Jones Pays

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Mr Hanky's picture
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Joined: 2004-12-21

Hey Mr. Hanky,
Care to wager on the bonus in January?  Apparently my cube is more aware of what's going on than yours.
 
For brokers...there is no bonus in January A S Sociate.  Broker bonus is paid about Feb 15th for 3rd trimester. 
Are you from Field services dept?  Salesprevention would be an appropriate name if so. 

salesprevention's picture
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Joined: 2004-12-21

Mr. Hanky,
You don't need to get nasty.  If you were offered (additional) LP in the last offering (and accepted) you will be paid a "bonus" in January as though you had actually received it already.  At this point the amount is supposed to be the actual return on LP for 2004 (currently 19.83%). 
I'm not exactly sure why you are upset that I'm telling you there will be an extra bonus in January.

Mr Hanky's picture
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Joined: 2004-12-21

Im not upset.   Don't come on here like a white knight coming through a storm preaching all is well and times are good, in fact theres bonuses for all!  I'm tired of all the lies that are told and people like you who perpetuate them.
There were at least 3 inconsistencies from the "internal"  version that can't be printed by the way, and the article in the St Louis Post. Go read them both and then tell me Im wrong. 
By the way salesprevention, you are wrong.  The accrual of the phantom LP starts in Jan 05, it does not go back retroactive to 04. 

Player's picture
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Joined: 2004-12-08

HEY YOU DRONES......
The only reason the Firm (Fraud) would pay Drones & Clones something for nothing (LP promised and not paid for ?), is because  ?
They are afraid you will wize up and  LEAVE !
Mark my words, the WORST is yet to come  !
California Dreaming is the tune..............................

illuminati's picture
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Joined: 2004-12-21

RadioOne wrote:
Illuminati:  Golly, Mr. Wizard, tell us what will happen next!  Should I really quit?  Please share with all the 20-somethings on this board your wisdom beyond your years!!
The only reason anyone would spend so much effort badmouthing Jones is because you were a FAILURE there.  And don't bother responding with a bunch of made-up production numbers.  Everyone here knows you're lying.  Go watch SpongeBob, junior.

#1 Should [you] really quit?  No.  After reading your complete pedantic response, my posting wasn't intended for you.  If you go back and read it carefully you will see I SPECIFICALLY intended it for Jones Reps with HALF a mind left.  My guess is, judging by your assumptuous and moronic diatribe, that your destiny is not that of the rats leaving the sinking ship, but rather the dead weight in the ship's hold which helps it to sink faster.
#2 "Please share with all the 20-somethings on this board your wisdom beyond your years!!"  I haven't been 20-something in a very long time, if that is part of what you are implying.  If it is mostly 20-somethings on this board, then it is they who have the chance.  It sounds to me that YOUR glass of kool-aid was emptied long ago.  DRINK UP!!
#3 Your dedication to scientific principles and discerning empiricism in assessing my character is overwhelming.  I warn Jones brokers to leave...therefore I am bad-mouthing Jones...therefore I must have been a FAILURE...  AMAZING!!!  Who is the "Wizard" now??
The beautiful part is your assumption that I will give you false production numbers, and then you can label me as a liar in advance.  How very convenient for you.
In my own defense (since you have drawn first blood, verbally):
I sincerely doubt I am YOUR junior. I left Jones making PLENTY of money (not yellow, or green or blue or purple...).  Finally, I would venture that any ONE of the SIX companies I am presently involved with is worth more than your book of business at Jones (Zero, I believe). 
Again, for anyone on the fence (twenty-something or not), LEAVE for your own good.  Jones has an archaic business model, an archaic communication system, and an archaic pay-out and support structure.  At this point, you can't go wrong by going ANYWHERE else.
 

RadioOne's picture
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Joined: 2004-12-21

Illuminati:
Wow! Six companies!!  Maybe after my company sinks I can ACAT all of my personal accounts to you!  Grow up, kid.

eddjones654's picture
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Joined: 2004-12-03

Edward Jones' True Colors Aren't Pretty By James J. CramerRealMoney.com Columnist 12/21/2004 9:05 AM EST

So Edward D. Jones wasn't a conservative brokerage house with a boring recommended list meant to keep its clients in healthy shape. Edward Jones simply de-emphasized research entirely, paid little attention to it, and steered people toward funds for kickbacks.
During the vast bubble and its subsequent burst, I was impressed that Edward D. Jones seemed to have its feet on the ground, not suggesting wildly inappropriate stocks for its clients. I praised the firm on my radio show for seeming to have its clients' conservative sentiments at heart.

What a chucklehead I was. Instead of pushing inappropriate stocks on clients, Edward Jones could have pushed inappropriate funds on them. Stocks can't give kickbacks, but funds can. What Jones was doing was far worse than just recommending bad stocks.
Monday, this firm agreed to pay a gigantic fine, $75 million, and to stop this outrageous pay-to-play junk where preferred funds got tons of money in return for hefty fees on the back end. To think that this firm cloaked itself in conservative clothes is just outrageous. The company exhibited a stupefying two-facedness that makes me want to scream.

Of course, it will pay the fine and be allowed to stay in business. Everyone gets to stay in business. You would think it was in the Constitution or something, that it was written, that, no matter how outrageous the fiduciary violation, you still are good to go in the financial services business because once you are in, you are in.

