Jones Secrets Revealed

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Apr 20, 2006 1:44 am

I was a Jones’ Rep for 8 years and I just went INDY.  It was amazing when I got a million dollar client in the office I was figuring out how many ways I could slice the pie so I could miss breakpoints.  The amazing thing is Jones professes to be this honest/ethical firm and they only sell A-Shares.  I can tell you that maybe one broker out of a hundred would put $1,000,000 at NAV and get paid 1% and .25 trail.  Instead most successful top producers have figured out that in order to “get paid” on a million dollar account, they need to split the million over three fund families, buy some 3 point bonds and buy 5 or 6 stocks so that it appears diversified to the client but instead it is allowing the IR to “get paid”!  They can miss the $500k breakpoint and justify to their Field Supervisor that they are diversifying the client.  Jones reps continue to try and sell against Fee-Based programs because of the “WRAP-FEE.”  The problem is when they get a $1,000,000 client they F%#! the client on commissions by avoiding breakpoints purposely.  If any current Jones reps disagree I would love to hear about it.  Because at Regional Meetings and Diversification trips I never hear about 1,000,000 NAV trades!

Apr 20, 2006 9:05 am

There are very few conflicts of interest--and none even close to hypocracy you experienced at Jones--that exist at a well run indy firm.

Just did a million dollar IRA ticket two weeks ago.  (Actually it was 960k)  Used 7 fund familes, 3-4 s/t bonds, a couple of preferreds, etc.  Difference is--I used a FEE BASED ACCOUNT.  It will take me a full year before I even earn the 1% the client is paying.  I know that my client has the flexibility to make changes and is not tied to an antiquated method of buying 2-3 families in A shares and paying 20-25k in upfront commissions. 

Welcome to the indy world--you will be MUCH HAPPIER here.

Apr 20, 2006 11:12 am

I am a much better financial advisor by working through Fee-Based because I’m not worried about how to miss breakpoints. 

Apr 20, 2006 11:39 am

Intentionally missing breakpoint sales???

Not at the firm in question as that is major no-no just ask Mr. Michelman ( I met him when he was articling and now he's a GP???)

Apr 20, 2006 1:35 pm

Here's another Jones Secret Revealed: On a previous thread where a Jones Drone  quipped "What about Purcell paying his private secretary $1.9 mil a year for life..." How much did it cost that great and glorious

Long Time Managing Partner of the Most Ethical Firm on Wall Street to quietly divorce his wife of many years so he could marry his private secretary? Yep - look it up.... alot more than $1.9Mil

Apr 20, 2006 1:42 pm

Mr. Michaelman doesn’t have a clue.  There are so many IR’s that are intentionally missing breakpoints (under the disguise of diversification)!  He is fool who has yet to believe that IR’s actually do this and they don’t have the systems in place to catch it.  Just before I left they were starting to put in place annuity systems that would catch breakpoints.  Now brokers are trying to sell annuities that are different than the mutual funds that people own just so they won’t hit breakpoints. 

Apr 20, 2006 1:55 pm

Very well said.  Face it.  EDJ is limited in what they can do for clients.

Congrats.  Best Wishes to you.

Apr 20, 2006 2:26 pm

Spiked- You are right. No one still at Jones will admit it, but it is done. I did my first Million Dollar client at NAV- What a kick in the gut to see $4000 pay out for that. Then my Mentor taught me how to play… and another bonus for ‘diversifying the client’ was the spread of points on the almight Div Trip contest, so not only did you get paid but you get sent to the Bahamas…Now when I have conversations with my clients, we really talk about their money- and I am not thinking of what I need to make this month.

Apr 20, 2006 2:33 pm

Great subject…it just shows that the long term interest of the client and advisor seem to be better served in a fee-based arrangement.  It may cost more vs. buying holding the same funds (bought at best possible breakpoints) forever, but that model really doesn’t seem to exist, despite the claims of EJ.  While I’m not indy just yet, I have felt the difference in using fee-based accounts that zacko mentions…you get almost NO “pop” when you initiate the account or invest the $, so you are even MORE cognizant that you need to take care of this client for a long time.  I think I did a good job of that in a transaction based world, but human nature being what it is, you still had that “high” when the revnue hit on the initial investment. 

Apr 20, 2006 2:57 pm are right there on the annuity bkpts. When we left Metlife offered Lord Abbett and American Funds, Lord would allow funds held outside annuity to count for bkpt, but American Funds wouldn't allow. While SunAmerica offered bkpt for any of the preferred fund family.

But now we're indy and snoopy pays 6 milk bones to the client, and 7 WHOLE beeps to us. Talk about conflict...get someone from Jones insurance services to tell what commission REALLY is on annuities.

Apr 20, 2006 3:22 pm

I tried to get a straight answer from the Insurance Services Dept and they put up the smoke and mirrors in regards to why the payout on a B-Share was 4.75%.  It was a long winded answer that actually made sense at the time.  In regards, to the Diversification Trips.  I made every one and I started new/new.  I built my office to $54 million in 7 years from scratch.  I did $540,000 gross when I left.  The whole time I was there I had IR's calling me asking, "I've got this client and I need to figure out a way to get paid."  I would tell them, just like my Mentor taught me, "Three fund families, some 3 pt bonds, and 5 to 7 stocks."  I'll bet you that if Jones went down the list of their top clients who aren't in the MAP program they would find that they have multiple fund families and 3 pt bonds and 5 to 7 stocks.    It's amazing, now I get a $1,000,000 client come in the door and I just say it's 1% for everything there is no discussion or anything.  I'm so glad I went Indy. 

