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Feb 24, 2007 2:12 pm

I've seen several FAs from firms other than EDJ make comments about Jones FAs being hamstrung as to the investment options that they make available to their clients.


What are some investments that you guys that were formerly at Jones and are now Indy use?


Feb 24, 2007 5:14 pm

Fee based asset allocation models.


not A shares.

Feb 24, 2007 7:49 pm

Do you former Jones-ers stick with some of the same fund companies you used while you where there, e.g., American, Franklin, Van Kampen, etc.?


Or have you found other families you prefer?

Feb 25, 2007 7:11 am

ETF's and lots of them !



Target Date funds, and lots of them !



With rare exceptions (Junk bonds, International) active management isn't worth the cost. At best manager alpha == expense fee.




Feb 25, 2007 8:50 am

if you do an ETF wrap, do you try for your own alpha (not just buy and hold) to justify YOUR "exp fee"?

Feb 25, 2007 10:44 am
newnew:

if you do an ETF wrap, do you try for your own alpha (not just buy and hold) to justify YOUR "exp fee"?





I had to re-carpet a few rooms in my house and I went to the floor
covering store a few weeks back.  The owner took care of me and
spent about an hour with my wife an I explaining all of the features
and benefits of various types of carpet, texture, and padding. 
This one good for this room, this one bad for that room...etc.  In
the end we took his advice and I could not tell you one single thing he
told me about the carpet.  But I really like the way the rooms
look and feel now.



I am not an indexer, but think about your post.  If you are an
investor, not really knowing, or having the motivation to know, the
real difference between an ETF, and Exchange Fund, Mutual Fund, Hedge
Fund, Open End Fund, Closed End Fund, or Fund of Funds, is there value
in paying a fee to have someone who does understand?  Even if it
is just holding a variety of indexes?  Will these little holdings
achieve the stated goals of the client?  If yes, then they are
just fine...alpha or not.




Feb 25, 2007 11:10 am
AllREIT:

ETF's and lots of them !



Target Date funds, and lots of them !



With rare exceptions (Junk bonds, International) active management isn't worth the cost. At best manager alpha == expense fee.






You do realize that most of those target date fund that you love so much are actively managed, right?

Feb 25, 2007 1:11 pm
joedabrkr:
AllREIT:

ETF's and lots of them !



Target Date funds, and lots of them !



With rare exceptions (Junk bonds, International) active management isn't worth the cost. At best manager alpha == expense fee.






You do realize that most of those target date fund that you love so much are actively managed, right?





At the micro implimentation level, yes many are actively managed, but at the macro allocation level they are passive.



I mostly use them in smaller accounts.


Feb 25, 2007 2:09 pm

Private Equity Reit's, L-Share Annuities, ETF's, Fee Based Asset Allocation, No Load Mutual Funds, Floating Rate Funds, Covered Call Funds, Long/Short funds, Alternative MicroCap strategies, Fidelity stuff, Partnerships with CPA's, Partnerships with Banks, Partnerships with Long Term Care Agents, trading my fees for dental work for my children, FREEDOM!


And yes I still use some of the funds that Jones has on the preferred list...the beauty is I only have to use the one's I like.

Feb 26, 2007 5:17 pm

Ask your regioinal leader about Fidelity Advisor funds - see how the GP's would react if you start using them - Outside of that, cherry pick assets held in wrap - rebalance when portfolio deviates from chosen allocation if we find out about a new fund, we add it in if the shoe fits.

Feb 26, 2007 5:58 pm
Borker Boy:

Do you former Jones-ers stick with some of the same fund companies you used while you where there, e.g., American, Franklin, Van Kampen, etc.?


Or have you found other families you prefer?



I was getting away from American while at Jones, but I still use it a little. It's still 70% of my book right now. My largest two families I use now are Van Kampen (no ticket charges) and Goldman ($11 ticket charge). I've also started using a wrap account with ETFs and funds.


I've actually started looking at using American Fund C shares. Even in the C share, they are mostly UNDER 1.5%.


One other thing, Thursday AND Friday new clients told me that they don't mind paying fees if the performance is there.  So, as for performance, the difference in a wrap, C share, or A shares is usually no more than 1%.  At Jones, it seemed to be drilled into my head that lower annual fees are a must to keep the customer happy, this is not the case.

Feb 26, 2007 6:09 pm

Now_indy,

I find it strange that you would move over to Van Kampen. I also use

American and some Goldman. Do you mind explaining your move to VK?

I do like a few of their funds, but I don't usually use them for a full

portfolio. Usually I use them when I get an ACAT from Primerica (they all

seemed to use Van Kampen), and I just NAV them over into a better mix.

Feb 26, 2007 10:10 pm
now_indy:
Borker Boy:

Do you former Jones-ers stick with some of the same fund companies you used while you where there, e.g., American, Franklin, Van Kampen, etc.?


