Jones Pays

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footsoldier's picture
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If I were a betting man, Jones will continue to add other fund families as long as they pay. The more funds the more profits. Who is hurt by this?
The supposed most important person in the equation..i.e., the shareholder is left to pick from the payors directed by most FA's.  Seems one-sided especially if the FA listens to their management and vets who want to be in management.

Philo Kvetch's picture
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More than half a million views.

My, my.

troll's picture
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Philo Kvetch wrote:More than half a million views. My, my.
Most of them were done by poopachute

Philo Kvetch's picture
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Is that goforbroke's latest incarnation?

farotech's picture
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The good thing about the Focus List of kickback fund partners is that it allows me to not waste time researching funds. Rather than doing my due diligence on Putnam and Federated, I need to be selling. Perhaps the next blow up will be at American, who knows. Why should I waste time researching?

Maxstud's picture
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Joined: 2005-12-29

Broker24 wrote:proudlp wrote: FREE wrote: Again Spiff you do not get it.EDJ NET 360MIL-REV SHARING 140MIL. This is the most goofball comparison I consistently see.  You can't compare Net to Revenues.  It just doesn't work that way. EJ could have made 500 million on Insurance Products, does that mean they are in the negative since their 'Net' was only 360.  You have to put Revenue Sharing into their entire pot of Revenue streams and then back it out.  I've not done the math in a couple of years, but last time I did, Revenue sharing made up about 9 percent of EJ's Net.  (I've mentioned this before).  It does not make up almost 50 percent the way this quote leads you to believe.  Don't get me wrong...9 percent is still a lot and it would hurt if it were not there, but it wouldn't cause the world to stop spinning for Edward Jones.
Proud, actually you are wrong.  There is no cost associated with Revenue Sharing Income, so the revenue flows 100% to the bottom line.  You are assuming Revenue Sharing revenue flows through at the overall company margin.  Not so.
Gross commissions (income) have significant costs associated with it, such as broker cut (40%), FICA taxes (on the commission), etc.  A dollar in revenue sharing is FAR more profitable than a dollar in gross commissions.
We received $172mm in revenue sharing income in 2005.  NET income for same period was $330mm.  That entire $172mm in revenue sharing income was 100% profit.  If you took out that $172mm, you would also reduce Net Income by $172mm.  OTOH, reducing gross commissions by $172mm would reduce Net Income by maybe only $100mm.
It's just simple accounting.  Works this way in every business.  Some revenue streams are more profitable than others.  Revenue Sharing is a "fee" with no associated expense.  I'm not arguing right or wrong - just the facts.
Now, I have no idea how much other firms actually collect in Revenue Sharing.  But I am willing to guess (given that EDJ FA's are the "only" profit center) that our Revenue Sharing is a much larger % of total company income AND profit than compared to other firms.
Frankly, it makes me a little nervous.Your wrong, and it amazes me that people don't understand this.  It doesn't matter if you have a direct COST to produce the revenue because if you use the revenue to pay COSTS then it is not pure profit. Income= Revenue-costFurthermore Free said the 10% if revenue sharing goes to LP ect and 90% to GP's if that is true then Revenue sharing does not contribute to income at all.  ZERO income to the bottom line.

Maxstud's picture
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farotech wrote:The good thing about the Focus List of kickback fund partners is that it allows me to not waste time researching funds. Rather than doing my due diligence on Putnam and Federated, I need to be selling. Perhaps the next blow up will be at American, who knows. Why should I waste time researching?Why waste time working for a company you don't believe is a benefit to you?  Find a company or occupation you believe in, your life is yours unless you give it to something you don't support.

bspears's picture
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Joined: 2006-11-08

Great post Max.  As I mentioned in a thread a few days ago or last week...A GP came to our Spring Regional to show all the ins and outs of the money flow at Jones.  Revenue sharing was a very large part of the bottom line.  I understand business 101...and I will agree Revenue sharing isn't 100% profit...but it's damn close.  If it wasn't so important to the health of the company..why don't they say no and open the platform? We all know the reason they won't..because the more you have flowing to a few, albeit ok funds, the more power you wield(sp) the more safe the kickbacks become. Also, the cut of profits Lp vs Gp...is more 85% GP and 15% LP.  The pure $'s grow every year...remember back when they paid no LP but paid GP. Nice!! After pressure and a brokers leaving..they ghost credited the LP...GP's are nothing put greedy crooks.  And of course,,they were all top producers before getting into the club!! RIGHT!! 

farotech's picture
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Maxstud wrote: farotech wrote:The good thing about the Focus List of kickback fund partners is that it allows me to not waste time researching funds. Rather than doing my due diligence on Putnam and Federated, I need to be selling. Perhaps the next blow up will be at American, who knows. Why should I waste time researching?Why waste time working for a company you don't believe is a benefit to you?  Find a company or occupation you believe in, your life is yours unless you give it to something you don't support.
Thanks, Dad! (Rumples my hair.)

farotech's picture
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Maxstud (affectionately): Get outta here, you little scamp.
Farotech (whining): Can't we get ice cream just this once?
Maxstud: Well, alright you little troublemaker.

