Jones Secrets Revealed, Part V

Oh, and when the check arrives in the mail, be sure and wait until Shamrock Saturday to put in the trades because you can win an Edward Jones snow globe from the fixed income department if you generate over $1000 in gross commission if you are Segment 1 or Segment 2!

Then be sure you send a wire to the Regional Leader and let him know you are in working hard! (After you sign in on the class system of course).

Woah Woah Woah!  If I had known they were giving away snow globes…

Whereas, if you are"Indy", you just put them in a fee based account and

collect 1% for life. Much more ethical.

B24-

What is more ethical? Do what you think is right for the client, or let the client choose their money management fees structure? I thought the same as you until I asked the client what they preferred. I was astounded to find that the client would prefer to pay me more over the long term with the understanding that I could avoid the obvious conflicts that you Jones brokers actually think is better for the client.  

I know you are going to find this hard to believe, but some clients actually prefer fee based. What I find even more interesting is now I don't care which way a client pays me. I let them choose. And some prefer that the inherent conflicts with transactions are not what they want with their financial advisor, so I can accomodate. You will too as more and more clients leave or probably never consider EDJ.

And you will wonder why..

[quote=spikedkoolaid]

The liquidate and transfer form that Jones has clients sign is the biggest form of churning/unethical behavior that Jones covers up.

Let me explain:  Unassuming client brings in a statement to get a "free portfolio review".  The IR suggests that they transfer their account in to EDJ.  Instead of transferring in-kind the T-Rowe Price Int'l Fund, the Calamos Growth fund, the Phoenix Mid-Cap Value fund, the Alliance International Value fund, and the Legg Mason Value Trust.  They say, let's Liquidate and Transfer this $400,000 account and put it into two different fund families. 

I would hope that Jones would start asking the IR where this $400,000 check is coming from and why did the client decide to liquidate and transfer the account.  What funds were the client invested in, etc.  I just wish that the field supervision at Jones would ask more questions of the IR when they get a big check deposited into an account.

[/quote]

My own RL in NC told us regularly at our meetings that every client had 2 problems: taxation and diversification.  Liquidate and transfer were also readily talked about for new IRs to do like vets.

[quote=footsoldier]

B24-

What is more ethical? Do what you think is right for the client, or let the client choose their money management fees structure? I thought the same as you until I asked the client what they preferred. I was astounded to find that the client would prefer to pay me more over the long term with the understanding that I could avoid the obvious conflicts that you Jones brokers actually think is better for the client.  

I know you are going to find this hard to believe, but some clients actually prefer fee based. What I find even more interesting is now I don't care which way a client pays me. I let them choose. And some prefer that the inherent conflicts with transactions are not what they want with their financial advisor, so I can accomodate. You will too as more and more clients leave or probably never consider EDJ.

And you will wonder why..

[/quote]

Footsoldier, I had the same experience when I left EDJ for ML.  Fee based accounts were explained in detail to my former EDJ clients versus the A shares that Jones pushed us new IR's to do.  EVERY SINGLE ONE OF THEM preferred the fee based.  The FA had a vested interest in a client's portfolio performing well and the client knows it.

[quote=spikedkoolaid]

The liquidate and transfer form that Jones has clients sign is the biggest form of churning/unethical behavior that Jones covers up.

Let me explain:  Unassuming client brings in a statement to get a "free portfolio review".  The IR suggests that they transfer their account in to EDJ.  Instead of transferring in-kind the T-Rowe Price Int'l Fund, the Calamos Growth fund, the Phoenix Mid-Cap Value fund, the Alliance International Value fund, and the Legg Mason Value Trust.  They say, let's Liquidate and Transfer this $400,000 account and put it into two different fund families. 

I would hope that Jones would start asking the IR where this $400,000 check is coming from and why did the client decide to liquidate and transfer the account.  What funds were the client invested in, etc.  I just wish that the field supervision at Jones would ask more questions of the IR when they get a big check deposited into an account.

[/quote]

Spiked- One of my biggest gripes industry wide is what you just talked about..... I try to transfer inkind whenever possible and just do some exchanges if necessary for the client's risk tolerance. I personally like having to sign a switch letter as there is usually a reason that we are moving......not because I want a payday.

Foot, actually, I don’t think fee based is bad. I would love to have a better

platform to do it. My only issue is the general suggestion that liquidating

and transferring in order to move a client into investments you believe in,

AND earn a living doing good for your client is somehow wrong or

unethical. I am not going to take on a crappy portfolio and have

responsibility for managing it, AND not make money on it, just because it

is cheaper for the client. As most would agree, cheaper is not always

better.



Here’s the thing, though. If a client has a really good MF portfolio (we’ll

just talk about MF’s for right now), that you can work with, but the client

just wants a better broker, one would instinctively think that you should

try to work with what they have. BUT, is it entirely appropriate for me to

not earn any money for managing that portfolio? You would be getting

1% for life, I would be getting zero (maybe .25% x 40% if it carries a

12b1). On top of that, I now have to follow and track investments that

are not part of my core focus (Indy or not, we all have funds and stocks

we follow and are partial to).



My point is, we all need to get paid for our services. At EDJ, I am not

fortunate enough to have an adequate managed money platform, so I

work it out on commissions (and some MM). I do not have a conflict of

interest, because I utilize the funds I believe in. Do I use the preferred

funds? Sure, about 85% of the time. But I would not even touch 3 of our

preferred families. But I am not going to take on portfolios with dozens

of different fund families, because I do not follow them, I do not believe

in them (because I do not follow them), and I am not going to try because

it takes my eye off the ball. I am not going to apologize for how I manage

money, because it is in the best interest of the client, just as what you do

is ALSO in the best interest of the client. We just have different ways of

doing it. AND, you make more money for doing it than I do.



Here’s the thing: if you are good at what you do, are honest with your

client about fees/commissions, and you charge a REASONABLE price for

your services, there is not a conflict of interest under ANY platform, fee

based or commission based. A good, ethical broker will NEVER have a

conflict of interest. I am comfortable with doing the right thing for my

client AND making money doing it. Now, trading securities or moving

among A share families just for the purpose of generating additional

commissions is wrong. BUT, so is collecting 1% if you are not staying on

top of your accounts and just riding an electric cart every afternoon (I am

not suggesting that anyone specific does that - I am just stating that

there are potential conflicts of interest in EVERY model).

[quote=Broker24] Whereas, if you are"Indy", you just put them in a fee

based account and

collect 1% for life. Much more ethical.[/quote]



No offense B24, but hijacking this thread deserves a boot in the nuts.



I’d say take it to another thread for the 1% vs. A-share debate. It’s been

covered to death in other places.



Liquidate and transfer documents from EJ will be on the forefront soon I

smell lawsuits (even if I have to initiate it myself) which will turn into class

action lawsuits.



This one will be a loser for EJ. It’s a horrible practice, and terrible way for

a compliance department to turn their heads to the mutual fund

replacement issue and churning.



C

I do not have a conflict of interest, because I utilize the funds I believe in. Do I use the preferred funds? Sure, about 85% of the time.

B24-

You deserve to be paid. Period. You deserve to have all the options the marketplace offers so you can be totally and completely unbiased in your proposals to clients.

You must ask yourself as many of us have, am I in the right place or the right firm that affords me the opportunity to do the right thing always. I was in your camp for many years, but one day I realized I was being manipulated.

The conflicts you have as an agent transcend you when you are an employee. i.e., If you are representing your firm and they admit to conflicts of interest, and you can obviously not do anything about it, then the argument would seem reasonable that you in fact become part of the conflict. 

I felt the same was as you a couple of years ago. Now I can understand the difference and I can empathize with your situation. Don't fool yourself into thinking because you choose, that you are free of the conflict. The Jones box of goodies is extremely limited. And they get paid more through kickbacks than they do from commissions.

You can only be free one way in our industry.

Broker 24 and others-

You are missing the point.  The point is that I would like Edward Jones to require that all transfers be in-kind.  Then if you want to liquidate and move the money into something that you feel you can manage effectively, so be it.  At least then you will have to answer to your field supervisor as to why the change is necessary.

Pretty simple!

This is a HUGE loophole in the supervision of IR's and needs to be corrected.

I've been at Jones 2 plus years now and I've never even heard of this liquidate and transfer form.  I can tell you it's not something that anyone has ever encouraged me to use.

I understand the conflicts and all that argument (and agree to some degree with both sides) but the question I think is: 

Do you have a responsibility to research every mf that some prospect may have in order to keep the "best" ones?   

In my opinion this sounds like a terrible idea regardless of commission or fee based. (Of which I prefer fees)  

Now, to take into consideration capital gains is a whole different topics.

But say a client has a 500k IRA they are transferring to you.  My opinion (subject to change) is that the best approach is to liquidate and put them in the model you use and believe in and are able to monitor.  You will do yourself and your clients a disservice trying to track 250 or more funds. 

I don't know if this is old news but it was reported on financial-planning.com on January 5,2007.

NASD Fines Four Firms For Not Waiving Charges

The NASD fined four brokerage firms $850,000 for failing to waive front-end sales charges for customers buying Class A shares

The NASD fined four brokerage firms $850,000 for failing to waive front-end sales charges for customers buying Class A shares by not having adequate supervisory systems and procedures in place. In addition, the companies must repay $43.8 million to the overcharged customers.

As far as the remediation is concerned, Edward Jones is paying $25 million, plus interest; RBC Dain Rauscher $6.8 million, plus interest; Royal Alliance $1.6 million, plus interest; and Morgan Stanley $10.4 million, plus interest.

"Securities firms must learn all of the relevant pricing features of the fund shares they sell and ensure that eligible investors receive all available discounts and sales charge waivers-without exception," said James S. Shorris, NASD executive vice president and head of enforcement.

From 2002 to 2004, a number of mutual fund families offered customers who redeemed shares for which they paid a sales charge to use that money to buy Class A shares of a new mutual fund without paying a sales charge. The NASD found that the four brokerages failed to eliminate the front-end sales charge.

I think this fine explains that there is loopholes in Edward Jones’ supervision.  They don’t have the technology nor the eyeballs to effectively manage the IR’s who are abusing the “Liquidate and Transfer” form.  Please start using the ACAT and transfer in kind!

Spiked-

How else will the Jones reps get paid?

[quote=spikedkoolaid]I think this fine explains that there is loopholes in Edward Jones' supervision.  They don't have the technology nor the eyeballs to effectively manage the IR's who are abusing the "Liquidate and Transfer" form.  Please start using the ACAT and transfer in kind![/quote]

I agree with you, Spiked...

[quote=Broker24] I am not going to take on a crappy portfolio and have
responsibility for managing it, AND not make money on it, just because it
is cheaper for the client. As most would agree, cheaper is not always
better.

[/quote]



That’s why they pay you the big bucks. Just adopt a policy that
transfered in accounts go to a fee based platform. EDJ is holding onto
an obsolete business model.


[quote] Here’s the thing, though. If a client has a really good MF portfolio (we’ll
just talk about MF’s for right now), that you can work with, but the client 
just wants a better broker, one would instinctively think that you should
try to work with what they have.



BUT, is it entirely appropriate for me to
not earn any money for managing that portfolio? You would be getting
1% for life, I would be getting zero (maybe .25% x 40% if it carries a
12b1). On top of that, I now have to follow and track investments that
are not part of my core focus (Indy or not, we all have funds and stocks
we follow and are partial to).
[/quote]



Funds are funds, you are not working in the best interests of the clients
if you run their money through the deli slicer again. How you get paid
and the best interests of the clients are two different things.


