EJ MONEY LOSING INTERNATIONAL OPERATIONS

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Juck Phones's picture
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see the outlook from Jones' 2008 10-k report below
I don't get it...Canada 1995= 14 years.  U.K. 1997= 12 years
Q1: How does this help my clients in my small town?
Q2: How does it help me help my clients?
Q3: Any guesses as to WHY they'd keep pissing money away around the globe?
I can only speculate there MUST be some "pie in the sky" gigantic payoff somehow "some day" expected by the GEEPs. 
Jones Financial Companies LP LLP · 10-K · For 12/31/08  Filed On 3/30/09 5:32pm ET   ·SEC File 0-16633   ·   Accession Number 1068800-9-75
Item 1A. Risk Factors, continued
International Expansion — The Partnership's foreign operations are not yet profitable; they will require significant infusions of capital and may never become profitable.
 
The Partnership's branch system has expanded into Canada and the United Kingdom.  Operations are at substantial deficits in these two countries, and it is anticipated that it will be a substantial number of years before the Partnership's expansion in these countries will reach a sufficient scale of operations to achieve profitability.  Additional investments will be incurred in the interim, which will be substantial.  Despite the substantial past and prospective investment in the foreign branch system, the Partnership's Canadian and U.K. operations are not yet profitable, nor is there any assurance at this time that either operation will ultimately attain profitability.

Anonymous's picture
Anonymous

Welcome to being in business?  It's amazing to me the great lengths that people will go to on this board to bash EDJ.
 
All companies lose money when rolling out new product, expand territories, etc., even small businesses!  It's called risk - welcome to the business world.
I think UBS might know something similar about expanding to a new territory (from Switz to USA). 
 

voltmoie's picture
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Get a life bro - If your wife won't sleep with you, get a hooker.  

Moraen's picture
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Seriously. This is ridiculous. In order to grow, you have to incur losses sometimes. Every company has to. Eventually those business units will be profitable, but how knows how long it could take.

B24's picture
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Here's my take - they give it the good college try (which can take years or decades).  When they decide to cut their losses, they will sell the offices to a firm up there, and across the pond.  It's business.  If you think Jones is the only major firm that has ever had a losing business unit, try reading the paper.  But my guess is that they want to gain more mass before they try to sell off the offices.

Spaceman Spiff's picture
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I don't believe they'll sell off the offices.  My guess is that they're committed to both of those countries no matter what.  The issue is that they're trying to grow Canada and the UK in a similar fashion to the US.  But instead of doing it over 50 years like Ed, Ted, and John did, they're doing it in a decade.  There just aren't enough people in those countries hitting big numbers yet to make a bunch of profit. 
As to the OP's three questions:
1) It doesn't matter to you. 
2) It doesn't matter to your clients.
3) You have to spend money to make money.  Jones lost money on you for years before they ever saw a profit.  Why would they keep throwing good money after bad? 
Just as an example, let's say your client, at your recommendation, purchased $10,000 of CAIBX in Oct of 2007 and had him add $100 a month.  In almost 2 years of investing with you, he's still down.  Is it a bad fund?  Was it a bad advice?  No on both.  Is there some big pie in the sky gigantic payoff somehow someday that you expect that the client just doesn't see?  What do you tell your client?   

chief123's picture
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To xfer to somebody who won't just slam them in A shares and forget about them.. just kidding spiff..

I had to room with a guy who was going to start an office in Canada(forgot if it was PDP, Eval Grad or what) but he mention all the differences between securities regulations and portfolio holdings(more int'l because there domestic stock market shouldn't account for 60% of the portfolio). It was actually kind of interesting.

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voltmoie wrote:Get a life bro - If your wife won't sleep with you, get a hooker.  
 
 
 
currently leader :
 
"RR quote of the year"

noggin's picture
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Spaceman Spiff wrote:
I don't believe they'll sell off the offices.  My guess is that they're committed to both of those countries no matter what.  The issue is that they're trying to grow Canada and the UK in a similar fashion to the US.  But instead of doing it over 50 years like Ed, Ted, and John did, they're doing it in a decade.  There just aren't enough people in those countries hitting big numbers yet to make a bunch of profit. 
As to the OP's three questions:
1) It doesn't matter to you. 
2) It doesn't matter to your clients.
3) You have to spend money to make money.  Jones lost money on you for years before they ever saw a profit.  Why would they keep throwing good money after bad? 
Just as an example, let's say your client, at your recommendation, purchased $10,000 of CAIBX in Oct of 2007 and had him add $100 a month.  In almost 2 years of investing with you, he's still down.  Is it a bad fund?  Was it a bad advice?  No on both.  Is there some big pie in the sky gigantic payoff somehow someday that you expect that the client just doesn't see?  What do you tell your client?   
 
Maybe it's just me, do you have American Funds on the brain?  How does this analogy apply to business operations in Canada and England? By the way, to explain further, let's say your client went to New York City on a train that left Philly and was travelling at 60 mile per hour north and another train left NYC and was travelling south at 75 miles per hour. When would they collide if they were on the same longitude? Does that help explain?? Your office must be next to a nail salon because I just don't get where you are coming from....

BigCheese's picture
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Bottom line. At some point Jones will have to decide if it makes economic sense to continue the bleeding. Bleeding is defined for those that feel like challenging...not making a profit.
The problem gets amplified when markets (i.e., profits) are down. I don't disagree that companies make investments that take time to provide profits, but they do need to see a light at the end of the tunnel. I would think 12-14 years ought to be enough time to figure out whether or not they have made a good business decision.
 
My statement stands...when the average GP's income drops to their base, everything is up for discussion. I wouldn't be suprised to see Jones management make major changes in many areas to shore up their cushy little kingdom...or sell out to the highest bidder (before Spiff jumps too high, I think that's very unlikely).

Juck Phones's picture
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OK Ice, Volt, Moraen, and B24, and others, go ahead and ignore my opinionated or inflamatory question #3 but DO addres the first two questions, seriously...
HOW DOES THIS HELP MY CLIENTS?
HOW DOES THIS HELP ME HELP MY CLIENTS?
Lay it on me dudes (and dudettes). Lets hear it.

