Edward Jones is the BEST

[quote=Incredble Hulk]

Please tell me why Edward Jones is NOT the best?  I have not heard one good answer.

[/quote]

Given your, shall we say limited experience and abilities, Edward Jones probably is the best.  For you.

[quote=Incredble Hulk]

Please tell me why Edward Jones is NOT the best?  I have not heard one good answer.

uh…I think this joker is spoofing the real “hulk”…or else he suddenly can’t spell his own name…

#1 - Their technology would be cutting edge, if it was in 1992.

#2 - Their Rep peddle the same old stocks, bonds and mutual funds to everyone blindly with no real thought behind them.

#3 - Look at their model portfolio vs ever other firm on the street.  Reg. Rep. did a comparison and they came in at the bottom in every major category.

#4 - Their is no emphasis on annuitizing your business, it's all about getting the trade done and charging the big upfront fees.

#5 - Door knocking.  This is so stupid.  You're an investment professional, act like it.

#6 - They do not have the tools you need in order to provide comprehensive financial planning.

#7 - I've been approached 3 times by their recruiters who have "a wonderful opportunity to take over the book of a retiring IR."  The book has never been over $25 million.

#8 - 401K and Pension Plans.  The capabilities are virually non-exhistant.  

#9 - Just talk to the reps.  Most of them do not have the fundamental knowledge of finance and economics.  They are sales people.

#10 - Everything that Edward Jones has is available at every other firm on the street, only the other firms can beat the pants off of Jones in each of the categories listed above.

[quote=Indyone]uh…I think this joker is spoofing the real “hulk”…or else he suddenly can’t spell his own name…[/quote]

Damn man you’re right!

Ethics would have to be at the top of your list Hulk. If you don’t see it now,

that means you are not looking hard enough.

They are the best firm on the street for me.  I take 1-3 new accounts from there per month, new client mostly over 200K.  I cannot reveal my secret but it is available only because I work in a bank environment.

[quote=bankrep1]They are the best firm on the street for me.  I take 1-3 new accounts from there per month, new client mostly over 200K.  I cannot reveal my secret but it is available only because I work in a bank environment.[/quote]

Jones is definately the easiest place to take clients from.  No question.

Wait, I thought Edjones had no big accounts.  Jones is not the easiest place to take clients from.  We live and breath for the client in their town, go to ther church, and use their Chinese restaurants and drycleaners. 

We have a bond with our client.

Is it your contention that you are the only one who goes to the same church as your clients?

I really hate to point this out, but you really are pretty stupid.  EDJ is probably where you belong.  And clearly, they deserve you.

[quote=iconsult100]

[quote=bankrep1]They are the best firm on the street for me.  I take 1-3 new accounts from there per month, new client mostly over 200K.  I cannot reveal my secret but it is available only because I work in a bank environment.[/quote]

Jones is definately the easiest place to take clients from.  No question.

[/quote]

I hate to disagree but by far the easiest place to take accounts from is the bank...

[quote=Incredble Hulk]

Wait, I thought Edjones had no big accounts.  Jones is not the easiest place to take clients from.  We live and breath for the client in their town, go to ther church, and use their Chinese restaurants and drycleaners. 

We have a bond with our client.

uh…I think this joker is spoofing the real “hulk”…or else he suddenly can’t spell his own name…

Congratulations, you are the first to pick up on this…

Cool…I’ll pass on the prize, though…

I’ll take the prize!

 Jones is a great place to work.  I'm free from having someone standing over me.  My financial well-being is second to the needs of my clients.  Everyone of you out there knows in your heart of hearts that paying an up-front sales charge, and 25bp thereafter, is an effective, cost-effective way to build long-term wealth for your clients.  However, most of you like the 125bp AUM to sit and you move little around.  But isn't putting the client first most important?  Jones brokers are less paid, but I think the data will show Jones clients do very well on a risk/reward/cost basis.

but the question was why isn't EDJ the best?  Because my feet hurt, and new guys get flung mega million books and then get paraded like kings of sales tactics, discipline, and work ethic. 

that said, I'd say Jones is ONE OF THE BEST.

 ED

[quote=EdJehovah]

 ................, but I think the data will show Jones clients do very well on a risk/reward/cost basis.

[/quote]

Again your ignorance shows, don't "think" do the research and you'll find that Jones customers are at the bottom of the average return.

EdJehovah said

 Jones is a great place to work.  I'm free from having someone standing over me.  As far as you know. There's always someone standing over you.My financial well-being is second to the needs of my clients.  There's a little of this at every firm, but why should you be able to make money for your clients but not be compensated properly for doing so? Everyone of you out there knows in your heart of hearts that paying an up-front sales charge, and 25bp thereafter, is an effective, cost-effective way to build long-term wealth for your clients.  This is your opinion!!! There are many ways to build wealth for your clients and if you give them the proper advice, there is no reason that you should not be paid for your knowledge.  In this profession (notice the pro) you are the one with the knowledge and the ideas just like doctors and lawyers are paid for their advice, we are allowed to make a living too.However, most of you like the 125bp AUM to sit and you move little around. You sound like you've drank the koolaid all the way to the bottom of the pitcher..."all fee-based advisors just sit on the portfolios and get paid for doing it.  They offer no real value to the clients."  Funny thing is that clients want a professionally managed account and don't mind the fees if they are making a good return on their money. But isn't putting the client first most important?  Jones brokers are less paid, but I think the data will show Jones clients do very well on a risk/reward/cost basis. That's right, Jones is the only firm that does what is right for the client. 

but the question was why isn't EDJ the best?  Because my feet hurt, and new guys get flung mega million books and then get paraded like kings of sales tactics, discipline, and work ethic. 

that said, I'd say Jones is ONE OF THE BEST.

 ED

Get a life ED!  You, too will soon figure out that the koolaid is really "unsweetened" and that it'll be a long time before they add any sugar.

EDJ SUCKS

FFJ,

First, I think JOne is a great firm..  perfect? no.  However, we all know that the client comes first.  Period.  Having said that meeting the needs of clients means different things, especially fee structures.  Maybe I dont want to pay you 1.5% to give me your advice.  You operate on the exact same public info. as we all do.  Its how you interpret that data.  If you think you can build a stock/MF portfolio better than anyone else, more power to you.  I'll say you cant!!  Its ALL about putting your clients in the best investment possible to meet their needs at the cheapest cost.  All this BS about I am a professional, i should be paid like.  blah blah blah.  I agree we are professionals, but giving good advice should NOT come at the highest expense to your client.  Its easy to pick stocks and investments in up markets.  Lets go through another 50% decline and see how many of you are left!!!!!!!

Success,

 Edward Jones is a good firm..for a select person.   It is a good employed platform that allows you to feel somewhat independant from home office, but the platform has been set up for low net worth prospecting.   EDJ is rolling out FA's and managed money this spring/summer. Trying to catch up with the times.  YOU will be asking your clients to pay you 1-2% for your advice.  I hope you are ready to do that.

[quote=EdJehovah]

 Everyone of you out there knows in your heart of hearts that paying an up-front sales charge, and 25bp thereafter, is an effective, cost-effective way to build long-term wealth for your clients.  However, most of you like the 125bp AUM to sit and you move little around.  But isn't putting the client first most important? [/quote]

I used to beleive this too when I was at Jones. They do an excellent job of brain-washing.

The costs of investing at Jones:

3.5% A-share load over 10yrs (b/c IR is not going to manage or change ANYTHING!) = .35%

Annual expense ratio (avg.) = .80%

Avg. turnover cost in funds = .35%

So that total is 1.5% EVERY year to "sit" on a mutual fund portfolio.

Compared to paying me 1.25% per year. If you have some money available I'd recommend you buy some today!

[quote=success]

FFJ,

First, I think JOne is a great firm..  perfect? no.  However, we all know that the client comes first.  Period.  Having said that meeting the needs of clients means different things, especially fee structures.  Maybe I dont want to pay you 1.5% to give me your advice.  You operate on the exact same public info. as we all do.  Its how you interpret that data.  If you think you can build a stock/MF portfolio better than anyone else, more power to you.  I'll say you cant!!  Its ALL about putting your clients in the best investment possible to meet their needs at the cheapest cost.  All this BS about I am a professional, i should be paid like.  blah blah blah.  I agree we are professionals, but giving good advice should NOT come at the highest expense to your client.  Its easy to pick stocks and investments in up markets.  Lets go through another 50% decline and see how many of you are left!!!!!!!

[/quote]

Wow, I had to stop "interpreting data"(whatever that is) for a moment to respond to this.  It is interesting how the fees Jones reps accuse others of charging creep up over the course of a thread like this.  You cant make your point at 1% so someone takes it to 1.25% and now this guy assumes 1.5%. 

All that aside, how many different fund families do you own in your Jones 401(k)?  You probably dont realize this, but the choices you have are hardly the best ones out there.  They're just the ones willing to pay blood money to the GP's.

If I left the business tomorrow, I would gladly pay a professional 1% for access to the best managers available. Those hired for their core competancy rather than their willingness to provide kickbacks.  I would also expect an asset allocation model with more than four asset classes and quarterly reviews with my advisor.  If you can do that for all your clients on 25pbs more power to you, but I happen to know better.

BTW, how many Vangard funds have you sold today.  Gotta do it he cheapes way possible......right?

Can I just say...?

When I see a kid who is thinking about joining the military, I do everything I can to dissuade this kid from doing something that might get him killed!

But when I see the same kid or another kid IN the military, I tell him/her "Atta boy!" "Good on ya son!" I'm not about to make the guy feel bad, he's already in the mess, I want him to do his best there.

So yeah, when Edjehovah is now saying that jones is a good place to be. I'll say "There ya go! Go get'em killer!" The guy's in a word of hurt and he's trying to work his way through! Telling him that he's being deluded doesn't help anybody but Jones (because when you've destroyed the guy and he leaves, he's leaving his book behind for Jones to snare the next rabbit. If he's successful, he'll eventually leave and take his book with him!

Beat up on Spiff? Sure, have at it. He's up and running. But have some compassion for these noobs! If they make it, they deserved your respect. If they die, it's sad , and you beating on them didn't make it happier!

Meanwhile, Noobs. Don't get up in our face!

[quote=Whomitmayconcer]

Can I just say...?

When I see a kid who is thinking about joining the military, I do everything I can to dissuade this kid from doing something that might get him killed!

But when I see the same kid or another kid IN the military, I tell him/her "Atta boy!" "Good on ya son!"

[/quote]

I agree to some degree but but if I join the Marines and get a $5000 signing bonus and then some ignorant kid is giving me crap cause he got $50 and a meal at Dennys for signing-up with the National Guard, and telling me how much better he is to boot, well I'm gonna let him know exactly where he stands on the food chain.  Same goes for EDJ.

[quote=Whomitmayconcer]

Beat up on Spiff? Sure, have at it. He's up and running. But have some compassion for these noobs! If they make it, they deserved your respect. If they die, it's sad , and you beating on them didn't make it happier!

