The Main reason people leave Jones

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JonesIR's picture
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Joined: 2005-12-31

The reason people leave Jones usually is because they can't hack building a business the correct and ethical way.  others leave for other reasons, but most are not willing to put in 3-5 years worth of really hard work selling appropriate low cost investments that don't pay the broker as well as those annuities, wrap accounts, and market timing churn and burn mentality.  
We know we do it right...lots of the other firms preach (push)annuities, wrap accounts, market timing/churning.  We preach annuities w/out surrender fees and half the expenses to the client.  Pays us less money, but better for the customer.  Hmmm....  No fee based accounts just buy your mutual funds with A share expenses and hold for 20 years.  Hmmm...do the math on A share versus fee based account over 20 years and see which comes out better for the client.  Math doesn't lie if you don't believe me.  Check the SEC website for a mutual fund cost calculator.  I got to figuring what I needed in C shares or a wrap account versus having a book of A shares.  Wrap fee broker or annuity broker gets just as much in trails from $20M under management as someone that had $80M in A share funds.  Strange huh.  Is that best for the client or the broker?  My thoughts are that there are so many people on here that leave Jones in the first few years to go somewhere else because they can't hack it the ethical way.  The "say" they make more money at the new firm.  But it is strange the payout portion is much the same.  Hmm...  If they make more money it is usually because they do things the easier less client friendly way by selling things that pay themselves more money. Annuities, wraps, and market timing (churning) They get on here and bash the firm.   I think the Jones guys and gals are just proud that they have been able to build a sound ethical business the client friendly way.  Yep, there are other firms with brokers/advisors that do it the "right way" for the client but not may other firms that structure their business model the "right way" for the client.  I think the Jones folk are just taking up for themselves and the ethical businesses that most Jones folks have built.

Dirk Diggler's picture
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Joined: 2005-12-30

Yeah...you figured it all out. I thought about moving to Jones, but I just love making money too much.

JonesIR's picture
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Joined: 2005-12-31

I hope I run across your clients one day.  I would like to help them the ethical way.

Dirk Diggler's picture
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JonesIR wrote:I hope I run across your clients one day.  I would like to help them the ethical way.
I'm sure that when they start to hate making money, they'll love what have to offer. The only problem is that they won't be happy about having people bumping their cars with shopping carts, while parked outisde your office.

bankrep1's picture
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Joined: 2004-12-02

JonesIR,
I have nothing good or bad to say about Jones, but your above statement shows you truly don't understand the business. 
?  What are you doing with all of your clients you sold A share Putnam funds to in 2000?  Are you selling them another A share?
Did you know that using ETF's/closed end funds and stocks can sometimes serve the client better maybe with lower expenses even when you toss in 1% for your FEE.  It is OK to charge clients an ongoing fee if you spend time with them, helping them. Take someone with 200K in A shares, you receive 500 a year in 12-b-1. Your cut 40% =$200 how many hours can you devote to him/her.  Not many, you need to be out knocking on doors, finding new money so the big boys at Jones can get their revenue sharing and 60%.  Wake up!  If you want to truly help people you need to spend time with them, that time costs them money.
Slapping someones rollover into an A share then moving to the next person is not what a financial advisor does.  That is what a financial salesperson does.  As an advisor I meet with my clients often, I update their plan, set goals and make sure they are saving/invest the money they need to sucessfully meet their goals.  If they stray from the plan, I help get them back on course.  Now if I spend 10 hours a year with above example/the 200K rollover, I am not going to make $20 per hour for my time, nor am I going to make it up from someone else, sorry to put you in your place, sounds like the top dogs really did a sales job on you.
I have never worked for or known anyone that worked for Jones.  I do ACAT a few accounts every year from there though!

JonesIR's picture
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Joined: 2005-12-31

Bankrep, I spend the time with them just as you do with your clients, the difference is that they are charged much, much less and get larger returns.  Again, math doesn't lie.  I get plenty of referral business from those clients because they realize the deal they are getting.  Rebalancing and good service at 1/4 the cost to the client.

The Truth's picture
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Joined: 2004-12-01

You are too funny and obviously someone new to the firm.  Good luck to you as you have a great start in saying the right things to your GP friends.  Rebalancing at Jones means moving from an A share held for a year or two to a preferred A share at full boat.  Is that a more efficient way than auto-rebalancing at no additional cost?  Well, I guess I am asking the wrong person since you do not have this option quite yet.
And don't try and preach about your A share annuity option.  Only the "real" players in the firm know why you offer this share class. 
 

