EJ - GP & LP changes

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oneof10,000's picture
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Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated.

No more we're all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs.

Just doesn't seem right. What would Ted say?

Cowboy93's picture
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Those at the top of the pyramid always make more than later joiners...this just makes it official (if true...?).

Ron 14's picture
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Well if you have 10 yrs there become 1 of 1 and go solo instead of 1 of 10,000

bspears's picture
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I've always felt the GP/LP was a ponzi scheme. I'm sure spiff will be on here in a few defending the changes. 

B24's picture
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I have no diea wht the changes are (don't really care, actually).  But I never quite got the "Ponzi Scheme" thing with regards to partnership.  If you're offered partnership, you buy in, you get your returns, and that's it.  I don't know how it differs from any other professional partnership (i.e. accounting firms, law firms, etc.).

chief123's picture
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I don't think there is a buy in with law firms...

Fooled No More's picture
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eyes are starting to open to the way of the world

Valhalla's picture
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oneof10,000 wrote:Just doesn't seem right. What would Ted say?
 
"give 'em the 'ol 1-2 punch"????

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oneof10,000 wrote:Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated. No more we're all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs. Just doesn't seem right. What would Ted say?
 
I can't see how they could justify making changes like that.  Would it be based on tenure?  Production?  Does the GP over IS earn less than the GP over Mutual Funds?  How about a guy like me who will have LP from both my home office time and my branch?  The negative feedback from something like that would be huge. 
 
Ted would say that's a bunch of crap.  If you're a partner in the firm, you're a partner in the firm.  Period.   
 
 

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chief123 wrote:I don't think there is a buy in with law firms...
 
Exactly. Partnership is usually something that is earned, not paid for. I guess I am a "partner" of Microsoft because I bought shares and now have a small ownership stake.

BigCheese's picture
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Spiff-
The ship is listing. Can you imagine the comraderie and togetherness this decision will have for the limited partners? Just one more nail...
 
What's the message?  The growth model doesn't work for successful FA's because in these times, they are losing at least 20% of their pay i.e., no bonus, and the firm still grows at their expense. This is a feeble attempt to get them some money back, paid by the lesser producing limited partners. If I were you Spiff, I would get my brethren together and voice your opinion...maybe you will get them to reconsider.

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chief123 wrote:I don't think there is a buy in with law firms...
 
Hmmmm.  That would be great.  I partnership where nobody has to invest capital into the business.  I didn't realize that "law firms" was a generic business model, and no partners at law firms buy into partnership.  So what if the business is struggling and you need to pay your staff?  What then?  Would a "partner" inject more capital into the business?  That's right, law firms don't have partners put capital in.  How do you start the business with no capital?  Who buys out the retiring partners?  Or is that just an accounts payable thing? 
 
Yes, there are some partnerships that will grant new limited partner shares on "sweat equity".  However, this is more comparable to "profit sharing".  But to make a general statement that law firm partners don't have to pay in is silly. 

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Spaceman Spiff wrote:oneof10,000 wrote:Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated. No more we're all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs. Just doesn't seem right. What would Ted say?
 
I can't see how they could justify making changes like that.  Would it be based on tenure?  Production?  Does the GP over IS earn less than the GP over Mutual Funds?  How about a guy like me who will have LP from both my home office time and my branch?  The negative feedback from something like that would be huge. 
 
Ted would say that's a bunch of crap.  If you're a partner in the firm, you're a partner in the firm.  Period.   
 
 
Since none of us know what the he!! he's talking about, it's hard to comment.  For all we know, it may be an improvement.  Maybe it's something more equitable.  Who knows.  I'd be interested to see the details.

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I doubt it is better..I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through.. For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP... Same for GP, my guess is that they are going to limit the type of GP to regional leaders.

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chief123 wrote:I doubt it is better..I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through.. For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP... Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
 
That actually makes sense.  Maybe GP's now get SLP or something similar.  The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary?  Weddle's salary is only 250K I think.  How they could separate basic LP I don't know. 

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B24 wrote:chief123 wrote:I don't think there is a buy in with law firms...
 
