Arbitration and The Green Machine

215 replies [Last post]
munytalks's picture
Offline
Joined: 2006-04-17

Having just gone through the Arbitration Process with Edward Jones, I wanted to share some of the highlights.
 
First, the Arbitration Panel- which in my case consisted of Three Attorneys, was a very comfortable and beneficial process.
 
At one point , the Panelists were asking questions about Edward Jones' infrastructure.
After the GP representing EDJ explained it- several times- the head Arbitrator said "Let me see if I understand correctly.... an Edward Jones broker is required to work really hard to build their own book of business to a level of profitablility  in order to get an offering of Limited Partnership, then must do EXTRA VOLUNTEER work for the firm in order to  MAYBE get an additional offering and then they end up OWING the firm money for their efforts? This has gone on for HOW long?"
 
 

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

                                   
 
                                                                     

Broker24's picture
Offline
Joined: 2006-10-12

munytalks wrote: Having just gone through the Arbitration Process with Edward Jones, I wanted to share some of the highlights.
 
First, the Arbitration Panel- which in my case consisted of Three Attorneys, was a very comfortable and beneficial process.
 
At one point , the Panelists were asking questions about Edward Jones' infrastructure.
After the GP representing EDJ explained it- several times- the head Arbitrator said "Let me see if I understand correctly.... an Edward Jones broker is required to work really hard to build their own book of business to a level of profitablility  in order to get an offering of Limited Partnership, then must do EXTRA VOLUNTEER work for the firm in order to  MAYBE get an additional offering and then they end up OWING the firm money for their efforts? This has gone on for HOW long?"
 
 

It works for us.

Philo Kvetch's picture
Offline
Joined: 2005-05-17

And that's why real brokers are so bemused by it all.

Indy4Life's picture
Offline
Joined: 2006-02-04

As an ex-Jonser that is one of the best ways I've seen it put.  Short and sweet, and true.  The LP is really oversold.  Right before I resigned I was offered about $30,000 of LP and everyone thought I was so lucky.  After all, the average return has been something like 18% per year.  Then I thought about outside of the kool-aid jar:  hmmm... I have to BUY this with money I could be using to invest somewhere else.  If I could average 10% in a good mutual fund over the long haul than really it is only a 8% number (yes I know you can borrow for the LP but there is an interest rate).  So on $30,000, that equates to $2,400 per year in extra income for me.  I was grossing about $400,000 when I left so this equates to about 0.5% of my gross and about 1.5% of my net.  Since going indy, my net net effective payout has gone from about 40% to almost 60%, or about $80,000 raise.  Hmm.... $2,400 or $80,000. 
Any EDJ IR that is doing over $250k gross should go Indy...ANYWAY you cut the numbers you are better off... not to mention you have the ability to use appropriate platforms to run your clients money, own your practice, can hire FA's under you, etc....

doubleb's picture
Offline
Joined: 2005-05-28

A few questions for Indy4 life.  How long ago did you make the move? How long before you changed the way you did business (fee based)? Have you hired fa's under you and if so could you elaborate ?   Thanks.

henryhill's picture
Offline
Joined: 2007-08-23

I am curious about the arbitration process.  Can you go over what got you there?  Did EDJ properly represent you?  How scared were you?  Did you hire your own attorney?

doubleb's picture
Offline
Joined: 2005-05-28

I've had one in my career. Jones did send a lawyer down to represent the firm. The fa is not named in the suit. That makes it more likely that the firm will settle. We went before one judge. You had their 2 lawyers, the plaintiff and the "expert" on one side of the table. My lawyer and I on the other side. It was unpleasant day and a half. But, their case was ridiculous and in the closing argument their lawyer was pleading with the judge not to make the plaintiff pay for our expenses. We won and the firm didn't have to pay out a dime But, it shows that none of us are immune to this especially in a bad market. The case stemmed from the client losing 7.5% in 2000. Jones paid for everything and handled it well.doubleb

doberman's picture
Offline
Joined: 2005-02-22

doubleb wrote:... The case stemmed from the client losing 7.5% in 2000. Jones paid for everything and handled it well.doubleb
 
Geesh, all this over a 7.5% loss? 
 
