Leaving Jones
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Nog - I frankly don't know how many assets the STL guy had. I never asked him. I do know that he had a degree in Finance, interned with Jones in college, worked for a short time in HQ, opened an office in STL metro, got to Seg 3 or 4 (I don't remember which), and then moved to KY. He is intelligent, professional, and has the southern accent that helps him fit right in. Yes, he caught his golden ring. The last time I saw him I asked him if he had caught any flak over it. He said of course he had. He said he also knows he's one of the luckiest people in the country. David Lane could have said the same thing at one time. Now Jones looks at him like some sort of uberbroker. So, he's got the same choice David did. He can either sit on his $90 MM and do nothing but keep his clients happy or he can turn his $90 MM into $150 MM and enjoy life just that much more.
The PASS program is what it is. You are correct that most of the guys in that program are either too green for the field or didn't make it the first time. So, they get some training and then get back at it. The design of the program is for all of them to take over books. The size of office they take over varies. Some will take over large books, some will take over virtually nothing. It's not a perfect program, but it works.SupermanFan - I know absolutely nothing about Bloomington, MN. I can only assume that the RL and the area leader in STL looked at the situation and did the best they could with the people they had. My guess is the two new guys didn’t have offices yet, so it was easy for them to drop what they were doing and take over. They probably also didn’t have an existing book of business to deal with either. Would it have pissed you off if Jones would have given the one guy in town who had been with Jones since 2000 the whole book? Just moved those clients over to him?
This open office thing has got to be a Jones anomoly. If that guy would have passed away while working for ML, by the end of the week his accounts would have ended up with who knows how many different advisors in the local branch. Since that's not the Jones model, it doesn't work that way now does it? I don't know what his widow got. Probably some life insurance, his LP dollars, his 401k. Jones didn't buy her out. He made a choice not be an indy advisor, so he didn't own his book. That doesn't mean Jones is some big evil company. It's just the business model. I know that if I died today, my wife wouldn't be able to sell my book to the highest bidder. She wouldn't know how or where to start and my clients would suffer in the time it took her to figure it out. So, let's say you're an indy. Today at lunch you choke on your Big Mac and keel over. Dead at 50. Who services your clients? Who pays your rent check? Who pays your secretary? Who do your clients call? How long does it take for LPL, RayJay, or whoever to figure out you're dead? Who takes care of your book until all that gets figured out? Does LPL have Transitional Reps who will come out and sit in your office until someone buys your book? Do your clients have to move their accounts to a different office? Do they get to keep talking to your secretary? Does she stay? Now, granted, your wife will have something of value to sell. So, perhaps she's willing to do the due diligence to make sure she gets a fair value for the book. How long does that process take? Does LPL help her figure out what her deceased husbands book worth? What if she just simply doesn't want to deal with it? Is all of that in the best interest of clients?I will say, this is one of those issues that I wish firms would address (most of the wirehouses are in the same boat as Jones, I believe). It seems to me that the right thing to do is to essentially “Goodknight” or “Sunset” the office, and give a % of the gross over the next X years to the deceased estate, with the balance of the gross going to the advisor taking over. That doesn’t take any money out of Jones’ wallet, it is fair to the deceased’s family, and it is also fair to the guy that was handed the book.
It seems to me that it is such a rare event for an FA to pass away during his career, that they should offer this to FA's families. It seems to me that no more than a dozen or so FA's pass away each year.It’s going to happen more and more, as the boomers get older.
