3rdyrp2:

[quote=hotair1] [quote=3rdyrp2] I meant for it to mean “control how the clients year-end statement looks, as far as the bottom line goes”. You know why Edward Jones wants you to use the buy and hold approach? Because they don’t want you doing actual research that will make you more knowledgable because it will take away time for you to go knock on doors. The clients you got 6 months ago are suffering from your lack of knowledge so you can have a few hours extra each day to get your quota of contacts. If you simply do a great job of getting superior performance then you’ll get enough referrals to keep you from needing to knock all day. The company doesn’t get a higher profit from you knowing actual market tactics, they get a higher profit by you knocking 8 hours a day. THE COMPANY gets more. But its YOUR business!! [/quote] a lil girl that built his business with fish bowls is judging? when you work for a real firm let us know and then you can give advice. YUP

Haven’t done a lunch and learn in almost 2 years. Being on a platinum team for Ameriprise on the P2 side is as independent as I need to be, only thing we don’t get is diverse choice of annuities. I’m ok with that. Which heavyhitter are you hawking stocks for, clown?[/quote]



I’m a riversource rep: American Express and American Express Financial Advisors - The Unofficial Consumer Opinion Site

[quote=LuvIndy] [quote=Spaceman Spiff]

Rarely do I have a client ask me about a product other than gold.  Twice, no three times today I had a conversation about gold.  It's actually rare for me to have a client ask me about any investments.  I'm normally the one telling them about ideas.  Just because I said I didn't have anyone asking me about things I can't handle doesn't mean that I'm not the one calling the shots in my office.    

I'll go back to my original comment that at the end of the day this business is about stocks vs bonds.  Period.  Whatever variation we put out there, it's still about owning an equity stake or loaning your money to someone.    Access to alternative investments, IMHO, is only important if that's the business you want to be in.  If you like spending your time researching, calling, explaining, tracking, etc those kind of things, knock yourself out.  I don't.  I think clients are more concerned with what we do not how we do it.  They're much more concerned with retiring, college, weddings, and estate planning than learning about a new product from me.  At least that's what I've found with my clients.    Would it be helpful for that one prospect or client out there that is, I'll say bored, with the traditional approach to have something new and exciting in my back pocket?  Maybe.  But I'm not going to switch firms because Jones has a traditional investing approach.    Would it be great to control my clients accounts?  Absolutely.  Of course I could only buy fixed annuities for them and I could do that all day long.  I could buy ETFs and not have to worry about money managers at all.  BTW, Wash Mutual and Growth Fund are team managed.  Just FYI in case you forgot.  [/quote]

Spiff, I used to be with you on the stocks v. bonds theme. Since then I have come to the realization the portfolios are less volatile with commodities and real estate components in them. If that makes the clients more likely to stay with the portfolios we put in place for them, it serves THE CLIENT very well.

My RL trained me to believe that mid and small cap stock funds were unnecessary as well. I have since come to the realization that he was wrong. Ignoring multiple asset classes serves the advisor well more so than THE CLIENT. (i.e. it's too hard to keep track of all that stuff).


[/quote]   Your RL must have had his head in the sand.  I've personally never heard anyone from Jones tell me that there are certain asset classes that should be ignored.  My guess is along with the conversation with your RL about small and mid caps, he then told you that you should only sell American Funds for the rest of your career.  Thus the reason small and mid caps aren't necessary.  It might work for his office, but not mine.    I agree with you on the real estate and commodities.  Jones does a very good job on the core investments, but really doesn't talk much about the satellites.  Until Advisory Solutions when they built into their "Plus" models some of those asset classes if you wanted something other than what is one the Morningstar boxes, you were on your own.  Fortunately for me we had some great wholesalers early in my career who saw things a little differently than Jones does.  My Goldman rep was the one who started talking about a more complete portfolio than stocks vs bonds. 

3rdyrp2:

[quote=Spaceman Spiff]  I think clients are more concerned with what we do not how we do it.  They’re much more concerned with retiring, college, weddings, and estate planning than learning about a new product from me.  At least that’s what I’ve found with my clients. 

