Dual advisor offices is a good idea.  There are 12-15 Jones offices within a 10 minute drive of my office.  Rent isn't as expensive here in my area as it is in some metro locations, but it's not as cheap as it would be in Podunk, USA.  I think in metro areas specifically it would be a great move.

I'm not sure how big an impact a licensed sales assistant would have on the majority of our offices.  I have a difficult time justifying a full time BOA some days.  I can see for a huge office with 1000+ households it might make sense.  But if an FA has the option of hiring an assistant vs doing a GKN plan, it's not going to be as profitable for the firm overall in the long run. 

I don't see the sales team thing working at Jones.  Of course as I type this I've already got the team I'd like to work with put together in my mind. 

Partnership isn't based solely on profit right now as it is.  As an FA there's a profit hurdle you've got to get over before you're eligible for LP, but there's a lot more that goes into that discussion.  That will be interesting. 

I think you'd probably be suprised as how many meetings like that actually take place frequenty among the upper level GPs.  If you would have asked me 5 years ago if something like Advisory Solutions or the soon to be released UMA would even be a possibility at Jones, I'd have laughed at you. 

My only fear with sweeping changes like those you mention would be that Jones loses some of it's mojo.  It's difficult to keep your identity as the anti-wirehouse brokerage firm if you look exactly like a wirehouse.  I like change when it's a benefit to the clients AND to the firm.   

Not sure what a "Sales Team" is?  Does that mean like Regional Sales Teams that drive business to the branches?

I like dual-advisor offices.  Some comradery, lower costs, etc.  It would allow guys longer ramp-up time for office profitability.  I can tell you that me and my Legacy FA are neither very profitable (we both have "location gain", or positive profit after branch expenses, but not enough profit to cover the home-office costs or "profit contribution" to firm).  But if you combine our gross production and expenses (he adds very little in expenses to the office - benefits, a computer, a phone, some licensing, etc.), we are very profitable to the firm.  I am in a high-cost location, thus very expensive real-estate.  If I were in an area that pays $400 bucks for an office, I would be very profitable.

I also feel like we could work together more on some business, maybe go after some joint retirement plans, etc.  It's nice to go in on busienss as a team.

I would not have a need for a licensed SA.  I jsut don't do enough transactional stuff to need it.

Not sure how the LP would change.  But if I were a big producer, and it would negatively affect my bonus, that would irk me.  I don't feel like there should be a big "volunteerism" componant. 

Why am I hearing about this meeting on RegRep and not through Jones?

Just curious Jones folks. What is the success failure rate in recent years of newbie Jones reps? What percentage make it to say year 3 or 5?

I've got a rep right across the street from me, pretty cool guy, and I even occupy his old office. He mentioned he's looking to retire reasonaby soon. He said he's now a partner or whatever. His book about the same as mine, around mid 50m.

Anything I can offer him to join forces with me, I buy him out? Or is the exit package at Jones really good?

[quote=FA86]

Why am I hearing about this meeting on RegRep and not through Jones?

[/quote]

Because Weddle and his folks aren't going to advertise to the masses everytime they get together and discuss the future direction of the firm.  This was more than likely one of those I heard it from a guy who heard it from a GP type of conversations. 

[quote=BigFirepower]

Just curious Jones folks. What is the success failure rate in recent years of newbie Jones reps? What percentage make it to say year 3 or 5?

I've got a rep right across the street from me, pretty cool guy, and I even occupy his old office. He mentioned he's looking to retire reasonaby soon. He said he's now a partner or whatever. His book about the same as mine, around mid 50m.

Anything I can offer him to join forces with me, I buy him out? Or is the exit package at Jones really good?

[/quote]

In a nutshell, the Jones retirement program will pay you approximately 1.15X t-12 paid over four years, plus you get to maintain all benefits during the first 3 years (year 4 is just a 1099 "Consulting Fee").  So it depends.  Let's say he's doing like 350K.  I used the Succession Plan calculator and figured he would get paid 400K over the next 4 years (while teh Succession Plan took place).  This does not include the value of the 401K Profit Sharing contribution or Jones-paid benefits (which may be important if he is under 65).  The number could be higher or lower depending on his branch's profitability (if he has low costs, his profit bonus would be higher the first 3 years, and vice versa).

So if you could pay him significantly more than that, it may be worth it.  But keep in mind, much of his production may be transactional and insurance-based, which may not recurr.  However, your payout on his production would be MUCH higher.  Let's say he brought over 300K in production, your payout may be 85-90% (or more?).  So you could pay for that very quickly.  So there is some risk involved on his part (what if he only brings over 150-200K in production....), but the downside for you is limited, because you would only pay him for what he brought over.