But a more important issue is retirement. When you retire, can you sell your book? That's a substantial asset that a lot of advisors will lose, because they don't own their book to sell.Spiff and B24-
This was exactly my issue/reason for leaving Jones. There was no succession plan, then, just promises of a plan. I saw two large offices come and go to others non-deserving (even outside the company let alone the region) and friends/goodknights of the RL. And it really isn't a succession plan because you must remain working for 3 years to receive the commission earned on a declining split. The real issue for me was the desire to bring in a family member or two over the next 15 years. And if it didn't happen, then as you and others have said now, we can sell our assets because we own it. This week marks two years of independence. I was there 9 years and am thankful for the experience, and grateful for the opportunity to be the GP of my firm.Foot,
I don't disagree with you. The program Jones has for "retiring" FA's is similar to at some of the wirehouses (I know Merrill does it anyway). However, you are right, it's odd that you still have to work for those 3 years (at Merrill you leave). Although, I always wondered how much the retiring FA actually "works" during those 3 years. It may be a way to maintain benefits, etc. Jones has done an 'OK' job of implementing the retirement policy. However, I think they still have a ways to go. I can't for the life of me understand why it isn't richer for the departing FA. It costs Jones nothing - it comes out of the pocket of the new FA taking over. I would love to see a richer split, and for 5 years, and no working requirement (well, maybe a year or two to transition clients - even if you sell a book as an indy, you usually have to stay on for some time as part of the P&S Agreement). I am willing to bet during the next several years, Jones will improve that plan.Retirement is still a bit different than dying, like the other post was about. I have some sort of control over when I retire. Not so much when I die. I too believe that Jones could do a better job with this issue. I’m not saying there needs to be some sort of golden parachute, but at least some recognition of the hard work you’ve put in for those years. Of course, they’ll argue that you don’t own your book and that when you retire, you should have done a good enough job saving that you don’t have to worry about your book being sold. I like B24’s commission split idea. You should put that in a Suggbox and see where it goes.
foot - what happens if you die tonight on the way home from the office? How does it work at indyworld? Let's assume for the sake of discussion that there are no kids or partners with a buy/sell agreement. So, there's no quick out for your wife.It’s our responsibility as Indy’s to have an agreement on file in the event of our death. I do.
When I first started I had nothing in place, but I recently agreed to a buy/sell with another advisor and we are currently getting the life insurance in place.
My book is currently worth approx 500K (looks like trailing will end up close to 150K and transaction of 2-250K this year)and the tricky part was dealing with a biz that's growing, I chose to insure the biz for more (1M) and will have to evaluate along the way if its adequate. My calcs are 2X for trailing and .8 for transaction.
At first I thought I would license my wife, but now I think its better for all if she gets cashed out if I croak. Spiff- Don't belittle the retirement issue. One of the benefits of indy vs employee is 45K deferral vs 15.5K, and everything related to the biz is deductible. I think I have mentioned that I employ my wife part-time, another benefit.Responsibility or requirement? There’s a difference. If it’s a requirement, you’re telling me that every indy office on the planet has a contingency plan in place in case of death. If it’s a responsibilty there are going to be some pretty upset clients out there at some point in the future.
So, you have one. Who else knows about it? How long does it take for it to go into effect? It may take a few weeks before a death certificate is available. A couple more weeks before you can get it from the surviving spouse. A couple more weeks on top of that to run it through the appropriate parties. Does your B/D have any way of knowing that you've passed on or that you have an agreement in place? Do they have copies of those records on file somewhere? What kind of legal issues are there? Is it like an estate that has to settle? Now, I'm not saying that the Jones way of doing things is perfect. Far from it. But if I'm a Jones client and my FA passes away I'm going to get a phone call from the new guy or the Transitional Rep to tell me that everything is OK. Sure I have to meet a new guy, but at least I still have the relationship with the BOA. My statement still looks the same. The office hasn't changed. People don't like negative change in their investments/plan.foot - I’m not belittling the retirement issue. I think I said that I agree with B24 that it is something Jones needs to address. I figure I’ve got 20 years or more for them to figure it out. I also get the deferral differences.
My issue here is with the complaining about the way Jones handles an FA leaving or dying. I've taken the steps (life insurance) to make sure that my spouse is taken care of if I die prematurely. I understand completely that if I die today, they'll probably have a new guy in my desk next Monday. Just the facts of working for EDJ. I would assume there are a whole lot of other issues when you die as an indy. I'm also going to guess that whatever plans you make, might not be all that kosher with your clients. Again, the change thing. So, what would have happened with your clients if you had died last month before this b/s agreement was in place?[quote=Spaceman Spiff]foot - I’m not belittling the retirement issue. I think I said that I agree with B24 that it is something Jones needs to address. I figure I’ve got 20 years or more for them to figure it out. I also get the deferral differences.