[/quote]

Go ahead, take your shots.  Water off a duck's back. 

[quote=Spaceman Spiff][quote=Whomitmayconcer]

Beat up on Spiff? Sure, have at it. He's up and running. But have some compassion for these noobs! If they make it, they deserved your respect. If they die, it's sad , and you beating on them didn't make it happier!

[/quote]

Go ahead, take your shots.  Water off a duck's back. 

[/quote]

Fortunately Spiff even though you may "fit" with EDJ, thankfully you are not the typical kool-aid guzzler, I rather enjoy your postings.  If all the Jonesers used your common sense there would be alot less EDJ bashi. 

OK I bite; I DESPISE all of the talk about Edward Jones (pro or con) bit I do have 2 questions for any EDJ's:

- Do they require door knocking? Or do you have your choice of prospecting methods (cold calling, networking, mailings, etc)?

- What is this term/analogy about a "hamburger" relating to investments? I have my hunch but please fill me in.

Oh Kathleen (the original Joneser on this board back in 1997) where have you gone?

Yes…I too would like to have the mystery of “the hamburger” unraveled.  I guess if no one coughs up here, I’ll have to break down and ask one of my Jonsie friends…

[quote=The Judge]

OK I bite; I DESPISE all of the talk about Edward Jones (pro or con) bit I do have 2 questions for any EDJ's:

- Do they require door knocking? Or do you have your choice of prospecting methods (cold calling, networking, mailings, etc)?

- What is this term/analogy about a "hamburger" relating to investments? I have my hunch but please fill me in.

Oh Kathleen (the original Joneser on this board back in 1997) where have you gone?

[/quote]

Soon to be ex Joneser here.  Doorknocking is required for your first few months as they monitor you somewhat closely.  (Although no one really watches you except for an hour or so when your mentor goes with you, so I guess you could just lie about it.)  After that you are pretty much left alone and TOLD that door knocking is the best.  i.e. Mentor calls and says have you been door knocking this week?  But there is no ongoing requirement to door knock.  I quit seriously door knocking about 6 months in and have done fine. 

As far as the hamburger, it's some stupid selling techinque they teach at training that I never really paid attention to and don't really know.  I THINK it's like this.  You make a sales call and the intro, is the bottom bun, the info on the bond/stock is the meat, and the close is the top bun (i.e buy some today) and bingo there is your hamburger.

Go figure.

Yes, you are required to DK early on.  You can't do anything other than get name, address and phone number.  When I went to KFC or KYC,,,many in my class (all long gone) didn't do any dking, while the guillable(sp) bspears did as I was told!  I lasted and moved on, while all but 1 is still in the system.  He is struggling, and will never make the 18k requirement for segment 3. He'll soon be shown the door.  I actually like to get out and see people.  But, I don't go door to door, I see people at rotary, lions club, 4h meetings, softball games etc...Just being seen, and I love talking about MY new business. 

Ex,

I never said I was against fee based and I dont are if we use 1% for examples.  My point is that there is nothing wrong with A share funds.  Also, dont fool yourself that you are any smarter or better at picking stocks and funds just b/c you charge an advisory fee.  Whether its fee based or load funds, we are all in the same boat with information.  You may think you can do it better now that you can charge these assets fees, but you are still the same as you were before - trying to do the right thing.  Both models have there purpose.

Success wrote, "Its ALL about putting your clients in the best investment possible to meet their needs at the cheapest cost."

Wouldn't it be cheaper for the client to go to a $100/hour fee only planner who could recommend no-load funds?  Their $500,000 investment would cost $100 instead of $10,000.

It's not about being the cheapest.  It is about doing what is best for the client.  Cheapest is not what's best for the client.  Investor performance is what counts, not investment performance.  Forget about my fee-only example.  For a buy and hold investor, "A" shares are much cheaper than being in a fee account.  This does not make it better for the client. 

The major problem with "A" shares is that the interest of the rep and the interest of the client are not alligned.  Success, if you build a decent book using "A" shares, you won't be able to afford to service your clients.   Hell, you will need a $1,000,000 book of business to earn $100,000 before expenses.  This means that you have a choice of giving good service to your existing clients while you struggle financially forever or ignoring your clients to constantly focus on getting new clients. 

The bottom line with "A" share funds, is that you can sell them to customers, but you can't sell them to clients.

[quote=anonymous]

The major problem with "A" shares is that the interest of the rep and the interest of the client are not alligned.  Success, if you build a decent book using "A" shares, you won't be able to afford to service your clients.   Hell, you will need a $1,000,000 book of business to earn $100,000 before expenses.  This means that you have a choice of giving good service to your existing clients while you struggle financially forever or ignoring your clients to constantly focus on getting new clients. 

[/quote]

I think you meant $40,000,000

Actually, I meant $100,000,000.00!  100 million x .25% (trail on an “A” share) x .4% (my guess on a Jones payout to the rep) = $100,000.

Although they “Require” doorknicking in the beginning, if you have

another method (like if you had previous experience or some really good

network), you can do it. As long as you have prospects in your system

and start producing, nobody cares. You will only get pressed to

doorknock exclusively if you are not producing. If you produce, they

leave you alone. I know guys that were new/new that didn’t doorknock

one day after their training period and were very successful (one that

comes to mind was a successful business owner previously, and well

tapped in - he got to $90mm AUM in 6 years, new/new, no GK, no daddy

GP, nothing - but he would be the rare exception).



But honestly, most EDJ new/new’s had no previous experience, so they

really have no choice but to DK. However, if you are not REALLY

successful doing it, you need to find other ways to prospect to

supplement DK/cold calling. I see too many Jones guys get lost because

they don’t know how to network, develop referral networks, etc.

[quote=Incredble Hulk]

Wait, I thought Edjones had no big accounts. Jones is not the easiest place to take clients from. We live and breath for the client in their town, go to ther church, and use their Chinese restaurants and drycleaners.

We have a bond with our client.

THE HAMBURGER REFERS TO "ASKING OPEN ENDED QUESTIONS TO OBTAIN FINANCIAL INFO,ETC". IT MEANS SOMETHING LIKE

1. YES, I UNDERSTAND YOUR QUESTION/CONCERN (GET IN STEP)

2. HERE IS THE ANSWER---(THE "MEAT")

3. FOLLOWUP QUESTION SUCH AS "ANYTHING ELSE?"

Answer to your question, Yes you will door knock!  Does it work or help?  Yes, people will remember that you came by at one time.

I have been working in Jonesville for 14 years, close to six figures in AUM and the time has come for me to work directly for my clients and not the pockets of the GP's.  Unlike some of you I am not bitter over my treatment the last 14 years.  I started NEW/NEW as you call it on these posts.

I'm retired from the Military and I'm very proud to read your support for our young men and women that have served and continue to serve this great country.  So as you can add up 22 years in the military and 14 years at Jones = senior (grandfather).

I will be indy in < 45 days.  There is a lot of work going into transferring out a large book from Jonesville.  I know there is a lot of bashing of EDJ and a large amount of it is justified.  I have done the goodknight program and have a large sum in LP.  I agreed  the indy model is the best model for most of us.  But please try and remember that some of these rookies need to start somewhere and Jones is not a bad place to get a book started. 

I would ask that you wish me luck since this is St Patrick's Day, but luck had nothing to do with me making it this far in the business and luck won't have anything to do with me making it as a Indy.  So the countdown is 45 days! 

By the way this is a team event--2 from Jones to start own business!

Roadhard,

Congrats on the move...It will be hard work for a month or so and then it's back to your normal routine.  Please PM me if you have any questions and would even be happy to give you my phone number and e-mail in case you want some suggestions on how to streamline this process.

What firm are you going to?

Good luck!

Roadhard,

From another retired military ex-Joneser, good luck.  Yes you will enjoy life more.  Yes, it's good to be the owner and not the employee.  As retired military, we know what it's like to be employees, not getting to make your own decisions, etc..., so becoming independent and becoming your own boss (for real) is a huge relief and a breath of fresh air.  Enjoy not letting EDJ keep so much of what you've worked for each month.  Feel free to contact me directly.

Just FYI, I would be EXTEMELY careful in how much information you disclose until you and your buddy are out of there. It is way too easy for the home office to narrow down who you are and put a crimp in your plans.

Good luck going indy.

The gestapo is always lurking.  It would be nice for one of their techies to tell us how they operate. 

Mucho is correct.  Stay stealth until you leave, then you can blast anything you want to anyone you want to.  Watch out for the hidden camera in the Jones monitor though and you know they’re always listening!!  They’re likely to do what they can to keep you, or at least to keep YOUR CLIENTS, so be careful not to fall under the GP spell.

LPL, and roger out!

Just left jones!! they hold my U4/5 for 30 days....looks like I have some down time as they do damage control.!!

why are they holding your u-whatever?

B7,

They shouldn't be holding it because they should want to wash their hands of you as soon as possible.  If you are staying in the industry, they are liable for your actions as long as they hold your U5.

I assume you left today because it's the last day of the EDJ selling month?  Good luck!!  and welcome to life after koolaid.

Go inside a little room and lock yourself in.  After 20 days come out and you will be detoxed from the Koolaid.  It will be hell for the first few days…wanting to flip someone from one fund family to another, 1035 from a good annuity to another, sell stocks with low cost basis to the client.  Hell, you’ll still be telling people, if you have the money today, I think you should buy some.  If you thought you had any buds at the devil firm, you don’t now.  WELCOME ABOARD!!

EJ can't legally hold up your U5...only the NASD or the state can do that.  Mine came over in hours, a guy I know had to wait a couple of weeks.  The guy kept going with client meetings and had them sign undated forms...Don't let EJ win...kick some a$$!!!

fact of the matter is jones does win.  the average broker takes 25% to 30% of their assets to the new firm.  seems like all the brokers going to lpl couldnt cut it at jones, and now they are sucking wind on their own dime. 

[quote=jusboughtacaddy]

fact of the matter is jones does win.  the average broker takes 25% to 30% of their assets to the new firm.  seems like all the brokers going to lpl couldnt cut it at jones, and now they are sucking wind on their own dime. 

[/quote]

You are a completely uneducated moron!  It is quite obvious you have had a little too much Kool-Aid.  I know of no fewer than 10 Jones brokers that have moved and their range of assets taken it between 70% and 95% with the average of about 85%.  Granted, this is not a scientific survey but your 25% to 30% number is just plain wacky.

Now get back to work for the GPs!

[quote=jusboughtacaddy]

fact of the matter is jones does win.  the average broker takes 25% to 30% of their assets to the new firm.  seems like all the brokers going to lpl couldnt cut it at jones, and now they are sucking wind on their own dime. 

[/quote]

By the way caddy, congratulations on becoming your Region's Recruiting Specialist. Did the last one leave?....When I was a Jonsee, ours did. It was SO funny he left the week after summer regionals.