When I started my radio show, I alleged that there were a lot of secret revenue-sharing agreements between brokers and funds because otherwise, the really crummy funds would have no customers. Who would deliberately stay with a crummy fund? Who is that stupid?

But I wasn't able to get the documents that told you who was paying to get money and who wasn't. We now have settled the problem when it comes to brokers. Next up? The kickbacks some of these human resources people have been taking to keep their companies with bad funds for the 401(k)s. Some of it will be kickbacks to the companies, others will be under the table. What else is new?

Would anyone mind taking a pledge with me to do what's best for the client over the long term, so both he and the client make big money? Is there anyone willing to raise his right hand and swear he will do his best for his client, not for his firm or himself?

From here, the silence sure seems deafening.
   
 
 

Mr Hanky's picture
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Joined: 2004-12-21

Player,  you are right they are afraid people will leave.   I'm glad I did 8 months ago, best career move I ever made.   I have a good friend still over there but he's getting wiser every day.  In fact he told me about this board, said it would be like therapy.  He's right.

ezmoney's picture
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Joined: 2004-11-30

So are jones clones reps getting a bonus or not? Boy I'm glad I left a year ago. They are in trouble. Bad place to be.

dashampersand's picture
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Joined: 2004-12-22

The real crime here is not that Jones took quasi-legal kickbacks.  The real crime is that they have not been punished heavily enough for their gross hypocrisy.  I began my career in 1982 with Jones by handing out copies of a magazine article extoling the virtues of the "conservative" investment company.  I personally witnessed brokers selling oil and gas limited partnerships as bond equivalents and I read Saturday morning wires offering a sleeve of golf balls if you sold an unrated bond.  I left because of the hypocrisy.  Frankly, there is an order to the world and when things get out of balance, they are brought back in line by a variety of means.  I fervantly hope that the class action lawsuits and the suit filed by the California AG will bring some semblance of justice to a "whore" brokerage firm and its band of koolaide drinking pimps.  By the way, Merry Christmas! 

Player's picture
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Joined: 2004-12-08

dashampersand,
Well said.........

illuminati's picture
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Joined: 2004-12-21

Dashampersand,
Perfectly written.  I left because of the hypocrisy as well, and can't agree more with your reference to "order" and "balance".  Jones HAD it, and blew it when they consciously decided to grow the firm, but not evolve the business model.
It's interesting to watch now.  They can't evolve because of their structure, and the world is not going to let them stay the way they are.  To invoke a little Darwin, they are at an evolutionary DEAD END.
 
 

Marshall's picture
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Joined: 2004-12-20

Just saw this article showing that they have emails from Brokers to substantiate their claims.
Edward Jones Brokers Concerned Yrs Ago About Rev Sharing
By ARDEN DALE and KATHY CHU
December 21, 2004 4:40 p.m.
Of DOW JONES NEWSWIRES
NEW YORK -- Long before regulators got involved, Edward D. Jones brokers had expressed concerns about financial incentives they had to sell certain mutual funds.
In more than a dozen internal e-mail messages between Edward Jones employees - and released by California Attorney General Bill Lockyer this week as part of a civil lawsuit brought against the brokerage house - brokers questioned whether they were serving their clients' best interest if they were pitching mutual funds partly because they brought in higher revenue to the firm. The e-mails date as far back as 2001.
What concerned the employees who sent the e-mails were incentives that brokers got for steering investors to a small group of funds, some of which didn't have particularly good performance records.
"There is something dirty about the mutual fund business that has been developing over the last 5 years," one Edward Jones employee wrote in an e-mail dated May 17, 2001, going on to criticize the company's own policies. Another message, dated Dec. 8, 2003, expressed concern that "we could have a can of worms opened" if the firm's practices were looked at closely.
The e-mails, released Monday by Lockyer, provide a telling glimpse into how and why brokers push certain investments. Lockyer alleges that Edward D. Jones failed to tell investors about payments it got from seven mutual-fund companies: American Funds, Federated Investors Inc. (FII), Goldman Sachs Group Inc. (GS), Hartford Mutual Funds Inc., Lord Abbett & Co., Marsh & McLennan Co.'s (MMC) Putnam Investments and Van Kampen Investments.
Also this week, the company agreed to pay $75 million to settle similar charges by the Securities and Exchange Commission, the National Association of Securities Dealers and the New York Stock Exchange.
At issue is the practice of revenue-sharing, called "pay to play" by critics, in which financial relationships exist between brokers and the mutual funds they sell. Although not illegal, regulators who have looked at the practice say that failing to disclose these arrangements may be against the law.
Revenue sharing troubled people inside of Edward Jones partly because of how this apparent conflict-of-interest contrasted with the firm's image. One writer, in January 2004, said he was feeling "a bit disgusted now to work for a firm who portrays the image of being proper & moral in its practices" but that will "play a little dirty to get more revenue."
Another employee said some of the favored funds tried to sway brokers with spreadsheets showing how much bigger bonus checks would be if they pushed their funds over others. "Without question, this information has tainted my objectivity and has the potential to change the pattern of my investment recommendations," said the person in an e-mail dated Dec. 17, 2003.
The e-mails - many of which were addressed to a suggestion box at Edward Jones - bring into living color an issue that can seem dry as dust. Lockyer spokesman Tom Dresslar said the California attorney general gathered the documents as part of an investigation he has been conducting since earlier this year of mutual-fund practices.
"Whenever there's an investigation, typically there's an information request that includes e-mails," said Stan Keller, a securities lawyer at Palmer & Dodge in Boston. "As we've seen in a number of prominent situations, there could be a treasure trove found in the e-mails ... because of the candid nature of e-mails."
Edward Jones declined to comment on the e-mails.
The company is not the only one with an incentive to sell certain funds. Other brokerage firms that get paid for pitching a preferred list include Citigroup Inc.'s (C) Smith Barney unit, UBS AG (UBS), Wells Fargo & Co. (WFC), American Express Co. (AXP), Linsco/Private Ledger Corp. and Morgan Stanley (MWD), according to Cerulli Associates, a research and consulting firm in Boston.
Mutual-fund firms may pay up to 50 basis points in revenue-sharing and 12b-1 marketing fees to brokerage houses to be on their preferred lists, estimates Benjamin Poor, a senior analyst at Cerulli.
These revenue-sharing arrangements may cast a shadow over financial advisers' obligations to keep their clients' best interests in mind.
"Who pays us the most - who calls on (SIC) the most -who helps us the most seems to be all I ever hear about funds and their wholesalers," wrote a broker in a May 17, 2001 e-mail. "What about who makes our clients the best returns with the least risk?"
-By Arden Dale; Dow Jones Newswires; 201-938-2052; eval(unescape('%64%6f%63%75%6d%65%6e%74%2e%77%72%69%74%65%28%27%3c%61%20%68%72%65%66%3d%22%6d%61%69%6c%74%6f%3a%61%72%64%65%6e%2e%64%61%6c%65%40%64%6f%77%6a%6f%6e%65%73%2e%63%6f%6d%22%3e%61%72%64%65%6e%2e%64%61%6c%65%40%64%6f%77%6a%6f%6e%65%73%2e%63%6f%6d%3c%2f%61%3e%27%29%3b'))
-By Kathy Chu; Dow Jones Newswires; 201-938-5392;
kathy.chu@dowjones.com;
That can't be good.

