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Broker Report Card 2010. Edward Jones: Cooling It On The Kool-Aid

Well, this is a first. Edward Jones, which has ranked in at number one for 17 consecutive years in the popularity contest that is Registered Rep.'s annual broker report card, actually saw its rating drop by nearly a full point in 2010, to 8.5 out of 10 from 9.4 last year. Instead of receiving nines on nearly every metric in the survey as in prior years, Jones received mostly eights, and even a handful of sixes and sevens. Even more surprising: the number of Edward Jones reps responding to the survey sank to 85 from 385. (The simple and unfortunate explanation for this is that Registered Rep.'s survey did not make it through Edward Jones' spam filter.)

Jones advisors are known the industry over for their devotion to their firm. So, what changed? Perhaps some advisors are unhappy with recent adjustments to payout and products—an increase in the length of service and production thresholds advisors must meet to earn certain payouts and an aggressive build out of the firm's fee-based advisory offering, Advisory Solutions. But other advisors seem to feel the firm is not changing quickly enough: Jones, known for its blue-chip buy-and-hold philosophy, received its lowest rating for access to alternative investments: 6.6. Either way, some of the firm's top producers left in 2010, lured away to LPL and wirehouse firms by recruiting packages.

“I have noticed that at our regional meetings there hasn't been as much enthusiasm,” said one Edward Jones advisor. “I think some FAs are having a hard time in this economy, and with the higher standards they are seeing the handwriting on the wall.”

In April, top brass told the firm's nearly 12,600 advisors that the new payout thresholds would be in place starting in 2011. The firm also froze raises for branch administrative assistants and bonuses based on branch profitability earlier this year, according to advisors at the firm. ”So these are tough times in terms of compensation and perks,“ says one Edward Jones advisor.

In spite of the drop in the firm's rating, 85 percent of Edward Jones reps still think their firm is the best to work for, and 85 percent said they were likely to be working for the firm two years from now. The Kool-Aid still tastes pretty good.

Share price: N/A
Pre-tax operating income Q1-3: $278.4mn
Net revenue Q1-3: $2.97bn
Total Client AUM (9/30/10): $549bn
Net new client assets, Q3: N/A
Number of advisors, Q3: 12,052
Average annualized production per advisor: $241,549
Average AUM per advisor, Q3: $44.3mn

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