EJ Changes Below Expectation Rules

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breaking news's picture
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Edward Jones announced today that they are suspending the "goals" program this month and lowering the % required in future months based on firm profitability.  This comes in response to so many FAs being below firm expectations.  I know in our region over 75% of the FA's selling 2-10 yrs are below and many were on the brink of going on goals.  This should save a lot of jobs and retain a lot of AUM that would have left with some of these FAs.  I think it was a good move. 

noggin's picture
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breaking news wrote:Edward Jones announced today that they are suspending the "goals" program this month and lowering the % required in future months based on firm profitability.  This comes in response to so many FAs being below firm expectations.  I know in our region over 75% of the FA's selling 2-10 yrs are below and many were on the brink of going on goals.  This should save a lot of jobs and retain a lot of AUM that would have left with some of these FAs.  I think it was a good move.  Why would you want to be employed at a company that would have to rush in at the 23rd hour to potentially save your job??

josephjones107's picture
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are there really that many below expectations?

this might not be a bad idea

rocky's picture
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What were the minimums ?
 
I know what they used to be years ago.
 
Red, Yellow, and Green was the names given, but the % numbers do not come to my mind.

Squash1's picture
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I think it is just delaying the inevitable(spelling?)... You are talking about advisors who can't do $216K/year...that is bad...some of these guy can't put together $8-10K/month..
 
Jones should cut them loose and scale back their growth(it's obviously not working real well) my old region had 26 out of 64 advisors on goals.. There were some guys who were looking at leaving to go to LPL, but now they might hang out for awhile..

wsubob's picture
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As I look at my region it's all the guys from 5 to 10 years out that are hurting.  Less than five and the expectations are lower.  More than 10 and this market hasn't hurt their production much at all.  5 to 10 = Lots of little blue dots hanging out below the red line.

Lou Mannheim, CFP's picture
Joined: 2009-01-31

I think this is hilarious! Expensive business model, veteran advisors carrying the firm for years and being recruited like crazy, Regional meetings where the number one focus is growth, growth, growth, all these resources being dumped into training brand new advisors how to door knock. Is this really sustainable?

Advisor238's picture
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My region appears to be healthier than a lot of the regions that I read about on this board. We certainly don't have anywhere near 75% of the
FA's below standard. I would guess based upon my last look at the
regional performance chart, maybe there are 40% below standard. I think
that as of last week we had 2 or 3 on goals. As for why Jones is relaxing the standards (which were already pretty low compared to the
major wirehouses), we all know it's strictly a business decision.
There are not enough new trainees in the system to replace all of those
who were going to fail.

josephjones107's picture
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they are going to have reps making 50k a year , this is going to bring their average rep salary down alot

Swordoftruth's picture
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I think it's a good move.

Now we can concentrate on our clients and growing our businesses and not on losing our seats. I can't compare myself to people at different firms in large population centers. I can only compare myself to people at my own firm in small rural towns like myself.

We just had our second best month in a year though so I have to admit being on goals actually helped us. I''m determined not to slack.

The events of the past year are unprecedented. We're all in uncharted territory.

Spaceman Spiff's picture
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Jones is doing a lot of things to keep us employed, if not happy. 
 
Changing the goals percentage is a short term fix.  They are making is a moving target.  When the firm is in a high bonus bracket and things are going well the goals numbers will be higher.  Times like this, they get lower.  Goals used to be the kiss of death.  You just simply didn't have time for the process to work.  If you didn't have the money in the pipeline coming in, you were screwed.  They're changing that process.  I think it's a wise move.  From a relationship standpoint it's much better to have someone that the clients know, even if it is a relatively new FA, sitting in that desk than some new guy.  Nothing like a bad market and an new guy in the office to start the ACATs coming in. 
 
They've also started an asset gathering contest.  First I've seen in over 12 years.  Between now and the end of April with every new relationship I start and bring money over, they'll pay me $1 per $1000.  So, the $1 mil in new money I have on the fence right now should mean an extra $1000 bonus here in the near future.  If I can do the work to get it over here. 
 
So, why do I want to work for a company that would rush in at the 23rd hour and save my job?  Because they did.  Because they could have just simply said screw you.  But, they didn't.  I have a few friends in my region who have just been handed a new lease on life.  Jones just handed them a do over slip.  They've now got about 6 months to transform their business.  They've been given the opportunity to do it, now they have to decide if they want it or not and work accordingly.  I think it will be good for the company in the long run.  

jkl1v1n6's picture
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Swordoftruth wrote:I think it's a good move. Now we can concentrate on our clients and growing our businesses and not on losing our seats. I can't compare myself to people at different firms in large population centers. I can only compare myself to people at my own firm in small rural towns like myself. We just had our second best month in a year though so I have to admit being on goals actually helped us. I''m determined not to slack. The events of the past year are unprecedented. We're all in uncharted territory.
 
I'm not saying you did Sword but when I was there and someone got put on goals very few made it and I always wondered "how in the hell did that guy pull it out?  Did he work his ass off and find that much new money or did he have to make a moral decisions?"  No one will know except that individual broker.  I truly believe some just had the money come through that they had been waiting on but I also trly believe some moved money around.  I've believe that's what getting put on goals does to you, you get backed into a corner and you fight to survive. 

