The doublespeak never ends

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footsoldier's picture
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Question:
"In looking over the most recent revenue sharing disclosure, I noticed the total amount for Hartford was significantly higher than the other funds. Could you please explain the disparity?"
Answer:
"We provided a lot of input and assistance to Hartford when they entered the mutual fund business. In return we received a small percentage participation of the annual net income produced by its fund family. Before the end of 2005, we sold our profit participation back to Hartford for $70 million. At the time the arrangement was put in place, it seemed appropriate and acceptable. Reviewing it in the perspective of the regulatory events of the past few years, I believed the right thing to do was to end it. The sale of the profit participation resulted in the numbers you are referring to." 
These are direct quotes from the Jim Weddle weekly Q&A forum.  During my almost 10 years at Jones I never ever was told that the firm owned a piece of the Hartford Mutual Funds.
I think I need to retake my ethics class.

spikedkoolaid's picture
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C'mon Weddle,
Your response should've been...We owned part of Hartford, Doug 3mil Hill negotiated the contract...and because of the current regulatory environment we decided that owning a mutual fund company went against our upstanding ethics and therefore we ended the contract...blah,blah,blah

troll's picture
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footsoldier wrote:Question:
"In looking over the most recent revenue sharing disclosure, I noticed the total amount for Hartford was significantly higher than the other funds. Could you please explain the disparity?"
Answer:
"We provided a lot of input and assistance to Hartford when they entered the mutual fund business. In return we received a small percentage participation of the annual net income produced by its fund family. Before the end of 2005, we sold our profit participation back to Hartford for $70 million. At the time the arrangement was put in place, it seemed appropriate and acceptable. Reviewing it in the perspective of the regulatory events of the past few years, I believed the right thing to do was to end it. The sale of the profit participation resulted in the numbers you are referring to." 
These are direct quotes from the Jim Weddle weekly Q&A forum.  During my almost 10 years at Jones I never ever was told that the firm owned a piece of the Hartford Mutual Funds.
I think I need to retake my ethics class. Well technically they didn't own a piece of Hartford funds, they merely owned "profit participation".....

Philo Kvetch's picture
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footsoldier wrote:
Question:
"In looking over the most recent revenue sharing disclosure, I noticed the total amount for Hartford was significantly higher than the other funds. Could you please explain the disparity?"
Answer:
"We provided a lot of input and assistance to Hartford when they entered the mutual fund business. In return we received a small percentage participation of the annual net income produced by its fund family. Before the end of 2005, we sold our profit participation back to Hartford for $70 million. At the time the arrangement was put in place, it seemed appropriate and acceptable. Reviewing it in the perspective of the regulatory events of the past few years, I believed the right thing to do was to end it. The sale of the profit participation resulted in the numbers you are referring to." 
These are direct quotes from the Jim Weddle weekly Q&A forum.  During my almost 10 years at Jones I never ever was told that the firm owned a piece of the Hartford Mutual Funds.
I think I need to retake my ethics class.

Footsoldier, it seems clear to me that you're not the one at Edward Jones that needs to revisit the ethics class.  Not at all.

footsoldier's picture
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Joined: 2006-04-30

Joe-
Technically speaking, Hartford Mutual Funds paid for EDJ's expertise (i.e. 10,000 reps). For that they received a profit participation income stream for 10 years. And a 70M payout to avoid further scandal. And of course none of it was distributed  with the reps. Only the owners (GP's).
The only question I have is:
If the reps are the only profit center, how did we get passed by?

Devoted SA's picture
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footsoldier wrote:
Joe-
Technically speaking, Hartford Mutual Funds paid for EDJ's expertise (i.e. 10,000 reps). For that they received a profit participation income stream for 10 years. And a 70M payout to avoid further scandal. And of course none of it was distributed  with the reps. Only the owners (GP's).
The only question I have is:
If the reps are the only profit center, how did we get passed by?

Profit center....not Profit recipient.

Soothsayer's picture
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Too bad the GPs don't have to disclose their "outside interests."  BTW, what in the hell is Doug Hill doing these days to justify his multi-million dollar paycheck?  And, if you had his or Bachmann's paychecks, and either one of those sets of teeth, wouldn't you have some work done?

footsoldier's picture
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Sooth-
Interesting point you bring up, but the beauty of being privately held is less open communication. They are only beholden to themselves. I actually am aware of at least one instance where an IR who "got it" and did all the mentoring bs, got offered a piece of a parntership in the Jones companies (not EDJ partnership). So privacy does have its perks.
Just sucks for the front line people, aka footsoldiers. Before NASD has a chance to respond with the usual diatribe, I know my options, thank you.

footsoldier's picture
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Just for the record, this weeks Q & A Weddle again refers to the IR as the only profit center.
How does one somehow continue to bury their heads in the sand and think everything is hunky-dory. They believe the crap they are telling us. To me that is what is truly baffling. It is no wonder Jones IR's are referred to koolaid drinkers.
Another example of the hyperbole;
Limited partners are owners in the company. They pay for the opportunity to receive a income payout for as long as they own their partnership. They do not participate in any fashion in the equity side of the equation. So if they invest 50K they (or heirs)will at some point get the 50K back. Imagine putting 30 years in with Jones (accumulating 3-400K in partnership) and as the company grows, the only component that grows is the income. A bond in drag is how it has been characterized on this forum. The income has been consistenly very high (with a guarantee of 7.5%) so it certainly is not the worst opportunity out there, but once again this is proof that the real winners in this equation is the GP's.
And Weddle continues the mis-information campaign.

