What can Jones improve for top producers?

or Register to post new content in the forum

26 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 23, 2010 12:04 am

Without getting into the differences of being INDY vs. being a Jones rep, I wonder what Jones could adjust to get the top producers to stay?   It seems that a lot of disgruntled people get on here just to complain, but there must be more that stay than leave?

 Is it really just money?  Is attending a couple meetings a year horrible, or is it beneficial for you?  It seems like that would be a simple fix for Jones.  If it was just about money doesn't the LP or even GP opportunity have any traction?

  I read the previous forum on Jones vs. INDY, and I would like to reiterate that I really don't want a repeat of that thread.  Please discuss what Jones should/could/would improve to keep more top producers?

Jun 23, 2010 9:47 am

I don't think that Jones is a bad place for top producers. IMHO it is a worse place for low middle and middle level producers.

However a sliding commission scale would also help some of the top producers. My last point is that I believe trying to "fix" all financial concerns with LP is a bad idea. Limited Partnership is still an investment. It isn't a salary, it isn't a bonus. It is an investment. It has a great track record but so did the market before 2008. My point being that when you use investments (stock options, LP, etc) as the answer to under compensation it is dangerous not matter where you work. Even matching 401K up to 8% would be a better option.

Jun 23, 2010 10:16 am

I think it's a shame that Jones doesn't match our 401k.  It's doesn't even match that much for home office employees.  I've heard the explanation that they do profit sharing instead, but it's not the same.  I'd be interested to see the impact of matching our 401k contributions, even at the paltry HQ level, on the bottom line. 

I agree with your comments about the LP.  I do have to come up with cash to buy in.  Now, if I were a top producer and Jones just handed me $50K in LP in addition to letting me buy whatever offers come along, then that might be enough to keep me interested.  I think it would be fair to say that they'd lose more than $50K in profit if a top producer left and took his $100MM book with him. 

Indy is a much better route for the guy who wants to gross $250K a year and play a lot of golf.  But if you want to make a play for the elusive GP, which IMHO trumps indy, you've gotta become a top producer at Jones and be willing to move to either Tempe or STL.  Good thing for me I already live in the STL area. 

Jun 23, 2010 10:27 am

I believe that the majority of Jones brokers especially top producers (what is that 6-700 GDC?) have been taking in the shorts to sustain this crazy concept of growing at all costs. They clearly need to pay these  people more. Whether it be through higher bonuses, higher payouts etc it really doens't matter. They have been used to better treatment and with the economic downturn, and higher expenses any firm would have to resort to the measures discussed in all the previous threads.

Jones is a better company with Weddle at the helm. (Spiff and B are you reading this?) It would seem to me, that further changes on the expense side seem fairly obvious. Reduce the footprint with redundant offices. Eliminate or at the very least reduce single person offices and support staff. They must get back to the 50%+ net for Top Producers and probably the most imortant give Top Producers a reason to stay as they move to retirement. Don't make them work too long during the transition and pay them for their hard work and dedication to build their practices to where they are.

I have a friend who was adamant that he would never leave Jones and has been there more than 20 years. He told me that MS offered him 3X his trailing 12. 2.1M to move. That's real money. The culture can't match that....

Jun 23, 2010 10:30 am

I can't believe I'm saying this, but Cheese, I agree with everything you just said.  Ugh...I think I just threw up in my mouth a little bit. 

Jun 23, 2010 11:16 am

Cheese - I don't agree with some of what you wrote.

I am more concerned with Weddle at the helm as this firm has moved from one built for the advisor, to one built for the client, to one built for the GP or top producer.

They are moving this way in the form of fees. 95 now to transfer an account. What if a client had two IRAs, two taxables and one trust... That is $500 just to get out. Estate accounts are now $100, T.O.D now cost, Also the retirment fees have risen from 20-30-40...

I think the problem is that the fix to the compensation model is being answered by raising our fees to be more like a traditional wirehouse, however IMO the problem doesn't stem from offices not earning enough. It steems from having a constant flow of new advisors coming in and not earning enough commission to pay for their training or their offices when they get one.

Cut down on people leaving, then you can cut down on the need for mass new advisors to take their spot. Then most of the new advisors are actually building assets instead of finding ways to make more money off the assets that they were left.

I believe the current strategy is short sided and only backed up by using false calculations and achievements. The old GIGO garbage in garbage out. You can make new advisors seem to look like really fast starters if they all take over 15 million from the advisors leaving after getting squeezed by the system for years.

Jun 23, 2010 1:06 pm

The problem with Jones is that while they're trying to become more like a traditional wirehouse, they'll never be able to achieve their goal. Jones needs to have a low payout to pay for the costs associated with taking anyone that can fog a mirror as an advisor. This costs them a ton of money. They need to raise the payout to 80-90% to keep the top producers on board. It's all about the money. No one cares about Ted Jones' farm and how he didn't take the firm public. The top producers stay on board b/c they're afraid to leave. If Jones raises their payout, they won't be able to pay for the costs of hiring new advisors and they'll go broke. They'll always be the WalMart of firms. Great place to start though.