Hey Kool-Aid's picture
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noggin wrote: breaking news wrote:Edward Jones announced today that they are suspending the "goals" program this month and lowering the % required in future months based on firm profitability.  This comes in response to so many FAs being below firm expectations.  I know in our region over 75% of the FA's selling 2-10 yrs are below and many were on the brink of going on goals.  This should save a lot of jobs and retain a lot of AUM that would have left with some of these FAs.  I think it was a good move.  Why would you want to be employed at a company that would have to rush in at the 23rd hour to potentially save your job??
 
LOL...LMFAO...Now my day is complete...I knew good ole Noggin wouldn't disappoint!  Find a way to put a negative spin on a company trying to save it's employees who are struggling due to this once in a lifetime (hopefully) huge economic/market decline.  Why would anyone want to work for that type of company...i'll tell you why....because they actually care about their employees unlike mother merrill & others who are axeing (sp) people left and right and couldn't care less if you walked out the door and drove off a cliff.  Now...personally, I am not on or near "goals"....but when I saw this memo, I thought ...wow...what a company I work for...and believe me ...I have worked for many large companies in the corporate world and seen my share of "F you" leadership.  And for the record, I too am in a region that is not near 75% below expectations, however, there are more than usual due to the environment..the brokers that were going to fail will still likely fail...but this move was just another reason why we are rated best place to work for in the brokerage business. 

Squash1's picture
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They aren't looking out for you... They are looking out for themselves because they can't attract enough transfer brokers to fill the offices that would be empty in 4-6 months and they didn't want to see their revenue(read 12b-1 fees) dwindle any more than it already has due to market conditions... If you can't put together a 10-15K month and you have been out longer than 5 years... YOU SHOULD BE DOING SOMETHING ELSE...

Squash1's picture
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P.S.
 
I think LPL now has more former EDJ guys doing over $150K than, EDJ does now.. Odd..

avise's picture
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Lou Mannheim, CFP wrote:I think this is hilarious! Expensive business model, veteran advisors carrying the firm for years and being recruited like crazy, Regional meetings where the number one focus is growth, growth, growth, all these resources being dumped into training brand new advisors how to door knock. Is this really sustainable? No. This is an old retail scam. Grow, grow, grow your locations so that it looks like you are a rapidly growing company. The bubble eventually pops. (See GAP, Talbots, Starbucks, etc.)For a really great read and a look at how one of these "Grow, Grow, Grow" ponzi's ends up check out this article on Florida and it's basic economic driver....1,000 new residents a day. Til last year when they only added a total of 5,000 new residents. At least the weather's nice!http://www.newyorker.com/reporting/2009/02/09/090209fa_fact_packer

Squash1's picture
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I also think Jones lacks the tools and products to keep up... I would be willing to be that the average Jones account is $125K...

outofjail's picture
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Do they still charge $1300 per month for communication fees?

B24's picture
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Squash1 wrote:I also think Jones lacks the tools and products to keep up... I would be willing to be that the average Jones account is $125K...
 
It's not the tools or products.  I think it's their philosophy and strategy.  They focus on guys opening up as many accounts as humanly possible in the first 5-8 years.  Large producer in our region has about $180mm AUM, but like 1200 households (been out about 18 years).  So his average account is like $150K.  He is starting to get rid of accounts (Goodknighting them) and he said he could easily shed 500 housholds and barely dent his AUM.  He said his top 350 households account for 85% of his assets, so about a $450K average.  Problem is, guys at Jones traditionally don't like to get rid of accounts, so it drags the average account size down. 
Honestly, though, there are lots of wirehouse FA's just like this, especially in the suburban areas.

footsoldier's picture
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The GP's should be circling the wagons to protect what they have vs go out and recruit new blood. The growth model at Jones will go the same way any other street corner business has. It will have to contract at some point just like Starbucks,  etc.
Jones is no different than any other enterprise and to have an office with staff on many street corners or shopping centers with all the costs involved can only make sense if the markets work. If there is no bonus (remember GP's still get their dough) the seasoned reps are scratching their heads wondering why the firm isn't take care of them. I know Spiff....its a great firm and they are so sincere that they are giving the starving FA 6 months grace period before the axe falls.
Maybe the approach that would make sense is to contract offices, reduce staff, and consolidate assets with those that can do the work. It's kind of like Obama's mortgage plan, it helps those who shouldn't receive help because they should have never received the loan in the first place. Rewarding those for bad behavior....God I sound like Rick Santelli now (by the way google his rant on CNBC, it is thought provoking if not hilarious...even the White House responded)!

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Foot, you make good points.  Jones has sort of made it's own bed.  We are a company that is probably 1/2 new FA's (under say 5 years).  Problem is, the model works great when we are ina  raging bull, like from 82-99, and people are making money.  But in a secular bear market that could last years (or decades), the model will get killed because the bottom half of FA's get hammered. 

I agree with the other post, Jones is not doing this out of a big heart.  They are protecting their investments (in newly minted and trained FA's). 

Hey Kool-Aid's picture
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B24 wrote:Foot, you make good points.  Jones has sort of made it's own bed.  We are a company that is probably 1/2 new FA's (under say 5 years).  Problem is, the model works great when we are ina  raging bull, like from 82-99, and people are making money.  But in a secular bear market that could last years (or decades), the model will get killed because the bottom half of FA's get hammered. 

I agree with the other post, Jones is not doing this out of a big heart.  They are protecting their investments (in newly minted and trained FA's). 
 
