Revenue Sharing

or Register to post new content in the forum

94 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Jun 1, 2006 2:14 pm

There has been discussion of revenue sharing at Jones here recently. Revenue sharing for 2005 was $127 million of $717 million in asset fees, and was 4.1% of the $3.1 billion in total revenue.

Jun 1, 2006 2:19 pm

But-


If you read the disclosure you will see a little different number. 172M with funds and 33M with insurance. What source were you using?

Jun 1, 2006 2:20 pm
Butkus:

There has been discussion of revenue sharing at Jones here recently. Revenue sharing for 2005 was $127 million of $717 million in asset fees, and was 4.1% of the $3.1 billion in total revenue.


Who cares?

Jun 1, 2006 2:38 pm

[quote=footsoldier]

But-


If you read the disclosure you will see a little different number. 172M with funds and 33M with insurance. What source were you using?




FS- It seems ButKiss suffers from some form of Dyslexia. There is medication for it. But it reacts negatively when mixed with Koolade.

Jun 1, 2006 4:20 pm

Adding insurance increases the revenue sharing contribution to overall revenue from 4.1% to 5.2%.

Jun 1, 2006 9:08 pm

Remember, Mr. Butkus, as it states in the disclosure, it is ONLY  a potential conflict of interest. Mr. Butkus, when do you feel it would constitute a real conflict? How do you describe this to your clients? Or are you like most IR's who don't read and have your head in the sand and hope your clients follow along.


Just wondering.


What happened to Guest1, proudlp, success, and the green monster? It would be nice to hear a competent rebuttal without a lame personal attack. After all the rest of us have gone to the dark side.

Jun 1, 2006 9:25 pm

You just cautioned me against giving a "lame personal attack" right you gave me one. No wonder there isn't much thoughtful discussion here as many people don't want to stoop to it.


Obviously it would be a real conflict if the revenue sharing affected my investment recommendations. I don't believe revenue sharing affects my recommendations, and neither do my clients. I think I explain it clearly and simply. No one that I have met with has rejected an investment recommendation because of revenue sharing and the disclosure.

Jun 1, 2006 9:40 pm

I don't have a dog in this fight, but it seems to me that the retail investor is not the one hurt by this type of shell game.  The betrayal is between the firm and the broker.  Arguably, many firms engage in the practice; however Edward Jones is the firm that a) seems to have been involved to a much larger extent, and b) was foolish enough to kick sand in the face of much larger and more upright firms via an ad in the Wall street Journal, yet expected no reaction. 


It would seem that the emperor has no clothes.

Jun 1, 2006 11:51 pm
Butkus:

You just cautioned me against giving a "lame personal attack" right you gave me one. No wonder there isn't much thoughtful discussion here as many people don't want to stoop to it.


Obviously it would be a real conflict if the revenue sharing affected my investment recommendations. I don't believe revenue sharing affects my recommendations, and neither do my clients. I think I explain it clearly and simply. No one that I have met with has rejected an investment recommendation because of revenue sharing and the disclosure.



Try recommending a Pacific Life insurance product to your client, and you'll see where revenue sharing compromises your objectivity.  (You can't do it.......hint, hint)

Jun 3, 2006 8:26 am

Good pt Sooth. That would be selling away at Jones. Take a look at some

independent sources that rank sub-account performance, riders, cost, etc.

Most of what Jones sell are inferior just like their funds.

Jun 5, 2006 1:46 pm

Butkus, how often do you offer anything to your clients that isn't on preferred fund family list?


In my opinion (and as I've been told it isn't worth much from the Jones IRs posting here) that's where the conflict of interest lies. We were always spoon fed the mantra at Jones that we only offer 7 (at the time) preferred fund families of companies with a proven, historical track record for success. (how does anyone explain Hartford being on that list btw?)

Jun 5, 2006 5:42 pm

Devoted-


The GP's owned a stake in the Hartford Mutual Funds since 1996. No track record needed. Just pay to play. The ultimate conflict especially for the GP's who are selling.  


Jun 5, 2006 7:11 pm

I use a non-preferred occationally and haven't heard a word from St Louis.  I started using it after the RS issue came up though.  Although I believe one can do better with asset allocation in a wrap account, the results from a balanced AF portfolio are hard to ignore.  It works fine for a conservative, no frills, retired person.  It has to work or EDJ would be out of business.  I believe they have a niche.


Being able to give my client an All-Star lineup AND get paid to do research to keep it that way... that is better for both my client and myself.  Not to mention no conflict of interest.

Jun 5, 2006 7:12 pm

And I love this place.  I had no idea about the Hartford and EDJ connection prior.  They don't tell you such things.

Jun 5, 2006 7:54 pm

Revenue sharing is PURE profit paid to Jones.  It's an ongoing kickback that shouldn't be buried in asset fees.  The number is much larger as a % when you take it as a % of net income.  Withput even looking at the 10-k, I'll bet that revenue sharing made up at least 50% of Jones profit.

Jun 5, 2006 8:21 pm

Zacko or is it Karnak-


Hopefully most of you remember Johnny Carson. He did a Karnak the Magnificent routine. If you haven't seen it you ought to go and rent it for a good laugh. Now to the question at hand by Zack.


172M mutual funds. 35M insurance. 330 net profit. My calculator says 63% of net came from the backdoor. Zacko is right on once again.

Jun 6, 2006 1:10 am

Zacko and footsoldier,


    You bring up an absolutely moronic point.  What does it matter how much of revenue sharing makes up of profit?  Stock trades make up over 200% of profit, bond trades over 100%.....so what.  Put on that red pitcher suit they give you at Raymond James and jump through a brick wall.

Jun 6, 2006 9:15 am
rankstocks:

Zacko and footsoldier,


    You bring up an absolutely moronic point.  What does it matter how much of revenue sharing makes up of profit?  Stock trades make up over 200% of profit, bond trades over 100%.....so what.  Put on that red pitcher suit they give you at Raymond James and jump through a brick wall.



That's right Rank, when faced with an issue you can't overcome, resort to personal attacks.  That is always and effective technique!

The size of revenue sharing relative to overall profits(or revenues) is relevant in that it indicates how much the GEEPS rely on this profit sharing to keep the firm profitable.  Pretty simple, but then again I don't expect a kool-aid drinker like you to understand any analysis which relies on independent thinking!  Just keep selling them long-term bonds and preferred funds and stop thinking there, sonny!

Jun 6, 2006 9:33 am

Rank-


Stay the course. They need you to keep the growth numbers stagnate.

Jun 6, 2006 10:42 am
zacko:

Revenue sharing is PURE profit paid to Jones.  It's an ongoing kickback that shouldn't be buried in asset fees.  The number is much larger as a % when you take it as a % of net income.  Withput even looking at the 10-k, I'll bet that revenue sharing made up at least 50% of Jones profit.



Why would you take it as a % of net income?  I have never seen a balance sheet that shows a revenue source as pure profit.  So your saying that EDJ doesnt use any portion of the revenue sharing money to pay for any kind of overhead?  I am certainly not an accounting expert but that doesnt make any sense to me.