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EJ Changes Below Expectation Rules

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Feb 26, 2009 8:53 pm

Foot, you make good points.  Jones has sort of made it’s own bed.  We are a company that is probably 1/2 new FA’s (under say 5 years).  Problem is, the model works great when we are ina  raging bull, like from 82-99, and people are making money.  But in a secular bear market that could last years (or decades), the model will get killed because the bottom half of FA’s get hammered. 

I agree with the other post, Jones is not doing this out of a big heart.  They are protecting their investments (in newly minted and trained FA's). 
Feb 26, 2009 9:26 pm

[quote=B24]Foot, you make good points.  Jones has sort of made it’s own bed.  We are a company that is probably 1/2 new FA’s (under say 5 years).  Problem is, the model works great when we are ina  raging bull, like from 82-99, and people are making money.  But in a secular bear market that could last years (or decades), the model will get killed because the bottom half of FA’s get hammered. 

I agree with the other post, Jones is not doing this out of a big heart.  They are protecting their investments (in newly minted and trained FA's).  [/quote]   Ok....so let's say that is the worst case.....then it's a win win!
Feb 26, 2009 9:35 pm

Jones is lucky they leased instead of bought all their offices

Feb 26, 2009 9:44 pm

And back in my day many leases were negotiated with 3 month out clauses. But the capital it takes to open those offices is significant, I see this market as an opportunity for Jones to help those who they think can make it while making it look like they are a firm that really cares about their employees.

Many former Jones reps  cringe when we think any firm really cares about their replacable components (FA's). Spiff... this is one time I will say Jones is different than other firms, they just make it look like they care.

Feb 26, 2009 9:44 pm

If this is an evil GP conversation, which you have turned it into, it is absolutely not in the best interest of the GPs to continue to hold onto these folks who aren't at least at location gain.  Jones isn't upping the ante on growth.  They're following the plan they set out last year or the year before.  Just because the market is down doesn't mean that baby boomers aren't retiring.  Maybe some of them hold on for a few more years, but they'll retire eventually.  While the rest of the industry is contracting, Jones is expanding.  Call it buying more shares when the prices are down. 

I think this move is absolutely a circle the wagons move.  They are protecting what they have.  Record numbers of advisors are below expectations.  After this month, FAD probably couldn't keep up with the number of people on goals.  Something had to be done.  So, instead of sticking with the old line of too bad so sad, they said we're gonna give you a break.  They'll probably save some of the FAs, but the ones who are destined to fail still will.  As the market, and firm production, gets better the goals line gets higher.  So, you can't skate by at 31% of standard forever.    Spin it however you like.  There's a ton of FAs out there that are thankful they have a job and benefits next month.  So, they'll be trying to figure out how to get money out of their clients pockets instead of yours and mine from the unemployment office.  
Feb 26, 2009 9:47 pm

now Jones will have zombie IRs all over the firm

Feb 26, 2009 9:51 pm

[quote=Spaceman Spiff]

If this is an evil GP conversation, which you have turned it into, it is absolutely not in the best interest of the GPs to continue to hold onto these folks who aren't at least at location gain.  Jones isn't upping the ante on growth.  They're following the plan they set out last year or the year before.  Just because the market is down doesn't mean that baby boomers aren't retiring.  Maybe some of them hold on for a few more years, but they'll retire eventually.  While the rest of the industry is contracting, Jones is expanding.  Call it buying more shares when the prices are down. 

I think this move is absolutely a circle the wagons move.  They are protecting what they have.  Record numbers of advisors are below expectations.  After this month, FAD probably couldn't keep up with the number of people on goals.  Something had to be done.  So, instead of sticking with the old line of too bad so sad, they said we're gonna give you a break.  They'll probably save some of the FAs, but the ones who are destined to fail still will.  As the market, and firm production, gets better the goals line gets higher.  So, you can't skate by at 31% of standard forever.    Spin it however you like.  There's a ton of FAs out there that are thankful they have a job and benefits next month.  So, they'll be trying to figure out how to get money out of their clients pockets instead of yours and mine from the unemployment office.   [/quote]   Creating how many moral/ethical choices to be made?  "How do I hit that bogey?" Remember when Putnam was going down in flames. Compliance looked the other way and how many Seg 1's had best months ever moving from Putnam to American Funds. 
Feb 26, 2009 9:54 pm

Smart move. Keeps the struggling 2 to 5-year FAs on board – prospecting, developing relationships, cultivating clients; in short, putting themselves in a position to grow their businesses when market sentiment changes. A year or three when the climate changes, a lot of money will be put to work. And demographic trends are still working in Jones’ favor.

