Negotiations with EDJ

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Aug 14, 2010 1:08 am

I am looking for advice on negotiating traning pay with EDJ.  I currently earn in the 100K range.  I am willing to take a substantial pay cut to start this business.  I have complete confidence the results in a couple of years will be well worth it.  Until then though I have a family and mortgage and other fixed expenses.  I know the minimum I need to make during the first 16 months (4 months hourly and 1st year salary) to cover my bills.  My question is, when negotiation my hourly and salary should I start high assuming they will counter offer, or simply let them know my minimum needs and see if they can meet them? 

Also, can anyone tell me, at what point do you learn if a Goodknight/Legacy is going to be an option.  I read a lot on here telling people " IF you get a goodknight...etc."  This leads me to believe a candidate might knwo before accepting the position.  How long can a FA work before they are not eligible for a Goodknight?

Thanks in advance for the feedback.

Aug 15, 2010 1:27 pm

First, the training pay/first year salary is not very negotiable.  Most newbies fail out, so it's not worth them negotiating.  You have some wiggle room getting to their max, but they don't go higher than that.  They take into account your previous income, job history, and geo location.

As far as the Goodknight, if you know an FA that is willing to do one with you, great.  If not, you have to roll the dice.  There may not be any FA's in your area planning to do one right now.

Some word of caution...if you have a mortgage and a family to feed, you should SERIOUSLY think twice about this move.  Unless you have some particular experience or network that you KNOW you can CERTAIN you can mine for clients, it is an UPHILL battle financially.  I blew through a LOT of capital my first few years.  Not sure what I would have done differently, but I would have been better prepared, and better prepared my wife.  I was making well over 100K with fully-paid company benefits.  Let's just say I am still not there yet, even after 4 years.  It's getting better, but it was a long road.  This has been very tough on my wife.  She was great the first few years, but it has been getting tough...

And DON'T get fooled into thinking your past experience is going to make life easier for you.  Just take this as fair warning, and DON'T use Jones' income tool on their website.  It is BULLSH!T.  Seriously.  I have seen several lives wrecked trying to do this, and I WORK there.  MAKE SURE you have PLENTY of capital saved, or a working spouse.

Aug 15, 2010 9:07 pm

B24, explain more.  I would be interested in learning more about what you did previously and your experiences thus far.  Even if you want to PM me so not to post it public.  I've been considering a career for years as an FA and have looked at Jones closely as well as studied these charts, etc. that you are referring to. 

Aug 17, 2010 10:41 am

[quote=B24]... DON'T get fooled into thinking your past experience is going to make life easier for you.  Just take this as fair warning, and DON'T use Jones' income tool on their website.  It is BULLSH!T.  Seriously.  I have seen several lives wrecked trying to do this, and I WORK there.  MAKE SURE you have PLENTY of capital saved, or a working spouse.[/quote]

Booyah; this is pure gold.By the time I got to my third year, I was finally among the top quartile of people that had graduated the same year as I. In my best three or four months, I was making around $7-8K a month. In my past, I'd always been able to perform in the top 20% of any endeavor I undertook so I figured if one out of three made it, I would too.  And $7000 a month, in your thirtieth month, is what being in the top quartile will get you at Edward Jones.

Best lecture I got pre-Jones? "Most people that fail, don't do what they are told. The rest fail because they run out of heart, or run out of money." Forget who you know, what you know, your backround. Any of that gives you, at best, a jump start in months 1 through 5. You sit in front of a long, long cold winter voyage. Best you be bundled correctly in attitude and have a correct store of acorns for the trip.

BUT ... even an idiot like me made it with the help of my beautiful wife, so what does that tell you? Anybody really can, and I'll bet B24 would echo that the wierdest people were successful.

Aug 17, 2010 10:51 am

God yes.  I can't tell you how many Jones guys I meet and I say "sh!t, if that tool can make it, there's no reason I can't."  Honestly, sometimes the dumbest fukcers make it because they are too dumb to do anything other than exactly what they are taught (so I'm not sure whether that makes THEM dumb, or most of the rest too smart for their own good).  Because in reality, if you do exactly what Jones teaches you, and never give up (and don't run out of money), you will eventually make it.

Aug 17, 2010 8:07 pm

LockEDJ based on the income chart the EDJ gives on their recruiting site your performing right about on scale for 100%.  The EDJ scale says 50-100% plan yearly $67,000 @ yr 3 and 100-150% plan $117,000.  B24 please tell me more.  I'm not coming from a 6 figure income in-fact I'm coming from 1/2 that before benefits and perks but do want to understand this further. 