  Then get them to their goals quicker.  You're not going to find opportunties with global infrastructure, ChIndia, base metals, communication & technology inside American funds or Advisory Solutions.  You can buy ETF's all you want in regular brokerage accounts but will clients be ok with paying commissions on every trade?  How can you possibly do whats best for a client if you can't use fee-based accounts that allow you to actually pick the investments.  Your fee based model is basically a retirement lifecycle mutual fund.  -   http://adviser.americanfunds.com/funds/details/nwf.htm?shareClassTypeId=0   I posted this link for you from the American Funds website.  It's a fund called New World.  I think it actually covers all of the things you mention above.  I could post a couple of others like New Economy or Small Cap World, but I think that would be overkill.  As far as Advisory Solutions goes, I can use not only New World, but I can also use a couple of commodity strategy funds, some real estate funds, and some other emerging markets funds.  Now, what I can't do is put more than a certain percentage of my client's assets into those funds.  But, I can be as tactical as I choose to be with those assets.  What I can't do is overweight more than 25% in any fund.  Not that I would, but the restrictions are there in case I got a wild hair.    You can keep telling people that it's a retirement lifecyle mutual fund, but you'd be incorrect.  For many reasons I won't go into here.      [quote=Spaceman Spiff]Would it be helpful for that one prospect or client out there that is, I'll say bored, with the traditional approach to have something new and exciting in my back pocket?  Maybe.  But I'm not going to switch firms because Jones has a traditional investing approach.  [/quote]   Buy and hold is for losers.  It's the lazy way to invest and over the past 10 years hasn't worked.  Its for investors and investment professionals that don't want to do the research necessary to find the tactical opportunities that will get the extra couple percent per year that will help the clients goals be reached.   No, buy and forget is for losers.  I see that all the time.  "Advisors" put together an initial group of mutual funds or other investments and just let them run.  No rebalancing, no regular due diligence, nothing.  It is a lazy way to invest.  I agree with you.  I don't have any real issues with "tactical" investing.  But you're still trying to look into your crystal ball and figure out what's right around the corner.  There are some folks who can pull that off and maybe you're one of them.  Most people are going to get smoked making sector bets at one point or another.  Proper asset allocation, proper rebalancing, proper due diligence on the money managers you use, and finding the correct risk tolerance for your client, IMHO, is perfect for the vast majority of investors out there.  From my point of view, I have to be right one time.  That's when the portfolio is originally constructed.  Get those things I mentioned above right at the beginning and you should be fine with the right kind of reviews along the way.  In your model you have to be right all the time.  You have to be right on the tactical move, the specific investment, the timing, your interpretation of the data.  Unless you have your CFA or something similar getting all of those things right is going to be challenging.  Not to mention time consuming.    [quote=Spaceman Spiff]Would it be great to control my clients accounts?  Absolutely.  Of course I could only buy fixed annuities for them and I could do that all day long.  I could buy ETFs and not have to worry about money managers at all.  BTW, Wash Mutual and Growth Fund are team managed.  Just FYI in case you forgot.  [/quote]   I meant for it to mean "control how the clients year-end statement looks, as far as the bottom line goes".  You know why Edward Jones wants you to use the buy and hold approach?  Because they don't want you doing actual research that will make you more knowledgable because it will take away time for you to go knock on doors.  The clients you got 6 months ago are suffering from your lack of knowledge so you can have a few hours extra each day to get your quota of contacts.  If you simply do a great job of getting superior performance then you'll get enough referrals to keep you from needing to knock all day.  The company doesn't get a higher profit from you knowing actual market tactics, they get a higher profit by you knocking 8 hours a day.  THE COMPANY gets more.  But its YOUR business!! [/quote]   See, I can't disagree with you more.  You have so many contradictions in the paragraph that I don't even know where to start.    Does EDJ want us to knock on doors?  Yes - to grow our businesses.    Does EDJ want us all to become analysts? - No, not until our business is mature enough.  And even then I think they'd rather us become CFPs than CFAs.   Does EDJ profit from me knocking on doors? - Yes - I get new clients, they make trades or set up new accounts, the firm makes money.    Is it ONLY EDJ that profits from that?  No - I get commission dollars from my doorknocking.    Does EDJ want me to only get new clients from doorknocking? - No - they don't care where they come from.  They're OK with referrals, you know.    NONE of my clients are suffering over the last 6 months.  In fact they're all up quite a bit.  In hindsight I should have moved all of my assets to small, mid, emerging markets, and high yield bonds.  However, that's not the risk tolerance my clients have.  So, we stuck with what's comfortable to them and didn't change the strategy based on the market.    Will EDJ profit more if I find a way to grow my client's assets faster?  - Yes.  From many different sources.    Just out of curiosity, how do you quantify superior performance?  How do you quantify that with your clients?  Do you compare your approach to some benchmark?  How do you know that your approach provides superior returns to mine?   