On the other hand, maybe if we don’t grow and stay in the bonus bracket, the partnerships become less valuable, the vets start drifting away and the firm goes broke.






Feb 26, 2009 10:13 pm

This is a great move by EJ.



The only problem I see is that they should have done this a year ago. Jones supposedly takes the long-term outlook. Identify the people that are prospecting and making their calls, circle the wagons around those people. Cut the chaff quick.



From a strategic point of view, they could have lowered their growth goals to adjust for the current economic climate and at the same time be a little more selective in how they open offices (instead of one on every corner, have one on every other corner).



Just my two cents. I hope they hang on to the starving brokers who will no longer be on goals. Makes it easy to poach their clients. These guys are so desperate, they’ll be pulling out the old, “Repositioning of Assets/Switch letter”.



Can’t wait.

Feb 26, 2009 11:10 pm

If this is an evil GP conversation, which you have turned it into, it is absolutely not in the best interest of the GPs to continue to hold onto these folks who aren't at least at location gain.

Spiff-   I'll agree with you that I don't hold much love for the GP's (i.e., I don't trust them and their agenda which in my opinion has nothing to do with the FA).   The GP's look at you and your brethren as interchangeable parts. B24 realizes this, why you continue to defend the mother ship at all costs is mind boggling. But we have had many conversations regarding the merits of Jones over the years, let's take a different perspective.   Let's look at Starbucks for a moment... What did they do, what was their business model, and why did they change.   Starbucks had coffee shops everywhere. Profits went through the roof, stock soared and then a funny thing happened. Competition came in and withered away some profits. Commodity prices increased but they were not able to increase because of competition so they absorbed the higher costs eroding profits. They tried gimmicks like adding food and music and WIFI etc...but profits didn't increase they shrank. And then the buyers weren't flocking to Starbucks for 3 lattee's a day...soon it was once a day or not at all. So what did they do, they cut stores out because the reality is that customers who really wanted Starbucks coffee that bad would drive to the next block or strip mall usually within a short distance to get their cup of JOE. So did the all the customers of Burger King, McDonalds, etc...   Sooner or later the growth model stagnates. If your reps are failing its because of many factors, not the least of which is that there are far too many Jones reps competing for the same type of client. Assume for a moment that there are a finite number of customers that want  the Jones model. There is a finite number of clients in the universe so one has to assume each firm has a finite number as well.   Spiff, I applaud  you for continually attmepting to demonstrate frequently that your firm is different. Maybe your firm is different in that they keep people longer than they should. Maybe your firm is different because they show compassion to struggling reps by giving them more time to improve before they are put on goals.   Please don't try to insult the rest of us or attack us because we challenge you and your thought process. Jones is no different than any other entity with multiple locations. It's overkill and at some point I would suspect that Jones will change to protect their turf. This conversation isn't about the evil GP. It's about the business model that they manage. It isn't sustainable especially if we are in a protracted difficult market.   I would submit to you that the fact your newer reps are struggling (and talking to some of my former  colleagues at Jones they are down 30% over last year and have been with Jones more than 5 years) you are either not honest with yourself or you are playing head games.   Hell, I had a great year last year up 47.5%. YTD I am down 28% over last years numbers. It's industry wide, but if I can take anything away from my situation, as an indy my net,  after all expenses, is 28% higher so I am able to survive with less revenue.
Feb 26, 2009 11:10 pm
iceco1d:

[quote=Squash1]I also think Jones lacks the tools and products to keep up… I would be willing to be that the average Jones account is $125K…

  Why is that a problem?  My average account size is well under $125K; in fact it's most certainly under $100K.  My average household might be under $100K, i'm not honestly sure.    [/quote]   Yeah but judging by your posts, you run a feebased practice... Most at Edj are taking the pop up front then the 25bps trail... so if you are charging 1.0% then the jones rep would need the account to be $400K to equal what you are getting(not counting the difference in payout)... that's why it is a problem..
Feb 26, 2009 11:25 pm

Somewhere before on this board I posted a conversation I had with a GP in St. Louis, I think he was in charge of new broker training or something and I asked him when they thought they would reach market saturation and he said they didn’t believe they ever would.  Somebody Spiff or B24 or maybe somebody else defended that position on the post, what they say still doesn’t resonate with me.  I think the industry is over-saturated and this is good for the industry as it’s thinning the heard. 