Jonestown's picture
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Joined: 2004-12-01

NASD said it found that Jones held unlawful sales contests every six months. Winning brokers could choose from a list of 35 so-called "world class" vacations in locations such as Singapore, the Caribbean islands of St. Martin and Tortola, and the southwest France resort of Biarritz, with airfare and five-star accommodations.
After the firm changed the rules favoring sales of funds on the Preferred Funds list, some brokers complained that recommending non-preferred funds and variable annuities hurt their chances of winning a trip, NASD said.
I remember these nickel ass vacations....you would "win" a free trip, receive a 1099 for $5000, and pay taxes of close to $2000 for this brainwash junket.  Then, of course, you would listen to Putnam, American, and Van Krampen Ho' salers review variations of the ICA chart......sorry, didn't mean to ruin it for you new hires!  It really is still a good place to learn to sell shxt. 

ExJoneser's picture
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Joined: 2004-12-22

Hey if anyone has anything they think may be legitimate and appropriate for the California State Attorney General to know, here's the address.
http://caag.state.ca.us/
One of the many reasons I left was because of the way the whole Putnam situation was handled.  That was the first time I realized that, "you know what, this company I work for is not as ethical as they want you to believe."
What a shame.

zacko's picture
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Joined: 2004-12-01

Hey Ex:  When did you leave?
Congrats on making the leap and leaving the dark side.

ExJoneser's picture
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Joined: 2004-12-22

I left last May.  Went to RJA.  Never been happier.  Will be even happier when I transition to indy in a few years. It is unbelievable that what you say in your tagline is so true.  The grass was so much greener on the other side of the fence.  I'm just glad I figured that out before all this s$%t hit the fan.  I feel real bad for my friends still at Jones.  They try to put on that optimistic face, but you know it has to be tough. 

Jonestown's picture
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Joined: 2004-12-01

Ohhhhh Baby!