[quote]My point is, we all need to get paid for our services. At EDJ, I am not
fortunate enough to have an adequate managed money platform, so I
work it out on commissions (and some MM). I do not have a conflict of
interest, because I utilize the funds I believe in. Do I use the preferred
funds? Sure, about 85% of the time. But I would not even touch 3 of our
preferred families.[/quote]



Just because you say you don’t have a conflict, doesn’t mean that there isn’t one.



You take clients out of old funds, often already paid for, to put them
into new funds (thus earning fresh commisions).  Some of those new
funds even give you an extra kickback. In fact you transfer clients to
funds that give you a kickback 85% of the time.



Do you see how this looks to everyone else outside of EDJ?



The core problem is that the transactional model is not suited to long
term investment of money. I like EDJ and thier business system, but I
think the A-share model is obsolete and it is holding the company as a
whole back.

[quote]But I am not going to take on portfolios with dozens
of different fund families, because I do not follow them, I do not believe

in them (because I do not follow them), and I am not going to try because
it takes my eye off the ball. [/quote]



Selling A shares?

[quote]I am not going to apologize for how I manage
money, because it is in the best interest of the client, just as what you do
is ALSO in the best interest of the client. We just have different ways of
doing it. AND, you make more money for doing it than I do.[/quote]


How can more than one thing be in the “best” interests of the clients?

[quote]A good, ethical broker will NEVER have a
conflict of interest.[/quote]



Sure they will, they will be presented with many conflicts of interest.



However the choice to take advantage of the situation is up to broker and his sense of ethics.

[quote]Now, trading securities or moving
among A share families just for the purpose of generating additional
commissions is wrong. BUT, so is collecting 1% if you are not staying on
top of your accounts and just riding an electric cart every afternoon (I am
not suggesting that anyone specific does that - I am just stating that
there are potential conflicts of interest in EVERY model).
[/quote]



LOL, clients pay me 1% so that I won’t trade the account as much as they would, if left to themselves.



Someone once asked Seth Klarman about the fact that his fund was 45% in
cash during 1999. He said that he gets paid to act in the best
interests of the clients money, not to invest it. Smart man that
Klarman.

[quote=gad12]Do you have a responsibility to research every mf
that some prospect may have in order to keep the “best” ones?
[/quote] 



If you are a doctor, do you not have a responsibility to know about
every disease that some prospect may have in order to make the
"best" diagnosis?

 

Ditto for a lawyer or accountant or anything else. I expect my plumber to know everything about the plumbing in my house



How long does it take to pull up a morningstar/S&P report on the
funds in someone’s portfolio? You are going to have more credibility if
you come to praise ceasar than if you bury him.

[QUOTE]But say a client has a 500k IRA they are transferring to you.  My opinion (subject to change) is that the best approach is to liquidate and put them in the model you use and believe in and are able to monitor.  You will do yourself and your clients a disservice trying to track 250 or more funds.[/quote]

Not really. What you do is asset allocation, Mutual funds are means to an end, not an end in themselves. You keep what fits into your new plan, and discard what does not.

But to trade Coke for Pepsi, just cause Pepsi gives you 3% commision  is not in the best interests of the client. If someone has $40K in Pimco real return, you arent doing them any good to shift it Bond fund of America.

Transferring in kind would never reduce the amount of switches.

Compliance is pretty much kept under control as long as preferred funds are

used.

ALLREIT -

I hate the "A" share system as much as anyone currently at Jones.  And when my 3 yrs are up will be out of here for that and many reasons.  And as noted above I've never even heard of this form they are talking about. 

However, your analogy apears flawed in my opion.  The disease is the customer's financial situation not the mf's.  As a doctor I am going to recommend the best way I know how to fix the problem I diagnose.  Under most circumstances I will not continue treatment in the methods prescribed by other doctors although I may consider them.  If I do that I will soon have hundreds of solutions and be responsible for them.  Sure I can look on morningstar for 10 minutes to check out a fund.  But try doing that for hundreds of funds every quarter.  That is going to take a lot of time.  You can't assume all those funds will be great indefinitely it takes constant effort and lots of it.  And the dilema at Jones is even worse if it is a no load with zero compensation. 

Even when I get to a fee based model (ASAP)  I will still try to limit the number of funds my clients hold as much as I can within the individual situations. 

Bottom line is, I am not condemning fee based at all. As I said, I would

love to do more of it. Look at it this way; in fee based, you get a client’s

portfolio to move over in kind. You don’t like their stuff, it’s not part of

your model, so you move it around and shape it how you want. No big

deal since you are just charging 1% for whatever you do. What you are

trying to tell me, is that since I get a “commission” of say, 2.5% once

upfront, and I want to rebalance to my model, that I am somehow doing

something wrong (and stop saying we also charge 150BP in expenses - I

have never used a MFD that charges close to that). In fee based, you are

making FAR more than on commission, for the SAME work. So don’t

condemn me for charging for my services, when the whole reason you are

doing it is to bash Jones. I would LOVE to get 1% on all my assets. It’s a

GREAT reason to bash Jones. I WANT TO MAKE MORE MONEY! Say it

louder!



One of the things I have not said previously is that there are plenty of

times I leave clients in what they already have. If I am happy with the

fund family choices, or with the funds they are holding, I will leave them.

Even if it means no payout. Maybe I don’t need to do anything for them,

so I am not really concerned about the payout. Do some people move

them out just to make commission? Damn straight. And it happens in

every firm, not just Jones. Just like in fee based you have plenty of 1%

accounts that you do NOTHING for. We all live in glass houses.



I can’t wait for a better fee based platform. I should be able to give

clients more choices. I have lost some prospects that do not like the

commission model. I am giving Jones 3 more years to come up with

something acceptable (that is when my book will be where I want it).

[quote=The Truth]Transferring in kind would never reduce the amount of switches.
Compliance is pretty much kept under control as long as preferred funds are
used.[/quote]

It wouldn't reduce the amount of switches but they would be visible......rather than invisible.

Compliance is pretty much kept under control as long as preferred funds are used.

I agree with Spiked on this one. Compliance reports directly to management and not the regulators so clearly a conflict is apparent even at the top level. Self regulation at least at EDJ is a farce. They are employess also and do what they are told.

Always remember that compliance works for whomever signs their check.  They are not there to protect the consumer and certainly not to protect the rep.

[quote=anonymous]Always remember that compliance works for whomever signs their check.  They are not there to protect the consumer and certainly not to protect the rep.[/quote]

They are there to protect the GP’s, but still they will also face a conflict when they say ‘no’ to a revenue-generating transaction right?

The problem is you cannot expect “compliance” to take a stance when you

are paying people $40K per year. Put yourself in their shoes. Would you

take on a big producer/GP at Jones when you are barely able to make ends

meet? No way and that is why nothing is ever done.

[quote=gad12]

I've been at Jones 2 plus years now and I've never even heard of this liquidate and transfer form.  I can tell you it's not something that anyone has ever encouraged me to use.  IT'S CALLED AN ACAT FORM, GENIUS!

Do you have a responsibility to research every mf that some prospect may have in order to keep the "best" ones?   UH, YEAH!  YOU ARE RESPONSIBLE TO "KNOW YOUR CLIENT."  IF SOMEONE HAD THE DODGE & COX STOCK FUND, YOU WOULD TELL THEM TO SELL?????  YOU ARE PERFECT FOR EDJ! 

In my opinion this sounds like a terrible idea regardless of commission or fee based. (Of which I prefer fees)  

Hey dogs why don't you read the initial post over again.  They are not talking about a normal ACAT transfer.  Who's the GENIUS?

And if you'd read my other post above you'd notice I said I occasionally will keep a fund, but as a general rule I do not.  I do not want to waste all of my time monitoring hundreds of funds that will indefinitely pile up if I keep every good fund that every client transfers in.  Keeping up with manager changes and knowing when funds are not worth holding anymore would be a huge time burden and would bog down your time from more important things.

With all due respect gad, what’s more important than your clients’ financial

well being?

[quote=The Truth]The problem is you cannot expect “compliance” to take a stance when you
are paying people $40K per year. Put yourself in their shoes. Would you
take on a big producer/GP at Jones when you are barely able to make ends
meet? No way and that is why nothing is ever done.[/quote]



It’s also a cultural matter in sales driven organizations. The top
sales people are gods, and basicly untouchable. In other companies that
care about compliance and ethics, thats not so much the case.



A good analogy is Ford with Pinto. They (Ford management) figured the
cost of wrongful death lawsuits is so much per car, and that was going
to be less than the cost of covering the gas tank with a rubber sheet.

From my memory, the "liquidate and transfer" form IS the ACAT form. You just check the "liquidate" box instead of the "in-kind" box. It's the same with my current custodian, though now I have no incentive to check "liquidate".

On another note, I always found the time issue to be a huge conflict of interest with Jones.

I was also in the same region as Ilovedogs in NC. The RL mentioned  had north of 3000 accounts. Let's say that's 1500 households. If you wanted to have an annual review with each HH once a year, you'd have to do 6.25 appt's each day.

Also, if you have some "core" holdings that are used accross the board and a change needed to be made, how do you decide who gets the update first? There was no system in place at Jones to make global changes to portfolios like I have in the independent world.

Just a couple of issues I had at Jones...

[quote=gad12]

Hey dogs why don't you read the initial post over again.  They are not talking about a normal ACAT transfer.  Who's the GENIUS?

And if you'd read my other post above you'd notice I said I occasionally will keep a fund, but as a general rule I do not.  I do not want to waste all of my time monitoring hundreds of funds that will indefinitely pile up if I keep every good fund that every client transfers in.  Keeping up with manager changes and knowing when funds are not worth holding anymore would be a huge time burden and would bog down your time from more important things.

[/quote]

Umm Yeah....It's all about you and your convenience.  Not about the client and whether the funds they currently own are better than the preferred funds.  Who wants to actually learn about investments.  Much easier to swallow the pablum that Jones gives you.

By the way......the reason that Jones wants you to sell the preferreds (besides the kick back, oops I mean revenue sharing) is that they send the prospectus for funds you sell to the client with the confirmation.  They don't want to have to have a huge stock of odd ball prospectuses.  It's much easier to have a large inventory of the preferreds on the shelf than to have to scrounge around for that Oppenheimer Small Cap International Fund you happened to sell.  (I already know it has a minimum so don't go there )

Just not cost effective to have you sell off the wall funds from their clerical perspective.

Babbling,

Great comment, accept Oppenheimer is now a preferred.  They are loading up on the perspectives back in St. Louis.

Just a thought,  Maybe people are clueing in on the Fortune 100 best companies to work for.  They dropped from the Top 10 to Number 29.  Maybe next year they will drop out of the top 100 altogther.  I love the turnover rate, 14%.  That must mean that the IR is 45% turnover and the back office and Sales Assistant (BOA) is 5-8%.

[quote=gad12]

Hey dogs why don't you read the initial post over again.  They are not talking about a normal ACAT transfer.  Who's the GENIUS?

And if you'd read my other post above you'd notice I said I occasionally will keep a fund, but as a general rule I do not.  I do not want to waste all of my time monitoring hundreds of funds that will indefinitely pile up if I keep every good fund that every client transfers in.  Keeping up with manager changes and knowing when funds are not worth holding anymore would be a huge time burden and would bog down your time from more important things.

[/quote]

Gad (what a name), you said there wasn't a form.  You can either ACAT and LIDUIDATE everything after TRANSFERRING which requires the ACAT form or LIQUIDATE at the holding firm.  You still have to use an ACAT to get the funds or have the firm send a check. 

Great comment, accept Oppenheimer is now a preferred.  They are loading up on the perspectives back in St. Louis.

Thats what they're called now? Funny- I thought they were called prospectuses...

Sorry Blarmston.