Ok....so let's say that is the worst case.....then it's a win win!

josephjones107's picture
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Jones is lucky they leased instead of bought all their offices

footsoldier's picture
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And back in my day many leases were negotiated with 3 month out clauses. But the capital it takes to open those offices is significant, I see this market as an opportunity for Jones to help those who they think can make it while making it look like they are a firm that really cares about their employees.
Many former Jones reps  cringe when we think any firm really cares about their replacable components (FA's). Spiff... this is one time I will say Jones is different than other firms, they just make it look like they care.

Spaceman Spiff's picture
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If this is an evil GP conversation, which you have turned it into, it is absolutely not in the best interest of the GPs to continue to hold onto these folks who aren't at least at location gain.  Jones isn't upping the ante on growth.  They're following the plan they set out last year or the year before.  Just because the market is down doesn't mean that baby boomers aren't retiring.  Maybe some of them hold on for a few more years, but they'll retire eventually.  While the rest of the industry is contracting, Jones is expanding.  Call it buying more shares when the prices are down. 
I think this move is absolutely a circle the wagons move.  They are protecting what they have.  Record numbers of advisors are below expectations.  After this month, FAD probably couldn't keep up with the number of people on goals.  Something had to be done.  So, instead of sticking with the old line of too bad so sad, they said we're gonna give you a break.  They'll probably save some of the FAs, but the ones who are destined to fail still will.  As the market, and firm production, gets better the goals line gets higher.  So, you can't skate by at 31% of standard forever. 
 
Spin it however you like.  There's a ton of FAs out there that are thankful they have a job and benefits next month.  So, they'll be trying to figure out how to get money out of their clients pockets instead of yours and mine from the unemployment office.  

josephjones107's picture
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now Jones will have zombie IRs all over the firm

jkl1v1n6's picture
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Spaceman Spiff wrote:
If this is an evil GP conversation, which you have turned it into, it is absolutely not in the best interest of the GPs to continue to hold onto these folks who aren't at least at location gain.  Jones isn't upping the ante on growth.  They're following the plan they set out last year or the year before.  Just because the market is down doesn't mean that baby boomers aren't retiring.  Maybe some of them hold on for a few more years, but they'll retire eventually.  While the rest of the industry is contracting, Jones is expanding.  Call it buying more shares when the prices are down. 
I think this move is absolutely a circle the wagons move.  They are protecting what they have.  Record numbers of advisors are below expectations.  After this month, FAD probably couldn't keep up with the number of people on goals.  Something had to be done.  So, instead of sticking with the old line of too bad so sad, they said we're gonna give you a break.  They'll probably save some of the FAs, but the ones who are destined to fail still will.  As the market, and firm production, gets better the goals line gets higher.  So, you can't skate by at 31% of standard forever. 
 
Spin it however you like.  There's a ton of FAs out there that are thankful they have a job and benefits next month.  So, they'll be trying to figure out how to get money out of their clients pockets instead of yours and mine from the unemployment office.  
 
Creating how many moral/ethical choices to be made?  "How do I hit that bogey?"
Remember when Putnam was going down in flames. Compliance looked the other way and how many Seg 1's had best months ever moving from Putnam to American Funds. 

buyandhold's picture
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Smart move. Keeps the struggling 2 to 5-year FAs on board -- prospecting, developing relationships, cultivating clients; in short, putting themselves in a position to grow their businesses when market sentiment changes. A year or three when the climate changes, a lot of money will be put to work. And demographic trends are still working in Jones' favor. On the other hand, maybe if we don't grow and stay in the bonus bracket, the partnerships become less valuable, the vets start drifting away and the firm goes broke.

Moraen's picture
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This is a great move by EJ.

The only problem I see is that they should have done this a year ago. Jones supposedly takes the long-term outlook. Identify the people that are prospecting and making their calls, circle the wagons around those people. Cut the chaff quick.

From a strategic point of view, they could have lowered their growth goals to adjust for the current economic climate and at the same time be a little more selective in how they open offices (instead of one on every corner, have one on every other corner).

Just my two cents. I hope they hang on to the starving brokers who will no longer be on goals. Makes it easy to poach their clients. These guys are so desperate, they'll be pulling out the old, "Repositioning of Assets/Switch letter".

Can't wait.

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If this is an evil GP conversation, which you have turned it into, it is absolutely not in the best interest of the GPs to continue to hold onto these folks who aren't at least at location gain.
Spiff-
 
I'll agree with you that I don't hold much love for the GP's (i.e., I don't trust them and their agenda which in my opinion has nothing to do with the FA).
 
The GP's look at you and your brethren as interchangeable parts. B24 realizes this, why you continue to defend the mother ship at all costs is mind boggling. But we have had many conversations regarding the merits of Jones over the years, let's take a different perspective.
 
Let's look at Starbucks for a moment... What did they do, what was their business model, and why did they change.
 
Starbucks had coffee shops everywhere. Profits went through the roof, stock soared and then a funny thing happened. Competition came in and withered away some profits. Commodity prices increased but they were not able to increase because of competition so they absorbed the higher costs eroding profits. They tried gimmicks like adding food and music and WIFI etc...but profits didn't increase they shrank. And then the buyers weren't flocking to Starbucks for 3 lattee's a day...soon it was once a day or not at all. So what did they do, they cut stores out because the reality is that customers who really wanted Starbucks coffee that bad would drive to the next block or strip mall usually within a short distance to get their cup of JOE. So did the all the customers of Burger King, McDonalds, etc...
 