BigCheese's picture
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1. It doesn't help your clients.
 
2. It probably hurts you in helping your clients because resources aren't available for US reps (really hard to quantify). Less bonus and partnership payout if you were elgible would be the logical answer.
 
What's your take? You obviously have an opinion or you wouldn't have asked.

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noggin wrote:Spaceman Spiff wrote:
I don't believe they'll sell off the offices.  My guess is that they're committed to both of those countries no matter what.  The issue is that they're trying to grow Canada and the UK in a similar fashion to the US.  But instead of doing it over 50 years like Ed, Ted, and John did, they're doing it in a decade.  There just aren't enough people in those countries hitting big numbers yet to make a bunch of profit. 
As to the OP's three questions:
1) It doesn't matter to you. 
2) It doesn't matter to your clients.
3) You have to spend money to make money.  Jones lost money on you for years before they ever saw a profit.  Why would they keep throwing good money after bad? 
Just as an example, let's say your client, at your recommendation, purchased $10,000 of CAIBX in Oct of 2007 and had him add $100 a month.  In almost 2 years of investing with you, he's still down.  Is it a bad fund?  Was it a bad advice?  No on both.  Is there some big pie in the sky gigantic payoff somehow someday that you expect that the client just doesn't see?  What do you tell your client?   
 
Maybe it's just me, do you have American Funds on the brain?  How does this analogy apply to business operations in Canada and England? By the way, to explain further, let's say your client went to New York City on a train that left Philly and was travelling at 60 mile per hour north and another train left NYC and was travelling south at 75 miles per hour. When would they collide if they were on the same longitude? Does that help explain?? Your office must be next to a nail salon because I just don't get where you are coming from....
 
Would it have made more sense if I had used Neuberger Berman Mid Cap Growth?  The mutual fund name is irrelevant.  The point is that when you make an investment, sometimes it initially loses money before you see any gains.  In this case, Jones is making and investment of capital to go international.  They're initially losing money.  Just like every business in this country that has ever been started, you lose money before you breakeven and then eventually make a profit.  You have to choose, whether as an investor in CAIBX or in a new business venture, how you want to move forward.  You can either cut and run or you can keep putting money in if you believe that what you are doing will be very profitable in the long run.  I would guess that Jones is going to stick it out. 
 
As to your algebra problem:  Approx 32 miles north of Philly on the New Jersey Turnpike.  I had to use some very general locations to get the answer, but I'm close.  Now, I've only driven into NY one time from the Poconos, so I'm not too familiar with that part of the country.  But, I'd guess you'd be pretty lucky to average 60 mph with the toll roads and all.  So, technically, I may be off a little bit.

canucklehead's picture
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I can't speak for the UK, but in Canada I think that part of the problem was a lack of veterans. I joined EJ as new/new in '02, was Seg 5 by '05, and left in '06. When I first joined, I was struck by how many enthusiastic fresh faces there were. I asked myself - where are the successful veterans? Oh, there were some veterans, but they had only been there 5 years or so, and were Seg 3 (and the occasional 4). EJ was having enough trouble keeping the pipeline full (at least in my region), so they weren't going to lean on those guys to produce more. I was grateful to EJ for the training and the salary and the office (and even a few assets they threw my way), but the first time I had an $80K month, with $28K for me and $52K for them, it was time to call the recruiters.

 
As I say, I left in '06, so maybe it's different now, as the guys would have picked up LP and grown their books (I didn't keep in touch, so I don't know). But at that time, EJ was practically the farm team for RayJay (so much so that EJ sued RJ, and RJ couldn't solicit EJ employees for 6 months in Canada), and anyone who's producing well knows that more freedom and more $$ are just a phone call away.
 
...and that's how I learned where the successful veterans went! Pretty hard to win the World Series when your best players go to the Yankees.
 
One other thing: Canadians don't like to admit it, but we sort of are America Jr., with minor cultural differences (like: gay marriage is legal here). I went on a div. trip to Hawaii, and when the hosting GP had to introduce the gay IR and his companion - well, let's just say there is no word in the language to describe the look on that GP's face. My wife and I killed ourselves laughing about that one.

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BigCheese wrote:1. It doesn't help your clients.  
Nor does is hurt them.  Since they aren't invested in, but rather with, EDJ what happens to the UK and Canadian divisions doesn't materially affect our clients. 
 
2. It probably hurts you in helping your clients because resources aren't available for US reps (really hard to quantify). Less bonus and partnership payout if you were elgible would be the logical answer.  Really?  Seems to me that those entities have never been profitable, but yet the firm has spent millions of dollars on things that make our jobs easier, allowing us to better advise and service our clients.  To list the things that have been done at EDJ while we've been in Canada and the UK would take too much time, but you can't seriously make the arguement that because of the way things are going in the UK and Canada that we are suffering as US advisors. 
 
Partnership and bonus payouts have ZERO impact on our ability to advise and service our clients.  That's proven every day by the number of Seg 1, 2, and 3 FAs who do a bang up job with clients. 
 
The only way you MIGHT be able to stretch it into a negative is if you assume that because we're not getting bonuses and our LP payouts aren't at 20% this year, it is having a negative impact on morale and that somehow translates to a below normal client experience. 
 
What's your take? You obviously have an opinion or you wouldn't have asked.
 
I'm also curious about your opinion.  Is this the first time you've read the 10-K?  As long as I've been reading them those statements have been there.  Do you really think that Jones is short changing you on something because they're spending money in the UK and Canada?
 

BigCheese's picture
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How do we get to gay marriage on this thread?????????
 
Spiff- I have a math problem for you.....
 
Let's assume for a moment you own a company and you have grown exponentially for years. You have expanded into two countries and for more than a decade you have lost money with dim prospects of making any money in the future. If your net profits are lagging in your only profitable country, and you are continuing to drain resources, the question I continue to scratch my head is....
 
HOW LONG WOULD YOU CONTINUE THE BLEEDING?
 
Remember for a moment you are the owner...

