EDJ Adv Solutions and Chase Strategic Portfolio
Hey all,
Had client walk in today and plop down a printed proposal for a Chase Strategic Portfolio account recommended to him by the friendly advisor at his bank. This may have already been discussed, but this platform is identical in every way to the Edward Jones advisory solutions proposals. Both firms are using the exact same backend software/provider.
The fee was a little higher, 50MM minimum like EDJ just moved to, and the funds were different. As you might expect the majority of funds were JPMorgan.
That’s all. Just thought those at both firms might like to know you’re working with the same thing.
Cheers!
Both bill monthly in arrears? I hadn’t found that in any other fee-based solution. Neither had I found the option to use one of four different pre-selected portfolio’s within a risk-tolerance platform plus an open-ended, advisor-driven platform.
[quote=LockEDJ]Both bill monthly in arrears? I hadn’t found that in any other fee-based solution. Neither had I found the option to use one of four different pre-selected portfolio’s within a risk-tolerance platform plus an open-ended, advisor-driven platform.
[/quote]
I thought most places bill monthly in arrears.
I thought everyone billed in advance
[quote=chief123]I thought everyone billed in advance[/quote]
well, what the hell do I know?
LOL.
Yeah, pretty much everything else I've seen is quarterly in advance (which, by the way, is something we're drilled on at Jones - it's supposed to be one of our competitive advantages [ducks]).I bill in arrears. Quarterly. They also get a detailed statement of what they are paying me and for what.
Was Ron upset that you were stealing his clients?Hey all,
Had client walk in today and plop down a printed proposal for a Chase Strategic Portfolio account recommended to him by the friendly advisor at his bank. This may have already been discussed, but this platform is identical in every way to the Edward Jones advisory solutions proposals. Both firms are using the exact same backend software/provider.
The fee was a little higher, 50MM minimum like EDJ just moved to, and the funds were different. As you might expect the majority of funds were JPMorgan.
That’s all. Just thought those at both firms might like to know you’re working with the same thing.
Cheers!
[quote=wsubob]Hey all,
Had client walk in today and plop down a printed proposal for a Chase Strategic Portfolio account recommended to him by the friendly advisor at his bank. This may have already been discussed, but this platform is identical in every way to the Edward Jones advisory solutions proposals. Both firms are using the exact same backend software/provider.
The fee was a little higher, 50MM minimum like EDJ just moved to, and the funds were different. As you might expect the majority of funds were JPMorgan.
That’s all. Just thought those at both firms might like to know you’re working with the same thing.
Cheers!
I was under the impression that Advisory Solutions was doing fee based “the Jones Way” and that no one else would do it the way that Jones would do it.
In the RIA world, doesn't it have regulatory implications if you bill in advance vs in arrears? And even moreso if you bill more than 6 months in advance? Maybe that was just my state and not the SEC, but if you bill in advance you have extra reporting requirements, etc. Most big firms probably don't care, so they bill in advance and take advantage of holding the money. Smaller RIA firms probably don't care, so they bill in arrears to save the hassle. I could be totally wrong on this...[/quote][quote=Moraen] [quote=LockEDJ]Both bill monthly in arrears? I hadn’t found that in any other fee-based solution. Neither had I found the option to use one of four different pre-selected portfolio’s within a risk-tolerance platform plus an open-ended, advisor-driven platform.
[/quote]
I thought most places bill monthly in arrears.
You are correct about the regulatory implications. And what you say makes sense about the bigger firms holding onto the money.
Using the same proposal software doesn't equal doing it the same way as someone else. 10 years ago, had someone even thought about something like Advisory Solutions, Jones would have spent more time writing the programming themselves and delayed the implementation for a long time. Today, they buy software and customize it. I have yet to find anyone that bills monthly in arrears. Of course I've never tried to steal any of Moraen's clients...yet. You corner a Jones GP about Advisory and ask what really makes it different than anyone else and they'll always default to the billing and maybe the rebalancing. I've never been able to get a good answer from anyone how that works other places. So, I just choose not to tell people that it's an incredibly unique process. It's a better process than what I can do on my own, but certainly not incredibly unique.I was under the impression that Advisory Solutions was doing fee based “the Jones Way” and that no one else would do it the way that Jones would do it.
We use PNC Financial for our wrap program, just like plenty of other institutions. Now, our “wrap” program is not too much unlike other “wrap” programs. Many people at Jones get this confused with the other managed money programs at other firms. Yes, we bill in arrears (plenty of others do this), yes, we re-balance dynamically (plenty of others do this), and yes, we have a very good process for evaluating funds for the program (and again, plenty of others do this).
It is a nice "total" package of features, but is not as unique as Jones likes to tell us.[quote=Spaceman Spiff]
I have yet to find anyone that bills monthly in arrears. Of course I've never tried to steal any of Moraen's clients...yet. [/quote]
Well, get on it. I still have some accounts under $50k that need to go!
You send me the names, and I’ll warm up the ACAT machine! We’ll call it a Goodknight from afar.
[quote=Moraen] [quote=Spaceman Spiff]
I have yet to find anyone that bills monthly in arrears. Of course I've never tried to steal any of Moraen's clients...yet. [/quote]
Well, get on it. I still have some accounts under $50k that need to go!
[/quote] I got dibs on all the CD buyers!