Feb 26, 2009 11:32 pm

That’s what’s made it so difficult for us Jonesies in this market. Our business model is one of new money–month after month after month. 

  I'm still bringing in assets, but out here in the country, if it doesn't have FDIC written all over it, it ain't gettin' bought.
Feb 26, 2009 11:41 pm

That’s one of the reasons I left and switched what I was doing… I figured I could really help 100 people or kind of help 600…

  Got sick of the dot, the new money month after month, new accounts(that I would never talk to again).. just to get by...wasn't worth it..
Feb 26, 2009 11:55 pm

I love how the word “ponzi” has become the new, all-encompassing vernacular insult for any business model that someone disagrees with. What a joke…it’s like a fad…probably from too much CNBC.

  Rick Santelli, by the way, is an ignorant, selfish, un-American, morally questionable moron. C'mon..."How many of you people want to pay for your neighbor's mortgage...." Ever hear of "Love thy neighbor"...how about "Do unto others as you would have them do unto you"...perhaps you've heard, "Ask not what your country can do for you...ask what you can do for your country"....    In the wake of the worst financial crisis that any of us are ever to likely endure in our lifetimes, it is petty and vengeful to let those that made the critical mistakes that ultimately led us here to simply rot. Put the shoe on the other foot...you bought a house you couldn't afford...you loaned money irresponsibly...you made a mistake...maybe you thought it was a good idea at the time....maybe you didn't have the foresight to see the eventual outcome (that pretty much means everybody except that guy that shorted everything)...   If YOU made the mistake...and YOU were now in the worst posible case scenario...would YOU want to be left to rot or would YOU want some help....   Love thy neighbor....Do unto others...do for your country. Screw Rick Santelli. Jerk.   For the record I am NOT a Jesus freak...I am, in fact, an atheist. I may not be a believer, but I recognize the moral truths and principles espoused in every major religion known to man.
Feb 27, 2009 12:02 am

THe problem with your put the shoe on the other foot is… most of us aren’t dumb enough to buy a house we couldn’t afford…

  I don't want to bail out people who should have never bought homes in the first place...(And yes they knew they couldn't afford it when they signed.)..  My neighbor(not mine but in general) is killing my house price because his house is being sold short which in turn drives down the prices in the entire neighborhood.. So screw my neighbor...He got himself into it, he should have to walk the plank for it...   What ever happened to responsibility.. I screwed up, I must fix it... Now it is, I screwed up, everybody help poor me..
Feb 27, 2009 12:32 am

I love how you haters predict the end of Edward Jones every day on this forum.  I also love how if 3 of you spew the same retarded babble it becomes a fact.  If each of you know how to run (or not run) a brokerage firm why haven’t you done it?  Lemme take a guess here.  You have no idea what you are talking about?

  I can just imagine the overwhelming frustration that when the opportunity of a lifetime came for Edward Jones to fail  (like Merrill or Wachovia or etc.) Jones did not participate in any of the things that caused the failures.   If you all hold hands and concentrate very very hard....maybe, just maybe you can cause Jones to go under.  Brilliant as you all are I wouldn't bet too much on it.   I will check here every day to see if Edward Jones is still in business.  I'm betting a lot it will be.
Feb 27, 2009 1:28 am

[quote=Squash1]THe problem with your put the shoe on the other foot is… most of us aren’t dumb enough to buy a house we couldn’t afford…