Spiffy,

  You're going to get blasted for this one:  "NONE of my clients are suffering over the last 6 months.  In fact they're all up quite a bit.  In hindsight I should have moved all of my assets to small, mid, emerging markets, and high yield bonds.  However, that's not the risk tolerance my clients have.  So, we stuck with what's comfortable to them and didn't change the strategy based on the market. "

noggin:

BTW, I talked to someone from my old Region at Edward Jones yesterday. Last week, 2 Seg 5’s jumped to LPL!!! I am glad for them, both great guys. They will do well. The reason that more people don’t jump is the fact that they are scared to. They don’t have access to the information that this forum provides. I, for one, am thankful for hearing both sides and allowing me to make up my mind rather than just hearing 1 side( EDJ) and trying to make up my mind. Thanks.

  Seriously?  You really believe that's true?  You know how I found these forums?  Through the EDJ intranet.    I don't believe it has anything to do with being scared.  I think it has more to do with being comfortable. 

[quote=uwec1986]Spiffy,

  You're going to get blasted for this one:  "NONE of my clients are suffering over the last 6 months.  In fact they're all up quite a bit.  In hindsight I should have moved all of my assets to small, mid, emerging markets, and high yield bonds.  However, that's not the risk tolerance my clients have.  So, we stuck with what's comfortable to them and didn't change the strategy based on the market. "[/quote]   So, how come you didn't blast me?  You obviously think that I'm wrong, so why don't you tell me where the erroneous statements are?

[quote=Spaceman Spiff]"NONE of my clients are suffering over the last 6 months.  In fact they’re all up quite a bit.  In hindsight I should have moved all of my assets to small, mid, emerging markets, and high yield bonds.  However, that’s not the risk tolerance my clients have.  So, we stuck with what’s comfortable to them and didn’t change the strategy based on the market. "

 [/quote]   This will probably hurt Spiffy more than anything...but I approve of this message.

Spiff

  I hope none of your clients were hurt the last six months as most markets are up 30-60%. The real question is how did they hold up the previous six months?

Spiff,

I'll try to hit on all your points w/out quoting the post since that thread has already gotten long enough.    I think one of the important parts of investing and allocation is being able to control the amount of a certain investment goes in the clients account.  I don't want a fund manager telling what % is going to be in base metals.  I want to be able to control that.  I also want to control the areas that the client doesn't invest in.  Maybe I want him in 10% emerging market debt, but I don't want 60% of that amount be in Russia.  I can't make that change for him, I'm at the mercy of the fund manager.  Or I find a fund like New World that is getting my client exposure to commodities but also has exposure to more utilities than I want the client having.  I would basically be a middle-man with my client.  "Mr. Client, please roll your 401(k) over to me so I can then pass it on to some other guys to manage."  This works w/SMA's because they aren't a diversified mix of sectors.   Tactical investing isn't looking into a crystal ball and dressing up like Miss Cleo.  Its taking the information that is given to us and translating it into educated investing.  "Ok, so the U.S. and developed Europe's governements are riddled in debt right now, while countries like Brazil, China and India are flush with more cash than we could know what to do with. Maybe they would be a smart place to put a few extra bucks in.  6 months from now, we'll take another look at the situtation and see if we need to scale back."  Or "The rise in oil prices lately has been almost solely due to the dropping of the dollar.  Maybe we need to scale back our oil exposure because the dollar can't keep dropping forever."    Being a doorknocker and middleman for our clients money is not what they want.  Talking about dreams and goals are all fine and dandy when we're telling them "you need to earn 8% over the next 10 years to 100% fund little Sammy's college.  In the last 80 years the Dow has averaged 8%.  As long as we follow a theory created by the great Harry Markowitz then you will reach that 8%!  Congratulations."  But what if they invest with you in 1999 and now its 2009 and their $10,000 contribution is sitting at $10,000.  They probably made a couple bucks based off your smart rebalancing over those 10 years, but all those gains went towards making up the original 5.75% A share load.  Read the Journal or listen to a few conference calls from the companies you invest with, learn to filter out the propaganda B.S. that some of the guys will stuff down your throat and use that info to your advantage. 