The Truth's picture
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Joined: 2004-12-01

Let me also attempt to walk you through a new client that comes to you.  You take a look at the funds he already has and you say I can do better with American Funds.  You present them the ICA chart, get the ACAT signed and off you are.  And don't tell me this crap doesn't go on.  If you are naive enough to believe it doesn't go to your power players and ask them how many non-preferred funds are on the books at Jones.  This may wake you up a bit.

JonesIR's picture
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Joined: 2005-12-31

Let me correct your response.  First A share to A share is called an exchange if done in the same mutual fund family.  There is no need to sell some one into another family of funds if the fund they have is in a reputable family of funds and meets their goals and objectives.  By the way, many other brokers make this their standard practice.   Also, I have many people that transferred funds in which we either held or exchanged for other funds in the same family of funds.  Now sometimes, you know some fund families have a horrid reputation.  In that instance you need to discuss apprpriate options with client which may mean sell out and buy something else.  Jones does not advocate switching back and forth, and you should knno that since you worked for them at one point. 

Dirk Diggler's picture
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Joined: 2005-12-30

JonesIR wrote:Let me correct your response.  First A share to A share is called an exchange if done in the same mutual fund family.  There is no need to sell some one into another family of funds if the fund they have is in a reputable family of funds and meets their goals and objectives.  By the way, many other brokers make this their standard practice.   Also, I have many people that transferred funds in which we either held or exchanged for other funds in the same family of funds.  Now sometimes, you know some fund families have a horrid reputation.  In that instance you need to discuss apprpriate options with client which may mean sell out and buy something else.  Jones does not advocate switching back and forth, and you should knno that since you worked for them at one point. 
Please address the widespread problem of Jones clients getting dings on their cars, from shopping carts, while parked outside of Jones offices.

scrim67's picture
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Joined: 2005-04-28

Age old question:
"How much do we deserve to be compensated for our services?"
As much as an MD?
As much as a sanitation worker?
A teacher?
An astronaut?
Where should we fall on the compensation chain?

Dirk Diggler's picture
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Joined: 2005-12-30

As much as the market will tolerate, just like MD's, janitors, teachers, and astronauts.

csmelnix's picture
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Joined: 2005-06-01

Jones IR,
Imagine that an IR preaching about ethics - priceless.  Your ignorance is grand - just like 'ol Doug said, sell your client a growth and income fund and they'll thank you for it...yea, mutual funds are the only real investment for all.  You just proved what a cookie cutter chop shop jones is, people I know, including myself, leave jones once they learn this.  You show me a fund family that has the best of class for every asset class out there stupid.  How do you help clients that need tax friendly investment advice?  Any knowledge will tell you MFDs are horrible for this.  God your dumb!

troll's picture
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Joined: 2004-11-29

JonesIR wrote:Bankrep, I spend the time with them just as you do with your clients, the difference is that they are charged much, much less and get larger returns.  Again, math doesn't lie.  I get plenty of referral business from those clients because they realize the deal they are getting.  Rebalancing and good service at 1/4 the cost to the client.
You charge less because
1.) your firm doesn't offer any other choice
2.)  you make it up in 3 or 4 years when you switch them to another fund family A-Share position...
3.) You don't really add that much value...

bankrep1's picture
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JonesIR wrote:

Bankrep, I spend the time with them just as you do with your clients, the difference is that they are charged much, much less and get larger returns.  Again, math doesn't lie.  I get plenty of referral business from those clients because they realize the deal they are getting.  Rebalancing and good service at 1/4 the cost to the client.
So with your business model, you will forever have to add new clients/assets...  How can you adequately service 4000 clients your going to have in 15-20 years.  Most Indy's I speak with manage between 80-200 clients and complain about time.  Can you imagine the level of service a client with an advisor like that receives, not shouldn't they be paid for working for their client.
Why don't they just cut you out of the picture and go to a fidelity investor center?  They'll save more....

csmelnix's picture
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Joined: 2005-06-01

JoeD and Bankrep - you both hit it on the head.  In order to grow they have to constantly add more and more clients all the while they put clients in investments that get called, mature or need to go to a new fund family so they can make a living. 
jonesir - I wonder how much of your $9.5 million book is in Van Guard or some other no load if you are so concerned about saving your clients money?  Why don't you charge a nominal fee to build a no-load portfolio?  Oh, that's right you're at Jones.

exdrone's picture
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Joined: 2005-07-01

JonesIR,
I have a couple suggestions for you.  First, stop posting on this site until you have spent a couple months reading other's posts.  Second, get to know someone at another firm (we don't all eat babies like they tell you at Jones) see how they do business and what tools they have.  This prob help you see what the competition is really doing, and might keep you from looking like an ignorant, pontificating, buffoon.

noggin's picture
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Joined: 2004-11-30

