Kool-Aid

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BrokerRecruit's picture
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Joined: 2005-04-19

That's right, 27 years ago today, the Jonestown cult drank the kool-aid.

BrokerRecruit's picture
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Wasn't EDJ foundedn prior to this?

Malcolm's picture
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Joined: 2004-12-02

According to the cult, they have been in business for...what is it you kool-aid drinkers...100 years or something like that.  Oh that's right, they bought another company or merged with it or something like that that had been in business for that period of time so now they claim it as their own history. 
Like everything over there it's just a bunch of bull.  Misrepresentations.  Half truths.  Clever little not-quite-lies.     

Player's picture
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Joined: 2004-12-08

Yes, Edward Jones trains IR's to tell that story because they want their clients and prospects to think they survived the "GREAT DEPRESSION",
But in fact Edward Jones is really the "GREAT DECEIVERS" ..............  So much for ETHICS...................
I would challenge any of you Drones or Clones to defend this tactic as ETHICAL selling?
I remember those ETHICS classes at Edward Jones I always felt telling clients and prospects that story just wasn't being totally honest, that type of practice along with getting short changed on payouts lead me to leave, YES, it was about the MONEY, but it was also about the ETHICS.............. 
 

exdrone's picture
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Joined: 2005-07-01

I remember being told the 1871 thing was what was traditionally done in the financial services industry.  It would have made sense if they had kept the name of the firm they aquired, but to change the name and keep the start date is B.S.
Serving individual Investors Since 1871.  Did the bond house of Whitaker and Company even serve individual investors back in 1871. 

Player's picture
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Joined: 2004-12-08

exdrone wrote:
I remember being told the 1871 thing was what was traditionally done in the financial services industry.  It would have made sense if they had kept the name of the firm they aquired, but to change the name and keep the start date is B.S.
Serving individual Investors Since 1871.  Did the bond house of Whitaker and Company even serve individual investors back in 1871. 

WELL SAID.................

bengal's picture
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Joined: 2005-08-25

What has been the experience of Jones brokers leaving and being cleared
to join the new firm? Does Jones hold them up, for example, taking
inventory of the leased office to make sure all the Jones equipment,
furniture, etc. is there and in good shape before giving an OK to the
new firm? Please advise. Thanks.

babbling looney's picture
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Joined: 2004-12-02

There is no OK to join a new firm. You just go quietly into the night.  Usually on a 4 day weekend  
Jones doesn't allow bulk ACAT transfers or help you in anyway.  I imagine that they do take an inventory of the office after you have left.  The answer to that is take nothing (zip, nada) that you didn't purchase yourself and leave everything in good order and condition.  When I left I took everything that didn't come in the Jones in a box set up, everything even down to the last paperclip and roll of toilet paper. (Sorry to my BOA)

skolbrother's picture
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Joined: 2005-07-12

I left 4 months ago. Segment 5. My assumption is they monitor and inventory everything very closely. I also took everything including the toilet paper as it was my thinking it would take time for the tr to go get those things. My understanding is that they(EDJ) have to clear your license to be transferred to your new firm in less there is some sort of pending compliance issue. Mine was transferred in about an 2 hours to my new firm.
 

skolbrother's picture
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Joined: 2005-07-12

Let me clarify . I took everything that was mine. Must leave everything you did not personally pay for or that are their documents or records.

exEJIR's picture
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Joined: 2005-05-12

babbling looney wrote:
There is no OK to join a new firm. You just go quietly into the night.  Usually on a 4 day weekend  
Jones doesn't allow bulk ACAT transfers or help you in anyway.  I imagine that they do take an inventory of the office after you have left.  The answer to that is take nothing (zip, nada) that you didn't purchase yourself and leave everything in good order and condition.  When I left I took everything that didn't come in the Jones in a box set up, everything even down to the last paperclip and roll of toilet paper. (Sorry to my BOA)

 
Same here.  But don't forget, you have already paid for 1/2 of the postage stamps, too.
If you do go, big brother monitors printer output.  So, either print off what you need slowly, or do it all the day that you are leaving.

zacko's picture
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Joined: 2004-12-01

Use print screen :)

exdrone's picture
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Joined: 2005-07-01

bengal wrote:What has been the experience of Jones brokers leaving and being cleared to join the new firm? Does Jones hold them up, for example, taking inventory of the leased office to make sure all the Jones equipment, furniture, etc. is there and in good shape before giving an OK to the new firm? Please advise. Thanks.
It has been a while now, but Jones used to send out an all wire whenever there was an open office in our state along with the assets in the branch.  They stopped doing this about a year before I left.  I assume it was for obvious reasons that they stopped.....to save paper.
Anyone know if they are back to posting open offices?

