BPD.... see I knew we could have discussions other than bashing EDJ.

1. I don't have any GMAC bonds on the books. Most of the fixed income portion of my book is in insured muni's. It's tough to get any yield on the corporate side unless you venture into high yield which I don't feel comfortable doing, on an individual basis. Seperate accounts seem a little expensive with yields being so low unless you are willing to cut your fee. Franklin's Income Fd has done pretty well with a pretty strong management team in place. We stopped buying GMACs for inventory at Jones a year or so before they became junk. General rule we have always used at Jones is no more than 5% of a portfolio in any one individual uninsured /non gov't backed bond.

Good for you in not having GMAC.  As I recall the issues were presold so heavily by the 'vets' when they came out that anyone who followed the rules and began calling to get verbal confirmations was SOL.  So I assume that a lot of GMAC paper is still hanging in accounts.  I have some in a few client's accounts but it is short term.  I'm not too worried about GMAC since it is likely to be spun off in a similar fashion to Sears/DiscoverCard.

2. It's very hard hard to justify a VA inside qualified accounts. Certainly not for a younger investor who is looking at accumulating for awhile. I can see possibley an older investor looking at the income guarantees and or death benefit but still here it doesn't happen a whole lot. My business in VAs is almost 95% A share at this time. All supervision of VAs is now under a new seperate Field Service Director at Jones. It is obviously challenging to keep up with all the new living and death benefits of VAs. It seems like we have almost a monthly CE video broadcast on them.

3. I think fee in lieu of commission is dead. Certainly what happened at RJF shows us that it was being abused. SMAs have certainly gained popularity. I belive for the tax consious investor in a high tax bracket they can be a great option. The costs are certainly more transparent and I think that is a good thing. The ability to write off fees outside of a qualified account is a plus. Fees for these accounts need to stay under 2.00% and really under 1.5% for a qualified account for them to be more cost effective than a mutual fund and verses ETFs they are probably not as tax efficient or cost effective but because they are actively managed are more risk averse for the HNW investor. My HNW want to earn a 5% - 6% real rate of return after taxes and inflation. They are more concerned about the down side than making a killing when the market goes up. Mutal Fund wraps for the right investor who does not want to buy and hold a diversified mutual fund portfolio may make sense but certainly will suffer in tax and cost inefficiences. I guess the idea would be to make up for that through timing the market and / or market sectors. 

I  believe the abuse at RJ was because the fee/wrap program wasn't being conducted by RIA but held in a brokerage account where the clients were not being assessed for suitablilty. (?) I'm studying for my series 65 and plan to be able to use fee in lieu of commission on a case by case basis. It isn't for all clients.  I'm still feeling my way through this transition which is why I find these discussions interesting.

 
4. As far as Life insurance to fund retirement goes I personally own and old Hartford Stag VUL that I have been overfunding. It serves a dual purpose of life insurance and income for retirement pre 59 1/2 which I hopefully be able to do. I must say it is quite expensive especially in the first 10 years where the costs are higher. Mine is in it's 12th year now so it's not as expensive. At Jones we have a LIRP program. (Life Insurance Retirement Program.) I have a couple of executives that have used it, mainly because they came to me with the idea. I have not used it as much outside of that. 

I found it very difficult to do life insurance within the EDJ system.  They seemed to regard it as some sort of nasty ickypoo product.  Of course Variable Life falls under the review of my BD but a term or UL insurance product or long term care insurance doesn't. Insurance is a growing segment of my product mix and I plan to market it more in the coming year.

5. The regulatory environment will be tougher in the future. No doubt. More and more disclosure. Get used to it, it isn't going away.
No kidding.  How is Jones handling the upcoming books and records rules?

BL, a Thanksgiving present for you.

I hope your prime rib comes out great.

Thanks it was rare just like I like it.

Protective has a special buyers version VL for employees of Protective and Reps alike.  No surrender and signifigantly reduced M&E.  It blows the Hartford product away if your in the business.

[quote=mikebutler222]

[quote=BigPayDay]Ex, Great question, I’m glad you asked. My pay out last year was around 56%. This includes my net commissions, bonuses, profit sharing and two trips per year. BPD[/quote]

You wrote such a nice, reasoned response that it sort of takes the fun out of jerking the chain. But since you were reasonable, tell me, do you really think it’s professional for a brokerage firm to have contests (even if they’re called “programs”) for trips? It sounds like the old Dean Witter stuff to me. So pre-Spitzer…

Also, when you take these trips, since you’re surrounded by other Jones reps, could you really call it the same sort of experience that you’d have if you took your family on your own dime?

exdrone- I am not a big Hartford fan for obvious reasons, a floating rate fund, you can do better than that…

Can I get some advice on entering this business?