I was thinking about the Investment Perspective that I use to pay $250/month to send out to clients and prospects when I was at Jones.  I mistyped!

[quote=Starka]With all due respect gad, what’s more important than your clients’ financial
well being? [/quote]

Getting Paid and getting laid?

If Gad12 wants to do the right thing for clients (research their portfolio’s, do the minimum trading necessary to rebalance, place them in the lowest cost/best performing funds): At EDJ he won’t eat.

On the other hand if does what EDJ wants, (Churn the account into EDJ preferred funds, don’t waste time that isn’t earning you money, don’t do anything personal that adds value), he will do ok, and have a bright future.

Let’s face it, if spending an hour doing  portfolio analysis precludes you from making $4000 in commisions, you aren’t going to spend time doing that. Most customers trust you to make sound recomendations,

EDJ’s A share business model forces a conflict between what is best for the adviser and what is best for clients. There is no way to get around this, even if you claim to act in the best interests of clients. And just to get a sense of how much depends on kickbacks from preferred funds:

[quote]For the year ended Dec. 31, 2005, Edward
Jones received approximately $172 million in revenue sharing payments
from the preferred fund families as designated throughout 2005.
For that same period, Edward Jones’ net income was $330 million.[/quote]

http://www.edwardjones.com/cgi/getHTML.cgi?page=/USA/product s/mutualfunds_revenue_sharing.html

Say hello to Edward Jones.

[quote=EDJ to RIA]Also, if you have some “core” holdings that are used accross the board and a change needed to be made, how do you decide who gets the update first? There was no system in place at Jones to make global changes to portfolios like I have in the independent world.[/quote]

This is so important if you add value by picking stocks for people, (i.e you are adding value), After the big REIT runup this year, it was very easy to just call up a select list of clients, tell them I recommend liquidating their positions, and then doing that all in one sweep.

Another aspect which is dumb at EDJ, is the lack of an online trading platform for clients. Stoopid, because alot of people like to play the markets, and that is ok in the context of a complete plan.

AllReit-

I actually disagree with you regarding online trading for clients.  I would rather they "play" the markets at some other firm.  I really like managing their serious money.  I think Jones is correct in keeping the IR protected.

The one thing of many I disagree with is their use of the Liquidate and Transfer Form.

I actually disagree with you regarding online trading for clients.  I would rather they “play” the markets at some other firm.  I really like managing their serious money.  I think Jones is correct in keeping the IR protected.

What I'm talking is someone having a taxable account for online trading, not for letting people trade online in IRA's and suchlike.

For example, Vangaurd charges $35 for online trades via their online brokerage system. That makes it wholly unsuitable for any sort of rapid trading, but allows people to manage stocks as needed.

It's a relatively minor issue all in. The much bigger problem is as discussed, the complete lack of will about moving the compnay to a fee based platform and away from a transactional model.

This would also ween the company from all those fund kickbacks (which to be honest shouldn't be legal).

Did anyone see the EDJ ad, in this weeks TIME magazine? Any thoughts?

I didn’t see the ad in the magazine but I don’t think that the Top Producers should be giving up 1% of their commissions for the National Advertising Campaign.  If you take an EDJ top producer producing 500,000 to 1000000 they are paying $5000 to $10000 to fund the national advertising campaign.  They are sacrificing “for the good of the firm”.  They don’t even get to write this off their taxes.  Hello AMT!

[quote=spikedkoolaid]I didn’t see the ad in the magazine but I don’t
think that the Top Producers should be giving up 1% of their
commissions for the National Advertising Campaign.  If you take an
EDJ top producer producing 500,000 to 1000000 they are paying $5000 to
$10000 to fund the national advertising campaign.  They are
sacrificing “for the good of the firm”.  They don’t even get to
write this off their taxes.  Hello AMT![/quote]



Wouldn’t top producers be involved in the LP? If so they should
willingly contribute to things that improve the productivity of
non-competative EDJ’ers, thus giving more profits to the LP.

Well if you look at it that way, you are probably right on.  I just hated paying that 1% to IR’s who were failing miserably.

Not backing Jones or the policy, but since it is taken out prior to the producer receiving the income then ultimately it is not taxed and makes no difference that they can’t deduct it. 

At least I assume it would be taken out pretax, being that it would be stupid to take it out after taxes and I can see no reason Jones would want to do it that way.

FYI everyone, that 1% National Sales/Ads fee at EDJ is is capped at $250/month, regardless of how much you produce.  The MOST you pay is $3,000/yr.  So a $20K/mo. producer is paying $200/mo. 

Also, it is taken out of pre-tax commissions, not post-tax.

Anyone can argue the merits of National Advertising.  Bottom line is that it is there, and it does not amount to much.

[quote=Broker24]

Anyone can argue the merits of National Advertising.  Bottom line is that it is there, and it does not amount to much.

[quote=AllREIT]

[quote=Broker24]

Anyone can argue the merits of National Advertising.  Bottom line is that it is there, and it does not amount to much.

So. If I could expand your mental horizons a bit Mr. B24 and other Jones folks. You are an employee, and your employer is making you pay up to 3K for those great ads (some of them are hilarious), aka national branding.  Do you benefit from them?

Hard to quantify, but for the sake of argument, people get a good impression and  come by and buy a bond, or request a mutual fund. And when you sell them something, you get roughly 40 (after expenses) of the revenue. Which means the owners keep 60%. And if you are selling a mutual fund, the likelihood it isn't a rebating fund to the owners is less than 5%. And the owners benefit again.

So to summarize the owners make you pay for the advertising, keep more than half of the revenue you generate, and then make more through the back door. What a great deal for the owners!

Maybe some Jones IR's can make the case why the national ads are worth paying for. I just don't get it. And I was there for almost ten years....

Lets see , $250 a month for ten years at 8% is $45,000. Ouch.

[quote=footsoldier]So to summarize the owners make you pay for the advertising, keep more than half of the revenue you generate, and then make more through the back door. What a great deal for the owners! [/quote]

You do know about the Jones LP system. Long time EDJ'ers get to purchase interests in the EDJ LP.

[quote]Maybe some Jones IR's can make the case why the national ads are worth paying for. I just don't get it. And I was there for almost ten years.[/quote]

You don't think national advertising expense gets taken out at wirehouses? The reason indy pays so well is that you have so little corporate overhead.

Income interest only. The equity remains with the owners. Equity is where its at. Period.

Unless you are looking for income...

The reason indy pays so well is that you have so little corporate overhead.

You mean we aren't top heavy with useless men in suits who have long outlived their time and sit around leeching off the people who are currently working their butts off.  You mean we don't have endless and pointless meetings so some schmuck can try to justify the obscene money he (or rarely she) is making.  You mean we aren't thrown the bones and leavings from the GP's tables, because we get to keep the meal for our selves.

You guys are really bitter. I am not supporting or condemning national

advertising. Most firms have some and someone pays for it (either the

broker or the shareholder). To me, it’s not really a big deal. $250/mo. is

not going to have any impact on my overall financial picture (since you

have to be making about 10K net for the full amount to be taken out

anyway). Do I like paying it? No. But I don’t like paying my mortgage bill

or grocery bill either. It’s just there. If I don’t like it I will leave, as many

of you did. But I will not continually dwell on it. That’s what you guys

don’t get. I know EXACTLY what I am getting and paying for. It was all in

my agreements before I started. I haven’t really had any surprises.

[quote=Broker24]You guys are really bitter. I am not supporting or condemning national
advertising. Most firms have some and someone pays for it (either the
broker or the shareholder). [/quote]



No way, I think EDJ’s national advertising and core theme of
conservative investing is a good thing. You’re right that people like
to heap on EDJ. but still they do ok.

B24-

When you are out many years and 10net doesn't pay the real bills you probably will wonder where your money has gone.

When I hit 20K net (AFTER EXPENSES) on the indy side, it was very clear who was getting paid at Jones. And it was not me. 

Babs has made some very good points in previous posts noting the difference in the culture. No more giddy team leader meetings which basically is a teleconference on production or lack of it. And those dreadful regional meetings.

Hopefully as time goes on I will not appear as bitter. In the meantime I prefer to call it a reality check. For me the light went on about seven years in, and ulitmately I made a change for the better. It meant saying goodbye to some clients and recognition that those who came with me were really my clients and not those of EDJ.

I could never put a price on that experience. Gut wrenching, but worth every moment in hindsight.

[quote=Broker24]...  It's just there. If I don't like it I will leave, as many
of you did. But I will not continually dwell on it. That's what you guys
don't get. I know EXACTLY what I am getting and paying for. It was all in
my agreements before I started. I haven't really had any surprises.

[/quote]

I thought the exact same thing when I was at Jones.  I spent almost 5 years at Jones.  I could read my P&L at Jones literally from month 1, I could even understand that stupid allocation formula based on your gross.  However, it wasn't UNTIL I went Indy that I realized I did NOT know exactly what I was getting OR NOT getting. 

The biggest things were haircuts on annuity tickets (granted, I only sold two annuities while at Jones) and life insurance.  Jones claims to split ALL commission with you 60/40. Not true.  On insurance, they take some off the top, and THEN split 60/40.  That's just one example.

I also loved seeing that DCA worksheet that would print every quarter or so.  It showed the amount of dividends being reinvested, and then showed a "possible" amount and what that would mean to your bonus if all dividends were reinvested.  I always laughed at the math. It would show, for example, that a $100 credit to your P&L would mean $30 in profitability bonus if Jones was in the 30% bonus bracket.  That is NOT THE CASE.  The profitability bonus funnel is another way the GP's can water down your compensation and keep more for  themselves.  It could take a $100 profit and water it down to a $5 actual bonus.

I guess I am not being clear.  I realize that the ultimate payout being Indy is usually higher.  But everyone has to start somewhere, and it is usually not Indy.  What you get as far as overall payout (at EDJ) is not much different than other regional and wirehouse firms.  I am not arguing that the payout is higher going Indy vs. being an employee at a firm.  But they are two different business models.  It's like comparing being an owner/manager of a restaurant (hotel, store, etc.) versus being just the manager.  With both comes benefits and drawbacks.  You will usually make more when you also own the business, though sometimes not, and you have added responsibilities.

Here's the thing - if they didn't allocate certain expenses to the branch and the IR, someone has to pay for them (GP's and LP's).  So, this basically incents better producers.  The lower producers tend to cover more expenses as a percentage of their income.  I work closely with some very high producers in my region, and they have showed me their numbers.  Excluding taxes and personal elections (401k, insurance, etc.), their net payouts including bonus and profit sharing are north of 50%.  Now, at my level it is more like 42%.  And yes, I understand you have more tax deductions and all that, but again, it's not the same model.  But that begs the question, what firm does not have that model?  Every wire and regional I know of incents higher producers, and forces low producers up or out.  It's not rocket science.  It's just business.  But I think the mistake many people make on this forum is trying to compare EDJ to Indy models.  It's just not a true comparison.

As far as all the meetings or whatever, I think that falls in the same category as wirehouse branch managers (good vs. bad).  My particular region does not have many meetings.  I meet one evening a month for productivity meetings, which are pretty helpful since we basically hold a forum on what is working, not working, etc.  Twice yearly all-region meetings.  That's about it.  My region doesn't do some of the silly stuff that people harp about ont his forum.

Foot, I hear you loud and clear.  EDJ takes a lot of my dough.  And so would ML, SB, etc.  I would love to go Indy - I'm just not there yet.  In the meantime, I will use all my resources and build my business here.  If I feel that a few years down the road I would be better off Indy, I will certainly pursue that.  But I think the constant criticism of EDJ does a disservice to people looking for advice on joining different firms, since most of you former EDJ IR's admit that it was a good place for you to start.