GoldCaddy's picture
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Joined: 2007-02-16

I just cashed the check from Jones.  $19.71.  I'll use it with my barber today.  One final haircut from Jones!

Indyone's picture
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...nice haircut analogy...

uwec86's picture
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GoldCaddy,
That was awesome!

CIBforeveryone's picture
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GoldCaddy wrote:I just cashed the check from Jones.  $19.71.  I'll use it with my barber today.  One final haircut from Jones!
Did your barber take 60% off the top?
 

Starka's picture
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Joined: 2004-11-30

CIBforeveryone wrote: GoldCaddy wrote:I just cashed the check
from Jones.  $19.71.  I'll use it with my barber today.  One final haircut from
Jones!
Did your barber take 60% off the top?
 

Did you also have to supply your own tissue paper fr around your neck?
(You do of course realize that this is only going to get worse!)

farotech's picture
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Joined: 2007-01-05

No doubt the barber argued that he is paying for the use of scissors and razors, and therefore you are actually getting quite a good deal.

farotech's picture
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PM PROMO UPDATE WIRE:
A JONES FA FROM IOWA MADE 60 REPEAT CONTACTS BETWEEN 4-9 PM TO WIN THE IPOD!
ALSO, HE MADE 31 REPEAT FACE TO FACE CONTACTS THIS SATURDAY MORNING !
Man, this guy makes me feel like crap. 60 repeat contacts in five hours on Tuesday? 31 face to face repeat contacts on Saturday morning? He must be a very fast talker/walker.
 

farotech's picture
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Joined: 2007-01-05

ADDENDUM: The May 5 Saturday Promo is called...no I'm not kidding...
THE REPEAT CONTACT FIESTA.
Yes, ladies and gentlemen, that is the firm we have grown to know and love.

hoosier's picture
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Joined: 2004-12-01

I use to be a client of EDJ.  I have moved since then and they have not contacted me.  How do I go about getting my lunch money from Jones?

doberman's picture
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farotech wrote:
PM PROMO UPDATE WIRE:
A JONES FA FROM IOWA MADE 60 REPEAT CONTACTS BETWEEN 4-9 PM TO WIN THE IPOD!
ALSO, HE MADE 31 REPEAT FACE TO FACE CONTACTS THIS SATURDAY MORNING !
Man, this guy makes me feel like crap. 60 repeat contacts in five hours on Tuesday? 31 face to face repeat contacts on Saturday morning? He must be a very fast talker/walker.
 

Don't sweat it, faro, this FA is lying. Check the FA's rankings in commissions, if EDJ provides that info. I'm betting you'll find that they rank near the bottom. If (and I mean if) they were able to actually accomplish this feat, they would be ranked near the top (and own a pair of red tights and a cape.)

farotech's picture
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Joined: 2007-01-05

31 repeat face to face contacts between 8 AM-12 PM. So 8 contacts per hour, or one contact every 7 minutes. Because contacts are supposed to last 5-7 minutes, that means that not only was every single person he doorknocked home, but that every single person he knocked was a repeat contact. If he knew 31 people on a set of three or four streets and jogged from house to house, he might have done it.
As for his 60 phone repeat contacts in four hours, that's doable if you talk very, very fast, or keep the conversations to: do you want this bond, no, click, do you want this bond, no, click...
The people in charge of these promotions have never worked in the field, so they assume that BS like this is true. Now the guy gets a free IPod.

noggin's picture
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Joined: 2004-11-30

Dont sweat it my brethren. He gets an Ipod so he can listen to 1.3 seconds of a song between contacts. Just think in 17 days he will actually get thru one song!!!

farotech's picture
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Joined: 2007-01-05

True. HAHHA

Broker24's picture
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Joined: 2006-10-12

This is one of the weaknesses of the Jones system. Many newbies
confuse hard work with smart work. Lying about contacts (or talking to
500 people an hour) doesn't really accomplish anything (except winning
an I-Pod.

AllREIT's picture
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Joined: 2006-12-16

bspears wrote:Great post Max.  As I mentioned in a thread a few
days ago or last week...A GP came to our Spring Regional to show all
the ins and outs of the money flow at Jones.  Revenue sharing was
a very large part of the bottom line.  I understand business
101...and I will agree Revenue sharing isn't 100% profit...but it's
damn close.  If it wasn't so important to the health of the
company..why don't they say no and open the platform? We all know the
reason they won't..because the more you have flowing to a few, albeit
ok funds, the more power you wield(sp) the more safe the kickbacks
become. Quote:

Except that the franchise value of EDJ the company goes down since they become a one trick pony with a single bag of tricks.