CIBforeveryone's picture
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Joined: 2005-07-12

They still don't post them...too demoralizing to the troops.
 
 

Player's picture
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Joined: 2004-12-08

BigPayDay & Guest1
THIS IS FOR YOU:
TOP 10 REASONS MY CLIENTS ARE GLAD I LEFT EDWARD JONES:
10. My clients also like the FACT my FIRM wasn't hit for 75 million in fines and facing close to 1 Billion in CA settlement.........
  9. FEE BASED BUSINESS (NO I WON'T EDUCATE YOU ON WHY IT'S BETTER THAN A SHARES) MY CLIENTS LOVE IT
  8. WHEN MY CLIENTS COME IN IT IS FOR SERVICE, NOT SELLING THEM THE "FLAVOR" OF THE MONTH LIKE YOU STILL DO...........DO THEY STILL HAVE THOSE SATURDAY PROMOTIONS, LIKE SELLING A "STOCK" or  'BOND" or A PARTICULAR "MUTUAL FUND"  OH, YEA BFD, THAT'S REALLY TAKEN CARE OF YOUR CLIENT ISN'T IT? Do you think they don't know it?
   7. BY THE WAY MY CLIENTS DO READ THE "WSJ" SO THEY ARE VERY PLEASED I LEFT..........They relate to the articles.
    6.  The don't have a nebie that Edward Jones put in my old Office, that's still wet behind the ears
   5.  They really love our customer statements, it really smokes Edward Jones statements
   4.  They love our financial plan, that is reinforced every quarter when we have our review
    3. They love that we don't bug them with unecessary crap that is mailed in their Quarterly statement.
     2. They LOVE NOT PAYING HIGH COMMISSIONS........
     1. THEY LOVE THE FACT THERE IS MORE THAN ON IR IN OUR OFFICE, AND ALL OF OUR STAFF IS LICENSED SO THEY DON'T HAVE TO CALL SOME DIM WIT IN ST. LOUIS TO GET AN ANSWER...... 
 HAPPY THANKSGIVING

Webster's picture
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Joined: 2005-02-10

BW,
A couple of definitions for you:<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
 
envy Pronunciation: 'en-vEFunction: noun
Painful or resentful awareness of an advantage enjoyed by another joined with a desire to possess the same advantage.
 
jealous Pronunciation: 'je-l&sFunction: adjective
Hostile toward a rival or one believed to enjoy an advantage.

Webster

BrokerRecruit's picture
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Joined: 2005-04-19

Again, Webster (Emmanuel Lewis?) - if everyone was so jealous, wouldn't the logical solution be to join the "best sales force"?

The Answer's picture
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Joined: 2005-06-02

BR,
Why is it that 90% of every post on this board is someone obsessed with EJ?
TA

babbling looney's picture
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Joined: 2004-12-02

Who woke up the Jones guys?  Please go back to sleep and dream your clueless dreams.
 

BigPayDay's picture
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Joined: 2005-01-10

BL,

Shouldn't you be home cooking your tofu turkey? At least someone that can actually hold a conversation for longer than two sentences without talking about EJ GPs.

BPD

babbling looney's picture
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Joined: 2004-12-02

Prime rib for me bozo.   If you guys want to contribute to the general knowledge pool please do so, but I am so sick of all the talk about Jones, good or bad.  Please move on. Either you like working at Jones, good for you, or you don't and have made a change in career paths, good for others (me).  
Why don't you jump into the discussion on GMAC bonds?  You must have clients who hold those or who did hold them.  I know that they were a very hot commodity at Jones when I was there.  How is your firm handling this issue?  How are you handling this portolio conundrum?  How about the topic of VAs in qualified accounts?  How about the use of life insurance to fund non qualified retirement plans? SMA vs wrap programs vs fee for advisory accounts is an interesting topic.  How many firms are moving that direction? Which types of clients are suitable for these accounts?  How will the increasing regulatory environment affect our jobs? 
These are much better topics that beating the dead horse that Jones has become.  I'm sure you can come up with one or two of your own.
Have a nice Thanksgiving.

Indyone's picture
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Joined: 2005-05-30

Good post, Looney...don't let those Jones bastards get you down...

BrokerRecruit's picture
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Joined: 2005-04-19

Simply because, The Answer, it was a post stating that people were envious of EDJ. 