Hmmmm.  That would be great.  I partnership where nobody has to invest capital into the business.  I didn't realize that "law firms" was a generic business model, and no partners at law firms buy into partnership.  So what if the business is struggling and you need to pay your staff?  What then?  Would a "partner" inject more capital into the business?  That's right, law firms don't have partners put capital in.  How do you start the business with no capital?  Who buys out the retiring partners?  Or is that just an accounts payable thing? 
 
Yes, there are some partnerships that will grant new limited partner shares on "sweat equity".  However, this is more comparable to "profit sharing".  But to make a general statement that law firm partners don't have to pay in is silly. 
When I left Jones, that is exactly the type of arrangement that I joined. All costs which are shared are variable with the exception of assistant and healthcare. My portion has changed due to my sweat equity...
 
 

Cowboy93's picture
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Well, can anyone confirm the existence of this supposed change?

chief123's picture
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B24 wrote: chief123 wrote:I don't think there is a buy in with law firms...
 
Hmmmm.  That would be great.  I partnership where nobody has to invest capital into the business.  I didn't realize that "law firms" was a generic business model, and no partners at law firms buy into partnership.  So what if the business is struggling and you need to pay your staff?  What then?  Would a "partner" inject more capital into the business?  That's right, law firms don't have partners put capital in.  How do you start the business with no capital?  Who buys out the retiring partners?  Or is that just an accounts payable thing? 
 
Yes, there are some partnerships that will grant new limited partner shares on "sweat equity".  However, this is more comparable to "profit sharing".  But to make a general statement that law firm partners don't have to pay in is silly. 

Law firms are typically organized around partners, who are joint owners and business directors of the legal operation; associates, who are employees of the firm with the prospect of becoming partners; and a variety of staff employees, providing paralegal, clerical, and other support services. An associate may have to wait as long as 9 years before the decision is made as to whether the associate "makes partner". Many law firms have an "up or out policy" (pioneered around 1900 by partner Paul Cravath of Cravath, Swaine & Moore[2]): associates who do not make partner are required to resign, either to join another firm, go it alone as a solo practitioner, go to work in-house in a corporate legal department, or change professions (burnout rates are very high in law[3]).
Making partner is very prestigious, especially due to competition at a large or mid-sized firm. Such firms may take out advertisements in legal newspapers to announce who has made partner. Traditionally, partners shared directly in the profits of the firm, after paying salaried employees, the landlord, and the usual costs of furniture, office supplies, and books for the law library (or a database subscription). Partners in a limited liability partnership can largely operate autonomously with regards to cultivating new business and servicing existing clients within their book of business. However, many large law firms have moved to a two-tiered partnership model, with equity and non-equity partners. Equity partners are considered to have ownership stakes in the firm, and share in the profits (and losses) of the firm. Non-equity partners are generally paid a fixed salary (albeit much higher than associates), and they are often granted certain limited voting rights with respect to firm operations. The world's oldest continuing partnership is that of Cadwalader, Wickersham & Taft, founded in 1792 in New York City.

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B24 wrote: chief123 wrote:I doubt it is better..I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through.. For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP... Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
 
That actually makes sense.  Maybe GP's now get SLP or something similar.  The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary?  Weddle's salary is only 250K I think.  How they could separate basic LP I don't know. 

James D. Weddle                   2006        $250,000       $11,682       $9,108,322            $9,370,004
                                  2005          175,000        9,954        6,578,395             6,763,349
                                  2004          175,000        8,508        4,053,790             4,237,298

chief123's picture
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The downsides of a partnership
Hill ranked No. 18 on the previous year's list with a 2004 pay package of $1.8 million. That was the year he agreed to personally pay $3 million as part of a $75 million Edward Jones settlement with Securities and Exchange Commission and the U.S. Department of Justice. Hill was the highest ranking of five Edward Jones executives on the current Business Journal list. The investment firm's other top executives -- Rich Malone, chief information officer; Gary Reamey, principal of Edward Jones Canada; Jim Weddle, managing partner, and Norman Eaker, partner in charge of operations -- filled out the No. 3 through No. 6 spots in this year's ranking. Their large payouts came as a result of Edward Jones turning a $330 million profit in 2005, a record for the company.