In the RIA world, doesn't it have regulatory implications if you bill in advance vs in arrears? And even moreso if you bill more than 6 months in advance? Maybe that was just my state and not the SEC, but if you bill in advance you have extra reporting requirements, etc. Most big firms probably don't care, so they bill in advance and take advantage of holding the money. Smaller RIA firms probably don't care, so they bill in arrears to save the hassle. I could be totally wrong on this...[/quote][quote=iceco1d][quote=Moraen] [quote=LockEDJ]Both bill monthly in arrears? I hadn’t found that in any other fee-based solution. Neither had I found the option to use one of four different pre-selected portfolio’s within a risk-tolerance platform plus an open-ended, advisor-driven platform.
[/quote]
I thought most places bill monthly in arrears.
You are correct about the regulatory implications. And what you say makes sense about the bigger firms holding onto the money.
[/quote] Its not when you bill, but what you bill for that has the regulatory Implications. When Filling form ADV the RIA has to select what they are charging a fee for. Most firms charge up front so they have the money to use towards operations.
In the RIA world, doesn't it have regulatory implications if you bill in advance vs in arrears? And even moreso if you bill more than 6 months in advance? Maybe that was just my state and not the SEC, but if you bill in advance you have extra reporting requirements, etc. Most big firms probably don't care, so they bill in advance and take advantage of holding the money. Smaller RIA firms probably don't care, so they bill in arrears to save the hassle. I could be totally wrong on this...[/quote][quote=Moraen] [quote=iceco1d][quote=Moraen] [quote=LockEDJ]Both bill monthly in arrears? I hadn’t found that in any other fee-based solution. Neither had I found the option to use one of four different pre-selected portfolio’s within a risk-tolerance platform plus an open-ended, advisor-driven platform.
[/quote]
I thought most places bill monthly in arrears.
You are correct about the regulatory implications. And what you say makes sense about the bigger firms holding onto the money.
[/quote] Its not when you bill, but what you bill for that has the regulatory Implications. When Filling form ADV the RIA has to select what they are charging a fee for. Most firms charge up front so they have the money to use towards operations.[/quote]
There is a place on the ADV. If you are billing in advance, you cannot bill more than 6 months in advance if it will be more than $500.
You can bill six months in advance over $500. Just in doing so you are required to send an accounted balance sheet to the State Securities Administrator for review.
1: Noggin. Every time I start to forget you are an idiot you set me straight.
2: B24. Don't want to pick a fight here but you keep referring to our "wrap" program. Am I sensing you are getting bitter with Jones or do you have a "different" definiton of "wrap"? 3: I hear lots of complaints about many different advisory programs on this site. Most of them revolve around not being able to select securities or do the rebalancing yourself. I cannot even imagine having a decent amount of dollars or accounts in an advisory program and having enough time to do this yourself. Frankly, I am starting to have problems timeblocking the required annual reviews much less monkeying with allocations.You can bill six months in advance over $500. Just in doing so you are required to send an accounted balance sheet to the State Securities Administrator for review.
my bad
[quote=ytrewq] 1: Noggin. Every time I start to forget you are an idiot you set me straight.
2: B24. Don’t want to pick a fight here but you keep referring to our “wrap” program. Am I sensing you are getting bitter with Jones or do you have a “different” definiton of “wrap”?
3: I hear lots of complaints about many different advisory programs on this site. Most of them revolve around not being able to select securities or do the rebalancing yourself. I cannot even imagine having a decent amount of dollars or accounts in an advisory program and having enough time to do this yourself. Frankly, I am starting to have problems timeblocking the required annual reviews much less monkeying with allocations.[/quote]
No, I actually think the program is pretty good. But it pretty much fits the textbook definition of what the rest of the industry calls a mutual fund wrap program (as opposed to an SMA, a UMA, etc.). Case in point, PNC Financial, who is the back office provider for our program, lists it as their mutual fund wrap program. I don’t think “wrap” is such a bad word, it just describes what the program is (outside our Jones bubble).
My only two challenges with the program are the investment theory (I don’t necessarily like style-box investing) and the lack of flexibility. I prefer more of a core-satellite approach. I would also like to be able to use “global allocation”-type funds (i.e. First Eagle Global, Capital Income Builder, Blackrock Global, IVY Asset Strategy, etc.). And I wish there were more flexibility with allocations. For example, because certain investments fall under Jones’ definition of “aggressive”, you can only use them with a more aggressive portfolio. That might be talking in circles, but commodities are a good example. I don’t want to argue the merits of that asset class, but if I want to allocate 5% to that class, and 5% to small cap growth, I can’t in certain allocations. I just find myself getting hamstrung sometimes. I realize some advisors (as you mentioned above) don’t want to be bothered with certain aspects of investment management, but there are others that place more emphasis on it. Either way, Jones is seriously limiting our flexibility within the program. Despite that, I honestly think it’s a good program for what it intends to accomplish. It has a lot of good features, and will prevent FA’s from getting lazy (well they can still be lazy, but the rebalancing and required reviews are there).