Lets see...I've been free for 6 weeks...left 32mill, had a competing newby in two days after I left.  I have transferred(settled) 122 accts totalling 14ish million...of the 32, 3 wasn't possible to move.  So in 6weeks I transferred about 1/2 of the assets and a quarter of the accts...My goal originally was to move 15 mil by end of 07...I've moved that to 20mil...by year end.  I to was a loser at Jones.  Caddy, you suck, your firm sucks!  Good day and Good selling!

fact of the matter is jones does win.  the average broker takes 25% to 30% of their assets to the new firm.  seems like all the brokers going to lpl couldnt cut it at jones, and now they are sucking wind on their own dime. 

If Jones mostly sells "A" shares, why would the broker want to take the assets with them when they left?  It's probably not in the clients' best interest to move the money and the (lack of) compensation often makes it not worth the effort.  A change is often a great excuse for a broker to not service unprofitable clients.

Also, that is a very misleading stat even if it is accurate.  Many of the assets don't go to a new firm because the broker doesn't stay in the business.

This has nothing to do with Jones.  If a broker leaves a firm and has done a good job with his clients, he can keep the bulk of his clients that he wants to keep.  No one is doing business with a Jones broker because he works for Jones.  That can be said for the majority of cases regardless of firms.

[quote=jusboughtacaddy]

fact of the matter is jones does win.  the average broker takes 25% to 30% of their assets to the new firm.  seems like all the brokers going to lpl couldnt cut it at jones, and now they are sucking wind on their own dime. 

[/quote]

I like him, he's silly!

most brokers want to capture assets so that they can wrap them or convert to c shares.  the 25-35% capture figure is spot on.  edward jones is a partnership, and im a partner.  guess i am working for myself.  my guess is you never recieved partnership, or were profitable.  it must suck to suck.

Spelling problems aside…Partner sh*t! I’m not a partner, I’m an owner. Your not working for yourself, your working for the real owners, the GP’s.  They can boot you happy ass anytime they wish.  Your at work and drunk on koolaid.  Go home, take a nap and when you trully wake up, come see us. 

drunk off cool aid???  you must be high from huffing paint thinner...  my guess is you make 8 gross a month and were tired of being below expectations...

Your funny.  Maybe the first couple of months out…8k per month.  However, I was pushing 20k per month, and just turned profitable.  This doesn’t mean much, other than my first commission check here was equal to my last good month at Jones.  I will admit, I sounded just like you the first few months…say 8 months can sell date.  But, then the attitude started to change and my conscience(sp) took hold.  It also helped having several buds move to the independent model.  Not losers, I wouldn’t follow losers to another firm, but good honest brokers with anywhere from 25million to 100+m aum. Lowest producer numbers 180k who left.  This guy had a 24 net month recently…been away from Jones 14 months. So, contrary to your info…we’re not all losers here.

sooo, did you hit seg 3???

Seg 3 …yah …11 months out.  If you read my posts you’ll see exactly how I made it to seg 3 and the accts I blew up…but it was all about the month and the next segment jerk off.  Partner in 3 years…who were you blowin or how much did you take over.

it was actually 3 years, and 7 months.  no assets, i built it one door at a time.  i also have a very large firm backing me in case times get rough.  does lpl help out in litigation and other disasters?

Doug, Are you that bored in premature retirement? Wipe your lip.

Do things right and you won’t have to worry about litigation.  Your mistaken if you think EDJ’s will be there when you need them. Your an employee…who paid in to get bond payments…LP…LIMITED partner.  Disasters…so if my computer goes down…I get my laptop and log back on to access my client accts…let’s see…the remote access Jones has…hell took me 20 minutes just to log on and couldn’t trade or do anything…well maybe make sales calls.  You need to venture out and open your eyes.  Maybe your afraid to…maybe your afraid you’ll polute your mind and start thinking YOU’RE being screwed, big time!! Don’t you have a call session you need to be getting ready for??

i recently heard of a broker losing his son in a drunk driving accident.  jim weddle, burr, fess, and some of the other lps were at the funeral. is the head of lpl going to come to your kids funeral?  my eyes are wide open... im surounded by very successful people in my region.  if there was a better mouse trap out there, these people would have left a long time ago. 

by the way, im runing the call session... 

Well, you know…EDJ trained most of the new LPL brokers…so…kinda scary if you think about it.  What you do is not proprietary(sp)…so guess what…I plan on making several contacts daily…visiting prospects…seminars…evening calls/appts.  So I assume I will still bring in 6-7million a year…push my production back up to 20k+ per month…except with a higher payout.  You don’t believe you can do dk’s better because your at EDJ’s, do you? Seriously, you don’t…do you?  How about 25-30 contacts per day…ask for the order…money due…appts to review your statement.  You think this is all proprietary?  When the (failing) newby moved to my office, I didn’t care…I know I will be here 30 years from now…and (if the office is still there) there will be another 5-10 brokers run through it.

I could care less if the boss of LPL is at the funeral.  A crook in the big office is still a crook at the funeral.  Hell if I was making a huge amount of cash off the backs of my employees, I might find the time (out of my nap time) to go to a funeral or two…just to make you feel good about making more calls for me.  Did you ever think it was a marketing tool…and it worked. Your here talking about…my managing partner went to this nobodys funeral. Isn’t he great…we have a great firm now.

yeah, but if it didnt work at jones, how the hell is it going to work at lpl…  at the end of the day, edward jones is the top firm to work for.  they take care of their producers…  no one does it better.   thats  why they rank so high in fortune and jd powers.  that damn cool aid must have leaked into our clients cups. 

i bet you dont care about who comes to your kids funeral.  i bet you would also sleep with your best friends wife cause she's got all her teeth and is "smokin hot"

The Jonsee's are all starting to cringe, he's pulling "Holier than thou.."   BS.

the indies are cringing cause im right...

While I don't agree with caddy's attitude, I do agree with his logic.  One of the reasons people stay at Jones is for the things the "man" will do for the "employees."  I've seen them pay for funerals, give extra time off for grieving, hold offices for deployed IRs, cover overwhelming medical costs, pay for adoptions, etc.  It's a very giving firm. 

On the other hand, if I'm indy, I wouldn't expect anything from my b/d.  It's my name on the door, not theirs. 

Caddy, from one Jones guy to another (maybe), give it a rest, please. 

if they can call your boss a jerk and a crook, the gloves come off, my friend.

What do you mean…Didn’t work at Jones.  Hell, thats why I’m here…it did work.  But why let Jimmy reap the rewards of my hardwork?  See this is the big disconnect.  EDJ’s believes people leave because IT DIDN"T WORK AT JONES…bullsh*t.  Except, It did work and now WE’RE reaping the fruits of our labor.  We’ve all confessed, Jones is a good place to start…not end. 

My boss'll be at any funeral i tell him to go to! He'll be at a funeral of a total stranger if I tell him to be...

I'm the boss!

That's the difference!

[quote=jusboughtacaddy]

it was actually 3 years, and 7 months.  no assets, i built it one door at a time.  i also have a very large firm backing me in case times get rough.  does lpl help out in litigation and other disasters?

[/quote]

You don't have E&O insurance.  Doesn't that worry you just the teeniest bit?  

[quote=jusboughtacaddy]

the indies are cringing cause im right...

[/quote]

Actually, I'm cringing because you are illiterate.

You guys do know that justboughtacaddy is putting y’all on, right?

Yeah, his real name is Justgothiredasacaddy!

[quote=Whomitmayconcer] Yeah, his real name is Justgothiredasacaddy!

[/quote]



That’s ridiculous!



Why would anyone go to Jones if they could get hired on as a caddy?

he is a bit. he is accomplishing precisely what he/she/it hoped.

[quote=skolbrother] he is a bit. he is accomplishing precisely what he/

she/it hoped.[/quote]



True, but it is fun to watch.

[quote=jusboughtacaddy]

i recently heard of a broker losing his son in a drunk driving accident.  jim weddle, burr, fess, and some of the other lps were at the funeral. is the head of lpl going to come to your kids funeral?  my eyes are wide open... im surounded by very successful people in my region.  if there was a better mouse trap out there, these people would have left a long time ago. 

by the way, im runing the call session... 

[/quote]

If the Broker died, old Jim would be there to get the keys to the office from the spouse and then tell her/him:  "Sorry for your loss and haul ass...I've got a GP's kid to put in this office."

Jusboughtacaddy is Incredble Hulk!!

[quote=bspears]I could care less if the boss of LPL is at the funeral.  A crook in the big office is still a crook at the funeral.  Hell if I was making a huge amount of cash off the backs of my employees, I might find the time (out of my nap time) to go to a funeral or two...just to make you feel good about making more calls for me.  Did you ever think it was a marketing tool...and it worked. Your here talking about...my managing partner went to this nobodys funeral. Isn't he great...we have a great firm now.[/quote]

 I'm gonna have to step up to the plate against one of my favorite posts on this site.  I'll not believe for a minute that Big Jim is a crook.  I'm goddamn starvin proof that the Jones model is hard to make a living on.  Attending a funeral, that's very respectable, under any circumstances.  Ease up, even i'll suck em off about this one.

 Gulp,

 My damn feet hurt

 ED

[quote=uwec86][quote=jusboughtacaddy]

i recently heard of a broker losing his son in a drunk driving accident.  jim weddle, burr, fess, and some of the other lps were at the funeral. is the head of lpl going to come to your kids funeral?  my eyes are wide open... im surounded by very successful people in my region.  if there was a better mouse trap out there, these people would have left a long time ago. 

by the way, im runing the call session... 

[/quote]

If the Broker died, old Jim would be there to get the keys to the office from the spouse and then tell her/him:  "Sorry for your loss and haul ass...I've got a GP's kid to put in this office."

[/quote]

 Nope, don't agree with this one either. 

 Gulp,

 My damn feet hurt,

 ED

I hear the same thing from every Jones broker I have come across:

LOW FEES, A SHARES, LOW EXPENSE INVESTMENTS.

Here's my reply to them:

#1:  C-shares will be cheaper for the client up until part way through the 6th year.  After that, A-shares are cheaper.  But what client holds an investment for 7 years or longer?  Not many.  They usually end up moving investments to meet their changing needs or the changing markets.  And besides, since Jones ONLY sells A-shares, they are going to need to get paid again in a few years so they will switch investments before that 6-7th year anyway.

#2:  Why does Jones focus so much on investments with low expenses?  Answer this: which investment is better?  Inv. A which has very low expenses and nets 8% annually, or Inv. B which has very high expenses, but the nets 10% annually.  A Jones broker would choose Inv. A because of the low fees, but I (hopefully most others) would choose Inv. B not because of the expenses, but because of the net return the investment provides my client.  Why do Jones brokers stress over low expenses when they should be stressing over net return.

