Edward Jones is changing tack a little bit. Long known as a firm that trains greenhorns and career changers from the ground up and then holds onto them (mostly) for life, the firm is getting serious about recruiting financial advisors with experience. Edward Jones brought in 50 such advisors last year and it wants to more than quadruple the number of experienced advisors it recruits each year to 230, at least one for each of the 230 regions where it operates, Jordy Evans, principal at Edward Jones, told Registered Rep.
To qualify as an experienced advisor, or "veteran," he or she must have a minimum of three years experience serving clients, a minimum of $20 million of assets under care that would be portable and a minimum of $150,000 in gross revenues in the prior 12 months. But the average among the 50 veterans the firm hired in 2010 was $300,000 in annual revenues, about $50 million in assets under care and about 13 years of experience.
“We intend to continue growing as a firm and we are not slowing down the recruiting of career changers or people who are unlicensed,” said Evans. “But we want to add experienced FAs who care about their clients and are craving the stability we feel we can offer. We do think it is an exciting time to be recruiting experienced FAs because of what is happening in our industry,” he added.
Edward Jones has been aiming to move its advisor force upstream for some time. Last year, it raised production expectations for its army of 12,700 FAs, which caused a ripple of complaints from advisors. It also crowed about low attrition among its top FAs.
To attract more veterans, the St. Louis-based broker/dealer has brought on new executives, tweaked its recruiting package and streamlined the hiring process. Last June, the firm hired Darin Dunlap away from Smith, Moore & Company to help transform its recruiting program. “We have implemented a lot of quality control in the last year,” said Evans. Early this year, Evans moved into his current position on the recruiting team and the firm hired another 3 recruiters, bringing the total to 6.
It also simplified the recruiting package it offers to veterans. Today, the firm guarantees income equal to at least 40 percent of a new recruits trailing 12 months production for the first three months they are employed at the firm. It also provides an asset bonus of up to $2,000 for every $1 million in assets the advisor transitions during first 6 months of employment. And finally, during their first year at Edward Jones, if they produce 85 percent or more of the revenue they were generating at their prior firm, they will get an additional 40 percent of that revenue, on top of the based 40 percent payout.
In addition, as of Feb. 28, the applications of veteran new hires are processed in a day. These FAs used to have to wait 45 days after applying to work at Edward Jones before they got a formal offer of employment, which was not optimal. That’s because the system was built for FAs with no experience, said Evans.
“Our slogan for our group is ‘more, better, faster,’ says Evans. “We want more experienced financial advisors that care bout serving their clients; we want to have a better transition experience; and we want to achieve our objectives faster than ever before.”
Edward Jones often appeals to guys who want the support of a full-service firm, but prefer the more intimate culture of a small-town outfit like Edward Jones, said Scott Smith of Cerulli Associates. And for Jones, hiring experienced advisors may be a less expensive proposition. “I know a couple of guys who have done this because the wirehouses weren’t really for them,” said Smith. “That small town feel does appeal to some advisors for whom the wirehouses are not really right. And Edwards Jones has a much lower washout rate with these guys because they know what the job entails.”
The firm is having particular success hiring advisors who are heading towards retirement, said Evans. “A lot of FAs in the industry are facing retirement themselves and are faced with the question, ‘Who is going to take care of my clients?’ We have an attractive process. You can come over with no golden handcuffs and we have a succession planning and profit sharing process. It is an ideal situation for someone who is at the end of their career.”