One other thing, ytrewq…I know you take issue with what some people say about investment management at Jones, but I know some huge producers that do primarily SMA business, and then others that make 50 calls a day and sell strictly individual stocks and bonds (which I would personally HATE doing). Remember, Jones preaches that you can run whatever type of business you want…
B24 In the Jones Advisory model can you have funds, ETF's and SMA's in one wrap account?One other thing, ytrewq…I know you take issue with what some people say about investment management at Jones, but I know some huge producers that do primarily SMA business, and then others that make 50 calls a day and sell strictly individual stocks and bonds (which I would personally HATE doing). Remember, Jones preaches that you can run whatever type of business you want…
I am not sure exactly what you mean by "I take issue..people say about investment management at Jones". I am not disagreeing, I just am not sure what you mean. I generally agree with you. Jones says (I think using the word PREACHES is a bit inflammatory but ok) do what you want as long as it is legal, ethical and profitable. In theory, more flexibility is good. In practice many FAs fail because they are "optimizing portfolios" instead of building their business. Also, and I am sure you would agree, the vast majority of FAs would cause more harm than good. As much as FAs are egomaniacs it is unlikely they are "better" than a dedicated team of analysts. On a final note. As you are probably aware, AS is going to continue to evolve. More options, more models, more FA control, and over time a UMA platform. That is if I understand the definition of a UMA. All I wanted for Christmas was a 2010 that was better than 2009. In hindsight, 2009 turned out to be a pretty darn good year.One other thing, ytrewq…I know you take issue with what some people say about investment management at Jones, but I know some huge producers that do primarily SMA business, and then others that make 50 calls a day and sell strictly individual stocks and bonds (which I would personally HATE doing). Remember, Jones preaches that you can run whatever type of business you want…
B24 In the Jones Advisory model can you have funds, ETF's and SMA's in one wrap account?[/quote] No, we have a separate SMA platform. But you can use ETFs and funds in our Advisory model.[quote=B24]One other thing, ytrewq…I know you take issue with what some people say about investment management at Jones, but I know some huge producers that do primarily SMA business, and then others that make 50 calls a day and sell strictly individual stocks and bonds (which I would personally HATE doing). Remember, Jones preaches that you can run whatever type of business you want…
I am not sure exactly what you mean by "I take issue..people say about investment management at Jones". I am not disagreeing, I just am not sure what you mean. I generally agree with you. Jones says (I think using the word PREACHES is a bit inflammatory but ok) do what you want as long as it is legal, ethical and profitable. In theory, more flexibility is good. In practice many FAs fail because they are "optimizing portfolios" instead of building their business. Also, and I am sure you would agree, the vast majority of FAs would cause more harm than good. As much as FAs are egomaniacs it is unlikely they are "better" than a dedicated team of analysts. On a final note. As you are probably aware, AS is going to continue to evolve. More options, more models, more FA control, and over time a UMA platform. That is if I understand the definition of a UMA. All I wanted for Christmas was a 2010 that was better than 2009. In hindsight, 2009 turned out to be a pretty darn good year.[/quote] Y, I agree with you. Most FA's at Jones are not really qualified to run their own portfolios. However, let's not forget that probably 95% of the assets are NOT in managed accounts, and are left to the discretion of the FA (and client). I have seen some pretty bonehead A share/stock/bond portfolios at Jones offices. I think it would be wise to have to "graduate" into using certain programs (like is required at some other firms). Jones does a good job of ferreting out good funds, I just don't necessarily agree with the style-box, buy-and-hold through anything strategy they employ. In fact, some of my worst performing portfolios the past 3 years are my classic American Funds portfolios. My best are my multi-family C share portfolios. Now, I am not claiming to be an analyst, but a lot of what I do is common sense. Do you know how many FA's at Jones thought Bond Fund of America was a good core bond fund? Most of them don't know the difference between corporate bonds and govies. And Apparently Jones didn't either. So what happened? Bond Fund was one of the worst performing bond funds in the entire category, Jones then removes it AFTER they meltdown, and then American Funds changes strategy and makes it a more Treasury-focused fund! Just in time for the Treasury Bubble!!! WTF?! I am just happy I pay attention to what's going on around me, and don't trust Jones implicitly.[quote=B24]One other thing, ytrewq…I know you take issue with what some people say about investment management at Jones, but I know some huge producers that do primarily SMA business, and then others that make 50 calls a day and sell strictly individual stocks and bonds (which I would personally HATE doing). Remember, Jones preaches that you can run whatever type of business you want…
[quote=ytrewq]1: Noggin. Every time I start to forget you are an idiot you set me straight.
2: B24. Don't want to pick a fight here but you keep referring to our "wrap" program. Am I sensing you are getting bitter with Jones or do you have a "different" definiton of "wrap"? 3: I hear lots of complaints about many different advisory programs on this site. Most of them revolve around not being able to select securities or do the rebalancing yourself. I cannot even imagine having a decent amount of dollars or accounts in an advisory program and having enough time to do this yourself. Frankly, I am starting to have problems timeblocking the required annual reviews much less monkeying with allocations.[/quote] Coming from you I will take that as a compliment..... Everytime I see one of your posts, I am reminded of the culture that I left behind. It is the culture that says our way is right without even discussing what the other ways are......Would you mind amplifying this?… In practice many FAs fail because they are “optimizing portfolios” instead of building their business. …
YTREWQ is correct that AS is going to evolve. I was at a meeting recently that included the GP in charge of AS. He said they're already talking about a UMA type of program. He didn't give us a time frame for implementation, but I can't help but think that with the success of AS, that they aren't seriously looking at being able to put even more investments under the fee based umbrella. And doing it as quickly as possible. I would imagine in the next 4-5 years we'll have the ability to run a fee based account that includes pretty much everything we can sell. The only hesitation the GP had was when someone asked him about indidvidual bonds.
