Weddle discusses advisor attrition

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May 14, 2010 9:36 am

I thought it was very interesting that Weddle only mentioned Segment 4 & 5 attrition when discussing this subject. If it is 1% of Segment 4 & 5 what is it for Segment 1-3?

May 14, 2010 9:53 am

He stated in the article.  Overall it's like 14% firm-wide, and like 1% for seg 4 & 5.  So obviously seg New-3 is high.  But the attrition naturally goes way down in each segment.  It's probably 50%+ for new, 30%+ for Seg 1, 20%+ for seg 2, and 5-10% for seg 3.  That's compeltely normal for scratch starters in the industry.  And considering that almost half of our FA's are Seg 4 and 5, it bascially says that we lose less than 50 profitable FA's per year.  And there are far more that BECOME profitable (or transfer in from other firms with enough assets to be profitable already) during the year versus the number that we lose.  Actually, we get 100+ producing transfer brokers a year, so already we are net positive without organic growth.

Honestly, I think it's a non-issue.

May 14, 2010 10:18 am

I thought the scarier point was that only 5,000 are doing SEG 4/SEG 5 numbers...

May 14, 2010 10:32 am

[quote=B24]

He stated in the article.  Overall it's like 14% firm-wide, and like 1% for seg 4 & 5.  So obviously seg New-3 is high.  But the attrition naturally goes way down in each segment.  It's probably 50%+ for new, 30%+ for Seg 1, 20%+ for seg 2, and 5-10% for seg 3.  That's compeltely normal for scratch starters in the industry.  And considering that almost half of our FA's are Seg 4 and 5, it bascially says that we lose less than 50 profitable FA's per year.  And there are far more that BECOME profitable (or transfer in from other firms with enough assets to be profitable already) during the year versus the number that we lose.  Actually, we get 100+ producing transfer brokers a year, so already we are net positive without organic growth.

Honestly, I think it's a non-issue.

[/quote]

I wonder what the average industry wide is for producers above 350K as far as attrition?  I don't know that I trust the fact that Jones loses 50 profitable FA's a year as I know of 25-30 myself that were all profitable that have left. Granted they didn't all leave this year...I would think that the transferring brokers would tend to be 150K to 250K producers...

May 14, 2010 10:37 am

14% attrition = 1680 new bodies needed every year

100 are transfer brokers???  yeah right

May 14, 2010 10:50 am

16% attrition = 1680 new bodies to stay at 12,000  "firm wide" 

100+  transfer in & producing brokers (yeah sure)

only 50+ "profitable" FA's leave per year, is that "firm wide too"?

The term "profitable" sounds to be almost subjective at EJ.....

once the 60% covers your branch expenses isn't that "profitable" .... so how come after 16 years an entire division that hasn't shown a profitable year and "may not be profitable in the near future" allowed to remain operational? (and the person in charge be the second highest compensated at the firm according to the 10-K after Weddle).  If losses are down to $1million/month how much of drain has it been for the previous 15 years?

May 14, 2010 10:56 am

OK, now Jones is lying about their numbers.  They are widely published within the firm, so it would be very difficult for them to lie to everyone in the firm. 

And it didn't say 50 profitable FA's, it said 50 seg 4 and 5.  That means above $325K in production.  You can be profitable below that.

XEJ, why is it hard to believe that 100 brokers transferred into Jones during the year?  Doesn't seem like a big number to me.  That's 8 per month, throughout the entire country.  We had 6 transfer brokers, just in my region last year (4 were from UBS).  I am finding that a lot of the transfers-in are old-school types that like to sell stocks and bonds on commission, and are being pressured into managed money at their current firms.  That could just be anecdotal from the few that I have talked to, but it seems sort of like a trend.  Not good or bad, just is what it is.

May 14, 2010 11:14 am

[quote=xej1984]

16% attrition = 1680 new bodies to stay at 12,000  "firm wide" 

The bulk of the attrition is among the newest advisors, as is the case at most firms.