Or have you found other families you prefer?



I was getting away from American while at Jones, but I still use it a little. It's still 70% of my book right now. My largest two families I use now are Van Kampen (no ticket charges) and Goldman ($11 ticket charge). I've also started using a wrap account with ETFs and funds.


I've actually started looking at using American Fund C shares. Even in the C share, they are mostly UNDER 1.5%.


One other thing, Thursday AND Friday new clients told me that they don't mind paying fees if the performance is there.  So, as for performance, the difference in a wrap, C share, or A shares is usually no more than 1%.  At Jones, it seemed to be drilled into my head that lower annual fees are a must to keep the customer happy, this is not the case.



I am at Jones and use C shares for about 20-25% of my fund business. I use Davis, 1st Eagle,American, FT, little bit of the VK Growth and Income stuff. Performance net of cost is the true value equation in my book.

Feb 27, 2007 9:25 am

Broker24, I didn't really move to VK. They were already my #2 holding when I left Jones. I just moved them up in the rotation so to speak.  I like their sales material and it's hard to beat Equity & Income and Comstock over a long period of time.


My VK three-pack for a long time was:


50% E&I, 25% Comstock, 25% one of their Int'l Funds


I now use Leaders quite a bit for smaller accounts. I'm also starting to use their Premium Income fund (covered calls), and I was using their Real Estate fund until it closed.


I agree that their good growth funds are few and far between, but with Int'l Growth you can still build a decent portfolio. It will be a LONG time before I even say the word Enterprise, much less put it into a client's account.


Oh yeah, this doesn't affect my decision to use them, but they do pay MONTHLY trails. Nice.  (yeah, I know, at Jones, all the preferreds pay monthly trails, not in the indy world).

Mar 2, 2007 10:39 am

I now use up to 500 individual stocks to passively asset-allocate the equity portion and 4-6 fixed/bond ETF's. A lot cheaper than mutual funds, usually better investor return than MFD's or Annuities and the ability to tax-harvest(non-Q) which boosts investor return.


This type of account is only appropriate though for folks who like the transparency and tax-efficiency.

Mar 2, 2007 11:54 am

I must have misunderstood what you meant. Are you really following 500 stocks? Or, are you using a professional money manager (Lord Abbet, etc.) who can pick from 500 stocks, and you just pay them a set asset fee?

Mar 2, 2007 1:12 pm

No, I use baskets of individual stocks objectively selected. Like Small Cap Value is all stocks $1.7B market cap or less (small) and with price/book ratios in the lowest 3rd (value). Then the largest 30 are selected. I don't manage the individual stocks, except to capture losses on the down stocks, typically in the Oct/Nov timeframe. I manage the overall portfolio allocations on a quarterly basis (15% Int'l, 20% Bonds, 25% cash, 40% stocks, for example). I may also add a basket that is broad market based like Russell3000 or MSCI EAFE index as a core holding.


It's basically passive separately managed accounts. That's a real oxymoron...


The custodian is FOLIOfn (www.folioadvisor.com)

Mar 2, 2007 3:07 pm
EDJ to RIA:

It's basically passive separately managed accounts. That's a real oxymoron...


The custodian is FOLIOfn (www.folioadvisor.com)





Nice,



How do you like foliofn's professional services. I beleive Zacks WMG uses them to impliment their strategies.



Personally I would use ETF folios, is it possible to rebalance across
several accounts.  For example if you run a portfolio, over time
small-value tends to  skew the  allocation.

Mar 2, 2007 9:21 pm

EDJtoRIA, by picking stocks like that, I assume you get a few that drop like a rock, but overall it works out.  If this is the case, I have a feeling that some clients would go straight for the bad stocks when looking at a statement, and not even notice the fact that they are doing well overall. Kinda like a parent freaking out at a D, when the kid had a 3.7 GPA overall. Does this happen? If so, how do you deal with it?

Mar 5, 2007 11:17 am

AllREIT and now_indy,


Yes, it works just like a mutual fund. Some winners, some losers, but the winners out-do the losers over time. The difference being I can sell a loser and lock in the tax loss for this year or any year in the future, even if the overall portfolio has a positive year. MFD's and ETF's can't pass on losses. My clients appreciate that and I make sure they know the difference!


As far as FOLIO, I've found their platform to be exactly what I need. I can manage 10,000 accounts as easily as 10. They allow you to build folios of up to 50 stocks, ETF's or MFD's. Then you can build allocations using those folios (Growth, Balanced, Conservative, etc.)


So when you manage your clients you can say "increase the small-cap from 10% to 15% of the total portfolio" and voila, all clients who are 'subscribed' to that folio get changed at the same time. Or you can go into the small cap folio itself and add or remove stocks or change the internal %'s and everyone gets exactly the same.


I haven't seen another platform like it. I really think it's a way to show added value!