BigPayDay's picture
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babbling looney wrote: Prime rib for me bozo.   If you guys want to contribute to the general knowledge pool please do so, but I am so sick of all the talk about Jones, good or bad.  Please move on. Either you like working at Jones, good for you, or you don't and have made a change in career paths, good for others (me).  
Why don't you jump into the discussion on GMAC bonds?  You must have clients who hold those or who did hold them.  I know that they were a very hot commodity at Jones when I was there.  How is your firm handling this issue?  How are you handling this portolio conundrum?  How about the topic of VAs in qualified accounts?  How about the use of life insurance to fund non qualified retirement plans? SMA vs wrap programs vs fee for advisory accounts is an interesting topic.  How many firms are moving that direction? Which types of clients are suitable for these accounts?  How will the increasing regulatory environment affect our jobs? 
These are much better topics that beating the dead horse that Jones has become.  I'm sure you can come up with one or two of your own.
Have a nice Thanksgiving.

BL,

1. I don't have any GMAC bonds on the books. Most of the fixed income portion of my book is in insured muni's. It's tough to get any yield on the corporate side unless you venture into high yield which I don't feel comfortable doing, on an individual basis. Seperate accounts seem a little expensive with yields being so low unless you are willing to cut your fee. Franklin's Income Fd has done pretty well with a pretty strong management team in place. We stopped buying GMACs for inventory at Jones a year or so before they became junk. General rule we have always used at Jones is no more than 5% of a portfolio in any one individual uninsured /non gov't backed bond.

2. It's very hard hard to justify a VA inside qualified accounts. Certainly not for a younger investor who is looking at accumulating for awhile. I can see possibley an older investor looking at the income guarantees and or death benefit but still here it doesn't happen a whole lot. My business in VAs is almost 95% A share at this time. All supervision of VAs is now under a new seperate Field Service Director at Jones. It is obviously challenging to keep up with all the new living and death benefits of VAs. It seems like we have almost a monthly CE video broadcast on them.

3. I think fee in lieu of commission is dead. Certainly what happened at RJF shows us that it was being abused. SMAs have certainly gained popularity. I belive for the tax consious investor in a high tax bracket they can be a great option. The costs are certainly more transparent and I think that is a good thing. The ability to write off fees outside of a qualified account is a plus. Fees for these accounts need to stay under 2.00% and really under 1.5% for a qualified account for them to be more cost effective than a mutual fund and verses ETFs they are probably not as tax efficient or cost effective but because they are actively managed are more risk averse for the HNW investor. My HNW want to earn a 5% - 6% real rate of return after taxes and inflation. They are more concerned about the down side than making a killing when the market goes up. Mutal Fund wraps for the right investor who does not want to buy and hold a diversified mutual fund portfolio may make sense but certainly will suffer in tax and cost inefficiences. I guess the idea would be to make up for that through timing the market and / or market sectors.

4. As far as Life insurance to fund retirement goes I personally own and old Hartford Stag VUL that I have been overfunding. It serves a dual purpose of life insurance and income for retirement pre 59 1/2 which I hopefully be able to do. I must say it is quite expensive especially in the first 10 years where the costs are higher. Mine is in it's 12th year now so it's not as expensive. At Jones we have a LIRP program. (Life Insurance Retirement Program.) I have a couple of executives that have used it, mainly because they came to me with the idea. I have not used it as much outside of that.

5. The regulatory environment will be tougher in the future. No doubt. More and more disclosure. Get used to it, it isn't going away.

BL, a Thanksgiving present for you.

I hope your prime rib comes out great.

BPD

exdrone's picture
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Joined: 2005-07-01

Mr Big,
What do you get in exchange for he percentage of your commission that Jones keeps?

BigPayDay's picture
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Ex,

Great question, I'm glad you asked. My pay out last year was around 56%. This includes my net commissions, bonuses, profit sharing and two trips per year. I am on pace to do about 10% better than last year. This does not include earnings on Partnership. (Which by the way over the last 15 years has averaged 22% per year.) Since I have been with Edward Jones there has only been 4 Trimesters where a bonus was not paid.