I hope this ex-client spent 20% of his portfolio just bringing the suit! 
 
What a low-life!

Incredible Hulk's picture
Offline
Joined: 2006-03-24

"Real Brokers?" What is it that makes you a real broker but not I??
Is it the catchy name Philo Kvetch?

As for the LP - let's take a $10M position purchased for $2500, the rest leveraged. That $10M LP paid out $2200 before interest this year. That's rougly a 70% return after interest. Explain how that's bad?

Hmmm... I've been sucked in again.

I'm going back into hiding.

Roadhard's picture
Offline
Joined: 2007-02-23

Philo Kvetch chum the waters and caught a Hulk...How about just keeping 90% upfront to start with? 

Incredible Hulk's picture
Offline
Joined: 2006-03-24

Show me an indy that has an office and an assistant that nets 90% and I'll consider moving... Working out of your mom's basement with her taking your calls doesn't count.

Broker24's picture
Offline
Joined: 2006-10-12

Roadhard wrote: Philo Kvetch chum the waters and caught a Hulk...How about just keeping 90% upfront to start with? 

I tell you, if I had the energy or desire to set the whole thing up, move my clients, worry about all that other stuff, I would go indy. I'm just too lazy with all that. I think that's why I like Jones. I KNOW I could net more, even after expenses. I think I have to get to a level where I can hire someone to do it for me and not worry if some of my clients don't come over. Maybe when my kids are older and I have more free time...

now_indy's picture
Offline
Joined: 2006-07-28

With LPL, my net is about 60% after ALL Expenses (that includes $1000/month for health insurance). I was lucky to net over 35% at Jones after they had deducted office expenses, health insurance, half phone/postage, etc.  I work in a very nice office, and share my rent with a number of other LPL reps, so that helps.
 
And, now I own my business. 
 
And, I don't have to deal with a regional leader asking why I had a bad month.
 
And, I don't have to pretend to recruit for Jones.
 
And, instead of 5 insurance companies, I can now work with over 20. 
 
And, I can offer the client multiple ways to pay for their variable annuity or mutual funds.
 
And, you get the idea.

Broker7's picture
Offline
Joined: 2007-02-23

all of the above..plus 65%net for me!

Dark Knight's picture
Offline
Joined: 2008-01-30

And now I can sell my business when I retire.
And now I can have outside business activities.  (This can be bigger than you realize.)
Those div trips were a lot of fun though.

troll's picture
Offline
Joined: 2004-11-29
Philo Kvetch's picture
Offline
Joined: 2005-05-17

Incredible Hulk wrote: "Real Brokers?" What is it that makes you a real broker but not I??
Is it the catchy name Philo Kvetch?

As for the LP - let's take a $10M position purchased for $2500, the rest leveraged. That $10M LP paid out $2200 before interest this year. That's rougly a 70% return after interest. Explain how that's bad?

Hmmm... I've been sucked in again.

I'm going back into hiding.

Since you're counting outside investments in your compensation, my Berkshire Hathaway holdings have consistently blown your LP out of the water...and the only limit on how much I can own is how much I can afford.

Philo Kvetch's picture
Offline
Joined: 2005-05-17

Incredible Hulk wrote: Show me an indy that has an office and an assistant that nets 90% and I'll consider moving... Working out of your mom's basement with her taking your calls doesn't count.

Many indy shops, mine included, net far in excess of 90%. In point of fact, I netted in excess of 100% last year.

Why do you find it so difficult to comprehend?

Broker24's picture
Offline
Joined: 2006-10-12

I agree with all you guys.  Again, I am just too lazy or comfortable to move yet.  I think I am also not ready to be completely on my own yet (until I am at the point where I could build a team).  I have a great group of guys in my area, and we all get along great, help each other, etc.  I would not enjoy complete solitude as a solo.
I actually find it sort of humorous that all the EDJ guys try to convinve the Indy's that life is better than it is at Jones, and the Indy guys try to convince all the EDJ guys to leave for Indy.
 