#3:  It seems Jones thinks low fees are the best thing since sliced bread.  LOW FEES, LOW FEES.  Blah Blah.  Don't we deserve to get get paid anymore?  I know competition drives prices down, but honestly, how far can we go.  And whats wrong with a few based business.  We should get paid for servicing a clients account, not just making a transaction.  Fee-based also gives advisors more of an incentive to service the account.  When the clients account appreciates, so does the advisors pay.  That sounds like a good correlation to me.  But the Jones broker will make a transaction and then be done with the client.  They got paid, thats what they wanted.   

I hope Jones brokers can pick up on some of this.  Ya think they will?

Did you get your opinion and facts about Jones ONLY from this site?  How many Jones brokers do you know?  Have you actually spoken with more than one to find out what we think and where we would like the firm to go?  My guess is 1)yes 2) maybe a couple 3) no. 

To your points:

#1 Your arguement is the same one that every fee based/C share proponent makes.  If we only worked with accounts that don't hit any significant ($100K+) breakpoints, you'd be right.  Using the $100K breakpoint numbers it takes less than 4 years at 10% for an A share to become cheaper for a buy and hold investor.  The NASD has a great tool for calculating mutual fund costs.  You should try it.  My opinion is, if you are selling mutual funds and you trade them like stocks you need to retake your series 7 again.  Funds are designed to be held for a long period of time.  Under $100K, B shares are appropriate for a buy and hold investor. 

You also need to do your homework on the client.  If they are going to completely change their lifestyle and therefore investments w/in 3 years I might look to C shares for the short term. 

2)  A good Jones broker would look at both expenses and returns.  I have no problem selling TEDIX with a 1.39% exp ratio BECAUSE of it's exceptional return.  Honestly I don't pay much attention to the expenses of a fund.  I look at the returns.  I was actually a little suprised when I started selling a lot of TEDIX and then noticed the expenses.  But I haven't stopped.  I'm just more aware. 

I'll use the expense arguement as a way to get a client in my doors.  If I can prove my process is better and less expensive than what they are currently doing, I've got a great shot at new biz.  I love to show how close I can come over time to the same expenses as Fidelity and give them personal service.

3) There is absolutely nothing wrong with a fee based biz in my opinion as long as the clients are paying a fair price for what they get.  I love to hear prospects tell me they have a fee based account but haven't heard from their broker in over a year.   Those are almost always slam dunk cases. 

I make the same arguement you do only in reverse.  Mr. Prospect, what incentive does your broker have to do anything more with you?  The market is going to grow your assets, not your broker.  He knows how much he's going to get paid this year whether he does any work for you or not.  BTW, how did you feel when you were paying your broker to lose you money 2000-2002?  Didn't that fee every year compound the problem?  Would you like me to show you how I can make it go away?

Have you seen the the service awards from JD Powers?  Do you think we got those by having the attitude "make a transaction and then be done with the client"?  If anything we contact our clients too often.  Service is stressed constantly at Jones.  The make a sale and forget about them is what people who run a fee based biz say about transaction based brokers to justify the fee they charge in their mind.

Spaceman Spiff:

Your definitely one of a kind then.  I know many EDJ brokers.  Actually one is a relative and who in this industry doesn't come into contact with people at different firms or know people at different firms. So thats that.

And about the breakpoints, yes, I forgot to take that into account and I know that mutual funds SHOULD be long-term investments.  But can you honestly tell me you don't have some clients that will move in that time frame, WITHOUT it being solicited or recommended.  I don't need to take the 7 again, I actually did quite well, maybe I'm just a realist and know that that goes on.

"I'll use the expense arguement as a way to get a client in my doors." ........And then what, you will sell them an investment with higher expenses.  Sounds kind of sleezy to me.

And when the market went down in 00-02, so did the advisor fees.

You have fun working FOR EDJ!!!

Spiffy,

I found out who you are.  You are the guy who was in my training class that filled vending machines for 5 years before joining Jones.  With your uneducated words of advice, you proceeded to counterdict yourself twice in one post by saying that a good Jones Porker would look at both expenses and returns but you would be screwing the client if you didn't hit 100,000 break point.  I call BS.

If this is true, when have you ever used Hart Cap Ap over your beloved GFA, when have you ever used a fund like columbia acorn intl to compliment your Cap World G&I, when have you ever used a mid or small to compliment the large cap of AM funds?  Have you ever used ING's Global Real Estate fund to add diversification? You have never done any of this because you admit that your focus is the breakpoint and your firm would hang you for not hitting the breakpoint.  I know this as I did this when I was at Jones and I had to answer FSPends all day long.  Never mind the fact that we might be adding diversification to the portfolio, Columbia doesn't pay us enough revenue sharing.  My clients are much happier having owned Columbia Acorn Intl over the last three years in a C share than having saved two percent on a breakpoint.  You kill me - I would have rather owned Cap Ap in a C share over GFA at NAV over the last 10 years even in my own acct.  Have I cherry picked examples? Yes but I would also pick George Forman over you in a backyard brawl. 

If that isn't enough you admit that you don't even research what you sell before you sell it.  You didn't know what the annual fee on Mutual Discovery was you didn't read the prospectus. Do you even know what portion of the fund is domestic vs intl or is it all about the return since Jones lits it in the Growth and Income section of their monthly focus list, you are probably selling it as a domestic fund.

Maybe you should quit listening to your Am Funds wholesaler and start doing some research of your own, but that would cut into your arts and crafts time. 

PS Wash Mut, Bond Fund of Amer, GFA, Cap World G&I and Small Cap world is not a well diversified portfolio

Serenity Now, Serenity Now

If this is true, when have you ever used Hart Cap Ap over your beloved GFA, when have you ever used a fund like columbia acorn intl to compliment your Cap World G&I, when have you ever used a mid or small to compliment the large cap of AM funds?  Have you ever used ING's Global Real Estate fund to add diversification? You have never done any of this because you admit that your focus is the breakpoint and your firm would hang you for not hitting the breakpoint.  I know this as I did this when I was at Jones and I had to answer FSPends all day long.  Never mind the fact that we might be adding diversification to the portfolio, Columbia doesn't pay us enough revenue sharing

To be fair,  a lot of this lack of diversification and emphasis on breakpoints has to do with the commission based model.  Unless you are a IAR who is doing fee based business, all B/D are making you use worksheets to figure out and document breakpoints.  If you scatter A share mutual funds all over the place you can expect to get a call from compliance.  The amount of B shares are limited and C shares also require documentation.

The handcuffs I had on when at Jones dropped away when I went Indy.   Maybe when the Jones model changes to fee based, as it seems to be doing, then Spiff will be better able to do asset allocation. 

Also.  To get over the A share delima and still get diversification why not look at a portfolio of closed end exchange traded funds?

You may be correct.  There might be a time or two when a client comes in and has a completely different situation than they did 3 years ago.  My job is to sit down with them at the very beginning of the relationship and based on what they tell me then, make recommendations to them.  If they tell me they're going to want to completely revamp their entire portfolio in three years, I would look at them a little differently.  In fact I had one of those recently.  Lady brought me $150K that she got when she sold a house.  She didn't know exactly when or even if she was going to buy another house, but since we didn't know for sure I bought C shares.  A year later she took the money and bought a house. 

When you try to make the arguement that people change their investments to meet their changing needs or changing markets, you're not talking about something that happens overnight.  Those kind of things happen over the course of years.  If the advisor does his job correctly there shouldn't be a wholesale change from one investing style to another.  You don't just wake up one morning and find that you need to move all of your clients out of Small Caps into Income.  You might make some small adjustments, but the asset allocation strategy remains relatively the same.  That's the beauty of asset allocation through our overly simplistic bar chart system.  It really doesn't matter what the market does or is doing.  It is what it is.  

Now, if I'm using Small Cap Growth Class A at Fund Co XYZ and I need to make a change to Total Return Bond Fund Class A, the beauty of A shares is that the clients don't pay a dime to make that move (taxes in a NQ account not withstanding).  Not so in your fee based account.  They're going to pay you 1%+/- to readjust their portfolio, whether you do or not.  Even if the market is going down, you still get paid.  Granted I do have to stay within Fund Co XYZ, but it's my job to find a company to start with that has good offerings in a lot of different styles.  Thus my use of Franklin Templeton.

But let's say I decided that I didn't want to stay in Fund Co XYZ, because Fund Co PDQ has a better Income fund with a higher yield.  I'm only going to move a small percentage of the overall portfolio to that new fund family.  Not make a wholesale change.  Let's say it's a $100K account.  I need to move 10% from Small Cap to Income and it's the only money we're going to move to a different fund company this year.  In a fee based example at 1% the client pays you $1000 that year.  With A shares he pays $350 for the $10K he moves.  Even if we did the same thing the next year he'd still be ahead.  As long as we make small changes when necessary the A share system will be cheaper.   

You won't find me on this board saying that fee based biz is evil.  I don't think it is.  I think it gets abused, just like you think A shares get abused. 

You are completely misjudging Jones brokers if you think we are slapping people into A shares and then forgetting about them.  ALL of the GOOD Jones brokers do a phenomenal job contacting our clients.  We call it Acceleration.  Jones even teaches us how to set the sytem up.  In fact I hear more stories from places like Amex, Morgan, or Merrill where the broker hasn't contacted the client in years than I do from Jones. 

I don't think there's a former Jones broker on this board who can honestly disagree with me.  As a whole we are VERY good at servicing our clients.  And we do it cheaper than your fee based platform.   

[quote=jones&out]

Spiffy,

I found out who you are.  You are the guy who was in my training class that filled vending machines for 5 years before joining Jones.  With your uneducated words of advice, you proceeded to counterdict yourself twice in one post by saying that a good Jones Porker would look at both expenses and returns but you would be screwing the client if you didn't hit 100,000 break point.  I call BS.

If this is true, when have you ever used Hart Cap Ap over your beloved GFA, when have you ever used a fund like columbia acorn intl to compliment your Cap World G&I, when have you ever used a mid or small to compliment the large cap of AM funds?  Have you ever used ING's Global Real Estate fund to add diversification? You have never done any of this because you admit that your focus is the breakpoint and your firm would hang you for not hitting the breakpoint.  I know this as I did this when I was at Jones and I had to answer FSPends all day long.  Never mind the fact that we might be adding diversification to the portfolio, Columbia doesn't pay us enough revenue sharing.  My clients are much happier having owned Columbia Acorn Intl over the last three years in a C share than having saved two percent on a breakpoint.  You kill me - I would have rather owned Cap Ap in a C share over GFA at NAV over the last 10 years even in my own acct.  Have I cherry picked examples? Yes but I would also pick George Forman over you in a backyard brawl. 

If that isn't enough you admit that you don't even research what you sell before you sell it.  You didn't know what the annual fee on Mutual Discovery was you didn't read the prospectus. Do you even know what portion of the fund is domestic vs intl or is it all about the return since Jones lits it in the Growth and Income section of their monthly focus list, you are probably selling it as a domestic fund.