[quote=Spaceman Spiff][quote=3rdyrp2][quote=Spaceman Spiff]  

Then get them to their goals quicker.  You're not going to find opportunties with global infrastructure, ChIndia, base metals, communication & technology inside American funds or Advisory Solutions.  You can buy ETF's all you want in regular brokerage accounts but will clients be ok with paying commissions on every trade?  How can you possibly do whats best for a client if you can't use fee-based accounts that allow you to actually pick the investments.  Your fee based model is basically a retirement lifecycle mutual fund.  -    You can keep telling people that it's a retirement lifecyle mutual fund, but you'd be incorrect.  For many reasons I won't go into here.   [/quote]   Advisory Solutions is a retirement lifecycle fund.  EDJ gives out the % for the aggressive model and you are handcuffed to whatever % they put in Large, mid, small cap, international, bonds, whatever.  Then quarterly or whenever they rebalance back to whatever the %'s are supposed to be.  Just like if you buy a Fidelity Freedom 2040 fund, they are already weighted based off a pre-determined model, then rebalanced back to that model quarterly or whenever.  Maybe Advisory Solutions has more fund families than a lifecycle fund but that doesn't mean its better.  It just means those funds have a special revenue sharing agreement with Jones.

Spaceman Spiff:

[quote=noggin]BTW, I talked to someone from my old Region at Edward Jones yesterday. Last week, 2 Seg 5’s jumped to LPL!!! I am glad for them, both great guys. They will do well. The reason that more people don’t jump is the fact that they are scared to. They don’t have access to the information that this forum provides. I, for one, am thankful for hearing both sides and allowing me to make up my mind rather than just hearing 1 side( EDJ) and trying to make up my mind. Thanks.

  Seriously?  You really believe that's true?  You know how I found these forums?  Through the EDJ intranet.    I don't believe it has anything to do with being scared.  I think it has more to do with being comfortable.  [/quote] Spiff,   You are welcome to your own interpretation but when that is EXACTLY what they tell me, I take it at face value. They tell me they are scared, I believe them. I don't think anyone is comfortable with where they are given the market enviroment over the last 12 months.

I’ll just slip in my $0.02…

As far as the "scared" comment.....it's true.  Maybe "Scared" isn't the right word, but let's just say "not comfortable or confident enough about what lurks around the corner to do anything about leaving".  I think many, many FA's (Jones and elsewhere) would answer "YES" if you asked them if they would like to be transported 1 year into the future when they are indy and everything they wanted to transfer has come over, they are now running their own business, and are earning 75% more net (i.e. from 100K to 175K).  Maybe "comfortable" as Spiff said, is also part of it.   As far as the Advisory Solutions "Lifecycle fund", I think this is a little bit inaccurate (though I understand the point).  Let's just examine for a minute....many RIA firms that I am aware of run model portfolios.  Typically there are 4-6 different core models (let's just talk about core, tax-deferred account models), ranging from aggressive to conservative, and sometimes including an all-equity and a "capital preservation" model.  Most of them stick to a rather pre-defined asset allocation strategy.  They may flex internal allocations at times between asset sub-classes (i.e. Emerging/Developed/Value/Growth/LC/SC, etc.), but for the most part, most firms that I have seen do not run ecclectic tactical models (I did not say NONE) with wild swings between asset classes.  Within the Jones models (custom), you only have to stick to the macro-allocations (i.e. Income, G&I, Growth, Aggressive).  But you can allocate between large-cap, small cap, emerging, value, growth, etc. however you see fit.  There are some limitations - no more than 25% in one fund (reasonable), no more than 10% in any one "niche" investment (real estate, commodities, EM), and there is some limitation on high-yield bond funds (I forget what it is).  So this is a little bit limiting, but most of the time most reasonable asset allocations are not allocating much more than that anyway.  And sicne we are operating under their RIA umbrella, there is a level of prudence that must be used.  I can't imagine going in fron of a panel and explaining why I had my client in 50% commodities when they blew up. And you can use any of the funds you want within their program.  Yes, I wish we could utilize non-style box funds (i.e. Global Allocation funds), but there are a lot of damn good funds to choose from, as well as most of the ETF's you would need. As always, not perfect, but far from a "Lifecycle Fund".

Mo, I am just saying that I know many people that have no idea what the transition would be like.  All they hear is how high the ticket charges are, how none of your clients come with you, and how expensive it is to pay for employer FICA (yes, much of this is spewed by Jones).  So most of them don’t bother looking any further, as they KNOW what they make NOW, and they are comfortable not changing.  Not that it’s RIGHT, it’s just how it is.

  And as you might have gathered, I am speaking for others on this...

For those reading this thread... I'll remove some of the mystery--which hopefully removes some of the "fear". 

