EDJ Unveils Fee Based Platform
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I haven’t put a penny into it yet, and I haven’t gotten up the nerve to approach existing clients and suggest we “upgrade” their mutual fund portfolios.
I worked too hard touting the virtues of American Funds to go back and tell them there's now something even better, and that I'd appreciate it if they'd also start paying me an annual fee for me to "manage" their new portfolio for them. What a bunch of crooks...C’mon Borker. It’s not about turning new clients into fee-payers. And if you did, they’d get their commission credited back to them anyway.
It's really about looking forward. It's much easier to be able to tell a client that we have several different approaches we can use, here's the options, here's what to consider. I have talked to a few prospects about it, and I basically tell them, "look, you will pay me more with fees over the long term, here's what you get, this is what we can do with a commisioned portfolio, etc., etc." Many people I talk to (not necessarily clients or prospects) have an aversion to commissions, so they are OK with fees. Here's something else to ponder: I have two CPA's that I am close to. I get a few referrals from both. One of them is anti-fee based, the other one only believes in fees (she has all her money invested with an RIA). So, even among the financial community, there is no concensus. It's good to have the flexibility to go either way (or go both ways, in the case of BSpears ). I also know some FA's that have said that some of their clients would rather be paying fees and WANT to switch. Great! But I would not go back to clients and try to convince them to switch unless there is some real compelling reason. Borker, stop looking for the conspiracy theory. It's just business.[quote=Spaceman Spiff]
My region has had it for about a month. I've got transfer papers on just over a mil, plus another $500k of client's that are moving some of their existing assets into it. And I haven't hit it as hard as I plan to in the next coming months. I'd like to have $6-7 MM in it before the end of the year.
They like it. Funny that to a person my clients who have moved have said that they listen to this guy on the radio who says fee based is the way to go. They are thrilled that Jones has taken this step. It's also reopened some conversations with some prospects that told me no a few years ago because they didn't want to pay me commissions. Now that it's a fee based conversation they'll listen again. [/quote] You're right, B24. I completely misunderstood what Spiff was saying.Borker if you told clients you were “managing” their accounts you broke the law. All Indys on this site will tell you that you acted as a broker not an advisor. If you want to act as an “advisor” you ain’t gonna do it on commission basis in a brokerage account. Figure out what is best for your clients and do it. Past costs are important but they are a very distant second to your clients’ current and future best interest.
[quote=Borker Boy]I haven’t put a penny into it yet, and I haven’t gotten up the nerve to approach existing clients and suggest we “upgrade” their mutual fund portfolios.
I worked too hard touting the virtues of American Funds to go back and tell them there's now something even better, and that I'd appreciate it if they'd also start paying me an annual fee for me to "manage" their new portfolio for them. What a bunch of crooks...[/quote]It shouldn't be about your method of compensation, it should be about what you think will help the client going forward. So you lack the "nerve" because you might look bad because of what you may have said in the past, rather than what might be best for your clients ... now, and in the future? It either makes sense for a client or it doesn't. Your nerves or what you thought in the past should have nothing to do with it.
Using that logic you would never have the nerve to sell out of anything you recommended, regardless of the method of compensation. Keep your eye on the ball, not on your nerves.
If what you thought to be true turned out not to be true, how soon would you want to know?
Plenty of FA’s are moving current mutual fund assets into the advisory program and they are doing it aggressively. For new guys obviously their participation will be mostly new money, but no one inside or outside EJ should think for a second that FA’s aren’t “transitioning” current assets into this program. Basically if they paid an A share 3+ years ago you have the go ahead. And B24, before you say it, yes it probably happens at all firms when something attractive is added to the platform.
I was told that 80% of the $$ that has gone into Advisory Solutions is existing money. That should give you an idea what it’s being used for.
I was told that 80% of the $$ that has gone into Advisory Solutions is existing money. That should give you an idea what it’s being used for.
I was told Santa Claus was real.
Borker - if you think Jones did this ONLY to make money, then you're really missing the boat on this one. Sure, this is a fee based account and therefore Jones will make some fees.