Thanks B24. I've admired Jones over the years for a number of reasons. Sounds like they have a very decent and fair exit package. Be hard to offer more, and take the risk.

You also need to take into consideration the LP that he evidently owns.  He is guaranteed 7.5% per year on that.  If he retires from Jones in good standing, he'll get to keep that for the rest of his life. Let's say he's got $50K of LP, that's $3750 a year guaranteed for say the next 20 years.  If it were me, I'd make you look at the historical returns on that LP, which have been mid teens, and figure that 7.5% is only the starting point.  I'm sure someone can run the NPV calculation for us and tell us how much that means you'd have to pay him to buy that out too. 

[quote=Spaceman Spiff]

You also need to take into consideration the LP that he evidently owns.  He is guaranteed 7.5% per year on that.  If he retires from Jones in good standing, he'll get to keep that for the rest of his life. Let's say he's got $50K of LP, that's $3750 a year guaranteed for say the next 20 years.  If it were me, I'd make you look at the historical returns on that LP, which have been mid teens, and figure that 7.5% is only the starting point.  I'm sure someone can run the NPV calculation for us and tell us how much that means you'd have to pay him to buy that out too. 

[/quote]

Actually Spiff, the average return is just slightly north of 20%.  And that average persisted throughout the 2000's (although it got into the low/mid teens in 2008/2009).  You are right, it is tough to walk away from a bond paying that much that has a zero principle standard deviation.  Guess it depends on how much he has.  If he only has a $50mm book, he probably has no more than 75-100K.  Last 10 years for those that are curious:

1999  24.9

2000  25.4

2001  17.2

2002  16.2

2003  18.3

2004  20.1

2005  23.2

2007  24.1

2008  16.1

2009  11.6

2010  16.4 (YTD 07/10)

[quote=Grosspayout]

Don't exactly know what to make of this but.....

There is a meeting next week in St. Louis where ideas will be presented on the future of the firm including:

1) Dual advisor offices

2) Licensed sales associates

3) Sales teams

4) How partnership is distributed --not necessarily based solely on profit? 

Supposedly everything is on the table. The comment was made that Jones will look significantly different in the next 2-3 years.

Thing is just this short list is not earth shaking and could have been done at any time. I'm assuming Weddle is driving this. Maybe someone has seen the writing on the wall and convinced someone (Weddle?) that the firm can't continue as it has. It has to make changes or FAs are going to walk.

I have a suggestion--ENOUGH WITH THE SEGMENTS! THEY HAVE SERVED THEIR PURPOSE.

Talk is cheap. We'll see what, if anything, they come up with.

[/quote]

It has always been difficult for me to take the firm's leadership seriously when they say "We are going to examine the Brutal Facts" while also saying "There are things that set this firm apart that we will not change".  If you are truly going to examine the "brutal facts", you should be prepared to examine and even challenge EVERYTHING.  Edward Jones has too many sacred cows grazing in tradition.

I think there are certain things that will never change, for example, only catering to long-term individual investors (versus institutions, online traders, etc.).  I don't think they will change the underlying business model of small offices (even if they decide to have two per office, they will never go to large branch offices like wirehouses).

Part of what makes Jones different (in the eye of the consumer) is that we have an "independent" feel to our offices.  Many people don't equate us to "Big Wall Street".  And I think we look at that as one of our differentiators.  Tactically speaking, we can certainly make changes.  Compensation, expenses, investment programs, etc.  But if we think that we could try to become "like a wirehouse" and actually comepte, we are fools.  We compete very, very well in the middle market.  We are never going to compete for the $5mm+ clients (though there are outliers naturally), but we have also found a way to service the $50K-$1.5mm client very well.

Make it an option for two fa offices. If a salty 25 year vet grossing 650k plus doesn't want to have another FA in his office, fine, give him what he wants. If guys aren't yet profitable (myself included) by all means combine the offices and allow them to continue in a multi-FA office for as long as it's working for them. Encourage it but don't penalize profitable single-FA offices that want to remain that way. I'd work with another guy in a second. Comradarie, competition, it'd be great.

[quote=B24]

I think there are certain things that will never change, for example, only catering to long-term individual investors (versus institutions, online traders, etc.).  I don't think they will change the underlying business model of small offices (even if they decide to have two per office, they will never go to large branch offices like wirehouses).

