JD Power Rankings

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B24's picture
B24
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So I have a theory on this JD Power Investor Satisfaction rankings thing.  I am the first one to admit that I don't think Edward Jones has some magnificent advantage over other firms.  I think we have a culture of client service, and I can't speak to the culture at other firms, but I am certain that plenty of FA's at plenty of firms give great client service.
 
So here is my theory....I saw a statistic the other day about investor satisfaction based on numerous factors...tenure of FA, longevity of client relationship, client satisfaction based on number of households per FA, etc.  It is obvious that the sweet spot for client satisfaction is actually LESS tenured FA's.  This is likely because as your practice grows, and you get beyond the "managable" level of clients, service to the bottom 80% of clients will start to suffer (unless you are a service superstar, or have a big team).  And after a number of years, the "honeymoon period" with clients falls off, and you call them a little less, whatever.  Well, at Jones, the average tenure is probably the shortest in the entire industry.  So many of the FA's are out between 3-5 years.  Well, of course their clients are getting great service - you only have a few hundred clients to worry about.  I have friends at other wires in the business 25+ years, and they have told me flat out that they do not proactively call anyone with less than 250K, and even most with under 500K, and that they have WAY too many clients to manage effectively.  But what they do for their top 50-75 clients is pretty amazing.  I also question a nationwide survey that contacted only 4500 people on like 10 different firms.  I think it is hard to get a real statistical sampling in this business, since there are different serivce levels BY DESIGN at most firms.
 
Not sure if this is accurate or not.  It's just a theory.  But although I think Jones has a good culture of service, I don't know that we are THAT GOOD every year.  I would welcome other feedback.

LockEDJ's picture
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Whether or not it's a statistically significant number seems moot. I'd imagine a firm like JDP knows what that number is and doesn't need to lectured on it.
I don't think there's any secret to it; we simply have what the survey asks. We have more locations, so we're more convenient. You don't need to have a minimum to actually speak to an advisor, so we have an actual advisor to grade. Because of the relative simplicity of what we offer, our statements are easy to read. Our clientele tend to be less sophisticated investors - so to them our offerings are exactly what they want. I don't know how many times a LP told me not to look for an aggressive customer, because we don't fit that prototype.
 
JP Power asks questions that shoot directly into what we do best. And nobody, nobody hits their target audience better than EDJ. Doesn't make us the best choice for investors, doesn't make us the best choice for FA's, doesn't mean we make the best money for our clients, or our FA's make the most money in the business. We do do it better than the competition. I suppose if you don't aim for UHNW investors, you won't get the headaches that come with them.

B24's picture
B24
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That's actually a pretty good observation. I never thought of it like that.

Squash1's picture
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I distrust surveys for the same reason I call everyone(over 45) not on the DNC... you just never know..

I think sampling makes sense in some instances(population estimates, school enrollment estimates etc) however when each individual will have a vastly different opinion i think these awards are useless. I wonder how many of the people called have more than one broker(70%) and if they compared there current firm(returns, contact with advisor) to the other one.. however they haven't been at the other 10 firms to justify that answer.

LockEDJ.. I don't think by dumbing down investing to people who don't qualify other places should count as an award

Buckeye's picture
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LockEDJ  I agree with your take on things.  You guys know your target market and aren't trying to be some kind of global banking model wannabe.

LockEDJ's picture
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Squash1 wrote:...

LockEDJ.. I don't think by dumbing down investing to people who don't qualify other places should count as an award

Yes, yes ... because making investing smart and complicated works so very, very well at other places. In fact, you can tell how well it works because of the ranking of places like MSSB and UBS. But I'll agree with this much: surveys rarely tell you much about anything but the survey itself.

At the end of the day, I do believe in about 99% of all cases the less a financial advisor gets between a client and their money the better off the client will be. And that's because in about 70% of the time, the guy in the tie simply was able to outlast the pain and financial hardship of the job ... not because he's some rocket scientist when it comes to MPT or asset allocation.

Hey, that's just my opinion. That, and 50K will get you two breakpoints at A-share American Funds. Who needs to worry about multiple asset classes, anyways?

Edit: Rereading this, it occurs to me that it sounds waaaay more snarky than I meant. Apologies.

Coal222's picture
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And that's because in about 70% of the time, the guy in the tie simply was able to outlast the pain and financial hardship of the job ... not because he's some rocket scientist when it comes to MPT or asset allocation.

What do you mean by this? Could you elaborate?

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shmer34 wrote: And that's because in about 70% of the time, the guy in the tie simply was able to outlast the pain and financial hardship of the job ... not because he's some rocket scientist when it comes to MPT or asset allocation.