  I don't want to bail out people who should have never bought homes in the first place...(And yes they knew they couldn't afford it when they signed.)..  My neighbor(not mine but in general) is killing my house price because his house is being sold short which in turn drives down the prices in the entire neighborhood.. So screw my neighbor...He got himself into it, he should have to walk the plank for it...   What ever happened to responsibility.. I screwed up, I must fix it... Now it is, I screwed up, everybody help poor me..[/quote] Let's say you took a wrong turn in the middle of nowhere...oops you forgot to fill up your tank before you left...oops you left your cell phone at home...would you want some passerby to stop and help you or leave you for dead b/c you didn't plan properly. Stop being so self centered, Santelli. Self-Centered Santelli....hmmm....kinda got a ring to it!   Seriously...I believe in personal responsibility as much as anyone...probably more than most. There comes a point, however, that one has to look at the big picture and serve the greater good. Letting your neighbor (multiplied by millions and millions of other neighbors) for dead will only make the problem bigger. The fact is we are all going to take it on the chin b/c of others' stupid decisions. Well...quitcherbitchin and take it like a man.
Feb 27, 2009 2:11 am
jkl1v1n6:

Somewhere before on this board I posted a conversation I had with a GP in St. Louis, I think he was in charge of new broker training or something and I asked him when they thought they would reach market saturation and he said they didn’t believe they ever would.  Somebody Spiff or B24 or maybe somebody else defended that position on the post, what they say still doesn’t resonate with me.  I think the industry is over-saturated and this is good for the industry as it’s thinning the heard. 

  The Jones model is an interesting one.  But you need some perspective.  If you live in an over-saturated market (i.e. STL), then you perception is that there is a jones office on every corner.  But let's look at the numbers...10,000 offices, 50 states, that's 200 offices per state on average (obviously the averages aren't accurate in this case).  I live in a REALLY small state.  Like, REALLY small.  And we have about 60+ offices.  OK, I would say we could easily add another 100 offices and not even have one in every town.  There is one FA every 5 or 6 towns.  Some cities have 4 or 5, and they are BARELY reaching 2% market penetration.  Our market is WAY underserved, and there is TONS of money around us. I am CERTAIN that I am not the only region in the country like this.  Half the country looks like us.  Keep in mind, in most non-urban, non-coast(expensive) locations, a $50mm office would be very profitable and the FA would make a decent living.  I know FA's doing that in towns of 2500 people. So, perception and frame of reference counts a lot when looking at our firm's model.  I think they are over-saturated in some markets, but have TONS of room to grow across the U.S. The other thing to remember that benefits our model is that we can stick profitable offices where wirehouse firms could not or would not choose to operate.  When you have two people operating out of a 1000 SQ.FT. office paying $800/mo. in rent and paying one BOA $10/hr. in the middle of nowhere, it's not tough to be profitable.  No, the same cannot be said in New York/southern CT, California, etc. but that is a small piece of the pie for us.   There are over 1200 FA's in Missouri and Illinois alone.  There are less than 700 in all of New England, New York, PA, MD, DC, and Delaware combined.  And I can GUARANTEE there is more wealth there.  We just have to get there.
Feb 27, 2009 2:19 am
Hey Kool-Aid:

[quote=noggin] [quote=breaking news]Edward Jones announced today that they are suspending the “goals” program this month and lowering the % required in future months based on firm profitability. This comes in response to so many FAs being below firm expectations. I know in our region over 75% of the FA’s selling 2-10 yrs are below and many were on the brink of going on goals. This should save a lot of jobs and retain a lot of AUM that would have left with some of these FAs. I think it was a good move. [/quote]Why would you want to be employed at a company that would have to rush in at the 23rd hour to potentially save your job??



LOL…LMFAO…Now my day is complete…I knew good ole Noggin wouldn’t disappoint! Find a way to put a negative spin on a company trying to save it’s employees who are struggling due to this once in a lifetime (hopefully) huge economic/market decline. Why would anyone want to work for that type of company…i’ll tell you why…because they actually care about their employees unlike mother merrill & others who are axeing (sp) people left and right and couldn’t care less if you walked out the door and drove off a cliff. Now…personally, I am not on or near “goals”…but when I saw this memo, I thought …wow…what a company I work for…and believe me …I have worked for many large companies in the corporate world and seen my share of “F you” leadership. And for the record, I too am in a region that is not near 75% below expectations, however, there are more than usual due to the environment…the brokers that were going to fail will still likely fail…but this move was just another reason why we are rated best place to work for in the brokerage business. [/quote]



Hey Kool-Aid, while I’m happy for those struggling brokers that Edward D. Jones has eased the numbers, please don’t delude yourself, or worse try to delude others, that the move is sheer altruism on the part of corporate. It’s a business decision…nothing more or less.