Technology at EJ

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Apr 11, 2008 2:13 pm

When I came over to EJ from another firm, which is now gone, we were in the stone age technology-wise. I was just analyzing our new Morningstar platform and realized all I can do is compare funds and get star rankings. Not like I can sort the universe of funds and locate the best performers compared to a relative index or do my own, true due diligence for my clients...!

It strikes me that the goal of the management at this firm may very well be to have 20,000 "thirty someting" reps all happy as heck to drink the kool aid and make 100k per year. And sell lots of banking products to increase fee income for the GPs....!
Nuff said. Needed to blow off some steam. Time to hear comments from inside and outside.
Thanks!!
 
((previous post) I have been at EJ for 7 years now, and have rejected the kool aid....as the firm rushes hell bent to grow, less is being done for branches by HQ, and I pay 60% of what I make for diminishing service, some of which I never use. The financial assessment software is difficult to use.
I learned the hard way to not waste my time doing stuff for my region. T
Then, when you read the firm k-1, you see that, yes, the limited partners are paid first from revenues, but the general partners are allocated $3 for every $1 to the LPs.
Hmmm...I have talked to RJ, LPL, and FSC, and received some impressive stuff from Commonwealth. I want to move to a fee based practice, and EJ is finally coming out with a platform based on the AG Edwards program...My estimates are that I would make approx a 60% payout leaving, but need "pay my own expenses" (Jones has always told us they pay for staff, but frankly I have never figured that one out since staff pay is expensed on my P&L!).
I have about 60mn under care, and gross about 300.
 
**If y'all were going to start over, and go indy, where would you go and why?
Thanks, in advance, for your feedback!!
Apr 11, 2008 2:24 pm

Ahhh...I see light breaking from the dark clouds....LPL was my choice...never looked anyplace else...You can pm me if you want to discuss further...Product choice, great payouts, technology, compliance....Have no idea what RJ or Commonwealth has to offer..

Apr 11, 2008 3:33 pm

How did you figure you would get a 60% payout with about $300K production?  Most of the IBDs you mention would offer payouts in the 90%+ range.  Expenses would of course need to be covered still.

Apr 11, 2008 3:47 pm

He estimates 60% IF he went indy.  Its not tied to the $300K in gross he is actually doing nowat EJ.  That means he nets $120K (40%), right?

Apr 11, 2008 4:21 pm

My question stands - where does the 60% Indy payout figure come from?

Apr 11, 2008 10:28 pm

He's likely refering to net, net payout.  After all expeses.

Apr 11, 2008 11:03 pm

I was at EDJ for three years. I hit location gain and profitability after 7 month of production. Three years in the wife and I had a kid and I went to get health insurance from edj and realized that Jones was not really a pro-family company. I left in 2000 grossing 250K to go to a wire.   I learned a great deal in my 7 years at a wire and left last year to go to RJ. I have moved 75% of my assets so far. Anyway, enough about me. I looked at LPL, Common Wealth, First Allied and Finet (Wachovia). I turned down $700k from a couple of wires. I chose RJ. I liked and like my contact with top management.   The research is better than what I had at my wire. I almost went to Finet but did not like that they kept the 12b-1's from wrap accounts. LPL had a better payout but seemed to offer a lot less support than I get from RJ. First Allied didn't answer my questions. Common had great marketing materials but offered no transition assistance and seemed focused on mutual funds and had no proprietary research. FYI, My wire has not sued me for leaving. EDJ sued me and was bot off by the wire. If you leave EDJ be sure to take your cost basis info with you because they are the only firm I know of that does not send cost basis info to the receiving firm of an ACAT. Hope this helps...

Apr 11, 2008 11:25 pm

Or when you leave Edward Jones you request cost basis from your old office and make them do the work!

Apr 12, 2008 2:33 pm

Net 60 after expenses. sorry. Most IBDs calculate a very low salary for your office administrator.

Apr 12, 2008 3:02 pm
Effay:

Net 60 after expenses. sorry. Most IBDs calculate a very low salary for your office administrator.

 
 
Is this a statement for or against his assertion? Please explain further.
Apr 12, 2008 5:34 pm

Just got my total annual compensation booklet from Jones.  58% total payout.  not bad.  Factor in postage, phone, and misc. out of pocket, and I'm still 55%.  How can you be at 40% if you are grossing over 300k?  I don't really understand.  With the 5%+ profit sharing, quarterly bonuses, LP payout, and winning the trips, how can you be that low?

Apr 12, 2008 7:25 pm

also call Ameritas in Lincoln NE.  I know several reps woth them that are happy.  Woodbury as well, i think they are headquartered in MN.


Nice try Rankstocks, not nuyin it.


Apr 12, 2008 7:26 pm

sorry, "noy Buyin it"

Apr 12, 2008 8:48 pm

Here's what I really don't get about the Jone's people.  Since most of their book is MFD's and they love their trails, they could go indy and make up to 80+% just off the trails.  It seems to me that all the other stuff is just irrelevant.  Some of those guys pull 10K+ gross off the trails, I would rather see a check for 8+k then 4+k anyday.  That would pay for a boatload of computers, office space, assistant, etc...