Fact is, both channels have merit.  It also depends what stage you are at.  But I still find it funny the way everyone swings their %^#'s around about it.

Philo Kvetch's picture
Offline
Joined: 2005-05-17

Broker24 wrote: I agree with all you guys.  Again, I am just too lazy or comfortable to move yet.  I think I am also not ready to be completely on my own yet (until I am at the point where I could build a team).  I have a great group of guys in my area, and we all get along great, help each other, etc.  I would not enjoy complete solitude as a solo.
I actually find it sort of humorous that all the EDJ guys try to convinve the Indy's that life is better than it is at Jones, and the Indy guys try to convince all the EDJ guys to leave for Indy.
 
Fact is, both channels have merit.  It also depends what stage you are at.  But I still find it funny the way everyone swings their %^#'s around about it.

Quite right, B24. I've said it before, and I'll say it again: If you're happy where you are, then I'm happy for you.

Incredible Hulk's picture
Offline
Joined: 2006-03-24

Philo Kvetch wrote:

Quite right, B24. I've said it before, and I'll say it again: If you're happy where you are, then I'm happy for you.

Really? Because what I read was:

Philo Kvetch wrote: And that's why real brokers are so bemused by it all.

Were you also for the war before you were against it?

Philo Kvetch's picture
Offline
Joined: 2005-05-17

Not to rain on your parade my diminutive green friend, but the statements are not contradictory.
 
I can, for example, be amused watching a cat play with a string and be happy for the animal's pleasure.  That does not, however, make the cat my equal.

troll's picture
Offline
Joined: 2004-11-29
Indyone's picture
Offline
Joined: 2005-05-30

Philo Kvetch wrote:I can, for example, be amused watching a cat play with a string and be happy for the animal's pleasure.  That does not, however, make the cat my equal.
 

 

Broker24's picture
Offline
Joined: 2006-10-12

Philo Kvetch wrote: Not to rain on your parade my diminutive green friend, but the statements are not contradictory.
 
I can, for example, be amused watching a cat play with a string and be happy for the animal's pleasure.  That does not, however, make the cat my equal.

Hey, what are you trying to say??

troll's picture
Offline
Joined: 2004-11-29

 

Maxstud's picture
Offline
Joined: 2005-12-29

Broker24 wrote: Philo Kvetch wrote: Not to rain on your parade my diminutive green friend, but the statements are not contradictory.
 
I can, for example, be amused watching a cat play with a string and be happy for the animal's pleasure.  That does not, however, make the cat my equal.

Hey, what are you trying to say?? He's saying that the string is his equal and he hopes to be a cat someday.

Cowboy93's picture
Offline
Joined: 2005-05-10

He is saying the string is being screwed by the GPs and the cat doesn't do enough fee-base business.

Indy4Life's picture
Offline
Joined: 2006-02-04

Doubleb:  to elaborate, I made the move about 3 years ago.  Since that time all new business has been fee-based except for the occasional VA ticket.  I've been converting old EDJ clients into fee-based where appropriate but it is not always.  So my book is about 50% fee-based advisory accounts, 25% C-shares and VA's, and the rest in old A-shares (primarily american funds buy-and-hold portfolios).  But it is wonderful to have the choice and recommend what makes the most sense for the client and to be able to use all the great no-load funds out there.  I don't have any FA's under me yet but only because I have not found the right guy.  I'm not really actively looking yet either but plan to this year.

Incredible Hulk's picture
Offline
Joined: 2006-03-24

Philo - touche

Broker24's picture
Offline
Joined: 2006-10-12

Cowboy93 wrote: He is saying the string is being screwed by the GPs and the cat doesn't do enough fee-base business.

      

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

Philo Kvetch wrote: Incredible Hulk wrote: "Real Brokers?" What is it that makes you a real broker but not I?? Is it the catchy name Philo Kvetch? As for the LP - let's take a $10M position purchased for $2500, the rest leveraged. That $10M LP paid out $2200 before interest this year. That's rougly a 70% return after interest. Explain how that's bad? Hmmm... I've been sucked in again. I'm going back into hiding. Since you're counting outside investments in your compensation, my Berkshire Hathaway holdings have consistently blown your LP out of the water...and the only limit on how much I can own is how much I can afford.
 
