Philo,

Lets reintroduce you to the topic, you seemed to have missed it yet again.  Many EDJ brokers are only selling long term bonds in order to net 2 and above regardless of whether appropriate for the client or not.  This is the corrupt nature of a pure transaction model as previously stated..just nod if your getting this.

[quote=Philo Kvetch]I think the same could be said regarding stocks, reits, etfs, mfds, etc.

Clients like it when the price is up, and don’t like it when they’re down.

What’s your point?



As to the breakpoints, are you saying that they’d rather take 3 points on a
bond trade, so they don’t have to give the client some Washington Mutual
Investors at 4 1/2%?



No Allreit, your arguments don’t make any sense.[/quote]



My point is that the long bonds typically sold by EDJ aren’t
appropriate since most people won’t hold them for the full 30 years,
and they add needless interest rate risk to the portfolio.



As for AF breakpoints, you realise that they don’t stay at 4.5% forever.



The classic high earning B/D portfolio is going to be 2 sets of
A-shares, some bonds, and then a Dow stock. This looks good to everyone
yet maximises total GDC vs putting it all in AF.

Pinhead, the statement made was:

"Anyways the main reason an EDJ’er sells a bond vs BFA/CIB is to avoid

running up the break points in the AF bucket."



My retort was that it wouldn’t make sense to go for a 3 point commission to

prevent the client from hitting a 4 1/2% breakpoint.



Please try not to confirm ALL of my suspiscions about you.

UH...how about 65 year bonds paying 4.77%..net 3

Listed above was the first comment about bonds by BSpears..

This is where the topic of bonds began until you brilliantly asked what is wrong with bonds? When commission generation was the topic. It is clear ALL of my suspiscions have been confirmed thus far.

[quote=AllREIT] [quote=Philo Kvetch]I think the same could be said regarding stocks, reits, etfs, mfds, etc.
Clients like it when the price is up, and don't like it when they're down.
What's your point?

As to the breakpoints, are you saying that they'd rather take 3 points on a bond trade, so they don't have to give the client some Washington Mutual Investors at 4 1/2%?

No Allreit, your arguments don't make any sense.[/quote]

My point is that the long bonds typically sold by EDJ aren't appropriate since most people won't hold them for the full 30 years, and they add needless interest rate risk to the portfolio.

As for AF breakpoints, you realise that they don't stay at 4.5% forever.

The classic high earning B/D portfolio is going to be 2 sets of A-shares, some bonds, and then a Dow stock. This looks good to everyone yet maximises total GDC vs putting it all in AF.



[/quote]

Look, I'm no fan of mutual funds to begin with.  But to play the Devil's Advovcate here, let's use an hypothetical $50,000.  At 3 pts, broker GDC is $1,500 in a bond, and at 4.5 in AWSAX is $2,250, plus 25 bps starting in month 15.  So to say that a Jones broker uses the bond for selfish reasons is just plain nonsense.

Philo,

Your out of your league.......However I wish you the best, as I can tell your clients must love to hear how much you know.

For an income oriented client it is hard to beat GNMA’s. Govt guarantee and as long as you stay away from premium GNMA’s, the principal flows rather quickly back.

Believe it or not your case is true however both you and ALLREIT missed the topic…

[quote=advisor28]Believe it or not your case is true however both you and ALLREIT missed the topic....[/quote]

Gee pinhead, it's a good thing that you're the only one who "gets it".

I just call it like I see it…Maybe tomorrow you’ll awake a new man or woman. Just remember if you have an appointment tomorrow work intently on listening you might just close some business and at the same time do whats best for your client.

I just left Jones last week and truly think the main reason new reps
sell bonds is because they are easy to sell over the phone.  Not
easy to sell per se, but easy to say here is something paying a stated
rate.  Try selling a MF over the phone, not as simple.  And I
don;t for a minute think it is a blanket practice to split $ up amongst
many fund companies to avoid breakpoints.  Simply not true.

Correct.. However searching the inventory at Jones high net bonds is common practice for most advisors.

[quote=advisor28] I just call it like I see it…Maybe tomorrow you’ll awake a

new man or woman. Just remember if you have an appointment tomorrow

work intently on listening you might just close some business and at the

same time do whats best for your client.[/quote]



I too call 'em as I see ‘em, pinhead. I always endeavor to do what’s best for

my clients. That’s how I’ve survived and thrived in this business. So take it

from this ol’ boy from the Deep South…shut up and learn from your

betters…such as myself.

[quote=advisor28]

Correct… However searching the inventory at Jones

high net bonds is common practice for most advisors.

If you havn't figured it out by now there is no hope for you. This topic was moving quite nicely until you arrived, but stick around you may learn somthing..

The iron horse:  I’m sorry about the side show Philo has been searching for active topics and stummbled into this one I would be curious to hear your honest answer.

[quote=advisor28]

If you havn’t figured it out by now there is no hope

for you. This topic was moving quite nicely until you arrived, but stick

around you may learn somthing…

advisor28-I am not certain which question you want a response to, I
will assume it was the “high net” one.  I would say yeah, if 2
bonds are 30 year bonds paying the same stated rate and no "extra"
features, the broker will choose the higher net bond 99/100
times.  But I am not sure if that is what you are asking me.



But I have no idea if people would sell a 30 yeaar instead of a 10 year
due to a higher net.  I have no way of knowing that, unlike most
people on here who seem to know the ins and outs of all the Jones reps
transactions.

Most Jones brokers I know consider the commission on the bond nearly as much as they consider the other details of the bond.  Most (of the ones I know) shy away from selling shorter term bonds due to low commission. 

Come on People---

This is one is so obvious...Sell the 30 year at 2.75 net and then if the bond price falls you do a tax swap and get paid again and the client thinks you saved them money on the swap.  This was a system wide acceptable practice in 1994. 

I remember all the EDJ Vets teaching me the above technique.