Jones To Decrease Payout to Financial Advisors

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spikedkoolaid's picture
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In response the pending litigation on overtime abuses Edward Jones has had to revamp their compensation policies.  Word is that the 40% is going to 30%!  Any Word?

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

Seriously, where do you get your info?  The proverbial Cracker Jack box?
 
 

bspears's picture
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I called Weddle and he said 28% for you Spiff.

bspears's picture
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I called a 20 year vet on the cut in commish...rumor has it.....

spikedkoolaid's picture
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Mr. Spiff,
On Wednesday the hammer is supposed to drop...Check your broadcast schedule, it should say it's a unrecordable broadcast.
 
What I heard was you won't have to pay for your stamps and phone bill anymore.  You will also not be charged for the errors you make.  There will be a grid system that will be based on Gross Production what payout level you will be at.

noggin's picture
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The good old grid system, huh??? Sounds like Wachovia.......

nestegg's picture
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noggin wrote:The good old grid system, huh??? Sounds like Wachovia.......Wachovia Doesnt have a Grid....

Broker7's picture
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Joined: 2007-02-23

I would send out 10K post cards a month if that were the case

newnew's picture
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no way they do a grid. this will be about expenses (overtime lawsuit etc)

bspears's picture
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Just a little FYI...LPL raised our payouts....based on production

MISS JONES's picture
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We should all leave and go to LPL if they go grid..
Miss J

bspears's picture
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I would open my arms and my heart to you Miss Jones....

MISS JONES's picture
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Aww.. That is sweet.. I think it would be a good working enviroment.. Jones and Spears all over again.. Just kidding.. But thanks.. Love you too.

Roadhard's picture
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I left seven months ago to LPL--Leave now before they send out new contracts for all of you to sign.

bspears's picture
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Joined: 2006-11-08

So..lets say this rumor is true.  30% payout and they pickup the tab on some of the expenses.  It just shows me the payouts are over hyped from Jones.  If you do the freakin math, you only get around 28%.  Can we all say this out loud....28%, 28%, 28%....louder now 28%...28%...You think the P/L sucked....wait now...28%...I bet its Revenue neutral to the..who....GP's.   What a wonderful, wonderful company.  I wish I were you....Make it a great day.

Broker7's picture
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Spaceman Spiff wrote:Seriously, where do you get your info?  The proverbial Cracker Jack box?
 
 
 
Sounds like you will know tommorow! Keep up the hard work!

bspears's picture
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I don't want to alarm any of you Jones people, but rumor has it that starting on Dec 3rd,  whenever your area GP comes into the room, you must stand at attention and salute, or if at a large gathering, bend over and kiss the ring and sing..."hail to the GP"..."hail to the exhaulted one"...Does anyone know where spiffy can buy a cracker jack box??

Indyone's picture
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So I take it the cease-fire has been once again broken...
 
Seriously, such a move would come as no surprise to me as it makes good business sense to use a carrot & stick approach to raise production and thus profitability.  Of course the GP's are interested in raising profitability.  I don't know too many business owners that aren't.  You may think they're SOB's for wanting more money, but in that regard, they're very little different from you and me.  Anger at hypocrisy I understand, but you're stating the obvious when you say that the GPs are first for the GPs.

bspears's picture
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Joined: 2006-11-08

I will be civil on the truce thread.  I'm trying to promote the obvious. If you're making an average living at Jones, why not do yourself and your family a favor and go Indy.  Do the same work, and make 2.5 times the money.  Yes, the GP's are for themselves, I would be to and I AM. 
I think Spiffy, Maxstud and Miss Jones would make great Indy Financial Advisor's.  I'm promoting the world of Independence at the expense of the GP's. 
 
The cut in payout would be all good if they would pony up for the toilet paper. 

Roadhard's picture
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BSpears--getting the GP's to roll out TP on EJ would be OK if the FA would take a cut in pay!
 
