Edward Jones Gets Apology from Reg Rep Magazine

The apology is as funny as the pic, hehe. 

 http://registeredrep.com/institutions/edwardjones/finance_apologies_edward_jones/index.html?imw=Y

Jul 1, 2010 12:00 PM, By David A. Geracioti Editor-In-Chief

In our June issue, we wrote a story detailing Ed Jones' new increased production expectations (“Jones Raising Production Expectations,” June 2010). It was, in general, a positive story noting Ed Jones' support in trying to lift the business fortunes of lagging advisors. Alas, we played out the trite theme of Ed Jones' long history, its no-nonsense approach to investing and, well, the firm's “squareness,” is how we put it. Of course, Ed Jones does play to this theme, about how the firm and its employees don't chase the hot dot.

And that's a fine theme. But we here at Registered Rep. erred in our illustration of the story. (See photo at right.) We put a photo of a geeky businessman, wearing an ill-fitting suit, carrying — unaccountably — a red piece of luggage. The guy looks like a rube or some sort of hayseed trying to affect sophistication. We wanted to illustrate the no-nonsense investing philosophy of Ed Jones and its FAs. The image failed. We regret that we chose it; our intent was not to poke fun at Ed Jones FAs. I received a few complaints via email, as did the author of the story. In fact, CEO Jim Weddle (who received nearly 20 complaints from angry FAs) called me and complained — in a polite way — and I agree with him: The photo was a bad choice to illustrate the story. Our apologies to Ed Jones employees.

I don't know...looks pretty right on to me.  I've seen that guy at some regional meetings in 2004. 

They should do a Saturday night live skit, with a bunch of Kool aid drinking clowns.

They apologized because they used a picture of a nerdy guy? Weddle called and was upset? Man up, registered rep.

They forgot the cross on the lapel and the copy of glen bickers latest hanging out of the pocket.

Here is an article on the apology in the New York Times (right before it occured).

Note: just substitue Reg Rep for McChrystal, Jim Weddle for Obama.

“I think it’s clear that the article in which the picture appeared showed poor judgment,” Mr. Obama said after a cabinet meeting. “But I also want to make sure I talk to him directly before I make final judgment.”

What a joke, Weddle barks and reg rep jumps. No wonder they win Reg Rep's best in business every year

You Jonsies should watch the latest season of "Raising Sextuplets" the guy gets hired at Jones and fired for not telling them he was on the show haha. The show the other night had them debating about moving to FL for an open office. Talk about some bad PR that can come out of this. Jones should think about the +/- of that decision!

It is telling though that so many of the brokerages out there are gone or merged and EDJ is still ticking.  I do agree with the cross pin and Glenn Beck reference, one of my reasons for leaving.  I actually had someone on a leadership team tell me once that I was not "Christian Enough"!  Nice...

The photo was astute and good journalism.

The red brief case can be seen as a reference to EJ's former Green, Yellow, and Red categorization for FAs. The system is based on commission performance, with "Red" being below standard.

Reg Rep played the role of the Court Jester. Looks like an advertiser got upset.

Huh interesting. Thanks for posting.

Also, the ill fitting, cheap looking suit was probably a reference to brokers not meeting the firms standards, not a reference to Jones brokers in general.

But apologies are all the rage these days... especially after making a true statement:

White House Spokesman Gibb Apologizes After House Prediction

I'm not sure RR put that much thought into it other than to play to the stereotype of the small town, small time EDJ brokers.  I might go for the idea that the red suitcase was a nod to the green, yellow, red standards that we use. 

I don't remember a pic attached to a RR article other than that one that was clearly meant to, despite what the editor said in his apology, poke a little fun at a group of FAs.  They've written a ton of articles about indy reps, many of whom are former EDJ guys with offices in the same small towns that the "hayseed" EDJ FA inhabits, and they've never put up that kind of cartoonish looking pic. 

While I didn't go to the extent of calling Weddle to complain, I think it was appropriate that he politely remind RR that we do spend a good chunk of change with their magazine and that making fun of us is not in their best interest. 

Spiff, although I agree with you, the question of leaving us alone because we pay for ad space is up for debate.  I guess it comes down to philosophical questions....freedom of press vs. "pay to play".  At many periodicals, they try their best to keep the ad guys separate from the press guys in order to avoid the temptation to play favorites with advertisers.  I also think that much of the image they portrayed comes from the opinions on the Forums.  It seems that many stories seem to quote forum comments.  I think this is pretty poor (and lazy) journalism.  Despite the fact that I work for Jones, I honestly believe that the opinions of Jones on the Forums are slanted against them by many former Jones FA's, and people that know nothing about Jones, other than what they read on the Forums. 