What do you mean by this? Could you elaborate?

Sort of thought this was clear but ...

On the whole, this is a game of survival for the first 500 days. You make it to that point, you'll probably go on to make enough money to keep you in the game.

It's really a sort of extension of the Peter Principle. From what I've seen, the average FA is absolutely not concerned a whit about improving their knowledge about finance especially once they've reached a point where they have a margin of safety in their business.

Evidence: how many FAs in your firm have gone on to get accredited by a financial organization, or spend significant amounts of time reading periodicals like Journal of Finance? My guess if fewer than you'd like. And those that did, probably stopped learning a long, long time ago.

My (former) RL had something like four titles after his name. He was a brilliant seller AND a brilliant analyst. So I do believe that people like that exist. I also believe that those advisors are rarer than they should be.

Coal222's picture
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what is an rl?

LockEDJ's picture
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Regional Leader. Perhaps at your firm you'll have Branch Managers; not an option at EDJ, insofar as none of us have their S24.

Weddle Me's picture
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Perhaps we won the award because we are #1!  Stop trying to throw darts at Edward Jones.Customers voted us #1 ... deal with it!

LockEDJ's picture
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Weddle Me wrote: Perhaps we won the award because we are #1!  Stop trying to throw darts at Edward Jones.Customers voted us #1 ... deal with it!

And perhaps you're an asshole that adds nothing to conversations. Yes, I'm pretty sure that's the trick.

No one in this thread - no one - was "throwing darts at Edward Jones". Get over yourself.

Weddle Me's picture
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Really?  Trying to explain away the JD Power award is not throwing darts?  What's your IQ, 75?We won the award for a simple reason.  Our culture is about service and doing the right thing. Other firms talk it - we live it.  Of course we are not perfect but we are better than everyone else.   SUCK ON THAT!Edward Jones #1

chief123's picture
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It was funny at first no its just sad...

Lew Ashby's picture
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chief123 wrote:It was funny at first no its just sad...

You're right-- This guy has real issues.  What would happen to his self esteem if EJ fell to #2 in the rankings?  Better hide the sharp objects!
 
LA

Weddle Me's picture
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You guys have issues with telling the truth?  Edward Jones won the JD Power award.  Instead of saying, wow those guys really do a great job taking care of their customers you try to find REASONS we won it.  We won it because we are the best.  It's a fact you need to deal with.  Someone has to be #1 and we are.  SUCK ON THAT LADIESEDJ#1

newnew's picture
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As a caricature, Weddle Me is funny. Now I am starting to think he means it? Is so, unbelievably immature....thought is what all a joke, still hoping it is for all our sake....signed, Someone Who Likes Edj, Once Worked There,  And Knows That There Are Quality People At Every Firm Trying To Do The Right Thing

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Weddle Me wrote: Really?  Trying to explain away the JD Power award is not throwing darts?  What's your IQ, 75?

I don't need to trot out my educational qualifications, or how I scored on the Mensa test for the likes of you. I won't lower myself to your stupidity.

Again, read the thread: Nobody is "throwing darts". There ARE reasons for winning the award; and in fact, Meddle Me, the reasons I posted are exactly what your own namesake stated.

Oh ... what am I thinking? Read the thread? Understand what Jim himself has stated? Clearly above you.

Moraen's picture
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If you ignore him he will go away.

KensLoveChild's picture
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Weddle Me wrote:Perhaps we won the award because we are #1!  Stop trying to throw darts at Edward Jones.Customers voted us #1 ... deal with it!
Stop trying to catch them.  It's ruining your complexion.

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the reality is that most fa's aren't interested in the clients that make up the jones biz model.  those clients feel privileged to get the service, and the jones fa likely appreciates the opportunity. it's a symbiotic relationship than jones figured out, and it works.
as most wirehouse fa's biz matures, the focal clients' net worth increases.  those at the lower end of the spectrum get frustrated as they're valued less by the fa's practice.  once those clients find jones, they must feel a sense of validation - hence the jd power response.
 
i may actually consider referring some clients from my c book to jones. it may be in everyone's interest.  that said, please stop with the gloating. few jones advisors could hold a candle to a majority of wirehouse fa's practices

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I don't think there was a lot of gloating.  If you read the first two posts, you might see what we are trying to say.

Weddle Me's picture
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Edward Jones #1

B24's picture
B24
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OK, I rescind my previous comments

Spaceman Spiff's picture
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LockEDJ wrote:Regional Leader. Perhaps at your firm you'll have Branch Managers; not an option at EDJ, insofar as none of us have their S24.
 
