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!!

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.

"The Truth" is hurtin'

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.

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

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.

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.

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.

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.

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.

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!!!!!!

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.

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.    

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.   

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.

One question;

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

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.

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

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.

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.