WTF.....Indy vs Jones? Same ol'

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Jun 21, 2005 5:33 pm

Things do remain the same within this forum.  I see that one of you even has decided to remain at Jones (7 yr vet)--while others like me continue to pound the table on going indy.  There are also the hopeless bunch....but this isn't for you.  Please stay where you belong.


Let me clarify a few things for those of you who still wear kool-aid colored glasses:


PAYOUT:  First of all your payout as an indy isn't 90%.  Sure, on your gross it might be 90% on some trades.  You will have ticket charges, errors & ommissions, and office overhead such as rent, staff , supplies, phone etc...The real question that needs to be answered is:  What is your net payout?  What will you be taking home before taxes?  I can tell you it will be between 62-68%.  That is if you have a staffed office and run it similar to what you did at Jones.


Secondly, those of you who speak of 50% payouts at Jones are on cloud nine.  In a high bonus bracket they might exist for a short time.  But you need to be fair and consider the Jones overhead such as 1% net for advertising, half phone book ads, half phone bill and half postage.  Also and non seminar ads you run are 100% at your expense.  It's quite possible that at Jones you might have a 800k gross or better year as I did with no bonus ie. 2002 and have your net/net be about 35%. 


The payout over a long term career assuming you do the same level of business will be about 15-20% higher as an indy on a net/net basis.  So an 800k producer will make about 120k-150k more per year on payout alone in take home pay before any tax advanatges are figured in.  That's about 10k per month at least.


TAX ADVANTAGES;


Often overlooked...butthey are quite signifigant.  No form 2106.  Someone who nets 300k will save 6k just from that alone.  Safe Harbor 401k allows greater deferral and savings.  Putting your spouse on the plan just like you advise your biz owner clients to do only makes it sweeter.  Sure you can do the deferred comp at Jones..but read the fine print...and it's not qualified money. 


LP:


Where I am at I receive stock options.  RJ stock has done about the same over the last fifteen years as LP.  Oh...did I mention that they GIVE THEM TO ME?


OWNERSHIP:


Yes, you own your business.  You can hire other brokers for an override instead of giving assets away in a ridiculous Goodnight program.  You can also have your spouse, son or daughter work inthe office...hell, you can even transition them into the business if you so choose.  And finally, you can sell it if you wish.


If you die, there is no wriiten guarantee that your spouse will even get to keep the LP.  It's up to the acting managing partner.  Furthermore, your book goes back to the firm and your family gets exactly what you likely had the day you opened your office...squat!


When you are independent--it's like going to the next level in your career.  You are treated like an adult by your firm and they view themselves as working for you and your clients. 


PRODUCT & TECHNOLOGY:


I don't think there is any debate here on where the superior choices are.  My only comment is that I have found fee based programs more useful than I first thought.  It is also nice to recieve the same payout on A, B, & C shares so I CAN CHOOSE what is best for my client.


FINALLY:


Jones isn't awful--in fact--it's still an ok place to start as long as you know what getting into.  But please!!!  To compare Jones to indy isn't really fair.  Indy firms are designed to service veteran brokers while the Jones model has become all about recruiting and training newbie's. 


To this day I think too many people do not do enough homework before going indy.  They have too high expectations and are told incorrect or misleading things through people who know little more than they do. 


BTW, I left Jones 18 months ago after a ten year career there.  I was in the top 5% of all Jones IR's and am the same at my new firm.  I'm not claiming to be the expert here...but I must say that I know more than most of you who have posted previously on this subject.  Half the crap you guys say is inaccurate or just plain the wrong.  Where do you get your info?


Zack is back!

Jun 21, 2005 9:29 pm

Those are some nice facts about going Indie.  I have a few firends
who are in your shoes, about the same production and Indy.  They
tell me they enjoy many of the things mentioned, but they are envious
of those of us who come and focus soley on manageing clients affairs,
prospecting, and growing.  They get a little bogged down by the
"running your business" end of things.  Besides that- I just
showed one of my Indy firends the new systems installed at my office
and he could not believe it.  It would not be possible for him to
purchase and maintain such a platform.  A larger producer can hit
around the 47-50% mark, get an expense account, and pay for nothing,
including sales support.  Not bad. 