Ahem...I do.  Not that it does me any good or is useful for anything other than an extra test from time to time.  But I do keep it up to date, just in case. 
 
The awards are only really beneficial as a marketing tool.  It's the same reason hotels, car manufacturers, and many other businesses like to tout their JD Power ratings.  It's not the kind of thing that will bring a never ending stream of traffic in your door, but it's positive press and helps build the brand image.  It's nice when an independant third party says you're the best at something.  Gives consumers that extra little nudge when trying to make a big decision. 
 
Other than the window stickers and blurbs in some of our corporate advertising, Jones FAs don't spend any time worrying about telling clients/prospects that we're ranked #1.  I'd rather promise them that I can give them better service, guarantee better returns, and get them into all the Rams football games for free.   

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Weddle Me wrote:Perhaps we won the award because we are #1!  Stop trying to throw darts at Edward Jones.Customers voted us #1 ... deal with it!
 
I knew Jim Weddle.  Jim Weddle is a friend of mine.  You sir are no Jim Weddle.
 
IndyEDJ

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Spaceman Spiff wrote:LockEDJ wrote:Regional Leader. Perhaps at your firm you'll have Branch Managers; not an option at EDJ, insofar as none of us have their S24.
 
Ahem...I do.  ...
 
LOL. Sure enough, there had to be at least one online. I'm sure you'd agree it's pretty rare for an EDJ guy to have it; pretty shocking for one of us to go out and actually get one while we were working for the company.
 
Kinda like a red flag to the company saying, "uh, yeah, I'm about to leave because I'm getting this certification that's only useful if I leave you."

voltmoie's picture
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iceco1d wrote:I thought EDJ eliminated the different payout on C shares?A Shares - 40%B&C Shares - 35%It's complete crap since the higher payout pushes people to do the wrong thing.

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I thought C was 30%...

Spaceman Spiff's picture
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LockEDJ wrote:Spaceman Spiff wrote:LockEDJ wrote:Regional Leader. Perhaps at your firm you'll have Branch Managers; not an option at EDJ, insofar as none of us have their S24.
 
Ahem...I do.  ...
 
LOL. Sure enough, there had to be at least one online. I'm sure you'd agree it's pretty rare for an EDJ guy to have it; pretty shocking for one of us to go out and actually get one while we were working for the company.
 
Kinda like a red flag to the company saying, "uh, yeah, I'm about to leave because I'm getting this certification that's only useful if I leave you."
 
I got my 24 when I was in the home office working with advisors from states that required the 24 along with the 7 & 63.  There were a couple of them if I recall.  I don't remember if they required it or not for all trainers, or if I was just looking for something to put on my annual review. 
 
It is pretty useless for me right now.  Unless I ever decide that I don't want to be an FA any longer and go into the home office and work in Compliance.  I won't.  So, it will remain a useless registration that I have to go sit through a test every few years to keep up to date. 

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AGEMAN wrote:voltmoie wrote: iceco1d wrote:I thought EDJ eliminated the different payout on C shares?A Shares - 40%B&C Shares - 35%It's complete crap since the higher payout pushes people to do the wrong thing.

I completely agree with you.  Tell someone who bought Putnam A shares in January 2000 that A shares are the way to go.  I just wish firms would be fair and pay a fair commission from dollar one and not play games.  Obviously for some reason Jones prefers A shares and they are trying to force that on their advisors. 
 
You're seriously bringing up Putnam as the reason that A shares are the wrong way to go?  What about all the American or Lord Abbett or Goldman A shares that were sold during the same time period?  Were they bad too?  Or was it just the A shares of a company that decided to completely disregard sound investing and business practices? 
 
Just FYI, the majority of the things you mentioned as the reason Jones can't recruit wirehouse advisors have changed.  Drastically.  Where have you been?  Under a rock?  Or maybe just trying to figure out what company you work for? You must have talked with someone in  
 
We don't do options. - You got us there.  Then again, most advisors don't actually use options anyway.   
We do pay transfer brokers to come over. 
We have a fee based alternative.  A couple of them in fact. -  And if you spoke with anyone last year, they would have known when the most recent fee based addition was ready to launch. 
You still have to fill out an application.  Mostly just for the fact that we have to get your personal info into our system.  How else would we know you're info?  Osmosis?
Our payouts are much different than any other wirehouse or regional from what I've heard.  Certainly not as good as indy, but that's a whole different conversation. 
 
"Ed J #1 among the uninformed" - pot, meet the kettle. 
 
