Jones Secrets Revealed, Part IV

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spikedkoolaid's picture
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Over the next two weeks I will be posting Jones secrets that they do not tell J.D. Power, they don't tell Fortune magazine.
1)  In order to avoid the aggegration rule on fixed income investments an IR puts $100,000 into a 3pt 30 year bond and then puts $100,000 into the secondary fixed income UIT's paying 4 to 4.5.  Then you put $85,000 into LBNDX no $50k breakpoint net 4.  Total payout on $285,000 would be close to 4%.  $11,400 gross, $4560 net minus 1% for the National Advertising program.  $4104 net!  That's the way I was taught to diversify at Jones from my mentor! 

NASD Newbie's picture
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But you said you don't check the facts so that might not be correct?

troll's picture
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spikedkoolaid wrote:
... minus 1% for the National Advertising program. 
Ugh, you mean the FAs have to pay for those pathetic ads? wow...

Devoted SA's picture
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Yes Mike....my life, my world, it all begins with a dream.....urrp. Just threw up a little in my mouth.
At least now, they have funnier ads. Better than the my life, my world crap.

spikedkoolaid's picture
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If you sell a fixed annuity you don't have to look at the Jones' Reccommended vi,31333.  Different companies offer different commissions for fixed products.  For example, AIG may be offering a 4% commission even though their rate is lower than the Hartford product only offering 2% commission.  You have to delve into the fine print in order to find these gems.  Jones doesn't want you to find out that certain companies are offering a higher commission for the same products.

Incredible Hulk's picture
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Spiked - you are the type of broker that when leaving, the remaining IRs say "he was a compliance issue" You are a joke, and if only your clients could find out whose pocket you were looking out for.

Philo Kvetch's picture
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Incredible Hulk wrote:Spiked - you are the type of broker that when leaving, the remaining IRs say "he was a compliance issue" You are a joke, and if only your clients could find out whose pocket you were looking out for.
And just whose pocket are you looking out for?  Did you get into the brokerage business to wear a hair shirt and do good works for the poor?  Do you put your earnings into the EDJ poor box and preach the gospel according to St. Louis?

munytalks's picture
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Philo Kvetch wrote:
Incredible Hulk wrote:Spiked - you are the type of broker that when leaving, the remaining IRs say "he was a compliance issue" You are a joke, and if only your clients could find out whose pocket you were looking out for.
And just whose pocket are you looking out for?  Did you get into the brokerage business to wear a hair shirt and do good works for the poor?  Do you put your earnings into the EDJ poor box and preach the gospel according to St. Louis?

 
Spiked-
You have been very bad... you will now recite 3 Our Bachmann's, and 4 Hail Weddle's....
(Borrowed this from Devoted....)
 
P.S. On the annuity stuff they don't tell you.... AIG also has a "C" share annuity with a minimum guarantee. No upfront, no surrender fees... if the Market Value doesn't go up, death benefit still pays 3% compound interest. Up to age 90!  They call it the 'super CD".

csmelnix's picture
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Spiked - nice story.  I love how incredible comes out to say it was just you - that's a surprise.  Here's another incredible:  THIS WAS THE SAME TYPE OF TRICK my RL taught me when I was at Jones; his way of building recurring revenue. 
Doing what's right for the client - it's crap like this that causes us formers to be so bitter at Jones but on cloud 9 as independent.

Devoted SA's picture
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Philo Kvetch wrote:
And just whose pocket are you looking out for?  Did you get into the brokerage business to wear a hair shirt and do good works for the poor?  Do you put your earnings into the EDJ poor box and preach the gospel according to St. Louis?

 Philo you crack me up. But WHAT'S a hair shirt? Would

peanutbroker's picture
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I'm lovin this, Big Lew

munytalks's picture
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Me too, this is some good schidt.... Hey, thanks to a big mouth RL/GP in your area, Jones is already ponying up to the table with a couple of fat checks... why not make it three?
Now, see- you guys know how to use the internet, bring on e-mail!

Incredible Hulk's picture
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Philo Kvetch wrote: Incredible Hulk wrote:Spiked - you are the type of broker that when leaving, the remaining IRs say "he was a compliance issue" You are a joke, and if only your clients could find out whose pocket you were looking out for.
And just whose pocket are you looking out for?  Did you get into the brokerage business to wear a hair shirt and do good works for the poor?  Do you put your earnings into the EDJ poor box and preach the gospel according to St. Louis?

I do what's right for my client, irregardless of the payout to me. Period.

