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Von Aldo

Edward Jones Advisors Used to Sell Against Fee-Based Plans. Not Anymore

Edward Jones FAs are a no-nonsense lot, who are proud of their simple buy-and-hold strategies. As we wrote back in January 2009, in our story, "Knock, Knock. Who's There? An Elated Jones Advisor" (about how Jones FAs canvass for clients by going door to door), we wrote: "Unlike the Wall Street wirehouses, Edward Jones does not chase the hot dot: It shuns options, commodities, online trading and wrap accounts, giving preference to blue-chip stocks and time-tested mutual funds. Such no-nonsense strategies kept Ed Jones out of the auction-rate securities and sub-prime messes." Well, Edward Jones FAs have about-faced and now are migrating to fee-based managed accounts.

In a conversation recently with Bill Broderick, head of Edward Jones Advisory Solutions, I learned that the managed money program is growing nicely. Advisory Solutions now has about $43.5 billion (about 8 % of client assets); this pales in comparison to, say, Merrill Lynch or other wirehouses. (Fees account for about 59% of wirehouse compensation these days, according to Cogent Research.) But remember: Jones unrolled the program in August of 2008.

Broderick says Jones FAs used to actively "sell against" such programs, calling them too expensive. (See posts from our Advisor Forum, where many Jones FAs groused amongst each other.) Mutual funds and ETFs would do just fine, thank you very much. But now about gathering about $80 million to $90 billion per day, says Broderick.

What changed? Why do so many of Edward Jones 12,000 U.S.-based FAs seem to have done an about face and seem to be welcoming managed accounts? Broderick says it's simple. "We didn't appreciate how much our clients would like it," he says. Of course, many clients still want the tradtional relationship --- individual securities and funds bought and sold with their approval. That said, "almost all" of Jones' FAs have a Series 65 or Series 66 license which allows them to offer comprehensive finanical advise on a fiduciary basis for a fee.

The Advisory Solutions has 38 research models on the shelf and about 200 funds (including index funds and ETFs).

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