 

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i didn't think anyone did loaded mutual funds anymore...
 
why would someone pay a sales load when they can get a similar strategy with a similar fee structure without the up front cost?
 
American Funds can't touch Wentworth Hausser or Neuberger for performance, and the later have no imbedded cap gains.
 
if you want the funds, use institutional shares in a wrap.  get 5 years service for the price of your up front load while paying the nearly the same mgmt fee.  have the option of swapping to other fund companies without a fee.  if your advisor doesn't cut it, walk without handcuffs.
 
tell me...do a-shares serve the client, or the broker?
 
a shares???...sounds like dinosaurs walking the earth to me...

noggin's picture
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The lowered payouts are simply a way to guide behavior, plain and simple. Jones believes that A shares are the right way to go 100% of the time. I disagree and we each have the right to our interpretation. If you sign up for that cruise, you better look at the itinerary because there will be no unscheduled stops along the way......

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True, for the most part.  I use C shares for almost everything under 100-150K, and never have a problem.  What's interesting is that FINRA's direction on C shares is even more militant than Jones.  After reading it, I am surprised that many firms are as loose as they are about C shares.  For the record, I am not pro A-share, I am just basing that on what I have seen from FINRA regarding the use of C shares.  I think this is why (one of the reasons) Jones is pushing Advisory so hard.  They don't want to worry about share class choices, conflicts of interest, etc.  It's easier from a compliance standpoint to have someone in their advisory program.

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Lots of people still use loaded funds.  A shares, if done right, absolutely serve the client.  There are still a lot of folks out there that don't want to pay a fee or who don't want a lot of changes made in their portfolios.  For them A shares absolutely make sense. 

 
Wentworth Hauser?  OK, who else besides me hadn't ever heard of these folks until just now?   
 
So, in poking around a bit on their website (www.whv.com) and looking at their performance on Large Cap Core Equity, it's not much different than AGTHX.  I wouldn't say it was vastly superior and that American Funds can't touch them.  But then again, AGHTX isn't the best growth fund out there either. 
 
Anyway, as far as who do A shares serve, I could ask the same thing about your wrap account.  I can sell against your wrap fees all day long.  Nothing like putting up a 10 year hypo that shows your client hasn't made any money, but you've made ten's of thousands of dollars in fees on a good account.  It's pretty easy to show the client that you've been milking them while they lose money.  Ouch. 
 
Now, I don't do that, because I think that everyone has to pick the way they want to pay their advisor.  Some of them are going to pick A shares, some C shares, some B shares, and some fee based.  At the end of the day it's about choices and their money.  They just want to make some with what they've got.  They could care less that their money is with American, WHV, or Nürburgring.  They don't really care.  Anything beyond what's my bottom line is just noise to them. 
 
Last thing, very few people actually pay 5.75% for their A shares.  Between the bond funds and breakpoints on the equity funds, most of my clients are probably closer to 3.5% than 5.75%. 

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noggin wrote:
The lowered payouts are simply a way to guide behavior, plain and simple. Jones believes that A shares are the right way to go 100% of the time. I disagree and we each have the right to our interpretation. If you sign up for that cruise, you better look at the itinerary because there will be no unscheduled stops along the way......
 
You couldn't be more wrong.  Jones has never said that they believe A shares were right 100% of the time.  If they did, everytime one of us placed a B share or C share trade we'd catch all sorts of crap for it.  They do believe that breakpoints are good, thus the A shares bent.  And if you're able to hit a breakpoint, but choose not to, then they'll bust you for it.  But, for anyone who can't hit a substantial breakpoint, B shares and C shares exist for a reason.  If they really wanted to disincent FAs from selling B and C shares, they'd drop the payout down even further. 

3rdyrp2's picture
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Spaceman Spiff wrote:noggin wrote:
The lowered payouts are simply a way to guide behavior, plain and simple. Jones believes that A shares are the right way to go 100% of the time. I disagree and we each have the right to our interpretation. If you sign up for that cruise, you better look at the itinerary because there will be no unscheduled stops along the way.....
 
You couldn't be more wrong.  Jones has never said that they believe A shares were right 100% of the time.  If they did, everytime one of us placed a B share or C share trade we'd catch all sorts of crap for it.  They do believe that breakpoints are good, thus the A shares bent.  And if you're able to hit a breakpoint, but choose not to, then they'll bust you for it.  But, for anyone who can't hit a substantial breakpoint, B shares and C shares exist for a reason.  If they really wanted to disincent FAs from selling B and C shares, they'd drop the payout down even further.   
 