Would you mind amplifying this? [/quote] I think what he means is that too many new FAs spend a ton of time worrying about which funds to buy, or whether UITs are better than funds, or whether 15% or 20% international is the optimum amount of international exposure. They spend hours "designing" a portfolio for a prospect. And they customize it for every single new prospect. I've been guilty of that, so I know what he's talking about. I would spend hours on a $100k portfolio to get it just right before I showed it to a prospect. Those were hours I should have been spending creating new relationships or fostering existing ones. Instead I was staring at my computer.[quote=ytrewq]… In practice many FAs fail because they are “optimizing portfolios” instead of building their business. …
like we are right now
Haha. I like that one better than HIS collection.
Would you mind amplifying this? [/quote] In practice many FAs fail because they are "optimizing portfolios" instead of building their business There. It is now amplified. In all serious, did you mean explain what I meant or stress it even more? serious=seriousness. B24. I wholeheartedly agree with the ABNDX example. I search for the positive. Jones took a position this time. Late but atleast they took a position. Times they are a changing. Noggin, my dig was meant with nothing but love. I am a changed man. Well, not that changed.[quote=ytrewq]… In practice many FAs fail because they are “optimizing portfolios” instead of building their business. …
ytrewq is NOT a new man! He is sooooooo mean!
Hey, my time at Jones was limited. But the time I did spend there, they made horrible investment decisions. It is possible that I’m only remembering the bad stuff, but I seriously can’t think of a single good call Alan & Co. made.
OK Moraen. You gotta make me call you out too? I am trying so hard to play well with others in this new year. Jones made "horrible" investment decisions? Asking my first (and ex) wife to marry me was a horrible decision. Not bad or misguided. Horrible. Jones has made some bad decisions but not "horrible". Atleast not compared to my "horrible" decisions. To change the topic a small bit, I would like to become much more of an Advisor and less of a Broker. I would really like to know about the Advisory business's FAs here have built. How large they are, how they built it, and how long it took. Moraen, as an RIA (or IAR), how big is your fee based book and how did you build it? I understand if you (or anyone else) doesn't want to post actual numbers but I would like to hear your best ideas and steal them. Maybe a seperate thread were we all played Rodney King and got along?ytrewq is NOT a new man! He is sooooooo mean!
Hey, my time at Jones was limited. But the time I did spend there, they made horrible investment decisions. It is possible that I’m only remembering the bad stuff, but I seriously can’t think of a single good call Alan & Co. made.
OK Moraen. You gotta make me call you out too? I am trying so hard to play well with others in this new year. Jones made "horrible" investment decisions? Asking my first (and ex) wife to marry me was a horrible decision. Not bad or misguided. Horrible. Jones has made some bad decisions but not "horrible". Atleast not compared to my "horrible" decisions. To change the topic a small bit, I would like to become much more of an Advisor and less of a Broker. I would really like to know about the Advisory business's FAs here have built. How large they are, how they built it, and how long it took. Moraen, as an RIA (or IAR), how big is your fee based book and how did you build it? I understand if you (or anyone else) doesn't want to post actual numbers but I would like to hear your best ideas and steal them. Maybe a seperate thread were we all played Rodney King and got along? [/quote][quote=Moraen]ytrewq is NOT a new man! He is sooooooo mean!
Hey, my time at Jones was limited. But the time I did spend there, they made horrible investment decisions. It is possible that I’m only remembering the bad stuff, but I seriously can’t think of a single good call Alan & Co. made.
Telling people to hang on to Lehman brother's bonds three days before they go bankrupt because they "absolutely have no liquidity issues, no matter what you stupid FA's think" (Mario DeRose at a meeting of my region) was pretty horrible. The rest were probably misguided I will concede.
I'll PM you my actual AUM, versus firm AUM and then also my cut. I've also been working some different things going on that are not necessarily "typical" financial advising stuff. I'll key you in on that too in a PM.
He called us stupid? Them thars fightin’ words. I thought you were long gone from Jones by the time Lehman went under? PM in a bit.
This is something I just don't understand. Jones isn't trying to make "calls" on the market. It is obvious before you even arrive in St. Louis that Jones isn't trying to train you to make "calls" on the market. They clearly preach a long term investment philosophy. You actually think they are going to send out a wire, "ALL FA's WHO HAVE LEHMAN BONDS IN THEIR BOOK MUST SELL THEM AT THE MARKET PRICE TODAY, THESE THINGS ARE GOING TO ZERO." Come on. That is a ridiculous expectation for any firm. Any advisor or firm who thinks they can consistently get in front of events like that is lying to themselves and their clients.ytrewq is NOT a new man! He is sooooooo mean!
Hey, my time at Jones was limited. But the time I did spend there, they made horrible investment decisions. It is possible that I’m only remembering the bad stuff, but I seriously can’t think of a single good call Alan & Co. made.
This is something I just don't understand. Jones isn't trying to make "calls" on the market. It is obvious before you even arrive in St. Louis that Jones isn't trying to train you to make "calls" on the market. They clearly preach a long term investment philosophy. You actually think they are going to send out a wire, "ALL FA's WHO HAVE LEHMAN BONDS IN THEIR BOOK MUST SELL THEM AT THE MARKET PRICE TODAY, THESE THINGS ARE GOING TO ZERO." Come on. That is a ridiculous expectation for any firm. Any advisor or firm who thinks they can consistently get in front of events like that is lying to themselves and their clients.[quote=Moraen]ytrewq is NOT a new man! He is sooooooo mean!
