What is Jones' Problem?

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mrjones99999's picture
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Joined: 2008-10-03

Is Jones' problem new FA's making it or hanging on to veterans?

Morphius's picture
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Joined: 2007-07-21

Incoming!  

buyandhold's picture
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Joined: 2008-09-23

It's tough for either newbies or vets to make it when you can't sell options on Chinese currency.

UNDERMINDED's picture
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Joined: 2008-10-14

New Folks

chief123's picture
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Joined: 2008-10-28

Hanging on to veterans... There is a general assumption that a large percentage of new FA's won't make it, and that is industry wide. But Jones does a terrible job of hanging on to their veterans (most go independent or bank route) because there is no incentive to stay. You can say LP, but most never get it, so why not go indy increase your payout, keep your same business and not have to attend the endless meetings jones continues to have..

Borker Boy's picture
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Joined: 2006-12-09

chief123 wrote:Hanging on to veterans... There is a general assumption that a large percentage of new FA's won't make it, and that is industry wide. But Jones does a terrible job of hanging on to their veterans (most go independent or bank route) because there is no incentive to stay. You can say LP, but most never get it, so why not go indy increase your payout, keep your same business and not have to attend the endless meetings jones continues to have..
 
 
My region's got a meeting coming up. I always feel like I need a good scrubbin' after spending two days with all those former car salesmen.
 
 

bspears's picture
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Joined: 2006-11-08

Use bleach...

Spaceman Spiff's picture
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Joined: 2006-08-08

Borker - man, you need to go find another company to work for.  My first RL used to say that one of the good reasons to leave Jones is when you have a fundamental disagreement with the company.  After some of the posts you've put up recently, I'd guess you're there.  Life is to short to work for a company you don't like.  Do what is best for you, but if I were feeling the way you must be feeling right now, I'd leave. 
 
Chief - what makes you say that Jones does a terrible job of hanging on to veterans?  Sure, some vets leave.  But our attrition in the ranks of the vets isn't any different than any other firm.  And I disagree with you on the LP issue.  Most, if not all, of the vets in my region are LPs.  Most of them have a relatively large chunk of it.  And we have a pretty good handful of folks who will get added to those ranks with the next offering. 
 
Without getting into the whole indy vs Jones issue, I would agrue that the phrase you use "keep your same business" in regards to going indy isn't anywhere near factual.  It's not the same business.   It might be some of the same clients and investments, but it's not the same business.  I think that the reason some guys go indy is because they want more control over things like payout, software, hiring/firing, compliance, etc.  When you work for a company like Jones, most of those things are out of your control.  Therefore you don't have to spend any time worrying about them.  Of course, you have no control over them either, so pick your poison. 
 
To answer the original post, I would say the INDUSTRY'S problem is keeping new FAs.  The washout rate is incredibly high.  Jones follows right along with that. 

B24's picture
B24
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Joined: 2008-07-08

chief123 wrote:Hanging on to veterans... There is a general assumption that a large percentage of new FA's won't make it, and that is industry wide. But Jones does a terrible job of hanging on to their veterans (most go independent or bank route) because there is no incentive to stay. You can say LP, but most never get it, so why not go indy increase your payout, keep your same business and not have to attend the endless meetings jones continues to have..
 
Not sure where you get your facts.  I am not an ardant Jones defender on everything, but this is just sort of an ignorant and uninformed post. 
 
Like Spiff, I am not going to argue the merits of indy, as it is totally different than being a captive advisor at any of the firms.
 
I don't think LP should be a big consideration as far as being with Jones (unless you have already bought a lot of it), even though the returns are damn good and the guarantee is better than anything you can get elsewhere for a fixed-income investment (7.5% GTD, and it has averaged about 27% over the past 25 years and 20.7% over the past 8 years).  It's lowest return ever was 15% in 1988.  And the best part is that you buy it with only 25% down.  The tough part is being offered enough to make it meaningful.
 
Anyway, stupid post Chief.