Juck Phones's picture
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Spaceman Spiff wrote:  As to the OP's three questions:
1) It doesn't matter to you. 
2) It doesn't matter to your clients.
 
Hmmm, let me see, it doesn't metter to me or my clients?  I wonder it it ONLY matters, then, to the GPs?  Since that is speculative of me to wonder (any GPs on these boards, I'd love to hear from you) let me tell you just a couple quick reasons off the top of my head as to why IT DOES MATTER TO ME.  
 
1) Because at Jones, my muni bond inventory purely SUCKS.  Sorry guys that's not bashing, theat's merly fact.  Gee guys, whaddayasay you put some capital into intermediates?  My buddy at LPL has an incredible inventory of intermediate or whatever ne needs in munis.  I dont have d*** to offer my clients under 25 year maturities.  I get the periodic wires lamenting that "Inventories are lean everywhere."  That's B.S. cause my buddy's LPL inventory isn't lean!
 
2) Because Jones' bond trading area SUCKS.  OK, ignore the inflammatory opinion and let me restate it factually.  FACT: The bond trading department is understaffed and they'll tell you so.  How about allocating some UK and Canada capital to staff up your trading areas to remotely pursue matching your mantra of GROWTH GROWTH GROWTH?  FACT: EJ continues to grow the hell out of the rookie sales force but refuses or declines to staff up critical area like bond trading.
 
FACT: Jones now WILL NOT provide firm quotes when my client needs to liquidate a bond. In the past, when they used to provide form quotes, it was sometimes truly DAYS before they responded to your wire but in all honesty, it was usually a few hours.  Now they have eliminated that pesky delay by refusing to provide firm quotes at all.   I call my buddy at LPL and he tells me "No, man they WANT us to use firm quotes and the traders  provide them after a short hold on the phone."  Similar resposes come from buddies at Steifel and Wells Fargo.  They're shaking their head like "C'mon man, you're not serious are you.. Jones won'tgive you firm quotes?"
 
Jones preaches to the lemmings about having the best bond inventory best pricing yada yada and lemmings believe that crap because that's all they know.  Well they don't know what they don't know.  What they don't know is the inventory sucks and it is not competitive when measured by 1) availability/quantity 2) pricing or yield the client receives, 3) yield to broker.  I've been documenting this for a year or so. 
 
Again, here's a couple problems that someone in St Louis should be throwing some capital at.  Anybody understand why I don't care to conquer the globe.  I only care to focus on that area around my small town office.  So Spiffy, it does matter to me and yes, I do really think that Jones is short changing me on bond inventory and undrestaffed trading areas at least indirectly because they're spending money in the UK and Canada.
 
Cuck Fanada
Euck Fengland
Juck Phones   

canucklehead's picture
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BigCheese (or foot, or whatever),
 
I meant no offense. I included the "gay marraige" anecdote because I thought (and still do think) it's funny.
 
The original thread title was EJ MONEY LOSING INTERNATIONAL OPERATIONS. I thought I'd offer a little perspective that you folks might not have - that's all.

Juck Phones's picture
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BigCheese wrote:1. It doesn't help your clients.
 
2. It probably hurts you in helping your clients because resources aren't available for US reps (really hard to quantify). Less bonus and partnership payout if you were elgible would be the logical answer.
 
What's your take? You obviously have an opinion or you wouldn't have asked.
 
Yes, Big Cheese you are spot on.  Doesn't do ANYTHING at all for my client and doesn't do ANYTHING to help me help my client, yet regardless of my LP and bonus, I have encountered specific situations that actually makes it harder for me to help my clients. 
so
Juck Phones

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BigCheese wrote: How do we get to gay marriage on this thread?????????
 
Spiff- I have a math problem for you.....
 
Let's assume for a moment you own a company and you have grown exponentially for years. You have expanded into two countries and for more than a decade you have lost money with dim prospects of making any money in the future. If your net profits are lagging in your only profitable country, and you are continuing to drain resources, the question I continue to scratch my head is....
 
HOW LONG WOULD YOU CONTINUE THE BLEEDING?
 
Remember for a moment you are the owner...

That wasn't a math problem.

Anonymous's picture
Anonymous

Juck Phones wrote:Spaceman Spiff wrote:  As to the OP's three questions:
1) It doesn't matter to you. 
2) It doesn't matter to your clients.
 
Hmmm, let me see, it doesn't metter to me or my clients?  I wonder it it ONLY matters, then, to the GPs?  Since that is speculative of me to wonder (any GPs on these boards, I'd love to hear from you) let me tell you just a couple quick reasons off the top of my head as to why IT DOES MATTER TO ME.  
 
1) Because at Jones, my muni bond inventory purely SUCKS.  Sorry guys that's not bashing, theat's merly fact.  Gee guys, whaddayasay you put some capital into intermediates?  My buddy at LPL has an incredible inventory of intermediate or whatever ne needs in munis.  I dont have d*** to offer my clients under 25 year maturities.  I get the periodic wires lamenting that "Inventories are lean everywhere."  That's B.S. cause my buddy's LPL inventory isn't lean!
 
2) Because Jones' bond trading area SUCKS.  OK, ignore the inflammatory opinion and let me restate it factually.  FACT: The bond trading department is understaffed and they'll tell you so.  How about allocating some UK and Canada capital to staff up your trading areas to remotely pursue matching your mantra of GROWTH GROWTH GROWTH?  FACT: EJ continues to grow the hell out of the rookie sales force but refuses or declines to staff up critical area like bond trading.
 
FACT: Jones now WILL NOT provide firm quotes when my client needs to liquidate a bond. In the past, when they used to provide form quotes, it was sometimes truly DAYS before they responded to your wire but in all honesty, it was usually a few hours.  Now they have eliminated that pesky delay by refusing to provide firm quotes at all.   I call my buddy at LPL and he tells me "No, man they WANT us to use firm quotes and the traders  provide them after a short hold on the phone."  Similar resposes come from buddies at Steifel and Wells Fargo.  They're shaking their head like "C'mon man, you're not serious are you.. Jones won'tgive you firm quotes?"
 