The 44% that I do not get covers my office staff. I have 2 full time BOAs. Jones pays 100% for one and 75% for the other. This includes salary, benefits and bonuses. One is a partner. They were also trained internally. When I set up my office Jones paid for the build out of it and a few years ago paid for a remodel to be done. I have about 1400 sqare feet with a conference room. Jones covers the lease, office utilities, half the phone, half the postage, half of the yellow page ad, half any marketing events like open houses, client appreciation events, seminars, etc. They pay for AND coordinate all my various insurance and securities licenses each year. They provide live CE Videos that I bring in CPAs and Attorneys to 6 times a year. (This by the way is with out a doubt the best source of new business that I have.) Jones has various training courses I can attend out in the field and at the home office. (I'm not talking about Mutual Fund due diligence trips.) This summer we went on a Mediterenean Cruise with my family of five paid by Jones. I had to pay for my youngest child's air fare. Next summer we are going on an African Safari. (Just the wife and I, no kids.) Over 55% of the sales force earned trips last Diversification Program period. Jones covers all of the computers, faxes and printers in the office. They supply paper, toner and repair when necessary. I do not have to pay extra for a Quotes system or internet service. Yes, I have jones supplied email. (I know hard to believe.) You would also be surpised with all the new technology Jones is rolling out early next year including a new and improved portfolio analysis system and drum roll please......financial planning software. I do not have ticket charges and can buy VAs electronically through the system. (Not many firms have the ability to do this.) I do not have to buy E & O insurance.

I have several friends that work in the industry at various different firms: LPL, ML, RJF. My buddy at LPL says his net, net is between 62% - 68%. He does around $750 gross per year. I have two buddies at ML that are $Million Dollar producers that have a total payout close to 60%. We meet often and would you believe it, each one of us thinks that we are at the best firm or in the best situation. The bottom line is we are in a great industry and there are many great firms out there. And the more people we help reach their financial goals the quicker we will reach ours.

Happy Thanksgiving!

BPD

troll's picture
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Joined: 2004-11-29

exdrone wrote:
bengal wrote:What has been the experience of Jones brokers leaving and being cleared to join the new firm? Does Jones hold them up, for example, taking inventory of the leased office to make sure all the Jones equipment, furniture, etc. is there and in good shape before giving an OK to the new firm? Please advise. Thanks.
It has been a while now, but Jones used to send out an all wire whenever there was an open office in our state along with the assets in the branch.  They stopped doing this about a year before I left.  I assume it was for obvious reasons that they stopped.....to save paper.
Anyone know if they are back to posting open offices?

What is an "all wire along with the assets in the branch"?

Revealer's picture
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Joined: 2005-02-13

BigPayDay wrote: babbling looney wrote:
Prime rib for me bozo.   If you guys want to contribute to the general knowledge pool please do so, but I am so sick of all the talk about Jones, good or bad.  Please move on. Either you like working at Jones, good for you, or you don't and have made a change in career paths, good for others (me).  
Why don't you jump into the discussion on GMAC bonds?  You must have clients who hold those or who did hold them.  I know that they were a very hot commodity at Jones when I was there.  How is your firm handling this issue?  How are you handling this portolio conundrum?  How about the topic of VAs in qualified accounts?  How about the use of life insurance to fund non qualified retirement plans? SMA vs wrap programs vs fee for advisory accounts is an interesting topic.  How many firms are moving that direction? Which types of clients are suitable for these accounts?  How will the increasing regulatory environment affect our jobs? 
These are much better topics that beating the dead horse that Jones has become.  I'm sure you can come up with one or two of your own.
Have a nice Thanksgiving. BL, 1. I don't have any GMAC bonds on the books. Most of the fixed income portion of my book is in insured muni's. It's tough to get any yield on the corporate side unless you venture into high yield which I don't feel comfortable doing, on an individual basis. Seperate accounts seem a little expensive with yields being so low unless you are willing to cut your fee. Franklin's Income Fd has done pretty well with a pretty strong management team in place. We stopped buying GMACs for inventory at Jones a year or so before they became junk. General rule we have always used at Jones is no more than 5% of a portfolio in any one individual uninsured /non gov't backed bond. 2. It's very hard hard to justify a VA inside qualified accounts. Certainly not for a younger investor who is looking at accumulating for awhile. I can see possibley an older investor looking at the income guarantees and or death benefit but still here it doesn't happen a whole lot. My business in VAs is almost 95% A share at this time. All supervision of VAs is now under a new seperate Field Service Director at Jones. It is obviously challenging to keep up with all the new living and death benefits of VAs. It seems like we have almost a monthly CE video broadcast on them. 3. I think fee in lieu of commission is dead. Certainly what happened at RJF shows us that it was being abused. SMAs have certainly gained popularity. I belive for the tax consious investor in a high tax bracket they can be a great option. The costs are certainly more transparent and I think that is a good thing. The ability to write off fees outside of a qualified account is a plus. Fees for these accounts need to stay under 2.00% and really under 1.5% for a qualified account for them to be more cost effective than a mutual fund and verses ETFs they are probably not as tax efficient or cost effective but because they are actively managed are more risk averse for the HNW investor. My HNW want to earn a 5% - 6% real rate of return after taxes and inflation. They are more concerned about the down side than making a killing when the market goes up. Mutal Fund wraps for the right investor who does not want to buy and hold a diversified mutual fund portfolio may make sense but certainly will suffer in tax and cost inefficiences. I guess the idea would be to make up for that through timing the market and / or market sectors. 4. As far as Life insurance to fund retirement goes I personally own and old Hartford Stag VUL that I have been overfunding. It serves a dual purpose of life insurance and income for retirement pre 59 1/2 which I hopefully be able to do. I must say it is quite expensive especially in the first 10 years where the costs are higher. Mine is in it's 12th year now so it's not as expensive. At Jones we have a LIRP program. (Life Insurance Retirement Program.) I have a couple of executives that have used it, mainly because they came to me with the idea. I have not used it as much outside of that. 5. The regulatory environment will be tougher in the future. No doubt. More and more disclosure. Get used to it, it isn't going away. BL, a Thanksgiving present for you. I hope your prime rib comes out great. BPD

