Should I become a Financial Planner for Waddell & Reed or Edward Jones?

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Wookie's picture
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Joined: 2010-09-10

Hello all, I just finished my finance degree and I've got interest for Financial Planning positions from both Waddell & Reed and Edward Jones.  I'm conflicted about which firm I should go with.  At Waddell & Reed I would be a 1099 contractor vs. an employee, which I assume means I can take my clients with me if I leave the firm, while at Edward Jones I've heard they do everything they can to keep your clients if you leave or get fired.  On the other hand, almost everyone has heard of Edward Jones due to their marketing, while almost nobody has heard of Waddell & Reed, so the Edward Jones brand would give me more credibility.  I'm turned off by the relentless door knocking required at Edward Jones, but it seems like Edward Jones offers a more substantive training program.  Waddell & Reed only offers mutual funds, not individual stocks; is this a handicap for a starting financial planner?  Will Waddell & Reed require me to sell their mutual funds over competitors, such as Vangard?  What kind of support would I be getting from either firm that would justify their chunk of my commissions, instead of just starting out as an independent financial planner and keeping everything I make for myself?Any and all advice/suggestions/recommendations/information is greatly appreciated, thank you!  If you work for either firm, please tell me about your experiences!    

Sunchaser's picture
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Joined: 2010-09-08

Waddel is a mutual fund shop.  I have never seen a statement from Waddell with anything in it other than Waddell funds.  Would you want your own assets to be limited to just mutual funds from one company?  FYI The odds of you making it in this industry are minute.  When you are fresh out of college you look it, and act like it.  How many 60 year olds are going to trust their life savings to a youngster fresh out of college?  Even they thought very highly of you, they would be very wary of handing over their account.  I suggest you go work in the industry in some sort of back office position to learn more about the industry and gain more life experience.  Late 20s or early 30s with experience in the industry is a better alternative than starting at 22 with no experience...When you do start in the industry, no matter where, you are going to have to be rejected countless times every day before you will ever succeed, so if the idea of knocking on doors with Jones lacks appeal, you should reconsider the profession.Congrats on finishing your degree!

Wookie's picture
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Joined: 2010-09-10

I'm in my early 30's and I do have lots of work and life experience, but none in the financial industry.  I went back to school with an eye on getting into the world of finance.  Does Waddell & Reed really force you to only sell their own products?  Thanks for the response!

I am legend's picture
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Joined: 2010-03-04

If those are your only choices--Jones.  The real answer is to look for a third choice.Raymond James/Wells Fargo Advisors/Stifel Nicolas would all be much better.

iliketennis's picture
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Joined: 2010-08-30

Wookie wrote:I'm in my early 30's and I do have lots of work and life experience, but none in the financial industry.  I went back to school with an eye on getting into the world of finance.  Does Waddell & Reed really force you to only sell their own products?  Thanks for the response!They have around 6k funds to choose from other than Ivy and W&R funds - but one of their core products, I forget the name of it, limits you to Ivy and W&R funds. They will likely enjoy you more if you push this product to your clients - but on paper you have options.

ambitious's picture
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Joined: 2009-05-26

It is almost impossible to start out independent, I found out the hard way, Started my own RIA Without any prior experience,In a short time I was totally lost, And not making money,The biggest challenges are, NO roadmap who your market should be, What products to sell, Case design, Etc,Since then I have partnered up with a successfull Planner as his assistant doing paperwork Etc. He also lets me do my own business through his firm, I couldnt be happier making a wage learning the business,If you can find that kind of gig I would recommend it as the best way to start out.

llcoolj's picture
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Joined: 2008-11-23

I agree with Ambitious. Find a seasoned Advisor/Planner who is operating independently and tell him/her your story. Make sure you have plenty of cash laying around to back-up your lifestyle. You have very little chance ob being successful right away………no matter where you start. Waddell is a chop-shop and they will want you to promote / sell their proprietary funds. Even If you use their managed money platform, it is only Ivy / Waddell funds……which are, for the most part, the same funds anyway.Jones seems to have a pretty good training platform but I do not know where they stand on planning? It seems that in my town, none of the Jones reps do planning. If planning is your intent, I am not sure they are the right fit for you. I would ask a current Jones rep that isn’t doused in the kool-aid what they think.Find a seasoned mentor and learn from them. Call planners in your area and just ask them for a few minutes of their time. The ones who give you time are going to be your prospects. Sit with them and listen. Ask them how they got started and what they would do different. That type of information is priceless.Good luck. It is a tough business but worth the effort. 