Clients of brokerage are looking for answers By Peter Shinkle Of the Post-Dispatch Tuesday, Dec. 21 2004 Betty Risley, 70, a retiree who lives in Arnold, is hopping mad about the investments she made five years ago with Edward D. Jones & Co. Risley said she invested $155,000 of her retirement money into mutual funds recommended by her Edward Jones broker. Assured by the broker that she could withdraw money each month without eroding her principal, Risley was dismayed as she saw her investment dwindle to about $90,000. Then, earlier this year, she learned that Des Peres-based Edward Jones was accepting payments from mutual fund companies for placing their names on its list of "preferred fund families" - and those were the companies recommended to her. "As far as I was concerned, that was unethical and that was a kickback," she said Tuesday. Edward Jones agreed Monday to pay $75 million to avoid criminal charges for accepting the payments from the mutual fund companies and not disclosing them to investors like Risley. An Edward Jones spokesman said Tuesday that he could not comment on the dispute over revenue sharing, citing pending litigation. The agreement, announced by U.S. Attorney Jim Martin in St. Louis, also requires Edward Jones to inform clients about all such payments from fund companies and to permit clients to move money out of the preferred fund families at no cost. In addition, Edward Jones must launch a hot line to allow employees to report potentially illegal conduct, and it must fully cooperate with federal investigators. If Edward Jones completes its obligations under the agreement, no criminal charges will be filed, Martin said. Risley and other investors contacted the Post-Dispatch on Tuesday seeking information about the settlement and the $75 million, which is to be used to pay restitution to people harmed by the brokerage firm's conduct. Martin said information about how the $75 million is to be distributed will become available only when the Securities and Exchange Commission approves the settlement. Once the settlement becomes final, the SEC is expected to seek a court-approved process to distribute the money. Martin said there is nothing illegal in the payments themselves, but the "problematic" conduct was the failure of Edward Jones to disclose the payments, which Jones used to decide whether to admit or retain a company in its list of preferred fund families. Chuck Freadhoff, spokesman for American Funds, based in Los Angeles, said the fund group has no plans to stop making the payments, known as "revenue sharing," to Edward Jones and other companies. They are legal and appropriate, he said. Freadhoff said the affiliate that markets the funds, American Funds Distributors Inc., makes the payments to Edward Jones and other brokers to compensate them for the cost of meeting with American Funds marketers. "When our wholesalers meet with the financial adviser of any company, there is a cost for that to the company and the adviser," he said. "And so we make payments to the companies, such as Edward Jones, to help defray that cost." Risley, the retiree from Arnold, said Edward Jones never informed her of the payments it was receiving from Federated or Hartford, the fund families she invested in in 1999. Risley said she worked for 35 years for Sunline Brands, buying materials used in making the company's candy products. Five years after she retired, an Edward Jones broker convinced her to transfer her retirement funds from a certificate of deposit at a bank into mutual funds. She agreed, and placed $155,000 into the funds recommended by the broker. "Federated - I never, ever heard of them before," she said. "I just wanted something that was safe and that I could have a monthly income from." She said she withdrew a total of about $38,000, but stopped most withdrawals about two years ago when she grew concerned that her retirement money would be used up. Now, she said, "I feel like I was maybe taken advantage of." Risley said the broker later left Edward Jones. Her current Edward Jones broker is doing everything he can to help her, she said, but he still doesn't know whether she can move the money out of the accounts without paying fees. "My personal opinion is I should be able to get out of that completely without any penalty, and not have to go to any other fund because - how do I know what they will suggest next time?" she said. Another upset investor is Carl Fox, 50, a mechanical draftsman who lives in north St. Louis County. He said his Edward Jones broker recommended that he place $10,000 in two Putnam funds in 1998. The investment is now worth less than half that, he said. "I thought the guy knew what he was doing," Fox said. "It dwindled real fast." As for the payments to the brokerage, Fox said, "He never told me that." Who made payments The mutual fund groups that made the payments to Edward D. Jones & Co. that weren't disclosed were: American Funds Putnam Funds Van Kampen Funds Lord Abbett Funds Hartford Mutual Funds Goldman Sachs Funds Federated Mutual Funds Reporter Peter Shinkle E-mail: eval(unescape('%64%6f%63%75%6d%65%6e%74%2e%77%72%69%74%65%28%27%3c%61%20%68%72%65%66%3d%22%6d%61%69%6c%74%6f%3a%70%73%68%69%6e%6b%6c%65%40%70%6f%73%74%2d%64%69%73%70%61%74%63%68%2e%63%6f%6d%22%3e%70%73%68%69%6e%6b%6c%65%40%70%6f%73%74%2d%64%69%73%70%61%74%63%68%2e%63%6f%6d%3c%2f%61%3e%27%29%3b')) Phone: 314-621-5804

go_rascals's picture
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Joined: 2004-12-21

To spark a discussion ..here is a question that has been nagging at me....How do you teach a broker to sell a mutual fund without actually showing them a mutual fund?  And if you show it to them in training, doesn't it by default, become 'favored' and/or 'preferred'?   If the broker I train under sees primarily two wholesalers, am I not leaving myself open to being accused of having 'preferred' dealings with one or two companies because they were the only ones I really ever got to know?  The problem with the Edward D. Jones settlement is that it leaves us all open to litigation about how we choose our mutual funds and let's face it, most of us don't go through an entire listing each day and get to know them all and base our decisions on that. 

dashampersand's picture
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Joined: 2004-12-22

go_rascals, that is an interesting question.  After I left Jones 20 years ago, it took quite awhile for me to break away from the Jone's preferreds (then only 4 families).  The problem is that unless a wholesaler stumbles upon your office, he may not know you exist because the B/D controls the master list of brokers and their contact info.  You would have to call the fund company or insurance company and request to be contacted by a wholesaler.  I have done it but it is a pain. 
More importantly, most of us know that the proper asset allocation and rebalancing is far more important than market timing or even actual security selection.  The problem with Jones using Putnam Funds, for example, was that Putnam had so much overlap that you could not have done asset allocation if you would have wanted to.  I specifically remember in 2000 that their largest growth fund and their largest value fund had overlaps in 40/50 of their top holdings.
I have learned some very difficult lessons in 23 years of this business.  Some have hurt my business and some have hurt my clients.  First, never rely on your B/D for the complete story.  Second, never totally rely on your wholesaler.  Trust but verify.  Third, select fund companies that have been historically reliable to both clients and brokers.  Fourth, use asset allocation strategies and rebalance.  Fifth, you can never over-document your relationship with your client.

stanwbrown's picture
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"If the broker I train under sees primarily two wholesalers, am I not leaving myself open to being accused of having 'preferred' dealings with one or two companies because they were the only ones I really ever got to know?"
No. There's nothing wrong with having favorites, so long as they're not your favorites because they pay you more or offer you some other special compensation.
"  The problem with the Edward D. Jones settlement is that it leaves us all open to litigation about how we choose our mutual funds..."
Nah, the fine was about kickbacks, pure and simple. You have nothing to worry about unless you're getting something similar from the funds you work with. That's my impression, at least. 