And when GFA seriously lags the market for a few year's there is going to be a storm of ACATs

Of couse the GP's are addicted to that 90% gross margin income stream.
So change at EDJ is blindingly slow even if EDJ is giving up even
larger amounts of topline revenues and market opportunites.

Real HNW clients are going to bump up against the edges of EDJ's platform real quick. 

In the long run, I think that FA's who are just mutual fund conduits
are going to lose out to RIA's and FA's who can manage money and have
an ownership stake in the business.

Quote:Also, the cut of profits Lp vs Gp...is more 85% GP and
15% LP.  The pure $'s grow every year...remember back when
they paid no LP but paid GP. Nice!! After pressure and a brokers
leaving..they ghost credited the LP.

The solution to this would be to require the LP unit's to get a certain
preferred return before the GP units got thier cut. Kind of like in a
private Equity deal.

LP's get cash up to a hurdle rate,
GP's get catch-up allocation
GP's get 25% of the excess cash.

Dust Bunny's picture
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Joined: 2007-05-07

As for his 60 phone repeat contacts in four hours, that's doable if you talk very, very fast, or keep the conversations to: do you want this bond, no, click, do you want this bond, no, click...
Ha... that was the last straw for me when at Jones.  It was exactly like that.  I was at some mandatory meeting and Tom Bartow(sp?) was leading the meeting.  He was supposed to be some sort of guru for cold calling, but to me he was a sawed off a-hole with a short guy complex.
I had a list of clients and good prospects to call.  My procedure then and now was to call the client, make sure that they had some time, do some small talk (how's the kids, garden, job whatever going), have a laugh and then tell them why I was calling, give them some details on the investment idea and why I think it would fit into their portfolio or plan, why it would be a good investment for them.   During and after the call, I would take some notes on what we had discussed, how much they wanted to buy, or why they didn't like the investment idea etc.   Naturally this took a bit longer than "wanna buy a bond? no... click" 
He pointed out that he didn't want us to put down the phone and we should take no more than 15 seconds on a call to determine if the prospect was going to buy or not and if not move on. He made an example of how badly I was doing (even though I had actually sold more of the product than anyone else that day.)
If I treated my clients that way or my prospects they would wonder if the body snatchers had taken over. I told I wasn't going to do business like that and didn't aspire to be  like HIM.
I was gone within a few months and never felt better about myself.
 

now_indy's picture
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Dust Bunny wrote:
 I was at some mandatory meeting and Tom Bartow(sp?) was leading the meeting.  He was supposed to be some sort of guru for cold calling, but to me he was a sawed off a-hole with a short guy complex.

Starka's picture
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Tom Bartow...now there's a blast from the past!
Remember him handing out quarters every time you 'asked for the order'?
I was at one of those 'Top Gun' (or whatever it was called) sessions in St. Louis.  He was trying to shove a quarter into my face while I was trying to close.  After a few moments of that, I excused myself from the client for a second and told him to get out of my face while I was trying to make a living.  The way the room gasped you'd have thought that I took a dump in the punchbowl.
Geez.

Kargon's picture
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Starka wrote:
Tom Bartow...now there's a blast from the past!
Remember him handing out quarters every time you 'asked for the order'?
I was at one of those 'Top Gun' (or whatever it was called) sessions in St. Louis.  He was trying to shove a quarter into my face while I was trying to close.  After a few moments of that, I excused myself from the client for a second and told him to get out of my face while I was trying to make a living.  The way the room gasped you'd have thought that I took a dump in the punchbowl.
Geez.

OMG!  I am rolling in my seat over here.

bspears's picture
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Joined: 2006-11-08

He was at one of the last meetings I attended when I was still part of the cult.  Way over the top...but he was a very successful seller of investments, just ask Dave Lane!

FreeFromJones's picture
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Tommy B.  What a legend in his own mind.  A great salesman of American Funds, so great they hired him away from EDJ.  He definitely thought highly of himself and treated others like they were a piece of donkey dung if they didn't bow when he came into the room.  Man o man, am I glad that I'll never be forced to attend another one of his presentations.

Gone Indy's picture
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Bartow always reminded me of Sgt Carter from Gomer Pyle, USMC.

now_indy's picture
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Gone Indy wrote:Bartow always reminded me of Sgt Carter from Gomer Pyle, USMC.
I can see him now... "move it, move it, move it"
He loved to bring up Patton and act very military. Was he even in the military?

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