Is Jones changing its model?

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BigCheese's picture
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Heard today from a Jones BOA that the model in large metro areas is going to be multiple reps in one office.
Can anyone confirm this rumor?

Grosspayout's picture
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Not quite. Supposedly Jones will have one centralized location where new FAs can work out of and that will be staffed with BOAs or BOA-trainees. Then, when he/she qualifies for their new office they can take one of the BOAs from the office with them. Details are few at this point becuase it does, on the surface, appear to conflict with Legacy arrangements.

Advisor238's picture
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Joined: 2009-02-25

Don't know anything about this, but I think it makes sense in many
cases to drop the one broker office model.

LockEDJ's picture
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Grosspayout wrote:Not quite. Supposedly Jones will have one centralized location where new FAs can work out of and that will be staffed with BOAs or BOA-trainees. Then, when he/she qualifies for their new office they can take one of the BOAs from the office with them. Details are few at this point becuase it does, on the surface, appear to conflict with Legacy arrangements.
 
very interesting ... it would be great to hear how that would work. You'd clearly need some sort of S24-qualified personnel to run the office, wouldn't you think?

B24's picture
B24
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Just like Gross said, but it does not conflict with Legacy arrangement, since they are doing it in metro areas with few existing offices, and a lot of potential for growth.

Moraen's picture
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LockEDJ wrote: Grosspayout wrote:Not quite. Supposedly Jones will have one centralized location where new FAs can work out of and that will be staffed with BOAs or BOA-trainees. Then, when he/she qualifies for their new office they can take one of the BOAs from the office with them. Details are few at this point becuase it does, on the surface, appear to conflict with Legacy arrangements.
 
very interesting ... it would be great to hear how that would work. You'd clearly need some sort of S24-qualified personnel to run the office, wouldn't you think?

I doubt it, Field Supervision would still be responsible for the newbies I would assume.

LockEDJ's picture
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Moraen wrote: I doubt it, Field Supervision would still be responsible for the newbies I would assume.
 
Mmmm. I dunno; I suppose it's possible.
 
But our region has as many as 12 FAs operating without an office at any given time. That's a lot of humanoids to be in one building without direct supervision, and supervision that isn't totally dedicated to the effort. And that doesn't even account for the BOAs.
 
FS still would account for the work ... but it sounds a lot like building out an infrastructure for training in the field. Maybe not an S24 being required ... but you get more than three trainees on somebody's shoulder and that's a full time job.
 
 

Grosspayout's picture
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One other detail. These offices where the new FAs can work out of can also be used for at least some meetings, training and, of course, phone sessions. I'd want to see how it actually works. Like which new FAs would you put in there? The ones who eventually work closest to this facility? Are you going to have new guys drive 90 minutes to this office and then 90 minutes back?

Shania Twain's picture
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Joined: 2009-09-23

Jones offices now are only one FA?    Where is manager or supervisors?

Moraen's picture
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Shania Twain wrote: Jones offices now are only one FA?    Where is manager or supervisors?

St. Louis. They supervise in between shifts at Wal-Mart.

Ronnie Dobbs's picture
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Moraen wrote: Shania Twain wrote: Jones offices now are only one FA?    Where is manager or supervisors?

St. Louis. They supervise in between shifts at Wal-Mart.

You know what is funny. As much as i do enjoy working for Jones, my Development Leader (Pre-PDP), used to tell me about working in the mall as well. lol They must get paid crap.

SometimesNowhere's picture
Joined: 2008-12-22

Moraen wrote: Shania Twain wrote: Jones offices now are only one FA?    Where is manager or supervisors?

St. Louis. They supervise in between shifts at Wal-Mart.

Spaceman Spiff's picture
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Ronnie Dobbs wrote: Moraen wrote: Shania Twain wrote: Jones offices now are only one FA?    Where is manager or supervisors? St. Louis. They supervise in between shifts at Wal-Mart. You know what is funny. As much as i do enjoy working for Jones, my Development Leader (Pre-PDP), used to tell me about working in the mall as well. lol They must get paid crap.
 
Unfortunately that is true.  Your DL probably made around $40K plus bonuses.  Jones HQ is not a place to work to get rich.  I know they've been making some adjustments, but the average home office employee isn't paid anywhere near what they should be.  When I left HQ years ago I wasn't making more than $35K.  So, your DL could very well have been picking up some shift on the weekends at the mall for some reason.   

Spaceman Spiff's picture
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As to the original question - Jones is thinking about starting some incubator offices like the one described for new FAs.  There would in essence be a HQ employee who manages the place and acts like a full time trainer.  Picture your ATL/DL working in the same building with you, checking on your progress, etc until you qualify for your own office. 