Exdrone- Good post!! I have learned an amazing amount about how to build my business from people who are employed at other firms. At the least, you start to understand how their business works and how you might effectively compete against them. Ther are many people on this forum that I have a lot of respect for because they have earned it, it takes a lot more than 9.5 M AUM to earn respect....

exEJIR's picture
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Joined: 2005-05-12

The problem is, at 2.5 yrs and $9.5MM, at EDJ that makes him a "veteran".  And, now he is preaching to the "rookies."

troll's picture
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Joined: 2004-11-29

JonesIR wrote:
The reason people leave Jones usually is because they can't hack building a business the correct and ethical way. 
That pretty much demonstrates the "we're honest, you're not" brainwashing that makes Jones a laughing stock outside their firm. Every one of us here could pick apart the bogus reasoning on products and services that makes up the rest of the post, it’s enough to say that no firm has a monopoly on ethical reps, much less one that took a massive fine for paying brokers more to sell one group of families of funds over all others and takes reps on sales contests trips.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

eddjones654's picture
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JonesIR wrote:
The reason people leave Jones usually is because they can't hack building a business the correct and ethical way.  others leave for other reasons, but most are not willing to put in 3-5 years worth of really hard work selling appropriate low cost investments that don't pay the broker as well as those annuities, wrap accounts, and market timing churn and burn mentality.

 
And which "appropriate low cost investments" are you referring to?
Every B/D gets paid the same on mutual funds and annuities, what your firms pays you is different that what another wire house will pay and completely different from what a indy gets.
Churn and burn burn mentality -  is that your term for switching out of a non-preferred family into a preferred?
Two part final question - What is your can sell date and what's your AUM?
Mine is 01-26-85 and AUM is 189 and an indy.

Duke#1's picture
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Joined: 2004-12-06

JonesIR, I'm not an ex-Jones rep, but I know a lot of them because there's a ton of them at my b/d (RJFS).  No firm is perfect, & I'm glad you're happy at Jones.  But, as an outsider to all the Jones stuff I do know enough that in reading your post that you're way off base by attacking reps that don't follow the Jones mantra of how to do business. 
Your "defense" of the Jones A-share buy & hold model, and accusing others of being unethical because they're being compensated by recurring revenues is naive at best.  You clearly come across as the proverbial Kool-aid drinker when you post such irresponsible things.  You are still viewing our business as a transactional commission-based approach wherein reps are only selling products and are not acting as a client's "trusted advisor".  "Cheap" is not better in our business as you propose, unless all a client wants is to buy something at the lowest cost.  There are discount firms out there that can handle that for investors seeking the cheapest price for a transaction.
The fact is our industry and the needs of the investing public have outgrown the traditional Jones model.  Most affluent investors want more than just the stock/bond/mutual fund "du jour", as our business was known for 20 years ago.  They want advice.  They want a comprehensive, coordinated strategy to address their financial goals in line with their risk tolerance.  And, they want a professional who stays on top of that strategy, fine tunes it, monitors it, provides regular performance reports relating to it, and regularly communicates with them about it and to learn what may have changed in the client's life that affects it. 
You say that you spend as much time with clients as other reps.  Maybe you are able to do that now with a small book.  And, maybe you're able to give them full-service support like I've described above, instead of just selling them an investment or two.  But, the reality of the Jones business model is that assuming you continue at Jones for a few more years you won't be servicing your clients as well as others can.  Your clients won't be receiving customized asset allocation services that are continually being reviewed, amended as situations change, & rebalanced.  Your clients won't be getting personalized quarterly reviews.  Appropriate clients won't be getting more comprehensive financial planning. 
Surviving & prospering at Jones mandates that you continue to add new clients to maintain, let alone grow your income.  Book the A share commission and move on to another new client.  In doing so, you won't have the time nor will you be fairly compensated for the value that you should be delivering to meet your clients' long term needs, assuming that's what you want to do.
A common criticism I hear from former Jones IRs is that the sheer volume of accounts they end up with places them in the position of not being able to properly service their clients.  They feel they're not able to responsibly meet their client needs.  They end up with 1000 or more accounts & it's impossible to deliver value to all these clients.  They eventually recognize that their clients for the most part are NOT being properly served. 
I've known many ex-IRs who may not have really bad feelings about Jones, as others do for various reasons.  They're thankful for the training and for the conservative investment approach that they learned & followed.  But, they chose to leave Jones if only because the "system" ultimately worked to the detriment of how they felt their clients should be serviced. 
So, they left Jones & converted their practice to being able to focus on providing better service to their clients.  They culled their book to a manageable number of households.  They converted their compensation structure to a recurring revenue structure to be able to deliver greater value and be fairly compensated for that additional value.  By being able to focus on & serve these clients they got more business from fewer households.  If they went indy they may have hired one or more other junior reps to take over the smaller accounts they couldn't service.  Those clients got serviced better as well, & more business was developed from them.  It became a "win-win" for their clients and for them.
So, be very careful in casting stones as you did in your post.  It's clear from your post that you don't yet have the experience, appreciation, and/or awareness for the reality of our business outside of the Jones model.  If you choose to continue doing business as you have up to this point, that's your choice.  But, you're way off-base when you start attacking the ethics of others who choose not to.