I am currently interviewing with EJ and am relatively new to the industry.

[quote=noggin]exdrone- I am not a big Hartford fan for obvious reasons, a floating rate fund, you can do better than that....[/quote]

Yes, but if you DID want to buy it, would you be allowed to do so?

Why would one want to buy a floating rate fund in today’s market?

Floating rate funds have done just fine the last couple of years.  I guess my opinion would be negative if my firm didn't allow me to sell them either.

As long as rates are rising they will be fine.  I also use the daily access.

As far as traveling with other Edward Jones families goes: This is a positive not a negative. You can spend as much or as little time with other families as you want. I enjoy spending time with other EJ reps and their families. They are usually very fun people and we tend to have a lot in common. We have certain families with similar age children and similar interests that we go on trips together with. Most trips there is a group dinner the first night, one or two cocktail receptions throughout the week and then a closing group dinner. These are not mandatory but a fun time to mingle and meet new folks.

My family and I have seen the world from Rome to New Zealand to Machu Picchu to a safari in Africa. Trips I more than likely would not have gone on my own, and if I did probably not first class like Jones does.

Well, to each his own.  The trips and meetings while being held out as a glittering carrot, were to me the most unattractive part of Jones.  For many reasons, which will probably annoy you. 

1. I am older than you with grown children. So the last thing that appeals to me is a "family" trip with a bunch of annoying little kids. 

2. I have been to all of those places and more (well, except for the Africa Safari) before, on my own dime, and in more unstructured format where I was actually able to explore the countries and meet the local people, spend some time doing what I want to do. Linger or leave.

3. The meetings and dinners, while not 'officially' mandatory, were still a pressure to have to hang out with a bunch of Jones reps.   I hate group events and forced activities.

4. If I want a vacation, I want to go somewhere that isn't related to my work environment.  Vacation to me is doing something new and exciting, not hanging out with a bunch of Jones (or insert the name of any organization here) clones and their Stepford wives and robo-children.  The same goes for the insurance trips that I have been on, so don't think it is just Jones, it is me. 

5. I would rather have the cash.  Instead of being taxed on a trip I didn't enjoy much anyway.

If I do go on a trip, I try to have as much private time with my spouse as I can and get away from the herd.   I know a lot of people really enjoy the trips and I am happy for them.  The Jones trips were probably the nicest compared to other companies that I have experienced. The criterion didn't involve pushing any particular product but was instead based on having a diversified office, which I thought was a very good idea.

Floating rate funds are a good spot to park some short term, semi liquid funds while rates are going up.  I was also disappointed that we were not able to offer them at Jones.  Although I probably wouldn't have done so at that time, since rates were going down.

[quote=noggin]Why would one want to buy a floating rate fund in today's market? [/quote]

You are avoiding the real question, aren't you?  I repeat....If you DID want to buy it, WOULD THEY ALLOW YOU TO DO IT?  Or...would Big Brother in DesPeres cancel your order?

WHAT?!!! I thought all Jones offices were INDEPENDENT?!!!

[quote=noggin]exdrone- I have never been told that i couldn't purchase a load mutual fund for a client whether it was "preferred" or not. I do a lot of business on the fund side outside the "preferred", I have never heard a peep out of anyone. Maybe your observation holds water on the VA side but certainly is not accurate on the MF side. [/quote]

Mr Eggnoggin,

You can't buy that fund.  My "observation" holds water.  It would be nice to hear you admit it, but I won't hold my breath.

[quote=BigPayDay] [quote=mikebutler222]

[quote=BigPayDay]Ex, Great question, I'm glad you asked. My pay out last year was around 56%. This includes my net commissions, bonuses, profit sharing and two trips per year. BPD[/quote]

You wrote such a nice, reasoned response that it sort of takes the fun out of jerking the chain.   But since you were reasonable, tell me, do you really think it's professional for a brokerage firm to have contests (even if they're called "programs") for trips?  It sounds like the old Dean Witter stuff to me. So pre-Spitzer...

Also, when you take these trips, since you're surrounded by other Jones reps, could you really call it the same sort of experience that you'd have if you took your family on your own dime?

