New fee based platform at EJ

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Jan 18, 2007 4:25 pm

Interesting, now they are going to have to backtrack on theirs sales pitch about all those evil advisors who charge a fee on the clients assets as opposed to loaded funds.

Jan 18, 2007 5:03 pm

Where did you get this information? Has it been made public?

Jan 19, 2007 11:43 am

this month of reg rep magazine _ all jones reps have to have the 66 within 3 months and Weddle said at a regional meeting they were going to roll out a fee program

Jan 19, 2007 12:18 pm
jamesbond:

this month of reg rep magazine _ all jones reps have to have the 66 within 3 months and Weddle said at a regional meeting they were going to roll out a fee program


Any ideas on the timeline or the details of the program?

Jan 19, 2007 2:42 pm

We also have a GP that was tasked this year with heading up the fee based platform.  I've heard everything from first quarter to sometime in 2007 on when they are going to launch it.  It's coming, they just haven't told us exactly when. 


I've heard Jim say we are going to have fee based (fall regional last year).  I don't think it's as much backtracking on saying fee based is evil, just a realization that the environment is changing and we need to change too.  Jones is a company that doesn't change very quickly.  BTW, I've never heard anyone put a blanket statement on fee based that says it's evil.  I have heard it said that fee based is not appropriate for everyone like some firms tend to think.  There's a difference.

Jan 19, 2007 4:45 pm

Not to rehash this debate (which is hard to do on this forum) , but my opinion is if you explain all the pros and the cons as honestly as possible to the client and let them choose, you can't go wrong. It's about options and perceived value. If the client likes to have the option of paying more in fees but getting to choose the best funds in each asset class, rebalance regularly with no concern of transaction costs, and to avoid front loads...then so be it. I've told all my clients that have chosen wrap that it is the most expensive way to inest but it's also one of the most flexible. The ones that choose it don't mind in order to gain the flexibility.


I am almost positive this won't be in place by the time I get to Jones. That will make for some difficult decisions for me and my clients.

Jan 20, 2007 8:14 pm

Nole, are you moving to Jones? Where are you moving from, and why?

Just curious.

Jan 21, 2007 2:54 pm

Spiff said:


BTW, I've never heard anyone put a blanket statement on fee based that says it's evil.  I have heard it said that fee based is not appropriate for everyone like some firms tend to think.  There's a difference.


I don't know if anyone ever said "evil", but Jack Cahill told me about a year ago that fee based accounts were wrong for the customer, and if EDJ was losing big producers because they wanted to use fee based accounts, the GP's had no problem letting them go.  He told a small group of us that if we wanted to have fee based business, we should go too.  It had nothing to do with fee based being appropriate for some people and not others, it was pretty clear that fee based was considered inappropriate in virtually all circumstances.  This fit with the party line I had been hearing since I started with Jones.


Shortly after that, Weddle started making noise about his fee based platform, but he said on Suggbox that the broker would make about 1/2 what they do at other firms,  which was all I needed to hear to let me know I would be happier elsewhere. 


Jan 21, 2007 3:39 pm

I've heard the blanket statement many times.


Started about 2.5 yrs ago w/Jones and all I heard from trainers, visiting vets etc, was how fee based was such a rip off to the client and you should always do A shares. 

Jan 21, 2007 8:56 pm

EDJ4-



I would imagine any fee based platform would have to be correlated

somehow to the current MAP program, which pays you comparably to

other firms. But then again, I have no idea what it's really going to look

like. It may end up being comparable to some watered-down version of

preferred-fund C-shares.



Jan 21, 2007 10:11 pm
Broker24:

EDJ4-

I would imagine any fee based platform would have to be correlated
somehow to the current MAP program, which pays you comparably to
other firms. But then again, I have no idea what it's really going to look
like. It may end up being comparable to some watered-down version of
preferred-fund C-shares.



B24, the Jones MAP program doesn't even come close to payouts at other firms.  We had a Jones broker in an insurance CE class a year or so ago, and at every break he could be found touting the wonder that is Edward Jones.  When the subject of payouts came up, he said the same thing...that it was comparable.  When pressed for actual numbers, he was laughed out of the room.

Jan 22, 2007 10:19 am

I was not referring to payout %, just the % charge.  Can't compare actual payout to Indy, if that is what you are referring to (though if memory serves, you are at a wirehouse?).


Anyhow, MAP charges range from about 0.75% to 1.75% to the firm (plus 0.50-0.75% to the manager).  It's a convoluted sort of graduated scale, so it's hard to quote exact numbers.  With a large enough investment (several millions), plus the allowable discounts, I think the fee to EDJ can go as low as 0.50%, but that would be rare.  I think the average fee to EDJ is around 1% based on typical account sizes.  And of course our payout is only 40%.  I am not sure how that compares to other non-Indy firms.


I don't claim to know how everything works at other firms, so I welcome any corrections.

Jan 22, 2007 10:33 am
Broker24:

Nole, are you moving to Jones? Where are you moving from, and why?
Just curious.