But I think the mistake many people make on this forum is trying to compare EDJ to Indy models.  It's just not a true comparison.

You're right it isn't a true comparison. Unfortunately it is the hook that Jones uses to bring in unsuspecting brokers and new hires.  The illusion that you will be your own boss and run your own business.

See the inserted from the Jones site

As an Edward Jones investment representative, you're starting right at the top.

While some of these things are correct, they are not actual representations of reality.

That was my biggest beef with Jones.....they LIED to me.

B24,

I do think that Jones is a great place to start. If I had to do it over again, I would go with Jones over a ML, SB, MS, etc, any day.

But, my above point wasn't referring to net, but GROSS.  If you and I both sell a Hartford 20-yr term product, my gross will be higher.  Obviously the net will be higher, but that's not my point.  Why is my gross higher?  Is it that LPL negotiated a better deal than Jones has with Hartford.  I don't think so. I think it is that Jones keeps a little off the top, and then puts the rest toward your gross. That was the unfair part.  When I joined Jones, we agreed to a 40/60 split. When Jones takes a piece off the top BEFORE that split, that's not the deal I agreed to.

BL,

   How correct you are.  They want your loyalty to them but they have no loyalty to you.  If you don't fit their mold, they will eventually find a way to "encourage you" to leave, even if your production is satisfactory.

See the inserted from the Jones site

[quote=babbling looney]

See the inserted from the Jones site

As an Edward Jones investment representative, you're starting right at the top.

[/quote]

I don't harbor many hard feelings towards EDJ, but I feel they do tend to twist the truth when representing the full picture hiring people. 

Oh yeah, then there's the kool-aid.

I do know that a Jones broker will liquidate some old ladies Metlife annuity (with a 5% surrender fee without telling her) that is performing well to roll into an IRA and then invest in American Funds A shares, again without telling her.

Kargon, the same guy that would do that at Jones would do it at Merrill,

or SB, or RJ or to his wife. Let’s not paint an entire firm as having 10,000

dishonest brokers. That’s just a stretch.

[quote=Broker24]Kargon, the same guy that would do that at Jones would do it at Merrill,
or SB, or RJ or to his wife. Let's not paint an entire firm as having 10,000
dishonest brokers. That's just a stretch.[/quote]

B24,

There is a diff between the Jones broker and the others you listed.  the Jones broker actually believes that he/she is doing the client a favor.  The others are smart enough to know they are ripping the client off.  BTW, my anecdotal 2 cents is that it happens more a Jones.  There are more stupid people at Jones than there are dishonest people at every other firm...that is the real secret. 

[quote=Broker24]Kargon, the same guy that would do that at Jones would do it at Merrill,
or SB, or RJ or to his wife. Let's not paint an entire firm as having 10,000
dishonest brokers. That's just a stretch.[/quote]

What's even worse is that should the trade "stand" it will have gone through FS (yeah right) and no-one will even question it.  While at SB, ML or RJ the BM would have had to have reviewed AND signed off.

By the time the client gets the notice for with holding the EJ rep is probably gone for low production. 

[quote=spikedkoolaid]

The liquidate and transfer form that Jones has clients sign is the biggest form of churning/unethical behavior that Jones covers up.

Let me explain:  Unassuming client brings in a statement to get a "free portfolio review".  The IR suggests that they transfer their account in to EDJ.  Instead of transferring in-kind the T-Rowe Price Int'l Fund, the Calamos Growth fund, the Phoenix Mid-Cap Value fund, the Alliance International Value fund, and the Legg Mason Value Trust.  They say, let's Liquidate and Transfer this $400,000 account and put it into two different fund families. 

I would hope that Jones would start asking the IR where this $400,000 check is coming from and why did the client decide to liquidate and transfer the account.  What funds were the client invested in, etc.  I just wish that the field supervision at Jones would ask more questions of the IR when they get a big check deposited into an account.

[/quote]

You are not painting the picture properly. When I evaluate a client's portfolio I always bring in investments in kind. I'm not sure what you are talking about because most of the Jones brokers I deal with also try to bring in everything they can inkind. There are those that we can not hold in our branches that require us to liquidate, but I think this is the same all over.

You are obviously not happy with Jones for some other reason and are lashing out. It shows iin your post and most people here are smart enough to know that Jones brokers are not perfect. I know that there are some Jones brokers who do things wrong some on purpose some just don't understand what they are doing. It is a large company and I don't care where you work every brokerage has some bad apples.

Be obsessed!

[quote=Kargon]I do know that a Jones broker will liquidate some old ladies Metlife annuity (with a 5% surrender fee without telling her) that is performing well to roll into an IRA and then invest in American Funds A shares, again without telling her.[/quote]

Are you kidding!?  I know a lot of Jones brokers and none of us would do that.  Most of us would keep a good Met annuity.  The only person I've ever heard of doing that was the local US Bank guy. 

First, Field Supervision wouldn't let it happen because the surrender is too big.  We have to prove that it's beneficial to the client to liquidate an annuity.  Then we have to have the client sign all kinds of acknowledgement letters that says they understand.  We haven't even talked about the death benefit yet. 

Second, unless it's already qualified money you can't just roll it into an IRA.  I'll give you the benefit of the doubt and assume you know that.  We may use American Funds A shares, we may not.  I like Goldman and Franklin right now. 

Finally, we'd explain the whole thing to the client before we did it.  A shares and all.  And if it is an IRA, unless the little old lady really wants the death benefit of an annuity or to annuitize, the mutual funds would be cheaper for her in the long run.  No M&E charges.

Maybe there are some IRs out there that are struggling enough that they'd try that hoping they don't get caught, but they are certainly the minority.     

I agree.  I just think it is plain wrong to paint a picture of an entire firm based on a few anecdotes.  MY point earlier was that if a Jones guy did that, that SAME guy would do it anywhere.  It's not JONES that makes someone be dishonest like that.  It's the person.  And yes, any Jones broker would know better, so it would be dishonest no matter how you slice it.

I haven’t checked out this forum for many months and I must say…it’s like I

never left. I first started reading the anti-Jones posts in 2002 , about 18

months into my career. I was shocked…Edward Jones was everywhere. It was

like Biff Loman discovering his Dad was a lying, cheating loser travelling

salesman. I tried defending them for a while…a few years, actually. I ranted.

I raved. I reached Segment 4 in my third year…won trips…made good money

for everyone. Now the worm has turned. As Bill Shakespeare once may have

said, hell hath no fury like Bill Fakkland scorned.I won’t go into detail about

what happened, but it wasn’t compliance…not performance (in the top 5%

nationwide). I am sipping coffee looking at an offer from , well…I won’t say

whom. Maybe I’ll sign it tonight and start a new life as a professional Rep.

with a company that won’t say one thing and do another. See y’all next year

when I report on how things have gone.

[quote=Bill Fakkland]I haven't checked out this forum for many months and I must say...it's like I
never left. I first started reading the anti-Jones posts in 2002 , about 18
months into my career. I was shocked...Edward Jones was everywhere. It was
like Biff Loman discovering his Dad was a lying, cheating loser travelling
salesman. I tried defending them for a while...a few years, actually. I ranted.
I raved. I reached Segment 4 in my third year...won trips...made good money
for everyone. Now the worm has turned. As Bill Shakespeare once may have
said, hell hath no fury like Bill Fakkland scorned.I won't go into detail about
what happened, but it wasn't compliance...not performance (in the top 5%
nationwide). I am sipping coffee looking at an offer from , well...I won't say
whom. Maybe I'll sign it tonight and start a new life as a professional Rep.
with a company that won't say one thing and do another. See y'all next year
when I report on how things have gone.[/quote]

I can't believe I'm reading this.  Good luck and keep us posted.

[quote=Bill Fakkland]I haven’t checked out this forum for many months and I must say…it’s like I

never left. I first started reading the anti-Jones posts in 2002 , about 18

months into my career. I was shocked…Edward Jones was everywhere. It was

like Biff Loman discovering his Dad was a lying, cheating loser travelling

salesman. I tried defending them for a while…a few years, actually. I ranted.

I raved. I reached Segment 4 in my third year…won trips…made good money

for everyone. Now the worm has turned. As Bill Shakespeare once may have

said, hell hath no fury like Bill Fakkland scorned.I won’t go into detail about

what happened, but it wasn’t compliance…not performance (in the top 5%

nationwide). I am sipping coffee looking at an offer from , well…I won’t say

whom. Maybe I’ll sign it tonight and start a new life as a professional Rep.

with a company that won’t say one thing and do another. See y’all next year

when I report on how things have gone.[/quote]

all I can say is wow!  I remember you from past days Bill!  I can’t imagine what happened!

Bill don’t leave us hanging. You were a great jones defender and you did it in a relatively humorous fashion. Plesase update when you are comfortable.

Mr. Bill–

Seems as though you found your catalyst to move.  That’s what
happens at Jones.  They care about the newbie and the red
ir.  The guy who is producing gets S*^T on!

[quote=Bill Fakkland]I haven't checked out this forum for many months and I must say...it's like I
never left. I first started reading the anti-Jones posts in 2002 , about 18
months into my career. I was shocked...Edward Jones was everywhere. It was
like Biff Loman discovering his Dad was a lying, cheating loser travelling
salesman. I tried defending them for a while...a few years, actually. I ranted.
I raved. I reached Segment 4 in my third year...won trips...made good money
for everyone. Now the worm has turned. As Bill Shakespeare once may have
said, hell hath no fury like Bill Fakkland scorned.I won't go into detail about
what happened, but it wasn't compliance...not performance (in the top 5%
nationwide). I am sipping coffee looking at an offer from , well...I won't say
whom. Maybe I'll sign it tonight and start a new life as a professional Rep.
with a company that won't say one thing and do another. See y'all next year
when I report on how things have gone.[/quote]

MaxDud, Spiffman, et al. take note.  Maybe you don't know it all after all.

I’m likewise shocked…and very curious to hear the rest of the story.  I’d categorize this one as something I never expected to hear…

[quote=Indyone]I’m likewise shocked…and very curious to hear the rest of the story.  I’d categorize this one as something I never expected to hear…[/quote]

no sh*te…he was a defender to the end it seemed…wonder what happened!!

Simple. As Spiked said. They don't really care about the IR once they are profitable. They say they do but in reality they can split the office in 2 or 3 pieces and get their precious office numbers up. And by gosh, make almost the same amount, pay no bonus and the profit is retained by you know whom.

Bill-

It wasn't easy for me to come to grips with the Jones management practices. It wasn't easy to leave. Now that I have I personally have never been so excited to be in this business. There is an incredible opportunity out there, read Fragrasso's book on transition, plan before you leap if you can, it will make your life alot easier. You have many  options whether independent or wirehouse. Take your time and choose carefully.

Go Bill Go!!!!  I to am leaving in the next couple of weeks. Joining the independent ranks with LPL.  It's one of the most exhilirating things I've done.  Starting my OWN business..ordering furniture, doing a buildout, getting computers ordered, hooked-up and networked.  Getting letterhead, a logo for my business, business cards.  Going through my current client list and making a list of people I WANT to come with me.  Setting new goals for 07...real goals...FOR ME...Not for some deadbeat GP. 

I'm not sure why, but I always felt like a loser when I told people I worked at EDJ.  I actually stopped telling them...I was embarrassed.  It sounds weird..but it's the truth.  Can't wait to get the hell out and move on.   