 
So my question becomes..."have they never done the math?"
 
Stating that, I really really want them to stay at Jones and stay out of my way.
Apr 14, 2008 2:53 am

Effay:
 
I  WAS in the exact position you're in.  (I've copied & paste the below from my previous posts):
Edward Jones is an excellent firm.  I truly appreciates them giving me an opportunity to be hired, train, & work for them.  But after 7 yrs at Jones, I started looking around, wondering why Jones only does meetings w/ just other Jones reps & never mix w/ other reps.  When I got passed over for my LP, when compliance started to tell me how to run my business from 2,000 miles away & to tell me that I can't sell other funds besides the 7 preferred (esp when we have several other non-preferreds which are much more recognizable in our city).  If I'm in a little bitty town (a Jones town), & if I'm  & the bank is the only choice in town, then I'm all set.  But I'm in a big city, so the Jones model doesn't fit in very well.  At the time, I didn't mind the 40% payout that much, but what really bothers me is that I get back even a fraction of the 60% that I send to Jones.  With fast DSL internet coming on, why are we still using satelites?  & why are we being charged over $2000 a month for technology (computers, printers, etc.), when you can buy a couple of Dell computers for a few hundred that'll last a while.  I was contributing a lot of time & effort to Jones to recruit new brokers for Jones' "healthy growth" initiative, but was really bothered that they don't spend enough on the "healthy retention" aspect of it.  What really got me thinking & moving was the thought that if I work for Jones another 20 yrs, & when I retire, & if one of my kids don't take over the business, I just have to "Goodknight" my office assets over to a new Jones broker & walk away empty handed.  That was then, I don't know if they have a good transition program now.  But at least LPL is now partnered w/ FP Transitions to sell your book when you retire.
At the time, I was producing $250 to $300K, w/ assets of about $40 Mil.  Doing about 40% MF & 40% VA, & other stuff mixed in to qualify for my diversification trips.   Taking home $100K net or so.
Now after 9 yrs at LPL, I gross $600+, net high $500's, 89.4% payout (93% payout minus BS charges).  Assets about $90 Mil.  40% MF, 40% VA, 15% REITs.  Very little fee based business, but at least I can give my clients an option & also take care of their no-load funds. 
For the 7% or so I send to LPL, I think I'm getting of it back in the Compliance oversight, the 2 free trips they send to: the summer regional meeting in SD, or Chicago this yr, & the Master's trip for me & my wife to Hawaii, Puerto Rico, last few yrs, Phoenix this yr, & Hawaii next yr (my wife don't care how much I make, just as long as we go on those damn trips), the technical support, & the better home office service.  Oh, the $150K free stock bonus plan is great too.
 
The biggest surprise after moving over to the dark side at LPL was the VA business that I done at Jones, on a $100K order, I get 40% of 4.75% gross (net $1740).  The exact same VA contract thru LPL now pays 8% w/o trail, or 7% gross w/ trail.  So 93% payout of 7% is $6510 net.  Always wondered where the difference between 7 & 4.75 goes to.  That was before Jones' A share Annuities came out.
 
When I first moved over to LPL from Jones in the late 90's, the service was so much better.  Calls to Everyone (100%) in the San Diego & Boston home office were super & were so nice, all my questions got answered, or all calls returned promptly.  They totally understands that they're 100% overhead & they work for us out here in the field & appreciates our business, not the other way around like back at Jones, no attitude like like a Limited or General partner here at Jones in St Louis & you're just a pee-on out there in the field.   LPL's focus then was 100% to/for the reps. 
 
It took me 2 - 3 yrs to make the move from Jones.  I flew out to San Diego to meet w/ LPL, & also interviewed w/ IM&R (Raymond James then) in Tampa, great firm, but also worried about their multiple company holdings, in which the independent advisor channel is just one of the many numerous companies that Raymond James owns, so wasn't convinced that IM&R independent reps was their top priority.  & also, someone gotta pay for that Raymond James stadium name, just like Jones now.  So not to bash Raymond James (or IM&R then), they're a great company, but wasn't for me, at that time. 
 
I'm still very satisfied w/ LPL, love the great payout, the total freedom to conduct my business w/out their interference, the great technology, & the still great service (although has a few small glitches lately), luckily I still do a lot of my business at the MF, VA & REIT firms, & not held at LPL.  Love the self clearing aspect.  But at every chance they get, at least LPL management always thanks me for my business, since I guess they know that they work for me & that I can pack up & leave them for any other Indy B/D at any time.  So if I ever get pissed & decides to leave, guess this would be my new dream B/D:


- totally independent, no wire house
- high payout: 90% +
- strict compliance
- all funds, VA's, all companies avail, no limited preferred group to choose from
- smaller, more family culture
- great technology
- great trips
- & sends me Birthday cards & anniversary reminder cards...
 
The below is the worksheet I use to compare expenses before I made the move:
These #'s are over 10 yrs old, so use your own current #'s.  Some don't even apply now.  Also you know which ones Jones pays fully or half for. 
But after subtracting my 93% gross/  89% net, I still make high 70% net/net & everything is tax deductible as a  business expense.