Hey, my time at Jones was limited. But the time I did spend there, they made horrible investment decisions. It is possible that I’m only remembering the bad stuff, but I seriously can’t think of a single good call Alan & Co. made.
When FAs are genuinely concerned and ask a direct question, they don't expect a lie. I never could stomach my commanders lying in the military and I don't expect it now.
I guess that's why I'm on my own.
No, I haven't been gone from Jones long. Long enough that most of the bitterness of my unique experience has faded (talk about a peace offering!).
I actually left the next week (haha!). The exit had been a year in the making.
Ron - I do realize that if Jones sent out wires like that it could potentially move the market. But you expect our fixed income expert to have a little more insight. But now I'm my own fixed income expert, and have no one to blame but myself when things go wrong
[/quote]
So you think he knew Lehman was going under and lied to your face ? Why would he do that ? Or is it possible that he missed it like many other bond analysts ? Every damn mutual fund in the world owned BofA and Citi, should you never use their funds again ?
There are times I love to rip Jones also, dont get me wrong. I just think this shot is misdirected and unfair.[quote=Ron 14]So you think he knew Lehman was going under and lied to your face ? Why would he do that ? Or is it possible that he missed it like many other bond analysts ? Every damn mutual fund in the world owned BofA and Citi, should you never use their funds again ?
There are times I love to rip Jones also, dont get me wrong. I just think this shot is misdirected and unfair. [/quote]I sold out of all of my financial stock positions before they began to lose too much.
Lehman should have been fairly obvious to anybody looking at their books. There was no confidence in them. They couldn't make their debt payments. It should have come as no surprise to anybody who watches the markets.
Or here's a better one. A company with $19 billion in cash at the time, been around for well past the 20 year mark, YOY increased profits, and they place a buy recommendation on it after it has appreciated 500%. Not a horrible call, but not a smart one. Especially when you tell one of your FAs that "you better get the client to sign an acknowledgement letter before yous sell them a stock like that again".
And no, I will not use actively managed mutual funds EVER AGAIN.
Well if you were able to sell out of all of your financials before they lost and you were absolutely confident in their decline a few strategic put purchases would have made you a few 100k. If you have this type of consistent ability you don’t need to advise clients on anything, you can trade for yourself for more money and less hassle.
I should probably clarify what I said earlier, as it sort of started a little battle…I did not suggest that Jones was making “bad calls”, so to speak. What I meant was, I don’t want to have to live by all of their decisions, a good example being their asset allocation methodology. I believe they are too aggressive (yes, you heard me right). I do not believe a 55 year-old with a moderate risk tolerance should be balanced towards growth. I have a specific methodology for how I allocate investments for those approaching retirement, and I am FAR more conservative than Jones. However, I have to “jockey” the system (lie, for all intents and purposes), in order to get a more conservative allocation in Advisory Solutions. Usually it involves scaling down the client’s risk tolerance (clients don’t know their risk tolerance anyway, but that’s another discussion).
I realize Jones follows the standard FPA process for allocations, risk tolerance, etc. which is great for protecting their liability, but I believe there are situations to dial back the risk, and they are just so pro-equity all the time, that I have a hard time with it.
Yeah this discussion is about to turn into a predicting vs planning argument and I have no interest in participating in that.
[quote=Ron 14]Well if you were able to sell out of all of your financials before they lost and you were absolutely confident in their decline a few strategic put purchases would have made you a few 100k. If you have this type of consistent ability you don’t need to advise clients on anything, you can trade for yourself for more money and less hassle. [/quote]
No. Lost a little bit. Got back in on the way up. Not precise, but really all you need to do is look at the financial statements. It is certainly better than hanging on until the stock reaches $7 a share and then putting a sell on it. That is irresponsible and why people are so fed up with our industry. This recession created huge opportunities. I’m sorry, but sometimes the talking heads are right, probably because they read the statements.
I don’t “predict” anything. I adjust my models based on any new information. I have certain criteria for valuation. DeRose SHOULD have known better.
EDIT: Feel free to get back on topic. Ron and I have had this out too many times. It just makes him not like me.
Personally, I think AS is a good program, and will be extremely helpful to Jones clients as it continues to evolve. I think it is a tremendous asset gathering tool, if used correctly.
I don’t know anything about the Chase Strategic Portfolio, but if they are similar, then it’s also a good program.
[quote=B24]I should probably clarify what I said earlier, as it sort of started a little battle…I did not suggest that Jones was making “bad calls”, so to speak. What I meant was, I don’t want to have to live by all of their decisions, a good example being their asset allocation methodology. I believe they are too aggressive (yes, you heard me right). I do not believe a 55 year-old with a moderate risk tolerance should be balanced towards growth. I have a specific methodology for how I allocate investments for those approaching retirement, and I am FAR more conservative than Jones. However, I have to “jockey” the system (lie, for all intents and purposes), in order to get a more conservative allocation in Advisory Solutions. Usually it involves scaling down the client’s risk tolerance (clients don’t know their risk tolerance anyway, but that’s another discussion).