Jones preaches to the lemmings about having the best bond inventory best pricing yada yada and lemmings believe that crap because that's all they know.  Well they don't know what they don't know.  What they don't know is the inventory sucks and it is not competitive when measured by 1) availability/quantity 2) pricing or yield the client receives, 3) yield to broker.  I've been documenting this for a year or so. 
 
Again, here's a couple problems that someone in St Louis should be throwing some capital at.  Anybody understand why I don't care to conquer the globe.  I only care to focus on that area around my small town office.  So Spiffy, it does matter to me and yes, I do really think that Jones is short changing me on bond inventory and undrestaffed trading areas at least indirectly because they're spending money in the UK and Canada.
 
Cuck Fanada
Euck Fengland
Juck Phones   All good points.  Still, things like that happen all the time, in all businesses.  Business owner's have to decide how to deploy capital.  You probably have clients with $10,000 that have lost (% wise) a ton of money - I bet they are wondering why you are out hand-holding and shmoozing your $1MM clients at the fanciest restaurant in town, while they get nothing more but a "hold on" letter, and a semi-annual phone call.Could you do better than Capital Income Builder for the $10K client?  Maybe.  Could you spend more time with them to make their impression of your service improve?  Probably.Before you say, "but the million dollar client generates more revenue for me!  EDJ Canada and EDJ UK aren't "A" clients, they are losing EDJ money!"Then change the scenario to a $1MM PROSPECT.  You'll spend time and money on them, hoping that they will have a nice payoff in the end, along with other HNW referrals.  Same concept with EDJ Canada and EDJ UK.  Now, when will they stop trying to make those markets work?  I dunno.  How long will you chase the $1MM client?  How much will you spend?  How many dinner bills will you foot, before you cut the $1,244,204 rollover loose?  We all have that decision to make, and all of our answers will be different.

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Juck Phones wrote: OK Ice, Volt, Moraen, and B24, and others, go ahead and ignore my opinionated or inflamatory question #3 but DO addres the first two questions, seriously...
HOW DOES THIS HELP MY CLIENTS? It doesn't.
HOW DOES THIS HELP ME HELP MY CLIENTS?   It doesn't.
Lay it on me dudes (and dudettes). Lets hear it.

Juck - it's not about you. Why would it be? The purpose of any for profit company is to generate profits for the owners. Not so that you can help your clients. Helping your clients is supposed to generate profits for the company, not using profits to help you help your clients.

They will continue to fund those operations because they believe it will eventually be profitable, and they have the capital to continue to fund those operations.

Whether they are correct or not is a subject for debate. I personally wouldn't do it, or at least change the business model in both countries (3 person offices anyone?).

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iceco1d wrote: Now, when will they stop trying to make those markets work?  I dunno.  How long will you chase the $1MM client?  How much will you spend?  How many dinner bills will you foot, before you cut the $1,244,204 rollover loose?  We all have that decision to make, and all of our answers will be different.
Yeah it IS rhetorical for me to ask "When will they stock the muni inventory with other than 30 year bonds?" and "When will they staff up the trading areas even quasi-commensurate with the growth level of adding kindergarten level new FAs?" cause I don't really care about fixing Jones' model.  I care about taking care of my local clients and, oh, by the way I'll make a good living too.
We all have decisions to make and I'm not one to accept or dish out bitching/moaning/whining without using ones own spine to make a decision and act on it- basically man up and do something about it or STFU.  Life is full of choices isn't it?

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Moraen wrote: Juck - it's not about you. Why would it be? The purpose of any for profit company is ...
 
Moraen, please note that these two questions are specifically focused on my client, not " about me" so I can agree with you.  Duh. 
 
I'm not insinuating or alleging or  whining "Wah wah wah, they're taking comp away from me and sending it to negative cash flow operations across the golbe.".  No, I'm merely saying through these questions that these decade(s) long global conquests do not A) help my client in any way and B) do not even help me help my client.  I understand for profit companies etc.  I love free enterprise. 
 
It's just become so clear that Jones' priorities are not my priorities.

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Mr. Juck.
Simply, firm efforts in the UK or Canada don't help your clients. They help clients in the UK and Canada. They don't help you - they help the new and veteran FAs in the UK and Canada. Financial results in those two countries are not where anyone wants them (though the UK FAs are doing very well). That's why there is considerable effort underway to improve.

I'd suggest you worry about what you can control.    You may choose to start with your attitude.

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Juck - Did you and your buddies at LPL, et al discuss what guidelines they are using to tell you that they have a full inventory of bonds to choose from?  As you probably know from your research, Jones won't just throw anything into the inventory.  It has to meet certain criteria before they'll put it in there.  So, while your buddy at LPL may be able to offer his client a non rated 7 year muni, Jones isn't going to put that bond in our inventory. You'll rarely, if ever, see anything BBB or below on a muni.  That may be one explanation. 
Is that the only thing you have to complain about in regards to the UK and Canada operations?  Because the times that you'd actually need to buy an intermediate muni can't come up all that often.  At least they don't in my office.   

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Spaceman Spiff wrote: Juck - Did you and your buddies at LPL, et al discuss what guidelines they are using to tell you that they have a full inventory of bonds to choose from?  As you probably know from your research, Jones won't just throw anything into the inventory.  It has to meet certain criteria before they'll put it in there.  So, while your buddy at LPL may be able to offer his client a non rated 7 year muni, Jones isn't going to put that bond in our inventory. You'll rarely, if ever, see anything BBB or below on a muni.  That may be one explanation. 
Is that the only thing you have to complain about in regards to the UK and Canada operations?  Because the times that you'd actually need to buy an intermediate muni can't come up all that often.  At least they don't in my office.   

I will back up Juck here. I'm not sure about LPL, but Schwab and Fidelity usually have A or better with several different maturities (they have others, but the search criteria I use is A or better). When Jones says that offerings are thin, it is their inability to get them.

You would be surprised at the incredible amount in inventory.