Sooner or later the growth model stagnates. If your reps are failing its because of many factors, not the least of which is that there are far too many Jones reps competing for the same type of client. Assume for a moment that there are a finite number of customers that want  the Jones model. There is a finite number of clients in the universe so one has to assume each firm has a finite number as well.
 
Spiff, I applaud  you for continually attmepting to demonstrate frequently that your firm is different. Maybe your firm is different in that they keep people longer than they should. Maybe your firm is different because they show compassion to struggling reps by giving them more time to improve before they are put on goals.
 
Please don't try to insult the rest of us or attack us because we challenge you and your thought process. Jones is no different than any other entity with multiple locations. It's overkill and at some point I would suspect that Jones will change to protect their turf. This conversation isn't about the evil GP. It's about the business model that they manage. It isn't sustainable especially if we are in a protracted difficult market.
 
I would submit to you that the fact your newer reps are struggling (and talking to some of my former  colleagues at Jones they are down 30% over last year and have been with Jones more than 5 years) you are either not honest with yourself or you are playing head games.
 
Hell, I had a great year last year up 47.5%. YTD I am down 28% over last years numbers. It's industry wide, but if I can take anything away from my situation, as an indy my net,  after all expenses, is 28% higher so I am able to survive with less revenue.

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iceco1d wrote:Squash1 wrote:I also think Jones lacks the tools and products to keep up... I would be willing to be that the average Jones account is $125K...
 
Why is that a problem?  My average account size is well under $125K; in fact it's most certainly under $100K.  My average household might be under $100K, i'm not honestly sure.
 
 
 
Yeah but judging by your posts, you run a feebased practice... Most at Edj are taking the pop up front then the 25bps trail... so if you are charging 1.0% then the jones rep would need the account to be $400K to equal what you are getting(not counting the difference in payout)... that's why it is a problem..

jkl1v1n6's picture
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Somewhere before on this board I posted a conversation I had with a GP in St. Louis, I think he was in charge of new broker training or something and I asked him when they thought they would reach market saturation and he said they didn't believe they ever would.  Somebody Spiff or B24 or maybe somebody else defended that position on the post, what they say still doesn't resonate with me.  I think the industry is over-saturated and this is good for the industry as it's thinning the heard. 

Borker Boy's picture
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That's what's made it so difficult for us Jonesies in this market. Our business model is one of new money--month after month after month. 
 
I'm still bringing in assets, but out here in the country, if it doesn't have FDIC written all over it, it ain't gettin' bought.

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That's one of the reasons I left and switched what I was doing... I figured I could really help 100 people or kind of help 600...
 
Got sick of the dot, the new money month after month, new accounts(that I would never talk to again).. just to get by...wasn't worth it..

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I love how the word "ponzi" has become the new, all-encompassing vernacular insult for any business model that someone disagrees with. What a joke...it's like a fad...probably from too much CNBC.
 
Rick Santelli, by the way, is an ignorant, selfish, un-American, morally questionable moron. C'mon..."How many of you people want to pay for your neighbor's mortgage...." Ever hear of "Love thy neighbor"...how about "Do unto others as you would have them do unto you"...perhaps you've heard, "Ask not what your country can do for you...ask what you can do for your country".... 
 
In the wake of the worst financial crisis that any of us are ever to likely endure in our lifetimes, it is petty and vengeful to let those that made the critical mistakes that ultimately led us here to simply rot. Put the shoe on the other foot...you bought a house you couldn't afford...you loaned money irresponsibly...you made a mistake...maybe you thought it was a good idea at the time....maybe you didn't have the foresight to see the eventual outcome (that pretty much means everybody except that guy that shorted everything)...
 
If YOU made the mistake...and YOU were now in the worst posible case scenario...would YOU want to be left to rot or would YOU want some help....
 
Love thy neighbor....Do unto others...do for your country. Screw Rick Santelli. Jerk.
 
For the record I am NOT a Jesus freak...I am, in fact, an atheist. I may not be a believer, but I recognize the moral truths and principles espoused in every major religion known to man.

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THe problem with your put the shoe on the other foot is... most of us aren't dumb enough to buy a house we couldn't afford...
 
I don't want to bail out people who should have never bought homes in the first place...(And yes they knew they couldn't afford it when they signed.)..  My neighbor(not mine but in general) is killing my house price because his house is being sold short which in turn drives down the prices in the entire neighborhood.. So screw my neighbor...He got himself into it, he should have to walk the plank for it...
 
What ever happened to responsibility.. I screwed up, I must fix it... Now it is, I screwed up, everybody help poor me..

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I love how you haters predict the end of Edward Jones every day on this forum.  I also love how if 3 of you spew the same retarded babble it becomes a fact.  If each of you know how to run (or not run) a brokerage firm why haven't you done it?  Lemme take a guess here.  You have no idea what you are talking about?
 
I can just imagine the overwhelming frustration that when the opportunity of a lifetime came for Edward Jones to fail  (like Merrill or Wachovia or etc.) Jones did not participate in any of the things that caused the failures.
 
If you all hold hands and concentrate very very hard....maybe, just maybe you can cause Jones to go under.  Brilliant as you all are I wouldn't bet too much on it.
 