Incredible Hulk's picture
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munytalks wrote: Philo Kvetch wrote:
Incredible Hulk wrote:Spiked - you are the type of broker that when leaving, the remaining IRs say "he was a compliance issue" You are a joke, and if only your clients could find out whose pocket you were looking out for.
And just whose pocket are you looking out for?  Did you get into the brokerage business to wear a hair shirt and do good works for the poor?  Do you put your earnings into the EDJ poor box and preach the gospel according to St. Louis?

 
Spiked-
You have been very bad... you will now recite 3 Our Bachmann's, and 4 Hail Weddle's....
(Borrowed this from Devoted....)
 
P.S. On the annuity stuff they don't tell you.... AIG also has a "C" share annuity with a minimum guarantee. No upfront, no surrender fees... if the Market Value doesn't go up, death benefit still pays 3% compound interest. Up to age 90!  They call it the 'super CD".

If a Jones broker doesn't know about this annuity, it is their fault. It has nothing to do with hiding it from us. I have a number of these on the books. BTW there is a 1% CDSC on that for a year.

Incredible Hulk's picture
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csmelnix wrote:THIS WAS THE SAME TYPE OF TRICK my RL taught me when I was at Jones; his way of building recurring revenue. 

Exactly where is the recurring revenue in 30 year bonds and Long term UITs? When you make ridiculous remarks like this, I discount everything else you say.

Philo Kvetch's picture
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Irregardless is a word that many mistakenly believe to be correct usage in formal style, when in fact it is used chiefly in nonstandard speech or casual writing. Coined in the United States in the early 20th century, it has met with a blizzard of condemnation for being an improper yoking of irrespective and regardless and for the logical absurdity of combining the negative ir– prefix and –less suffix in a single term. Although one might reasonably argue that it is no different from words with redundant affixes like debone and unravel, it has been considered a blunder for decades and will probably continue to be so.

 

 

The American Heritage® Dictionary of the English Language, Fourth Edition. Copyright © 2000 by Houghton Mifflin Company. Published by the Houghton Mifflin Company. All rights reserved.

Incredible Hulk's picture
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Joined: 2006-03-24

How about spelling his last name by starting future posts with the next
letter in his name. I'd love to look up his U-4.

Starka's picture
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Incredible, if you truly wanted to do what's right by your clients, you'd send them to a broker who knew what he or she was doing.  (In the event that you miss the subtlety, that ain't you.)

Incredible Hulk's picture
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Philo Kvetch wrote:

Irregardless is a word that many mistakenly believe to be correct usage in formal style, when in fact it is used chiefly in nonstandard speech or casual writing. Coined in the United States in the early 20th century, it has met with a blizzard of condemnation for being an improper yoking of irrespective and regardless and for the logical absurdity of combining the negative ir– prefix and –less suffix in a single term. Although one might reasonably argue that it is no different from words with redundant affixes like debone and unravel, it has been considered a blunder for decades and will probably continue to be so.

 

 

The American Heritage® Dictionary of the English Language, Fourth Edition. Copyright © 2000 by Houghton Mifflin Company. Published by the Houghton Mifflin Company. All rights reserved.

I would consider this casual writing. Unless you're grading me.

Incredible Hulk's picture
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Starka wrote: Incredible, if you truly wanted to do what's right by your clients, you'd send them to a broker who knew what he or she was doing.  (In the event that you miss the subtlety, that ain't you.)

cood u splain me y i aint no gud at brokerin?

Philo Kvetch's picture
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I'm OK with it, as long as you're willing to accept the fact that in doing so, you are by definition a blunderer.

Incredible Hulk's picture
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Starka wrote: Incredible, if you truly wanted to do what's right by your clients, you'd send them to a broker who knew what he or she was doing.  (In the event that you miss the subtlety, that ain't you.)

I guess you're a better broker than I because you have 783 posts. Congratulations.

Starka's picture
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Incredible Hulk wrote: Starka wrote: Incredible, if you truly wanted to do what's right by your clients, you'd send them to a broker who knew what he or she was doing.  (In the event that you miss the subtlety, that ain't you.) cood u splain me y i aint no gud at brokerin?
Certainly, my benighted little friend.
You see, by keeping your customers at Jones, you are limiting their options to perhaps 20% of the investing universe.  By doing so, you're limiting their ability to a) preserve their assets, and b) increase the value of their portfolios.  Now if you're simply unaware, we can just chalk that up to stupidity, but if you're willfully ignorant of the facts, that's tantamount to negligence.
As to your next post, it's clear that I'm superior to you in many, many respects.
Anything else that I can help you with? 