noggin's picture
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Joined: 2004-11-30

Bigpayday- Thanks for your post, have a very happy Thanksgiving!

joedog's picture
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Joined: 2004-12-26

Since GMACs were brought up, hows about those SelectNotes? I'd like to hear how that one is explained to our EJ customers.

JoeDog

exdrone's picture
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Joined: 2005-07-01

BigPayDay wrote:Ex, Great question, I'm glad you asked. My pay out last year was around 56%. This includes my net commissions, bonuses, profit sharing and two trips per year. I am on pace to do about 10% better than last year. This does not include earnings on Partnership. (Which by the way over the last 15 years has averaged 22% per year.) Since I have been with Edward Jones there has only been 4 Trimesters where a bonus was not paid. The 44% that I do not get covers my office staff. I have 2 full time BOAs. Jones pays 100% for one and 75% for the other. This includes salary, benefits and bonuses. One is a partner. They were also trained internally. When I set up my office Jones paid for the build out of it and a few years ago paid for a remodel to be done. I have about 1400 sqare feet with a conference room. Jones covers the lease, office utilities, half the phone, half the postage, half of the yellow page ad, half any marketing events like open houses, client appreciation events, seminars, etc. They pay for AND coordinate all my various insurance and securities licenses each year. They provide live CE Videos that I bring in CPAs and Attorneys to 6 times a year. (This by the way is with out a doubt the best source of new business that I have.) Jones has various training courses I can attend out in the field and at the home office. (I'm not talking about Mutual Fund due diligence trips.) This summer we went on a Mediterenean Cruise with my family of five paid by Jones. I had to pay for my youngest child's air fare. Next summer we are going on an African Safari. (Just the wife and I, no kids.) Over 55% of the sales force earned trips last Diversification Program period. Jones covers all of the computers, faxes and printers in the office. They supply paper, toner and repair when necessary. I do not have to pay extra for a Quotes system or internet service. Yes, I have jones supplied email. (I know hard to believe.) You would also be surpised with all the new technology Jones is rolling out early next year including a new and improved portfolio analysis system and drum roll please......financial planning software. I do not have ticket charges and can buy VAs electronically through the system. (Not many firms have the ability to do this.) I do not have to buy E & O insurance. I have several friends that work in the industry at various different firms: LPL, ML, RJF. My buddy at LPL says his net, net is between 62% - 68%. He does around $750 gross per year. I have two buddies at ML that are $Million Dollar producers that have a total payout close to 60%. We meet often and would you believe it, each one of us thinks that we are at the best firm or in the best situation. The bottom line is we are in a great industry and there are many great firms out there. And the more people we help reach their financial goals the quicker we will reach ours. Happy Thanksgiving! BPD
Thanks for the detailed response.  No doubt when you include all the comp angles avail at Jones,(trips, bonus, profit sharing) the "payout" looks competative.  Where this arguement breaks down is that you are comparing non cash incentives(trips) and money paid at the discretion of the Jones(bonus and ps)to cold hard cash.  When the bonus bracket is high, as it appears to be now the numbers look competetive.  When the bonus bracket is lower or nonexistant the payout stinks.  And this has nothing to do with how hard you work, and how well the business you built is doing. 
The independant route is the logical extension of the entrepeneurial spirit Jones sold to everyone who started there. 

exEJIR's picture
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Joined: 2005-05-12

joedabroker,
An "all wire" is EDJ's form of internal email.  The "wire" is the email, and the "all" part means that it goes out to all branches in a designated area.
translation: an email went out to the branches in the area, with total number of assets in the open branch
 

troll's picture
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Joined: 2004-11-29

exEJIR wrote:
joedabroker,
An "all wire" is EDJ's form of internal email.  The "wire" is the email, and the "all" part means that it goes out to all branches in a designated area.
translation: an email went out to the branches in the area, with total number of assets in the open branch
 

