LP Offering at Jones--A JOKE!

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Nov 21, 2006 1:27 am

Ok drones...myopia has truly set in at Jones.  They have snowed the koolaid drinking public that the LP offering they received was the best thing in the world!   Let's discuss:


$25,000 offering (hypothetical)


17% return. 


You have to put 20% down.  $5000.  Then you receive imputed interest that goes on your K-1 (which you have to pay your CPA more to do your return, now).  You are being charged 7.5% interest on the loan that Edward Jones Financial Companies profits from.


So let's say you worked at Jones 5 years and got the above offering.  You now have to pay the LP down so you can one day own it.  The company is making money off of your loan and you have to pay more taxes because of the distributions you never realize.  And you basically got a $5000 bonus every year that you worked at Jones, whoopeee!  All those call sessions, recruiting meetings, mentor training workshops.  I don't think it adds up to $600/month.  It's a hoax...the only people profitting from the LP are the Long Timers (Subordinated/and GP's). 


By the way, very few EDJ IR's pay for their LP outright on the first offering because they are so poor they have been putting so much money back into their businesses they don't have extra cash to be making investments.


Loved to hear your thoghts!.....

Nov 21, 2006 9:47 am
spikedkoolaid:

Ok drones...myopia has truly set in at Jones.  They have snowed the koolaid drinking public that the LP offering they received was the best thing in the world!   Let's discuss:


$25,000 offering (hypothetical)


17% return. 


You have to put 20% down.  $5000.  Then you receive imputed interest that goes on your K-1 (which you have to pay your CPA more to do your return, now).  You are being charged 7.5% interest on the loan that Edward Jones Financial Companies profits from.


So let's say you worked at Jones 5 years and got the above offering.  You now have to pay the LP down so you can one day own it.  The company is making money off of your loan and you have to pay more taxes because of the distributions you never realize.  And you basically got a $5000 bonus every year that you worked at Jones, whoopeee!  All those call sessions, recruiting meetings, mentor training workshops.  I don't think it adds up to $600/month.  It's a hoax...the only people profitting from the LP are the Long Timers (Subordinated/and GP's). 


By the way, very few EDJ IR's pay for their LP outright on the first offering because they are so poor they have been putting so much money back into their businesses they don't have extra cash to be making investments.


Loved to hear your thoghts!.....



Wow....I think I'm going to do my own LP offering to local Jones reps...if they have any money left I'll make a mint!

Nov 21, 2006 9:51 am

Why borrow the money from EJ, there are a lot of different options for a lower cost loan.  Just because someone offers a loan doesn't mean that is the one to take.  Just like the people who complain about EJ health insurance and say now that they are indy they pay less/same with more benefits.  Just because the company offers it doesn't mean you have to use it.

Nov 21, 2006 9:58 am

Spiked-


You forgot about the recoginition that they get at the next regional. Kumbayah my lord, kumbayah.


It is so obvious to any casual observer, the only customer at Jones is the GP. It is truly sad that it took me almost a decade to figure it out. Now that I am free, the haze is starting to fade and the reality of how truly one-sided the relationship was is becoming so clear.


Nov 21, 2006 10:20 am

Just like the people who complain about EJ health insurance and say now that they are indy they pay less/same with more benefits.  Just because the company offers it doesn't mean you have to use it.


This is true, you don't have to use the company plan, BUT.....if you choose to buy your own insurance you can only deduct it subject to the 7.5% floor for medical costs on your IRS Schedule A instead of taking it as a pre tax deduction from your W-2 paycheck.  Since Jones doesn't offer many choices besides the most expensive for the IRs, you are stuck with the company plan unless you have a lot of medical deductions AND file a Schedule A.


This is another advantage of being self employed instead of a wage slave for EDJ..... 100% of the premiums are a deductible expense. I use a high deductible HSA plan as well for myself, so not only are the premiums deductible, the amount I put into the HSA is an above the line deduction growing tax deferred and able to be withdrawn in the future for non medical uses tax free.


I suggest as a "financial advisor" (scare quotes) you look some of this stuff up.  Your client's might actually need advice some day.   Wouldn't it be nice if YOU gave it to them instead of someone else like, oh.... say ....ME.

Nov 21, 2006 10:44 am
babbling looney:

Just like the people who complain about EJ health insurance and say now that they are indy they pay less/same with more benefits.  Just because the company offers it doesn't mean you have to use it.