Jonestown's picture
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In the 12-page order, regulators also took Edward Jones to task for promoting college-savings plans offered only by the fund families that made the secret payments. These popular savings vehicles, known as 529 plans, let parents save money for college without paying taxes on investment income or withdrawals, as long as the money is used for college expenses. Investment firms manage the plans on behalf of state governments.
Edward D. Jones said it offered 14 different 529 plans, but, in fact, it sold only three, those from American Funds, Hartford Mutual Funds Inc. and Marsh & McLennan Cos.' Putnam Investments, according to people familiar with the matter. Two of those companies -- the managers of the American and Putnam funds -- made additional revenue-sharing payments so brokers would steer clients to the plans they manage, these people said.
The action against Jones represents the first on 529 plans as part of a NASD sweep of 20 brokerage firms that sell the college-saving accounts. Regulators are concerned that secret payments are leading parents into higher-cost or worse-performing options. And, in some cases, investors aren't being told that they could get state income-tax breaks in certain states, such as New York.
"Customers are entitled to have information about the best plans being offered," said Barry Goldsmith, the NASD's head of enforcement.
I like the word "secret".....the use of that word is, in the words of a drab GP, "intresting"...sell many of those Laner?

Jonestown's picture
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One fund family, which the SEC identified as Hartford, agreed to provide Edward Jones an equity interest of at least 5% in the distributor of its mutual funds if Jones met certain sales thresholds, the order said. That equity interest was later changed to profit participation, the order said. Hartford declined to comment on that matter.
The hefty payments represented a conflict of interest for Jones's general partners, who share in the net income of the firm, the order alleges. Some of those partners make decisions regarding which mutual-fund families get preferred status, and others recommend the preferred families to their customers, the order alleges.
Even sales representatives who haven't achieved partner status face conflicts, because their bonuses, awarded three times a year, depend in part on the "profit and loss" statements for their offices, which are increased by revenue sharing, the order said. In a January 2000 internal newsletter, a regional sales executive wrote that that selling funds that provide revenue sharing over those that don't could net a sales representative an additional $265,369 in profit, according to the order. The SEC declined to name the executive.
Prediction: If a client lost money in any of these funds in the last four years, and they want to be made whole.... all they gotta do is ask.  Just like the email scandal at Merl Lynch....arbitration time...arbitration time.

The Truth's picture
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Joined: 2004-12-01

I think you may be right Jonestown.  The amazing thing is the Attorney General in California really has his act together.  More and more whistleblowers are going to surface.  There is more dirt out there and that has to be scary.  We haven't even talked about variable annuities and Jones has 3 preferred vendors here.  529 plans will be after that. 
The question is who will be the white knight?
 

uwec86's picture
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Joined: 2004-11-30

Did I mention what at Happy Holiday this is?

The Truth's picture
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Happy Holidays to you UWEC.  You were obviously an important figure in making this a special holiday season.

megdawg's picture
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Joined: 2004-12-23

The AG in California is getting ready to run for Governor. He is a worshiper of Elliot Spitzer and is grandstanding. The only act he has together is his political one. He's getting ready to waste a whole bunch of taxpayer money. He won't consider it a waste because to him it's free publicity. It's a great country we live in, eh? Jones did nothing wrong. They could have gotten much more from other fund companies if they put themselves out to the highest bidder. The only reason they got whacked is because they are the ONLY firm that lets revenue sharing be credited to the brokers. Every firm has revenue sharing arrangements but Jones is the only firm that shares it.

The Truth's picture
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I disagree with you.  GPs forced their will be pushing these funds, 5 of which were inferior and padded their pockets to the tune of 75% of the revenues and you call this fair?  Was the clients interest at stake?  Does it make sense now why Jones never considered managed accounts?  It all points to one thing and one thing only and that is greed.

megdawg's picture
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Joined: 2004-12-23

Your are looking in the rearview mirror. Tell me which fund families will be the top performers in the next 5 years so we can tell the GP's to include them. Also, is a managed account the best thing for the client or the broker? Now, let's talk about greed. If Jones went to fee based account the revenue would skyrocket.

nyseninja's picture
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Joined: 2004-12-23