Jim JONES is being profiled on the History Channel.  “The first step of a CULT is to use good intentions to draw people in”…Model organization…well liked leader…success draws scrutiny…sounds like another Jones…

JOnes had his followers work seven days a week.  Forced to follow the “way”…tell everyone about the PEOPLES TEMPLE…theirs is the right way…everyone else is evil.  Damn…I’m getting the hell out as soon as possible. Broker24…you better get out NOW!!!  The next time you become a Visiting Vet…may be your last!! If Weeddle starts wearing sunglasses…I’m out!!!

[quote=Bill Fakkland]I won’t go into detail about

what happened, but it wasn’t compliance…not performance (in the top 5%
nationwide).[/quote]



Please do go into detail. It may save others from making your mistake.

Mr. Spears—

It definitely is a different animal when you tell people you OWN your
own firm!  You will be looked at differently amongst your peers
and your centers of influence.  It’s amazing having your own name
stand behind the business!

Jones was a great place for me to start but if you are grossing $250,000 and up you don’t need to be there!

[quote=bspears]

Go Bill Go!!!  I to am leaving in the next couple of weeks. Joining the independent ranks with LPL.  It’s one of the most exhilirating things I’ve done.  Starting my OWN business…ordering furniture, doing a buildout, getting computers ordered, hooked-up and networked.  Getting letterhead, a logo for my business, business cards.  Going through my current client list and making a list of people I WANT to come with me.  Setting new goals for 07…real goals…FOR ME…Not for some deadbeat GP. 

I'm not sure why, but I always felt like a loser when I told people I worked at EDJ.  I actually stopped telling them...I was embarrassed.  It sounds weird..but it's the truth.  Can't wait to get the hell out and move on.   

[quote=bspears]JOnes had his followers work seven days a week.  Forced to follow the "way"...tell everyone about the PEOPLES TEMPLE...theirs is the right way...everyone else is evil.  Damn..I'm getting the hell out as soon as possible. Broker24...you better get out NOW!!!  The next time you become a Visiting Vet...may be your last!! If Weeddle starts wearing sunglasses...I'm out!!!![/quote]

I'm right there with you, Brittany.  You are my new Messiah.  See you on the other side. 

Jones is trash. Do yourself a favor and do not work there, it will ruin your resume’

Heard a good one the other day.  The powers that be in Jonestown, are making a big push to grow the number of female IR’s.  Not that this is a bad thing…but listen to this.  The reason why…because women normally are not the main bread winner,will accept lower pay and aren’t normally ballsy enough to leave.  They see a shift to a lower production number based on competition and an outdated model.  GPs know they will continue to suck the preferreds dry and if they can keep an IR in place…they will continue pumping a share preferreds.  I trully think it is a pyramid scheme.   I’m just in my RL’s downline.  Boy, I’m just rambling tonight.  Spent most of the day working at MY new office and I’m  beat.

WORD OF CAUTION ALL JONES DRONES PLANNING TO LEAVE-

Remember- Big Brother in STL can track your every keystroke. They can and do watch your numbers. If you normally produce $30K gross/ open  over 10 accounts a month and suddenly you drop off - they start watching what you are printing... like statements, etc.  They monitor who you call, who you wire- buddies that might know you are jumping.

Then you get the phone call... locked out of your computer and bad mark on the U-5.

Keep your numbers up. Don't be tempted to 'sand bag' to jump start your new business.

That is paranoia if I have ever seen it.

[quote=Broker24]That is paranoia if I have ever seen it.[/quote]

Maybe not B24.  Some of the old timers on here know some pretty wild stuff!

B24-all firms have tracking mechanisms in place when certain red flags appear. EJ is no different. They absolutely track certain scenarios and quite honestly if it were my company, I would do the exact same thing.

B24, it's not unknown that at times BOAs have been "encouraged" to watch their broker for activities such as copying clinet lists, files, new account forms, etc.

As the saying goes, "Just 'cause I'm papanoid doesn't mean that they're NOT out to get me!

SP: client, paranoid

If you start printing tons of client statements, and reams of cost basis, then yes, Jones will at the very least give you a call.  They may even send a wire to your RL to "keep an eye on you."

Actually B24 they’re right.  When I was at the home office I had the ability to see what commands you entered into the green screens.  I used to tell my new trainees that there was inverse relationship between the number of times you typed COMM (the command we used to use to track our production numbers) and your actual commissions.  There is a sense of Big Brother is watching around here.  The example given was a little extreme, but it does exist.  I can’t believe you haven’t discovered the remote video camera in the left speaker on your monitor. 

[quote=munytalks]WORD OF CAUTION ALL JONES DRONES PLANNING TO LEAVE-

Remember- Big Brother in STL can track your every keystroke. They can and do watch your numbers. If you normally produce $30K gross/ open  over 10 accounts a month and suddenly you drop off - they start watching what you are printing... like statements, etc.  They monitor who you call, who you wire- buddies that might know you are jumping.

Then you get the phone call... locked out of your computer and bad mark on the U-5.

Keep your numbers up. Don't be tempted to 'sand bag' to jump start your new business.[/quote]

This brought back memories fo when I worked at the bank...reps getting called on the carpet for things they'd emailed each other that had nothing to do with any compliance issues.  By the time I was ready to leave, I was so paranoid that I was making a lot of calls on my cell phone in my car at lunch.  As careful as I was, I got blown out of the water three days before I planned on leaving and I resigned the next morning (I think it was a blabbermouth employee of the office furniture vendor I was talking to).

I understand that email, etc. can be monitored for compliance purposes, but I hated the feeling that my employer was watching us reps for signs of disloyalty.  If they'd focused more on making themselves an employer that no one wanted to leave, I think they'd have been miles ahead.  Instead, they were very focused on seeing how much margin and volume they could squeeze out of all of us.  From what I've been told by former colleagues, it's only gotten worse since I left...new phone system (hmmmmm...), new tougher non-competes, ever-increasing production demands, and a compliance supervisor that openly tells them that he reads every email they send/receive.  The guys I speak with are just miserable (and probably wish they'd bailed also).

Although I know my compliance department can see every email I send, I no longer have that constant feeling that someone is looking over my shoulder...it's a night and day improvement.

I wasn't challenging that it happens, I was just stating that his TONE was a bit paranoid.  I realize they see everything that goes on.

And I just taped my business card over the little camera.  Thanks for the heads-up!

I put a camera in to watch their camera…

[quote=Indyone]

If they’d focused more on making themselves an employer that no one wanted to leave, I think they’d have been miles ahead.

I agree with you Joe.....

[quote=noggin]

I agree with you Joe…

[quote=joedabrkr]Because, of course, we have such a shortage of jones-bashing threads on here…
[/quote]



And so much secret EDJ envy.

[quote=spikedkoolaid]

The liquidate and transfer form that Jones has clients sign is the biggest form of churning/unethical behavior that Jones covers up.

Let me explain:  Unassuming client brings in a statement to get a "free portfolio review".  The IR suggests that they transfer their account in to EDJ.  Instead of transferring in-kind the T-Rowe Price Int'l Fund, the Calamos Growth fund, the Phoenix Mid-Cap Value fund, the Alliance International Value fund, and the Legg Mason Value Trust.  They say, let's Liquidate and Transfer this $400,000 account and put it into two different fund families. 

I would hope that Jones would start asking the IR where this $400,000 check is coming from and why did the client decide to liquidate and transfer the account.  What funds were the client invested in, etc.  I just wish that the field supervision at Jones would ask more questions of the IR when they get a big check deposited into an account.

Ed Jones is not allowed to hold the Legg Mason Fund.  Nor are they allowed to hold a couple others you mention.  Edward Jones does not sell proprietary products.  Anything Eddie Jones sells, if another firm doesn’t hold them, and you know they have 7 “preferred fund” families: American, Frank/Temp, Goldman Sacs, Hartford, Putnam, Van Kampen, Lord Abbett, then I suggest you find another firm or broker dealer, because everyone should be able to hold everyone else’s product.

Jones sucks!!  They have a great propoganda machine.  Hell the regional leader recruits to have positive info sent to a consultant so we can get “Best place to work{and go broke}” in x state.  Losers!!  I sent a I hate this place to the consultant.  I figure by the time they get through them, I’ll be gooooone!!! Liquidate and transfer…wait 3 years and then switch the mutual funds to another family for some coooool cash!!  Run hypos until you find a better performance than what the client already has in place and sell out and put in.  Put "the client held said funds for x years at prior broker…will get lower internal expense and historical performance demonstrates a better ROI.  No redemption fees.  on the Fspend.  I know all the tricks…EDJ’s has taught the brokers well.  Long live the GP.   

[quote=regrep2007]Ed Jones is not allowed to hold the Legg Mason Fund.  Nor are they allowed to hold a couple others you mention.  Edward Jones does not sell proprietary products.  Anything Eddie Jones sells, if another firm doesn't hold them, and you know they have 7 "preferred fund" families: American, Frank/Temp, Goldman Sacs, Hartford, Putnam, Van Kampen, Lord Abbett, then I suggest you find another firm or broker dealer, because everyone should be able to hold everyone else's product.[/quote]

It is true that there are a few funds we cannot hold.  But we have dealer agreements on about 95% of fund families out there, including most of the no-loads.

woah there 24, while I concur there are many funds we can hold and the prior quote that we can’t hold any was an exaggeration, 95% is exaggerated on the other end.  I’d GUESS it’s closer to 50%.  I recently transferred in an account with a dozen or so different families, mostly no load, and we had to sell about half of them.  MAYBE 95% of the biggest families, but many funds we cannot hold.

gad12,

     I'm glad that someone from Jones tempers the exaggerations from the koolaid drinkers.  On the other hand, I do see that a lot of former Jonsers like to exaggerate the negative.  Though you work at Jones, you don't seem to drink all of the kool-aid. Thanks for keeping the fight headed down the right path. 

No problem. 

I actually think Broker 24 does a pretty good job of not getting too extreme either way.

Like you said though there are lots of those on either side of the fence who just get too crazy one way or the other. 

I like Jones and apppreciate what they've done to help me get started.  If they didn't have half a dozen major issues, I probably wouldn't be looking to leave.  These problems get me frustrated and angry from time to time and I can see why many get so bitter.  However, if you try to take an objective view of the entire situation most of us were benefited overall from Jones. 

Actually, I was only basing my comment on experience from what I have

brought over from other firms. I have never really looked that close at at

the list unless I wasn’t sure if we could hold them. If you’ve studied the

list, you’re probably right.

This is an example of the small sandbox some firms guide you towards…if

you haven’t even looked at what options you have, it’s hard to say you’ve

really done much due diligence before making recommedations. Since

you’ve been quite forthcoming in outlining some of your current model’s

limitations, but still haven’t even looked outside the box, that’s telling.



Nowhere can you hold EVERYTHING, but the fact is that you cannot be

compensated for keeping good stuff you bring over (by having no-load stuff

in a fee-based account). For the average, or perhaps majority of people EJ

has on board, that leads to finding a way to sell 'em and buy something else,

regardless of the quality of what’s being sold. It doesn’t make them bad

people, but as Bachmann says–you have to “get the incentives right.”

I think you misunderstood me. I meant that I only look at the list of funds

we can hold when someone presents something to me that I don’t think I

can hold. Most of the funds that people have brought to me, we have

been able to hold, so it was not necessary to study the list of 14,000

funds. I don’t use that list to start my research. I get my ideas from the

same places as everyone else; colleagues, mags, newspapers, internet

research, whatever. When I find a compelling idea that I think I might

want to use, I go about researching the investment.



You may be right about others at EDJ. I don’t know. I am not going to

excel by limiting myself to the Preferred Funds. But there are a lot of

great options available, so I do use them, just not exclusively. And yes, it

limits us because of breakpoints, blah, blah, blah. But that’s my problem

to deal with, not yours. My clients likely do just as well as others, based

on what I see come over from other firms.