The Truth's picture
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Are you still working there? If so, then I guess I have to ask why?

footsoldier's picture
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Truth-
The best laid plans are done without emotion. If you have read Fragrasso's book, the answer to your question is simple. On my schedule not theirs. I am meeting their numbers while the details are being ironed out. And when it happens they won't have a chance.

Indyone's picture
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Great answer, footsoldier.  It's a game that you play to win, and complete surprise is your best friend.
If you're planning to jump to independence, that Fragasso book is gold...

GoodTimes's picture
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You know one of the DISADVANTAGES with being a privately held
company is that employees with a vested interest have no idea what is
going on within the company. I worked in the home office for a while and
scooped several GPs and every LP out there as to what was going on in St.
Louis. I am not saying that the typical associate or IR (or even above
average one) could read a 10K, but the fact that Edward Jones does not
have
to release the same minimal information public companies have to report
should make everyone there a little leary. Maybe you like the excitement
of reading about it in the WSJ?

Please pardon any grammatical or spelling errors.

NASD Newbie's picture
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GoodTimes wrote:You know one of the DISADVANTAGES with being a privately held company is that employees with a vested interest have no idea what is going on within the company. I worked in the home office for a while and scooped several GPs and every LP out there as to what was going on in St. Louis. I am not saying that the typical associate or IR (or even above average one) could read a 10K, but the fact that Edward Jones does not have to release the same minimal information public companies have to report should make everyone there a little leary. Maybe you like the excitement of reading about it in the WSJ? Please pardon any grammatical or spelling errors.
What would be an example of something you knew about that all of the LPs and most of the GPs did not know about because you worked at the Home Office?
 

footsoldier's picture
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NASD-
How about this one. Jones Financial Companies owns another brokerage firm called Conestoga Securities. I could not find out what they do. Just the key GP's are the principals. I doubt the majority of GP's have any clue.
The GP's own many companies with Jones Financial (EDJ is just one). General agencies for insurance as well. The 10K is very interesting reading. I am sure all companies do this, don't they? NASD give us the truth. Tell us Jones is no different that most.

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footsoldier wrote:
NASD-
How about this one. Jones Financial Companies owns another brokerage firm called Conestoga Securities. I could not find out what they do. Just the key GP's are the principals. I doubt the majority of GP's have any clue.
The GP's own many companies with Jones Financial (EDJ is just one). General agencies for insurance as well. The 10K is very interesting reading. I am sure all companies do this, don't they? NASD give us the truth. Tell us Jones is no different that most.

Why do you conclude that Conestoga Securities is a brokerage firm--it is not a member of the NASD, so that would tend to mean it is not a securities firm.
It is possibly a broker/dealer shell with the name registered.  It could be that at some point there was a plan to roll Edward D Jones into Conestoga, but the decision was made to just drop the D from the name instead of doing a complete name change.
How does the existence of a shell affect those who work for the company?
Why is it necessary for a rep working in Missoula, MT to be aware of things that may or may not ever be implemented.
If there were no planning being done you morons would be screaming about how they never plan ahead--chronic bitching always indicates a grasping at reasons to justify your own failure.

footsoldier's picture
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NASD-
Read the 10k. Just for the record Conestoga Securities according to the Missouri Secretary of State has been in existence for quite a while. Doug Hill was President until he resigned. I don't know if Bachman was President prior. Shell it isn't. They are making serious dough behind the scenes.
Regarding your question why would it affect those who work for the company. The montra shoved down the IR's throats constatntly is that there is only one profit center. Then the 10K shows 88 million in other revenue. It just doesn't make sense. And that's the way they want it.

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footsoldier wrote:
NASD-
Read the 10k. Just for the record Conestoga Securities according to the Missouri Secretary of State has been in existence for quite a while. Doug Hill was President until he resigned. I don't know if Bachman was President prior. Shell it isn't. They are making serious dough behind the scenes.
Regarding your question why would it affect those who work for the company. The montra shoved down the IR's throats constatntly is that there is only one profit center. Then the 10K shows 88 million in other revenue. It just doesn't make sense. And that's the way they want it.

In order to conduct a securities business in the United States a broker/dealer must be registered with the SEC and while joining the NASD is voluntary it is virtually impossible to operate if the firm does not belong.
What 10-K shows 88 million in other revenue?  What is the source of the other revenue?

footsoldier's picture
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NASD-
Checkout the SEC website and its under Jones Financial Companies. It takes a little digging but you can find it. I have said it before, its the grocery store model in the financial services industry. They have back door deals galore and I am of the belief that all the shell companies are in place for the payments to flow outside of EDJ.
So when Weddle does the doublespeak dance about only one profit center, he is neglecting the other side of the business where the partners profit. If memory serves, it was more net revenue than EDJ brought in last year.