Philo, I hate to be the one to rain on your parade, but just running a quick hypo on your BRK B for the last 10 years tells me that you have averaged about 10.5%, where the Jones LP has averaged 22.5%.  Let's say we both started with $10,000 in our investments.  If I would have just simply taken the interest and stuck it in my sock drawer (no additional interest) I would have $32,500 today.  You'd have $27,000.  That's without earning a single penny in additional interest on that LP return.  I'm GUARANTEED 7.5% every year.  Is Warren going to do that for you?  Ted Jones did it for us.        

Philo Kvetch's picture
Offline
Joined: 2005-05-17

Spiff;

1) I'm not talking about BRK.B

2) I suggest you re-check your numbers.

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

OK.  I ran the same thing on BRK A.  Same results. 

Broker24's picture
Offline
Joined: 2006-10-12

Philo Kvetch wrote:Spiff; 1) I'm not talking about BRK.B 2) I suggest you re-check your numbers.
 
Philo, I checked BRKA and B.  Both of the numbers Spiff listed are correct.  On the other hand, this is exactly 10 years.  Depending on your actual holding period, it could be more or less.  For example, a 20 year holding period on BRKA would have returned 21%, which is almost as good as EDJ partnership (not reinvesting dividends).  And you may have used 50% margin, which improves the return.  But then we would have used 75% margin, so, moot point.  And with our margin, our interest checks pay back the loans.  We don't have to sell shares or use cash to pay it back.  Bottom line, EDJ LP is a pretty good deal if you can get enough to matter.  Anyone that can get a guaranteed 7.5% return and use 75% margin to buy in has a pretty sweet deal.  The only problem you run into with LP is the tax affect.  This is probably what you are referring to.  Since it is ordinary income, it can really chew through returns.  That is my biggest beef with LP.  Then again, most guys (and gals ) are using this as a retirement annuity, so they just have to deal with making 20%+ in taxable income.  But if you are in the 38% tax bracket (combined), that's really only like 12.5% after taxes.  So I am guessing that the tax issue is where your argument comes in?  Valid point.

doneWjones's picture
Offline
Joined: 2006-12-17

Broker24 wrote:Philo Kvetch wrote:Spiff; 1) I'm not talking about BRK.B 2) I suggest you re-check your numbers.
 
Philo, I checked BRKA and B.  Both of the numbers Spiff listed are correct.  On the other hand, this is exactly 10 years.  Depending on your actual holding period, it could be more or less.  For example, a 20 year holding period on BRKA would have returned 21%, which is almost as good as EDJ partnership (not reinvesting dividends).  And you may have used 50% margin, which improves the return.  But then we would have used 75% margin, so, moot point.  And with our margin, our interest checks pay back the loans.  We don't have to sell shares or use cash to pay it back.  Bottom line, EDJ LP is a pretty good deal if you can get enough to matter.  Anyone that can get a guaranteed 7.5% return and use 75% margin to buy in has a pretty sweet deal.  The only problem you run into with LP is the tax affect.  This is probably what you are referring to.  Since it is ordinary income, it can really chew through returns.  That is my biggest beef with LP.  Then again, most guys (and gals ) are using this as a retirement annuity, so they just have to deal with making 20%+ in taxable income.  But if you are in the 38% tax bracket (combined), that's really only like 12.5% after taxes.  So I am guessing that the tax issue is where your argument comes in?  Valid point.
".......if you can get enough to matter."
 
Here in lies the problem....   most jonesers fight over the peanuts and are lucky if they even get any LP to begin with.  I have a friend at jones that always says how great that LP is and all, but the problem is that his Seg 4 arse has exactly zero, squat, zilch, notta of it. He has been with jones for over 7 years and in a leadership position in the region for about 5 years.  for 90% of the Jones reps, LP is nothing more than a carrot and stick.... wanna play??.... anybody want to lead the saturday morning newbie meetings??.... Their is LP in it for you... maybe... at some point... just a little more "volunteer" work fellas.... it is right here..... come and get it!!!
 