The fact is, the top 50% of the firm (about 5000 FA's) average about $90mm in AUM.  It's the bottom 50% that is the drag on the firm (an average of about $20mm AUM).  The average 15 year veteran has $100mm AUM.  I think the "newbie" recruiting mentality places a drag on the firms financials and image.  I would estimate around 3000 FA's have less than 3-5 years experience.  There is a wild curve of AUM at  our firm, unlike many other firms.  Although I guess it's probably all relative.  For every guy at Merrill with $25mm, there is a guy with $250mm. 

I'm not saying that RR needs to leave us alone.  What I was saying that the story was fine, but the pic wasn't.  I agree with Weddle and the rest of the people who complained about it.  The story would have been just as good, or bad, had the pic been of a guy doorknocking in a proper suit and tie or even just a pic of our home office.  I think they were trying to be cute and cater to the indy crowd around here just a bit too much. 

As to the easy journalism, I agree that using these forums as fodder for your material can be dicey if you want to be taken as a serious reporter.  I don't know if that's Christina's goal or not, but if I were her my journalistic goals would certainly reach beyond RR. 

You can work for RR and be a good reporter.  Using info you derive from Blogs and Forums and not coming to your own independant conclusions is lazy and unprofessional.

Registered Rep by its very nature gives advisors independent information. That is, information independent of the advisors own broker dealer about the industry.  I would have benefitted had I paid closer attention to Reg Rep in my early years.

I believe the more Reg Rep protects and retains their status as an independent voice, the more valuable they'll be to advisors. If they become a mouthpiece for certain firms because those firms are advertisers - and write advertorials about them without labeling them as such - they'll become less relevant.

They have to stay in business too. It's a fine line to walk.

The real question about the picture is what does the upraised hand indicate?

Edward Jones, RBC top J.D. Power investor survey

I wonder if J.D. Power would have had to apologize if they had forgotten to put Edward Jones on top?

[quote=B24]The fact is, the top 50% of the firm (about 5000 FA's) average about $90mm in AUM.  It's the bottom 50% that is the drag on the firm (an average of about $20mm AUM).  The average 15 year veteran has $100mm AUM.  I think the "newbie" recruiting mentality places a drag on the firms financials and image.  I would estimate around 3000 FA's have less than 3-5 years experience.  There is a wild curve of AUM at  our firm, unlike many other firms.  Although I guess it's probably all relative.  For every guy at Merrill with $25mm, there is a guy with $250mm.[/quote]

Being a former financial advisor at Edward Jones, those numbers sound way off-base. When my office had more than $24 million AUM in 2003, my office was ranked in the top 2500 for the firm. I also remember Jim Weddle's 2006 interview with Registered Rep where he said the typical Edward Jones financial advisor had about $44 million AUM:

http://registeredrep.com/mag/finance_keeping_joneses/

Keep in mind that article came out before the massive market downturn of 2008. Using very rough returns for the S&P 500 since that article came out, I would say the AUM for the typical FA is somewhere around $37 million. Based on my experience, that sounds about right -- I know someone who also left EJ recently, and his office was at $23 million AUM and that ranked in the 5,500 to 5,700 range (which is roughly the halfway mark of the number of FAs with the firm).

I was in a region that once produced THREE financial advisors that went to the Managing Partners Conference, and our region didn't come close to roughly half of its FAs having $90 million AUM. Out of the 60-plus branches in our region, I counted no more than six with $100 million or more AUM when I left -- and two of the offices have father-son FAs working in the office and a third office is a husband-wife combination. It's the typical Merrill Lynch financial advisor who has a book of $95 million AUM.

As for the performance standards being raised, Edward Jones had planned that way before it announced them in April. In October 2009, a general partner came to the fall regional and after berating the region for its sales numbers said the performance standards would be going up. The firm needs to be upfront and call it what it truly is -- a massive culling plan to move out a good portion of its Segment 3 and Segment 4 financial advisors (the higher numbers also will take out a larger proportion of its new FAs and Segment 1 and Segment 2 FAs) as part of its ultimate plan to consolidate its smaller offices into larger offices.

While that is understandable that all businesses tend to cut back during tough economic times, Edward Jones' cloak-and-dagger, misleading tactics leave a stench of being ethically challenged. By stringing along its sales force along and telling the public "it doesn't lay off people" (see the Fortune Best Places to Work highlight in its ranking) when it goes through a lot of financial advisor trainees and other FAs, the firm tries too hard to conceal its tactics. 

[quote=Remo Gaggi]

It is telling though that so many of the brokerages out there are gone or merged and EDJ is still ticking.  I do agree with the cross pin and Glenn Beck reference, one of my reasons for leaving.  I actually had someone on a leadership team tell me once that I was not "Christian Enough"!  Nice...