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The bottom line on the disaster and debacle disguised as an "expansion" into the UK and Canada is that it is the brainchild of the evil genius himself, John Bachmann.  Until he is pushing up daisies somewhere, they will continue to throw good money after bad paying homage to this very bad idea.  They will not abandon the idea, thereby dishonoring and disgracing Bachmann, while he is still alive.  Write this down: "After Bachmann dies, EDJ will begin the process of selling the UK and Canada operation within a year!" 
 
This is exactly the kind of small-minded nonsense that keeps Jones "culture" alive and well.  The interests and ego of the former Managing Partner are put ahead of the good of the company and the thousands of people who work there today.  The UK and Canada don't work, have never worked, will never work, and serve as a bottomless black hole of capital infusion funded by hard-working brokers in the U.S.  You Jones guys have a house payment, a car payment, a credit-card payment, and a Bachmann ego payment every frickin' month.  Sucks to be you! 

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Sooth,
 
"The UK and Canada...will never work..."
 
That's a pretty broad statement. EJ "works" in the US, why wouldn't it work elsewhere? Can you expand on your statement?

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Sooth, I have not been around long enough to understand the "Bachman" effect (he was before my time). But there may be some validity to your statement. I don't believe they are showing enough traction in those areas. If they were hiring a few hundred new FA's a year and they were sticking, or were getting a lot of transfer FA's with assets, it could work. But they need to ramp up much quicker to make it work. I think the transition happens before Bachman is gone. Weddle has shown the gumption to get stuff done.

Anonymous's picture
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Moraen wrote: Spaceman Spiff wrote:
Juck - Did you and your buddies at LPL, et al discuss what guidelines they are using to tell you that they have a full inventory of bonds to choose from?  As you probably know from your research, Jones won't just throw anything into the inventory.  It has to meet certain criteria before they'll put it in there.  So, while your buddy at LPL may be able to offer his client a non rated 7 year muni, Jones isn't going to put that bond in our inventory. You'll rarely, if ever, see anything BBB or below on a muni.  That may be one explanation. 
Is that the only thing you have to complain about in regards to the UK and Canada operations?  Because the times that you'd actually need to buy an intermediate muni can't come up all that often.  At least they don't in my office.    I will back up Juck here. I'm not sure about LPL, but Schwab and Fidelity usually have A or better with several different maturities (they have others, but the search criteria I use is A or better). When Jones says that offerings are thin, it is their inability to get them. You would be surprised at the incredible amount in inventory.
I am at AGE/Wach/Wells and I can say that I have actually heard complaints from former Jones clients about how they were unable to get the bonds they wanted from Jones' inventory and they have told me we have so much more to offer as far as bond inventory choices.  Through bonddesk we not only see our inventory, but also bonds from other firms and can offer whichever ones we want to offer to our clients.  This is one improvement since AGE was taken over by Wach, but even when we were AGE I was told we had a much better bond inventory that Jones.

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Spaceman Spiff wrote:
Juck - Did you and your buddies at LPL, et al discuss what guidelines they are using to tell you that they have a full inventory of bonds to choose from?  As you probably know from your research, Jones won't just throw anything into the inventory.  It has to meet certain criteria before they'll put it in there.  So, while your buddy at LPL may be able to offer his client a non rated 7 year muni, Jones isn't going to put that bond in our inventory. You'll rarely, if ever, see anything BBB or below on a muni.  That may be one explanation. 
Is that the only thing you have to complain about in regards to the UK and Canada operations?  Because the times that you'd actually need to buy an intermediate muni can't come up all that often.  At least they don't in my office.   
 
Look, let me preface this saying this is not merely my bitch, moan, and whine board, nor a personal flamethrowing board.  I don't feel good about merely filling up space here if it could not be productive or beneficialal -perhaps truly educational- for someone else, perhaps another lemming out there. 
 
Spiff, your premise seems to me that "Big Green Daddy knows best" but LPL or it's advisors couldn't possibly know a good bond from a bad bond.  Anyway thanks for the layup question about LPL's non rated POS munis that Big Greenie just wouldn't speculate on in it's inventory.
 
Here's how the scenario had unfolded some half dozen times in the past 6-12 months... I call my buddy "Joe" at LPL saying, "Hey Joe, I'm feeling a bit frustrated.  Do me a favor.  Sort your muni inventory so it shows you all 11-13 year, AA or better, non-AMT, with a quantity of $50k or more available..."   FYI, I don't tell him that I only have $5k here or $10k there or most of the time I have NOTHING AT ALL under that criteria until after he shows me his 130 cusips available under that criteria and hundreds of millions of dollars of inventory available.   The bit@h of it is that he's got way higher yields to the client and 1+ full point of gross for him verus me with 1/4 point gross on a wholly UNcompetitive yield!  Doesn't matter, I don't have sufficient quantities anyway.
 
99% of the Big Greenie's lemmings don't know what they don't know.  I didn't know it until I came to educate myself.  I'm feeling that what I've just described is not a function of availablility, IT'S A FUNCTION OF PRIORITY.  It's a function of priority of capital, sending dollars around the globe rather than rather than supplying us an appropriate NON-30 year muni inventory.  The priority of spending more capital on growth, growth, growth training kindergarten lemming advisors that will sell 80 year old clients the only thing we're choosing to inventory -thirty year "high quality" munis- without questioning the suitability or the benefit versus the risk.
 
Finally, let me come clean in the interest of full disclosure... I believe maybe he's gotta pay LPL a ticket charge -you know, that bogeyman they preach to us about occasionally at our regional meetings.  Oh yeah, maybe thats only at the seg 5 meetings.   You don't know what a joke that old ticket charge bogeyman is!  And again, you don't know what you don't know.
 
I aspire to pay those ticket charges! 
Juck Phones 

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Moraen wrote:  When Jones says that offerings are thin, it is their inability to get them. 
 
Nope, Jones could get whatever they want in their inventory. IT'S JONES' CHOICE. They choose NOT to deploy capital on NON-30 year munis.  Their choice. Their prioritization. 
 
So, Juck Phones

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Juck Phones wrote: Moraen wrote:  When Jones says that offerings are thin, it is their inability to get them. 
 