This is true, you don't have to use the company plan, BUT.....if you choose to buy your own insurance you can only deduct it subject to the 7.5% floor for medical costs on your IRS Schedule A instead of taking it as a pre tax deduction from your W-2 paycheck.  Since Jones doesn't offer many choices besides the most expensive for the IRs, you are stuck with the company plan unless you have a lot of medical deductions AND file a Schedule A.


This is another advantage of being self employed instead of a wage slave for EDJ..... 100% of the premiums are a deductible expense. I use a high deductible HSA plan as well for myself, so not only are the premiums deductible, the amount I put into the HSA is an above the line deduction growing tax deferred and able to be withdrawn in the future for non medical uses tax free.


I suggest as a "financial advisor" (scare quotes) you look some of this stuff up.  Your client's might actually need advice some day.   Wouldn't it be nice if YOU gave it to them instead of someone else like, oh.... say ....ME.



Everybody knows that girls can't give financial advice.

Nov 21, 2006 10:52 am
babbling looney:

.


This is true, you don't have to use the company plan, BUT.....if you choose to buy your own insurance you can only deduct it subject to the 7.5% floor for medical costs on your IRS Schedule A instead of taking it as a pre tax deduction from your W-2 paycheck. 


This is another advantage of being self employed instead of a wage slave for EDJ..... 100% of the premiums are a deductible expense. I use a high deductible HSA plan as well for myself, so not only are the premiums deductible, the amount I put into the HSA is an above the line deduction growing tax deferred and able to be withdrawn in the future for non medical uses tax free.


I suggest as a "financial advisor" (scare quotes) you look some of this stuff up.  Your client's might actually need advice some day.   Wouldn't it be nice if YOU gave it to them instead of someone else like, oh.... say ....ME.



You're right, I should have known that, thanks for the info.  I do use the HSA option that EDJ offers, since my family usually doesn't need to go to the doctor very often.  Of course this year my 12 year old had his appendicts taken out, that hit the HSA account pretty hard.

Nov 21, 2006 11:04 am

They didn't have an HSA option when I was there and the only choice on health insurance was very expensive. (over 700 a month for just me and my spouse) They wouldn't even let me chose to not take the prescription coverage.  We don't use prescriptions and if we did, the cost to pay cash would  have been less than the coverage.   Grrrrr. 


I hate not having choices, which is one of the main reasons I left to be independent.  It dose, however, sound like they are making a lot of changes from when I was there.


Nov 21, 2006 11:36 am

Love the LP. seriously


Lets assume you get $40k on each offering.  There is an offering about every 3 years, and you receive about 7 offerings in your career.  In the end, you have $280K of paid for LP and lets use your 17% return figure.  That comes to $47,600 a year in income.  Now, since you are all smart, financial advisors on this site, you would recommend no more that a 5% w/d from a retirement account.   Therefore, this income is lilke having an IRA worth $952,000 and taking a 5% w/d.  I'll take it.


Nov 21, 2006 12:00 pm
My Inner Child:
babbling looney:

Just like the people who complain about EJ health insurance and say now that they are indy they pay less/same with more benefits.  Just because the company offers it doesn't mean you have to use it.


This is true, you don't have to use the company plan, BUT.....if you choose to buy your own insurance you can only deduct it subject to the 7.5% floor for medical costs on your IRS Schedule A instead of taking it as a pre tax deduction from your W-2 paycheck.  Since Jones doesn't offer many choices besides the most expensive for the IRs, you are stuck with the company plan unless you have a lot of medical deductions AND file a Schedule A.


This is another advantage of being self employed instead of a wage slave for EDJ..... 100% of the premiums are a deductible expense. I use a high deductible HSA plan as well for myself, so not only are the premiums deductible, the amount I put into the HSA is an above the line deduction growing tax deferred and able to be withdrawn in the future for non medical uses tax free.


I suggest as a "financial advisor" (scare quotes) you look some of this stuff up.  Your client's might actually need advice some day.   Wouldn't it be nice if YOU gave it to them instead of someone else like, oh.... say ....ME.


Everybody knows that girls can't give financial advice.



I think she can, and she probably looks a lot better in a golf shirt than you do!

Nov 21, 2006 12:16 pm
joedabrkr:
My Inner Child:
babbling looney:

Just like the people who complain about EJ health insurance and say now that they are indy they pay less/same with more benefits.  Just because the company offers it doesn't mean you have to use it.