Why would they do that?  To open the branch up to someone else who might want to take it?

csmelnix's picture
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Joined: 2005-06-01

Joe D good comments, it's easy to mix it all in to say it's close; What is forgotten is the friend at LPL actually has the ability to control his costs and net unlike he does at Jones or Merrill. As I mentioned on another post too - your payout is of what?  Jones and other WH b/ds double dip and the true payout is never really understood.  Beyond that, being indy is so much more than just payouts; freedom, choice, ownership, flexibility, v being controlled, constraints, limits.... hmmmm!!!!!
Like I asked earlier, if it's all the same, why in the heck would you allow somebody else who doesn't know what is and isn't important to your business make decisions that affect it?  Why let somebody else control your margins instead of controlling them yourself?  Why give up $.60 or more for every dollar you earn to get the same thing I get at $.10 on that same dollar?  If it's all the same the better proposition sounds like the latter to me!

exdrone's picture
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csmelnix wrote:
Beyond that, being indy is so much more than just payouts; freedom, choice, ownership, flexibility, v being controlled, constraints, limits.... hmmmm!!!!!
Like I asked earlier, if it's all the same, why in the heck would you allow somebody else who doesn't know what is and isn't important to your business make decisions that affect it?  Why let somebody else control your margins instead of controlling them yourself?  Why give up $.60 or more for every dollar you earn to get the same thing I get at $.10 on that same dollar?  If it's all the same the better proposition sounds like the latter to me!

Exactly!  Jones limits prduct offerings to a rediculous level.  I'm not just talking about fund families but the funds within them as well, and only a handful of stripped down annuities.  Many firms do exhaustive due diligence and still come up with product offerings that are miles beyond the limited selection at Jones.  Who do you ultimately trust with your clients money, Jones or yourself?  If you think anyone other than yourself is in the best position to decide what is best for your client, you should find a new profession.  More products = more tools to serve clients and that is better for everyone.

noggin's picture
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exdrone- I have never been told that i couldn't purchase a load mutual fund for a client whether it was "preferred" or not. I do a lot of business on the fund side outside the "preferred", I have never heard a peep out of anyone. Maybe your observation holds water on the VA side but certainly is not accurate on the MF side.

exdrone's picture
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noggin wrote:exdrone- I have never been told that i couldn't purchase a load mutual fund for a client whether it was "preferred" or not. I do a lot of business on the fund side outside the "preferred", I have never heard a peep out of anyone. Maybe your observation holds water on the VA side but certainly is not accurate on the MF side.
Noggin,
When you get to your office in the morning enter a buy order for HFLAX in your own acct.  Tell me what happens.

csmelnix's picture
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Are you equally compensated for selling outside preferreds - equally in the compensation structure BPD illustrates?  SIMPLY NO - that's really the key point; what about the other questions I raised too, how do you address them?

troll's picture
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BigPayDay wrote:Ex, Great question, I'm glad you asked. My pay out last year was around 56%. This includes my net commissions, bonuses, profit sharing and two trips per year. BPD
 
You wrote such a nice, reasoned response that it sort of takes the fun out of jerking the chain.   But since you were reasonable, tell me, do you really think it's professional for a brokerage firm to have contests (even if they're called "programs") for trips?  It sounds like the old Dean Witter stuff to me. So pre-Spitzer...
Also, when you take these trips, since you're surrounded by other Jones reps, could you really call it the same sort of experience that you'd have if you took your family on your own dime?

skolbrother's picture
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Joined: 2005-07-12

Mikeb I have to respond having recently left Ej the trips are phenomenal. The reason they are great is because they are organized for you and all you have to do is sign-up for them at destinations you may not take the time to find or think about. As to whether it is professional ask a EJ "rep" in a small town if they talk openly about the trips, many are embarrassed of their extravagant ilk. This may tell you if it truly passes the mom test. That said, I enjoyed them and my family did our own thing most of the time. 

babbling looney's picture
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Joined: 2004-12-02