I will check here every day to see if Edward Jones is still in business.  I'm betting a lot it will be.

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Squash1 wrote:THe problem with your put the shoe on the other foot is... most of us aren't dumb enough to buy a house we couldn't afford...
 
I don't want to bail out people who should have never bought homes in the first place...(And yes they knew they couldn't afford it when they signed.)..  My neighbor(not mine but in general) is killing my house price because his house is being sold short which in turn drives down the prices in the entire neighborhood.. So screw my neighbor...He got himself into it, he should have to walk the plank for it...
 
What ever happened to responsibility.. I screwed up, I must fix it... Now it is, I screwed up, everybody help poor me..
Let's say you took a wrong turn in the middle of nowhere...oops you forgot to fill up your tank before you left...oops you left your cell phone at home...would you want some passerby to stop and help you or leave you for dead b/c you didn't plan properly. Stop being so self centered, Santelli. Self-Centered Santelli....hmmm....kinda got a ring to it!
 
Seriously...I believe in personal responsibility as much as anyone...probably more than most. There comes a point, however, that one has to look at the big picture and serve the greater good. Letting your neighbor (multiplied by millions and millions of other neighbors) for dead will only make the problem bigger. The fact is we are all going to take it on the chin b/c of others' stupid decisions. Well...quitcherbitchin and take it like a man.

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jkl1v1n6 wrote:Somewhere before on this board I posted a conversation I had with a GP in St. Louis, I think he was in charge of new broker training or something and I asked him when they thought they would reach market saturation and he said they didn't believe they ever would.  Somebody Spiff or B24 or maybe somebody else defended that position on the post, what they say still doesn't resonate with me.  I think the industry is over-saturated and this is good for the industry as it's thinning the heard. 
 
The Jones model is an interesting one.  But you need some perspective.  If you live in an over-saturated market (i.e. STL), then you perception is that there is a jones office on every corner.  But let's look at the numbers...10,000 offices, 50 states, that's 200 offices per state on average (obviously the averages aren't accurate in this case).  I live in a REALLY small state.  Like, REALLY small.  And we have about 60+ offices.  OK, I would say we could easily add another 100 offices and not even have one in every town.  There is one FA every 5 or 6 towns.  Some cities have 4 or 5, and they are BARELY reaching 2% market penetration.  Our market is WAY underserved, and there is TONS of money around us.
I am CERTAIN that I am not the only region in the country like this.  Half the country looks like us.  Keep in mind, in most non-urban, non-coast(expensive) locations, a $50mm office would be very profitable and the FA would make a decent living.  I know FA's doing that in towns of 2500 people.
So, perception and frame of reference counts a lot when looking at our firm's model.  I think they are over-saturated in some markets, but have TONS of room to grow across the U.S.
The other thing to remember that benefits our model is that we can stick profitable offices where wirehouse firms could not or would not choose to operate.  When you have two people operating out of a 1000 SQ.FT. office paying $800/mo. in rent and paying one BOA $10/hr. in the middle of nowhere, it's not tough to be profitable.  No, the same cannot be said in New York/southern CT, California, etc. but that is a small piece of the pie for us.
 
There are over 1200 FA's in Missouri and Illinois alone.  There are less than 700 in all of New England, New York, PA, MD, DC, and Delaware combined.  And I can GUARANTEE there is more wealth there.  We just have to get there.

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Hey Kool-Aid wrote: noggin wrote: breaking news wrote:Edward Jones announced today that they are suspending the "goals" program this month and lowering the % required in future months based on firm profitability.  This comes in response to so many FAs being below firm expectations.  I know in our region over 75% of the FA's selling 2-10 yrs are below and many were on the brink of going on goals.  This should save a lot of jobs and retain a lot of AUM that would have left with some of these FAs.  I think it was a good move.  Why would you want to be employed at a company that would have to rush in at the 23rd hour to potentially save your job??
 
LOL...LMFAO...Now my day is complete...I knew good ole Noggin wouldn't disappoint!  Find a way to put a negative spin on a company trying to save it's employees who are struggling due to this once in a lifetime (hopefully) huge economic/market decline.  Why would anyone want to work for that type of company...i'll tell you why....because they actually care about their employees unlike mother merrill & others who are axeing (sp) people left and right and couldn't care less if you walked out the door and drove off a cliff.  Now...personally, I am not on or near "goals"....but when I saw this memo, I thought ...wow...what a company I work for...and believe me ...I have worked for many large companies in the corporate world and seen my share of "F you" leadership.  And for the record, I too am in a region that is not near 75% below expectations, however, there are more than usual due to the environment..the brokers that were going to fail will still likely fail...but this move was just another reason why we are rated best place to work for in the brokerage business. 

Hey Kool-Aid, while I'm happy for those struggling brokers that Edward D. Jones has eased the numbers, please don't delude yourself, or worse try to delude others, that the move is sheer altruism on the part of corporate. It's a business decision...nothing more or less.

noggin's picture
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Joined: 2004-11-30

Hey Kool-Aid wrote:noggin wrote: breaking news wrote:Edward Jones announced today that they are suspending the "goals" program this month and lowering the % required in future months based on firm profitability.  This comes in response to so many FAs being below firm expectations.  I know in our region over 75% of the FA's selling 2-10 yrs are below and many were on the brink of going on goals.  This should save a lot of jobs and retain a lot of AUM that would have left with some of these FAs.  I think it was a good move.  Why would you want to be employed at a company that would have to rush in at the 23rd hour to potentially save your job??
 