Squash's picture
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Joined: 2008-08-08

I am going to back Chief123 on this one. Put aside the fact that the post kind of rambles, the initial question of this topic was "Is Jones' problem new FA's making it or hanging on to veterans? " So the idea was to choose one or the other, not make an argument for neither.

So spiff and b24, I understand you points, however take a side.... The post could have been for any firm, but as a former EDJer I have more insight into this one..

noggin's picture
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Joined: 2004-11-30

I have to say ALL firms have those struggles not just Jones. Factor the fact that Jones increases it's sales force from hiring new brokers rather than acquiring a firm to grow in your answer. Certainly this market will lessen all brokers working in the industry.

B24's picture
B24
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Joined: 2008-07-08

Good point Noggin.  Jones, by and large, mostly hires newbies rather than transfer brokers (usually the xfer brokers are rather new to the industry since they don't pay much upfront, other than transition packages and some performance bonuses for transfers).
 
But Squash, you were right.  Jones' issue is more with hanging on to newbies than veterans. 
 
This raises a question (sort of side-topic) - it seems the past several years, and this weird consolidation phase aside, that msot of the big firms are just swapping producers at this point.  From what I see, most of the big firms aren't really growing organically in aggregate - they are just fighting for each other's producers.  Does it seem that any one firm is holding onto more producers than the others?  I am really talking Morgan, Merrill, SB, Wach/WF/AGE, and UBS.
 
I am trying to figure out long-term if Jones' strategy of organic growth will work or not.  I certainly know they will not grow by acquisition or buying producers.  And they have grown nearly every year for the past 12 years (though their growth slowed dramatically from '02-'05).  They are working very hard to find ways of making their newbies stick, primarily through Goodknight and Partnership plans.  Turnover at the newbie level is so expensive (due to recruiting, training, salary, travel, etc., with no production), that despite what people say, they NEED newbies to stick.  They hire thousands of people per year, and only several hundred to a thousand stick each year.  If they could increase their capture ratio, their costs would be reduced dramatically.

Squash's picture
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Joined: 2008-08-08

I don't think any firm has the upper hand in retaining producers. I think some of the upfront money and backend bonuses make it appear that they are, but in reality it is just temporary, because as soon as they lock a producer up for X years, another one just got done with his contract and leaves for another payout/culturechange/etc..

I think one problem that Jones has and it has nothing to do with the brokers themselves is, the multitude of offices that start to surround a community. When I was back at Jones, there was this idea floated that Jones wanted an 1 office for every 5,000 people in a community. Not households, but people...
Lots of good brokers at Jones, lots of bad ones, some ok ones... just like every other firm.. I think they struggle with paying people to train, training them(travel,equipment,education) and then they leave right after to go somewhere else... making them a training ground for every other firm,bank,fund company, etc...My class start with over 250 and by the end there were 45 of us... that is over 205 with series 7 and 66, who are trained and free to go to any firm...

B24's picture
B24
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Joined: 2008-07-08

Squash, I think that's fairly accurate.  But they use several factors in considering lcoations - age 55+ population, liquid net investable assets in the market (I think they want 500mm-750mm per branch), median income, median home values, etc.  I think it's pretty scientific.  But keep in mind, outside the highly concentrated areas (St. Louis, Texas, etc.), there are so many available areas, and most people don't just have clients in their specific location - so it's not as if you are limited.  My "market" has tehcnically like 13,000 residents.  But my county, which is very accessible to me, has more like 250,000 (about 100,000 households).  Jones has less than 1% market share for most of my county (0.6%).  Out of about $40B in LNIA, we have like $240mm.  But we only have 7 FA's in my county - only one which has more than 10 years in the business.  So there is MORE than enough business to be had.  Most of the wirehouse veterans in this area have been around 20-30 years.  EACH wirehouse has more FA's in their offices than we have in total in the region.
 
But as you said, the training expense is huge.  But this seems to happen everywhere.  And most newbies at Jones leave prior to getting their office open anyway. 

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