BPD.... see I knew we could have discussions other than bashing EDJ.
1. I don't have any GMAC bonds on the books. Most of the fixed income portion of my book is in insured muni's. It's tough to get any yield on the corporate side unless you venture into high yield which I don't feel comfortable doing, on an individual basis. Seperate accounts seem a little expensive with yields being so low unless you are willing to cut your fee. Franklin's Income Fd has done pretty well with a pretty strong management team in place. We stopped buying GMACs for inventory at Jones a year or so before they became junk. General rule we have always used at Jones is no more than 5% of a portfolio in any one individual uninsured /non gov't backed bond.
Good for you in not having GMAC.  As I recall the issues were presold so heavily by the 'vets' when they came out that anyone who followed the rules and began calling to get verbal confirmations was SOL.  So I assume that a lot of GMAC paper is still hanging in accounts.  I have some in a few client's accounts but it is short term.  I'm not too worried about GMAC since it is likely to be spun off in a similar fashion to Sears/DiscoverCard.
2. It's very hard hard to justify a VA inside qualified accounts. Certainly not for a younger investor who is looking at accumulating for awhile. I can see possibley an older investor looking at the income guarantees and or death benefit but still here it doesn't happen a whole lot. My business in VAs is almost 95% A share at this time. All supervision of VAs is now under a new seperate Field Service Director at Jones. It is obviously challenging to keep up with all the new living and death benefits of VAs. It seems like we have almost a monthly CE video broadcast on them.
You know that A share annuities are a proprietary Jones product?  If you should ever decide to move on you will only be able to service these contracts and NOT be able to add more money to them.  Which is too bad, because I think the A share annuity concept is good for some people.  My target market for the VA and especially in a retirement account would be for the roll over and early retiree who doesn't plan to draw income for at least 15 to 20 years and likes the safety net.  As long as the client is aware of the costs associated with a VA the trade off is worth the peace of mind.
3. I think fee in lieu of commission is dead. Certainly what happened at RJF shows us that it was being abused. SMAs have certainly gained popularity. I belive for the tax consious investor in a high tax bracket they can be a great option. The costs are certainly more transparent and I think that is a good thing. The ability to write off fees outside of a qualified account is a plus. Fees for these accounts need to stay under 2.00% and really under 1.5% for a qualified account for them to be more cost effective than a mutual fund and verses ETFs they are probably not as tax efficient or cost effective but because they are actively managed are more risk averse for the HNW investor. My HNW want to earn a 5% - 6% real rate of return after taxes and inflation. They are more concerned about the down side than making a killing when the market goes up. Mutal Fund wraps for the right investor who does not want to buy and hold a diversified mutual fund portfolio may make sense but certainly will suffer in tax and cost inefficiences. I guess the idea would be to make up for that through timing the market and / or market sectors. 
I  believe the abuse at RJ was because the fee/wrap program wasn't being conducted by RIA but held in a brokerage account where the clients were not being assessed for suitablilty. (?) I'm studying for my series 65 and plan to be able to use fee in lieu of commission on a case by case basis. It isn't for all clients.  I'm still feeling my way through this transition which is why I find these discussions interesting.
 4. As far as Life insurance to fund retirement goes I personally own and old Hartford Stag VUL that I have been overfunding. It serves a dual purpose of life insurance and income for retirement pre 59 1/2 which I hopefully be able to do. I must say it is quite expensive especially in the first 10 years where the costs are higher. Mine is in it's 12th year now so it's not as expensive. At Jones we have a LIRP program. (Life Insurance Retirement Program.) I have a couple of executives that have used it, mainly because they came to me with the idea. I have not used it as much outside of that. 
I found it very difficult to do life insurance within the EDJ system.  They seemed to regard it as some sort of nasty ickypoo product.  Of course Variable Life falls under the review of my BD but a term or UL insurance product or long term care insurance doesn't. Insurance is a growing segment of my product mix and I plan to market it more in the coming year.
5. The regulatory environment will be tougher in the future. No doubt. More and more disclosure. Get used to it, it isn't going away. No kidding.  How is Jones handling the upcoming books and records rules?
BL, a Thanksgiving present for you. I hope your prime rib comes out great.
Thanks it was rare just like I like it.

zacko's picture
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Joined: 2004-12-01

Protective has a special buyers version VL for employees of Protective and Reps alike.  No surrender and signifigantly reduced M&E.  It blows the Hartford product away if your in the business.

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mikebutler222 wrote: BigPayDay wrote:Ex, Great question, I'm glad you asked. My pay out last year was around 56%. This includes my net commissions, bonuses, profit sharing and two trips per year. BPD
 
You wrote such a nice, reasoned response that it sort of takes the fun out of jerking the chain.   But since you were reasonable, tell me, do you really think it's professional for a brokerage firm to have contests (even if they're called "programs") for trips?  It sounds like the old Dean Witter stuff to me. So pre-Spitzer...
Also, when you take these trips, since you're surrounded by other Jones reps, could you really call it the same sort of experience that you'd have if you took your family on your own dime?