Of course they're not going to come out and say it because its illegal.  If thats not the case why is there even a 5% premium for advisors to do A shares vs. anything else?  Its like going up to the host and slipping him a $10 to get you seated quicker.  The only difference is your company slips you a 5% to sell A shares.  My firm catches $h!t from every corner of the world for hawking VUL's to everyone and their mother.  Why?  Because they pay us 95% of the 1st year premium upfront.  How much do we get paid for Term insurance?  64%.  Tell me there's not an incentive to sell more VUL's than term insurance.  We get paid 20% less for selling non-proprietary insurance than our crappy Riversource insurance.  Every company has their own little conflicts of interest.  Its nothing to be ashamed of as long as you realize it and can sleep at night knowing that you sell the products (A shares, C shares, VUL's) knowing its in the clients best interest and not your own.  Thats all.

voltmoie's picture
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My opinion is if Jones wanted you to make the VERY best decision for the clients payouts would be the same on A shares.  They want us to sell A shares and when we sell C they take a bigger cut.  Not sure what you are trying to defend here, Spiff.  You know as well as anyone that A shares are burned into our brains.My simple opinion is A shares are good for anything under 25k and anything above 100k.

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Good for anything under 25K?  Huh?  Why?  I haven't done A shares for something under 100K since my first 6 months.  But I don't get the under-25K thing.
 
I will say, I think the attitude is changing about A shares.  That is probably the BIGGEST obstacle Weddle had to overcome in his new role.  He has tackled many other things, and now he is tackling the "A share American Funds and long bond" attitude at Jones. 

voltmoie's picture
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My logic might be off, correct me if it is.  As I build my client list I'll have less time to service those with smaller accounts.  Why should I put them in C shares if I won't monitor their accounts and earn my 1% per year?  Hopefully I'll have the time... but will I really? Also, I'd prob. stick them into a Franklin asset allocation fund in most cases.  I know the exp. ratio is higher but it seems like I can achieve better diversification for them over the long haul with this model.So, under 25k ... A shares.  Above 25k C shares which I hope to meet more often with.Again, my logic could be flawed.  (I also take into account time horizon.)

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voltmoie wrote:

My logic might be off, correct me if it is.  As I build my client list I'll have less time to service those with smaller accounts.  Why should I put them in C shares if I won't monitor their accounts and earn my 1% per year?  Hopefully I'll have the time... but will I really? Also, I'd prob. stick them into a Franklin asset allocation fund in most cases.  I know the exp. ratio is higher but it seems like I can achieve better diversification for them over the long haul with this model.So, under 25k ... A shares.  Above 25k C shares which I hope to meet more often with.Again, my logic could be flawed.  (I also take into account time horizon.)

Your logic is flawed. Under 25k there is no breakpoint. What if you made a mistake in your fund selection. You are going to cost the client more and they'll end up making less than your wealthier clients, and receive absolutely zero help.

The upfront sales charge is often billed as a "one-time advisor fee". If you are not going to service these people, what is the point in them paying the one-time advisor fee. It's better for them to pay someone $500 to come up with an asset allocation plan and send them to Vanguard.

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Moraen wrote: voltmoie wrote: My logic might be off, correct me if it is.  As I build my client list I'll have less time to service those with smaller accounts.  Why should I put them in C shares if I won't monitor their accounts and earn my 1% per year?  Hopefully I'll have the time... but will I really? Also, I'd prob. stick them into a Franklin asset allocation fund in most cases.  I know the exp. ratio is higher but it seems like I can achieve better diversification for them over the long haul with this model.So, under 25k ... A shares.  Above 25k C shares which I hope to meet more often with.Again, my logic could be flawed.  (I also take into account time horizon.) Your logic is flawed. Under 25k there is no breakpoint. What if you made a mistake in your fund selection. You are going to cost the client more and they'll end up making less than your wealthier clients, and receive absolutely zero help. The upfront sales charge is often billed as a "one-time advisor fee". If you are not going to service these people, what is the point in them paying the one-time advisor fee. It's better for them to pay someone $500 to come up with an asset allocation plan and send them to Vanguard.
 
I get there is no break point but as my business evolves will I truly be able to spend time with these clients within the Jones model?  Also, I'm not picking five funds for them and saying goodnight.  Running a risk profile on them and then plugging them into something like this FMTIX since who knows when I'll touch them in the future and want some sort of active management.  I sorta view those funds as advisory solutions lite. 
 
Door knocking time....

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Volt - Have fun knockin'!

I agree with you. The problem is your platform. To be completely honest, as your business grows you will care less and less about these people. Yet they came to you for service (personal, face-to-face service) and now they got an A-share.

The problem is not with you, it's with the model.

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