Rhett Captain's picture
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Joined: 2010-01-01

With respect to Waddell & Reed - see my previous posts on that company.  A simple search ought to bring them up for you.

Wookie's picture
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Joined: 2010-09-10

Thank you all for your advice; I've applied to more firms to increase my options, and heard back from MetLife about an interview.  Would MetLife be a better place to get started as a Financial Planner than Waddell & Reed or Edward Jones?

gethardgetraw's picture
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Joined: 2009-10-22

why would you want to get into this business

BigFirepower's picture
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Joined: 2010-07-09

You finished a degree in finance, but you apparently don't know much about our industry. Either your educators were lacking, or you haven't done your homework for a good number of years, and you've essentially waited until the last minute. Well, at least you're doing something now, but I'd say you're behind the curve. Be careful going forward, this biz is tuff enuf under the best of circumstances, and these aren't exactly high times.

gethardgetraw's picture
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Joined: 2009-10-22

GET OUT YOUVE GOT TO GET OUT

Wookie's picture
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gethardgetraw wrote:why would you want to get into this businessBecause I want to help people achieve financial security while making a lot of money in the process.

Wookie's picture
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Joined: 2010-09-10

BigFirepower wrote:You finished a degree in finance, but you apparently don't know much about our industry. Either your educators were lacking, or you haven't done your homework for a good number of years, and you've essentially waited until the last minute. Well, at least you're doing something now, but I'd say you're behind the curve. Be careful going forward, this biz is tuff enuf under the best of circumstances, and these aren't exactly high times. I don't know a lot about the industry yet, as I only recently decided I wanted to go in this specific direction.

BigFirepower's picture
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Joined: 2010-07-09

Do you have any sales experience? If so, what, how long, how successful?

Wookie's picture
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BigFirepower wrote:Do you have any sales experience? If so, what, how long, how successful?I have a year's worth of experience selling high-end home theater setups, and I was extremely successful at it.

BigFirepower's picture
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Joined: 2010-07-09

Define "extremely" successful. What did you like, dislike about doing that? 

Wookie's picture
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BigFirepower wrote:Define "extremely" successful. What did you like, dislike about doing that?  I was the top salesman on the team every month of the year, and in some months I met the entire business' quota on my own.  I loved the thrill of closing a $4,000 sale, and getting return business from customers that trusted me, but I hated that I wasn't getting compensated fairly for my production (bonuses were not paid out on an individual basis).

Spaceman Spiff's picture
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Wookie wrote:BigFirepower wrote:Do you have any sales experience? If so, what, how long, how successful?I have a year's worth of experience selling high-end home theater setups, and I was extremely successful at it.You were selling  a product to people who wanted to buy what you were selling.  Being a financial advisor, or a stock broker for that matter, is a completely different ball game.  High end home theater systems are a minor purchase for people who are audiophiles.  They'll spend $4000 on something like that because they can see it, feel it, and hear it work instantly both in your store and in their home.  Unless you were working in someplace like Best Buy, those people know that in order to get a great home theater system they have to work with someone better than, well, Best Buy.  There may only be one or two trusted stores in an entire metro area that people would just walk into and drop $4000.  Investments/Planning is absolutely different.  You have a service to sell.  Sometimes a product.  They can't touch it, see it, or even see the results of your work for, in some cases, decades.  You're selling a theory.  Theoretically you can look at AT&T stock and see that they have raised their dividend for the last 10 years and assume they'll keep doing it.  Well, theories are great until their disproven.  To quote Robert Burns "The best laid schemes o' Mice an' Men, Gang aft agley,An' lea'e us nought but grief an' pain, For promis'd joy!"  Yes, you might have to pull out your English Lit book to decipher that one.  So, don't assume that your selling of HDTVs and expensive speakers will immediately translate into success in this business.  It'll help that you've sold something to someone, but it's not quite the same thing.  

tenthtee's picture
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Joined: 2006-11-16

Investments/Planning is absolutely different.  You have a service to sell.  Sometimes a product.  They can't touch it, see it, or even see the results of your work for, in some cases, decades.  You're selling a theory.  Theoretically you can look at AT&T stock and see that they have raised their dividend for the last 10 years and assume they'll keep doing it.  Well, theories are great until their disproven.  To quote Robert Burns "The best laid schemes o' Mice an' Men, Gang aft agley,An' lea'e us nought but grief an' pain, For promis'd joy!"  Great post worth remembering. The environment has changed, people used to have to come stock brokers to buy stock. This is more about leadership. Which program ends up putting you in a stronger leadership position in the community, Jones or W&R?