[/quote]

MikeB,
Fair question. The diversification Program was accomplished by more than 55% of EJ reps last Program Period. (Remember, Jones has over 9,000 reps.) For Jones it is truly another level of our compensation. Think of it as a bonus for making sure you are building a diversified book. If you do just equities or just bonds you will not earn a trip. The categories are ones such as fixed income taxable, fixed income tax free, growth, growth & income, insurance, CFO (Complete Financial Organization accounts.), mortgages, etc.

BPD[/quote]

Thanks for the reply, BPD. I tend to agree with BL about the trips, but I'm glad you enjoy them.

I have to say on the program as a whole, I find it fishy. Management shouldn't have to hold a contest to get people to do the right thing. I don't think it reflects on you specifically, but it does you firm. Sort of like the days when Dean Witter paid their guys more to sell in-house funds. I knew good people there, but the firm itself was suspect.

exdrone- I meant to add on my original response that I concede your point. I believe though that the floating rate type of funds is the exception to the rule that I stated. I do a lot of business outside the box and have never recieved even a wire about it. It sure seems to me that certain folks have a severe ax to grind concerning jones. As for myself, I am all about doing the best for one and one’s family and certainly have never criticized one for acting in the best interests of their future.

[quote=noggin]exdrone- I meant to add on my original response that I concede your point. I believe though that the floating rate type of funds is the exception to the rule that I stated. I do a lot of business outside the box and have never recieved even a wire about it. It sure seems to me that certain folks have a severe ax to grind concerning jones. As for myself, I am all about doing the best for one and one's family and certainly have never criticized one for acting in the best interests of their future. [/quote]

I concede that I have an ax to grind.  I wasn't trying to be excessively harsh as you seem very civil.  I just though Eggnoggin sounded festive.

exdrone- No problem… I’m all about the holiday season.!

[quote=babbling looney]

As far as traveling with other Edward Jones families goes: This is a positive not a negative. You can spend as much or as little time with other families as you want. I enjoy spending time with other EJ reps and their families. They are usually very fun people and we tend to have a lot in common. We have certain families with similar age children and similar interests that we go on trips together with. Most trips there is a group dinner the first night, one or two cocktail receptions throughout the week and then a closing group dinner. These are not mandatory but a fun time to mingle and meet new folks.

My family and I have seen the world from Rome to New Zealand to Machu Picchu to a safari in Africa. Trips I more than likely would not have gone on my own, and if I did probably not first class like Jones does.

Well, to each his own.  The trips and meetings while being held out as a glittering carrot, were to me the most unattractive part of Jones.  For many reasons, which will probably annoy you. 

1. I am older than you with grown children. So the last thing that appeals to me is a "family" trip with a bunch of annoying little kids. 

2. I have been to all of those places and more (well, except for the Africa Safari) before, on my own dime, and in more unstructured format where I was actually able to explore the countries and meet the local people, spend some time doing what I want to do. Linger or leave.

3. The meetings and dinners, while not 'officially' mandatory, were still a pressure to have to hang out with a bunch of Jones reps.   I hate group events and forced activities.

4. If I want a vacation, I want to go somewhere that isn't related to my work environment.  Vacation to me is doing something new and exciting, not hanging out with a bunch of Jones (or insert the name of any organization here) clones and their Stepford wives and robo-children.  The same goes for the insurance trips that I have been on, so don't think it is just Jones, it is me. 

5. I would rather have the cash.  Instead of being taxed on a trip I didn't enjoy much anyway.

If I do go on a trip, I try to have as much private time with my spouse as I can and get away from the herd.   I know a lot of people really enjoy the trips and I am happy for them.  The Jones trips were probably the nicest compared to other companies that I have experienced. The criterion didn't involve pushing any particular product but was instead based on having a diversified office, which I thought was a very good idea.

Floating rate funds are a good spot to park some short term, semi liquid funds while rates are going up.  I was also disappointed that we were not able to offer them at Jones.  Although I probably wouldn't have done so at that time, since rates were going down.

[/quote]

Babbling,

There are family and NON-Family trips.

I have been on Jones trips where beside the business meeting and picking up my spending money from Jones afterward I don't see another Jones person. As PayDay said you can spend as much or as little time with other families or couples.

Where is your favorite place you have been lately?