I realize Jones follows the standard FPA process for allocations, risk tolerance, etc. which is great for protecting their liability, but I believe there are situations to dial back the risk, and they are just so pro-equity all the time, that I have a hard time with it.[/quote]
I’m glad someone said this. They have a ridiculous equity bias, I can’t tell you how many times I have explained to clients that we are reducing our risk profile even though it seems to be OK with EDJ’s IPC.
That is my criticism of ADSOL too. If I don’t want a bunch of equity funds and ETF’s in a portfolio, I shouldn’t have to have them just because that’s what the “model” suggests. Not to mention, it seems they pay no attention to the sector weighting in their recommended portfolios. Many of the funds in those portfolios are heavily weighted in financials, which makes me a bit uncomfortable.
[quote=SometimesNowhere]
[quote=B24]I should probably clarify what I said earlier, as it sort of started a little battle…I did not suggest that Jones was making “bad calls”, so to speak. What I meant was, I don’t want to have to live by all of their decisions, a good example being their asset allocation methodology. I believe they are too aggressive (yes, you heard me right). I do not believe a 55 year-old with a moderate risk tolerance should be balanced towards growth. I have a specific methodology for how I allocate investments for those approaching retirement, and I am FAR more conservative than Jones. However, I have to “jockey” the system (lie, for all intents and purposes), in order to get a more conservative allocation in Advisory Solutions. Usually it involves scaling down the client’s risk tolerance (clients don’t know their risk tolerance anyway, but that’s another discussion).
I realize Jones follows the standard FPA process for allocations, risk tolerance, etc. which is great for protecting their liability, but I believe there are situations to dial back the risk, and they are just so pro-equity all the time, that I have a hard time with it.[/quote]I’m glad someone said this. They have a ridiculous equity bias, I can’t tell you how many times I have explained to clients that we are reducing our risk profile even though it seems to be OK with EDJ’s IPC. That is my criticism of ADSOL too. If I don’t want a bunch of equity funds and ETF’s in a portfolio, I shouldn’t have to have them just because that’s what the “model” suggests. Not to mention, it seems they pay no attention to the sector weighting in their recommended portfolios. Many of the funds in those portfolios are heavily weighted in financials, which makes me a bit uncomfortable.[/quote]
B24 it is funny that you say this. I transferred in a fairly large account just 2 days ago and after running his “Risk Tolorance” through Jones system, he came out balanced toward growth. I was thinking, 55, wanting to retire in 2 years…Are you serious?
Totally agree - too much equity-- but that is how they make the most upfront with all those Ashares over the years- and now it is just ingrained in the culture to be pro equities (but never any talk about how risk can be lowered thru the use of the lowest equity-correlated assets: commodities and treasuries (Hard to make a buck on treasuries in a proAshare enviro-----but ABNDX is not diversification!!!).
Newnew,
Honestly, as much as I disagree with them, I don't believe it has to do with A-share breakpoints. I think they honestly believe in equities long-term. Not that they are wrong, because they also have a long-term approach to investing, but most investors' time horizons are much shorter than their lives. A lot of firms/individuals have this philosophy: over the long-term, equities outperform. That's fine, but the problem lies in the fact that you can't always "hold on" during bear markets. Many people are forced to liquidate at depressed levels du to spending needs, and dialing back from a 5% to a 4% withdrawal will do nothing to make up the shortfall. Jones sort of looks at investments as one big bucket. Or maybe they don't, and we just interpret them that way. Either way, clients should only be invested in equities for their LONG term holdings (IMHO, 7-10 years or more). Everything shorter should be in bonds/cash/fixed products. I take sort of the "bucket" approach. I just have a hard time believing Jones has an equity biased due to the commission structure.[quote=B24]Newnew,
Honestly, as much as I disagree with them, I don't believe it has to do with A-share breakpoints. I think they honestly believe in equities long-term. Not that they are wrong, because they also have a long-term approach to investing, but most investors' time horizons are much shorter than their lives. A lot of firms/individuals have this philosophy: over the long-term, equities outperform. That's fine, but the problem lies in the fact that you can't always "hold on" during bear markets. Many people are forced to liquidate at depressed levels du to spending needs, and dialing back from a 5% to a 4% withdrawal will do nothing to make up the shortfall. Jones sort of looks at investments as one big bucket. Or maybe they don't, and we just interpret them that way. Either way, clients should only be invested in equities for their LONG term holdings (IMHO, 7-10 years or more). Everything shorter should be in bonds/cash/fixed products. I take sort of the "bucket" approach. I just have a hard time believing Jones has an equity biased due to the commission structure.[/quote] One of my wholesalers that calls on me gave me a book titled "Buckets of Money" by Raymond Lucia, CFP...It goes over the philosophy of separating out your investments. Interesting not exactly deep, easy read. It makes it easier to explain to clients so that they understand.Yeah, I’ve read it. It’s good. I used to do something similar to what he recommends, but after reading the book, it made it much easier to illustrate to clients. He also gets a lot of press in things like Money, MSN Finance, Yahoo Finance, etc., so people have commented before that they “read something just like that”. For whatever reason, people like to see “experts” (even when they may just be finance columnists) confirming what they are doing.
OK. But 2008 showed how much “TRUE” AAA is needed in a port- and it just does not pay well, and is not emphasized at all. All the training is on “bonds” with no differentiation other that two bars on the bar graph: Highyield and Income. That’s it.