Wookie's picture
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tenthtee wrote:The environment has changed, people used to have to come stock brokers to buy stock. This is more about leadership. Which program ends up putting you in a stronger leadership position in the community, Jones or W&R?To be honest, it seems like both firms essentially just send me out to cold call/door knock to find clients (at least initially).  I've got interest from Barnum Financial (MetLife) now, and I'm trying to uncover as much information as possible about them.

tenthtee's picture
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Joined: 2006-11-16

Good. The only reason someone need to hire you is to find new clients and get them to do what is right for themselves. A strong career is going to begin with a strong belief in the financial planning process:Identify goals - collect data - analyze - provide solutions -implement - review You need to get people to fill in: cash reserve, protection, college, retirement, home ownership, blah blah  blaHere is a secret: people make this business way too hard and think too much  You can think your way out of selling a Metlife proprietary fund because xyz have lower expenses and not proprietary, buy if you are not successful and stay in business, you didn't help anyone who would have gone out and blown the money and become disabled without owning any disability insurance. If you don't believe in insurance, you should not be holding yourself out as a financial advisor.  If someone offers to hire you, train you, get your licenses - do everything they say. If you want to be in this businss and help people, and have the potential to grow and change into the greatest profession ( okay, maybe for people like me who needed to pull a quick career fix, but like economics, personal finance, and helping people) - it doesn't really matter where you start. Don't train yourself to take the bait of thinking too much. I started and decided that failure was not an option. I learned to hate my b/d, and I taught myself to love my b/d when they changed for the better. I have always had lots of freedom and lots of money, and other than working hard for the first few years, I have had lots and lots and lots of free time. Enjoy.

Wookie's picture
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Joined: 2010-09-10

Thanks for the thoughtful advice tenthtee, your comments make a lot of sense.  I'm definitely the type of guy that overthinks everything, and I've been obsessing over the proprietary fund issue, but I'm starting to realize that I need to simplify things to "Am I helping my client?" and not obsess over the details as much.  Edward Jones apparently does everything in their power to keep an advisor's clients if they leave the firm, including lawsuits, so that's probably going to be a dealbreaker for me.  I don't want to spend years cultivating a strong book only to have to start from scratch again if I leave.

tenthtee's picture
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Joined: 2006-11-16

Yeah, try to start somewhere where you can move on without too much trouble. Also, Jones would be a lot of work, going around and proclaiming to the world you are the Jones guy with the office down the hill. ( In terms of branding yourself.)I'm way too analytical. Coming out the other end of the pipe ( a decade and a half ) I'm trying to simplify and offer solutions. Are you getting insurance licensed?

Wookie's picture
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Joined: 2010-09-10

At both Waddell & Reed and Edward Jones I'd be taking the Series 7, Series 66, and the Life & Health, and I assume I'd be insurance licensed at Barnum FInancial since they're affiliated with MetLife.

tenthtee's picture
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You have to learn so much, it is like drinking from a fire hose. It is like a pyramid, at the base is the need for insurance, at the top is the specific product. If you cover the need, the pyramid stands. Whatever you do, believe in it. Selling insurance generates up from commissions, and is the base of any financial plan. Gathering assets under management in wrap accounts (my favorite thing) - should not be the priority when you are getting started, for many good economic and practical reasons. I could take anyone to the mat on that debate, as an experienced and successful CFP. Believe. Drink the Kool - Aid, it is FDA approved and it provides needed calories. Your body is already grown, you just need calories, later on you can go back to eating holistic foods. The fact that you are bringing new people to personal financial planning justifies your product sales, in most cases.

B24's picture
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Wookie,To be honest, you might consider Barnum before the other two.  I am very familiar with Barnum.  Although I don't work there, they seem to provide a lot of resources for their advisors, they have built-in seminar relationships with a lot of local employers (not sure of your location, but I could narrow it down pretty closely), and they are not just insurance guys (though that's their focus).  I would listen to their story before you make any decisions.

Wookie's picture
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Joined: 2010-09-10

Do all firms require the same hours in the office from new advisors?  Waddell told me they expect me to work from 9am to 9pm Monday-Friday in the office (sometimes I could leave early at 7pm), and I'd also have to come to the office on Saturdays if I didn't hit my goal of 10 appointments per week.