This is true, you don't have to use the company plan, BUT.....if you choose to buy your own insurance you can only deduct it subject to the 7.5% floor for medical costs on your IRS Schedule A instead of taking it as a pre tax deduction from your W-2 paycheck.  Since Jones doesn't offer many choices besides the most expensive for the IRs, you are stuck with the company plan unless you have a lot of medical deductions AND file a Schedule A.


This is another advantage of being self employed instead of a wage slave for EDJ..... 100% of the premiums are a deductible expense. I use a high deductible HSA plan as well for myself, so not only are the premiums deductible, the amount I put into the HSA is an above the line deduction growing tax deferred and able to be withdrawn in the future for non medical uses tax free.


I suggest as a "financial advisor" (scare quotes) you look some of this stuff up.  Your client's might actually need advice some day.   Wouldn't it be nice if YOU gave it to them instead of someone else like, oh.... say ....ME.



Everybody knows that girls can't give financial advice.




I think she can, and she probably looks a lot better in a golf shirt than you do!


That's not hard to do.

Nov 21, 2006 10:55 pm

Success-


You are the rare bird that pays their LP off in full at each offering. Or at least that is what you are inferring. If you are like most who get it, they pay 25% down and finance the rest. Your assumption assumes incorrectly that the firm finances your income investment at 0%. It's at prime if memory serves.


If you were astute you would realize all you own is an income investment. There is no growth therefore inflation will erode at least half over your work life assuming you have 20 years left. It doesn't look as good and any financial advisor worth a darn would advise no more than 10% of your liquid net worth in any investment, including your precious LP.


Your numbers are seriously fllawed. Look up lost opportunity cost and you will understand that the GP's are reaping the rewards from your investment. A brilliant snow job. Keep plowing.


Nov 22, 2006 6:32 am

The fact that LP economics are murky at best dovetails perfectly with
many other facets of the EDJ platform. Office financials, including the

St Louis home office allocation that increases with your gross, the
charges to each individual branch, the culture of "volunteer" time
sapping and often pointless tasks, the single minded evangelical drive
for "healthy growth", the insistence that more branches in your podunk
one stoplight hamlet are beneficial to your location, and countless
other tenets attributal only to Jones proves this outfit is not only
strange but downright weird. The drones who eat this propaganda up and
spew it religiously are tunnel visioned and brainwashed. "A" share
annuities?5 ways you get paid? "Edward Jones Culture and Values"? 4 day
summer regional "product partner" "family vacation" gatherings
highlited by a toast to the Visionary Deity Ted Jones? The inscrutible
finances of GP allocations? Please.

Nov 22, 2006 11:12 am

Everytime I hear one of you people spouting a bunch of negative opinions about Jones I have to chuckle and think how sad your existences must be to hold on to a grudge for such a long time.  I've been reading this board frequently for about 6 months and some of you have never said anything other than how much you hate Jones.  Is that the best you have to offer?  The hate of another company?  How miserable is your life that you have to come to work every day, login on your superior PC and spend time looking for ways to bash Jones.  Why don't you spend the time you would normally spend bashing Jones and make 3 more phone calls to clients who like you?  Assuming you can find some that is. 


Nov 22, 2006 11:32 am
footsoldier:

Success-


You are the rare bird that pays their LP off in full at each offering. Or at least that is what you are inferring. If you are like most who get it, they pay 25% down and finance the rest. Your assumption assumes incorrectly that the firm finances your income investment at 0%. It's at prime if memory serves.


If you were astute you would realize all you own is an income investment. There is no growth therefore inflation will erode at least half over your work life assuming you have 20 years left. It doesn't look as good and any financial advisor worth a darn would advise no more than 10% of your liquid net worth in any investment, including your precious LP.


Your numbers are seriously fllawed. Look up lost opportunity cost and you will understand that the GP's are reaping the rewards from your investment. A brilliant snow job. Keep plowing.




No, the numbers aren't flawed.  Your assumptions about who we are and what we do with the income our LP provides are flawed.  Let's say I'm 40 years old and I've got $50K in paid for LP earning (as of this year's rate) 19%.  Let's also assume the 19& number will go on until I die at age 90.  Jones cuts a check to me every year for $9500.  Being the astute broker, I save it and earn 10%.  When I retire at 65 I have somewhere around $1 million, just from saving my LP interest.  And I still have a $9500 per year income from Jones coming in.