Newnew,
I would suggest you do a little reading on Joneslink. They actually offer a lot of guidance on fixed income and overall asset allocation. You just have to take the time to find it. Despite what I believe to be some faults at Jones, there is also plenty of Jones "lore" out there that is simply not true. One good example is duration/maturity of bonds. I can't tell you how many times people whine about Jones trumpeting "long-bonds", yet if you look at their IPAC recommendations, it clearly suggests 60-80% in short and intermediate-term bonds, with 20-40% in long (16+ year). It also talks about # of issues and mix of type/industry. I honestly believe if FA's actually followed IPAC recommendations, they would probably be OK (versus listening to some veterans and "former" Jones FA's). Here's a small excerpt on individual fixed income securities:Diversification:
May not be necessary to venture past the three major bond categories (corporate, municipal, government) Corporate and municipal - Diversify corporate bonds across sectors and for municipal bonds, start with general obligation and if needed, diversify revenue bonds across issuer and type (transportation, housing, health care, higher education and utilities). Limit how much from one issuer – no more than 5% of an overall portfolio;10 to 20 fixed-income investments Try to limit fixed annuity exposure from any one insurance company to 10% of the overall portfolio Diversify by maturity: Short-term (up to 5 years): 25% – 35% Intermediate-term (6-15 years): 35% – 45% Long-term (16+ years): 25% – 35% Within corporates: Financial: 40% – 55% Industrial: 25% – 40% Utilities: 10% – 30%Minimum investment
$10,000 for each individual bond $5,000 (or less) for each individual CDQuality
Investment-grade fixed-income securities, with at least 85% in A-rated or better securitiesB - I think what you are seeing could be called the Great Awakening @ EDJ. For YEARS research was only done on equities. Mostly large cap value at that. I remember almost falling out of my chair when they put a mid cap stock on the research list. Tiffany's I believe it was. "Marketing" was "here's an ICA guide...Happy Selling!" Product Review's only job was to make sure that what we offered didn't turn out to be another Baldwin United (or whatever that was). And IPAC's seemingly only function was to mess around with how much international and high yield was appropriate. You can still find grizzled Jones vets who only sell dividend paying stocks, American Funds, and long bonds.
Today, with the number of transfer brokers, not to mention the HQ folks we brought over here from AGE when they disappeared, there are some different ideas out there. I think AS alone has opened up a lot of eyes and minds to things outside the Jones norm. I had a Fidelity wholesaler in my office for cryin out loud. I looked outside for the flying pigs and Satan on ice skates. I think Jones has been forced, just by the number of grumblings about the way things used to be, to step it up and give us more info like you posted before. I'm getting wires now telling me that I've got this and that client in too many hospital bonds. Used to be they were tax free bonds with a 1% default rate and no need to worry. I can't tell you how many E/G classes I taught where Kevin Flatt would tell the class that no A rated muni had ever defaulted. Of course if you questioned him about it afterwards he'd tell you it's because their credit rating got dropped to BBB then they defaulted. I agree that it's not about equity breakpoints as they're generally the same on bond funds after $100K. I think it is absolutely about the average advisor wanting to be better informed about why his/her investments act the way they do. I've always been of the opinion that if Jones were to educate their advisors about portfolio theory and structure, in a classroom setting or with some very good online materials, that we'd be much better asset gatherers. Can you imagine coupling a well educated advisor with the doorknocking strategy? Mr. Prospect - you give me 15 minutes with your portfolio and I'll be able to tell you the good, bad, and ugly of your portfolio and where I can improve on your current advisor. Our new FAs now act like the dog who caught the car. I got the appt!!! Oh crap. What now?Couldn't agree more. Where would one be able to educate themselves efficiently in the subject?I’ve always been of the opinion that if Jones were to educate their advisors about portfolio theory and structure, in a classroom setting or with some very good online materials, that we’d be much better asset gatherers. Can you imagine coupling a well educated advisor with the doorknocking strategy? Mr. Prospect - you give me 15 minutes with your portfolio and I’ll be able to tell you the good, bad, and ugly of your portfolio and where I can improve on your current advisor.
If it were up to me, at Jones it would be an additional class, probably after PDP. A week long intensive class on nothing but investments. Not enough to create a group of quasi CFAs or CFPs, but enough that they know what they’re looking at when they pick up a Morningstar report on a fund or a stock report or how to point out the weak spots in a competitor’s plan. They cover different investments in training now, but only enough to get the new folks comfortable with the difference between a stock and a bond. Most importantly how to create a script for selling them. Until I went from the training environment at EDJ to the real world of being an FA, I didn’t realize how incredibly unprepared I was for to look at a portfolio and talk intelligently about it. There’s a simple reason that most new FAs at EDJ sell only American Funds. It’s because they don’t know any better. It’s not their fault, they just simply haven’t been trained any better.
Good to see that, B24. I would point out that they still have up to 40% in 16 year plus. The comments above, however, do echo my post. I remember the main “lesson” in training was that phoning anyone and everyone on a 30 year A rated financial bond was just fine (I defn questioned them on it). Why? “Wouldn’t you always want 6% return on some of your money? It can’t hurt anybody”
What’s wrong with 40% in >15 year bonds? The sweet spot in the yield curve is 20 years right now. I’ll take 6.5% A+/AA- Taxable MBDs all day long.
“Mr Smith, if you earned 6.5% a year for the next decade or so, would you be happy?” 4 out 5 times the answer is yes and 9 out of 10 for those over 60.