Anyway, you guys can have fun with that.

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

You've got a valid point.  The difference between a lot of company stock plans and Jones LP is that most company stock is available whenever you want it.  Not so with the LP.  Your friend is caught in that awkward bubble where he probably was brand new when the first round of LP came out about 6 years ago.  Not profitable enough when it came out this last time.  But he should get it when it comes out again in a couple of years.  A buddy of mine similar to your friend was passed over a few years ago because of profitability, but got a good offer the last time around.  He doesn't do much in the way of volunteering, but they offered him $35,000 worth mostly on his profitability.  Once you get offerings in the field they are typically substantial.  It's not a perfect investment, but you can't argue that it's not a good one.

munytalks's picture
Offline
Joined: 2006-04-17

FOOD FOR THOUGHT:

If I own $30,000 worth of BRK B or any other stock for that matter, I have paid for it and can sell any day the market is open. If I die, my heirs can keep it or sell with a step-up in cost basis. 

If I am 'offered' $30,000 worth of EDJ LP- it is a DEBT. I OWE Edward Jones $30,000.
I cannot sell it anytime I want- nor can my heirs keep it or sell it. 
AND think about this:  If I am 'offered' $30,000 worth of LP and Jones goes belly up- I will still have to PAY the $30,000 to the General Partners-  General Partners have EQUITY Partnership in the firm. Limited Partnership is a DEBT TO THE FIRM. You DON'T OWN IT.
I would still OWE the General Partners AND I wouldn't have a job anymore.
 
 
 

footsoldier's picture
Offline
Joined: 2006-04-30

Munytalks tells the real story of LP. LP is intended to make you FEEL special. And screw you in the end. The essence of the Jones culture.
It really is a shell game. And LP is the biggest shell in the Jones system. Spiff, noggin, B24 and any other Jones rep on this forum should really think long and hard before they try to defend management. Maybe all firms are like this, but I doubt it.

munytalks's picture
Offline
Joined: 2006-04-17

And to put the 'Frosting' on this-  in order to be 'offered' DEBT to the Firm you must FIRST work extremely hard to build your business to a level of PROFITABILITY to the EQUITY OWNERS (GP's) of the Firm- THEN VOLUNTEER More of your time- away from your family- in order to be given a LARGER DEBT to the EQUITY OWNERS of the firm.
 
Say what you want- but this is really how it is.
In any other Publicly Traded Firm, you are GIVEN Stock and Stock Options.

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

I don't think that is correct. 
If I was offered $30,000 of LP as an FA I would have to come up with $7500 upfront.  The rest is a loan made through US Bank, not the GPs.  The interest earned goes to pay off the loan.  Just like if you bought a house, but carried a mortgage, if you sold the house you would keep the difference between the current loan payoff and the value of the home.  If I sell my LP, I keep what I have already paid off.  I CAN sell it any any time.   Once it is completely paid for (like mine will be in the next 3 months) I don't owe Jones anything.  In fact, they owe me 7.5% interest guaranteed for the rest of my life. 
 
If Jones goes belly up, there would be no more LP to pay for.  Therefore, the loan would go away.  If the firm owed anyone anything that couldn't be covered by cash on hand, the GPs would have to come up with the rest.  As an LP, I don't owe them anything and I don't have to dig into my own pocket should the firm need the extra cash.  Sure, I lose my investment, but the same thing would have happened to me if BRK went bankrupt. 
 
When I die, my family can't keep the LP, but they do get a check for the money I have invested.  If I leave Jones, I cash out my LP and take a check to the bank.  If I retire from Jones, I get to keep the LP as long as I live.
 
It is not a stock investment.  Nobody has ever said it was.  It's what we have.  It works for us.  The good thing about it is that if you don't work for Jones,  you don't really need to concern yourself with it.     

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

footsoldier wrote:
Munytalks tells the real story of LP. LP is intended to make you FEEL special. And screw you in the end. The essence of the Jones culture.
It really is a shell game. And LP is the biggest shell in the Jones system. Spiff, noggin, B24 and any other Jones rep on this forum should really think long and hard before they try to defend management. Maybe all firms are like this, but I doubt it.
 