I am about to have a meeting so I don't have a whole lot of time. However, currently I work for Ameriprise. There's a few reasons I am going to move to Edward Jones. The #1 reason basically surrounds fee based planning vs. commission based planning. Firstly, I think I could do better for myself and have a greater quantity of clients if I do not charge an annual planning fee. Some times, I don't even think the advice we/I give is even worth a fee (some of the smaller clients where you just set up roths, disability insurance etc.). Furthermore, I think that the majority of our comp at AMP doesn't come from annual planning fees but from commissions. So, I don't think we make as much in commissions from the planning fees as we lose in business from people who don't want to pay them.


Secondly, I don't really see the ethics of doing fee based and commission based planning. I might if one actually created financial plans for clients and gave them advice using products that you could and could not sell. I probably still would not because even then you might be influenced knowing that some products have bigger up front commissions than others. However, nobody does that. Nobody creates a plan for somebody with products that they can't sell so people are paying a planning fee for biased advice.


Thirdly, I want to create my own atmosphere. Whereas that's not entirely possible with Jones, it's more so the case if you have your own office than being in an office with 60 other advisors...many of them (but certainly not all) who know very little about financial planning. A bunch of young salesmen in suits. It can be a little greasy around here for me.


Jones contacted me so I am going to give them a shot. I know a lot about the pros and cons from talking to people who work there and people that don't. This forum has been very helpful. For me, I think Jones is a step up and I don't mind marketing door to door. It's better than doing lunch and learns in my book. I don't have to get reimbursed and I am offering free advice...essentially. Jones certainly isn't perfect, but I think it's better than what I am doing now. Plus, at Jones, there is a stronger focus on asset management...what I prefer doing. I don't mind selling insurance, but sometimes at AMP (formerly IDS life), it seems like there's not much else out there.

Jan 22, 2007 11:20 am

Nole Wrote:


However, nobody does that. Nobody creates a plan for somebody with products that they can't sell so people are paying a planning fee for biased advice.


It's called fee-only planning. Every meeting I put together plans with investments that I cannot 'sell'. That's the beauty, no conflict and I have a vested interest in protecting clients money and seeing it grow.


I charge either an hourly fee ($150) or AUM fee (1%-.55%) and have no strings attached.

Jan 22, 2007 12:42 pm
EDJ to RIA:

It's called fee-only planning. Every meeting I put together plans with investments that I cannot 'sell'. That's the beauty, no conflict and I have a vested interest in protecting clients money and seeing it grow.


I charge either an hourly fee ($150) or AUM fee (1%-.55%) and have no strings attached.



Yes, and as an Indy, you can do that. At Ameriprise, I can't. And I am too young in the business to go indy.

Jan 22, 2007 1:06 pm
EDJ to RIA:

Nole Wrote:


However, nobody does that. Nobody creates a plan for
somebody with products that they can't sell so people are paying a
planning fee for biased advice.


It's called fee-only planning. Every meeting I put together plans
with investments that I cannot 'sell'. That's the beauty, no conflict
and I have a vested interest in protecting clients money and seeing it
grow.


I charge either an hourly fee ($150) or AUM fee (1%-.55%) and have no strings attached.





Same here, except I charge $200, I just can't imagine how A-share pushers live with themselves.

Jan 22, 2007 1:36 pm
AllREIT:

[quote=EDJ to RIA]


 I just can't imagine how A-share pushers live with themselves.



Frankly, that is the kind of crazy, stupid, elitist crap that breaks down reasonable conversation.

Jan 22, 2007 1:58 pm
Nole32303:

So, I don't think we make as much in commissions
from the planning fees as we lose in business from people who don't
want to pay them.


AMP's flawed business model does not make EDJ's flawed model any better.


[quote]I probably still would not because even then you might be
influenced knowing that some products have bigger up front commissions
than others. However, nobody does that. Nobody creates a plan for
somebody with products that they can't sell so people are paying a
planning fee for biased advice.[/quote]

You realise that the future of this industry is towards fee based
advice from disinterested advisors? There is a reason that Vanguard
opens up 4000 advisory accounts a month.


The future of this business is fee-based done by RIA's. You can either try to fight the future, or be on the right side of it.


[quote]A bunch of young salesmen in suits. It can be a little greasy around here for me.[/quote]


That is true, AMP is very greasy.

[quote]For me, I think Jones is a step up and I don't mind marketing
door to door. It's better than doing lunch and learns in my book. I
don't have to get reimbursed and I am offering free
advice...essentially.[/quote]


AMP's seminar based model is really the only thing going for them. RVS funds suck, IDS Life is overpriced.




[quote]Jones certainly isn't perfect, but I think it's better than what
I am doing now. Plus, at Jones, there is a stronger focus on asset
management...what I prefer doing. I don't mind selling insurance, but
sometimes at AMP (formerly IDS life), it seems like there's not much
else out there.[/quote]


EDJ shares 70% of the problems of AMP, because both of them are based on transactional business and pushing A-shares.

Jan 22, 2007 2:14 pm
Nole32303:

Frankly, that is the kind of crazy, stupid, elitist crap that breaks down reasonable conversation.





You cannot, (and indeed you have admitted as much yourself) give
unbiased advice if you are compensated by product commisions. If you
can't make  an unbiased financial plan, how can you make unbiased
recomendations?



The difference is working for yourself or working for clients.



Are clients a means to an end or an end in themselves?

Jan 22, 2007 2:24 pm

AllREIT-


Maybe I should raise my hourly rate to eleventy kabillion!