WRAP Business At Jones?

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Jul 5, 2006 6:24 pm


Mr. Hulk (the real one) I think the more interesting topic of debate would be why Jones changed it's position on WRAP accounts. Another Jones IR posted that he thought Weddle would bring about WRAP accounts soon, and that there were rumblings about the possibility. What do you think about that?







As I've said before. I look forward to the day that Jones offers wrap accounts. There are a number of reasons we will. First off, fees. Everyone in the industry has them because it smooths out revenues in the down quarters/years. Second, there are many rumblings within our ranks for them. Third, the argument can be made for the benefits of wrap accounts. Fourth, it is difficult enough to convince a transfer broker to come to EDJ without an upfront check, but near impossible when we tell him he can't move the 50% of his book that is in wrap accounts into them. Who in their right mind would give up that kind of revenue stream? It's a matter of when, not if...and pricing. Will it be 1-3% with discretion to the broker? I don't know.

But what do I know, I'm only 3 months into the business and will be out in 3 more, right Greenbacks?


------------------------------------------------------------ ------


A serious discussion, gentlemen & ladies / Jones & Ex-Jonesers, without any put downs. What do some of the longtime Jonesers think about this idea? What would WRAP accts at Jones look like?  Like the MAP accts?

Jul 5, 2006 6:39 pm

Would someone define the MAP accounts?  All I've heard is that MAP is a fee-based account with a limited number of mediocre mutual funds to choose from...how close is that to the truth?  I've honestly never ran across a local Jones rep using the infamous MAP program...


Also, is MAP limited to just mutual funds?

Jul 5, 2006 6:55 pm

Map is an seperately managed account program. Not the traditional wrap program with mutual funds. Most of the vets feel it is needed but the GP's are so far not in favor publicly. Privately who knows how they feel.

Jul 5, 2006 6:56 pm

MAP is the current Jones version of Managed Money, except the Broker whose account it is does NOT manage the Money, people in STL do.


It hasn't been as popular with the Veterans because the Maintenance of the account still rests with the broker. Further, the payout is extremely low. Client pays a fee based on assets, most are around 1.5% and the broker gets .25%. I understand it has been adjusted as this was the topic of heated debate at the Managing Partners conference two years ago.


The account can be either stocks or Mutual Funds- depends on the client.

Jul 5, 2006 7:22 pm

25 bps seems pretty low.  Does that get cut in the split as well, or does the broker see it all?


Jul 5, 2006 8:21 pm

The MAP program is a separate acct platform for accts 500k and over.  The expenses are usually over 2% and if the IR reduces them it comes out of his/her payout.  The platform has a very limited number of managers, maybe 20 in all.  There are no mutual funds in the MAP acct program.  The way the MAP pitch woman put it to us is that the MAP program is cheaper than mutual funds because the mutual fund expense ratio doesn't include transaction expenses which add about 1% to fund expenses.  She acted like having funds in a fee based acct was a criminal offense.  It would be interesting to see the rhetoric change if Jones ever offers a fund wrap program.

Jul 5, 2006 8:24 pm

It is true that the management is handled by people in St Louis.  This and the Jones Trust Company are the only platforms that have any discretionary trading in them.  What I have heard is that the GPs are afraid to give discretion to IR's so a fund wrap program is unlikely.

Jul 5, 2006 11:44 pm

If that's what it is, no wonder no one uses it...

Jul 6, 2006 10:03 am

Map Programs Fee is about 1.5%-2.5% depending on equity vs fixed income strategy.  of that about .5-.65% goes to the Money manager.  The rest is Gross commision of which you get 40% cut. 


The MOney managers include GOldman Sachs, Lord Abbett, Oak Ridge, Cambiar, Gannett Welsh & Kotler, RNC among others.


Jul 6, 2006 10:43 am

on 500k in MAP, the gross fee to the IR is about 1.25%. good selection of managers and right for some people.  A fund wrap program where we can buy any fund at NAV.  No way we will have discretion and I dont want it anyway.

Jul 6, 2006 10:48 am
success:

No way we will have discretion and I dont want it anyway.


You'd want it if you had to get all these prospectus receipts for your files... 

Jul 9, 2006 5:12 pm
footsoldier:

Map is an seperately managed account program. Not the traditional wrap program with mutual funds. Most of the vets feel it is needed but the GP's are so far not in favor publicly. Privately who knows how they feel.







Not to sound like Put Trader, but how many GP's do you talk with? If they weren't in favor of it, then they/we wouldn't be doing it. This is not a democracy, it's a business. I have never heard a GP publicly "knock" the program. I've heard nothing but positive remarks from few I speak with. I'm happy with it, but I've got only 1 account thus far. Again, why haven't you left yet?

Jul 9, 2006 5:21 pm
munytalks:

MAP is the current Jones version of Managed Money, except the Broker whose account it is does NOT manage the Money, people in STL do.