100+  transfer in & producing brokers (yeah sure)

Still not sure why this sems excessive.

only 50+ "profitable" FA's leave per year, is that "firm wide too"?

It's 1% of seg 4 and 5, not 1% of profitable.

The term "profitable" sounds to be almost subjective at EJ.....

once the 60% covers your branch expenses isn't that "profitable" .... so how come after 16 years an entire division that hasn't shown a profitable year and "may not be profitable in the near future" allowed to remain operational? (and the person in charge be the second highest compensated at the firm according to the 10-K after Weddle).  If losses are down to $1million/month how much of drain has it been for the previous 15 years?

No idea.  Not something that really concerns me.  But it is a blip on the financial statement in terms of the total operation.

[/quote]

May 14, 2010 11:29 am

b24

let's do some simple math.....let's say the operations lost on average $2Million/month or $24 million/year... over 15 years that works out to $360 million even if the average was $1million/month that works out $180 million.  Then there was the expense of the UK operations.....just to close up shop it is costing $70 million and there is no reporting of how much the 10 years over there cost.  Just for comparison why don't you look up see what the dollar amount of the last LP offering was?

Not that small of a blip now is it b24?

May 14, 2010 11:45 am

just a little food for thought

http://www.investmentnews.com/article/20100509/REG/305099982

May 14, 2010 11:53 am

B - you're wasting your breath.  These guys will never believe anything that Weddle, or you, or I say in defense of EDJ.  They've convinced themselves that everything that is said about Jones that isn't derragatory in nature is a lie.  Or at the very least a complete spin on the truth. 

Kudos to your region on that many transfer brokers in a year.  At 100 total transfer brokers for the entire firm, your region had to be pretty close to #1 in that category.  Mine didn't bring in a singe transfer broker. 

May 14, 2010 12:12 pm

that's right spaceballs. and everything you state is the whole truth and 'nuttin but da truth.  You and Weddle share all sorts of little secrets.....

take the two articles the one in RR and the one I posted a link to.  they are only days apart so why the difference in numbers yes I'm splitting hairs but why would the Managing partner be quoted on 12,600 FAs in one and a few days later 12,000 (unless the firm has either lost or gained that many in those few days). 

One of the biggest things I have against my one time employer is the lack of consistency.  Whether it be from HR, training, compliance, fsd  down through the channels to the RL and then to me.  And of course us "dark siders" are the only ones that put any sort of spin on the story.

And then once we do decide to leave how many of us were made the target of an insuation smear?  Left under some sort of shady issue...compliance problem, we don't know where she went?  I heard he left the business.  They had money problems....etc etc then the TR tries to insinuate we've had them in some questionable produtcts, so why don't we correct that.  Yep your employer is darn perfect. 

May 14, 2010 12:26 pm

X,

You care FAR too much on this subject.  First, I won't even get into the Int'l numbers, because (a) I don't care, and (b) I don't have the time to verify silly numbers.  Second, the article talks about TWO departing brokers.  Yes TWO (2).  Investment News has lists of departing wirehouse brokers DAILY.  Finally, are you really going to analyze whether Weddle meant 12,600 or 12,000?  We haven't had net losses in FA's in years.  Most likely, when someone says "how many FA's ya got?", there's a good chance you say "ah, about 12,000".  And maybe it depends when the interview took place.  Now, if you need to get exact, the number is exactly 12,743 as of April 30th, up from 11,988 same time last year.

And I never said our employer is perfect....it's just really annoying when you nit-pick the dumbest little things.

May 14, 2010 12:37 pm

A few comments regarding this thread.

B24 - Not 50 seg 4 & 5s, but just short of 200 (granted that includes retirement too)

noggin - My concern isn't the number of 4s and 5s, it's the lack of tenure.  Less than 2 out of 10 of our brokers have been out 10 plus years. 

xej - Why do you care about Canada so much?  Using your numbers we lost $360MM on Canada.  How many Billions have the wires lost on CDOs?  SIVs? ARS?  My guess is that is that $360MM is a fraction of each of one these.