LOL...LMFAO...Now my day is complete...I knew good ole Noggin wouldn't disappoint!  Find a way to put a negative spin on a company trying to save it's employees who are struggling due to this once in a lifetime (hopefully) huge economic/market decline.  Why would anyone want to work for that type of company...i'll tell you why....because they actually care about their employees unlike mother merrill & others who are axeing (sp) people left and right and couldn't care less if you walked out the door and drove off a cliff.  Now...personally, I am not on or near "goals"....but when I saw this memo, I thought ...wow...what a company I work for...and believe me ...I have worked for many large companies in the corporate world and seen my share of "F you" leadership.  And for the record, I too am in a region that is not near 75% below expectations, however, there are more than usual due to the environment..the brokers that were going to fail will still likely fail...but this move was just another reason why we are rated best place to work for in the brokerage business.  As always, Hey Kool Aid you misunderstand the point. The point is that as an employee the employer can always change the rules. This time it worked in the struggling broker's behalf. I have several friends at Jones and all I can think is how sorry I feel for my friends being bled dry......38% net before all their expenses are counted, about 25-28% after......It actually would have been kinder for Jones to have cut out those brokers that are more than 3 years out and still doing less than 15K a month......If they truly cared about their employees they wouldn't freeze pay increases for the BOA's and certainly would pay for the GP's wife's to accompany on regional meetings. Come on now guys, the GP's are suffering.......BTW, what did LP average last year??

Squash1's picture
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Joined: 2008-11-19

B24 wrote:jkl1v1n6 wrote:Somewhere before on this board I posted a conversation I had with a GP in St. Louis, I think he was in charge of new broker training or something and I asked him when they thought they would reach market saturation and he said they didn't believe they ever would.  Somebody Spiff or B24 or maybe somebody else defended that position on the post, what they say still doesn't resonate with me.  I think the industry is over-saturated and this is good for the industry as it's thinning the heard. 
 
The Jones model is an interesting one.  But you need some perspective.  If you live in an over-saturated market (i.e. STL), then you perception is that there is a jones office on every corner.  But let's look at the numbers...10,000 offices, 50 states, that's 200 offices per state on average (obviously the averages aren't accurate in this case).  I live in a REALLY small state.  Like, REALLY small.  And we have about 60+ offices.  OK, I would say we could easily add another 100 offices and not even have one in every town.  There is one FA every 5 or 6 towns.  Some cities have 4 or 5, and they are BARELY reaching 2% market penetration.  Our market is WAY underserved, and there is TONS of money around us.
I am CERTAIN that I am not the only region in the country like this.  Half the country looks like us.  Keep in mind, in most non-urban, non-coast(expensive) locations, a $50mm office would be very profitable and the FA would make a decent living.  I know FA's doing that in towns of 2500 people.
So, perception and frame of reference counts a lot when looking at our firm's model.  I think they are over-saturated in some markets, but have TONS of room to grow across the U.S.
The other thing to remember that benefits our model is that we can stick profitable offices where wirehouse firms could not or would not choose to operate.  When you have two people operating out of a 1000 SQ.FT. office paying $800/mo. in rent and paying one BOA $10/hr. in the middle of nowhere, it's not tough to be profitable.  No, the same cannot be said in New York/southern CT, California, etc. but that is a small piece of the pie for us.
 
There are over 1200 FA's in Missouri and Illinois alone.  There are less than 700 in all of New England, New York, PA, MD, DC, and Delaware combined.  And I can GUARANTEE there is more wealth there.  We just have to get there.
 
I agree.. I happened to be in that over saturated area.... They had plans for a broker for every 5K people(not households) and that was just over doing it in my area.. What ends up happening is the Jones people fight amongst themselves and neither broker gets off the ground, or one broker does really well, while another office just turns over...

buyandhold's picture
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Joined: 2008-09-23

Squash1 wrote:THe problem with your put the shoe on the other foot is... most of us aren't dumb enough to buy a house we couldn't afford...
 
I don't want to bail out people who should have never bought homes in the first place...(And yes they knew they couldn't afford it when they signed.)..  My neighbor(not mine but in general) is killing my house price because his house is being sold short which in turn drives down the prices in the entire neighborhood.. So screw my neighbor...He got himself into it, he should have to walk the plank for it...
 
What ever happened to responsibility.. I screwed up, I must fix it... Now it is, I screwed up, everybody help poor me..
 
We're not bailing out the guy who bought a house he couldn't afford -- we're bailing out the banks who bundled that subprime mortgage with a bunch of others and turned it into a AAA-rated investment via the magic of a formula that magically eliminated risk, sold them to each other, wrapped, sliced and diced it and then borrowed against it, so that when the value of the house went down 10 percent they owed somebody else 10 times that amount.
 
 
 

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

noggin wrote: BTW, what did LP average last year??
 
2008 = 16.1% return
 
It was the lowest LP return in 19 years.  The lowest since 1979 previous to that was 15.0% in 1988.  I am guessing 2009 will be much lower.  At least there is a 7.5% floor.
 