It hasn't been as popular with the Veterans because the Maintenance of the account still rests with the broker. Further, the payout is extremely low. Client pays a fee based on assets, most are around 1.5% and the broker gets .25%. I understand it has been adjusted as this was the topic of heated debate at the Managing Partners conference two years ago.



The account can be either stocks or Mutual Funds- depends on the client.







You no longer have any credibility regarding Jones current programs. The only thing you said that was correct is that it's our version of managed money. Everything, read that again, everything you said is wrong. Fees are NOT 1.5%, we DON'T get .25%, there can NOT be mutual funds inside the MAP, and it HAS been popular with the vets (not me, because I've got just 3 months in) that I know.

I have another question for you. Who should the maintenance of the account be turned over to? If you aren't managing the clients money or even holding the clients hand, then what the hell do you get paid for?
Jul 9, 2006 5:26 pm
success:

on 500k in MAP, the gross fee to the IR is about 1.25%. good selection of managers and right for some people. A fund wrap program where we can buy any fund at NAV. No way we will have discretion and I dont want it anyway.





You don't necessarily need discretion. "Mr. Client, your Putnam Vista hasn't performed as well as we hoped, I think you should move the money to Van Kampen Enterprise. Is that okay with you?" There are a number of accounts I'd like discretion on.

Jul 9, 2006 6:04 pm
Incredible Hulk:
munytalks:

MAP is the current Jones version of Managed Money, except the Broker whose account it is does NOT manage the Money, people in STL do.



It hasn't been as popular with the Veterans because the Maintenance of the account still rests with the broker. Further, the payout is extremely low. Client pays a fee based on assets, most are around 1.5% and the broker gets .25%. I understand it has been adjusted as this was the topic of heated debate at the Managing Partners conference two years ago.



The account can be either stocks or Mutual Funds- depends on the client.




You no longer have any credibility regarding Jones current programs. The only thing you said that was correct is that it's our version of managed money. Everything, read that again, everything you said is wrong. Fees are NOT 1.5%, we DON'T get .25%, there can NOT be mutual funds inside the MAP, and it HAS been popular with the vets (not me, because I've got just 3 months in) that I know.


I have another question for you. Who should the maintenance of the account be turned over to? If you aren't managing the clients money or even holding the clients hand, then what the hell do you get paid for?


I am sorry this upset you so much. I am not sure why you get so angry, I don't read anything negative in this and I admit I have not been at Jones in a while.


However, in my Region, this program was NOT very popular. And the payout WAS very Low.... please admit they just upped the payout to the broker in the last year?


The Program WAS popular with our RL/GP and I won't upset you further as to why I felt it was popular with him.


Last, as a Jones Broker, when you turn the Management of Money over to associates in St. Louis, but still have to take the multiple phone calls of Maintenance, it is an odd situation. You don't make the trades but are expected to explain the trades-after the fact I might add.


I find it more comfortable to let a client know IN ADVANCE that trades will be made.... and I really feel that I earn what I am paid.

Jul 9, 2006 7:04 pm

Yet most firms really don't like us doing this on our own (using C shs.) and send out switch letters which appear to be some sort of an indictment of our judgement, discussions w/clients, following a discipline, etc, ad infinitum. Do the managers of the firms REALLY think they are smarter than all of us?

Jul 10, 2006 8:21 am
munytalks:

MAP is the current Jones version of Managed Money, except the Broker whose account it is does NOT manage the Money, people in STL do.





To clarify, STL does not manage the money. The accounts are managed by one of several money managers who are independent of EJ. The clients choose their money manager, Of course, we introduced 2 money managers this year who, coincidentally, have revenue sharing arrangements (RSA) with the firm as well.



Discussion:

Can IR's recommend money managers who do not have a RSA? Your answer doesn't matter, the GPs will make a boat load of money either way.



Question:

Would anyone recommend/allow a client to buy a taxable, high yield bond on margin?



Joedog



Jul 10, 2006 9:03 am
joedog:


Question:
Would anyone recommend/allow a client to buy a taxable, high yield bond on margin?



It would be a great idea if interest rates were expected to drop significantly and quickly.


Or it could be a great idea if the bond was convertible and something was expected to happen in the company that would drive the common higher.


Or it could be a great idea if the bonds were trading at a discount and the bonds were candidates for being called early.


No doubt there are more reasons that others will add.

Jul 10, 2006 10:05 am
NASD Newbie:
joedog:


Question:
Would anyone recommend/allow a client to buy a taxable, high yield bond on margin?



It would be a great idea if interest rates were expected to drop significantly and quickly.


Or it could be a great idea if the bond was convertible and something was expected to happen in the company that would drive the common higher.


Or it could be a great idea if the bonds were trading at a discount and the bonds were candidates for being called early.


No doubt there are more reasons that others will add.



OLD DINO,


As my ten year old would say


"thanks Capt. Obvious"

Jul 10, 2006 10:22 am
eddjones654:

"thanks Capt. Obvious"



You know damn well that if I hadn't listed them fools like you would have said absolutely not.


I actually debated answering it to see how many idiots showed up to talk about how wrong it would be, blah, blah, blah.