This is a little off-topic, but that is specifically one of the major issues I have against mutual funds.  By law, no one can know anything that no one else knows.  As a result, no mutual fund consistently beats it’s peer group year in and year out.  They all revert to the mean at some point.  So what’s the point of a client paying substantial management fees?  The client isn’t getting anything for his/her money.

[quote=Starka]This is a little off-topic, but that is specifically one of the major issues I have against mutual funds.  By law, no one can know anything that no one else knows.  As a result, no mutual fund consistently beats it's peer group year in and year out.  They all revert to the mean at some point.  So what's the point of a client paying substantial management fees?  The client isn't getting anything for his/her money.[/quote]

Then use index funds.  Cheaper and many will argue the better option.

[quote=gad12]

[quote=Starka]This is a little off-topic, but that is specifically one of the major issues I have against mutual funds.  By law, no one can know anything that no one else knows.  As a result, no mutual fund consistently beats it's peer group year in and year out.  They all revert to the mean at some point.  So what's the point of a client paying substantial management fees?  The client isn't getting anything for his/her money.[/quote]

Actually, I use a lot of things that aren't mutual funds.

Then use index funds.  Cheaper and many will argue the better option.

[quote=Starka]This is a little off-topic, but that is specifically one
of the major issues I have against mutual funds.  By law, no one
can know anything that no one else knows.[/quote]



But it’s what they do with the information that makes the difference.

[QUOTE]As a result, no mutual fund consistently beats it’s peer group
year in and year out.  They all revert to the mean at some
point.  So what’s the point of a client paying substantial
management fees?[QUOTE]



To pay for the portfolio manager’s yacht and the extensive mutual fund distribution system everywhere else.

Look at the DFA website. www.dfaus.com.  Plenty of ammunition to support Starka's point.

When one takes trading costs (which are not calculated ) into the true cost of ownership, www.personalfund.com, it is difficult but not impossible to make the case for active management vs. passive.

[quote=Starka] By law, no one can know anything that no one else

knows.[/quote]



There are things much more important than performance. For example,

in the distribution years of retirement, you can’t afford the std deviations

you get from the indexes. In addition, when the market gets thrown all

out of whack (i.e. the late '90’s, then the early 20’s), indexes are

extremely inefficient. They can’t adapt since they are not managed. I am

not saying that every MF manager knows the right answers in every

situation, but there are certain money managers I trust to manage my

clients money more than I do the wisdom of the “market”. Yes, you can

re-balance what indexes you hold, but then you are betting your skilss

against talented money managers. Not a bet I want to make.



I manage to minimize risk, not beat some arbitrary index.

[quote=Broker24]

There are things much more important than performance. For example,

in the distribution years of retirement, you can’t afford the std deviations
you get from the indexes.[/quote]



I would fire you as my advisor if you told me something that stupid.



Are you unaware of portfolio risk management? How about reducing your
exposure to market volatility by scaling back the allocation to stocks
in the portfolio?



Clearly I need EDJ’s preferred funds over good asset allocation using the cheapest exposure to the underlying asset classes.

[quote] In addition, when the market gets thrown all

out of whack (i.e. the late '90’s, then the early 20’s), indexes are

extremely inefficient. They can’t adapt since they are not managed.[/quote]



What exactly do customers pay you for again?

[quote]I am 
not saying that every MF manager knows the right answers in every
situation, but there are certain money managers I trust to manage my
clients money more than I do the wisdom of the “market”. [/quote]



Sure, people make a fuss about how Bill Miller beat the S&P 500 for
15 years. Did anyone ever check the performance of the S&P 600
Value index over that time frame?



I rely on your customers to keep the market’s effecient for my customers.

[quote]Yes, you can  re-balance what indexes you hold, but then
you are betting your skilss against talented money managers. Not a bet
I want to make. [/quote]



If you arent a talented money manager, why are you managing people’s money?



And what pray tell is the track record of “talented money managers” on the whole vs passive market indexes?

[quote]
I manage to minimize risk, not beat some arbitrary index.

[/quote]



Portfolio risk is a function of asset allocation.

[quote=Broker24] My clients likely do just as well as others, based

on what I see come over from other firms.
[/quote]



There is hidden self-selection bias operating, since clients who’s
assets are well managed probably aren’t ACAT’ing over to you.

[quote=footsoldier]

Look at the DFA website. www.dfaus.com.  Plenty of ammunition to support Starka’s point.

When one takes trading costs (which are not calculated ) into the true cost of ownership, www.personalfund.com, it is difficult but not impossible to make the case for active management vs. passive.[/quote]

The only managers who consistantly excel are going to be strict deep value managers. But these days you can own shares of the S&P pure value ETF's and get the same performance for much less.

[quote=Broker24] [quote=Starka] By law, no one can know anything

that no one else

knows.[/quote]



There are things much more important than performance. For example,

in the distribution years of retirement, you can’t afford the std deviations

you get from the indexes. In addition, when the market gets thrown all

out of whack (i.e. the late '90’s, then the early 20’s), indexes are

extremely inefficient. They can’t adapt since they are not managed. I am

not saying that every MF manager knows the right answers in every

situation, but there are certain money managers I trust to manage my

clients money more than I do the wisdom of the “market”. Yes, you can

re-balance what indexes you hold, but then you are betting your skilss

against talented money managers. Not a bet I want to make.



I manage to minimize risk, not beat some arbitrary index.

[/quote]



Then why don’t these talented money managers consistently beat the

indices? People invest with us for one reason and one reason alone…to

increase their net worth. Period. To believe anything else is simply

foolish.



I agree with the statement that if you were my finanacial advisor and you

said simething as stupid as the above, you’d be fired in a flash.

People invest with us for one reason and one reason alone...to
increase their net worth. Period. To believe anything else is simply
foolish.

Count me as a fool.  Many of my clients are business owners.  They get a much better return by investing in their own business than they can get in retail investments.  They don't need us to increase their net worth.  They got wealthy without us.   

Outside of their business, they are often looking for protection, savings, and guarantees.

Ok.



You’re a fool.

[quote=anonymous]

They don’t need us to increase their net worth.  They got wealthy without us.   

Outside of their business, they are often looking for protection, savings, and guarantees.

Here's some more foolish talk on my end.  My clients who are getting ready for retirement or are already in retirement care more about making sure that they don't outlive their money than they care about their net worth.

Let's add to the foolish talk.  Many of my clients buy significant amounts of whole life insurance.  This lowers their net worth.

[quote=anonymous]

Here's some more foolish talk on my end.  My clients who are getting ready for retirement or are already in retirement care more about making sure that they don't outlive their money than they care about their net worth.

Let's add to the foolish talk.  Many of my clients buy significant amounts of whole life insurance.  This lowers their net worth.

[/quote]

Insurance is a whole 'nother breed of cat, but do you honestly believe that whole life decreases one's net worth?  You need to ask the tax man that question.  I'm sure he'll let you know that death benefit is added to a person's estate.

You really DON'T seem to know what you're talking about!

I'm sure he'll let you know that death benefit is added to a person's estate.

But not until you are dead.  Until then you are paying out more money than you have in cash value accessible to you, therefore lowered net worth.

[quote=Starka][quote=anonymous]

Here's some more foolish talk on my end.  My clients who are getting ready for retirement or are already in retirement care more about making sure that they don't outlive their money than they care about their net worth.

Let's add to the foolish talk.  Many of my clients buy significant amounts of whole life insurance.  This lowers their net worth.

[/quote]

Insurance is a whole 'nother breed of cat, but do you honestly believe that whole life decreases one's net worth?  You need to ask the tax man that question.  I'm sure he'll let you know that death benefit is added to a person's estate.

You really DON'T seem to know what you're talking about!

[quote=joedabrkr] [quote=Starka][quote=anonymous]

Here's some more foolish talk on my end.  My clients who are getting ready for retirement or are already in retirement care more about making sure that they don't outlive their money than they care about their net worth.

Let's add to the foolish talk.  Many of my clients buy significant amounts of whole life insurance.  This lowers their net worth.

[/quote]

Insurance is a whole 'nother breed of cat, but do you honestly believe that whole life decreases one's net worth?  You need to ask the tax man that question.  I'm sure he'll let you know that death benefit is added to a person's estate.

You really DON'T seem to know what you're talking about!

[/quote]

If one structures the policy ownership properly the value of the death benefit can be kept out of the estate, no?
[/quote]

Generally, yes, by using an ILIT.

Insurance is a whole 'nother breed of cat

If we are doing planning, we can't talk help someone with their investments without looking at their whole financial situation and we can't do this without looking at insurance issues.

but do you honestly believe that whole life decreases one's net worth? 

Who owns the policy?  If it is in a trust, every premium payment will lower the person's net worth by the same amount.  If the payer owns the policy, it will certainly lower their net worth for several years.  Even once the cash value is giving them a greater than 0% return, the return may be less than they'd be getting in investments.

You need to ask the tax man that question.  I'm sure he'll let you know that death benefit is added to a person's estate.

The tax man won't let me know that.  Instead, he will let me know that the death benefit is only added to the person's estate if the owner and the insured are the same person.   

You really DON'T seem to know what you're talking about!

If you can point out what place where I posted something not correct, I'd appreciate it.  I like the learning opportunity and you'll enjoy me eating crow. 

You need to ask the tax man that question.  I'm sure he'll let you know that death benefit is added to a person's estate.

The tax man won't let me know that.  Instead, he will let me know that the death benefit is only added to the person's estate if the owner and the insured are the same person.   

Speaking as a former loan officer, you need to make the distinction between net worth and estate valuation.   Net worth is the amount you are worth now.  Estate value is what you are worth dead. 

As a loan officer I can include the cash value of life insurance policies in the total net worth of the client as an amount of net worth that could conceivably be used as loan repayment.  Obviously I would not seriously consider or hope, that a client cashes in their insurance to repay a loan, but nevertheless, it is part of the net worth. 

The cash value of a life insurance policy is less than the actual cash that has been contributed.  The net worth of the client has been reduced by the difference contributed subtracted by the cash value accumulated.  The death benefit is not part of net worth.

Mr A is correct.

The cash value of a life insurance policy is less than the actual cash that has been contributed.

The rest of your post is correct.  This part may or may not be correct.  Typically if the policy is less than about 10 years old this is true, otherwise, the cash value is usually higher.

Typically if the policy is less than about 10 years old this is true, otherwise, the cash value is usually higher.

I stand corrected.  Most policies I have experienced as loan officer material were less than the amount contributed or very close to the amount contributed.    The main point of my posting being to highlight the difference between net worth and estate value as there seemed to be some confusion.

[quote=Spaceman Spiff]

[quote=Kargon]I do know that a Jones broker will liquidate some old ladies Metlife annuity (with a 5% surrender fee without telling her) that is performing well to roll into an IRA and then invest in American Funds A shares, again without telling her.[/quote]

Are you kidding!?  I know a lot of Jones brokers and none of us would do that.  Most of us would keep a good Met annuity.  The only person I've ever heard of doing that was the local US Bank guy. 

First, Field Supervision wouldn't let it happen because the surrender is too big.  We have to prove that it's beneficial to the client to liquidate an annuity.  Then we have to have the client sign all kinds of acknowledgement letters that says they understand.  We haven't even talked about the death benefit yet. 

Second, unless it's already qualified money you can't just roll it into an IRA.  I'll give you the benefit of the doubt and assume you know that.  We may use American Funds A shares, we may not.  I like Goldman and Franklin right now. 

Finally, we'd explain the whole thing to the client before we did it.  A shares and all.  And if it is an IRA, unless the little old lady really wants the death benefit of an annuity or to annuitize, the mutual funds would be cheaper for her in the long run.  No M&E charges.