One more thing,  Jones' field supervision has no backbone to stand up to this kind of foul play that is going on.  They pay their FS so little that their is no incentive for them to stay.  They just sign off on trades and move on to the next one.

Apr 20, 2006 3:29 pm

We had this discussion many times on the ol payout argument.  Jonsers say when I add everything in, I am at 56% or whatever to your 65% indy.

And those of us who saw the light always would say 56% of what.  That's right ed jones double dips on annuity biz and insurance biz; a lot of wirehouse firms do this too.  It's nice to know I get 90% of what the vendor pays the b/d and sometimes I even get 100% on insurance business. 

Apr 20, 2006 3:38 pm

I just now met with an indy recruiting rep.  Her biggest area for recruiting is Jones.  She said, at least in her multistate area, Jones is bleeding good reps badly.  They'er seeing the light over there!

Anyone who really cares about what is in the clients best interest who handles even moderately wealthy money knows it is time to leave!

As far as me, "Wirehouse," I am beginning my due diligence!  My contract is over and this will be the last move of my career.

Apr 20, 2006 4:17 pm

Malcolm...I know the month we left in our region alone 3 Sr Vets with AUM ranging from $45 mill - $120 mill, and took their BOAs with.

CSMelnix... we didn't know about the "double dipping" until our Metlife wholesaler let it slip how much was really paid. Had a client who had Met bonus product and wanted to put more in. Call Met, they say you get 7, call Jones they say "Who told you that, it's 5 you get paid 5".

Apr 20, 2006 6:01 pm

[quote=munytalks]Spiked- You are right. No one still at Jones will admit it, but it is done. I did my first Million Dollar client at NAV- What a kick in the gut to see $4000 pay out for that. Then my Mentor taught me how to play... .[/quote]

Are you honestly suggesting that a million dollar account should all be placed in one fund family?

[/quote]and another bonus for 'diversifying the client' was the spread of points on the almight Div Trip contest, so not only did you get paid but you get sent to the Bahamas[/quote]

Sorry, but this statement is just plain false.  The Diversification Trip categories are based on investment type (e.g. Growth, G&I, Taxable and Non-Taxable Income, etc.).  You could put everything in one fund family and still make the trip.

You remind a lot of "The Truth."  Come to think of it, we haven't seen him in awhile. 

Apr 20, 2006 8:21 pm

No I'm not suggesting putting $1,000,000 with one family, but this is Jones' argument for not using WRAP and Fee-Based Programs.  They say that paying the upfront commish is in the best interest of the client, and I'm saying that Jones Top Producers are realizing that they can get away with 3 fund families. 

I almost forgot, I was in the top 10 at Jones for Unit Investment Trusts because their was no breakpoints.  So you could put $500,000k into several UIT's (fixed) and get paid 4 to 4.5.  An example of what I was taught at Jones is if someone comes in with $100,000.  Put $85,000 into Funds and buy a $15,000 UIT and that way you don't hit the 100k bkpt. 

As for the truth Newbie, the truth is a lot of people that need to earn a category would put money into a fixed income investment (to earn the Div Points) then DCA out of the fixed income investment into the proper portfolio just to win the trip. 

I will expose more of Jones secrets in future posts!

Apr 20, 2006 10:03 pm

There are breakpoints with UIT’s. Thanks for playing.

Apr 21, 2006 12:11 am

Not Secondary Fixed income UIT’s Noggin  Pull your head out! On your antiquated technology it’s  Inv,Mut,st=CA!  No breakpoints.  $500,000 tax free at 4.5.  22,000 gross commission.  Versus 1.25 % on a fee based account.  It would take 5 years to get to that point.

Apr 21, 2006 12:20 am

I find it amazing that there are no EDJ reps in this forum suggesting that I'm saying something that is not true.  In regions all over the country people are teaching IR's how to, "get paid." 

Here's another one.  If you have $250,000 to invest you can justify to the Field Supervisor to buy two separate a-share annuities at $85,000 each.  Then you put the other $80,000 in a fund family that is not represented in the VA's.  Basically you tell the Field Supervisor that you are using the living benefit with Hartford or American and then you use Protective (because they are the low cost provider) for tax deffered growth.  The field supervisor just likes the fact that you are using the a-share.

Many secrets soon to be revealed....stay tuned!

Apr 21, 2006 1:08 am


     Congratulations! I'm glad you made the change.  Sounds like you'll be happier.  But which is it, 7 or 8 years at Jones?  540k gross off 54 million?  That's a 100bp turn on your book.  Wow! You must have been a churning machine. Independent will be a much better fit.

    Now you can turn even higher ratios on your book.  Indexed annuities at 12%, variable annuities as high as 8%, wrap accounts at 1.5%, managed money at 2.5%, junk bonds at 5%.  I'm sure you'll do the right thing for the, I mean the client......or maybe that's why you're independent now.

    Too many FSPENDS, no wonder you left.  You have done some of the most unethical sales practices I can imaging on unsuspecting people, I'm guessing when you change firms and have even more free reign you will stop?  No, probably not.  I'm sorry your region had some unethical brokers, just make sure you take them with you when you move the LPL. 

    Let me know how those indexed annuities work out for your clients