Maybe you should quit listening to your Am Funds wholesaler and start doing some research of your own, but that would cut into your arts and crafts time. 

PS Wash Mut, Bond Fund of Amer, GFA, Cap World G&I and Small Cap world is not a well diversified portfolio

Serenity Now, Serenity Now

[/quote]

Sorry, nice try.  I was actually the one teaching your class.  You must have been that goober that didn't pay attention to anything I said.  No wonder you had to leave Jones.

As far as mixing fund families goes, I'm guilty as charged.  I do like to hit breakpoints.  Well, truth be told, I don't really like it.  But it's good for the clients when they have enough money. 

I've actually been working on something like you mentioned.  A best of the breed portfolio.  That way I can put it in front of my new clients that I stole from you and tell them that I can build it whichever way they want. 

The TEDIX was my own fault.  I did look at the returns over the expenses.  I know it's an international fund and I sell it that way. 

I don't know that the firm would hang me.  Maybe I'd have to answer a few more wires and send in a few more compliance letters.

Finally, since you're going to overanalyze me, I'll overanalyze you.  You go and try to run a hypo on your Cap App C for 10 years, Skippy.  Inception on that fund was 98.  And in 98 you probably weren't using Hartford funds because they hadn't been around all that long and it's difficult to sell a fund with no track record.   You probably started using them when some RL stood up and said "I don't sell American Funds anymore because they pay the least amount in revenue sharing.  I sell Hartford instead."   

wait a second, you took all of the ladiess money that was going to be used for a house and put it in mutual funds ???

Spaceman Spiff,

I will agree with you about having a good fund family and sticking with them.  Franklin is my main fund family because they have about any type of fund we could need to have a diversified portfolio full of GREAT funds.  Good job on that!

"Sorry, nice try.  I was actually the one teaching your class.  You must have been that goober that didn't pay attention to anything I said.  No wonder you had to leave Jones. "

No wonder I was dumber after attending that class than I was before I started.

You seriously need to think outside the box.  Take a look at the Columbia funds, ING funds, maybe even Dodge and Cox or T Rowe Price (oops, scratch the last two, you don't have a wrap account).    Better yet, ask your RL why fidelity isn't part of your line up. (hint, it has something to do with stealing Jones Money Market funds in the late 70's and you still hold a grudge).

You do have a point on the Revenue Sharing.  Although they have changed their system since this happened, my RL actually showed me how using preferred fund families enhanced the Rev Sharing section of the P&L and told me that I should use the fund families to help the profitability of the branch.  I don't know if this came as I was using fund families that didn't pay revenue sharing and St Louis requested he explain why I should stick to their funds or if he was trying to actually help.  Either way, it is that mentality that got them into trouble with the regulaters on Rev Sharing.

Well Spiffy…will you agree with the way JOnes model is set up…eventually you will have way to many clients to cover…Maybe you do…but most vets don’t touch base with all their clients…

Space, how long has Franklin been your main fund family? Maybe since they pay revenue sharing now? What are they number 2 in the system since they started paying-to play.

Actually I started looking at them about 6 months before they became a preferred fund family.  A client transferred some in and while doing the due diligence on the funds they owned I taught myself about FT. I was looking for something besides American and they had a great lineup.  

I've looked at Columbia.  They've got some great stuff in the Small/Mid Cap space, but their Large Value doesn't keep up with Franklin or American.  Dodge and Cox only has one fund open right now.  I wish I did have access to T Rowe Price.  I'd put them up with Franklin and American any day.  I haven't looked at ING, but thanks for the advice. 

spears - I'd agree.  That's one of the reasons we have the Goodknight plan.  Long term plan in my office is to have 100 $1 million+ clients that I focus on.  One down, 99 to go! 

My goal at the end of the day is to make what my clients need to make.  How they pay me to do it is only one part of the equation.  Knocking Jones because we don't do fee based biz the way you do is like not eating at MCD's because they sell KO not PEP.  Of course you guys probably don't like hamburgers anyway.

Space:

The International Stock fund & the income fund for Dodge & Cox are still open.

But I do not think you can use them any way with Jones!

Man, I wish D&C's two funds were still open.  I have owned Stock for years in my own account, but I was dumb about 6 years ago and dumped Balanced.  Now I can't get back in.  But their Balanced Fund is basically a meshing of Stock and Income.  A client could do perfectly fine just owning Stock, Income, and Int'l in varying %'s.

And by the way, Revenue Sharing no longer has anything to do with your P&L directly.  You are given a pro-rata P&L credit of ALL assets under management.  So there is not a DIRECT incentive to use PF's.  (For example, if I had $100mm AUM, and that was 1% of all AUM in the firm, I would get a credit of 1% of ALL Revenue Sharing Income on my P&L).

"I've looked at Columbia.  They've got some great stuff in the Small/Mid Cap space, but their Large Value doesn't keep up with Franklin or American.  Dodge and Cox only has one fund open right now.  I wish I did have access to T Rowe Price.  I'd put them up with Franklin and American any day.  I haven't looked at ING, but thanks for the advice. "

You just don't get it do you.  Not every fund family has to be everything to everyone.  Please don't tell me that your only reason for not using a fund family is the lack of a large cap value that competes with Franklin and American.  You can use investments from all over to compliment each other.  I don't use the entire ING universe in fact I have only optimized their international holdings.  If you have someone who wants to be invested in something with some pop and they can stomach some movement, ING Russia has to go through your thought process (albeit only a very small fraction of people should own this fund).  If you want something with lower correlation to the market, you have got to think of ING Global Real Estate or the Wells S&P 500 Reit index fund.  If you are only using a fund family for their entire lineup, you are missing out on some fantastic opportunities my friend.  I do hope that I run into one of your clients someday as the first question I will ask them is, why didn't spiff use a low correlated real estate fund in your portfolio.  Was he afraid of the 35% return it put up last year, never mind, your ICA was almost up 16%.

Space, how long has Franklin been your main fund family? Maybe since they pay revenue sharing now? What are they number 2 in the system since they started paying-to play.

That makes the second time that Franklin is on the Jones list. The last time

they were dropped was when they stopped paying kickbacks.

[quote=Starka]That makes the second time that Franklin is on the Jones list. The last time

they were dropped was when they stopped paying kickbacks.[/quote]



This whole preferred fund thing is absurd. It’s time the SEC killed this entire practice.



Also all this moaning about closed fund’s. Roll your own fund with
ETF’s. I  hope everyone realises that the almost all of the
outperformance of value funds vs the S&P500 vanishes when you
benchmark them against S&P500 Value index/Russell 1K Value.

Absolute Bottom Line: At Edward Jones, advisors are not ALLOWED to sell Dodge and Cox, Fidelity, Vanguard or any other good, NO LOAD funds. This DENIES the client great investment opportunities. No load funds are CHEAPER and JUST AS GOOD OR BETTER than loaded funds. You can't call yourself a FINANCIAL ADVISOR or FIDUCIARY if you can't recommend NO LOAD funds. Therefore, Broker24 and Spaceman Spiff, et al, you are IGNORING GREAT INVESTMENTS by NOT being able to recommend Vanguard, Fidelity and Dodge and Cox, among others and you are HURTING your clients with LARGE SALES CHARGES.

You are denying your clients great NO LOAD families and your firm pushes you to sell certain LOADED families. That is WRONG and you know it.

Open end mutual funds are a rip-off anyway.



The day is coming when they’ll be fewer in number and they’ll trade at

significantly lower commissions, with trails being a thing of the past.

[quote=farotech]

Absolute Bottom Line: At Edward Jones, advisors are not ALLOWED to sell Dodge and Cox, Fidelity, Vanguard or any other good, NO LOAD funds. This DENIES the client great investment opportunities. No load funds are CHEAPER and JUST AS GOOD OR BETTER than loaded funds. You can’t call yourself a FINANCIAL ADVISOR or FIDUCIARY if you can’t recommend NO LOAD funds. Therefore, Broker24 and Spaceman Spiff, et al, you are IGNORING GREAT INVESTMENTS by NOT being able to recommend Vanguard, Fidelity and Dodge and Cox, among others and you are HURTING your clients with LARGE SALES CHARGES.

You are denying your clients great NO LOAD families and your firm pushes you to sell certain LOADED families. That is WRONG and you know it.

[quote=Maxstud]
If you don't like the business model, find one you do like and go there.

CNN money has a fees and expense calculator on their website, I don't know how accurate it is.  I put in Dodge and Cox balance fund, $25,000 investment for 10 years the total expenses are $2468.08, put in Capital Income bBilder for the same parameters, with load and it comes to $2327.90.  Both seem very reasonable. 

Now you may say that nobody holds a fund for 10 years, can't speak for you but I do.  Heck I held a couple of Janus funds from around '93 until late last year.  Rode them up and then all the way down and my personal return on my statement was 11% avg annual.  You don't have to always have the number one fund in every category to do well, and sometimes you number one fund won't be number one all the time.

Good luck.
[/quote]

maxipad,

so where was your held ........ at your firm if it was were you able to make switches within Janus?

[quote=compliancejerk]

maxipad,

so where was your held ........ at your firm if it was were you able to make switches within Janus?

I've looked at Columbia.  They've got some great stuff in the Small/Mid Cap space, but their Large Value doesn't keep up with Franklin or American."

I use Columbia Marsico 21st Century for the Large/ Multi Cap Growth space. Compare it to Growth Fund of America ( a pure apple to apples comparison) and Tom Marsico outperforms on a risk- adjusted basis for every time period out there... Also, Columbia's Acorn series of funds are top tier as well...

[quote=blarmston]

I use Columbia Marsico 21st Century for the Large/
Multi Cap Growth space. Compare it to Growth Fund of America ( a pure
apple to apples comparison) and Tom Marsico outperforms on a risk-
adjusted basis for every time period out there… Also, Columbia’s
Acorn series of funds are top tier as well…

I may be jumping to a general comment on the title of this thread as opposed to following the last comment, but here's my opinion.

There is nothing wrong with Jone's IR's that a little research and perspective can't cure.  I remember a training class when I started at jones that stated there were managed funds that outperformed the S&P 500 and then was given a hypo proving it.  I was new so I bought into it.  A few years later I went into the same hypo and looked at the details as noticed that the hypo did not include dividends paid by the S&P but did include the dividends paid by the mutual fund in question.  I contacted SL to ask why and was told the index doesn't track it as part of the overall gains so it won't show on the hypo.  I didn't actually use that hypo as part of my daily practice, so it didn't concern me that I might had given out innaccurate information, but had I not done the research I might have bought that information without a second thought.  Stating all of that, there are some managed funds that can outperform the S&P, just not the one Jones was plugging at that particular class. 

Anyway, without teaching terms like Due Diligence and the need to always attempt to do the right thing for your client the jones IR's are somewhat handicapped.  In my experience they are all nice people that are trying to do the right thing, but don't have the complete toolbox to get the job done.  It sort of scares me to think they are going to the FA model without actually giving more training to truly explain what that means.  I new computer program does not make a mutual fund salesman into an FA.