Monthly Office Expenses

<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" /> 


                                      EDJ          LPL

Assistant salary          2750          2500
Office lease                 1400    

Utilities:       Electric               130


Telephone          220                       47


Long distance/800#   30                    30


Internet access     30                         30


Cellular phone      30                         30


 


Branch Office fees


Rep contract fees                               125


Bonding fees                                      10


Branch plan                                        15


Branch folio                                       50


Branch plus                                        50


Quote screen, Yahoo                          10


                   Morningstar            15                         15

S & P                                                25


Value Line               20                       20


SIPC fee                                            20


NASD fee                                          22     


Other fees (state fees, NASD Renewal, compliance inspection)      40                         68


 


Insurance:    Medical                                              257                       248


                   E & O                                                83                         150


                   Office - Hartford                                 42                         42


 


Advertising                                                            200                       250


Postage                                                                 100                       166


Supplies, Other Office Expenses                            50                         100


                                                                             ================


                            


TOTAL               _____ / Month       


                                                                           ______/ Yr   
 
Apr 14, 2008 11:21 am
GoneIndy02:

also call Ameritas in Lincoln NE.  I know several reps woth them that are happy.  Woodbury as well, i think they are headquartered in MN.


Nice try Rankstocks, not nuyin it.


I got mine recently too.  My bonuses aren't going to be as large as rank's, but I was in the 55% payout range also.  I'm not sure I understand why you're not buying it. 
 
 
Apr 14, 2008 6:45 pm
new_indy:

Here's what I really don't get about the Jone's people.  Since most of their book is MFD's and they love their trails, they could go indy and make up to 80+% just off the trails.  It seems to me that all the other stuff is just irrelevant.  Some of those guys pull 10K+ gross off the trails, I would rather see a check for 8+k then 4+k anyday.  That would pay for a boatload of computers, office space, assistant, etc...

 
So my question becomes..."have they never done the math?"
 
Stating that, I really really want them to stay at Jones and stay out of my way.
 
If you are a vet, you move 80% of the book...8k/mo gross trails=6400/mo cash flow to cover expenses. (Not to mention systematic investments)
 
If that advisor sees the light and realizes the rest of the industry is using advisory fees, all he/she needs to do is bring in 15 million new $, charge 1%, and they are grossing another 150k/yr, netting about 120k/yr profit (10k/net/mo) when they walk in the door instead of 8000/mo. Meanwhile their commission clients are still probably producing around 10k/mo gross on top of trails (8000/mo profit). From that point on the curve gets very steep on the up-side.
 
It really is that simple, and this assumes only 80% moves. I moved 90%.
 
CIB
 
 
 
Apr 15, 2008 10:29 am

Thanks, WestH for the detalied reply!

That info is very useful.
 
One question: can you guys (Indies) really get by with a 30k assistant? Maybe I've been spoiled, but I have a registered assistant, and pay her over 50k. Cost of living here is quite high.
I see it this way: any admin tasks a branch administrator does not do have to be done by me or the back office.
Frankly, I want to sell and service the investments themselves, not do the related, myriad tasks a good "BOA" does.
Another question: how hard did EJ come after you? I just spoke with one of the guard dogs at HQ, and she said they can - and do - still get TROs in Cali.
Any and all feed back is greatly appreciated!
 
 
 
 
 
Apr 15, 2008 10:48 am
Effay:

Another question: how hard did EJ come after you? I just spoke with one of the guard dogs at HQ, and she said they can - and do - still get TROs in Cali.

Any and all feed back is greatly appreciated!


First and most importantly, be very careful about what questions you ask of anyone at EJ that have ANYTHING to do with brokers leaving.  You can very easily send up clear red flags that could lead to more serious problems for you.  Tread very carefully here. 

If you are seriously considering leaving, hire an attorney experienced in this industry right away.  They will explain all the risks, including TROs and what you can and cannot say or do. 


Apr 15, 2008 3:51 pm

Ok people,  Here's the real deal...

Listen to your transition people and you won't have any problem with TRO's in Cali...
 
The Net/Net/Net question is one that always boggles my mind when it comes to Jones versus Indy.
 
Let's say you are in the 55% Net program at Jones...You gross $500k...you get a W-2 with $200,000 on it!  Then you file your taxes and your tax guy/girl says, all of your deductions phase out because you bump up against the AMT.  You pay uncle Sam $40,000 so now your Net/Net/Net percentage is more like 40%.
 
Indy (I'm at LPL).
I grossed $650,000 last year.  I paid my assistants, phone, rent, etc.  Then I paid payroll taxes, then I contributed to my wife's 401k, my 401k, my profit sharing 25% of payroll, and paid my kids $4000/each so that they could make a roth contribution.  I got to deduct my health insurance premiums (Can't do that at Jones).
 
SAVED/INVESTED $70,000 last year.  I can tell you that at Jones I NEVER even dreamed of saving $70,000, I could barely scrape enough together to contribute to my 401k. 
 
It's not how much you make it's how much you save....At Jones you can't save enough for the amount of income you are producing...and top of that if you have LP at Jones you get a K-1 that is phantom income that you have to pay more tax on!!!!!