What gets me the most excited about that article is the "unified managed account platform due to come out next year."  LPL will have to find another recruiting strategy if we get a full blown fee based platform.

May 14, 2010 12:56 pm

bb,

a) I should be so lucky not to care about where my firm sinks $250 MILLION internationally. Instead of sharing that money back here?  10-K and 10-Q make for interesting readings (instead of losing over $8million in the first quarter last year the Canadian operation only lost around $5 million during the first quarter this year)  gee that only a spit in the bucket for you so let's keep doing that since we're loosing less this year than last........smaaart.

b) for some who doesn't have time to verify silly numbers you still do find the time to post 3258 times under your current handle in less than 2 year's time  (this will be my 108th in 5.5 years)

c) I never knew your firm had net losses of FAs.  the articles were posted within DAYS of each other.  I'm sure your firm would prefer to say we have close to 13,000 instead of we're over 12,000.  (and remember the FAs are are YOUR firms ONLY profit Centers)

d) size matters.  those were only 2 FAs yes TWO, but their assets were HUGE.  I heard some one else state that you had a problem with reading comprehension.....the article I read was about what industry observers are saying about what might occur at your firm "Edward Jones' lack of a top-tier advisory platform for brokers and a succession plan for veteran advisers is hurting its ability to hang on to its highest-producing reps in the fiercely competitive recruiting marketplace." 

e) best response when you can't answer call the question dumb or I can't beleive you're asking that sort of question (didn't a break-in at a hotel by plumbers get the same sort of response at the beginning?)

May 14, 2010 1:10 pm

innocuous bulk,

nice ploy, deflect questions about your problem and reply with what others are doing.    How much has EJ lost on  CDOs?  SIVs? ARS?  I'm sorry how much?    If I was commenting on other firm's losses I would not be commenting about them on this thread or is that your idea of fuzzy logic?

I had a personal interest in the land north of the 49° parallel. is that okay with you bulkster.

Your firm lost $360 MILLION and you're concerned that I show an interest and that you don't? 

May 14, 2010 1:29 pm

[quote=xej1984]

bb,

a) I should be so lucky not to care about where my firm sinks $250 MILLION internationally. Instead of sharing that money back here?  10-K and 10-Q make for interesting readings (instead of losing over $8million in the first quarter last year the Canadian operation only lost around $5 million during the first quarter this year)  gee that only a spit in the bucket for you so let's keep doing that since we're loosing less this year than last........smaaart.

b) for some who doesn't have time to verify silly numbers you still do find the time to post 3258 times under your current handle in less than 2 year's time  (this will be my 108th in 5.5 years)

c) I never knew your firm had net losses of FAs.  the articles were posted within DAYS of each other.  I'm sure your firm would prefer to say we have close to 13,000 instead of we're over 12,000.  (and remember the FAs are are YOUR firms ONLY profit Centers)

d) size matters.  those were only 2 FAs yes TWO, but their assets were HUGE.  I heard some one else state that you had a problem with reading comprehension.....the article I read was about what industry observers are saying about what might occur at your firm "Edward Jones' lack of a top-tier advisory platform for brokers and a succession plan for veteran advisers is hurting its ability to hang on to its highest-producing reps in the fiercely competitive recruiting marketplace." 

e) best response when you can't answer call the question dumb or I can't beleive you're asking that sort of question (didn't a break-in at a hotel by plumbers get the same sort of response at the beginning?)

[/quote]

You're right, I'm wrong.

May 14, 2010 1:54 pm

 c'mon bb you already knew that when you woke up this morning.

May 14, 2010 2:17 pm

Attrition in segment 4's and 5's isn't the issue. Attrition in the 2's and 3's could be devastating. With the new standards being set, it may be enough to cause 2's and 3's to take a longer look at indy etc. Since they are the future 4's and 5's, the question of their retention is very important. So far, what I hear from Weddel is the the guys who've stayed look like they're staying. Big deal.

May 14, 2010 3:18 pm

attrition at ANY segment is bad.