Moraen's picture
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Spaceman Spiff wrote: As to the original question - Jones is thinking about starting some incubator offices like the one described for new FAs.  There would in essence be a HQ employee who manages the place and acts like a full time trainer.  Picture your ATL/DL working in the same building with you, checking on your progress, etc until you qualify for your own office. 

That's actually a REALLY good idea.

Squash1's picture
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That would be the best move they every made, no sense wasting offices on people who aren't going to make it and then have to fill the office over and over again.(15 reps have gone through my office since I left.. and there were 7 before me).

Incredible Hulk's picture
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Squash1 wrote: That would be the best move they every made, no sense wasting offices on people who aren't going to make it and then have to fill the office over and over again.(15 reps have gone through my office since I left.. and there were 7 before me).

23 reps in one office? I'm not saying it couldn't happen, but the only one in our area even close to that was shut down after 10ish. But, they sure don't like to close a "location".

chief123's picture
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Mine had 5 advisors in first 2 years.

BerkshireBull's picture
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Correct me if I'm wrong but isn't a BOA a $14/hr secretarial position?  Is it the type of job or career someone would move to pursue?  Is it possible to be a failed BOA if you show up and don't steal anything?

compliancejerk's picture
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how many licensed individuals are permitted in ONE location before that location MUST be registered as a "branch"?

Moraen's picture
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compliancejerk wrote: how many licensed individuals are permitted in ONE location before that location MUST be registered as a "branch"?

Spiff - aren't all Jones offices registered as "branches"?

Spaceman Spiff's picture
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That's a good question, I'm glad you asked.  I honestly don't know.  We use the "branch" term pretty loosely around here, but I don't know exactly how they are registered. 
 
 

Ronnie Dobbs's picture
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Well in a recent sugg Weddle says, that" He does not believe that Jones should abandon the One FA office." In fact he goes on to say that he believes. "The great majority of two-financial advisor offices simply do not work well". That should answer your question. I'm not sure why someone would support a model, they don't think works.

newnew's picture
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not relevant. Like he would spill the beans in the sugg box! I remember how he talked about A shares being "in the best int of our clients", too, right up until he announced the formation of a fee-based program task force. Think of the behind-the-scenes politics he needs to employ against the "old guard" to change these things.

B24's picture
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I am torn about what jones sees in the one-man office.  I think they either see it as one of their differentiating factors, or they believe there are negative business ramifications to doing it (i.e. what happens to the assets if one of them leaves - do they go to the other advisor?  Does a new person get them?  Do you get to pick your own "team", or is an advisor "assigned" to your office?  Who decides if you will have multiple FA's in the office?  How do you agree on out-of-pocket overhead?  Also, they may feel it could lead to teams leaving en masse).
 
Either way, I don't see them abandoning the model anytime soon.  However, I think they are getting a very good look at how it would work right now, with the number of Goodknight and Legacy arrangements they have put in place.  I think from a business perspective, asset retention would be MUCH higher.  In fact, I bet asset retention is much higher among Goodknight/Legacy arrangements versus "out of your house" office arrangements for newbs.
 
At the end of the day, it's all a business decision.  I am sure they have some real good reasons why they don't do it.  It may have to do with regulatory reasons and the non-OSJ setup, I don't know. 

LockEDJ's picture
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Said and done, there's a distinction to be made about having your own office and being a trainee. Once you've qualified - and that distinctly appears in the opening post here - you get your own office.
 
I don't think it requires mental gymnastics on the part of Weddle to say it's okay to have 5 trainees sharing space, but qualified advisors get their own office ... and that that part of our "culture" remains unchanged.
 
PS: we are registered as a branch, but our branch "manager" is listed as the FS. At least, that's how it came across when my FS stopped in last month.

B24's picture
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Locked, I think you hit on a good point.  I think maybe Advisory Solutions (dare I bring it up) is going to solve some of these issues.  Why?  Because I think the goal is to have new FA's be more profitable before they get their own office.  How do you get them profitable, consistently?  Recurring revenue.  Once they are consistently profitable, they are making a contribution to the firm.  Lower the overhead for non-performing "assets" (i.e. newbie FA's), and you improve your firm profit.

Spaceman Spiff's picture
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Just to be clear, I don't believe Jones is talking about changing the structure of the one man offices.  I think they are simply looking for a way to great a high growth model without the issues associated with that kind of model.  If you can take areas like Orlando, Boston, or LA where there are significant assets, but virtuallly no Jones presence and grow it rapidly, but cost effectively at the same time, it benefits everyone involved.  
 