What part screws you in the end? I guess I'm gonna feel really screwed in the next few months when I start gettting that check deposited into my Jones account every month.  Man, I hate it when that happens.  They are soooo screwing me.

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

munytalks wrote:And to put the 'Frosting' on this-  in order to be 'offered' DEBT to the Firm you must FIRST work extremely hard to build your business to a level of PROFITABILITY to the EQUITY OWNERS (GP's) of the Firm- THEN VOLUNTEER More of your time- away from your family- in order to be given a LARGER DEBT to the EQUITY OWNERS of the firm.
 
Say what you want- but this is really how it is.
In any other Publicly Traded Firm, you are GIVEN Stock and Stock Options.

 
No, you aren't.  Most clients that I've worked with have to work their fingers to the bone to get any really meaningful stock options.  They travel, work long hours away from their families, work while they are at home, stress about everything, and are basically owned by the company.  And they don't get to say no.  If you don't say how high when management says jump, you're out of luck.  They'll just go on to the next guy who is willing to play the game. 
 
The volunteerism at Jones typically gets worked into your normal schedule.  Unless  you are the Seg 1 support specialist who runs the monthly New FA meetings in the evenings.  All the other meetings that I go to are during the day.  You just learn to work your biz around it.  You have to work really hard to get your biz up and running anyway.  So, that's really a moot point. 
 
You've got this debt to the firm issue all wrong.  If you don't know what you are talking about you should really stop.  

munytalks's picture
Offline
Joined: 2006-04-17

Mr. Spiff,
I think YOU are mis-informed.  You were 'offered' $30,000 LP?  You had to put up $7500- then took out a Bank Loan for the Balance?  Okay- where do you get the idea that if EDJ goes belly up your loan to US Bank 'goes away'?  Why would a Bank write off a personal loan for you?  Would your mortgage company make your house payment 'go away' if your house burnt down?

Edward Jones does not have the legal ability to dismiss any unpaid for L.P. offerings if the firm needed cash.
Do you know WHEN  and WHY LP is offered?  Do you know what FORMULA is used to determine HOW MUCH LP will be offered?  Start asking G.P.'s- see if you can find ONE who will explain it to you.
 
The fact is- LP is offered when there is a disparity between EQUITY Partnertship and DEBT Partnership.  And the $700 Million in the General Partnership fund is EQUITY to the G.P.'s .

munytalks's picture
Offline
Joined: 2006-04-17

RE: Stock and Stock Options-  Did you ever have any former employees of Chevron/ Wal-mart/ ATT/ Boeing / Exxon / Home Depot / Pfiser ?
I had many. The greeters at Wal-Mart are given Stock.  As for 'jumping' when managments say how high, were you describing your Regional Leader?

bspears's picture
Offline
Joined: 2006-11-08

I was reading info on Scientology last evening.  Sounds very very much like the Jones and LP setup.  Pay to play...odd isn't it.  Discredit the ones who leave...lie lie lie is preached...a cult...Muny..Your arguing with a sucked in drone...Weddle could call him and say.."Spiffy, I'm sorry, but we've been screwing you for years"..and Spiff..would just shrug it off and jump on the phone with his 20 year HSBC subprime bomb....la la la la ..I'm not listening....lalala

Ashland's picture
Offline
Joined: 2007-03-06

Wow... I could jump in this most inane conversation, but I have clients to call.

Broker24's picture
Offline
Joined: 2006-10-12

munytalks wrote:FOOD FOR THOUGHT:

If I own $30,000 worth of BRK B or any other stock for that matter, I have paid for it and can sell any day the market is open. If I die, my heirs can keep it or sell with a step-up in cost basis. 

If I am 'offered' $30,000 worth of EDJ LP- it is a DEBT. I OWE Edward Jones $30,000.
I cannot sell it anytime I want- nor can my heirs keep it or sell it. 
AND think about this:  If I am 'offered' $30,000 worth of LP and Jones goes belly up- I will still have to PAY the $30,000 to the General Partners-  General Partners have EQUITY Partnership in the firm. Limited Partnership is a DEBT TO THE FIRM. You DON'T OWN IT.
I would still OWE the General Partners AND I wouldn't have a job anymore.
 