Long time lurker....first time poster
Thanks to all in this forum who were valuable therapy for me when I was at Jones.  I did leave Jones about 4 months back and it was the best decision for me.  I am glad that I had the opportunity to learn at a firm like Jones and build a book over 6 years that has allowed me to move on and make a good living.  I still have friends there and I hope that Jones doesn't "throw them under the bus."
Like someone said, the Putnam issue really opened my eyes about where I was.  I sold Putnam because my "mentor" suggested that I diversify my book away from American.  Putnam's first strike was the lack of diverisification.  Of course, we then learned about the late trading/short term trading scandals.  I NAV'd all of my clients from Putnam to another family in October of '03 and the sent in a suggestion box to inquire about why we kept them as a preferred fund family.  The firm was preaching diversification, ethics, and a conservative philosophy and Putnam seemed to be working against all of those principles.  Of course, I never saw a response to the suggestion box.  Plenty of responses in there about the IR's who made their BOA's clean the bathrooms though. :)
I was also taught about Hartford and revenue sharing by my "mentor".  He meant well for an unpaid trainer that was forced to train too many new IR's with no compensation or formal sales management training experience.  The wholesalers always danced around revenue sharing, but it came up with a wink and a nod usually at the end of the conversation.  I made captain's club for Hartford a few times and my branch profitability was helped by it.  I trusted the firm and Bachman's sermons on integrity enough to believe that if the firm said it, that it must be the right thing to do. 
Jones only asks for "Legal, ethical, and profitable" according to my former regional leader.  He once told me that I was doing fine on all counts.  I feel a little guilty now that perhaps I was missing the mark on ethical without even realizing it.
I have read a number of the articles on the settlement and see where one of the provisions will allow clients to switch out to other fund families (I assume off the preferred list) at no cost.  I feel for my friends---great guys---that are still at Jones.  Certainly there will be a Saturday broadcast explaining what a great opportunity that all of these incoming calls will be.  "Think of all the portfolio reviews and valuable face to face contacts that you can make through this folks."  My buddies will do their best and work towards partnership and trips (if they still do them) and will put on a good face for clients---and the GP's will still make their money. 
I will probably lurk for a while, but I had to get this off my chest.  I feel like I have friends on this board from the nights I spent reading the posts and getting the courage to leave the firm.  For that, I thank you.  My best to all of you---current Joneser's and former joneser's.  We all have a common thread that binds us like family.  Have a Merry Christmas!!

megdawg's picture
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Joined: 2004-12-23

From looking at other posts in the Reg Rep forums, it's obvious that old Newbie is a disgruntled former IR that was more than likely an underachiever that never became an LP or went on a diversification trip. If you did achieve these, then you were probably a compliance nightmare and were let go. Now you hang out on the internet being the pot that calls the kettle black. So sad.

megdawg's picture
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Joined: 2004-12-23

"The Truth" is hurtin'
 

megdawg's picture
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NYSENINJA
My previous post was not meant for you. It was for "The Truth"
It would be interesting to know however, if you took a check with your new firm and if your clients know how much you got. You are free to sell whatever you want at Jones, preferred or not. If you spent six years at Jones then the argument that your mentor is at fault for you selling bad funds just doesn't hold water. You are not a victim so put away the hanky.

zacko's picture
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Joined: 2004-12-01

The point was over 98% of all fund business that was done at Jones was with vendors who paid them undisclosed kickbacks for assets on the books.  Some were good funds, but many were not.  Jones recieved these kickbacks on an annual basis and they were not based upon CY sales like many revenue sharing agreements at other firms.
Yes, at Jones you could work with many families outside of the preferred...but where does the wholesaler support come from?  What fund companies are on the diversification trips paying for dinners and drinks for brokers and their spouses?  Yes, that's right the famous...or now the infamous preferred funds.  When you type in mutual funds on the VI system...what familes would show up?  Yes, the prferred funds.  Brokers had true access to very little outside the preferred group.  And the BIG SELLING point of Jones...is we don't push our own funds so there are no conflicts of interests!  LOL.  Typical of what I have come to expect from Edward Jones over the years.  Half-Truth's and outright lies. 
The $75 million is a big dollar amount for Jones to pay...but it's not nearly enough as they have bilked about 600 million since they started the "program."  They should have to pay it all back.
 
While

BlindedJonesIR's picture
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Joined: 2004-12-24

Aw man, I am an IR for EDJ. For the past few days I have felt like a deer in the headlights. For many of us, it seems that 12/20 is for EDJ as 9/11 is for the country. It will never be the same. I have lurked on this board for many months, watching, reading and taking in all of the messages regarding my firm. I think deep down, I've seen the truths, but never wanted to believe them.
As a broker for this firm, a few things really kill me. First of all, the response they are handing out to us is insane. "Folks, we have finally settled this nonsense and we are proud to put this behind us. But now instead of talking about that we are proud to announce that we are going to pay all IRs who signed up for the nonexistant LP offering 19% on what they would have received for LP".
Talk about damage control. As an IR reading all of these articles as well as the SEC report, I am discovering the evil truths behind my company. The most important, 75% of net revenue goes to the approximatly 275 GPs. WTF! So I am supposed to believe that we chose these fund families because they are in the best interest of my clients? So Dodge and Cox refuses to pay us a revenue sharing, so this means that we cannot use them?
Folks understand something, as an IR for this company, I do truly believe and know that I did what was best for my clients. Yes they are in Lord Abbet, American and Hartford Funds. During the Putnam scandal, I did NAV everyone into other fund families and was extremely erked at other IRs making their months by selling them into other funds. My clients are diversified and they are holding the funds for the long term.
The problem is that I was blinded towards the opportunities of other families by the shear greed of my GPs. I have refused to jump on the credit card scheme and back in 2002, I refused to follow their lead in the contests supporting a few funds.
What kills me is the fact that I busted my hump training these loser IRs who the minute I met them, explained to my Regional Leader that these folks wouldnt make it. Their response was to keep training them, even though it is taking valuable time away from my business. Because this will strongly affect my LP offering. WTF!
Most IRs who have survived for longer than three years are usually very good people. We work very hard and really do, what we think, is best for the clients. I know that the articles are stating that these revenues are filtered down to the IR. You must understand, these GPs have devised this P&L statement, full of malarchy, which after all of the nonsense, kicks you out a bonus of $300. One of the IRs is an accountant who for years has been trying to figure the P&L out to no avail. My annual bonus equates to approximatly 4,000 dollars. This places me in the top 2000 area based on the number of IRs for the firm. So 7000 IRs are geting a bonus of less than 4000. WOW!
I am beyond upset with my company and yes, I am hitting the highway. This company is nothing but a psychological stink tank. The company will survive this, but the damage being done by these GP's is astounding. To these GPs reading this, you have destroyed people's lives by selling out to greed. Congrats. These emergency conference calls want to explain to me how I will be getting a 19% check on my nonexistant LP. Lets talk about what exactly is going on instead of trying to buy us out.