My issue here is with the complaining about the way Jones handles an FA leaving or dying. I've taken the steps (life insurance) to make sure that my spouse is taken care of if I die prematurely. I understand completely that if I die today, they'll probably have a new guy in my desk next Monday. Just the facts of working for EDJ. I would assume there are a whole lot of other issues when you die as an indy. I'm also going to guess that whatever plans you make, might not be all that kosher with your clients. Again, the change thing. So, what would have happened with your clients if you had died last month before this b/s agreement was in place? [/quote] Not to drone on into infinity but you mentioned 1 guy that went to Paducah, i was under the impression that 2 went into that area. Was or was not the 2nd guy a pass program person?I don't know. I told you in one of the posts that, like you, I didn't know the whole story. Why does it matter?
Spiff-
If you are implying that my wife would have to deal with the tremendous grief of losing her soul mate (i.e., she tolerates me) of 25 years, keep our 3 girls on their paths to success (hopefully) and try to find a buyer and calm clients fears at the same time, yeah I agree it was a serious void in our plan to protect ourselves and our business. A risk that I believe in hindsight should be part of the process sooner than 2 years after a transition to independence. One result of independence, is no one tells you what to do, you have to seek out competent legal and tax advisors who should direct you to deal with the tough issues. I'll take a stab at a guess as to the percentage of reps that actually finalize these important issues. Probably less than 25%.Congrats for being in that probable 25%. I would imagine that your wife sleeps a bit easier at night knowing that at least one more part of your life is protected and planned for.
I'm still curious about the procedures if an indy broker dies without a plan in place. At this point I'm not even concerned about the debate we were having earlier. My curiousity has been peaked and I'd like to know how it works. All of these conversations we have about indy vs Jones go into my memory banks and get stored away for possible future use. Call it an emergency contingency plan. Probably never going to get used, but you never know.[quote=Spaceman Spiff]
Congrats for being in that probable 25%. I would imagine that your wife sleeps a bit easier at night knowing that at least one more part of your life is protected and planned for.
I'm still curious about the procedures if an indy broker dies without a plan in place. At this point I'm not even concerned about the debate we were having earlier. My curiousity has been peaked and I'd like to know how it works. All of these conversations we have about indy vs Jones go into my memory banks and get stored away for possible future use. Call it an emergency contingency plan. Probably never going to get used, but you never know. [/quote] I don't recall the specifics, but one issue is that the business can't be transferred to another advisor unless there is written instruction to do so. The spouse would own the business through the estate, and then I believe would have to go through some process with the firm to allow the business to be transferred to the new advisor. This could be done immediately if there was a plan, if there wasn't and she has to find an advisor, I imagine it would be done after that agreement is finalized. Certainly under the circumstances it wouldn't be the most attractive purchase, but from what I gather it is not hard to sell a financial planning practice these days. ETA: It is clear to me RJ sees this as an issue and they are working very hard to make sure their advisors have plans in place.She could techincally own the business. However, if there was no licensed FA to receive the commissions/fees, then there would not be much income coming into the business. I believe the commissions would have to revert to the B/D until a licensed broker was in place. However, there may be ways that a B/D works around this in these circumstances.
I still like it at Jones and am not thinking of leaving.