Period
Actual Return(With Unusual Items)*
Actual Return(Without Unusual Items)

1979
21.1%
21.1%

1980
37.3%
37.3%

1981
45.7%
45.7%

1982
57.3%
57.3%

1983
37.4%
37.4%

1984
23.5%
23.5%

1985
38.7%
38.7%

1986
56.3%
56.3%

1987
30.5%
30.5%

1988
15.0%
15.0%

1989
15.7%
15.7%

1990
17.1%
17.1%

1991
26.4%
26.4%

1992
31.6%
31.6%

1993
27.0%
27.0%

1994
20.3%
20.3%

1995
19.6%
19.6%

1996
24.6%
24.6%

1997
25.1%
25.1%

1998
33.3%
33.3%

1999
24.9%
24.9%

2000
25.4%
25.4%

2001
17.2%
17.2%

2002
16.2%
15.8%

2003
18.3%
18.3%

2004
20.1%
20.1%

2005
23.2%
20.1%

2006
22.9%
23.7%

2007

 24.1%

 24.1%

2008
16.1%
16.1%

jkl1v1n6's picture
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Joined: 2008-10-06

Squash1 wrote:B24 wrote:jkl1v1n6 wrote:Somewhere before on this board I posted a conversation I had with a GP in St. Louis, I think he was in charge of new broker training or something and I asked him when they thought they would reach market saturation and he said they didn't believe they ever would.  Somebody Spiff or B24 or maybe somebody else defended that position on the post, what they say still doesn't resonate with me.  I think the industry is over-saturated and this is good for the industry as it's thinning the heard. 
 
The Jones model is an interesting one.  But you need some perspective.  If you live in an over-saturated market (i.e. STL), then you perception is that there is a jones office on every corner.  But let's look at the numbers...10,000 offices, 50 states, that's 200 offices per state on average (obviously the averages aren't accurate in this case).  I live in a REALLY small state.  Like, REALLY small.  And we have about 60+ offices.  OK, I would say we could easily add another 100 offices and not even have one in every town.  There is one FA every 5 or 6 towns.  Some cities have 4 or 5, and they are BARELY reaching 2% market penetration.  Our market is WAY underserved, and there is TONS of money around us.
I am CERTAIN that I am not the only region in the country like this.  Half the country looks like us.  Keep in mind, in most non-urban, non-coast(expensive) locations, a $50mm office would be very profitable and the FA would make a decent living.  I know FA's doing that in towns of 2500 people.
So, perception and frame of reference counts a lot when looking at our firm's model.  I think they are over-saturated in some markets, but have TONS of room to grow across the U.S.
The other thing to remember that benefits our model is that we can stick profitable offices where wirehouse firms could not or would not choose to operate.  When you have two people operating out of a 1000 SQ.FT. office paying $800/mo. in rent and paying one BOA $10/hr. in the middle of nowhere, it's not tough to be profitable.  No, the same cannot be said in New York/southern CT, California, etc. but that is a small piece of the pie for us.
 
There are over 1200 FA's in Missouri and Illinois alone.  There are less than 700 in all of New England, New York, PA, MD, DC, and Delaware combined.  And I can GUARANTEE there is more wealth there.  We just have to get there.
 
I agree.. I happened to be in that over saturated area.... They had plans for a broker for every 5K people(not households) and that was just over doing it in my area.. What ends up happening is the Jones people fight amongst themselves and neither broker gets off the ground, or one broker does really well, while another office just turns over...
 
B24,  I agree that maybe across the U.S. there might be room to grow out in the many hamlets.  And being with Jones I have experienced first hand the 50mm office guy who is making a killing especially in comparison to his neighbors.  My experience comes from a market that has 30 reps in a city of 200m-250m.  Now to look at that the home office sees tremendous opportunity.  We've only got 2% market share there, let's add more offices.  But I do not think it is correct to say that the market is underserved.  Not when you throw in all the old A.G. Edwards, Smith Barney, Merril No More, bank, insurance agencies, and countless other firms.  The home office may feel that it is underserved by Jones with only 2% penetration but not by the industry as a whole. 
 
Here's the way I see it.  We've all seen an office that has had 5, 6, maybe 7 brokers go through it.  Is it really true that all those guys/gals just didn't do the work.  Or maybe could there be other factors involved.  Things like area of town with a low median household income or maybe their prospecting area is too small because all the Jones reps got together with a map of the town and drew a radius around each office that delineated where they could and could not door knock.  Maybe the market took a sh*t and nobody wanted to invest
 
It amazes me the amount of money that people can have.  But to say that they are underserved isn't always true.

Fud Box's picture
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Joined: 2009-01-08

Bitch bitch bitch bitch bitch....you're sooooooo perfect and have never made a mistake that somebody else bailed you out on. I call bullsh!t on that one! Everybody's so quick to judge. What gives you the right??? And don't tell me, "Well, I'm not the one that blah blah blah...." Maybe not...but you're dad or your girlfriend or your brother or sister did. And then I, my best friend, my father-in-law, and my colleague all lost our jobs in the carnage that ensued. Yes...I became one of the doom and gloom statistics on CNBC.  At least I don't sound like an angry teenager like you selfish, inconsiderate, know-it-all, Rick Santelli wannabes. Grow up...do something positive for your community...and, no, Rotary club (et. al.) doesn't count cuz you know and I know you only joined for the contacts. Man...I hope you don't have kids...the heap-of-dung attitude you'd teach them.
Lemme ask you a question. What are YOU doing to help the economy? What are YOU doing to help the MILLIONS of distressed AMERICANS that are on their frickin' knees PRAYING that they don't end up destitute and financially ruined for life?
I'm not so deluded that I don't see that people shoud reap what they sow...but we're past all that now. We've gone beyond the point where allowing nature to take it's course is the best avenue for all of us.  If we weren't, then our government wouldn't have spent $1.5T to intervene. Intervention was and is necessary...that means help the people/companies that put us ALL in this predicament. That means correcting the mistakes of others in order to help ourselves. Otherwise...lest we all take your stance on things...the state of affairs we're enduring today will feel like the "good 'ole days".
 