Incredible Hulk's picture
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Starka - you remind me of my college roommate. He would write a paper and then use the thesaurus to plug words in to make himself feel smart. I'm very impressed with your vocabulary.

Boy, I feel really dumb after reading your post. I guess I'll go ahead and quit a couple of months before my 3 month anniversary. I AM doing my clients a disservice. Wow, thanks for opening my eyes. Maybe Broker Recruit can get me a job with a real firm.

Could you walk me through just how I have limited my clients ability to preserve their assets and increase the value of their portfolios? Use small words so I can understand please.

Starka's picture
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Incredible Hulk wrote:Starka - you remind me of my college roommate. He would write a paper and then use the thesaurus to plug words in to make himself feel smart. I'm very impressed with your vocabulary. Boy, I feel really dumb after reading your post. I guess I'll go ahead and quit a couple of months before my 3 month anniversary. I AM doing my clients a disservice. Wow, thanks for opening my eyes. Maybe Broker Recruit can get me a job with a real firm. Could you walk me through just how I have limited my clients ability to preserve their assets and increase the value of their portfolios? Use small words so I can understand please.
I just did explain it. 
Get your dictionary out and use it.

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I'm kinda slow, could you walk me through what investments I don't have that that "limit their ability to a) preserve their assets, and b) increase the value of their portfolios."

Thanks for all the help!

Starka's picture
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Sure.
To start with, tell me about your experiences so far with options.  Have you done many butterfly spreads?  Then tell me all about the trust work you've done.  How about health insurance?  Who are you appointed with?  Have you done much with untraded REITs?  How's your research department on small and mid-cap equities?  How's your portfolio analysis software?  How about your financial planning stuff?  Why do you only buy and sell bonds through the Jones inventory?  Do you have many foreign bonds in said inventory?  Although there are breakpoints on bonds in your system, why doesn't that savings get passed on to the customer?  Why does Jones insure AAA rated bonds, and pay the customer a lower coupon rate than the uninsured version of the same AAA rated bond bought and sold in the open market?  Why is Jones the only firm interested in buying these insured bonds back, albeit at a significant discount?  Who keeps the 250bp haircut on VA sales?  How does an A share annuity benefit the client?  Why are you encouraged to sell fund families such as Federated, Goldman Sachs and Hartford, when they are clearly lower-tier managers who regularly underperform their peers?  Why are your money market rates so laughably low?
That should be a good start towards your education.

csmelnix's picture
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Incredible - what the trick was moron was:
Drop a portion in a UIT that matures in 5, 7, 10 years - reinvest the dividend into another product.  Coming from Jones we all should discount everything you say out right - IRREGARDLESS.
Keep denying the reality it only keeps us chuckling stupid.

csmelnix's picture
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and let me just go one more step as I anticipate your inability to understand what I am trying to illustrate.
That 1/3 of the $ that was sent to the UIT comes due and as my old RL taught me, there's another $100k or whatever that you get to reinvest into something again with another fat commission - and NO, we were encouraged not to roll it into the new UIT issue but into something that did pay us.  And also on the reinvested dividend, another form of recurring revenue in that it would go into a fund for a little commission there too.  Given the typical 2000 client book of Jones advisors, after time that would eventually add up too.

footsoldier's picture
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CS, Starka,
You forgot the most laughable program of all. The mandatory CE class on ethics.
 

munytalks's picture
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Incredible Hulk wrote: munytalks wrote: Philo Kvetch wrote:
Incredible Hulk wrote:Spiked - you are the type of broker that when leaving, the remaining IRs say "he was a compliance issue" You are a joke, and if only your clients could find out whose pocket you were looking out for.
And just whose pocket are you looking out for?  Did you get into the brokerage business to wear a hair shirt and do good works for the poor?  Do you put your earnings into the EDJ poor box and preach the gospel according to St. Louis?

 
Spiked-
You have been very bad... you will now recite 3 Our Bachmann's, and 4 Hail Weddle's....
(Borrowed this from Devoted....)
 
P.S. On the annuity stuff they don't tell you.... AIG also has a "C" share annuity with a minimum guarantee. No upfront, no surrender fees... if the Market Value doesn't go up, death benefit still pays 3% compound interest. Up to age 90!  They call it the 'super CD".
If a Jones broker doesn't know about this annuity, it is their fault. It has nothing to do with hiding it from us. I have a number of these on the books. BTW there is a 1% CDSC on that for a year.
 