[/quote]

As someone who once worked in the home office and still know some contacts there in St. Louis, I wouldn't be shocked if that changed in the future. A lot of Edward Jones' abrupt changes -- selling its UK division without telling the U.S. sales force and home office without any prior notice, markedly raising its production standards, freezing salaries of home office associates and BOAs -- smell of things a company does in financial straits. I've worked for companies previously that have bought other companies or sold itself, and those are the type of things companies do to get ready for the auction block. 

Keep in mind, in the late '90s Edward Jones considered a merger with the former A.G. Edwards but backed out because it questioned A.G.'s financials. Given the cloak-and-dagger methods of the past few years, it just wouldn't shock me if part of the general partners' "five-year plan" includes a nuclear option.

Najee,

You're a moron.  You really think they can broadcast that their going to sell a piece of the firm before the deal is done? 

 The firm was in financial straits?  Really?  Maybe you had your head in the sand during 2008/2009.  When revenue drops like it did, you cut expenses.  Or take a handout from TARP....

[quote=Najee]

[quote=B24]The fact is, the top 50% of the firm (about 5000 FA's) average about $90mm in AUM.  It's the bottom 50% that is the drag on the firm (an average of about $20mm AUM).  The average 15 year veteran has $100mm AUM.  I think the "newbie" recruiting mentality places a drag on the firms financials and image.  I would estimate around 3000 FA's have less than 3-5 years experience.  There is a wild curve of AUM at  our firm, unlike many other firms.  Although I guess it's probably all relative.  For every guy at Merrill with $25mm, there is a guy with $250mm.[/quote]

Being a former financial advisor at Edward Jones, those numbers sound way off-base. When my office had more than $24 million AUM in 2003, my office was ranked in the top 2500 for the firm. I also remember Jim Weddle's 2006 interview with Registered Rep where he said the typical Edward Jones financial advisor had about $44 million AUM:

[/quote]

For the record, I don't know the exact number.  But simple math tells a lot.  Approximately 45% of our advisors have 3 years or less experience.  That's a fact that was stated by a top GP.  So about 5500 FA's probably have average AUM of less than $10mm (since several thousand are probably only at a few million).  Call it $9mm.  This means that other half (or so) of the FA's account for about $450B of the AUM of the firm.  The number is probably somewhere between 80 and 90mm per FA for the top 1/2.  I'm not saying this is great.  I'm saying there is a huge disparity between the top and the bottom.

I'm not sure where your office is, but another fact is that the majority of top producers are concentrated in certain areas (Midwest/STL areas, Texas, North Carolina, and a few other areas).  We actually have very few big producers in my area, because we only have 5 FA's with more than 15 years.  Our first FA in our state (actually two states) started 18 years ago.  And recruiting was sloooooow back then.  It didn't really pick up in our states until about 10 years ago.  But there are many regions with lots of guys out 15, 20, 25, 30 years.  That's where all the assets are.

And another thing, the $44mm AUM number from Weddle is simply the average AUM based on total firm assets divided by # of advisors.  So if $44mm is the average, and roughly 45% of FA's are less than 3 years in, what does that tell you?  It tells you that the top 50% of the firm has a lot of assets.  But Jones' dilemma is that the FA's that control 85% of the AUM of the firm (the top 50% of FA's) are not growing their assets and production.  THIS IS THE SOLE REASON FOR GROWTH.  Only newbies grow their assets and production.  Why do you think they rolled out Advisory Solutions?  Because it would be good for the clients?

24, I'm slow at times...

 Why do you think they rollded out Advisory Solutions? Do you have reservations about the program?

He means they figured that if they rolled out Advisory Solutions, they could get some of those vets who are sitting on $100MM books, grossing $40K a month to move their assets into Advisory and gross $60K a month.  Good for the clients (I'm a fan of Advisory for more than the gross to me), good for the FA, and ultimately good for Jones.  You take a guy with $50 mil in mutual funds getting a .25% trail and switch just half of that to Advisory and that FA goes from flipping on his lights and making $125K ($50 million @ .25%) a year to making $400K ($25 million @1.35% + $25 Million @ .25%) a year.  He didn't have to grow his assets a single dime, but his cash flow triples.   

At the rate it's growing Advisory will soon become the main source of revenue to EDJ instead of revenue sharing.  That's good for everyone involved too.  It will become an even bigger deal when they eventually roll out a UMA account.  I've heard rumors of later this year or by summer regionals next year on that one.  Still rumors, but that's how we started hearing about Advisory Solutions.     

This idea dovetails into the other conversation going on about Jones and the number of offices per dollars per zip code.  With fee based assets Jones could conceivably lower their $750 million per FA target for opening up a new office.  If you can support one guy at $750MM without fee based business, couldn't you reasonably support an office at $500 million with fee based?