Maybe there are some IRs out there that are struggling enough that they'd try that hoping they don't get caught, but they are certainly the minority.     

[/quote]

Trust me, the client was never informed and I had to run around and work to get the annuity reinstated, but because the Jones broker had invested in A Shares and taken 10k in commissions, I couldn't get the annuity reinstated.  My firm would have fired me if I had done this to this lady.

[quote=babbling looney]

You need to ask the tax man that question.  I'm sure he'll let you know that death benefit is added to a person's estate.

The tax man won't let me know that.  Instead, he will let me know that the death benefit is only added to the person's estate if the owner and the insured are the same person.   

Speaking as a former loan officer, you need to make the distinction between net worth and estate valuation.   Net worth is the amount you are worth now.  Estate value is what you are worth dead. 

As a loan officer I can include the cash value of life insurance policies in the total net worth of the client as an amount of net worth that could conceivably be used as loan repayment.  Obviously I would not seriously consider or hope, that a client cashes in their insurance to repay a loan, but nevertheless, it is part of the net worth. 

The cash value of a life insurance policy is less than the actual cash that has been contributed.  The net worth of the client has been reduced by the difference contributed subtracted by the cash value accumulated.  The death benefit is not part of net worth.

Mr A is correct.

[/quote]

So what you're saying is that by funding a whole life contract,  A is NOT materially increasing the client's net worth?

No BL, neither one of you are correct.

Example so that Starka can understand.

Junior has no debts and no assets other than the $10,000 that he has sitting in the bank.  He has a net worth of $10,000.

Junior decides to buy a $1,000,000 whole life policy.  The premium is $10,000/year.  He pays the annual premium leaving nothing in the bank.  The cash value of the policy is $0.  He now has a net worth of $0.

[quote=anonymous]

Example so that Starka can understand.

Junior has no debts and no assets other than the $10,000 that he has sitting in the bank.  He has a net worth of $10,000.

Junior decides to buy a $1,000,000 whole life policy.  The premium is $10,000/year.  He pays the annual premium leaving nothing in the bank.  The cash value of the policy is $0.  He now has a net worth of $0.

[/quote]

And Junior's estate is what?

Like I said before Kid...you haven't a clue.

As long as he's alive, he doesn't have an estate.  What's your point?

Since when does someone's estate at death have any bearing on their net worth while alive? 

Starka. The only thing that would affect the client's net worth is the cash value of the insurance policy.  Again.... Net worth is what you are worth NOW.  It doesn't include the estate value of life insurance.    If you have a 1 million dollar term insurance policy on yourself, it will not increase your net worth one cent.

[quote=anonymous]

As long as he’s alive, he doesn’t have an estate.

What’s your point?

Since when does someone’s estate at death have any bearing on their net

worth while alive?

Hell yea, I brought insurance into the debate.   How does insurance possibly get left out of a financial planning conversation that deals with what people want in terms of financial advice?  

What's going on Starkyboy, you lose the argument so the opposing argument becomes drivel?

[quote=Kargon][quote=Spaceman Spiff]

[quote=Kargon]I do know that a Jones broker will liquidate some old ladies Metlife annuity (with a 5% surrender fee without telling her) that is performing well to roll into an IRA and then invest in American Funds A shares, again without telling her.[/quote]

Are you kidding!?  I know a lot of Jones brokers and none of us would do that.  Most of us would keep a good Met annuity.  The only person I've ever heard of doing that was the local US Bank guy. 

First, Field Supervision wouldn't let it happen because the surrender is too big.  We have to prove that it's beneficial to the client to liquidate an annuity.  Then we have to have the client sign all kinds of acknowledgement letters that says they understand.  We haven't even talked about the death benefit yet. 

Second, unless it's already qualified money you can't just roll it into an IRA.  I'll give you the benefit of the doubt and assume you know that.  We may use American Funds A shares, we may not.  I like Goldman and Franklin right now. 

Finally, we'd explain the whole thing to the client before we did it.  A shares and all.  And if it is an IRA, unless the little old lady really wants the death benefit of an annuity or to annuitize, the mutual funds would be cheaper for her in the long run.  No M&E charges.

Maybe there are some IRs out there that are struggling enough that they'd try that hoping they don't get caught, but they are certainly the minority.     

[/quote]

Trust me, the client was never informed and I had to run around and work to get the annuity reinstated, but because the Jones broker had invested in A Shares and taken 10k in commissions, I couldn't get the annuity reinstated.  My firm would have fired me if I had done this to this lady.

[/quote]

Wow, 10k.  That must have been one of your larger clients.  If the FA put all the funds into American it would have had to be $400K to generate $10K in commissions.  I'm suprised that a broker of your standing would be so in the dark about one of his best clients that you didn't know she was unhappy with her annuity.  Did she call you and ask for a second opinion on what the evil Jones broker said?  Or did you get blindsided and then scramble to try to save the policy?  She must not have been completely happy with the policy like you think or she wouldn't have been talking with the Jones FA.    

If there was a 5% surrender that would mean you sold it to her what, 2 years ago?  Was it for the tax deferral, death benefit, or income benefits that you put an "old lady" into a Metlife annuity?  Or was that all you could sell her?  Maybe it just paid you the most.  Annuity commissions I understand are a lot higher than mutual fund commissions. 

So, tell me, where did you get the money?  From another annuity would be my guess.  Was it really necessary to move the contract and start another 7 year surrender period, or could you have done something different with the existing contract to look for better returns?  How much did  you get paid on that transaction?  What $25K+?  Who's best interest was that?  Did she know how much you got paid, or did you tell her that she doesn't pay anything, which by the way is not completely true?

I don't know the specifics behind the policy you sold her, the actual age of the client, what her goals for the money were, etc.  I do know that if the scenario played out like you said it did, the Jones broker didn't hurt her much.  5% surrender + 2.5% sales charge = 7.5%.  Let's say 1.4% on the M&E for 5 more years = 7%.  Maybe they did talk about the surrender and she was willing to let go of the .5% for immediate access to all of her money, not just the 10% max your contract would have given her. 

With that said, I still argue that if this FA went through all of the proper Jones channels, Field Supervision wouldn't have let it go through.  Maybe he didn't.  Who knows.

If the FA put all the funds into American it would have had to be $400K to generate $10K in commissions.

Please explain how $400,000 into an American Funds Mutual Fund could generate $10,000 in commissions for a Jones rep.  We may have to send you back to remedial math.

[quote=Starka] [quote=Broker24] [quote=Starka] By law, no one can

know anything

that no one else

knows.[/quote]



There are things much more important than performance. For example,

in the distribution years of retirement, you can’t afford the std deviations

you get from the indexes. In addition, when the market gets thrown all

out of whack (i.e. the late '90’s, then the early 20’s), indexes are

extremely inefficient. They can’t adapt since they are not managed. I am

not saying that every MF manager knows the right answers in every

situation, but there are certain money managers I trust to manage my

clients money more than I do the wisdom of the “market”. Yes, you can

re-balance what indexes you hold, but then you are betting your skilss

against talented money managers. Not a bet I want to make.



I manage to minimize risk, not beat some arbitrary index.

[/quote]



Then why don’t these talented money managers consistently beat the

indices? People invest with us for one reason and one reason alone…to

increase their net worth. Period. To believe anything else is simply

foolish.



I agree with the statement that if you were my finanacial advisor and you

said simething as stupid as the above, you’d be fired in a flash.[/quote]



Starka, I think you’re missing the point. There’s a big difference between

investing for a 40 year old, and investing for a 67 year old. I have plenty

of clients that come to me with 70% of their 7 figure net worths in ONE

stock (their employer). Now, this employer has delivered about 22% per

year the past 6 years. Do you think it would be wise for me to try to get a

retiree 22% per year in retirement?? That’s insane. But that’s what I’m

talking about. Risk and volatility. Most wealthy individuals would prefer

relative safety over the absolute highest returns. Any knucklehead can go

out and pick the highest returning investments. I am not talking finding

them 4% returns. I’m saying giving someone 10% annual returns with low

beta versus 11% with wild deviations makes a lot of sense.



Maybe my clients are all different, but I don’t think I am off-base here.

[quote=Broker24] Starka, I think you’re missing the point. There’s a big difference between
investing for a 40 year old, and investing for a 67 year old. I have plenty
of clients that come to me with 70% of their 7 figure net worths in ONE
stock (their employer). Now, this employer has delivered about 22% per
year the past 6 years. Do you think it would be wise for me to try to get a
retiree 22% per year in retirement?? [/quote]



This has nothing to do with what we have been talking about, the fact
that active fund managers consistantly fail to beat their passive
benchmarks.



You can get any risk profile you want via an allocation to a riskfree
asset and one or more risky asset classes. If you want less risk, you
crank up the cash allocation.



Portfolio risk depends on exposure to market risk factors. Active
management within those risk factors is mostly useless and often
harmful in an effecient market.

[quote]That’s insane. But that’s what I’m 
talking about. Risk and volatility. Most wealthy individuals would prefer
relative safety over the absolute highest returns.[/quote]



Your clients could be taking a real risk working with someone who doesn’t understand the concepts of portfolio risk management.

[quote]Any knucklehead can go 
out and pick the highest returning investments. I am not talking finding
them 4% returns. I’m saying giving someone 10% annual returns with low
beta versus 11% with wild deviations makes a lot of sense.
[/quote]



If you want a low beta portfolio, reduce your exposure to market risk (beta).

"Starka, I think you’re missing the point. There’s a big difference between

investing for a 40 year old, and investing for a 67 year old. I have plenty

of clients that come to me with 70% of their 7 figure net worths in ONE

stock (their employer). Now, this employer has delivered about 22% per

year the past 6 years. Do you think it would be wise for me to try to get a

retiree 22% per year in retirement?? That’s insane. But that’s what I’m

talking about. Risk and volatility. Most wealthy individuals would prefer

relative safety over the absolute highest returns. Any knucklehead can go

out and pick the highest returning investments. I am not talking finding

them 4% returns. I’m saying giving someone 10% annual returns with low

beta versus 11% with wild deviations makes a lot of sense.



Maybe my clients are all different, but I don’t think I am off-base here. "

___________________________________________



I’m not too sure about who’s missing the point, B24. You’re citing the

exception to prove the rule. If you’re simply in business to minimize risk,

why are you looking at betas anyway? Put the whole portfolio into CDs

and be done with it.



And frankly I’d question the statement that you have “plenty” of seven

figure clients who have 70% of their net worth in one company’s stock.

That would truly be an extraordinary book. Extraordinary indeed.

[quote=Starka]


I’m not too sure about who’s missing the point, B24. You’re citing the

exception to prove the rule. If you’re simply in business to minimize risk,

why are you looking at betas anyway? Put the whole portfolio into CDs

and be done with it.



And frankly I’d question the statement that you have “plenty” of seven

figure clients who have 70% of their net worth in one company’s stock.

That would truly be an extraordinary book. Extraordinary indeed.

[/quote]



If you are really serious about reducing risk, you would be developing
optimised portfolios using MPT. B24 has given no evidence that he does
any of that.



And if you accept the idea’s of Modern Portfolio Theory, then you would
accept the core hypothesis that exposure to market risk factors is what
creates portfolio risk and portfolio returns.



I’ve seen 70% in a single stock portfolio’s but that usually pretty
rare and a fair percentage of those people are dingbats who would
refuse to sell any of their precious stock.



So either you decline the engagement or you put the remainder of the
portfolio in muni’s/tips and other assets with low correlation to
that stock.

[quote=anonymous]

If the FA put all the funds into American it would have had to be $400K to generate $10K in commissions.