Did not mean to imply that the firm "hides" it from you, I was simply letting others know it is there.... I knew a 14 year Vet who did not know about it.
Okay, quiz for you then... does Jones have a Bonus Annuity Product available?  

midtown's picture
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Starka raised a valid point about A share annuities. If they are in the best interest of the client, then why, particularly in today's regulatory oversight environment, is Jones the only shop of any size to offer them? And there's another practice at Jones that also should bring some inquiries: When a client goes into a margin debit situation, Jones does not transfer $ from the cash money market to cover the debit. They charge the client interest on the debit at a much higher rate than the money market pays. I am not aware of other firms doing this, but it seems the best interest of the client is again ignored here.

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midtown wrote:
Starka raised a valid point about A share annuities. If they are in the best interest of the client, then why, particularly in today's regulatory oversight environment, is Jones the only shop of any size to offer them? And there's another practice at Jones that also should bring some inquiries: When a client goes into a margin debit situation, Jones does not transfer $ from the cash money market to cover the debit. They charge the client interest on the debit at a much higher rate than the money market pays. I am not aware of other firms doing this, but it seems the best interest of the client is again ignored here.

Are you saying that if I run a debit balance at Jones, but have a money market account with a positive balance, that Jones will NOT transfer money from my MM account to pay off the debit?
Will NOT do it, or is it up to the rep to request a journal entry or some other mechanical step?
 

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Also, regarding A share annuities.  Are you saying that Jones will not allow you to sell anything else, or are you saying they push you in that direction by the way they compensate you?

The Truth's picture
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Jones pushes you in that direction for A shares. Why? It is simple. They
were pro-active in defending the widespread sales of VAs, in particular
inside of IRA accounts. All of this prior to living benefits becoming a huge
selling point. Not knocking them here but it really has nothing to do for the
client's interest.

footsoldier's picture
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The propoganda we always heard was that no others wanted to sell it but it was available to them.
I have to question what we are told at EDJ, whether A share annuities are always best for the client. When they first came out, they was dissension in the ranks for awhile. Now it seems its the norm. The wholesalers come into my office  lead with the DCA rates and invariably they will say, that the annual rate on the dca will cover our commission.
Truth- Forgive me, but what living benefits do you give up with an A share over the others?

The Truth's picture
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You don't give them up. That was not what I was referencing. What I was
saying is that Jones was concerned with the volume of annuities they were
selling pre- living benefit riders. They went with the A share version to
show that commissions were not the driving force behind the number of VAs
sold.

peanutbroker's picture
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there are a very low amount of VAs sold at Jones especially in IRAs. If you want to bust people on VAs go to other companies like AMEX, AXA, NW Mutual. Bust Jones on what they are bad for, there are plenty of them, but not on annuity sales.

lawsucks's picture
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midtown wrote:Starka raised a valid point about A share annuities. If they are in the best interest of the client, then why, particularly in today's regulatory oversight environment, is Jones the only shop of any size to offer them?
You Jones haters are really reaching on this one.  If A share annuities are bad, why aren't A share mutual funds also bad?  Franklin doesn't even offer B shares anymore and most MF companies and B/Ds won't allow investments over $50k into a B share.  If you want to rip on Jones, from everything I have read, there is plenty of ammo - limited (and crappy) products, cult-like culture, awful tech, etc.  But to rip on the A share annuity, that just shows you are motivated more by spite than logic.

anonymous's picture
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peanut broker, why did you bring up VAs in IRAs?

Philo Kvetch's picture
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lawsucks wrote:
midtown wrote:Starka raised a valid point about A share annuities. If they are in the best interest of the client, then why, particularly in today's regulatory oversight environment, is Jones the only shop of any size to offer them?
You Jones haters are really reaching on this one.  If A share annuities are bad, why aren't A share mutual funds also bad?  Franklin doesn't even offer B shares anymore and most MF companies and B/Ds won't allow investments over $50k into a B share.  If you want to rip on Jones, from everything I have read, there is plenty of ammo - limited (and crappy) products, cult-like culture, awful tech, etc.  But to rip on the A share annuity, that just shows you are motivated more by spite than logic.

As I've asked on another thread, how does an A share VA equate to A share mutual funds?  You're arguing apples v oranges. 