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chief123 wrote: B24 wrote: chief123 wrote:I doubt it is better..I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through.. For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP... Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
 
That actually makes sense.  Maybe GP's now get SLP or something similar.  The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary?  Weddle's salary is only 250K I think.  How they could separate basic LP I don't know.  James D. Weddle                   2006        $250,000       $11,682       $9,108,322            $9,370,004                                   2005          175,000        9,954        6,578,395             6,763,349                                   2004          175,000        8,508        4,053,790             4,237,298
 
Maybe I'm dense, but is this what this means?
$250,000  (salary) +   $11,682 (profit sharing) +   $9,108,322 (GP) =  $9,370,004

chief123's picture
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Yep.. sorry when i copied it it king of messed thing up.

Moraen's picture
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B24 wrote: chief123 wrote:I doubt it is better..I am guessing the GPs lost some money last year and want to prevent it from happening again. Also this makes another hoop to jump through.. For basic producers, regular LP, but for you guys really knocking the cover off the ball, double secret LP... Same for GP, my guess is that they are going to limit the type of GP to regional leaders.
 
That actually makes sense.  Maybe GP's now get SLP or something similar.  The reason this seems more appropriate is that why would a RL producing $1mm, netting 550K (net, bonus, etc.) get the same GP returns as a corporate GP with a $100K salary?  Weddle's salary is only 250K I think.  How they could separate basic LP I don't know. 

I think the RL would deserve a decent share of GP simply because not only is he producing for the firm, he is taking on a pain in the neck job. A good RL anyway.

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BigCheese wrote:
Spiff-
The ship is listing. Can you imagine the comraderie and togetherness this decision will have for the limited partners? Just one more nail...
 
What's the message?  The growth model doesn't work for successful FA's because in these times, they are losing at least 20% of their pay i.e., no bonus, and the firm still grows at their expense. This is a feeble attempt to get them some money back, paid by the lesser producing limited partners. If I were you Spiff, I would get my brethren together and voice your opinion...maybe you will get them to reconsider.
 
Can a ship list based on conjecture?  Can an imaginary torpedo from a U-Boat sink a battleship?  You're acting like the original posting is a fact.  I personally haven't heard anything about GP or LP being reworked.     
 
Nobody promised a bonus to me when I joined.  They said if we are profitable, there will be a bonus.  Well, Jones wasn't profitable for the last few trimesters, so there wasn't a bonus.  We will eventually get back into the good bonus brackets and probably stay there for a while.  That's the way it works.  It doesn't mean the system is flawed.  It's just the way the system works.   
 
Your anti-Jones radar is working overtime these days, foot.  We've all heard this rhetoric from you before.  Everything Jones does is bad.  Everything foot does is good.  And you want me to open my mind and consider the alternatives? 

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It makes TOTAL sense to pay bonuses, when you don't make any profit. Just ask AIG.

Incredible Hulk's picture
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This whole topic is absurd. They won't change the structure of LP/GP because they don't have to. If they want a certain GP or LP in the field to profit more than another they do what they all ready do. Provide a larger share of partnership to said individual. Period. End of story.

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Well, I don't think this was pulled out of thin air.  I am sure what he is saying is true, we just don't know the details.  I'm not sure how that translates into a "listing ship", but hey, whatever.  All I have to say is, if OUR ship is listing, there are a LOT of ships at the bottom of the sea right now.  This is sort of like when everyone was calling for the demise of Jones 5 or 6 years ago.

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Spaceman Spiff wrote:oneof10,000 wrote:Being a Limited Partner has been a source of pride for me for over a decade but now I hear that that the Executive Committee is about to change how both GP & LP returns are calculated. No more we're all in this together. Starting in a month or so there will be different levels of both GP & LP. Some GPs will earn a higher rate on their GP than others and some LPs will earn a higher rate of return than other LPs. Just doesn't seem right. What would Ted say?
 
I can't see how they could justify making changes like that.  Would it be based on tenure?  Production?  Does the GP over IS earn less than the GP over Mutual Funds?  How about a guy like me who will have LP from both my home office time and my branch?  The negative feedback from something like that would be huge. 
 
Ted would say that's a bunch of crap.  If you're a partner in the firm, you're a partner in the firm.  Period.   
 