Here's the choice with accounts like this. Either learn how they work and adopt them into your existing practice, yes even with existing clients who have already purchased American Funds from you, or make conscious decision right now to not get pissed off when you start losing assets to the Mutual Fund Store, or ML, or MS when they call your clients and ask them if they are still using just one fund family? It's not a matter of how good American Funds is. It's a matter of how good the media machine is at telling your clients that they should avoid commissions at all costs and only pay fees. ALL of the people I've talked with about Advisory Solutions has told me they were wondering if fee based was a better way to go. My first phone call was to a guy who told me 18 months ago that he was considering leaving Jones BECAUSE we didn't do fee based for a guy like him. He loves me, but wants to do fee based. Our clients are going to hear about a program like this. I want it to be from me, not from Ice. A group from my region was having dinner a few weeks ago and a GP named Ray Raley walked into our meeting. He happened to be eating in the same restaurant and they told him we were there. He said without blinking "The days of me sitting down at my desk and calling clients and prospects on a bond or a stock are DEAD. You guys HAVE TO adopt FAST into your businesses. You owe it to your clients and future clients to learn to appreciate Advisory Solutions. If you plan on being competitive in this business for the next 20 years I would strongly advise you get your CFP." This industry is changing. You really need to change with it.Your point?
I'm saying that Jonesies are simply going to use this to "annuitize" existing, nonactive, "non-trading" accounts. I think it's a shame.[quote=SayNo2KoolAid]Your point?
I'm saying that Jonesies are simply going to use this to "annuitize" existing, nonactive, "non-trading" accounts. I think it's a shame.[/quote] Why is it a shame to offer clients, who probably only hold one fund family now, the ability to have a more robust, better diversified, better structured platform? You people are amazing. For years the complaint was, and probably one of the reasons some of you left Jones to begin with, that Jones didn't have anything fee based. You also complain that the majority of the money we invest in funds goes to American. I can't tell you how many discussions have been had on this board about how investing works at EDJ. Now that there have been some nice steps taken to change that, you come up with a shallow comment like the one above. You know, I think Weddle could start pooping gold bricks and handing them out to our clients for free and you people would complain about it because the bricks smelled a little. And jamesbond, just because the GP told us that in a meeting a few weeks ago doesn't mean he just now figured it out."You people" Spiff? I should let you know that I am a 12+ year vet with Jones. I never complained that we didn't offer a fee based platform. Maybe it does have its place in the Jones system, but i'm just saying that in my little corner of the Jones world, I know several who are using it as an opportunity to annuitize existing business for their benefit. Just like the folks I used to know who would choose mutual funds for their clients based on what months they paid their trails so as to 'even out" their service income. These weren't the newbies, either. They were some of the big boys. Thank goodness monthly trails have eliminated that.
My apologies for making an assumption that you were something other than a Jones FA based on your screen name and the couple of above posts.
I think that even with the scenario you gave above, where the FAs are looking at it as a way to create more income for themselves, the clients will be better off for it. That's just my personal opinion.Spiff you have evolved. I don’t think you would have made the above comment a year ago.
Additionally, I agree. If you have all of someone's money and they're taking income, you have little to no incentive to do much of anything for them except maintain an automatic reverse-dca and issue their electronic deposit. This eliminates that conflict of finally getting all of someone's money and then being done getting paid.By the way…getting paid on fees lets the advisor keep some money in cash for clients taking income rather than reverse-DCAing them out of ICA like many Jones FA’s do. If history says you pay less to buy when you DCA, you also get less to sell.
I like to think I’m in a constant state of evolution, brought about by insightful and meaningful discussion daily on the RR forums.
[quote=LuvIndy]Spiff you have evolved. I don’t think you would have made the above comment a year ago.
Additionally, I agree. If you have all of someone's money and they're taking income, you have little to no incentive to do much of anything for them except maintain an automatic reverse-dca and issue their electronic deposit. This eliminates that conflict of finally getting all of someone's money and then being done getting paid. [/quote] Not exactly. We're only dealing with mutual funds in the advisory account. It has to be invested if we're going to get paid. No sitting on the sidelines with cash here. It's going into the funds, by golly.Once again Borkers attitude outruns his intelligence. By Golly. Money market is generally held outside of the program so clients are not charged a fee on the money market. There is only enough (approx 2%) money market in the program to facilitate re balancing and the monthly fee. Borker, what you twist in to some evil plot actually saves the client money. I am sure you have enough real things to complain about that you shouldn’t have to resort to making up nonsense.
Forgot. Ice your are right. A full menu of both ETFs and Index Funds for those who are so inclined.