[QUOTE] A few years later I went into the same hypo and looked at the details as noticed that the hypo did not include dividends paid by the S&P but did include the dividends paid by the mutual fund in question.  I contacted SL to ask why and was told the index doesn't track it as part of the overall gains so it won't show on the hypo. [/quote]

Actually, it does, you need to compare the mutual fund Total return to the S&P500 Total Return Index. I'll let you guess why alot of people don't do this comparison...

Most S&P vs whatever comparisons/examples are hopeless muddled by using only the price return index vs the total return Index.

[quote]I didn't actually use that hypo as part of my daily practice, so it didn't concern me that I might had given out innaccurate information, but had I not done the research I might have bought that information without a second thought.  Stating all of that, there are some managed funds that can outperform the S&P, just not the one Jones was plugging at that particular class.[/quote]

There are plenty of unmanaged funds that can beat the S&P500TR as well. I.e S&P600 Value and other small cap value index funds. The S&P Dividend Aristocrats  (SDY) also beat the SPY on a total return basis.

[quote]In my experience they are all nice people that are trying to do the right thing, but don't have the complete toolbox to get the job done.  It sort of scares me to think they are going to the FA model without actually giving more training to truly explain what that means.  A new computer program does not make a mutual fund salesman into an FA.[/quote]

Thoughtlessness is not an excuse for competence/incompetence. To paraphrase Hannah Arendt:

It was sheer thoughtlessness that predisposed him to become one of the greatest criminals of the period.

When  EDJ moves to a fee platform, the IR's will again be outclassed by everyone else who is more intelligent/thorough. The only way to cure this problem is to move to a business model based on best practices. And EDJ must do enough training so that IR's can understand, internalise, and explain those practices. 

[quote=AllREIT]

There are plenty of unmanaged funds that can beat the S&P500TR
as well. I.e S&P600 Value and other small cap value index funds.
The S&P Dividend Aristocrats  (SDY) also beat the SPY on a
total return basis.

[quote=joedabrkr]

[quote=AllREIT]

There are plenty of unmanaged funds that can beat the S&P500TR
as well. I.e S&P600 Value and other small cap value index funds.
The S&P Dividend Aristocrats  (SDY) also beat the SPY on a
total return basis.

Jones has an ETF Focus list.

[quote=AllREIT]

When  EDJ moves to a fee platform, the IR's will again be outclassed by everyone else who is more intelligent/thorough. The only way to cure this problem is to move to a business model based on best practices. And EDJ must do enough training so that IR's can understand, internalise, and explain those practices. 

[/quote]

The other problem with this will be their "top advisor" presentations on converting a business to fees. Since Jones is so damn high and mighty they won't let anyone from the outside talk to their advisors you will have 20+ year vets teaching newbies and they won't know any more than the newbies about a fee business. Probably even less. It should be a great comedy of errors for our observation.

[quote=CIBforeveryone][quote=AllREIT]

When  EDJ moves to a fee platform, the IR's will again be outclassed by everyone else who is more intelligent/thorough. The only way to cure this problem is to move to a business model based on best practices. And EDJ must do enough training so that IR's can understand, internalise, and explain those practices. 

[/quote]

The other problem with this will be their "top advisor" presentations on converting a business to fees. Since Jones is so damn high and mighty they won't let anyone from the outside talk to their advisors you will have 20+ year vets teaching newbies and they won't know any more than the newbies about a fee business. Probably even less. It should be a great comedy of errors for our observation.

Thoughtlessness is not an excuse for competence/incompetence.

Good point, but I favor thoughtful diversification over thoughtful fund jockeying. There some generally "good" fund families, ETFs, cash, certificate choices. Those buy hold folks, as typified by the core philosophy at Jones, are generally on to something. Looks like their just catering to taste on the expanded wrap account program.

[quote=CIBforeveryone][quote=AllREIT]

When  EDJ moves to a fee platform, the IR's will again be outclassed by everyone else who is more intelligent/thorough. The only way to cure this problem is to move to a business model based on best practices. And EDJ must do enough training so that IR's can understand, internalise, and explain those practices. 

[/quote]

The other problem with this will be their "top advisor" presentations on converting a business to fees. Since Jones is so damn high and mighty they won't let anyone from the outside talk to their advisors you will have 20+ year vets teaching newbies and they won't know any more than the newbies about a fee business. Probably even less. It should be a great comedy of errors for our observation.

[/quote]

Actually, I worry about this, too.  There aren't going to be too many people to turn to for direction (that you can trust).  BUT, you have to start somewhere, and it's a step in the right direction.  It will definitely be interesting.

[quote=silouette]

Thoughtlessness is not an excuse for competence/incompetence.

Good point, but I favor thoughtful diversification over thoughtful fund jockeying. There some generally "good" fund families, ETFs, cash, certificate choices. Those buy hold folks, as typified by the core philosophy at Jones, are generally on to something. Looks like their just catering to taste on the expanded wrap account program.

[quote=AllREIT]
Also all this moaning about closed fund's. Roll your own fund with ETF's. I  hope everyone realises that the almost all of the outperformance of value funds vs the S&P500 vanishes when you benchmark them against S&P500 Value index/Russell 1K Value.
[/quote]

I'll agree with this statement, because you used the word "almost".  Of course, there's still actively managed Large Value funds that blow away their "best fit" benchmark. 

I feel that the most efficiency is found in the large cap parts of the market -- because of the prominence of the companies involved they recieve more analyst and media coverage on their equity and debt, supporting the "EMHypothesis".  But this efficiency gradiates from efficient to less efficient as you get smaller in market cap, or decrease in regulation (some foreign securities).

REIT, I like a lot of your posts, and feel that you offer a lot of informative and entertaining bits.  But once you posted something along the lines that all alpha is eroded by the expense of active management.  I couldn't agree with this less.  Using the same asset allocation model, our wrap accounts that hold etfs underperform our wrap accounts that hold actively mnged open end mutual funds. 

So comparing apples to apples (wrap accounts investing according to the same risk-tol. based asset-allocation models, and same 1% wrap fee, taken monthly), our actively managed accounts do better. 

P.S., I’m not trying to be argumentative, just wanted some inputs on the EMH/Indexing vs. Managed topic, and real world experiences.

[quote=Big Taco][quote=AllREIT]Also all this moaning about closed
fund’s. Roll your own fund with ETF’s. I  hope everyone realises
that the almost all of the outperformance of value funds vs the
S&P500 vanishes when you benchmark them against S&P500 Value
index/Russell 1K Value.[/quote]

I'll agree with this statement, because you used the word "almost".  Of course, there's still actively managed Large Value funds that blow away their "best fit" benchmark. [/quote]

That last bit usually vanishes if you benchmark against the "Pure-style" s&p indexes (available in ETF's from Rydex). The best way to outperform your benchmark is to specify the wrong benchmark. So if I run a small cap value fund, I'd want to be benchmarked vs the S&P 500, or even better that s&p 500 pure growth index.

Most alpha vs the S&P500 vanishes after you adjust for value/small cap exposures. In most cases that residual alpha is not persistant nor statisticly significant vs  normal market varience.

Personally, I think alpha is an unsolvable problem, so I focus on asset allocation, psychological toughness, risk management, and investing in my speciality area (being speciality finance companies).

[quote]I feel that the most efficiency is found in the large cap parts of the market -- because of the prominence of the companies involved they recieve more analyst and media coverage on their equity and debt, supporting the "EMHypothesis".  But this efficiency gradiates from efficient to less efficient as you get smaller in market cap, or decrease in regulation (some foreign securities).[/quote]

This has been back and forth debated b/c of the issue of the "glamour premium." Look at the stocks Warren Buffet own's, and you'll see he has a lot of large cap stocks. Lots of large caps suffer from "Boring stock syndrome".

XOM is boring, GOOG is good. Both are large caps.

As for small caps, its hard to say, because there is alot of analyst coverage out there, but its not from the normal shops. There is actually an etf "STH" that focuses on stocks with less than 3 analysts and good fundamentals.

This is also good time to bring up the question of why don't the retail brokerage analysts cover more dividend stocks that would be useful for retail investors to own.

[quote]REIT, I like a lot of your posts, and feel that you offer a lot of informative and entertaining bits.  But once you posted something along the lines that all alpha is eroded by the expense of active management.  I couldn't agree with this less.  Using the same asset allocation model, our wrap accounts that hold etfs underperform our wrap accounts that hold actively mnged open end mutual funds. [/quote]

Since I don't know the specifics of your situation, I'll limit myself to saying that in general, actively managed money does not outperform its benchmarks. You may be lucky, and have found good managers, but the odds are against it.

Alpha has to be judged against the costs of obtaining it, it is very easy to outperform (usually based on luck alone) before the impact of fund expenses. 

[quote=Big Taco][quote=AllREIT]Also all this moaning about closed fund’s. Roll your own fund with ETF’s. I  hope everyone realises that the almost all of the outperformance of value funds vs the S&P500 vanishes when you benchmark them against S&P500 Value index/Russell 1K Value.

I'll agree with this statement, because you used the word "almost".  Of course, there's still actively managed Large Value funds that blow away their "best fit" benchmark. [/quote]

That last bit usually vanishes if you benchmark against the "Pure-style" s&p indexes (available in ETF's from Rydex). The best way to outperform your benchmark is to specify the wrong benchmark. So if I run a small cap value fund, I'd want to be benchmarked vs the S&P 500, or even better that s&p 500 pure growth index.

Most alpha vs the S&P500 vanishes after you adjust for value/small cap exposures. In most cases that residual alpha is not persistant nor statisticly significant vs  normal market varience.

I agree, impurity in mutual fund's styles play a role when we're talking about the elusive 'alpha'.  Still, I use software to xray, and look holistically at the asset allocation of each portfolio.

Personally, I think alpha is an unsolvable problem, so I focus on asset allocation, psychological toughness, risk management, and investing in my speciality area (being speciality finance companies).

We focus on the asset allocation also, based on a clear understanding of the client's risk tolerance, and managing client expectations

It sounds like you may have some of your own "active management" influence if you're overweighting Specialty Financials?

[quote]I feel that the most efficiency is found in the large cap parts of the market -- because of the prominence of the companies involved they recieve more analyst and media coverage on their equity and debt, supporting the "EMHypothesis".  But this efficiency gradiates from efficient to less efficient as you get smaller in market cap, or decrease in regulation (some foreign securities).[/quote]

This has been back and forth debated b/c of the issue of the "glamour premium." Look at the stocks Warren Buffet own's, and you'll see he has a lot of large cap stocks. Lots of large caps suffer from "Boring stock syndrome".

XOM is boring, GOOG is good. Both are large caps.

As for small caps, its hard to say, because there is alot of analyst coverage out there, but its not from the normal shops. There is actually an etf "STH" that focuses on stocks with less than 3 analysts and good fundamentals.

