spoke with Jim Weddle, CEO of Edward Jones, about the firm's new fee-based platform, which it began to roll out in June.
RR: What inspired the development of this program?
JW: Well, we did a lot of research — both among our clients and those we would like to have as clients. And over half of them responded favorably to the features and benefits we were designing, as well as to being charged an annual fee.
RR: Fee-based pricing wasn't part of the firm's philosophy before, is this in keeping with the traditions of Jones?
JW: Absolutely, it's very consistent with the long-term approach. It's designed to broaden the number of individual investors that we'll be able to appeal to. We were never against fees per se. But we are against fees that are too high, or that don't deliver value to our clients. And I think some of what we saw being offered fit that description. This is an advisory account, not a brokerage account. We weren't comfortable with the fee in lieu of commission accounts and we still aren't. So that was the primary reason we weren't quite ready to go into that area before. But we took a look at what others were doing and we thought, you know what, we can do this better.
RR: Okay, tell us a bit about the program.
JW: It's called Advisory Solutions. It's a mutual-fund based platform. And there are 24 model portfolios that advisors can choose from. But it also allows them, if they choose, to build a custom portfolio utilizing the 165 funds on the platform: 121 mutual funds and 44 ETFs. Where the SMA platform requires a $500,000 minimum, there's a $100,000 minimum in Advisory Solutions.
RR: How's it going so far?
JW: Well, after 18 months of research and development and fitting together all the parts, we've rolled it out to a select number of FAs, and we'll begin training after our summer regional meetings in the last two weeks of June. So far the reception has been great from advisors and clients. It's only been out a couple weeks [through the limited pilot program] and we did $100 million in this first week with another $150 million in the pipeline.
RR: What's next, alternative investments?
JW: No, no, no. We're not going there. We're still the boring kind of firm and right now I'm very glad that we are.