Jun 23, 2010 2:13 pm

A sliding scale on the payout makes sense, pehaps it increses incrementally with segment or gross $?  Maybe with the firm growth there will be more profits available to spread around.  Giving a top producer a LP with no investment is a good idea, or perhaps they have to match the investment to give you some feeling of ownership in the firm. .. Not sure how that works legally. 

I agree they need to improve retention ratios, but haven't they been drilling this to you in meetings?  "No scratch starts", and improving the chances a hire will succeed.  Hopefully there is an endgame.

What I've really floored with at Jones is the teamwork mentality, and that we want each other to succeed.  I think the LP is the only real way to compensate reps for their teamwork.  If you've ever had to work in a shark tank, this makes the quality of life, and the client interaction much more enjoyable at Jones. 

Are we just a few tweaks away from making Jones the ideal place to be for a top producer?  Do big producers ever transfer into Jones?  Perhaps top producers need to speak up more and use their pull before they pack up and go?  Or are most of them pretty content?  There seem to be a lot of seg 5's in my region.

Jun 23, 2010 2:16 pm

[quote=gethardgetraw]

The problem with Jones is that while they're trying to become more like a traditional wirehouse, they'll never be able to achieve their goal. Jones needs to have a low payout to pay for the costs associated with taking anyone that can fog a mirror as an advisor. This costs them a ton of money. They need to raise the payout to 80-90% to keep the top producers on board. It's all about the money. No one cares about Ted Jones' farm and how he didn't take the firm public. The top producers stay on board b/c they're afraid to leave. If Jones raises their payout, they won't be able to pay for the costs of hiring new advisors and they'll go broke. They'll always be the WalMart of firms. Great place to start though.

[/quote]

I'm curious how long you've been in the business?  Are you a top producer or has one shared with you they are scared to leave?  Never met a top producer at any firm that was afraid of making more money. 

Jun 23, 2010 2:24 pm

If they're not afraid of making more money, why are they still at Jones? You literally double your income when you leave. They don't leave Jones b/c they're content with their income at whatever stage they're at in life. They see leaving Jones as just another headache to put up with. You go to work to make money, not friends.

Jun 23, 2010 2:33 pm

When you're making 250k+ per year, why run the risk, expense and hard work of making a move? It's too easy to stay. I think the problem at jones is losing seg 3's. I doubt that they lose many seg 5's.

Jun 23, 2010 2:35 pm

Why not make $500k ?

Jun 23, 2010 2:42 pm

500k is obviously better than making 250k. But, are you willing to risk the sure thing of 250k to get to 500k more quickly? And if you're a seg 5 you've been extolling the virtues of jones to your clients for years. It could be difficult to justify the move. That's why I don't think many seg 5's move. Your question is usually aked by a seg 3 who is considering what direction his future will go in. And I imagine it is a big issue with jones. Seg 3's are the future of the company. If they can't keep a 3, how will they grow. And how many of the 3's are happy to sit on there ass and produce 100k net?

Jun 23, 2010 2:54 pm

[quote=gethardgetraw]

The problem with Jones is that while they're trying to become more like a traditional wirehouse, they'll never be able to achieve their goal. Jones needs to have a low payout to pay for the costs associated with taking anyone that can fog a mirror as an advisor. This costs them a ton of money. They need to raise the payout to 80-90% to keep the top producers on board. It's all about the money. No one cares about Ted Jones' farm and how he didn't take the firm public. The top producers stay on board b/c they're afraid to leave. If Jones raises their payout, they won't be able to pay for the costs of hiring new advisors and they'll go broke. They'll always be the WalMart of firms. Great place to start though.

[/quote]

This point is wrong on many levels; not the least of which is that nobody pays anywheres even CLOSE to that much, and then also pays for

EO; your office; your completely integrated technology; blah, blah, blah. The lowered Jones payout is mostly for the incredible amount of toys they offer and the fact that you completely net that 38.6%. Once you factor in everything they pay for, it's not a terrible deal.

Point of fact is that EDJ pays pretty competitive dollars against other wirehouses at the top end of the scale. Now ... do you NEED Morningstar and a completely integrated system and a back office and a BOA and 1200 square feet of space and and and? No. But don't go off the deep end with wild-a$$ accusations.