This is also good time to bring up the question of why don't the retail brokerage analysts cover more dividend stocks that would be useful for retail investors to own.

[quote]REIT, I like a lot of your posts, and feel that you offer a lot of informative and entertaining bits.  But once you posted something along the lines that all alpha is eroded by the expense of active management.  I couldn't agree with this less.  Using the same asset allocation model, our wrap accounts that hold etfs underperform our wrap accounts that hold actively mnged open end mutual funds. [/quote]

Since I don't know the specifics of your situation, I'll limit myself to saying that in general, actively managed money does not outperform its benchmarks. You may be lucky, and have found good managers, but the odds are against it.

We filter well, and when the playing field has been narrowed by certain parameters, we research what's left, running them through some routines.  I know you don't like to hear this, but one of our biggest problems is funds that we use closing.

Alpha has to be judged against the costs of obtaining it, it is very easy to outperform (usually based on luck alone) before the impact of fund expenses. 

I'm comparing actual, bottom line returns of etf wraps and fund wraps, with the same underlying asset allocation models, same wrap fee (1%, taken monthly).

For myself, I am my own superstar manager. So good, I have to be registered with the SEC. 



If you finding funds that work for you, more power to you. Personally,
I do my own ETF wrap which attempts to replicate DFA funds. Then on top
of that I add my own expertise (or lack thereof) in REITs to the
portfolio.

[quote=AllREIT]For myself, I am my own superstar manager. So good, I have to be registered with the SEC. 

If you finding funds that work for you, more power to you. Personally, I do my own ETF wrap which attempts to replicate DFA funds. Then on top of that I add my own expertise (or lack thereof) in REITs to the portfolio.
[/quote]

The bad one's don't have to register with the SEC?

[quote=AllREIT]For myself, I am my own superstar manager. So good, I have to be registered with the SEC. 

If you finding funds that work for you, more power to you. Personally, I do my own ETF wrap which attempts to replicate DFA funds. Then on top of that I add my own expertise (or lack thereof) in REITs to the portfolio.
[/quote]

Stop me if this has already been discussed on here, and I'm also being lazy, because I could probably google this myself...  I've heard of DFA's, from reading Trevor Moriens site, and other trade articles.

Why are they so special? 

Do you really have to take a rigorous qualification course to offer them?  

Do you have to be a RIA only to offer them? 

How are they different from asset allocation index funds?

I spoke with a client, who is also an RIA (has insurance with us), and this person was essentially bragging about a fund family that they sell that no one in [a huge tri-state-plus regional area] can sell.  I said: "you mean DAF?"  they corrected me, said "DFA", oops...  anyway: Was this person blowing smoke?  Or are they really that exclusive?

[quote=Big Taco]

[quote=AllREIT]For myself, I am my own superstar manager. So good, I have to be registered with the SEC. 

If
you finding funds that work for you, more power to you. Personally, I
do my own ETF wrap which attempts to replicate DFA funds. Then on top
of that I add my own expertise (or lack thereof) in REITs to the
portfolio.
[/quote]

Stop me if this has already been discussed on here, and I'm also being lazy, because I could probably google this myself...  I've heard of DFA's, from reading Trevor Moriens site, and other trade articles.

Why are they so special? 

Do you really have to take a rigorous qualification course to offer them?  

Do you have to be a RIA only to offer them? 

How are they different from asset allocation index funds?

I spoke with a client, who is also an RIA (has insurance with us), and this person was essentially bragging about a fund family that they sell that no one in [a huge tri-state-plus regional area] can sell.  I said: "you mean DAF?"  they corrected me, said "DFA", oops...  anyway: Was this person blowing smoke?  Or are they really that exclusive?

You know, REIT, I'm starting to feel that in an age where people will argue EMH on the grounds that there's so much real-time information, I will argue that there's an EAT.  (the A stands for Academic). 

If the DFA guys are "some big wheel's in academic finance", then when it comes to asset allocation indexing, vanguard or fidelity no load, or you with your etf wrap, etc... has to be close to what DFA is doing?  They're privy to much of the same statistical back testing, computing power, ability to hire academic talent, and of course, we're talking about INDEXing here, right?  That takes most guess work out right there, doesn't it? 

Again, I'm not trying to be obnoxious, just curious.

[quote=Big Taco]If the DFA guys are “some big wheel’s in academic
finance”, then when it comes to asset allocation indexing, vanguard or
fidelity no load, or you with your etf wrap, etc… has to be close to
what DFA is doing?  They’re privy to much of the same statistical
back testing, computing power, ability to hire academic talent, and of
course, we’re talking about INDEXing here, right?  That takes most
guess work out right there, doesn’t it? [/quote]



I’m not getting what you are talking about.



The point is process and tools. DFA funds are useful tools for people
who believe in EMH/Passive investing and want slightly more
sophisticated tools just ETFs. DFA funds provide a smooth skew towards
smallcap/value vs ETF’s which tend to be more discrete.



Thanks to low fund turnover, their small/micorcap funds tend to hold more illiquid stocks.



EMH’ers care about process, believing realised results are due to luck/factor exposure.

As far as my EAT (efficient academic theory) goes, if EMH is based on the idea that there's so much real-time info on all investments in the marketplace, that any inefficiencies are immediately zeroed out (is this correct?), then there must be enough real-time accessible data that we don't need these braniacs from DFA, you should be able to get passive asset allocation index funds from vanguard, fidelity, etc.  Is this a viable argument?

what I'm saying is: if they truly believe in EMH, a) then that makes security selection a moot point, because they'll just want whatever's in the appropriate indexes based on their AA, b) and marketing timing is of course, moot, because there's no inefficiency to exploit, right? 

So if it all just comes down to 1) lowest expense 2) matching passive indexed investments with appropriate AA, then what is DFA offering that a vanguard (T Rowe,Fidelity,etc.) AA index fund won't?  I don't get it yet.  Are they tactically allocated?  or static AA?  I thought EMHers wouldn't go for tactical ANYthing, because they feel there's never any worthwhile inefficiency to exploit? 

I'm definitely not in my element on a EMH discussion, because I don't beleive all the markets are very efficient.  That's why I'm asking.  I don't know if the basis for my reasoning is correct.

If EMHers don't worry about market timing or security selection (because their index funds will buy/sell a security when it enters/exits the index based on market cap), then it would seem that the only thing left is a) fees, and b) Asset Allocation, right? 

So DFA does better (tactical?) asset allocation and lower fees than other passive asset allocation funds? 

I think the efficient frontier is a piece of crap...

1.  Not everyone has access to the same information.

2.  Too much in financial statements is based on estimates.

3.  There are too many unknowns in companies that rely heavily on R&D.

4.  It is too easy for management to massage the numbers.

5.  All of this gets amplified with stocks that get little coverage.

MPT is a nice theory, and it might work if everything was 100% transparent, but I don't see this matching reality, and thus, I'll never be an indexer.

[quote=Indyone]

I think the efficient frontier is a piece of crap...

1.  Not everyone has access to the same information.

2.  Too much in financial statements is based on estimates.

3.  There are too many unknowns in companies that rely heavily on R&D.

4.  It is too easy for management to massage the numbers.

5.  All of this gets amplified with stocks that get little coverage.

MPT is a nice theory, and it might work if everything was 100% transparent, but I don't see this matching reality, and thus, I'll never be an indexer.

[/quote]

I agree.  I know that stats will say that 80-90% (or whatever) of funds underperform relevant benchmarks... well, out of nearly 20,000 funds, there should still be enough fodder out there for those who have the systems to find the good ones.  And that's just funds.  Of course there's so many other actively managed investments to plug into asset allocation models... 

that's not to say that some of our wrap accts aren't made entirely of etf's, but my whole tirade began because over the last 3 yrs (when we began using etf's), none of our etf accts have outperformed our fund wrap accts.  We want to offer the best investments to clients, so I'm not going to be closed minded.  that's why I was asking AllReit questions on this.

[quote=Indyone]I think the efficient frontier is a piece of crap…

MPT is a nice theory, and it might work if everything was 100% transparent, but I don't see this matching reality, and thus, I'll never be an indexer.[/quote]

wait, do you not like EMH, or MPT, or both?

and on the EMH once again, I remember reading a blog from Travis Morien about how he attended a conference w/ Fama & French, and his perception was that even one of those guys wasn't as gung-ho about EMH as would be expected... but that's hearsay.

My actively managed wrap accounts also beat the indexes consistently.  It’s all about picking the right horses.  Why would anyone want to track the indexes and underperform by their fee?!!

[quote=Indyone]My actively managed wrap accounts also beat the indexes consistently.  It's all about picking the right horses.  Why would anyone want to track the indexes and underperform by their fee?!![/quote]

The only time we put people into etf wraps is when they want it for some reason (too much CNBC?) or they're acting weird about fees...  But I'm always thinking: "great, 6 months from now I get to show you how we underperformed the indexes".  But eventually, I get some of them to go w/ our fund wraps, which beat other asset allocation investments (C shares, VAs w/ AA, etc.) that I watch.

I'm still looking for the etf or index AA investment product that is competitive to show clients, cuz the EMH story would be a real nice yarn to spin on the white board!

[quote=Big Taco]

I'm definitely not in my element on a EMH discussion, because I don't beleive all the markets are very efficient.  That's why I'm asking.  I don't know if the basis for my reasoning is correct.

If EMHers don't worry about market timing or security selection (because their index funds will buy/sell a security when it enters/exits the index based on market cap), then it would seem that the only thing left is a) fees, and b) Asset Allocation, right? 

So DFA does better (tactical?) asset allocation and lower fees than other passive asset allocation funds? 

[quote=Big Taco]So if it all just comes down to 1) lowest expense 2)
matching passive indexed investments with appropriate AA, then what is
DFA offering that a vanguard (T Rowe,Fidelity,etc.) AA index fund
won’t?  I don’t get it yet.  Are they tactically
allocated?  or static AA?  I thought EMHers wouldn’t go for
tactical ANYthing, because they feel there’s never any worthwhile
inefficiency to exploit?  [/quote]



Mostly DFA is offering smoother indexes and more comprehensive funds.
I.e without the discrete jumps from having single Large/Mid/Small
indexes and because people who invest with DFA tend to be long term
folks, the funds to offer much more complete exposure to the
small/microcap market segments.



It’s all static, and its up to the advisor to choose how much more risk
exposure to small+value he wants over the total market index.

[quote=Big Taco]

and on the EMH once again, I remember reading a
blog from Travis Morien about how he attended a conference w/ Fama
& French, and his perception was that even one of those guys wasn’t
as gung-ho about EMH as would be expected… but that’s hearsay.

It’s too bad this conversation is buried in a EDJ thread, this is good stuff.

[quote=AllREIT] The classic story is of two finace professors from UoChicago walking along and seeing a $100 bill on the sidewalk. One prof tells the other not to bother to pick it up, since if it really was a $100 bill someone would have picked it up already.
[/quote]

Hilarious!