I think when you add it all up, all things being equal one would make
more money Indy, but there is more to it than that- both for and
against Indy professionals.

Jun 22, 2005 1:35 am

Zacko,


You hit another home run, but there are many other advantages like having your own Corporation and taking a dividend at 15% and not paying other taxes on those funds.....As for the percentages that Bill F-up (Jones GP)has been stating on here about Jones and making over 50% payout is total bull....


As for starting at Jones I agree there was no better place, but once you start hitting some meaningful numbers it's time to wake-up and look around at whats out there.


WELL SAID.................... 

Jun 22, 2005 1:42 am

Player, what happened? Your caps lock is off and the emotions are gone.. Well done. Hate to tell you freind, I have been over 50% for some years now at your beloved firm.

Jun 22, 2005 5:38 am

Guest 1,


Players got his cap lock off and you're still stretching the truth 50% payout ..... since when did your firm paying that amount on trades or are you including your "total" payout?

Jun 22, 2005 10:05 am

Guest1,


Don't count LP...If you count LP--then I can count the money I make on my investments too.  I took home about 160k more lst year than I ever made at Jones.  I invested almost all of it and earned about 10-11% last year.  So, do I count that in and add to payout also?  That's an extra 2% or so if I do....


What about 2001 and 2002?  You might reach 50% in any given year with good bonuses even after you backout all of your overhead.  But, I'm well over 60% every year--and that's not counting tax advantages or "investment returns".  I was slightly above 65% last year on a net/net basis.  I can cut overhead if I choose but I am spending a good bit on advertising. 



BOTTOM LINE:


It's quite nice being in a bonus bracket that is controlled by me rather than by a pool of 4000 brokers who have less than 4 years experience. 


AND, if you look beyond the payout--the overall benefits of being indy far exceed that of being at Jones.  I have great staff people also which makes it all the better. 

Jun 22, 2005 11:37 am

Good call on 2001. lowest year in a while. Only did 758,000 gross total return (minus LP) was 47%. ComplianceJerk, as much as you speak of Edward Jones, I truly don't tink it is based on as much facts as it is emotions. That's ok, you are entitled to your emotions. Just seperate them from fact. Zacko, the only BIG advantage I can see on the INDY side is the tax games you can play. Although, I and my CPA have gotten pretty good on the side as well.

Jun 22, 2005 4:18 pm

 I am with LPL and happy but if LPL gets sold and things change I would go RIA. The heck with the BD's.

Jun 22, 2005 4:23 pm

Guest1,


And you recieved bonuses for all of that year (granted at the end of the year they were very low--but they were still there)  As i recall 2001 started in the 35% BB and worked down through the year to finish at 10-15% by year end.  2002 was worse by far in terms of bonus so your payout was even lower.


I guess you are using a different calculator than I am? 


100k or more still matters to me.  My gross last year was 760,000...so lets compare.  I had 610k in net minus office overhead of 120k...which equal 490k net/net.  That's a 65% net/netpayout. 


You did same gross and net/net of 356k in 2001.  I'm assuming thats after out of pocket expenses, also which you didn't say.


In 2001 being at Jones cost you 130k or so plus or minus a few pennies.


That's over 10k per month.  And, that's without any additional tax benefits which only make a bigger difference.


RUN!! FORREST RUN!!

Jun 22, 2005 10:12 pm
Guest1:

Good call on 2001. lowest year in a while. Only did 758,000 gross total return (minus LP) was 47%. ComplianceJerk, as much as you speak of Edward Jones, I truly don't tink it is based on as much facts as it is emotions. That's ok, you are entitled to your emotions. Just seperate them from fact. Zacko, the only BIG advantage I can see on the INDY side is the tax games you can play. Although, I and my CPA have gotten pretty good on the side as well.


Guest1,


If you are telling the TRUTH, take my 100K bet ?  I say you are a liar, when you said I didn't finsih in the top 10% at Jones my last full year, if you make so much, put it on the line........  

Jun 23, 2005 10:31 am

Shhhhhhhhh.....he's doing the math....quiet please.