Sorry I had to do it!

bspears's picture
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Joined: 2006-11-08

All kidding aside, I doubt management is so dumb that they would cut payouts.  I just don't think they will be that short sighted and or stupid.  It would be right up there with the Wall Street Journal ad.  (FYI Spiffy actually penned that little article)

Roadhard's picture
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You would think so--but in the last year they have raised minimums from 14k a month to 18k a month--going to fee based in the next year (Not because it is in the client's best interest but because they are looking for a way to be paid to issue money out to the baby boomers -- their words).  Next will be a consolidation of offices in cities and towns.  Not all of these are bad--but cutting commissions to 30% from 40%--stop paying the LPL recruiters 10k for each one--they will be contacting LPL directly themselves.

Borker Boy's picture
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Joined: 2006-12-09

...and I was hoping they were going to tell us that the overtime lawsuits had forced them to begin paying us some sort of minimum salary!
 
DANG IT!

apex01's picture
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Borker Boy wrote:...and I was hoping they were going to tell us that the overtime lawsuits had forced them to begin paying us some sort of minimum salary!
 
DANG IT!
 
Speaking of that has anyone heard when or even IF those will be paid out? It was big talk but I haven't heard anything about it, nor has it been published.
 
I was back home over the holiday and ran into the local Jones guy or should I say ex-Jones guy. He switched to LPL 6 months ago and has never been happier. Says he wished he did it 5 years ago. He made it sound like Jones is in a tailspin....is it really that bad?

bspears's picture
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Joined: 2006-11-08

Well..the Jones guys would answer the tailspin question, but they can't get Jim away from the mirror....
 
  Hill -"Jim, get the hell away from the mirror and get over here.  We need for you to come up with some bullshit positive spin to the cutbacks"
 
  Jim -"Don't bother me now, I just put some new mouse in my hair, and it won't stay in control.  Can we just push the old Irish guy..whats his name.....and have him talk about how good George Putnam Fund is...and how great our partners are...
 
 Hill- "He won't sober up...so its up to you Jimmy boy.  Its why you get the big bucks. Now don't "F" it up or I'll shoot your ass full of holes.  The company depends on it."
 
Jim-"Okay..Okay..can I get a shirley temple before I go on air?"  "You know all the Reps just love me"

footsoldier's picture
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Seems that Jones GP's have been having it both ways (benefits of employees and making them pay expenses/mistakes) and can't continue the stream of income under their current structure. SSB did the same, and made the less producing brokers pay the brunt of the cost. I would expect the same from Jones.

If they don't change someone will sue again for overtime and win. And that's got to frustrate them big time. But they'll just take it from the troops on the frontline and keep the kumbayah rollin. Spiff...hearing anything from the inside?

Broker24's picture
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bspears wrote:Well..the Jones guys would answer the tailspin question, but they can't get Jim away from the mirror....
 
  Hill -"Jim, get the hell away from the mirror and get over here.  We need for you to come up with some bullshit positive spin to the cutbacks"
 
  Jim -"Don't bother me now, I just put some new mouse in my hair, and it won't stay in control.  Can we just push the old Irish guy..whats his name.....and have him talk about how good George Putnam Fund is...and how great our partners are...
 
 Hill- "He won't sober up...so its up to you Jimmy boy.  Its why you get the big bucks. Now don't "F" it up or I'll shoot your ass full of holes.  The company depends on it."
 
Jim-"Okay..Okay..can I get a shirley temple before I go on air?"  "You know all the Reps just love me"
 
Dude, you are strange.

bspears's picture
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Joined: 2006-11-08

Not strange...but funny, very funny.  Not sure how long you've been with Jones, but all I ever remember of Fess S is his George Putnam fund spew......all the time. He's a pretty funny guy, but not sure I'd have him manage a CD ladder.

Spaceman Spiff's picture
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I don't think there is a timeframe or a dollar amount per FA on the overtime settlement yet.  At least nothing that has hit our system. 
 
Jones is not in a tailspin.  There have been several lawsuits that have been settled recently, but that money came out of a fund set up specifically for that purpose.  While it probably did affect the bottom line to some extent, it did not put the company into a tailspin.  The former FA you spoke with is just plain incorrect. 
 
I don't just say that as a kool aid drinker, but with some facts to back it up.  If a company starts struggling they start to look at options to save money.  Jones doesn't do layoffs, but they will do home office hiring freezes.  That's not happening.  They would look at cutting benefits like profit sharing.  That's not happening either.  LP  and GP returns would be going down or they would only be receiving the guaranteed minimum.  I'm sure GP earnings were something above 70%, that's just a pure guess.  LP earnings were something like 25% when I got the 3rd quarter LP letter.  They would stop spending money on trips.  Yes, they changed the qualifications, but not enough to matter to many people. 
 
