gone about 10 months and I'd say 25% of the people in my old region are gone.  They still have a core group of Vets, 20+ years, but from there it gets real weak.  I'd say the exec committee brought this out to "bring together the troops".  In business you NEVER tell your employees how bad it is.  This causes the internal strife to build and build and build until the company comes down.  Lets go through another downturn where the GP's continue getting their juicy payouts and the LP's don't, like 2003. Some lurkers here, who've been reading all the stuff I've said along with everyone else about the shitty model, low payouts, overpaid GP's and the bullshit P/L will now start to look elsewhere.  And all the little quirks that used to not bother them will now PISS them off.   I think the market is reacting to EDJ memo...its off 220...I would be shorting EDJ...

Nov 1, 2007 10:10 am
joedabrkr:

OK I'll bite...what is the product that produces 60% of EJ's net revenue?




 
American Funds (which isnt a bad thing for door to door IRA salemen)
Nov 1, 2007 10:45 am

New/New--

I think it's interesting that the Executive Committee got the Brutal Facts Wrong.  Especially the attrition of FA's.  I must say that you are wrong.
You are the first person I've ever heard that says the troops are over 11,000.  If you look at the growth in that number it is coming from Canada/England. 
 
Look at the other fact:  International Operations Are NOT Profitable.
Therefore, they are growing in FA's in a slower than expected pace and it's in a non-profitable area of the world!
 
New/New I think it's time to start addressing the "brutal facts" instead of suggesting that the Executive Committee is wrong.
Nov 1, 2007 11:05 am
joedabrkr:

OK I'll bite...what is the product that produces 60% of EJ's net revenue?

 
I would assume American Funds.  When I left, around the same time as Spiked, American was getting 85% of the mutual fund business.
 
It could be A share mutual funds in general, but I bet they meant all revenue (include trails and the paltry revenue sharing they pay) from American Funds.
Nov 1, 2007 11:14 am

Oops, I didn't read to the bottom to see that the question had already been answered. 

Nov 1, 2007 11:22 am

By the Way,

If you read the 10k, it's American Funds, not just mutual funds that make up 60% of total net revenue.
Nov 1, 2007 12:57 pm
footsoldier:

Did I miss something....I did not see fee based platform on the list. Must be  a low priority to the committee.





 
See the problem. The big boys say they want to implement, but when the rubber meets the road, it doesn't even make the list. So the FA's continue to be sold the future.
 
I wonder what the motivation was to publish the memo. It only illustrates that they know they have a problem. Change has never been easy at Jones.
 
They refered to outdated compensation, which I would guess covers this. It will be interesting to see how quickly they can address these issues. I actually think it's a pretty good list, but whoever said it is right...we've been covering this on this forum for a long time.
Nov 1, 2007 1:07 pm

I will take a bet that this is another tactic on their part to ACT one way (concerned about the future) and do something entirely different (nothing). I have referred to company doublespeak in the past and this is another example.

 
I ask the question to the Jones FA's. What possibly could be the motivation to publicize what's wrong with their model to the troops. How could that be construed as a morale booster?
 
Nov 1, 2007 1:24 pm

What I think they mean by outdated compensation is that the GPs are still being paid based on a very old formula.  Therefore, I bet they are looking at ways to increase their own payout to bring it in line with more modern economic times!  No?