Aug 18, 2010 9:28 am

My point is that most newbies (starting from scratch) are not performing that way.  Keep in mind (this is Jones' little secret)...those production scales you see INCLUDE (1) transfer brokers, (2) Goodknights, (3) FA's taking over existing offices with assets, as well as newbies.  And due to basic survivorship bias, it does NOT include those that have failed out.  In my region, the "average"  production at month 36 is about 10K per month.  Now, there are some in the 20's, and some in the mid single digits, and then there are a LOT that failed out prior.  But it is impossible to parse through which is a GK, took over an office, transfer broker, etc.

Point is, those "average" numbers have VERY, VERY high standard deviations.  It's like telling someone that their equity fund will return 8% "on average" every year, when in reality, there are very few years when you will see even within 200 basis points of that "average" return.

Starting from scratch young in this business is a great opportunity.  Your cost of living is real low, so you can afford to stick it out longer than most older, established guys.  And if you really make it, you have decades to make boatloads of cash and live a very relaxed lifestyle.

Incidentally, I should mention that the 67K in year three you mentioned is very do-able.  It is probably likely if you are making consistent progress.

Aug 18, 2010 9:36 am

B - Are these production numbers you mentioned gross or net #'s?  I would guess gross...just curious though.

Aug 18, 2010 11:43 am

Actually, I thinked I mixed them a bit.  The per month stuff I mentioned was gross (10K per month).  The 67K in year 3 was net (about 14K gross per month).

Aug 18, 2010 12:49 pm

That sounds about right in my region too.  I'm near that far from CSD, that's why I asked.  It's interesting to hear what avgerage production is outside this region.

Aug 18, 2010 8:37 pm

$45K-$60K looks very realistic if you don't fail out.  Failing out is not an option.

3-5 yrs $100K also seems realistic.  There's not to many careers no matter what life stage you are in where you have that type of opportunity.  I figure worst case scenario you are working 45-70 hr weeks the first 2 yrs, 45-60 hr weeks yr 3-5 and if you are pulling down $80K+ that's pretty good, yr 5+ 40-60 hrs $100K+.  I'm 8 yrs in and am a senior level manager and minority shareholder in a small private owned company and might make $80K on a good year with all benefits, perks, etc. included. 

Am I thinking right here?

Aug 19, 2010 10:19 am

Your thinking is realistic.  However, at least at Jones, I would say 1% of newbies make 100K after 3 years.  75-85% fail out before 3 years, and of the remaining 15-25%, maybe 5% of those are making 100K at 3 years.  This basically equates to 21K per month gross by your third year.  I only know of ONE guy in my region that has done this (and he had a 5mm Goodknight).  This is if you start from scratch, no assets, nothing.  So it is an UPHILL fight.

Aug 19, 2010 10:37 am

sorry to thread jack, but what is a 5mm Goodknight...?

Aug 19, 2010 1:04 pm

It's an asset sharing/giving from a veteran FA.  He is referencing someone getting $5 million in assets for a head start....Not very much in the end and usually the bottom of the book.  If this guy is making $100k in his 3rd year with a $5 million GK he is knocking the cover off the ball.

Aug 21, 2010 7:55 pm

Go Indy, I am with LPL.  LPL might not be an option at the start but you are a business owner not an employee with an office in a strip mall.  Take the 90-93% payout, run a tight ship and your net should be around 80-83%.  You don't have to do a lot of business to make a 100k in your first year.  

I still do seminars every other week and average 2-4 million in new business a month.  Almost all wrapped at 1-1.25%. You can do the math.  

I have never viewed Ed Jones as a competitor, the 7 in my town all do ok, but my thought is Ed Jones will only do well in a bull market.  They are a buy and hold shop that has no way to hedge portfolios other than asset allocation.  The days of buying A share mutual funds and growing the account year over year are over, at least for the time being.  We do a lot of non-traded REITS and other alternative investments that are not available at Jones.  We don't do a lot of annuity business but I understand Annuity sales are growing at Jones.  

If you think the market is going to go up 10-15% a year Jones is as good a place as any,if the market is flat to sideways you will be at a competitive disadvantage.  

Aug 23, 2010 10:10 am

2-4mm in new business each month?  How many reps?  That's pretty good asset growth.  How do you target seminar attendees?