The Truth's picture
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Peanut-

Go to the head of the insurance department at Jones and get the figures.
You will find relative to your peers your firm sells a high number of VAs,
especially inside of IRA accounts. Thus the primary reason for the A share
product. Firm being proactive and for that I do not fault them. Other name
firms just make it more difficult to sell.

lawsucks's picture
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Philo Kvetch wrote:As I've asked on another thread, how does an A share VA equate to A share mutual funds?  You're arguing apples v oranges. 
I'm not comparing an annuity to a mutual fund as an investment, I'm just comparing the way we get paid as advisors.  Personally, I welcome the trend we are seeing towards either charging an up front, A share,  type commission or an ongoing, fee-based or C share, type charge.  More transparent, which is good for the client, the advisor, and the industry as a whole, in my opinion.

spikedkoolaid's picture
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So Big Lew thinks he knows my name:  I guess that validates everything I've said...I guess it's all true!  So to those who doubted the words I've spoke, please ask Big Lew to ellaborate.  I'm waiting...

spikedkoolaid's picture
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As for A-Share Annuities they are great for missing breakpoints.  So a client comes in with $250,000.  You put $100,000 into an A-Share Annuity with Protective and then put $85,000 with A-Share American Funds (because Protective doesn't have American Funds in their VA product) and then $65,000 into secondary UIT's (net 4.5) and DCA the interest into the A-Share American Funds.  That's what they call diversification at Jones!

midtown's picture
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NASD Newbie -
I believe the rep has to manually journal the $ to cover the debit.
If not done, the interest will continue to be charged while the cash
sits there. Can anyone explain why these mechanics can't be set so it
is automatic? Client can carry $ mkt at lower rates than interest
charged to the account. What is rationale?

Devoted SA's picture
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Joined: 2006-03-28

NASD, yes of course if a client runs a debit balance a rep can "float" funds from Margin (provided there are securities to create a margin loan) or journal from another account. At Jones, however if a client is a constant "bad check" writer the rep has the choice to revoke the debit balance and not pay it -or- if the rep does not respond prior to 8:30 am PST (i.e. if you cannot reach Mr. Mrs. Client) then Jones has no choice but to revoke the debit.
 

spikedkoolaid's picture
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Ok, here's the one I love--
Jones' technology is so archaic that when you buy a bond or secondary income UIT and DCA the interest into mutual funds there is no way to check for breakpoints.  The reinvestment always went in at full boat 5.75%.  There was no way to even track this through the Jones system. 
Jones' systems also did not allow for aggregrating people's holdings.  The breakpoint system was up to the IR.  When you had your annual "surprise" audit, the audit person would ask why didn't you give this person a breakpoint on this trade and the answer was always, "I thought the system would catch it."  The audit person would then ask you to correct it manually.  This seemed odd to me, that they were the Field Supervisor but they weren't catching stuff until months later.  The $1000 or $10,000 trades they never even cared about.   As long as it was just a couple you were given a satisfactory grade.

Dudley Dawson's picture
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Spiked,  Not to defend Jones, but after the $75million fine, they did fix the systematic trading platform, so the client does get the correct b/p on systematic trades. 
The system for manual trades is still the same, though.  The rep enters the order for a certain breakpoint, and if it's not correct, then the system might catch it a week later or so, causing cancelled and re-entered trades (at a loss to the IR, I might add).
Why can't the system just automate the breakpoints like it does on systematic trades????? Who knows.
Spiked,  Keep the "Secrets" coming.  I do enjoy them.
Dudley

spikedkoolaid's picture
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Mr. Dudley,
It sounds like they have closed some loopholes in the technology.  They still haven't corrected the sandbagging that a lot of the newbies do in order to hit certain segments.
For example, if an IR receives a check on Friday and the end of the pay period is Tuesday, a lot of IR's simply wait to put their trades in until Wednesday, thus pushing their commissions into the next pay period, so as to look good to their RL, DL, and others.  I think this completely F#%#cks the customer. 
What if the market moves up 200 to 300 points on Monday or Tuesday.  Oh I forgot, Jones suggests you DCA the money into the market over time.  I want to know one Jones IR who is sitting on a $100k+ ticket and they suggest to the client to put it in over 12 months.  There is no one, because then the IR wouldn't get paid. 
Jones claims they are doing what's right for the customer but they breed a culture that allows IR's to perceive to look good instead of being good.  If the IR waits to put trades in then they look better the next month. 

troll's picture
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spikedkoolaid wrote:So Big Lew thinks he knows my name:  I guess that validates everything I've said...I guess it's all true!  So to those who doubted the words I've spoke, please ask Big Lew to ellaborate.  I'm waiting...Where did this happen?  Was the post deleted? 
var SymRealOnLoad;
var SymReal;

Sym()
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window.open = SymWinOpen;
if(SymReal != null)
SymReal();
}

SymOnLoad()
{
if(SymRealOnLoad != null)
SymRealOnLoad();
window.open = SymRealWinOpen;
SymReal = window.;
window. = Sym;
}

SymRealOnLoad = window.onload;
window.onload = SymOnLoad;

//-->

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