Part of what makes Jones different (in the eye of the consumer) is that we have an "independent" feel to our offices.  Many people don't equate us to "Big Wall Street".  And I think we look at that as one of our differentiators.  Tactically speaking, we can certainly make changes.  Compensation, expenses, investment programs, etc.  But if we think that we could try to become "like a wirehouse" and actually comepte, we are fools.  We compete very, very well in the middle market.  We are never going to compete for the $5mm+ clients (though there are outliers naturally), but we have also found a way to service the $50K-$1.5mm client very well.

[/quote]

As an outsider, admirer of the Jones model, I fully agree with you. For every positive in a wirehouse enviro where there are many people, I'd say there are far more drawbacks. The only scenario from my perspective with Jones, having multiple reps, is Sr. Broker, bringing in a Jr. so he can help service/sell the smaller accounts, build some experience, so the Jr. has a far better chance of success later. I'm assuming that is what Jones is up to?

[quote=B24]

Part of what makes Jones different (in the eye of the consumer) is that we have an "independent" feel to our offices.  Many people don't equate us to "Big Wall Street". [/quote]

Good point. Here is a retread of a prior post:

I think in a lot of ways, Edward Jones was the first independent brokerage firm. Long before Linsco was a glimmer in Private Ledger's eye, Ted Jones hit upon the idea of the one broker office. One broker, one assistant, no branch manager, individual autonomy as long as the broker is hitting their numbers... no propriatary products.

Ted Jones used to famously tell the home office folks - the broker is our customer. That sounds a like the independent brokerage philosophy of today.

And back in the mid-seventies when Ted was kicking Edward D Jones into high gear, there were less brokers in America. Less than 4% of the population owned mutual funds at that time. So Jones couldn't fill its ranks by doing what LPL and the other independents do today, and wait for good advisors to get washed out of Edward  Jones and the wirehouses. There wasn't a ready made supply of pre-screened, pre-trained brokers complete with their own books ready to do a turnkey startup.

So they had to hire and train their own brokers. Jack Phelan headed the sales side of the company and he was another great man from everything i have read. And Jones became a superb selling organization, pioneering the door-door approach and introducing middle class America to mutual funds and investing.

Just my perspective on early Jones history. Jones was in many ways the first independent brokerage.

Just curious Jones folks. What is the success failure rate in recent years of newbie Jones reps? What percentage make it to say year 3 or 5?

I've got a rep right across the street from me, pretty cool guy, and I even occupy his old office. He mentioned he's looking to retire reasonaby soon. He said he's now a partner or whatever. His book about the same as mine, around mid 50m.

I woudl say for a newbie (no experience, no clients, nothing inherited, etc.), the succes rate is somewhere around 5-10%.  The success rate goes WAY up when someoene gets an existing office, a Goodknight Plan, etc.

24 is right on, I would say 5% for someone starting out cold. Sort of like making it off Normandy Beach on D-Day is how I always thought of it.

However, if I understand you right, you may be asking about the office across from you. If a brand new guy takes over the 50m, his success rate will be 100%. My cat could profitably manage an office with 50m, assuming he had a BOA to help with the order entry.

Oh yeah, if that's what he meant.  If you fukc up a $50mm inheritance, you should be stoned (and not in the good sense).  I have never heard of someone failing out that inherited more than about 15mm.  I have heard of some leaving the business because they hated the job, but not because they couldn't make a living at it.

Look at it this way, that 50mm is probably about 500 clients (more or less).  He's probably doing at least 8k per month just in trails and other automatics stuff (assuming NO advisory business or C shares).  All he really needs to do is another 15K per month in business to clear about 100K net.  If his velocity is even just 0.5% on his assets, he is clearing over 100K.

[quote=riing]Just curious Jones folks. What is the success failure rate in recent years of newbie Jones reps? What percentage make it to say year 3 or 5?

I've got a rep right across the street from me, pretty cool guy, and I even occupy his old office. He mentioned he's looking to retire reasonaby soon. He said he's now a partner or whatever. His book about the same as mine, around mid 50m.[/quote]

As someone who recently left Edward Jones (worked in the field and in the home office for a combined 10 years), the attrition rate is very high if you start from scratch. Crica 2002, at one point only 15% of the financial advisors made it four years.

In a typical 12-man initial training class, it's not uncommon for 75% of the group to be gone in two years (my class fits that description). In rougher markets like the recent two years, it's likely even higher. A friend of mine left Jones recently, and he was the last person in his 2008 KYC group -- and the only reason he lasted that long was because he was the only one in his group who took over an existing office.

That said, if you took over an office of $50 million AUM, your success rate would be practically fool-proof even with the new production standards. Being a transfer FA with the potential to bring over your own clients (and the firm's more proactive approach in recruiting transfer FAs) would give you more leverage over a new FA or even someone from the home office wanting to go into the field.