[quote=Oracle]

I have been on Jones trips where beside the business meeting and picking up my spending money from Jones.... [/quote]

Wha? "Business meeting" and "spending money"????? Just what sort of bucketshop is this?

[quote=BigPayDay]Ex,

Great question, I'm glad you asked. My pay out last year was around 56%. This includes my net commissions, bonuses, profit sharing and two trips per year. I am on pace to do about 10% better than last year. This does not include earnings on Partnership. (Which by the way over the last 15 years has averaged 22% per year.) Since I have been with Edward Jones there has only been 4 Trimesters where a bonus was not paid.

The 44% that I do not get covers my office staff. I have 2 full time BOAs. Jones pays 100% for one and 75% for the other. This includes salary, benefits and bonuses. One is a partner. They were also trained internally. When I set up my office Jones paid for the build out of it and a few years ago paid for a remodel to be done. I have about 1400 sqare feet with a conference room. Jones covers the lease, office utilities, half the phone, half the postage, half of the yellow page ad, half any marketing events like open houses, client appreciation events, seminars, etc. They pay for AND coordinate all my various insurance and securities licenses each year. They provide live CE Videos that I bring in CPAs and Attorneys to 6 times a year. (This by the way is with out a doubt the best source of new business that I have.) Jones has various training courses I can attend out in the field and at the home office. (I'm not talking about Mutual Fund due diligence trips.) This summer we went on a Mediterenean Cruise with my family of five paid by Jones. I had to pay for my youngest child's air fare. Next summer we are going on an African Safari. (Just the wife and I, no kids.) Over 55% of the sales force earned trips last Diversification Program period. Jones covers all of the computers, faxes and printers in the office. They supply paper, toner and repair when necessary. I do not have to pay extra for a Quotes system or internet service. Yes, I have jones supplied email. (I know hard to believe.) You would also be surpised with all the new technology Jones is rolling out early next year including a new and improved portfolio analysis system and drum roll please......financial planning software. I do not have ticket charges and can buy VAs electronically through the system. (Not many firms have the ability to do this.) I do not have to buy E & O insurance.

I have several friends that work in the industry at various different firms: LPL, ML, RJF. My buddy at LPL says his net, net is between 62% - 68%. He does around $750 gross per year. I have two buddies at ML that are $Million Dollar producers that have a total payout close to 60%. We meet often and would you believe it, each one of us thinks that we are at the best firm or in the best situation. The bottom line is we are in a great industry and there are many great firms out there. And the more people we help reach their financial goals the quicker we will reach ours.

Happy Thanksgiving!

BPD[/quote]

BigPayDay,

Would you really like to compare this to my practice?

I too have two full time employees, I have my own fully funded 401K and profit Sharing Plan.  You might just want to set down with one of those CPA's that come to your CE class, and have them look at your tax return, and ask them if you generated that type of revenue in your own corporation what the results would really be?

Here is some food for thought:

1) Jones is NOT paying you the total Commission they receive from vendors, since I let I receive anywhere from .15% to as much as .35% HIGHER payouts in Gross Commission thru my BD.

2) I can take some of my income as a dividend, taxed at 15% do some figuring on that one

If I were Managing General Partner at Edward Jones this is what I would do:

1)  Exchange all LP & GP for STOCK (Private) making that 22% return on your LP only taxed at 15% not 33% you can do the math?   The GP's 50% return taxed at 15% not 33+%. 

2) Make all the LP's & GP's Officiers of the Company, therby being able to do Signature Guarnatees (saving the Firm Millions in postage not having to send forms to STL for Signature Guarnatees)    

3) Raise the Payout for all newbies to 50% for the first 3 years, cutting down on the failure rate, putting more return to LP's & GP's.

4) Change payout structure for IR's to 40% from zero to 250K (Segment 1) from 250.1K to 500K 50%(Segment 2) and from 500.1K to 1 Million 55% (Segment 3)and 1 Million.1 60%(Segment 4)........ those mean something        &nb sp; 

5) Fully disclose all commissions and revenue sharing fess paid to the firm to the IR's 

6)  Award LP and GP based on commissions, not a popularity contest for ass kissers, you know and I knew IR's that shot right to GP because of who they knew, not what they did for the Firm.

7)  Have Regional Leaders limited to no more that 40 IR's

8)  For recruiting have the recruiting IR get a 3% over ride the first 3 years.

9) Allow two and three IR offices, with a buyout option

So what do you think? 

Do you think you would want to work under that system ?