Don't confuse capitalism with patriotism...they're not the same. I love capitalism...but I love my country more...and that means making sacrifices...ask anyone that's served their country. I've never had the honor due to health reasons, but I grew up on military bases around the world, so I know first hand the level of sacrifice one makes in the name of their country. And it's a lot more profound and a lot bigger than simply paying more taxes. Make your sacrifices, take it on the chin, so that down the road you and your children can have the opportunity to enjoy the wonderful aspects of capitalism without the greed and self-absorption that got us where we are today. The same self-absorption that you are supporting and portraying in your posts. "I, I, I, I, I...me, me, me, me, me...it's all about me!" Ridiculous.
 
I'll say it again...it's this same attitude that makes people say, "We should let these people rot for the decisions they made....I don't want to bail out these people...I don't want my tax dollars to bail out these banks...I, I, I, I, I.", that got us here in the first place. A lot of those same people happened to be in the market for a new house in the early to mid 2000's and all they thought was, "Me, me, me , me, me. I want more house. I want more equity. I, I, I, I." The fact that you didn't partake in this fiasco could simply be a matter of circumstance...maybe, maybe not. But a lot of people....good, hard-working Americans just like you did get caught up in the "housing boom" and did make the fatal errors that destroyed our financial system. I'm sure if they knew then what they know now...they might've reconsidered that particular house. Woulda coulda shoulda doesn't help anyone. What're you gonna do NOW to help your fellow countrymen?
 
Screw Self-Centered Santelli.
 

Squash1's picture
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Joined: 2008-11-19

Aren't you the new guy? Who can't sell anything yet..?

jkl1v1n6's picture
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Joined: 2008-10-06

Um.....Fud....Not saying I disagree with you.....but.....do you know what industry you're talking to?   We are all self-centered a**holes or we wouldn't be doing what we're doing!
 
I personally think all parties involved have ownership in this.  Some more than others.  The banks the most.  They knew what they were doing they just thought it wouldn't implode on them. 

Fud Box's picture
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Joined: 2009-01-08

buyandhold wrote:Squash1 wrote:THe problem with your put the shoe on the other foot is... most of us aren't dumb enough to buy a house we couldn't afford...
 
I don't want to bail out people who should have never bought homes in the first place...(And yes they knew they couldn't afford it when they signed.)..  My neighbor(not mine but in general) is killing my house price because his house is being sold short which in turn drives down the prices in the entire neighborhood.. So screw my neighbor...He got himself into it, he should have to walk the plank for it...
 
What ever happened to responsibility.. I screwed up, I must fix it... Now it is, I screwed up, everybody help poor me..
 
We're not bailing out the guy who bought a house he couldn't afford -- we're bailing out the banks who bundled that subprime mortgage with a bunch of others and turned it into a AAA-rated investment via the magic of a formula that magically eliminated risk, sold them to each other, wrapped, sliced and diced it and then borrowed against it, so that when the value of the house went down 10 percent they owed somebody else 10 times that amount.
 
 
 
Actually...I'm pretty sure we're bailing out both. The guy who bought the house he couldn't afford using some fancy 80/20 variable no-money-down ARM that is now getting "modified" and the bank that ultimately bought the mortgage and repackaged it into a variety of funky "AAA" securities. 10X??? I've heard that the Lehman's and the AIG's were leveraged 35 to 1 or more against these freaking things!

Fud Box's picture
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Joined: 2009-01-08

Squash:
yep
 
jk:
 
You're absolutely right. All parties do have some ownership in this. The banks do have the most (IMO as well).  Just the same, letting the major banks fail will not do anyone any good. It'll tighten up credit even more so than it is causing housing prices to go even further into the sh!tter. It'll seal the fate of the Big 3 putting hundreds of thousands more out of work causing even more unemployment insurance (read taxes) and more foreclosures and more bankruptcies. The construction, steel, textile, auto parts, and hardware industries (as well as several others, I'm sure) will decline as a result, causing even more layoffs, more foreclosures, and more bankruptcies. The CPI will fall even more causing the dollar to go through the roof which in turn will cause stocks to plummet even further. Everybody reading this is at least half educated and can see the domino effect. In my view, this bail-out, as much as I hate it, is absolutely necessary for the greater good.
 
And, no, I'm the new guy, so I'm not fully aware of the level of self-centeredness prevalent in this industry (just what I see in the movies!), although I'm beginning to see what you mean. I hope it's not quite as bad as you're making out, but I'll find out in due time.

jkl1v1n6's picture
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Joined: 2008-10-06

I had an Uncle that was in Vietnam and when asked about what it was like he said "Did you see the movie Platoon?,  Just like that!" 
 

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