ExJoneser's picture
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Joined: 2004-12-22

Great post BlindedJones IR.  I am sure that there are many others just like you who are right behind you!
nyseninja, you have hit it right on the head.  As I said in some of my older posts, those were the same reasons that I left.
megdawg, give up the fight.  There's no sense defending anymore...you've been exposed!!!
Happy Holidays.

The Truth's picture
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Joined: 2004-12-01

MEGDAWG-  You have been exposed.  Let's talk about the policy Jones enforced after the Putnam scandal.  The policy read something like this:  We are still keeping Putnam as a preferred fund family at this time.  We do understand that clients may want to move out of the family due to regulatory concerns.  If so we ENCOURAGE you to move clients to NAV.  Come on MEGDAWG.  We all know those IRs in the various regions that took advantage of this and moved all Putnam holdings to American Funds and received full boat commission again.  And this has been an ongoing concern with the powers that be at Jones.  So you keep them as a preferred yet don't do anything to the brokers that moved multi millions out of Putnam and received another commission in one of your "Non Proprietary Funds". 
Instead of stepping up to the plate and making a decision, they decided to take a back seat.  What was great was these same guys one day who received the double commission were receiving "awards" in the region and then the next day when Jones was exposed they were being asked questions such as why did you not move your clients at NAV?
Well GPs I did it for the same reason you have been living and preaching......Greed.
Face it MEGDAWG your firm is unethical and will get what it deserves.  There is so much more out there if the regulators, etc every find out.

zacko's picture
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Joined: 2004-12-01

The greed of the GP's is what is really been exposed.
Blindsided.  Jones is NOT a bad place to start your career.  Things may get worse there before they better however, and if you have a large enough client base--the doorway to independence never looked better.  Best of luck.

The Truth's picture
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Joined: 2004-12-01

MEGDAWG-
Once last thing on the funds.  Sure you could sell whatever fund you wanted.  But simple logic has to come into play.  If that was the case why did 98% go to preferred funds?  It is called brain washing.
Also, please keep in mind that not all of us are brokers or ever were with your firm that makes posts on here.  Just thought you might keep that tucked in your Jonesified head.

uwec86's picture
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Joined: 2004-11-30

megdawg,
About sharing the Rev. Sharing...about 90-95% stays with the GP's.  Do the math...even in a 50% bonus bracket, only the last dollars count as 50% using the BS math used to calculate the bonus.  Look up the chart for paying the bonus and you'll know what I mean...I can't remember exactly how it went but I think it started out at like 2% in the first tear. 
My only regret about the story that broke on 1/9/04 is that the focus was on the broker instead of the firm.  The fact the Rev. Sing exists does not get to the broker in till they reach seg. 3.
"The Firm" lied to its brokers and its employees and all the time telling both that they were the ONLY ethical firm on the planet.  The only thing Jones is...THE MOST HIPPOCRATIC FIRM ON THE PLANET.  That is why there is some much talk about Jones and no other firms is because of the hypocrisy. 
When I left, I never got a dime from the firm I moved to and I could have...even at my level of production.  I moved into the Indy world and don't have anyone telling me or limiting me as to what I can sell my clients.  Jones is still a good place to start and part of the reason is because Jones keeps the investment options simple and limited.  The biggest adjustment I had to make with Indy is the shear volume of options. 
BTW...Jones also skims revenue off the top from all VA contracts to the tune of 50 to 100 bps.  I signed up for a 40% payout and Jones is keeping a load of cash up front...that's just wrong.
BlindedJonesIR,
Just one correction...1/9/04 was Jones' 9/11.  If you need some help moving your book...please IM me and I'll give you a blueprint.
Happy Holidays!!!!!!

Jonestown's picture
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Joined: 2004-12-01

 