I don't think there's a Jones broker around that will use his/her Jones LP as their only retirement vehicle.  No more at least than any of you who work for a firm that does stock options or lets you buy stock at a discount. 


Now, if I were a GP that 19% number would be a lot higher.  You can't fault those guys for knowing a good thing when they see it.  Most of them have spent years in the trenches to earn the right to live the relative easy life in the last half of their careers.  Good for them.         

Nov 22, 2006 12:33 pm

Mr. Spiff,


There are a lot of people on these boards that seem to have a hatred of Jones.  I'm not sure why that is.  However, there are a lot of ex-Jones people who simply had a problem with Jones, and left.  They then bring up those problems on these boards.  They don't "hate" Jones, they simply point out things that they feel are wrong.


For instance, midtown hit on one of my favorites.  I don't know how many times Jones tried to convince me that having more offices in my town was a good thing.  It is not.  It got to be that at a Chamber ribbon cutting, there were 4 Jones guys out of 20 people.  It's odd that even though they were saying this nonsense, the old vets and the regional leader weren't adding any offices within miles of their offices (hmmm, that's strange).


I would door knock, advertise, and call, only to contact prospects later and have them tell me "I went to your office, and this nice man helped me."  Obviously, they went to another Jones office that had better signage than mine.  That would not have happened if there hadn't been six offices in town.


Again, I don't hold a grudge against Jones, I simply want people to realize some of their flaws.  I wish someone would have told me this when I was with them.

Nov 22, 2006 12:36 pm

I just remembered the main reason I didn't like having other offices in my town.  When I met a prospect, and they told me that they had an IRA, or 529, or whatever with a Jones broker, then I was officially DONE with that prospect.  However, if that same client tells me he is with ANY other firm, then they are fair game.  The more Jones brokers in your town, the more often you will find prospects that are "off limits."

Nov 22, 2006 1:26 pm

Success-


Attaboy. Keep thinking its the greatest thing in the world. It is a friggin bond that pays you interest.


The GP's make money on your money. What a concept.


You are exactly the kind of broker that will do well at Jones.

Nov 22, 2006 2:14 pm
now_indy:

I just remembered the main reason I didn't like having other offices in my town.  When I met a prospect, and they told me that they had an IRA, or 529, or whatever with a Jones broker, then I was officially DONE with that prospect.  However, if that same client tells me he is with ANY other firm, then they are fair game.  The more Jones brokers in your town, the more often you will find prospects that are "off limits."



So you're saying that the other brokerage firms only have one broker per town?  How many brokers does ML, MS, UBS, or SB have in your town?  If it's a town of any size I'd guess there are more than one per firm.  They just happen to be in the same building.  What if you worked for ML and one of your prospects walked in that day and said I have some money, but you weren't there.  Wouldn't one of the other brokers handle that client?  I've heard things like that frequently. 


I went doorknocking a few weeks ago and found three people on one street that were with UBS.  If I were working for UBS I'd be DONE with those prospects.  So, is it a Jones problem or just the way the industry works?


I run into a number of Jones clients out there.  Once in a while I'll pursue one who conveniently forgets to tell me he has another Jones broker.  That's upsetting, but not the end of the world.   


The Jones rule is leave CLIENTS alone.  PROSPECTS are fair game.  We are gentlemen and respect each other, so most of the time we leave prospects alone if someone is actively pursuing them.  But when I call and talk with the other Jones IR sometimes they say go for it because they haven't had any luck.    


My region, in the shadow of the home office where there are a lot more of us per capita, has 131,000 households, $38 Billion in total assets, of which we manage $1.5 Billion.  There's a lot of room to grow, but the region has decided not to grow anymore for now.  There's not a person I talk to who doesn't know who Jones is.  For me that's a good thing.  It means the marketing has worked.   

Nov 22, 2006 2:58 pm

Spiffy-


The ultimate in stupidity is to make the assertion that you all work together. Your peers are as much a competitor as the local UBS office.


I have a client who is an MBA and a franchisee of Burger Kings restaurants. There is a competitor on every corner. He would vehemently disagree with you. Your direct competition (one who offers the same thing) is your peers. You choose to ignore it as I did for many years.


Ever had a client leave to go to another Jones office in the area?