Jun 24, 2005 2:08 am
Player:
Guest1:

Good call on 2001. lowest year in a while. Only did 758,000 gross total return (minus LP) was 47%. ComplianceJerk, as much as you speak of Edward Jones, I truly don't tink it is based on as much facts as it is emotions. That's ok, you are entitled to your emotions. Just separate them from fact. Zacko, the only BIG advantage I can see on the INDY side is the tax games you can play. Although, I and my CPA have gotten pretty good on the side as well.


Guest1,


If you are telling the TRUTH, take my 100K bet ?  I say you are a liar, when you said I didn't finish in the top 10% at Jones my last full year, if you make so much, put it on the line........  



Guest1,


What happen to your mouth? 


I will make this very easy for you, 100K check to who's telling the truth.  I said I finished in the top 10% at Edward Jones my last full year there, you say I didn't ?   Winner gets 100K from LIAR


Now, If you really did 758K in 2001 and that was your worst in the last few, then if you are telling the TRUTH, you can pay the 100k from your BONUS, or better yet from your LP or GP earnings, if you are telling the TRUTH?


Now don't run away from this like a little girl...............The PLAYER has this in the bag.............

Jun 24, 2005 7:38 pm

Can't a guy take a few days off around here? Geesh Player, just how do you want to "prove" your greatness on this anonymous board? And your fax number is...

Jun 24, 2005 9:35 pm
Guest1:

Can't a guy take a few days off around here? Geesh Player, just how do you want to "prove" your greatness on this anonymous board? And your fax number is...


Guest1,


Are you willing to take my bet?   Just a Yes or No, I am sure I can figure a way to amke it happen for your 100K....


Let's play.....................

Jun 26, 2005 3:25 pm

Too much ego here....However back to Zacko's initial wisdom...


I'm up here in Chicagoland & Jones has just lost its 2nd top producer in as many months to the "evil independent world."  That makes about 10-15 IR's that have left in this area since February.


Here's my question:  If top producers that have mountains of LP are leaving, what does that say to the rest of the workforce below them?  If they have reached the carrot that everybody else at Jones is striving for, what does that say about the true benefits of LP?


This are smart people that run clean businesses?  The numbers must be compelling. 


Here are some ideas why the numbers are compelling:


GP's split 90% of 217 million in net profit last year alone (Look at the 8k on the sec website for proof).  That money did not come from charity.  Also, who is paying for all the training of the failing brokers at Jones?


What happens if growth slows? Sure the attrition numbers look the same(according to Doug Hill), but losing 1 poor sap IR working from his house is VERY different than losing a $175 million dollar office in Rockford, Illlinois. 


IR's in the firms wheelhouse(seg 3&4) really need to get over the fear & truly look at the Indy world.  Don't believe the company line & do some homeworkon your own.


You can run the same business with 150% of the pay...at least

Jun 26, 2005 4:56 pm

Back in the mid-nineties, several of the major wirehouses were waking-up to the fact that their big hitters were leaving to go indy. So, they set-up separate company divisions to attract big hitters or keep the big hitters under their roof - even if the wirehouse would be getting a smaller slice of their production.


Looks like Edward Jones might have to do the same.

Jun 26, 2005 6:57 pm

This kind of talk about Jones has been around for years.  The way I see it is that Jones caters to a particular demographic, and they seem to serve it well.  Fortunately for them, no one else seems to want to focus on the same demographic, at least not exclusively.

Jun 26, 2005 8:24 pm

Jones needs to change their pay grid or continue to lose seg 3 & 4 guys...you know...the ones that turn a profit.  The arrogance of Jones is the issue and because of the zero bonus bracket from a few years ago, IR's are looking at other options.  I predict that Jones will change the pay grid in the next 12 months or they will be bought out.

Jun 27, 2005 9:33 am

I knew of the Illinois broker who left.  He is truly FREE now!  There are a few more that I know of making plans.  Bottom line is that the math does work out...but there is so much more.


Gotta get back to work in MY office...later.

Jun 27, 2005 9:57 am

Wouldn't it be funny if EDJ was on a month to month lease somewhere in the U.S. and the IR left to go indy and stayed in the same office because he makes a deal with the property ower who he is friends with to take over the space and kicks EDJ out? 


Just a funny thought-