From a profit standpoint net revenues were up 20% year over year at the end of the third quarter and net income before unusual items was up 49%. 
 
If you folks want to call that a tailspin, so be it.          

Spaceman Spiff's picture
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footsoldier wrote:Seems that Jones GP's have been having it both ways (benefits of employees and making them pay expenses/mistakes) and can't continue the stream of income under their current structure. SSB did the same, and made the less producing brokers pay the brunt of the cost. I would expect the same from Jones.

If they don't change someone will sue again for overtime and win. And that's got to frustrate them big time. But they'll just take it from the troops on the frontline and keep the kumbayah rollin. Spiff...hearing anything from the inside?
 
Lower producing brokers will always pay the brunt of the cost.  That's why they don't get profitability bonuses.  I've also heard it said, on this board, that GPs like those brokers who are profitable, but not bonusable.  That way they get max $$ coming into the firm, but nothing leaving.  Not a bad gig.  If you factor in profitability bonuses, larger producing FAs get a higher payout than lower producing FAs. 
 
I believe they are going to have to make changes regarding the overtime issues.  Maybe they will stop making me pay for postage and the phone.  Who knows.  That's all nickel and dime stuff in the big picture.  Cutting payout to 30% without some sort of corresponding boost from somewhere else would be catastropic to Jones.  Way more stupid than the WSJ article (that I had nothing to do with).  I told my BOA today that if they announce that they are going to reduce my income by 25% I'll be either heading back to the home office or going indy.  We'll have to see what happens.  Hey spears, want to share rent?

advisor28's picture
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Spiff,
Just curious what changes were made to the trip qualifications?  Was it an extra category or just gross production?  It used to be $107,500 every 6 month trip, what is it now?

Broker7's picture
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Joined: 2007-02-23

Spaceman,
the truce is still on, but it is hard for anyone who works there to see the situation objectively.   It might be a recoverable tail spin, but to force a paycut on the company's  "only profit center" is a logical move of a company that is in trouble.  Look at the financial sector as a whole.  I wouldn't doubt it if there are a few more consolidation mergers in the near future.

nestegg's picture
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Joined: 2007-06-14

So you are saying if you make a mistake at EJ you dont pay for it now?

troll's picture
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Joined: 2004-11-29

Spaceman Spiff wrote:footsoldier wrote:Seems that Jones GP's have been having it both ways (benefits of employees and making them pay expenses/mistakes) and can't continue the stream of income under their current structure. SSB did the same, and made the less producing brokers pay the brunt of the cost. I would expect the same from Jones.

If they don't change someone will sue again for overtime and win. And that's got to frustrate them big time. But they'll just take it from the troops on the frontline and keep the kumbayah rollin. Spiff...hearing anything from the inside?
 
Lower producing brokers will always pay the brunt of the cost.  That's why they don't get profitability bonuses.  I've also heard it said, on this board, that GPs like those brokers who are profitable, but not bonusable.  That way they get max $$ coming into the firm, but nothing leaving.  Not a bad gig.  If you factor in profitability bonuses, larger producing FAs get a higher payout than lower producing FAs. 
 
I believe they are going to have to make changes regarding the overtime issues.  Maybe they will stop making me pay for postage and the phone.  Who knows.  That's all nickel and dime stuff in the big picture.  Cutting payout to 30% without some sort of corresponding boost from somewhere else would be catastropic to Jones.  Way more stupid than the WSJ article (that I had nothing to do with).  I told my BOA today that if they announce that they are going to reduce my income by 25% I'll be either heading back to the home office or going indy.  We'll have to see what happens.  Hey spears, want to share rent?You would room with sourpuss spears?

skolbrother's picture
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Joined: 2005-07-12

They are going to drive out the 10 yr. guy doing 250k. This person should already be considering independent.