Jun 23, 2010 2:59 pm

That's true Navet, you pegged me ;)

Jun 23, 2010 5:27 pm

I think alot of the posts are correct. Most of what everybody says is correct. I can chime in from a different perspective than most of the people posting on this forum that I have been reading for the last 4/5yrs. The real question lies in asking former big producers who no longer prefer EDJ as their employer the question. (In fact EDJ should do exit interviews with those of us who have left to find out why we decided to leave.) Instead EDJ goes into attack mode and spends that initial time trashing the advisor who leaves. Making sure that the region has the right sound bites to answer questions. Giving the replacement advisor the sound bites to convince client assets to stay. I always used to ask "what did EDJ ever do to acquire the client" but with that said I can share with you  why I and 6 others left a few years ago. We got tired of the BS. Jones was built with the idea of being in business for yourself but not by your self. Those of you long in the tooth can remember. Over the last 5 years EDJ is a firm built by the GP's for the Gp's. I can elaborate more but I think its that simple. Stop the BS... and retention will begin to go up. 

Jun 23, 2010 8:47 pm

[quote=gethardgetraw]

The problem with Jones is that while they're trying to become more like a traditional wirehouse, they'll never be able to achieve their goal. Jones needs to have a low payout to pay for the costs associated with taking anyone that can fog a mirror as an advisor. This costs them a ton of money. They need to raise the payout to 80-90% to keep the top producers on board. It's all about the money. No one cares about Ted Jones' farm and how he didn't take the firm public. The top producers stay on board b/c they're afraid to leave. If Jones raises their payout, they won't be able to pay for the costs of hiring new advisors and they'll go broke. They'll always be the WalMart of firms. Great place to start though.

[/quote]

This has got to be the most un-informed comment i have ever heard.  Even the most ardent anti-Jones people on this board know that this is not even remotely feasible, at any captive firm.  So you're telling me that JOnes shoud pay someone that produces $1mm, 800-900K??  Soooo, that leaves 100-200K for BOA pay (average $1mm producer has three assistants), rent, all of the miscellaneous expenses, home-office overhead, and some profit to the firm.  Think about what you say before you say it.  Indy FA's don't even net that much after expenses, dopey.

Jun 24, 2010 9:49 pm

I do believe that the "profit motive" is beginning to come more into focus under Weddle's leadership. EDJ is a business, not a charity. Businesses are "for profit". Run the business to make money, be fair to your clients, offer a competetive service at a competetive price. If I'm in the grocery business, I sell my groceries for a profit, but not at a profit that's outlandish and out of line with my competitors. This is what EDJ is doing. The firm has to put more focus on the "profit motive" or one day it might not be around to compete with the Bank/Wirehouses of the world. There is a lot of change and a lot of consolidation going on in the financial services industry. I believe Weddle is forward looking, and is doing what is necessary to ensure that the firm survives and is healthy in the years to come.

Jun 25, 2010 3:39 am

I agree with the sliding scale.  Also, Spiff's idea of being given LP instead of having to buy it is a great idea.  It's like you've earned your ownership by building a Jones practice.

I fail to see the difference between working at Jones (and making 250k) and going Indy (making 500k).  Why is it so hard to leave?  Provided you have a good relationship with your clients it is easy to leave.  If you have a "business owner" mentality, it's not that risky. 

Sure it seems difficult outside looking in.  But once you are doing it, it is no different than being at a captive firm.  Most advisors want business owners as clients.  I find that business owners respect me a LOT more since I left Jones and started my own firm. 

Now, I'm "in the club". 

But, that wasn't the topic of the thread.  I don't see many top producers leaving Jones.  I think they are few and far between.  By the time you reach Seg 5, "EJ Green" is your bloodtype.

Jun 25, 2010 10:13 am

Advisor238 - I think your answer is very typical of our industry and short sided at best.

Basically your answer stats that everyone else is raising their fees so at Edward Jones we must raise ours to stay competitive.

Really Sir that makes no sense at all. The real answer as far as that is concerned is not based upon competition profitability, it is based upon partner and large producer profitability. I believe if you look into the sliding scale of bonus levels it is very simple to understand that we need to be in a high bonus bracket for our most profitable advisors to earn what they would if they were at WYZ firm.

However, the orginal premise of my firm is to not be sleazy, and we pride ourselves on being a partnership that does not chase short term profitability standards.

That is exactly what Mr. Weddle is comprimising by chasing trimester bonus brackets.

As far as individual advisor profitability. You will never get a good answer as to how profitable an advisor is based on our current system of how profitable a branch is.

If a Seg 4 is making 400K gross per year with 70 million under management and he leaves to go Indy and takes 35 million with him. He is currently 110% of standard.

Our current system replaces him with a NEW to jones, NEW to the business, NEW to the industry individual. If that new advisor takes the 35 million and in the first year grosses 180,000. He is 345% of standard. By the current system this is seen as a move forward and a positive for the firm. However the village idiot could figure out the net loss quickly. Garbage in Garbage out when you talk about profitability and the ways they are measured.