The way I've heard it described is basically 10 new guys in one office building.  Each with their own starter office where clients can come and meet with them.  One or two BOAs for all of them.  One ATL type person with FA experience that can act as a trainer/mentor/branch manager while those folks are in the starter office.  Some of those folks will never make it out of their starter offices into their own.  The ATL will be able to make that call quickly because he's boots on the ground, not managing from STL or across town.  The ATL would also be able to recognize those new FAs who are ready to take over an existing office if necessary. 
 
The savings for the firm would be immense.  One or two BOA salaries instead of 10.  No more opening offices just to start the rotating door spinning all the while paying a BOA to do crossword puzzles 8 hours a day.  You just open up offices for someone who is actually going to survive. 
 
The mental part of it would be huge too.  We're all super competitive, so to actually see the guy in the next office pounding out the calls while you're not would be really humbling.  I can just see the "Future Top Producer of the month" plaques on the wall.  Of course if you're the guy who doesn't cut the mustard, you'd get ostercized by your peers and probably leave the firm quicker.  You can hide in your one man office with the door closed, you can't hide in a building of 9 other new FAs for long without looking like a loser who's not pulling his weight. 
 
I think it would strengthen the culture to have centers like this.  New FAs lean on each other all the time.  Mostly from their cars or living rooms on the phone.  With something like this they can do it in person.  There's a reason Ted used to go visit new FAs in their offices.  I think that personal touch is huge. 
 
I hope whoever came up with the concept gets a little extra kool aid in their GP cup. 

Ronnie Dobbs's picture
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I would agree with that model. It might scare the people coming into the business, who it really isn't for. I think the people who won't make it, will end their career before it starts, instead of sippin on the titty (salary) for a few months and getting in their office before deciding to leave. They'll probably quit the first few weeks of doorknocking.

mrjones99999's picture
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Its called Location Rich Market. Phonenix, Tornonto, LA soon, more in the future. Centralized training, boa support from the beginning, trainers so the veterans aren't overwhelmed, etc. FAs "graduate" to their own office. Not changing our model at all, just better systems for new FAs to succeed. Goal is to have 250 plus succesful offices in large markets

newnew's picture
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makes a ton of sense. I did my first several months out of my bedroom; not ideal!! Certainly was no admin support...and all of the newnews failed

Roadhard's picture
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Having left Jones 2 1/2 years ago and going indy after spending 14 years at Jones as a seg 4.  I am the branch manager for 2 FA's one is 15 miles away and one is 60 miles away.  Though technology and personal visits it is very easy to manage these offices.  If Jones does the start ups in one building it would be a smart move.  For all the reasons listed I would have a branch manager S-24 in that office and based their pay based on success of the new FA's and asset gathering...also I would require the new FA's to hit seg 2 substained 2 cycles to get their own office.  The amount of money saved at Jones would be $$$$$$$$$$$....also I believe the quality of training would increase.  Plus the new BM could control the wholesellers who screw up new FA's.  If Jones does this I would have to give them a lot of credit!

Mr.Blonde's picture
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Agreed, all these original thoughts and good ideas after I left the green machine, makes me want to go back

RealWorld's picture
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I haven't heard a peep about this yet, but it sounds fantastic. In this scenario the best newbies could take over offices, the strugglers get the training they need and the ones not working can't just sit at their house all day.
Win Win

BerkshireBull's picture
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If Jones would have had this available they'd hold onto guys like still@jones, instead he's crushing it at an insurance firm who got a fully trained and functional advisor for nothing and Jones wasted $40k paying him, training him, and getting him his licenses.

 
If Jones did a model like this it would hurt their competition because they wouldn't give away free advisors.

Spaceman Spiff's picture
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It may be the best idea a Jones person has had since Doug Hill introduced the concept of revenue sharing to John Bachmann.

BigCheese's picture
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Spiff-
 
There must be some tongue in cheek linking the best idea with Doug Hill!
 
On a more serious note, I think this might be the best idea Weddle has come up with so far. You guys need profitable US FA's to sustain the outside growth that hasn't been profitable and may never be (according to the 10K). Giving offices (and all the expense) to newbies is ludicrous. Now if they could get the profitable FA's to produce more somehow...that might be the grand slam of concepts.

Spaceman Spiff's picture
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I think your comment about the profitable FA's producing more is a difficult thing.  There are a ton of guys in my region, and around the rest of the firm, who are Seg 4 producers averaging $25-30K a month.  They're pretty comfortable there.  Other than bigger bonuses and bigger paychecks, what's in it for them to making more money?  What kind of additional effort will they have to put out to do it?  How do you motivate folks like that to go from Seg 4 to Seg 5? 
 