 
 
I don't think they can justify it Spiff. You already own more partnership the longer you are here and the more profitable you are. So in a way it's already structured toward the tenured people, which is totally fine. They have worked harder than the dude out 2 years. I honestly don't feel like this is even anywhere near true. Rumor Mill as usual. Why in the world would ANY company, not Jones, but ANY company change something that NOONE is complaining about. Especially something that the whole company was built on.
 
Bunch of Rumor Mill

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Incredible Hulk wrote: This whole topic is absurd. They won't change the structure of LP/GP because they don't have to. If they want a certain GP or LP in the field to profit more than another they do what they all ready do. Provide a larger share of partnership to said individual. Period. End of story.

I'm not sure, but because it is a securities offering, don't they have to run that by the SEC? And they can't offer more in any given year, right? At least LP?

It might make more sense to structure the offerings differently, as Hulk says as opposed to changing the whole thing.

Maybe they want to change the guarantee? Or place a ceiling on the return of LP (causing the excess to go to the GP? Or some other fund?

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There are only two explanations for this potential change.
 
1-  The GP's are concerned about their own welfare.
 
2- The GP's are concerned about the 500k+ producer subsidizing the growth model and continuing to receive NO BONUS (which was at least 20% of their total comp).
 
My feeble mind tells me that item #1 is more important.
 
 
If they do in fact go through with the change, GP or LP envy will ensue breaking down the image that all will continue to work together for the greater good. However, Spiff will continue to mentor and train the newbies affecting his abitlity to make Seg 4 (where bonuses if they are paid hit the 10% of comp threshold) and strive for the original pot of gold....GP. Only now there will be levels of partnership. It just doesn't sound good, and believe it or not, I doubt they will go through with it. Too much downside, unless the ship is listing and they are becoming desperate.

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Why do people keep mentioning "foot?"

noggin's picture
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Because it is "foot"ball season!

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BigCheese wrote:There are only two explanations for this potential change.
 
1-  The GP's are concerned about their own welfare.
 
2- The GP's are concerned about the 500k+ producer subsidizing the growth model and continuing to receive NO BONUS (which was at least 20% of their total comp).
 
My feeble mind tells me that item #1 is more important.
 
 
If they do in fact go through with the change, GP or LP envy will ensue breaking down the image that all will continue to work together for the greater good. However, Spiff will continue to mentor and train the newbies affecting his abitlity to make Seg 4 (where bonuses if they are paid hit the 10% of comp threshold) and strive for the original pot of gold....GP. Only now there will be levels of partnership. It just doesn't sound good, and believe it or not, I doubt they will go through with it. Too much downside, unless the ship is listing and they are becoming desperate.
 
Actually, I think #2 makes sense.  If I were a 800K+ producer, and a large part of my income was reliant on the rest of the company, and on subsidizing growth (of the rest of that company), I would not be all that happy.  Realistically, the change in income for a 800K+ prodcuer could be well over 100K per year.  Between branch profit bonus, profit sharing, and LP (or GP) distributions, that adds up to a lot of dough.  I don't think it affects smaller producers all that much.

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B24 wrote: BigCheese wrote:There are only two explanations for this potential change.
 
1-  The GP's are concerned about their own welfare.
 
2- The GP's are concerned about the 500k+ producer subsidizing the growth model and continuing to receive NO BONUS (which was at least 20% of their total comp).
 
My feeble mind tells me that item #1 is more important.
 
 
If they do in fact go through with the change, GP or LP envy will ensue breaking down the image that all will continue to work together for the greater good. However, Spiff will continue to mentor and train the newbies affecting his abitlity to make Seg 4 (where bonuses if they are paid hit the 10% of comp threshold) and strive for the original pot of gold....GP. Only now there will be levels of partnership. It just doesn't sound good, and believe it or not, I doubt they will go through with it. Too much downside, unless the ship is listing and they are becoming desperate.
 
Actually, I think #2 makes sense.  If I were a 800K+ producer, and a large part of my income was reliant on the rest of the company, and on subsidizing growth (of the rest of that company), I would not be all that happy.  Realistically, the change in income for a 800K+ prodcuer could be well over 100K per year.  Between branch profit bonus, profit sharing, and LP (or GP) distributions, that adds up to a lot of dough.  I don't think it affects smaller producers all that much.

I have to agree. At some point, these Seg 5 guys will start wondering why they are staying (so far there have been a few that are "exploring").