1.  Not all of your clients will come with you.  The average is around 70-75% of your total assets.  Jones will tell you it's less.  It's not.  I was able to get 92% of all the assets.  This was due to proper preparation (about six months--although you can do it half that time) and set up of a new office, taking my BOA with me, etc...   2.  Do not underestimate the loyalty your clients have towards you.   They are your clients.  NOT Jones clients!  They do business with you because of the value you bring to the table.  They like you and they trust you.  With that being said...some clients you did not expect to come along with you  will and some you might think of as "sure things" will remain at Jones.  Some might come 6 months later--although the bulk will come over right away.    3.  Preparation is the key.  That will determine whether you are able to bring 60% or 90%.  Most FA's prepare--but some just are more creative and more organized than others.  Talk to others who have left before you.  Most will be glad to help you develop an action plan.   4.  The payout facts:  At RJ (which is not the highest payout for indy--but was the closest thing to Jones I could find as far as strong compliance, great back office support etc..) after ticket charges, technology fees, E&O, etc... I average about an 80% payout.  From that 80%, I then pay my rent, utilities, staff people (I have two--but one works 20 hours per week) etc...  My net/net as it's often called averages around 65%.  At Jones during good bonus periods, I would average around 45-50%.  During little or no bonus periods, it was closer to 35-38%.   On average, it's about a 20-25% higher net/net payout.  (and I'm leaving out RJ deferred comp ((which is free to me--as well as stock options)) likewise, I am leaving out the Jones profit sharing plan).   So, for me if I did 900k this year, I take home about 180k-200k MORE at RJ versus Jones.  Now, If your doing less production, that number will go down; however, your overhead will also be less.  Use the 80% figure to start as it's fairly accurate for everyone.   So, if your doing 500k gross, you will end up with close to 400k net from Raymond James.  From that, you pay all of your personal office bills.  Hope that makes sense.  Remember, you are running a business and deciding which expenses are worthwhile and which ones are not--is entirely up to you.   Then again--if you are coming from Jones, you probably already know a great deal about what your overhead might be.   Hope this helps shed some light on what some of the costs might be and you can apply these numbers to your own practice.   ps.  I will add that going independent after spending a decade at Jones was easily the best business decision I have ever made.   ZACKO  

[quote=zacko]

For those reading this thread... I'll remove some of the mystery--which hopefully removes some of the "fear". 

1.  Not all of your clients will come with you.  The average is around 70-75% of your total assets.  Jones will tell you it's less.  It's not.  I was able to get 92% of all the assets.  This was due to proper preparation (about six months--although you can do it half that time) and set up of a new office, taking my BOA with me, etc...   2.  Do not underestimate the loyalty your clients have towards you.   They are your clients.  NOT Jones clients!  They do business with you because of the value you bring to the table.  They like you and they trust you.  With that being said...some clients you did not expect to come along with you  will and some you might think of as "sure things" will remain at Jones.  Some might come 6 months later--although the bulk will come over right away.    3.  Preparation is the key.  That will determine whether you are able to bring 60% or 90%.  Most FA's prepare--but some just are more creative and more organized than others.  Talk to others who have left before you.  Most will be glad to help you develop an action plan.   4.  The payout facts:  At RJ (which is not the highest payout for indy--but was the closest thing to Jones I could find as far as strong compliance, great back office support etc..) after ticket charges, technology fees, E&O, etc... I average about an 80% payout.  From that 80%, I then pay my rent, utilities, staff people (I have two--but one works 20 hours per week) etc...  My net/net as it's often called averages around 65%.  At Jones during good bonus periods, I would average around 45-50%.  During little or no bonus periods, it was closer to 35-38%.   On average, it's about a 20-25% higher net/net payout.  (and I'm leaving out RJ deferred comp ((which is free to me--as well as stock options)) likewise, I am leaving out the Jones profit sharing plan).   So, for me if I did 900k this year, I take home about 180k-200k MORE at RJ versus Jones.  Now, If your doing less production, that number will go down; however, your overhead will also be less.  Use the 80% figure to start as it's fairly accurate for everyone.   So, if your doing 500k gross, you will end up with close to 400k net from Raymond James.  From that, you pay all of your personal office bills.  Hope that makes sense.  Remember, you are running a business and deciding which expenses are worthwhile and which ones are not--is entirely up to you.   Then again--if you are coming from Jones, you probably already know a great deal about what your overhead might be.   Hope this helps shed some light on what some of the costs might be and you can apply these numbers to your own practice.   ps.  I will add that going independent after spending a decade at Jones was easily the best business decision I have ever made.   ZACKO  [/quote]   That's crap. I'll bet RJ doesn't send you your print cartridges automatically when they are running low.