Jones is going to have to answer that question before they can get those guys to be more profitable.  I think the only answer is money.  The new FAs are motivated to hit their goals because every 6 months or so they're eligible for some sort of bonus.  Once you get past that initial time frame, there's no financial incentive to reach the next segment.  If Jones put a carrot on a stick out there they might just get some more profitability.  $5K bonus when you hit Seg 2.  $10K bonus when you hit Seg 3.  $20K bonus for Seg 4.  $40K bonus for Seg 5.  Or bump up payouts at the upper Segments.  Seg 4 gets 42.5% payout, Seg 5 gets 45% payout.  Something like that.  Until they do that, there's just not enough motivating a 10 year vet who's winning awards, going on trips, getting LP, and being the rock star in the region to work harder than he already is. 

voltmoie's picture
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This COULD be the best move with we hired Windy!
 

B24's picture
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Spiff, I agree wholeheartedly.  However, I think that's why Jones puts the profit bonus program in place.  And I wouldn't do it based on segments, I would do it based on consistent production.  IOW, I might make segment 4 one month by hitting a few homeruns - but it doesn't mean I should still get a higher payout if my production drops in the future (even though I am "segment 4").  I assume you were sort of suggesting this, but just my $0.02.

Spaceman Spiff's picture
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I agree.  There is no point to the Segmentation model.  There's no financial benefit to a Seg 4 guy going to Seg 5 and just like there are no finacial consequences with dropping back to Seg 3.  They're going to have to get creative with getting those folks motivated.  They're certainly not doing it now. 

SayNo2KoolAid's picture
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It's funny - I was once told that one of the characteristics that Jones looks for in their "personality interview" is someone who "never has enough" and always wants more more more.  And to be honest, I probably used to be like that.  But as I've matured, I've found one of the greatest things one can have is contentment.  One of the nice things about Jones is the ability to decide when enough is enough.  They can dangle all the carrots they want - doesn't mean anything to me.

Spaceman Spiff's picture
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It would suprise me if Jones did anything to encourage FAs like you to stop being content and work a little harder to reach a new plateau.  I don't really see them paying any bonuses for hitting a production goal or raising payouts at a certain level.  They're going to try negative reinforcement with the Seg 4 to Seg 3 thing.  I'm positive that's just going to piss people off. 

B24's picture
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Spiff, I agree.  I think they are going to stumble on this.  However, they need to find a way to motivate the 7-10 year, $15-18K/mo. producer into becoming a 25-28K producer without pissing off everyone above that.  They have made their bed with the really low hurdles, now they have to lie in it.  It will not be easy, but I think AS will have a lot to do with it.  Think about it....a lot of those 15-18K producers have 40-50mm AUM (or more), but it's all in stocks, bonds, and A-share funds.  They get tired of constantly calling and "asking for the order" to generate commissions.  If those guys can get half, say 20mm in advisory, that would mean about 20K per month in fees.  That would certainly improve things considerably.
We are where the wirehouses were 10-15 years ago with fees.

BigCheese's picture
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B24-
 
You hit the nail on the head. Fee income takes time to be substantial part of overall income. What they could do is increase the c share payout, maybe offer L share annuities to increase recurring revenue streams. It doesn't have to be only advisory.
 
Spiff...I think the fact you have a bunch of producers that don't produce anymore than  10 net tells me that management isn't relying on them for incremental revenue illustrating the dilemna they are in now that markets have dramatically been impacted. They have put much of their resources into the newbies and just assume that the 10 netters will continue on their merry way. Except now management needs them to produce more and they have set them up not to. (Maybe the model does need tweaking).
 
 

Effay's picture
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Jones will continually and gradually change their model until they or no longer distinct from any other firm, just a karge and valuable distribution channel.
Then they go public, sell, or merge.
Mark my words.

Spaceman Spiff's picture
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I agree with the first part of your statement, but not your second.  We're one of the biggest brokerage houses in the business.  We're not in financial distress.  We have no shareholders to satisfy.  Why would Jones go public, sell, or merge? 
BC - you're correct.  There are obviously a lot of ways Jones could increase fee revenue.  We may get there someday.  You're talking about a firm that held out a good 7-10 years past the rest of the industry to get into something fee based for the average client.  An L share annuity would blow their mind. 

Moraen's picture
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Joined: 2009-01-22

I'll say again. This is a brilliant move. A compromise between increasing the amount of people in the one-person office and leaving it alone.

Likely the best thing EJ ever did was choose Weddle to be their managing partner. Maybe at some point he'll get rid of all of the nepotism and cultness.

Soothsayer's picture
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Nepotism has been an Achilles heel for years--sort of their dirty little secret that's not allowed to be discussed openly.  But, when the best and brightest people are not ascending to the top of an organization, there's a problem.  Many of the best and brightest who came to Jones from '97-'06 left when they accepted this reality.  At some point, this time period will be referred to as Jones' Lost Decade. 

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