Nope, Jones could get whatever they want in their inventory. IT'S JONES' CHOICE. They choose NOT to deploy capital on NON-30 year munis.  Their choice. Their prioritization. 
 
So, Juck Phones

Juck - Why don't you leave? It's a serious question. If you are a Seg 5, I'm shocked that you would stay with that much jack.

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That's what I was thinking.  If you aspire to pay those ticket charges and you truly feel that the Jones bond inventory is handicapping you in the business you do with your clients, then why don't you go join your LPL buddy?  I'm not saying that to be a smart aleck, I'm saying that because I believe it's true.  One of my previous RL's used to say that one of the reasons he believed you should leave EDJ is when you have an issue with the way they run the company.  It appears you do.  So, why not voice that concern to Weddle or Bob Beck or take matters into your own hands and leave Jones behind? 
 
As far as allocating resources go, if that is your complaint, you might want to ask Weddle why he's not spending more resources on an area that produces only 9% of the profit for the firm.  He may have an explanation for you.  I believe you are absolutely right that they believe that in the long run the Canada, the UK, and continued growth in the US will be more profitable for the firm than our muni trading desk.  So, it makes sense, at least to me, that if the bigger perceived payoff is in a different area, adding 3 or 4 more bond traders to put inventory in our system like you described is not a good allocation of resources.  I would guess that they'd tell you that they just don't have a huge demand for 11-13 year, non-AMT, AA or better munis.   
 
Just a question, I've not tried before because I've never had the need, did you call Jones and ask them if they could get one of the bonds your LPL buddy had?  I've always been told that if you ask them for something specific like that, they'll try to accomodate you. 
 
Also, don't hear what I'm not trying to say - I didn't say anything about an LPL advisor's ability to tell what a good muni bond is or isn't.  Their system is different than ours.  That's what I was trying to say. 
 
I have to tell you that I find it kind of funny that of all the things you believe Jones should spend money on instead of Canada and the UK, that you pick intermediate muni bonds.  Why not global account opening?  Doesn't it piss you off that you have to enter the client's name, address, phone, etc so many times just to get an account open?  Or how about better performance measurement?  How many stock positions do you have for clients that they purchased in different lots at different times?  Wouldn't you like to be able to tell them how each of those lots has been performing individually as well as as a whole?  Or how about that you still can't tell your clients how their portfolio has performed as a whole on a YTD, 1, 3, 5, or 10 year mark without a TON of hassle?  Now those are things I'd like for them to spend money on. 

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Actually Spiff, there would be more demand for intermediate muni's if they were in inventory.  I don't sell a lot of 25+ year bonds, except for the clients that jsut want the highest yield, and don't care about the term (don't you LOVE those guys!). 
Actually, I don't think it's an allocation of resources, I think it has to do with the RIP.  Jones knows they would sell like hotcakes, so capital allocation might no be an issue.  But why would they want to sell a 15 year AA with a 1.5-2.25% RIP when you can get 3.0?  Jones knows nobody would sell 30 year muni's if they had a great intermediate inventory.  There is not much difference in yield between a 15 and a 30 right now (except half to 70% of the RIP), and most clients want the intermediates.

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Spaceman Spiff wrote:
 
... Doesn't it piss you off that you have to enter the client's name, address, phone, etc so many times just to get an account open?  Or how about better performance measurement?  How many stock positions do you have for clients that they purchased in different lots at different times?  Wouldn't you like to be able to tell them how each of those lots has been performing individually as well as as a whole?  Or how about that you still can't tell your clients how their portfolio has performed as a whole on a YTD, 1, 3, 5, or 10 year mark without a TON of hassle?  Now those are things I'd like for them to spend money on. 
 

 
Not asking for the moon here. Just what every other swinging d!ck has on the street. I asked about customer facing planning materials (Cashedge-enabled applications) and you'd have thought I was talking about technology that's decades away.
 
Weddle says most of this stuff's in the pipeline, so I believe him. My fear is that because of our "culture" we won't get into the eMoneyAdvisor technology for the same reason our web pages offer little interactivity with the client: we foster client-advisor interaction.
 
Thoughts from B, volt, Spaceman?

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Spaceman Spiff wrote: 
1) ...why don't you go join your LPL buddy?  
 
2)... why not voice that concern to Weddle or Bob Beck or take matters into your own hands and leave Jones behind? 
 
3)...did you call Jones and ask them if they could get one of the bonds your LPL buddy had? 
 
4) Doesn't it piss you off that you have to enter the client's name, address, phone, etc so many times just to get an account open? 
 
5)...how about better performance measurement? 

1) Definitely will.  Wont say anything more right now.
 
2) Beause I'm sooo off the bus... I don't care. As you are rightfully insinuating, it's time for me to take my action of STFU.
 
3) Do you realize the frustrating inefficiencies going back and forth from my buddy LPL Joe to StL trading, to Client (do you have anything longer/shorter/better yada yada yada?) to Joe to StL to Client etc etc etc.   Way too frustrating for me to do somebody elses job of trying to procure adequate suitable inventory.
 
4) A non-factor for me.  Really my BOA does that stuff.
 
5) I know it's coming...elsewhere.

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JP-
 
Perhaps you could give us your perspective of the firm from a Seg 5 standpoint. What percentage was bonus of your income typically?
 
In case you haven't been reading, I have suggested that the Seg 5 producer like yourself is increasingly agitated with the growth montra, especially if your bonus's are being confiscated to help the outside operations and new US offices. I find it curious that your concern centers around lack of inventory (what is available on the street compared to what Jones allows for whatever their reasons).
 
Have you heard about any modifications to the partnership program? We are still waiting from Spiff, his sources apparently can't confirm or deny,  just laugh at the possibility.

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B24 wrote:Actually Spiff, there would be more demand for intermediate muni's if they were in inventory.  I don't sell a lot of 25+ year bonds, except for the clients that jsut want the highest yield, and don't care about the term (don't you LOVE those guys!). 
Actually, I don't think it's an allocation of resources, I think it has to do with the RIP.  Jones knows they would sell like hotcakes, so capital allocation might no be an issue.  But why would they want to sell a 15 year AA with a 1.5-2.25% RIP when you can get 3.0?  Jones knows nobody would sell 30 year muni's if they had a great intermediate inventory.  There is not much difference in yield between a 15 and a 30 right now (except half to 70% of the RIP), and most clients want the intermediates.
 