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iceco1d wrote:Why do people keep mentioning "foot?"
 
BigCheese is the new username of the poster formerly known as footsoldier.
 
How could you not know that?

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I think #2 makes sense also. In my area I have seen three seg 4/5 guys move in the last month, 7 in last 3 months, and 12 in the last 6 months.. Those are producers that jones can't afford to lose because the guys who are replacing them are seg 1/2 and that crushes profitbality

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I would go back to what Hulk said.  If they want to compensate those guys for being big producers, they'll give them more LP or GP whenever it comes out.

Why would  you change a system that has worked for decades if you know the problem you are trying to solve is temporary?  The firm isn't in any financial trouble.  We're going to be, or at least should be, in a bonus bracket this trimester.  We aren't hemmoraging Seg 4 & 5 guys.  We've had 1 seg 4 guy in my region leave in the last 12 months (He jumped to some loser company called LPL).  I believe it is the same all over the company.  We're not losing more than average. 
 
I just won't believe the rumor is true until Weddle sends us an email telling us there is a drastic change.    

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Spaceman Spiff wrote: I would go back to what Hulk said.  If they want to compensate those guys for being big producers, they'll give them more LP or GP whenever it comes out.

Why would  you change a system that has worked for decades if you know the problem you are trying to solve is temporary?  The firm isn't in any financial trouble.  We're going to be, or at least should be, in a bonus bracket this trimester.  We aren't hemmoraging Seg 4 & 5 guys.  We've had 1 seg 4 guy in my region leave in the last 12 months (He jumped to some loser company called LPL).  I believe it is the same all over the company.  We're not losing more than average. 
 
I just won't believe the rumor is true until Weddle sends us an email telling us there is a drastic change.    

I don't think Jones is losing Seg4/5 guys either. But my guess is some guys are "thinking about it" like Segment 3 guys do all of the time.

I think different regions perform differently. Leadership is one of the things that will keep some producing advisors put at Jones. But regions where there is bad leadership, or resentment... all bets are off.

But since we're talking LP/GP - I have to agree with Spiff. Until Wind sends out that email, I won't believe it.

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Moraen wrote: Spaceman Spiff wrote:
I would go back to what Hulk said.  If they want to compensate those guys for being big producers, they'll give them more LP or GP whenever it comes out.

Why would  you change a system that has worked for decades if you know the problem you are trying to solve is temporary?  The firm isn't in any financial trouble.  We're going to be, or at least should be, in a bonus bracket this trimester.  We aren't hemmoraging Seg 4 & 5 guys.  We've had 1 seg 4 guy in my region leave in the last 12 months (He jumped to some loser company called LPL).  I believe it is the same all over the company.  We're not losing more than average. 
 
I just won't believe the rumor is true until Weddle sends us an email telling us there is a drastic change.     I don't think Jones is losing Seg4/5 guys either. But my guess is some guys are "thinking about it" like Segment 3 guys do all of the time. I think different regions perform differently. Leadership is one of the things that will keep some producing advisors put at Jones. But regions where there is bad leadership, or resentment... all bets are off. But since we're talking LP/GP - I have to agree with Spiff. Until Wind sends out that email, I won't believe it.
 
I had to read that twice before I caught that. That's hilarious!

Advisor238's picture
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The only people I have seen leaving the firm in my region have been
Seg 3 guys. I can't think of one Seg 4 or Seg 5 guy leaving in the
past few years. I have to say our Region has great camaraderie and
leadership.

sd_broker's picture
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In the last 12 months 7 of us left EDJ in 1 region.
 
4 were Seg 5 
5 were LP's
5 had greater than 10 years tenure at EDJ.
5 accounted for $400m in assets.
 
It's happening. Maybe not to this extent in all regions, but there is an exodous.

LockEDJ's picture
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FWIW ... in my entire region... not a single 5, a couple of fours and that's it ... since 2006. One three got a whiff from LPL, but he stayed with us.

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In my old region, there are now 8 brokers with LPL that were with Jones. I believe of that 8, 6 were segment 3 and 2 were segment 4. I would expect Segment 3's to go first then followed by Segments 4's. I would say it is unlikely that Segment 5's  would ever move. I believe our total brokers in the region when I left was around 60-65. We did have some that went to Next financial also, I believe there were 3. Our region had some special issues with it so that transition rate may be higher than the norm.