Please explain how $400,000 into an American Funds Mutual Fund could generate $10,000 in commissions for a Jones rep.  We may have to send you back to remedial math.

[/quote]

Let me take off my shoes so I can do this math.  Let's see...$400,000, $250K breakpoint is 2.5%, that should equal $10,000.  Let me check again, $400,000 X 2.5% = $10,000.  Yep, checked out the second time too. 

OK, in reality the numbers are $400,000 X 2.5% = $10,000, American keeps .5% = $2000.  Gross to the Jones rep $8000, net $3200.  Minus expenses, insurance, communications charges, money to GPs and LPs, BOA's salary, net net to me...$1.

Anonymous, if that's the best you got, you better go back to school.  Do they really let you talk to clients?

[quote=Spaceman Spiff]

Let me take off my shoes so I can do this math.

[quote=Spaceman Spiff][quote=anonymous]

If the FA put all the funds into American it would have had to be $400K to generate $10K in commissions.

Please explain how $400,000 into an American Funds Mutual Fund could generate $10,000 in commissions for a Jones rep.  We may have to send you back to remedial math.

[/quote]

Let me take off my shoes so I can do this math.  Let's see...$400,000, $250K breakpoint is 2.5%, that should equal $10,000.  Let me check again, $400,000 X 2.5% = $10,000.  Yep, checked out the second time too. 

[/quote]

I think you know what anonymous meant.  On a $400,00 purchase, that generates a $10,000 Sales Charge, it generate $8,000 in Commission. To generate $10,000 in commission, the FA would need to invest $625,000 into American Funds.

It would generate $8,000 in GDC which in turn would pay out a commission of somewhere about $3,000 for the Jones rep.

Actually, for the rep to generate $10,000 commission, the investment into American Funds "A" share would have to be $2,500,000.  This would give a GDC of $25,000 creating a commisson at 40% of $10,000.

This is a far cry from Spaceman's $400,000.

You guys must be bored today trying to figure out how to make my math look bad.  Don't you have some wrap account to push?

Indy - first, yeah I knew what he meant.  But I also think he knew what I meant and it was an attempt to make the lowly Jones broker look bad. 

Second, I love how you only quoted part of my response.  The rest that you didn't quote said exactly what you did.  Minus the calculation to get my net up to $10K.  Thanks for that.  Now I know how many $$$ I need to take from you to net $10K next month.  I think I'm halfway there.  

Anon - the semantics game is killing me.  If you go back and read Kargon's post, he said that he couldn't get the annuity reinstated because the broker had purchased A shares and taken $10K in commissions.  He didn't differentiate sales charges or dealer concession or net to broker.  Just blanket statement, commissions.  That's what the customer would have called them.  So, my originall math as my fingers and toes pointed out, was correct in the context of the post.  You should really try doorknocking.  It will take up a lot of that time you spend sitting around trying to make other people on this board look inferior to you.

In all honesty Spiff, I wish he was in my town! Tell me THAT’s not some low

hanging fruit!

Some days it’s just too easy.

[quote=AllREIT]

[quote=Starka]

I’m not too sure about who’s missing the point, B24. You’re citing the

exception to prove the rule. If you’re simply in business to minimize risk,

why are you looking at betas anyway? Put the whole portfolio into CDs

and be done with it.



And frankly I’d question the statement that you have “plenty” of seven

figure clients who have 70% of their net worth in one company’s stock.

That would truly be an extraordinary book. Extraordinary indeed.

[/quote]



If you are really serious about reducing risk, you would be developing

optimised portfolios using MPT. B24 has given no evidence that he does

any of that.



And if you accept the idea’s of Modern Portfolio Theory, then you would

accept the core hypothesis that exposure to market risk factors is what

creates portfolio risk and portfolio returns.



I’ve seen 70% in a single stock portfolio’s but that usually pretty

rare and a fair percentage of those people are dingbats who would

refuse to sell any of their precious stock.



So either you decline the engagement or you put the remainder of the

portfolio in muni’s/tips and other assets with low correlation to

that stock.

[/quote]



REIT-

I can’t understand why you have to prance around this board with a

wholier than thou attitude. It seems as if you are the only person (in your

mind) that has any idea what they are doing. Do I follow MPT? Yes. I try

to ride the efficient frontier just like the rest of you. Just because I don’t

spew every bit of knowledge I have about investing doesn’t mean I don’t

possess the knowledge.



My point in the previous post was that my goal is to get the BEST risk

adjusted returns as possible, not just reduce risk period. Of course I

could reduce risk with cash or G-Bonds or whatever, but that is not what

I’m trying to accomplish. My point is that clients appreciate significant

reductions in risk without significant reductions in return (though they

will accept SOME reduction in return). And yes, there are many ways to

get there. A bucket of Index funds inside a wrap account is not the only

way to achieve that.



Can’t you accept that your way is not the ONLY way??

[quote=Broker24]
Can’t you accept that your way is not the ONLY way??[/quote]



Only the best way.



More seriously, B24 don’t be so sensitive. You’re a smart guy and I
have confidence that you do what you think is best for clients.



You should really read up on DFA’s website and understand how the academic finance people approach investing. 

[quote=Spaceman Spiff]

You guys must be bored today trying to figure out how to make my math look bad.  Don't you have some wrap account to push?

Indy - first, yeah I knew what he meant.  But I also think he knew what I meant and it was an attempt to make the lowly Jones broker look bad. 

Second, I love how you only quoted part of my response.  The rest that you didn't quote said exactly what you did.  Minus the calculation to get my net up to $10K.  Thanks for that.  Now I know how many $$$ I need to take from you to net $10K next month.  I think I'm halfway there.  

[/quote]

Would you like me to do the math on what you actually take home if you net $10K next month?  I would show you, but I'm a nice guy, and don't want to depress you. (don't forget to put some into the toilet paper and trash bags fund)

[quote=now_indy][quote=Spaceman Spiff]

You guys must be bored today trying to figure out how to make my math look bad.  Don't you have some wrap account to push?

Indy - first, yeah I knew what he meant.  But I also think he knew what I meant and it was an attempt to make the lowly Jones broker look bad. 

Second, I love how you only quoted part of my response.  The rest that you didn't quote said exactly what you did.  Minus the calculation to get my net up to $10K.  Thanks for that.  Now I know how many $$$ I need to take from you to net $10K next month.  I think I'm halfway there.  

[/quote]

Would you like me to do the math on what you actually take home if you net $10K next month?  I would show you, but I'm a nice guy, and don't want to depress you. (don't forget to put some into the toilet paper and trash bags fund)

[/quote]

Are you going to include my office profitability check, my profit sharing contribution, my diversification trip, and my LP distribution?  Or are you just going to use your distorted view of how bad it is to be a Jones broker? 

Seriously, I'm just poking a little fun at you.  Don't get your panties in a wad.

SS-

Only a Jones broker would attempt to include LP income in total comp. Remember you paid for it, it was not given to you. Of course you could have paid less down and financed it, giving the GP's interest income as well.

If I used your sordid logic, I would include my portfolio returns in my comp. Clearly they are separate and can't be included. If your GP's handed you LP , I would buy your argument.

It is not bad to be a Jones broker, I was one for almost a decade. In my opinion you are limiting significantly the options you could have available if you were elsewhere including most of the wirehouses.

Example. Just yesterday I was talking to a friend who is still at Jones. He was concerned that his muni inventory was down to 8 bonds. I searched the global inventory (which most bd's participate)and found over 1200 bonds that fit the criteria. How is this good for your Jones clients when you don't have enough tools or some suit back in St Louis is telling you to utilize funds because rates aren't attractive. Your firm, as much as you fight against it, is not offering A++ service if it can't compete in the marketplace. SS you clearly are way behind, and someday you will see the light. I fought it as long as I could, ultimately the things that I disliked about Jones became more important to me than what they did right.

Those trips are very intoxicating for me and my family. Even though they are taxed, they were generally very good and now that I am independent, I actually miss them more than anything else. Clearly that was not enough to keep me at Jones.

[quote=Spaceman Spiff][quote=now_indy][quote=Spaceman Spiff]

You guys must be bored today trying to figure out how to make my math look bad.  Don't you have some wrap account to push?

Indy - first, yeah I knew what he meant.  But I also think he knew what I meant and it was an attempt to make the lowly Jones broker look bad. 

Second, I love how you only quoted part of my response.  The rest that you didn't quote said exactly what you did.  Minus the calculation to get my net up to $10K.  Thanks for that.  Now I know how many $$$ I need to take from you to net $10K next month.  I think I'm halfway there.  

[/quote]

Would you like me to do the math on what you actually take home if you net $10K next month?  I would show you, but I'm a nice guy, and don't want to depress you. (don't forget to put some into the toilet paper and trash bags fund)

[/quote]

Are you going to include my office profitability check, my profit sharing contribution, my diversification trip, and my LP distribution?  Or are you just going to use your distorted view of how bad it is to be a Jones broker? 

Seriously, I'm just poking a little fun at you.  Don't get your panties in a wad.

foot - OK, I get it.  For the hundreth time, Indy is better than Jones.   

Joe, I figured as much.

[quote=The Truth]The problem is you cannot expect "compliance" to take a stance when you
are paying people $40K per year. Put yourself in their shoes. Would you
take on a big producer/GP at Jones when you are barely able to make ends
meet? No way and that is why nothing is ever done.[/quote]

You mean they (compliance) make 40k?  I made 34k last year, and had 6k in expenses, not including my gas and wear and tear on my sh*tty car.  If you start from scratch at Jones, you do just that: scratch sh*t like chickens.

[quote=EdJehovah]

[quote=The Truth]The problem is you cannot expect "compliance" to take a stance when you
are paying people $40K per year. Put yourself in their shoes. Would you
take on a big producer/GP at Jones when you are barely able to make ends
meet? No way and that is why nothing is ever done.[/quote]

You mean they (compliance) make 40k?  I made 34k last year, and had 6k in expenses, not including my gas and wear and tear on my sh*tty car.  If you start from scratch at Jones, you do just that: scratch sh*t like chickens.

[/quote]

If you would get to work and stop posting maybe you would make more than 40K..... How could you make less than that in your first year????

[quote=noggin] [quote=EdJehovah]

[quote=The Truth]The problem is you cannot expect “compliance” to

take a stance when you are paying people $40K per year. Put yourself in

their shoes. Would you take on a big producer/GP at Jones when you are

barely able to make ends meet? No way and that is why nothing is ever

done.[/quote]

You mean they (compliance) make 40k? I made 34k last year, and had

6k in expenses, not including my gas and wear and tear on my shtty

car. If you start from scratch at Jones, you do just that: scratch sht like

chickens.

[/quote]

If you would get to work and stop posting maybe you would make

more than 40K… How could you make less than that in your first

year???

[quote=Starka] [quote=noggin] [quote=EdJehovah]

[quote=The Truth]The problem is you cannot expect "compliance" to
take a stance when you are paying people $40K per year. Put yourself in
their shoes. Would you take on a big producer/GP at Jones when you are
barely able to make ends meet? No way and that is why nothing is ever
done.[/quote]

You mean they (compliance) make 40k?  I made 34k last year, and had
6k in expenses, not including my gas and wear and tear on my sh*tty
car.  If you start from scratch at Jones, you do just that: scratch sh*t like
chickens.

[/quote]

If you would get to work and stop posting maybe you would make
more than 40K..... How could you make less than that in your first
year????

[/quote]

Actually Noggin, that's about $100,000 gross at EDJ.[/quote]

You should have progressed to Segment 2 by month 12.  Segment 2  is 8K minimum per month. 1st year you should do from scratch is at least 90K gross, if not you will really starve in year 2......