The way the firm handles inherited assets though sometimes can be galling. Asset inheritors, in general, tend to act like because they were doing good at the time of the "hand off" that they would have never hit the 3 or 5 year slump. Also, asset inheritors tend to downplay the effect of the extra trails they receive. In effect, the have much less risk then the average newbie. I've been out about five years. My town has been rocked by the foreclosure crisis. Honestly, I don't know if I'll make it. My office is on the cusp. It's galling to me that I might wash out and all the asset inheritors remain. My region is loaded with asset inheritors. There are so many of them - it's hard to tell who's accomplished what. Let me say, I hold no grudge against these people personally. They saw a good opportunity and took it. I would have done the same. I have to wonder what the HR people are thinking when they literally grease the skids for some people and ignore others. Anyone can post good numbers for a year or two. I was a star out of the gate too. Common sense tells you that if you have five employees and you line four pockets (with inherited dough) and one person is left standing in the cold - morale might suffer a bit. I'm litertally surrounded by asset inheritors in my region. Everyone tells me it doesn't matter. Maybe it doesn't - but it gives you a complex after a while. You think, "They got behind everyone else - why couldn't they have give me a break as well". I'm trying to be the good guy and work my way through it. The big handoffs happened two years ago. About 140 (mil) was passed out. Three of my surrounding brokers hit the lottery and we got goose egged. My numbers were good at the time. Though I've tried to put it out of my mind - it stayed with me. Ironically, my noble attitude of trying to be the good guy might come back to bite me because this current downturn is so severe many of the small guys are starting to wash out. Maybe I should have bailed when my numbers were good. One thing that makes me feel better. They can't take away what I've accomplished if I do go down. I've won three production awards in five years and have built my branch from scratch. If I go down - it's been a noble fight. To be surrounded by inheritors though sometimes cuts. I'm in this literal fight to survive. I was much happier when I was surrounded by people like myself - people fighting to grow their businesses. When they all struck gold and we were goose egged it's never really been the same for me. What lifts me above all the political BS (and yes it is BS) is my genuine love for my clients. Even though Jones botches inherited assets, overall I still think they're a pretty good place to work. Thanks for listening..... Glass ManThis is an ongoing issue. However, I don’t know what the right answer is. It’s not that big an issue at wirehouses, because it’s always limited to those within the branch offcie of the departing broker. But even there, senior brokers get preference, and it all depends on the BOM. Sometimes the producing BOM will take any good accounts and give out the rest. It’s not just Jones. It’s the freakin’ industry. It’s just that at Jones, everyone knows everyone’s business, so you can’t help but focus on what everyone else is doing and been handed. One of my best friends at Jones inherited a 25mm office. Nothing huge, but that is basically the point of a “self sustaining” office. Your focus changes when you inherit big $$.
Keep one thing in mind…I have found, almost without fail, that the guys that inherit money (GK, office takeover, whatever) do not work as hard or prospect as hard. Their businesses are strong in the beginning, but they tend to “plateau”. The “scratch” starters have a prospecting mindset that tends to carry with them. There are exceptions, but the point is that what you are building now is stronger than what the “inheritors” have built. That’s not a rah-rah speech, it’s more factual. You know every client. You sweat for every account. You will get the referrals. Just keep building it. They will come (just kidding).
Feel free to PM me if you feel like ranting.
For the record, Glass Man and Soothsayer are not the same person posting under different identities. I think we just had an eerily similar Jones experience.
What I can tell you, Glass Man, is that the feelings you are having now will not go away--ever--period! The feelings of resentment, rejection, inadequacy, envy, jealousy, anger, obstinence, disassociatation, apathy, etc., etc. etc. will only grow deeper and stronger from here on out. Do yourself, your family, and your clients a tremendous favor--start making your exit strategy tomorrow. Make a timeline, set goals for yourself again (not standards that are unfairly applied to both you and asset inheritors), become your own man, and get ready to stick it to the man. 18-24 months later, you'll be able to look your former colleagues in the eye, and you may not quite yet be making f-you money, but you'll have an f-you confidence and heir that they'll sense and feel and respect. In short, you'll get your swagger back because in fact you are the man! For the record, 5 years later, I've got the f-you money, too. Jones is a pimple on my ass today. I still hate the bastards. (It helps to motivate me.) But, for the most part, it is a firm of pikers and wannabes that serves as a puppy mill for people who want to take their careers and clients to the next level. Best of luck to you, my brotha!