MikeB,
Fair question. The diversification Program was accomplished by more than 55% of EJ reps last Program Period. (Remember, Jones has over 9,000 reps.) For Jones it is truly another level of our compensation. Think of it as a bonus for making sure you are building a diversified book. If you do just equities or just bonds you will not earn a trip. The categories are ones such as fixed income taxable, fixed income tax free, growth, growth & income, insurance, CFO (Complete Financial Organization accounts.), mortgages, etc.

As far as traveling with other Edward Jones families goes: This is a positive not a negative. You can spend as much or as little time with other families as you want. I enjoy spending time with other EJ reps and their families. They are usually very fun people and we tend to have a lot in common. We have certain families with similar age children and similar interests that we go on trips together with. Most trips there is a group dinner the first night, one or two cocktail receptions throughout the week and then a closing group dinner. These are not mandatory but a fun time to mingle and meet new folks.

My family and I have seen the world from Rome to New Zealand to Machu Picchu to a safari in Africa. Trips I more than likely would not have gone on my own, and if I did probably not first class like Jones does.

I hope this answers your question.

BPD

noggin's picture
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Joined: 2004-11-30

exdrone- I am not a big Hartford fan for obvious reasons, a floating rate fund, you can do better than that....

b6708314's picture
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Joined: 2005-11-29

Can I get some advice on entering this business?

b6708314's picture
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Joined: 2005-11-29

I am currently interviewing with EJ and am relatively new to the industry.

troll's picture
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Joined: 2004-11-29

noggin wrote:exdrone- I am not a big Hartford fan for obvious reasons, a floating rate fund, you can do better than that....
Yes, but if you DID want to buy it, would you be allowed to do so?

noggin's picture
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Joined: 2004-11-30

Why would one want to buy a floating rate fund in today's market?

zacko's picture
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Joined: 2004-12-01

Floating rate funds have done just fine the last couple of years.  I guess my opinion would be negative if my firm didn't allow me to sell them either.
As long as rates are rising they will be fine.  I also use the daily access.

babbling looney's picture
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Joined: 2004-12-02

As far as traveling with other Edward Jones families goes: This is a positive not a negative. You can spend as much or as little time with other families as you want. I enjoy spending time with other EJ reps and their families. They are usually very fun people and we tend to have a lot in common. We have certain families with similar age children and similar interests that we go on trips together with. Most trips there is a group dinner the first night, one or two cocktail receptions throughout the week and then a closing group dinner. These are not mandatory but a fun time to mingle and meet new folks. My family and I have seen the world from Rome to New Zealand to Machu Picchu to a safari in Africa. Trips I more than likely would not have gone on my own, and if I did probably not first class like Jones does.
Well, to each his own.  The trips and meetings while being held out as a glittering carrot, were to me the most unattractive part of Jones.  For many reasons, which will probably annoy you. 
1. I am older than you with grown children. So the last thing that appeals to me is a "family" trip with a bunch of annoying little kids. 
2. I have been to all of those places and more (well, except for the Africa Safari) before, on my own dime, and in more unstructured format where I was actually able to explore the countries and meet the local people, spend some time doing what I want to do. Linger or leave.
3. The meetings and dinners, while not 'officially' mandatory, were still a pressure to have to hang out with a bunch of Jones reps.   I hate group events and forced activities.
4. If I want a vacation, I want to go somewhere that isn't related to my work environment.  Vacation to me is doing something new and exciting, not hanging out with a bunch of Jones (or insert the name of any organization here) clones and their Stepford wives and robo-children.  The same goes for the insurance trips that I have been on, so don't think it is just Jones, it is me. 
5. I would rather have the cash.  Instead of being taxed on a trip I didn't enjoy much anyway.
If I do go on a trip, I try to have as much private time with my spouse as I can and get away from the herd.   I know a lot of people really enjoy the trips and I am happy for them.  The Jones trips were probably the nicest compared to other companies that I have experienced. The criterion didn't involve pushing any particular product but was instead based on having a diversified office, which I thought was a very good idea.
Floating rate funds are a good spot to park some short term, semi liquid funds while rates are going up.  I was also disappointed that we were not able to offer them at Jones.  Although I probably wouldn't have done so at that time, since rates were going down.

troll's picture
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Joined: 2004-11-29

noggin wrote:Why would one want to buy a floating rate fund in today's market?
You are avoiding the real question, aren't you?  I repeat....If you DID want to buy it, WOULD THEY ALLOW YOU TO DO IT?  Or...would Big Brother in DesPeres cancel your order?

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