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The only people that ever leave our region are New, Seg 1, Seg 2, and rarely seg 3.  We have not had a seg 4 or 5 leave in the 4 years I have been here.  But we have a lot of complacent seg 4's that are happy making 100-150K in second careers (many are in their late 50's), and have no interest in leaving.  Our seg 5's are green machines - a few former RL's (our region has been split/combined several times due to growth), they all have tons of LP, SLP and GP (current one).  Our longest tenured FA must have close to $1mm in LP based on his years, production, and being a former RL.  That's kicked him an extra 200K or so each year.  That's a tough annuity to walk away from.  And his business is mostly transactional, 1000+ households, can't really take that with you.  I think his business would get decimated if he left.  Either that or it would be too much work to rebuild.

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Some regions clearly have more turnover than others. My old region lost 4 Seg 4 brokers since 2006 and 2 Seg 5's. The guy who took over my office left and I think he was Seg 3.
 
Brokers who produce expect bonuses and brokers  who don't say it doesn't matter. If the firm is losing producing brokers, they had better do something to sustain them or the firm won't be able to maintain the growth that they had in the past. No one to pay for it and the GP's are not going to do it out of their pocket directly.
 
 

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Joined: 2009-07-13

We're going to be, or at least should be, in a bonus bracket this trimester. 
 
Remember Sir Spiffy, before there is bonuses, there is growth. According to your 10K which you claim to read cover to cover each quarter, FA growth is necessary for your firm. Are you guys growing or just maintaining head count these days. I know 3 years ago when I was there, it was 200 month new reps. And the headcount stayed about the same then...I believe you have 12K reps now, so obviously there is some net growth.
 
BTW...Did you happen to notice that LPL advisors were noted as the most repected representatives by clients according to the  JD Power survey which consistently names EDJ as the best firm...
 
Apparently JD Power rates firm satisfaction and client satisfaction...Not bad for an independent firm.

sd_broker's picture
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Joined: 2009-04-20

Until May of last year, only Seg 1-3 brokers left the region mainly from a lack of production. I  laughed off the people who left because they honestly were a joke. I'd seen a million leave in my 11 years, so many that I quit learning their names. Most left before they were put on goals and fired. Few if any of these stayed in production after leaving.

When Seg 5's started leaving, of which I was one, then I began to take notice.
 
It is a great firm, but depending on your specific situation there may be more profitable options. This is what led me down the path I took that led me to leave the only company I had worked for in my adult life.

BigCheese's picture
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Joined: 2009-07-13

Why would a Seg 5 broker leave if you have it soooo good?

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

Because everyone is an individual.  Each business is different.  Each FA has their own unique circumstances.  For some big producers, they could make almost as much with their deal at Jones (prodcution, bonus, profit sharing, LP/GP) compared to if they left.  It also depends where you are in life.  If you started at Jones at 22, and are seg 5 at age 35, there's a good chance you are going to stay open minded.  If you started at Jones at 45, and you are seg 5 at 55 or 60, chances are you are not leaving without a really good exit strategy and some serious energy.  It also depends what got you to where you are.  If you feel it is replicatable (word?) somewhere else, it's easy to move.  BUt as I stated earlier, our biggest producer has well over 1000 housholds, does stricly transactional business (about 25% MFDs, the rest indiv secur), has a boatload of LP and SLP (former RL), and does not have to work all that hard to gross 850K.  He is in his mid 40's.  I can't imagine trying to move a book like that.  And he does not really believe in managed money very much, so he needs lots of clients.  For him, staying put, doing Goodknights to shed unprofitable clients and have someone else pay his overhead and goose his profitability is probably worth more than the aggrevation of trying to move that entire operation.

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

BigCheese wrote:We're going to be, or at least should be, in a bonus bracket this trimester. 
 
Remember Sir Spiffy, before there is bonuses, there is growth. According to your 10K which you claim to read cover to cover each quarter, FA growth is necessary for your firm. Are you guys growing or just maintaining head count these days. I know 3 years ago when I was there, it was 200 month new reps. And the headcount stayed about the same then...I believe you have 12K reps now, so obviously there is some net growth.
 