BigFirepower's picture
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Wookie, your experience at audio/vis sales is fine. In fact, I'd suggest that if you went that way right now, you'd probably make more money, than you would for at least 3-5 yrs in this biz. Trust me, that would enter your mind. F WR, what a joke, don't even think about that place ok? Ed Jones is a fine place to work, and if it works there, you make money, leaving isn't even going to be an issue, they take care of their talent.   Based on some things that you've said, I think you sound quite sensitive to inequity. That would be a really big prob in this biz, because boy oh boy, is life not fair in our biz... 

Wookie's picture
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BigFirepower wrote:Wookie, your experience at audio/vis sales is fine. In fact, I'd suggest that if you went that way right now, you'd probably make more money, than you would for at least 3-5 yrs in this biz. Trust me, that would enter your mind. F WR, what a joke, don't even think about that place ok? Ed Jones is a fine place to work, and if it works there, you make money, leaving isn't even going to be an issue, they take care of their talent.   Based on some things that you've said, I think you sound quite sensitive to inequity. That would be a really big prob in this biz, because boy oh boy, is life not fair in our biz...  My goal is to set myself up to make big money in five years; what I make until then isn't nearly as important. As for being sensitive to inequity, what have I said that gave you that impression?

Rhett Captain's picture
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Joined: 2010-01-01

I'm with a MetLife affiliated firm.   Despite the overall recruiting pitch that they are a full service brokerage, 80 percent of daily activity revolves around insurance products.You bring in an $80K IRA Rollover?  Ho hum.Establish a $150K brokerage account for a client?  Yawn.Sell an annuity or permanent life policy?  WOO HOO!  Party time.While life insurance and annuities are good for suitable clients depending on their needs, I find an over emphasis on them.  For example any client approaching retirement age is given the annuity pitch even before all the suitability facts are in.The investment planning aspect is a joke.  The only thing I hear around the office is "Put them (the client) in A Shares in American Funds...).  Again irrespective of the suitability and client needs.Staff meetings consist of rehearing sales pitches for insurance.  Stock market?  Investments?  Oh yeah... an afterthought.  

co.external's picture
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Joined: 2010-09-18

W&R is really a joke. Any place where you have to PAY for your licenses, finger printing, registration etc. OTHER than LPL Financial or some place similar where they pay you a very high grid (like 80% to 90%), it's a joke and nothing more than a modified network marketing gig.  There are a handful of jokers who say that you are "independent," but they take 50% of your commission. W&R is one of them.  MetLife is another (if you stay longer than 3 years). When shopping for financial services companies, beware of this. Many are really bad. The only person getting a decent share is the sales manager.  If you are just starting out in the industry, you may no other choice. In these financial services companies, YOUR commissions pay for your sales manager, compliance, admin, your desk, your comp, your phone, your chair & desk. You pay for everything eventually. Some off set the cost initially--like MetLife.  Prudential or MetLife is o.k. to get educated on risk managed products. Wirehouses are o.k. since they pay a salary plus they pay all of your expenses that other financial services companies charge you. For example, I have been with MetLife for 4 years now, and they charges me $1,300 per month after taxes. This does not include gas, food, postage charges, and marketing expense. AND they take 58% of my commission on TOP of that. That is the most ridiculous deal in the entire industry. When I calculate everything, I get 11% payout on my sales. And I get 19% if I have $60K or more GDC sales. I PAY MetLife to work for them--about $24K a year. This is why I am moving to a wirehouse, where from an accounting perspective, I am gaining $70K to $100k the first year just by moving.   Since I don't have asset management experience, it is a decent move for me. If I had more balanced experience, I would be going independent (i.e. LPL) where they generally pay 80% to 90% payout on commission.

co.external's picture
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Joined: 2010-09-18

If you are a newbie starting out in the financial services industry, I recommend (but ot limited to): -For risk managed product experience, I recommend Prudential or MetLife (or in that order--because Prudential has good initial training. Once you get the paid training, go to MetLife, because they have a 19-week salary. Stay at MetLife for 2 years or less, because it goes down hill from there).   *These companies do not care about your career (your sales manger does however). Their program underminds your career-mindedness. So use them to your advantage. -For Asset Management, you can look into any of the top wirehouses. Once you get the knowledge and have a good idea about how you can market effectively, I would go to LPL or a similar setup. For experienced advisors, a place like MetLife doesn't work because you are paying for everything plus the sales mamanger. If you produce less than $60K GDC, you will end up getting 11% actual payout at MetLife.  But if you produce higher than 150K, the payout is decent, at about 55%. Even then, you are giving MetLife 45% of your commission and you still pay for everything, while you could have gone to LPL and you still pay for everything, but the expense is generally much less AND you get 90% payout (especially if you work under an OSJ and do a 70/20 or 80/10 split).  

