Is Jones changing its model?
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I agree. There is no point to the Segmentation model. There's no financial benefit to a Seg 4 guy going to Seg 5 and just like there are no finacial consequences with dropping back to Seg 3. They're going to have to get creative with getting those folks motivated. They're certainly not doing it now.
It’s funny - I was once told that one of the characteristics that Jones looks for in their “personality interview” is someone who “never has enough” and always wants more more more. And to be honest, I probably used to be like that. But as I’ve matured, I’ve found one of the greatest things one can have is contentment. One of the nice things about Jones is the ability to decide when enough is enough. They can dangle all the carrots they want - doesn’t mean anything to me.
It would suprise me if Jones did anything to encourage FAs like you to stop being content and work a little harder to reach a new plateau. I don't really see them paying any bonuses for hitting a production goal or raising payouts at a certain level. They're going to try negative reinforcement with the Seg 4 to Seg 3 thing. I'm positive that's just going to piss people off.
Spiff, I agree. I think they are going to stumble on this. However, they need to find a way to motivate the 7-10 year, $15-18K/mo. producer into becoming a 25-28K producer without pissing off everyone above that. They have made their bed with the really low hurdles, now they have to lie in it. It will not be easy, but I think AS will have a lot to do with it. Think about it…a lot of those 15-18K producers have 40-50mm AUM (or more), but it’s all in stocks, bonds, and A-share funds. They get tired of constantly calling and “asking for the order” to generate commissions. If those guys can get half, say 20mm in advisory, that would mean about 20K per month in fees. That would certainly improve things considerably.
We are where the wirehouses were 10-15 years ago with fees.B24-
You hit the nail on the head. Fee income takes time to be substantial part of overall income. What they could do is increase the c share payout, maybe offer L share annuities to increase recurring revenue streams. It doesn't have to be only advisory. Spiff...I think the fact you have a bunch of producers that don't produce anymore than 10 net tells me that management isn't relying on them for incremental revenue illustrating the dilemna they are in now that markets have dramatically been impacted. They have put much of their resources into the newbies and just assume that the 10 netters will continue on their merry way. Except now management needs them to produce more and they have set them up not to. (Maybe the model does need tweaking).Then they go public, sell, or merge.
Mark my words.
I agree with the first part of your statement, but not your second. We're one of the biggest brokerage houses in the business. We're not in financial distress. We have no shareholders to satisfy. Why would Jones go public, sell, or merge?
BC - you're correct. There are obviously a lot of ways Jones could increase fee revenue. We may get there someday. You're talking about a firm that held out a good 7-10 years past the rest of the industry to get into something fee based for the average client. An L share annuity would blow their mind.I’ll say again. This is a brilliant move. A compromise between increasing the amount of people in the one-person office and leaving it alone.
Likely the best thing EJ ever did was choose Weddle to be their managing partner. Maybe at some point he’ll get rid of all of the nepotism and cultness.
Nepotism has been an Achilles heel for years–sort of their dirty little secret that’s not allowed to be discussed openly. But, when the best and brightest people are not ascending to the top of an organization, there’s a problem. Many of the best and brightest who came to Jones from '97-‘06 left when they accepted this reality. At some point, this time period will be referred to as Jones’ Lost Decade.