I looked up DFA on Advisor Workstation.  I’d use some of them.  But reading about their corporate culture, and how they “turn away” advisors who don’t completely buy into their EMH culture, well, that’s not me.  I like that Europe fund, though. (DFCSX)

Everytime I realize a club is too exclusive for me, I remember the Groucho Marx quote:  “I don’t care to belong to any club that will have me as a member”

[quote=Big Taco]I looked up DFA on Advisor Workstation.  I’d use
some of them.  But reading about their corporate culture, and how
they “turn away” advisors who don’t completely buy into their EMH
culture, well, that’s not me.  I like that Europe fund, though.
(DFCSX)

Everytime
I realize a club is too exclusive for me, I remember the Groucho Marx
quote:  “I don’t care to belong to any club that will have me as a
member”[/quote]



It depends, in someways its just a varient of EDJ’s kool-aid and
preferred funds. Although the level of sophistication on both sides
(advisor/client) is much higher.



Also, the situation they don’t want is a bunch of performance chasing
FA’s cluttering up the funds operations with constant in/out flows.
Like all passive funds, they tend to have top quartile performance
(since 80%+ of active managers can’t beat indexes)



Once you understand whats going on, it is very easy to replicate using ETFs.

I agree, Max…I almost didn’t even see this conversation because of where it was…

No, I get it.  It's good.  The exclusivity ensures that investors are more buy&hold, which decreases outflows, which inturn decreases expenses.  I like it, I'm just not an EMHer.  I still haven't found the way to charge 1%, invest according to appropriate asset allocation, AND offer index-beating returns consistently with index/passive investments.  my office is still impressing clients the most with our actively managed fund wraps.

If I could get the best returns w/ passive investing, I'd be writing the expenses line-item on the whiteboard all day everyday, next to the alpha, beta, std dev..., and comparing them to how we "used to" invest in managed funds.  Slam dunks. 

[quote=Maxstud]It's too bad this conversation is buried in a EDJ thread, this is good stuff. [/quote]

Max,

 I have to agree. Most viewing this thread are Jonesers. EMH,DFA,ETF, bounded arbitrage - WTF?  90% of us Jonesers don't have a clue about this and the other 10% are leaving and could care less.

[quote=Big Taco]

No, I get it. It’s good. The exclusivity ensures that

investors are more buy&hold, which decreases outflows, which inturn

decreases expenses. I like it, I’m just not an EMHer. I still haven’t found

the way to charge 1%, invest according to appropriate asset

allocation, AND offer index-beating returns consistently with index/

passive investments. my office is still impressing clients the most

with our actively managed fund wraps.

If I could get the best returns w/ passive investing, I’d be writing the

expenses line-item on the whiteboard all day everyday, next to the alpha,

beta, std dev…, and comparing them to how we “used to” invest in

managed funds. Slam dunks.

[quote=Philo Kvetch] The ability to use stops helps to protect
the portfolio when the particular index turns south.[/quote]

What do you mean by the ability to use "stops"? 

and when you say it's not about using 1 etf to beat 1 index, do you mean: utilize appropriate asset allocation for clients' risk tolerance? 

Because we do that.  It's when we use the same exact risk tolerance asset allocation model (modrate, moderate aggressive, etc) for both an etf wrap charging 1%, OR a managed fund wrap charging 1%, that the managed accounts have always beaten the etf wrap returns consistently.

stops = stop orders? 

Yes.

[quote=Philo Kvetch]In reality, it’s not about one ETF’s inability to beat it’s corresponding
index. It can’t. It’s about an appropriate mix of ETFs generating a
positive net return for the client. The ability to use stops helps to protect
the portfolio when the particular index turns south.[/quote]



This is something alot of folks don’t understand. SPY will not beat the S&P 500 index.



An ETF is measured on its ability to track an index, not on the
performance of the underlying index. For example the XHB SPDR
homebuilder ETF has done a good job tracking its index, however XHB’s performance sucks though.



Recently there have been alot of “alpha seeking” ETF’s come to market
from Powershares, Claymore, FirstTrust etc. These all have high fee’s
(0.60-0.80%). Some of them seem pretty neat, such as the CSD (Clear
Spinoff Index) and NFO (Sabrient Insider Sentiment) etf.



IMHO these etf’s have “strategy risk” embeded in them. I.e owning the
PIV etf is a bet on the Valueline system, owning PDP a bet on Dorsey
Wright’s Relative strength methodology etc. Alot of these strategies
are untested and will probably not perform as well as backtests. The general rule is that financial gadget’s don’t work very well.



It’s getting to the point where you can do pretty much anything with
ETF’s these days. For example, I have a few "socially responsible"
clients, so for them I use the DSI/KLD funds and a vanguard mortgage
backed securities fund (No US T-bonds since they finance the evil Bush
regime.)

Philo, I don’t understand why you would want to sell an asset class when it’s down.  Isn’t that a great opportunity to buy inexpensively when you rebalance?  Take profits from the areas that did well last year or quarter and reinvest into the etf that did poorly during that time? 

I had not considered placing stops on etfs.  Plus, market orders expire so quickly.

[quote=Big Taco]Philo, I don't understand why you would want to sell an asset class when it's down.  Isn't that a great opportunity to buy inexpensively when you rebalance?  Take profits from the areas that did well last year or quarter and reinvest into the etf that did poorly during that time? 

I had not considered placing stops on etfs.  Plus, market orders expire so quickly.[/quote]

Philo, I had to respond to this.

What??  Taco you must be kidding. Don't tell me at your clients annual review you say, "oh this small cap value did 31 percent last year we need to sell it or take profit and buy our worst performing large cap growth fund that did 4."  You could have done this the last 5 years and killed your clients returns.  Some of us don't follow the pie chart methodology. I suggest you explore what your company may not be teaching you. Let's take for instance joneses preferred list. They never changed that lie until they got their ashes put against the flames from the revenue sharing. Voyager was on that list until it was a joke to see how long they could keep it there. 

What I am saying is if Philo sells an etf because it is down. He may be using a different methodology that says this class etf is not longer supported for whatever reason. He doesn't buy down, because it could 3 months, 6 month,s or 3 years before that class gets support.  Those of us that use technical analysis understand. My opinion is to never put a time frame around the investment itself. It is what it is.   Clients are the ones that think in 12's. We don't know when high is high and low is low.

[quote=Bamzor]

What I am saying is if Philo sells an etf because it
is down. He may be using a different methodology that says this class
etf is not longer supported for whatever reason. He doesn’t buy down,
because it could 3 months, 6 month,s or 3 years before that class gets
support.  Those of us that use technical analysis understand. My
opinion is to never put a time frame around the investment itself. It
is what it is.   Clients are the ones that think in 12’s. We
don’t know when high is high and low is low.

That’s the name of the tune with stops…watch the spacing, and move up

with the market. You get whip-sawed occasionally, but you make the client

aware that it can happen, and if the client gets out with some big gains (like

the REITs mentioned by ALLREIT), they’re pretty happy. I haven’t met the

client yet who complains about locking in a gain and then watch the position

tumble after they’re on the sidelines.

[quote=AllREIT]
Buy sell decisions should be motivated by objective/rational reasons. Very dangerious to go chasing what is hot and avoiding what is cold.

[/quote]

I concur about chasing what is hot an avoiding what is cold. My post doesn't imply this rationale. However, selling a good investment to put in a poor investment is very dangerous to your clients bottom line. Especially when trying to can a market cycle into a 12 month period to do this.

Allreit my methods are adding to the traditional fundamentalist view.  I use fundamental analysis to get my stock list and technical analysis to know when to buy and to sell.  For mutual funds, etfs, shorting I use technical analysis alone. Anyone can buy and hold, sell best performers to buy the lowest performers. That is elementary, thats why jones does not want anyone to think for themselves. My clients know when a market shifts what is going to happen. I do take a lot of time to educate them. We know when we are going to sell, how much profit we will take when trigger points happen, when to tighten stops. Some positions could be for just a few weeks, some years.

Is this method for everyone, no. I do not want every prospect.  I understand my methods are a minority in the investment business. I simple believe it is because people want the easy method and this requires more time.  If you simply follow the fundamentalist view, you are not the man. You are relying on someone else to tell you what action to take. My success has been better than I have ever dreamed due to my clients and sharing with them my methodology. They now more than ever feel like they have control.  They have listen to all the big firms analyst tell them to keep holding on to Enron. When technical analysis would have told you over and over to get out.

[quote=Bamzor]

[quote=Big Taco]Philo, I don't understand why you would want to sell an asset class when it's down.  Isn't that a great opportunity to buy inexpensively when you rebalance?  Take profits from the areas that did well last year or quarter and reinvest into the etf that did poorly during that time? 

I had not considered placing stops on etfs.  Plus, market orders expire so quickly.[/quote]

Philo, I had to respond to this.

What??  Taco you must be kidding. Don't tell me at your clients annual review you say, "oh this small cap value did 31 percent last year we need to sell it or take profit and buy our worst performing large cap growth fund that did 4."  You could have done this the last 5 years and killed your clients returns.  Some of us don't follow the pie chart methodology.

Yes, we rebalance.  In our wrap accounts we'll sell parts of the positions that have grown larger than the particular asset allocation model supports, and take that profit and reinvest it in the positions that didn't do as well, or lost value.  We do this mechanicly, and take much of the emotion out.  Yes, we make some tactical asset allocation decisions, but we're still disciplined in our rebalancing approach and try to stay humble enough to realize that we can't consistently outguess the markets.

I suggest you explore what your company may not be teaching you.

I didn't learn the finer points of MPT and asset allocation at a weekend retreat.  Who won a nobel peace price for your methodology?

 Let's take for instance joneses preferred list. They never changed that lie until they got their ashes put against the flames from the revenue sharing. Voyager was on that list until it was a joke to see how long they could keep it there. 

Why are we talking about revenue sharing?  Our security selection involves filtering, then zephyr analysis, and further scrutinizing by us.  We don't pick them from the "preferred list".

What I am saying is if Philo sells an etf because it is down. He may be using a different methodology that says this class etf is not longer supported for whatever reason. He doesn't buy down, because it could 3 months, 6 month,s or 3 years before that class gets support.  Those of us that use technical analysis understand.

I'm aware of what technical analysis is, but thanks for not patronizing me.  regardless of whether or not an asset class is getting support for 3 months or 3 years, rebalancing will insure that we keep adding to the asset classes that aren't doing as well, which will in turn insure that these areas are bought at a discount.  They will come around again.  This also insures that we're not buying the classes that are "hot", and buying them at premium prices.

My opinion is to never put a time frame around the investment itself. It is what it is. 

It sounds like market timing to me.  maybe I misunderstand it. 

 Clients are the ones that think in 12's. We don't know when high is high and low is low.

precisely why we rebalance, and take the emotion out of the equation.