My bet is 300k and up differnce is nominal.

noggin's picture
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advisor28 wrote:Spiff,
Just curious what changes were made to the trip qualifications?  Was it an extra category or just gross production?  It used to be $107,500 every 6 month trip, what is it now?
It is now 108,000 but you have to be averaging at least 18K to sign up for the trip. That is the yellow line now if you are out past 4 years. Hope that helps.

bspears's picture
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Joined: 2006-11-08

Spiff, if Miss Jones doesn't take the rent offer, then sure...no problem.  I'm not a sourpuss, just love to have a little fun every now and then.  Just like the couple who transferred 360k yesterday.."Jones is a joke"...with the referrence to the turnover in my old office.  Their words...not mine.(this time)  
 
I do have some caution criticizing the rumored pay cut.  So far LPL has done a lot of good things, but who knows if someone comes in and buys them out.  Things can change on a dime in this industry...look at E-trade.  Also, LPL still has backoffice problems.  Long wait times, things slipping through the crack.  Nothing my client sees, but something I'm definately aware of.  So maybe today Weddle announces a 25% pay raise and not a cut. 

Broker24's picture
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bspears wrote:Not strange...but funny, very funny.  Not sure how long you've been with Jones, but all I ever remember of Fess S is his George Putnam fund spew......all the time. He's a pretty funny guy, but not sure I'd have him manage a CD ladder.
 
Yes, Fes is one of the funniest guys I have met.  I would assume he was more put together in front of clients.  He built a pretty big business.

Maxstud's picture
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spikedkoolaid wrote:In response the pending litigation on overtime abuses Edward Jones has had to revamp their compensation policies.  Word is that the 40% is going to 30%!  Any Word?
 
Wrong again.  No change in commisions.

Borker Boy's picture
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Joined: 2006-12-09

I know you guys had high hopes for bad news coming out of the home office, but it was...get this...GOOD NEWS!!  

Maxstud's picture
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Joined: 2005-12-29

One correction, five states will have different plans because of state laws, California being one of them.  So maybe spike is partially correct.

bspears's picture
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Joined: 2006-11-08

Dang. I was hoping to recruit from the Jones camp.  Dang the bad luck.  Oh well, back to normal.

footsoldier's picture
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Just talked to an IR who said a grid is coming. Elimination of  the 1% national advertising also, and the broadcasts today are telling them to go a website to see how they will be affected.
 
He's in CA and expects some changes according to the memo he read. Sounds reasonable that the line of employee/independent rep are becoming more clear for Jones. You can't have it both ways, so those that say nothings happening or only good news should be careful. It sounds more ominous.

Maxstud's picture
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Joined: 2005-12-29

California, north and south dakota, montana, and new hampshire will be different.  No grid for me.

Broker24's picture
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No real significant changes.  No grid for most advisors.  Same payout.  No more 1% National Advertising expense.  No more local phone bill cost.  JOnes will pay for basic office supplies if purchased through Corporate Express.   Advisor now pays 100% of postage (other than statements, trade confirms, etc., which are 100% firm paid).  Biggest change really is the bonus structure.  St. Louis will no longer allocate overhead to P&L, so the bonus threshold goes up.  Net effect is that higher producers will get larger bonuses (marginally larger), and FA's that have a higher bonus in relationship to their gross will see their bonus go down slightly (because the St. Louis allocation used to be a function of your total gross).  Net effect here; about 80% of advisors will see no material change to compensation.  10% will see more, 10% will see less.  However, it could have a larger impact if you happen to be an office that does a larger proportion of mailings (i.e. seminar mailings to thousands every year), as the postage subsidy has gone away for marketing efforts.  Slightly negative impact to Jones' bottom line. 
 
All-in-all, it's mostly a non-event for me.  Not sure exactly how the grid thing effects those 5 states.  They increased their expense reimbursements, so I imagine it is largely cost neutral for them.

Spaceman Spiff's picture
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The system says that the grid starts with anyone under $100K at 36% payout on something that currently pays out at 40%.  There are 14 other levels on the grid with the top payout at $2 mil plus @ 39%. 
 
FAs in those states are also eligible for a special "growth bonus" that is based on starting above $100K, moving from one level on the grid to another during the year, and still being employed with Jones at the end of the year.  The growth bonus basically makes up the difference between what the rest of the states get in payout vs. what those 5 states get. 
If I were an FA in one of those states I'd look at the numbers on the screen and realize that I'm not really being hurt.  The money is just coming in a different form. 
 