Wookie's picture
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Joined: 2010-09-10

I just got an interview with New York Life.  Would they be a better company for a new Financial Planner than Barnum (Metlife)?

ambitious's picture
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Joined: 2009-05-26

NYL Is a very Insurance focused Business, They have great products excellent training, Just remember, Be ready to be an Insurance salesman forget the fancy Financial Advisor at home, And sell,

RandomRep's picture
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Joined: 2010-09-28

I joined Waddell & Reed about a year ago from Ed Jones, where I was for just over 7 years.  I've been around the block long enough to know that it's not easy to break into this industry and that most of the complaints are coming from people that don't know any better.  Complaining about having to pay licensing costs pales in comparison to the Non-Compete that Ed Jones makes you sign agreeing to 3 years or fork over $75,000 back to the firm.  Not to mention knocking on 600 doors before you even get started and then working out of your car for your first year with Ed Jones.  The payouts at Waddell are MUCH higher, you can do true financial planning instead of pushing products, and I'm not captive to Waddell & Reed funds as many people assume.  I work from the Pershing platform that I used when I was at Merrill before Jones.  I think most of the posts on here were referring to the old Waddell model, they opened up full service brokerage services for clients a couple of years ago and still do planning also.  The training is a hell of a lot better too, it's not just cold calling phone scripts.  I'm happy as hell and my clients are in a better position too.  

Wookie's picture
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Joined: 2010-09-10

co.external wrote:If you are a newbie starting out in the financial services industry, I recommend (but ot limited to): -For risk managed product experience, I recommend Prudential or MetLife (or in that order--because Prudential has good initial training. Once you get the paid training, go to MetLife, because they have a 19-week salary. Stay at MetLife for 2 years or less, because it goes down hill from there).   *These companies do not care about your career (your sales manger does however). Their program underminds your career-mindedness. So use them to your advantage. I'm interviewing with Metlife, but they've got a non-compete clause; how could I leave in 2 years or less without losing my entire book?

Wookie's picture
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Joined: 2010-09-10

I'm about to get an offer from Metlife, but with a Non-Compete.  I'm really stressing over it.  The idea of working 70 hour weeks for the next few years, only to have to start from scratch if I leave Metlife has me freaking out.  Should I be worried about this, or are Non-Compete clauses easy to work around?

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Joined: 2009-02-12

RandomRep wrote:I joined Waddell & Reed about a year ago from Ed Jones, where I was for just over 7 years.  I've been around the block long enough to know that it's not easy to break into this industry and that most of the complaints are coming from people that don't know any better.  Complaining about having to pay licensing costs pales in comparison to the Non-Compete that Ed Jones makes you sign agreeing to 3 years or fork over $75,000 back to the firm.  Not to mention knocking on 600 doors before you even get started and then working out of your car for your first year with Ed Jones.  The payouts at Waddell are MUCH higher, you can do true financial planning instead of pushing products, and I'm not captive to Waddell & Reed funds as many people assume.  I work from the Pershing platform that I used when I was at Merrill before Jones.  I think most of the posts on here were referring to the old Waddell model, they opened up full service brokerage services for clients a couple of years ago and still do planning also.  The training is a hell of a lot better too, it's not just cold calling phone scripts.  I'm happy as hell and my clients are in a better position too.   Finally, someone that actually makes sense and isn't basing their opinion off of rather dated HEARSAY.  

Rookie1986's picture
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Joined: 2011-01-13

How do they compensate you when you bring in money in individual stocks? I know they really want you to push their mutual funds, but what kind of commissions do you get when you bring in individual stocks?

youngbuck's picture
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Joined: 2010-03-05

Rookie, none. If you want to be a stock jockey I suggest going elsewhere.

Rookie1986's picture
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youngbuck wrote:Rookie, none. If you want to be a stock jockey I suggest going elsewhere.How do you know? What happens if I have a client who wants to buy an individual stock? Do I just tell them I can't do that?

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