Nothing wrong with it for the right person, if you sit down and do an investor profile. That is NOT what we were talking about back then. (also, what about when that “sweet spot” changes? There are ways to find longer duration exposure without locking in 20-30 years as we were trained to do)
also: “next decade or so” is a lot different than 20 or 30 years.
I appreciate the wake up call Hulk. Made me go out and look at BABs … found two with fine credit ratings, nearly 7% YTM and 20 year maturities. Bingo! A couple of calls later, I’m into a $100K bond sale to end a nice day. There was nothing left by the end of the day.
7 percent municipal bonds, for 20 years. I'm not so worried about when the sweet spot ends, newnew; when it does, I'll find different values for my client to invest in.[quote=LockEDJ] I appreciate the wake up call Hulk. Made me go out and look at BABs … found two with fine credit ratings, nearly 7% YTM and 20 year maturities. Bingo! A couple of calls later, I’m into a $100K bond sale to end a nice day. There was nothing left by the end of the day.
7 percent municipal bonds, for 20 years. I’m not so worried about when the sweet spot ends, newnew; when it does, I’ll find different values for my client to invest in.[/quote]
The only problem is that there are no 7% 20yr munis available. Right now the bond market is way overbought. BABs looked good till about a month ago. And when you do find a good bond, they sell out pretty quickly. I have a number of customers with CD’s coming due, and I’m feeling more comfortable recommending high dividend paying equities, particularly with inflation seeming to be on the horizon. The market has been so volitile that I don’t think that standard portfolio building tools are very useful right now. Particularly with clients in the 55+ age group.
[quote=52new] [quote=LockEDJ] I appreciate the wake up call Hulk. Made me go out and look at BABs … found two with fine credit ratings, nearly 7% YTM and 20 year maturities. Bingo! A couple of calls later, I’m into a $100K bond sale to end a nice day. There was nothing left by the end of the day.
7 percent municipal bonds, for 20 years. I’m not so worried about when the sweet spot ends, newnew; when it does, I’ll find different values for my client to invest in.[/quote]
The only problem is that there are no 7% 20yr munis available. Right now the bond market is way overbought. BABs looked good till about a month ago. And when you do find a good bond, they sell out pretty quickly. I have a number of customers with CD’s coming due, and I’m feeling more comfortable recommending high dividend paying equities, particularly with inflation seeming to be on the horizon. The market has been so volitile that I don’t think that standard portfolio building tools are very useful right now. Particularly with clients in the 55+ age group.[/quote]
I believe one Jersey bond had a YTM of 6.9 (coupon, 7.2), the other 6.8 (coupon, 7.02). Anyway pretty darn close to 7. I’m not going to replace bonds with stocks. Period. If the portfolio balance requires 40% bonds/loans, and I can’t find the value … then the money waits until value presents itself and it stays in cash. I think selling someone Pfizer because you like the dividend action to replace bonds/CDs is wrong.
newnew - i dont care what crap you or any other brokerage firms are spewing these days about investor profiles. Books are built by calling on a product and selling said product to begin the relationship. I have 9 accounts greater than $1M (good/bad/i don’t care - it is what it is) and all but 2 of those began with an initial investment into a bond that I called on.
WSUBOB,
What are we going to do with you...how unimformed are you? Back End software has nothting to do with the management of a portfolio let alone with EJ or JPMChase. Each of the firms have Global Multi Asset Groups that drive the Managed accounts in terms of Portfolio Construction, Tactical vs Strategic movements, Multi Fund Family Selection, and overall due dilligence. If software really mattered and was a driver of portfolios then everybody would need different opperating systems, program engineers an so fourth. I work for JPM and have many friends at EJ....there managed accounts are nothing alike.
A-real-broker
I still don't understand why a client would be willing to pay 1.5% plus, to have an advisor shove their money in a program that simply allocates their dollars between a bunch of mutual funds that also have internal expenses. The way I see it, we're in a low interest rate, highly volatile market environment, so the client has an uphill battle to make enough in returns to cover their overall portfolio expenses, let alone grow their portfolio. Unless it's individual stocks, fixed income products, ETFs, or maybe vanguard type funds...client's shouldn't be in these programs. All IMHO.
Feeling a bit lucky. My firm has something like 10 different managers who each have their own specific allocation models - conservative to aggressive. Some use ETFs for the models, others use active open end funds and a few holding individual stocks/bonds (larger accounts). And of course, I rarely use any.... One of our choices is to make our own model from about 400 approved funds - like Blackrock Global allocation, First Eagle Global, IVY, American, Wells (Evergreen) Asset allocation - a full choice of dynamic allocation funds. I am not much for "Static" models based on the previous 30 years of data.
We have no pre-set pricing - I usually go with 1.5% for the first $250K, then 1.25% for the next $250K, etc. I can "discount" to 1% to try and move C share clients into the program (it uses Institutional shares so C share clients save 5 to 10 bps).
Does Ed Jones have fixed pricing? What about JP Morgan Chase?
Thanks...
I like AS. My clients like AS. It's a great program for middle wealth investors. Where else can they get the service for 1.35%,
[quote=ytrewq]He called us stupid? Them thars fightin' words. I thought you were long gone from Jones by the time Lehman went under? PM in a bit.[/quote]
Jones is BS... Let em have it!