 
All true (except that you have it turned around - it is really debt to the limited partner - it's like buying a high-yielding bond - Jones pays YOU back upon death, termination, etc.).  But I will take debt that guarantees 7.5%, which has averaged 25.5% over the past 30 years, for which I buy on 75% margin.  It's WORST return over the past 30 years is like 15% (in 1988).  Even in 2002 it returned 15.8%.  Again, it's not perfect, but it's certainly nothing to turn your nose up at.  I have never heard of one Jones advisor (other than the real tenured veterans) claim to stay or work for the firm simply because of the LP.  Personally, I don't even consider it part of my "compensation" package, as they like to market it.  I consider it an investment (that would be if, and when, I get some).  Now if you stay long enough and get enough of it, it's a pretty sweet pension.  If you look at the IRR on the 25% you put down, it's a real sweet deal for retirement.  I think some people over-emphasize how much some of us really value LP with Jones.  Besides, I'd rather take the higher payout of being indy than the LP ownership any day - that is if there were not other factors.

Broker24's picture
Offline
Joined: 2006-10-12

munytalks wrote:
Mr. Spiff,
I think YOU are mis-informed.  You were 'offered' $30,000 LP?  You had to put up $7500- then took out a Bank Loan for the Balance?  Okay- where do you get the idea that if EDJ goes belly up your loan to US Bank 'goes away'?  Why would a Bank write off a personal loan for you?  Would your mortgage company make your house payment 'go away' if your house burnt down?

Edward Jones does not have the legal ability to dismiss any unpaid for L.P. offerings if the firm needed cash.
Do you know WHEN  and WHY LP is offered?  Do you know what FORMULA is used to determine HOW MUCH LP will be offered?  Start asking G.P.'s- see if you can find ONE who will explain it to you.
 
The fact is- LP is offered when there is a disparity between EQUITY Partnertship and DEBT Partnership.  And the $700 Million in the General Partnership fund is EQUITY to the G.P.'s .

 
Muny, Jones would not "dismiss" the debt.  The LP would be returned to you, and you would use the proceeds to pay off the loan.  It's like when you sell your house.  The buyer pays you, and you pay off the mortgage.  And if Jones goes belly-up, the GP's are on the hook for the LP balances (not the "loan" balance).
 
Honestly guys, I don't think any of us are claiming that LP is anything more than it is.  It's a very, very  high yielding bond that we were able to buy on margin.

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

bspears wrote:I was reading info on Scientology last evening.  Sounds very very much like the Jones and LP setup.  Pay to play...odd isn't it.  Discredit the ones who leave...lie lie lie is preached...a cult...Muny..Your arguing with a sucked in drone...Weddle could call him and say.."Spiffy, I'm sorry, but we've been screwing you for years"..and Spiff..would just shrug it off and jump on the phone with his 20 year HSBC subprime bomb....la la la la ..I'm not listening....lalala
 
spears - welcome back.  Nice to hear from you again.  Isn't any investment pay to play?  Wouldn't I have to pay for $30,000 of BRK in order to play along with them?  It's an investment.  As long as it keeps paying me, I guess I will just keep shrugging it off. 
 
muny - upon further review, you bring up a good point.  I would assume if Jones went bankrupt that my LP would just dissolve.  Perhaps US Bank wouldn't like that.  I'll have to do some further digging to see what would happen to my loan if Jones went out of biz.  Not that I think it's going to happen.  I would imagine they would sell the company before they went bankrupt.  At which point, I'd get a payout on whatever the sales price was.
 
Funny, the only people I've ever heard of that have bad mouthed the LP are the people who don't have any.  Then it's usually sour grapes cause they wanted some and didn't get any.     

Please or Register to post comments.

Industry Newsletters
Investment Category Sponsor Links

 

Careers Category Sponsor Links

Sponsored Introduction Continue on to (or wait seconds) ×