BTW...Did you happen to notice that LPL advisors were noted as the most repected representatives by clients according to the  JD Power survey which consistently names EDJ as the best firm...
 
Apparently JD Power rates firm satisfaction and client satisfaction...Not bad for an independent firm.
 
Yes, we are growing headcount.  We ended 2008 at 12,155 FAs globally.  At the end of July we were at 12,659.  4.14% growth in a market like this.  We ended 2007 at 11,202.  1457 advisors added in the midst of a major market meltdown, shrinking profits, and general fear of all things monetary.  The goal for the year is 7%, I believe.  Looks like we're at least close to being on track. 
 
Who said I read the 10-k cover to cover every quarter?  I read it from time to time, but not necessarily cover to cover every quarter.  You're pretty good at putting words in my mouth. 
 
I saw the JD Power ratings.  Congrats.  I've never said that you indy folks were bad or that you weren't good at customer service.  You should be.  A bunch of you cut your teeth at and learned about customer service from...drumroll please...Edward Jones! 
 
Question for the wiser than wise Mr. Big Cheese.  If EDJ wants to grow market share, how do they go about doing it in a substantial way?  In my zip code there are about $6.5B in TLIA out there for everyone to split.  If Jones wants to bump their market share from 2% to 4% how do they do it?  Funnel more marketing dollars to existing FA's?  Not put in any new FAs until the existing ones reach critical mass?  How would you suggest they do it differently than they are doing it right now?
 
The funny thing about Jones that you seem to be overlooking, or at least not mentioning, is that 90% of the time there is growth AND there are bonuses.  How many trimesters while you were at Jones were there no bonuses?  Three?  Four?  How many of those no bonus trimesters were due to new FA growth vs the market?  Zero? 
 
You can knock the growth at Jones all you want.  The majority of the time it works well within the business model.  Only in extreme times like this does it not look so good. 

edjgp123's picture
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Joined: 2009-07-14

Spaceman Spiff wrote:BigCheese wrote:We're going to be, or at least should be, in a bonus bracket this trimester. 
 
Remember Sir Spiffy, before there is bonuses, there is growth. According to your 10K which you claim to read cover to cover each quarter, FA growth is necessary for your firm. Are you guys growing or just maintaining head count these days. I know 3 years ago when I was there, it was 200 month new reps. And the headcount stayed about the same then...I believe you have 12K reps now, so obviously there is some net growth.
 
BTW...Did you happen to notice that LPL advisors were noted as the most repected representatives by clients according to the  JD Power survey which consistently names EDJ as the best firm...
 
Apparently JD Power rates firm satisfaction and client satisfaction...Not bad for an independent firm.
 
Yes, we are growing headcount.  We ended 2008 at 12,155 FAs globally.  At the end of July we were at 12,659.  4.14% growth in a market like this.  We ended 2007 at 11,202.  1457 advisors added in the midst of a major market meltdown, shrinking profits, and general fear of all things monetary.  The goal for the year is 7%, I believe.  Looks like we're at least close to being on track. 
 
Who said I read the 10-k cover to cover every quarter?  I read it from time to time, but not necessarily cover to cover every quarter.  You're pretty good at putting words in my mouth. 
 
I saw the JD Power ratings.  Congrats.  I've never said that you indy folks were bad or that you weren't good at customer service.  You should be.  A bunch of you cut your teeth at and learned about customer service from...drumroll please...Edward Jones! 
 
Question for the wiser than wise Mr. Big Cheese.  If EDJ wants to grow market share, how do they go about doing it in a substantial way?  In my zip code there are about $6.5B in TLIA out there for everyone to split.  If Jones wants to bump their market share from 2% to 4% how do they do it?  Funnel more marketing dollars to existing FA's?  Not put in any new FAs until the existing ones reach critical mass?  How would you suggest they do it differently than they are doing it right now?
 
The funny thing about Jones that you seem to be overlooking, or at least not mentioning, is that 90% of the time there is growth AND there are bonuses.  How many trimesters while you were at Jones were there no bonuses?  Three?  Four?  How many of those no bonus trimesters were due to new FA growth vs the market?  Zero? 
 
You can knock the growth at Jones all you want.  The majority of the time it works well within the business model.  Only in extreme times like this does it not look so good. 
very well put........

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