Agreed.  The FA will sell something at 3 vs 1.5 all day long.  I'm not saying Juck is wrong and that we have a wonderful inventory.  I can't tell you how many times my branch has received a wire from our muni guy saying that the reason we don't have any munis in our inventory is blah, blah, blah.  That gets really old after a while. 
 
But why would Jones allocate more resources, whether it is the capital to buy them and get them into inventory or the manpower expenses that go along with beefing up the trading desk, for something that is only 9% of the bottom line?  I don't know if they did beef up that area if they would raise the YTB or not.  I wouldn't imagine the spread on them would be any more favorable if we bought more of them.  I would assume not enough for us to get 3 points on an intermediate muni. 

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 My opinion on my why they keep the branches in Canada and England other than the fact they can and think they will be profitable at some point,  is more to do with model integrity than anything.
 
The premise of Jone's entire model is a person with high drive and proper training can make it in the business knocking on doors.  There is tons of proof this model works and has worked in the past.  However I'd say there are some doubts in some circles this is a viable business model.  For example, most Jones reps today are either Goodnighted, Legacy, inherit a branch, or are handed accounts when someone leaves.  We all know this makes the probability of success much higher - door knocking is less important in these scenarios  In Canada and England I would imagine most Jone's reps. start truly new/new and since we are a US firm it's probably even harder to sell the history and culture.  If the Jone's model does not work in the present where we have no history it throws into doubt if our current methods back in the states are as effective as taught.
 
Just another spin on it... (i really have no idea and simply don't care)
 
With respect to  Bond inventory ... It's very tough for me to find anything sub 20 years in any quantity.  No idea what firms are like but sometimes it's tough to win with one hand tied behind your back.

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Volt - on the bond comment - are you kidding?  It's very tough to find ANYTHING sub 20 years?  I just took a quick look at our muni, fed, cbd, and CD inventory and found plenty of things sub 20 years.  How many $50K individual bond orders are you trying to fill with under 20 years of maturity?  In fact there are currently 59 MBD positions with more than $25K in them with maturity between 10 and 20 years.  There are 31 muni positions 0-9 years.  Now, I didn't sort them for AMT (very small percentage of the US population have to worry about AMT), rating (I figured Jones did that for me already), or by state so you would obviously reduce those positions if you added those things.  But don't give me this bull of I can't find anything under 20 years.  BTW, there are 34 CBD positions 0-9 years.  Are you sure you can't find anything 20 years or under, or are you looking for something 20 years and under AND 2-3 points?
I don't believe that EDJ thinks for a second that doorknocking doesn't work.  Even with so many advisors out there who are inheriting assets, getting GKNs, or Legacy offices, the mantra to the majority of them is make face to face contacts.  They do want to make sure that everyone has the opportunity to get some assets right out of training, but that's just to try to give everyone as much of a chance for success as they can.  It's not the silver bullet, but it's certainly a help.  That doesn't mean, in any circles other than those consisting of FAs griping about doorknocking, that there are people who believe that our business model isn't viable. 

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Spaceman Spiff wrote:B24 wrote:Actually Spiff, there would be more demand for intermediate muni's if they were in inventory.  I don't sell a lot of 25+ year bonds, except for the clients that jsut want the highest yield, and don't care about the term (don't you LOVE those guys!). 
Actually, I don't think it's an allocation of resources, I think it has to do with the RIP.  Jones knows they would sell like hotcakes, so capital allocation might no be an issue.  But why would they want to sell a 15 year AA with a 1.5-2.25% RIP when you can get 3.0?  Jones knows nobody would sell 30 year muni's if they had a great intermediate inventory.  There is not much difference in yield between a 15 and a 30 right now (except half to 70% of the RIP), and most clients want the intermediates.
 
Agreed.  The FA will sell something at 3 vs 1.5 all day long.  I'm not saying Juck is wrong and that we have a wonderful inventory.  I can't tell you how many times my branch has received a wire from our muni guy saying that the reason we don't have any munis in our inventory is blah, blah, blah.  That gets really old after a while. 
 
But why would Jones allocate more resources, whether it is the capital to buy them and get them into inventory or the manpower expenses that go along with beefing up the trading desk, for something that is only 9% of the bottom line?  I don't know if they did beef up that area if they would raise the YTB or not.  I wouldn't imagine the spread on them would be any more favorable if we bought more of them.  I would assume not enough for us to get 3 points on an intermediate muni. 
 
You might have answered your own question.  I think it's only 9% of business because we don't have the right bonds in inventory.  Not saying it would increase the YTB, I am saying that they would be an easier sell for advisors, but Jones wants the 3%.  And I doubt we would need to icnrease the Bond Desk staffing to do it.  I mean seriously, how much effort does it take to buy a block of bonds?
FWIW, I don't think most other wirehouses have much better of an inventory than us, as I compare occassionally to Merrill  and MSSB (I know guys there).   Although I don't know about MS when it was just MS - I was familiar with SB.  Often we would get a better muni inventory than them.  I have no idea on Wachovia/AGE/WFA.
 
Bottom line, 30 year muni's are not neccesary in most cases, and more often than not, shorter maturities are more appropriate as they are less volatile (and it's what clients want!!).

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Spiff, I'm new/new  ... do you think I can seriously feed my family on 1 - 1.75 points?
 
You are correct - the muni bond inventory is better than most days.  I think you'd agree that it's been a bit weak for the last couple of months.  I have no benchmarking data so maybe it was simply normal?  I have however not had to "turn" away a buyer because of lack of inventory. 
 
BTW: we only have 1 muni bond position under 10 years today and over 4%.  Wonder what LPL has? I'd like to sell more of those.
 
 

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voltmoie wrote: Spiff, I'm new/new  ... do you think I can seriously feed my family on 1 - 1.75 points?