Like B24 said, it's a non-event for the majority of the firm.  Very few people are going to get pissed and leave because their bonus might be down a smidge and they have to pay their long distance now. 
 
Funny that a company in a tailspin is deciding to absorb so much costs that they now pass on to the FAs.  Seems to me like that would make GP profits go down.  Hmm... 

noggin's picture
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Spiked- I for one want to thank you for the fact that you got nothing right. Some of us who are at Jones like to get a truthful perspective from outside Jones. Can you at least provide that? Come clean and at least say you goofed......

footsoldier's picture
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Just to hear the other side if that's possible.
 
Any FA's from the 5 states affected care to comment. It seems that the only commentary so far are from FA's who aren't affected YET.
 
Slippery slopes start with minute changes. One thing I learned from my 10 years at Jones, was whatever they said, by and large, was tweaked to their benefit ALWAYS. I say let the dust settle and let's make a friendly wager Mr. Noggs and Spiff et al, that it ain't over by any stretch, and if management is posturing that only 10% are affected, the proof will be in the attrition numbers down the road.
 
Just for the record...I am not buying Spikes argument that the firm is spiraling. When you have interchangeable parts it doesn't matter who is sitting behind the desk. They may not be growing in numbers as fast as they want, but clearly the GP's are making dough, so the big green machine moves on. But change seems to be  in the wind because the A share model has flaws.

troll's picture
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footsoldier wrote:J 
Slippery slopes start with minute changes..... ....They may not be growing in numbers as fast as they want, but clearly the GP's are making dough, so the big green machine moves on. But change seems to be  in the wind because the A share model has flaws.You know how to boil a frog, right?

CIBforeveryone's picture
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Broker24 wrote:No real significant changes.  No grid for most advisors.  Same payout.  No more 1% National Advertising expense.  No more local phone bill cost.  JOnes will pay for basic office supplies if purchased through Corporate Express.   Advisor now pays 100% of postage (other than statements, trade confirms, etc., which are 100% firm paid).  Biggest change really is the bonus structure.  St. Louis will no longer allocate overhead to P&L, so the bonus threshold goes up.  Net effect is that higher producers will get larger bonuses (marginally larger), and FA's that have a higher bonus in relationship to their gross will see their bonus go down slightly (because the St. Louis allocation used to be a function of your total gross).  Net effect here; about 80% of advisors will see no material change to compensation.  10% will see more, 10% will see less.  However, it could have a larger impact if you happen to be an office that does a larger proportion of mailings (i.e. seminar mailings to thousands every year), as the postage subsidy has gone away for marketing efforts.  Slightly negative impact to Jones' bottom line. 
 
All-in-all, it's mostly a non-event for me.  Not sure exactly how the grid thing effects those 5 states.  They increased their expense reimbursements, so I imagine it is largely cost neutral for them.
 
If they are eliminating Overhead Allocation on the P&L are they going to continue to credit for assets and retirement fees, etc.? If so, I assume they adjusted the bonus bracket to a higher number to compensate? Are bonuses essentially going to be based on lgain now?
 
If this is the case, this is a huge step in the right direction. That Overhead Allocation was the biggest BS charge and created disparity from one branch to another, and was something I campaigned to have eliminated a long time ago. Looks like they listened after I left.
 
Frankly I can't imagine them going to a full-out grid like a SB and hitting so many lower producers when they are pushing for growth like they are.
 

spikedkoolaid's picture
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Joined: 2006-04-20

Mr. Spiff and Noggin,
 
I do believe I was correct.  Jones did reduce the payout.  I just didn't know the whole story and therefore I was trying to ellicit a response from the insiders on this forum.
 
EVERYONE that I have read is leaving out a big part of the new compensation plan.  The eradication of the BUSINESS EXPENSE PLAN is a huge loss to a w-2 employee.  My last year at Jones I was putting $56,000 into the BEP and therefore I was not subject to AMT where the business expenses phase out.    This one benefit will cost you w-2 employees a lot more than the Jones execs are leading on.
 
I am so glad they got rid of that 1% advertising expense.  That was so unfair. 

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