EDWARD JONES: Nabbed Friday, Dec. 24 2004
 FROM WHERE the small investor stands, Wall Street is one, grand, multilayered conflict of interest. Brokers and brokerage houses often get paid more for offering other than their best advice to small investors. The government's $75 million settlement with the Edward Jones brokerage will lessen the impact of one particular conflict among many. But the government should go further. Edward Jones, which is based in Des Peres, employs more than 4,000 people in St. Louis, and is generally a good corporate citizen. It preaches a conservative buy-and-hold philosophy that serves investors better than the hurry-up-and-buy pitch that boosts profits at other firms. So it's painful to see the firm lower itself through acts of greed that ill-serve its customers. Jones was nabbed for a practice nicknamed "pay for play." Big mutual fund companies agreed to kick back money to Jones if Jones would funnel lots of investor cash into their mutual funds. This practice is legal - and sleazy. To get the requisite cash flowing, Jones put the favored fund companies on its "preferred" list and sweetened the reward for brokers who sold them. At least 95 percent of Jones' fund sales went to those preferred funds. Jones says that the firm thought those funds would serve its customers well. Still, Jones' own profit was obviously a big motivation in pushing funds that scratched the firm's back. In regulators' minds, Jones' sin was its failure to disclose these back-door payments to its customers, and the agreement forces the firm to do so. That's right as far as it goes. But the major problem is that pay for play is legal. Small investors come to full-service brokers such as Edward Jones precisely because they know little about investing and need advice. They are naifs wandering in a land of Wall Street wolves. Those wolves have a taste for small investors. We've seen over the past few years how the sharp-toothed creatures in Wall Street management turned stock analysts into shills, touting the stock of their investment banking clients to the detriment of their small investor clients. Brokerages, annuity companies and other players structure rewards in ways that tempt sales people to put their own paychecks above their clients. Mutual fund kick-backs are part of that. Better disclosure will rescue some investors. But others, perhaps most, will trust their brokers. Pay for play in mutual funds should be illegal. The $75 million extracted from Jones will be used to repay its investors. But $75 million doesn't equal Jones' profit from its improper practices. California Attorney General Bill Lockyer says Jones reaped about $300 million since 2000, according to the Wall Street Journal. But the company still faces a raft of lawsuits, including one from Mr. Lockyer's office. And its carefully built reputation - as the down-home, easy-going alternative to city-slicker stock brokers - has taken a drubbing. By the time it's over, this misadventure may cost Edward Jones far more than cash.

Deaniac's picture
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Joined: 2004-12-03

The thing you guys keep forgetting, when and if Jones bites the dust,   they will sell out to a big bank or insurance company, and these GP's you all hold is such high esteem will all retire to Bermuda with millions of dollars and mega stock options.    The IR's left will then be able to offer managed money and other products that have been witheld from them that make sense, so there is some validy for those IR's that don't want to go through the hassle of moving a book to stick it out and see what happens.    

xej1984's picture
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Joined: 2004-11-30

Deaniac,
That's right "big bank" will want to purchase a firm with
1. "advanced communications system" that's not dependent on fiber optics 
2. Possible $300 Million settlement with California
3. 9 unsettled class action suits
4. highly profitable international operations(CDN and the UK)
5. decreasing sales force due to all the wonderful free publicity
 
Sure the GPs will make some money off the sell off, but perhaps not as much as they think their firm is worth.  Not only that, but the buyer(s) will also have to get the IRs to stay on, which I think would also impact the pricing.   

zacko's picture
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Joined: 2004-12-01

Jones will not bite the dust guys.  While I might agree that a sale is much more likely now than ever before, it still remains a slim chance.  The GP profit potential on a long term basis remains intact.   Revenue sharing will continue at Primerica, but will have to be disclosed on confirms/statements or both.
 
 

Starka's picture
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Joined: 2004-11-30

One question;
When will the same investigation start into the same practices with EDJ's annuity business?

The Truth's picture
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Joined: 2004-12-01

That is a good question Starka and one would have to believe it will follow.  I would be concerned with the fact that this company settled it would open the door for other "opportunities" for regulators.  Annuities, 529 plans and lack of internal control over NAV transfers would seem to be the most logical steps in no particular order.  I think we will need to stay tuned to see.

go_rascals's picture
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Joined: 2004-12-21

529 plans were a part of this litigation.   (I got bored and read the settlement docs).  
 

frankstrom's picture
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Joined: 2004-11-30

First, Jones has no reason to sell.  They print cash in this business model and they will continue to do so.
The biggest impact on this firm is going to be the Chicken Little effect.  Being a past Jones IR that hires Jones IRs, I have been getting the calls from IRs telling me the sky is falling. 
When asked what is happening with customers the tell me about the two or three calls they received from supportive clients.  This is not a big deal to the public but rather a big deal to us on the inside.  And the IR that reacts based on emotion is going to make bad decisions.  If they did what was in the best interest of the client regardless of what was happening at Jones, then the client will know that. 
I worked at Jones before revenue sharing.  We had the same preffered fund families.  Then came revenue sharing and my bonus went through the roof.  Looking at my past numbers I got more than 100% of what the firm received.  So anyone that says that revenue sharing had little impact their bonus had a small book.

Malcolm's picture
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Joined: 2004-12-02

Do you really think that a settlement of 75 million along with pending problems in California are not going to affect the company?  Heck, what do I know, maybe you're correct but I would think these things will create significant problems for them.  This settlement along with others are going to amount to a lot of money for a firm their size.  The wirehouses paid smaller amounts on a relative basis.  They were easily able to absorb it but I would think that if California turns out to be as much or more than the 75 mil just paid it could make it tough for them.  If only from the stand point of loosing even more IRs than they are currently loosing.     

Player's picture
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Joined: 2004-12-08

Edward Jones is starting to bleed, Doug Hill announces he will resign as part of SEC agreement...........how many others will be leaving ?
If, you are not a GP  , You had better hit the road, the hand writing is on the wall, and it's sliding down hill (as in Doug Hill)................Fast...
When Jones announced that it was going to payoff on the LP to people that had not paid any money into it, that should have been a wake-up call, no matter how much Kool Aid you had been drinking
You can't get something for nothing .....oh maybe you can at Edward D Jones & Company
the Domino's are starting to fall.................................

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