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footsoldier wrote:
NASD-
Checkout the SEC website and its under Jones Financial Companies. It takes a little digging but you can find it. I have said it before, its the grocery store model in the financial services industry. They have back door deals galore and I am of the belief that all the shell companies are in place for the payments to flow outside of EDJ.
So when Weddle does the doublespeak dance about only one profit center, he is neglecting the other side of the business where the partners profit. If memory serves, it was more net revenue than EDJ brought in last year.

So what are you complaining about?  If the partners are making money doing other things how does it affect you?

Philo Kvetch's picture
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NASD Newbie wrote:footsoldier wrote:
NASD-
Checkout the SEC website and its under Jones Financial Companies. It takes a little digging but you can find it. I have said it before, its the grocery store model in the financial services industry. They have back door deals galore and I am of the belief that all the shell companies are in place for the payments to flow outside of EDJ.
So when Weddle does the doublespeak dance about only one profit center, he is neglecting the other side of the business where the partners profit. If memory serves, it was more net revenue than EDJ brought in last year.

So what are you complaining about?  If the partners are making money doing other things how does it affect you?

C'mon now, lightweight.  Make us believe that you're not THAT stupid.

Philo Kvetch's picture
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What's wrong, Newbie?  Can't rise to the challenge?
(Honestly, I never thought you could.)

Spaceman Spiff's picture
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Foot, So let me get this straight.  You're pissed because someone who works for a company (Jones),  rises to a management position (GP), and makes a large personal ownership position in that company (Partnership) is making money?  If you owned 1% of the Jones Financial Companies, LLP wouldn't you make a lot of money too? 
I read the 10K last night.   The $88 mil of other revenue you started this train of thought with is an anomoly.  If you read far enough and looked close enough at the historic data you can see that there is normally less than $25 million in other revenue not accounted for by normal business activities.  This year however Jones Financial Companies sold about $75 Mil in Hartford stock.  Fully disclosed to you as an IR and (maybe) as an LP.  Take that out of the equation as an anomoly and you're down to $13 mil in other revenue. 
Now, are the GP's making money from other business ventures?  Probably.  One of them is making a bunch because his wife's company frames and sells all the pictures we have in our offices.  I know Dan and Sheila.  Nice people.  Both good business owners.  Good for them. 
I think if you look closely at that 10K you'll find that for the most part, when Weddle says we as IRs are the only profit centers it is 95% true.  If you're pissed about the other 5% then you have issues.
   

footsoldier's picture
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Space-
First we were never were we told of the relationship/conflict with Hartford.
Secondly, the only issue I have is telling the truth. We all know that Jones gives us a haircut on annuities and keeps it for themselves and now we know how, they sell it to EDJ or they are the general agent keeping the override. I could care less if the GP's are making money elsewhere, just don't insult my intelligence with misinformation.
You can't deny that its happening, can you?

Spaceman Spiff's picture
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Foot -
You are correct, we were never told of the relationship with Hartford.  I'l give you that.  In hindsight they should have put it out there.  But I believe that's why they dumped it. 
I still don't think it's a conspiracy to make the GPs a ton on money and hide it from the rest of us. 
I've also accepted the fact that as long as I continue to work for Jones, they are going to give me a haircut on some of the biz I do.  I also know there are some benefits to working for Jones I really like.  I remember you said you were waiting to leave Jones.  Good luck.  Do what makes you happy.   

footsoldier's picture
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SS-
The Hartford situation is the most blatant conflict that we know about. You are probably right that Weddle dumped the relationship due to adverse publicity. (Excuse me potenial adverse publicity).
But don't think for a moment that the haircuts are that obvious. Remember you are an employee. There is nothing independent about Jones except that your name is on the door for now. Believe me, as soon as you or I leave the first thing they will do is take a straight edge and remove it. And bring in the next person to represent them not YOU. In their eyes,you and I are the most expendable component in the system.

Maxstud's picture
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footsoldier wrote:SS-
The Hartford situation is the most blatant conflict that we know about. You are probably right that Weddle dumped the relationship due to adverse publicity. (Excuse me potenial adverse publicity).
But don't think for a moment that the haircuts are that obvious. Remember you are an employee. There is nothing independent about Jones except that your name is on the door for now. Believe me, as soon as you or I leave the first thing they will do is take a straight edge and remove it. And bring in the next person to represent them not YOU. In their eyes,you and I are the most expendable component in the system.Yea, this is how a business works, if you want to be self-employed to begin with I would suggest you don't go to work for an existing business.

noggin's picture
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Joined: 2004-11-30

Yea, this is how a business works, if you want to be self-employed to begin with I would suggest you don't go to work for an existing business.
Some of the best advice I have heard... I am constantly amazed that people would go to work for EDJ and then complain that they weren't independent.... You can't have it both ways.

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