Or afford to go to the strip club.

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Spaceman Spiff wrote:
Volt - on the bond comment - are you kidding?  It's very tough to find ANYTHING sub 20 years?  I just took a quick look at our muni, fed, cbd, and CD inventory and found plenty of things sub 20 years.  How many $50K individual bond orders are you trying to fill with under 20 years of maturity?  In fact there are currently 59 MBD positions with more than $25K in them with maturity between 10 and 20 years.  There are 31 muni positions 0-9 years.  Now, I didn't sort them for AMT (very small percentage of the US population have to worry about AMT), rating (I figured Jones did that for me already), or by state so you would obviously reduce those positions if you added those things.  But don't give me this bull of I can't find anything under 20 years.  BTW, there are 34 CBD positions 0-9 years.  Are you sure you can't find anything 20 years or under, or are you looking for something 20 years and under AND 2-3 points?
I don't believe that EDJ thinks for a second that doorknocking doesn't work.  Even with so many advisors out there who are inheriting assets, getting GKNs, or Legacy offices, the mantra to the majority of them is make face to face contacts.  They do want to make sure that everyone has the opportunity to get some assets right out of training, but that's just to try to give everyone as much of a chance for success as they can.  It's not the silver bullet, but it's certainly a help.  That doesn't mean, in any circles other than those consisting of FAs griping about doorknocking, that there are people who believe that our business model isn't viable. 
 
Spiff, not to be a spoilsport for you but I ran a query of muni's with less than a 9 year maturity and I could only pull up 1200 listings, there were more than that but we are limited to 1200 at a time to display....

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Juck Phones wrote:BigCheese wrote:1. It doesn't help your clients.
 
2. It probably hurts you in helping your clients because resources aren't available for US reps (really hard to quantify). Less bonus and partnership payout if you were elgible would be the logical answer.
 
What's your take? You obviously have an opinion or you wouldn't have asked.
 
Yes, Big Cheese you are spot on.  Doesn't do ANYTHING at all for my client and doesn't do ANYTHING to help me help my client, yet regardless of my LP and bonus, I have encountered specific situations that actually makes it harder for me to help my clients. 
so
Juck Phones
 
I'm pretty sure the biggest hurt to your clients is your attitude. If you can't be productive to your clients within the Jones model either you suck or... if you think LPL is so much better then pick up the phone and go! Griping about Jones will get you nothing.

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Thanks Noggin. I was going to post that, but didn't want to hurt Spiff.  Of course, we only have in inventory what jones said was bad for their brokers. All triple c, not insured and paying 12 pts to boot. Bad bad bad LPL. 
In Spiffs defense, if they had that much in inventory, the green screens would crash.  Always a silver lining. 

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fa09 wrote: Juck Phones wrote:BigCheese wrote:1. It doesn't help your clients.
 
2. It probably hurts you in helping your clients because resources aren't available for US reps (really hard to quantify). Less bonus and partnership payout if you were elgible would be the logical answer.
 
What's your take? You obviously have an opinion or you wouldn't have asked.
 
Yes, Big Cheese you are spot on.  Doesn't do ANYTHING at all for my client and doesn't do ANYTHING to help me help my client, yet regardless of my LP and bonus, I have encountered specific situations that actually makes it harder for me to help my clients. 
so
Juck Phones
 
I'm pretty sure the biggest hurt to your clients is your attitude. If you can't be productive to your clients within the Jones model either you suck or... if you think LPL is so much better then pick up the phone and go! Griping about Jones will get you nothing.

Seriously - Juck is Seg 5. I would think he'd earn a little more respect from another Jones guy.

You think the Jones model is right for every client?

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bspears wrote:Thanks Noggin. I was going to post that, but didn't want to hurt Spiff.  Of course, we only have in inventory what jones said was bad for their brokers. All triple c, not insured and paying 12 pts to boot. Bad bad bad LPL. 
In Spiffs defense, if they had that much in inventory, the green screens would crash.  Always a silver lining. 
 
Yes, 1200 bonds in our inventory would definitely crash the greens screens and probably be too much info for the average Jones FA's feeble mind to deal with.  Which is why they're going to stop using them in October for our bond inventory. 
 
You people are having trouble with hearing what I'm not saying.  I didn't pass any judgement at all on the inventory that LPL has for their advisors or your ability to buy what is best for your client.  None at all. 
 
noggin - I'm sure the number is still going to be higher than at Jones, but how many are there if you take out any positions less than $25K, under AA, and keep it at 0-9 years?  What's the best YTM and YTB?   
 
As far as respect for Juck - respect for his accomplishments in his business, yes.  But his attitude does suck.  He's obviously already decided to leave Jones and has also made the decision to do as much badmouthing of Jones on the way out.  Not the way I'd personally choose to leave, but if it makes him feel better, then more power to him. 

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Spaceman Spiff wrote:bspears wrote:Thanks Noggin. I was going to post that, but didn't want to hurt Spiff.  Of course, we only have in inventory what jones said was bad for their brokers. All triple c, not insured and paying 12 pts to boot. Bad bad bad LPL. 
In Spiffs defense, if they had that much in inventory, the green screens would crash.  Always a silver lining. 
 
Yes, 1200 bonds in our inventory would definitely crash the greens screens and probably be too much info for the average Jones FA's feeble mind to deal with.  Which is why they're going to stop using them in October for our bond inventory. 
 
You people are having trouble with hearing what I'm not saying.  I didn't pass any judgement at all on the inventory that LPL has for their advisors or your ability to buy what is best for your client.  None at all. 
 
noggin - I'm sure the number is still going to be higher than at Jones, but how many are there if you take out any positions less than $25K, under AA, and keep it at 0-9 years?  What's the best YTM and YTB?   
 
As far as respect for Juck - respect for his accomplishments in his business, yes.  But his attitude does suck.  He's obviously already decided to leave Jones and has also made the decision to do as much badmouthing of Jones on the way out.  Not the way I'd personally choose to leave, but if it makes him feel better, then more power to him. 
 
I ran it again it was still over 1200 with your parameters.

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