jamesbond's picture
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Joined: 2005-03-21

well said duke

blarmston's picture
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Joined: 2005-02-26

That is as insightful and accurate a post as any I have seen on this forum....

maybeeeeeeee's picture
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JonesIR wrote:
The reason people leave Jones usually is because they can't hack building a business the correct and ethical way.  others leave for other reasons, but most are not willing to put in 3-5 years worth of really hard work selling appropriate low cost investments that don't pay the broker as well as those annuities, wrap accounts, and market timing churn and burn mentality.  
We know we do it right...lots of the other firms preach (push)annuities, wrap accounts, market timing/churning.  We preach annuities w/out surrender fees and half the expenses to the client.  Pays us less money, but better for the customer.  Hmmm....  No fee based accounts just buy your mutual funds with A share expenses and hold for 20 years.  Hmmm...do the math on A share versus fee based account over 20 years and see which comes out better for the client.  Math doesn't lie if you don't believe me.  Check the SEC website for a mutual fund cost calculator.  I got to figuring what I needed in C shares or a wrap account versus having a book of A shares.  Wrap fee broker or annuity broker gets just as much in trails from $20M under management as someone that had $80M in A share funds.  Strange huh.  Is that best for the client or the broker?  My thoughts are that there are so many people on here that leave Jones in the first few years to go somewhere else because they can't hack it the ethical way.  The "say" they make more money at the new firm.  But it is strange the payout portion is much the same.  Hmm...  If they make more money it is usually because they do things the easier less client friendly way by selling things that pay themselves more money. Annuities, wraps, and market timing (churning) They get on here and bash the firm.   I think the Jones guys and gals are just proud that they have been able to build a sound ethical business the client friendly way.  Yep, there are other firms with brokers/advisors that do it the "right way" for the client but not may other firms that structure their business model the "right way" for the client.  I think the Jones folk are just taking up for themselves and the ethical businesses that most Jones folks have built.
 
If you sell an A share to the client, you get paid up front. Right?  OK stay with me.  The client walks out of the door and you get paid.  Done.  Now, you say he holds it for 20 years - - where are you in those 20 years? that is the question.  Are you doing annual rebalancing to maintain their asset allocation?  Are you doing reviews with them to discover any major life changes or risk tolerance changes?  Are you providing financial services to take the worry and guess work out of their financial freedom-OR are you moving on to another client because you can't make any more money off them if you don't sell them something.  You think that is ethical?
If my client wants an A share, I sell them an A share.  I sell them WHATEVER IS BEST FOR THEM.  We have managed money accounts for clients who want them and we get paid an annual fee--but there is work involved in that.  Why should we not get paid for our work?
And contrary to your sale of an A share where you get paid your 5.75% no matter HOW well the fund does, we sit on the same side of the desk as the customer.  If they make money -- we make money.  If they lose money - - we lose money.
Oh, we sell mutual funds in managed money programs at NAV--no sales charge and refund the 12-b-1 fee BACK TO THE CUSTOMER.  So how/and what is wrong with that?
If you want to brag about your company that is cool - - I brag about Raymond James & Assoc. all of the time.  But, you should cool off saying that other companies are unethical until you know what you are talking about.

southcampus's picture
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Joined: 2005-09-20

Reasons I've thought about leaving: (I'm doing well by the way, not struggling looking for a way out)
1) EXACTLY what Duke says SHOOT & KILL , SHOOT & KILL, so on and so on. I'll add that with that philosophy when clients do call and have questions about the account or they do just want to talk to you, in the back of your head, your thinking "I really need to be talking to somebody who has money to invest" I'm not saying everyone is like this, and many times you end up having bad months because you did to many "feel good" calls, where fee based helps alleviate this or I hope so over time anyways. I just hate the fact this even comes up in my head, because I genuinely like my clients, but by continuously pushing A shares,etc what else do you expect" Shoot Kill
2) I thinkthat and combine that with what EDDJONES says "Churn and Burn" philosophy. Example, somebody has a crappy Oppenheimer fund and they come in unhappy with , you say you can help, do your Ameri, VK, Frank take your pick presentation. ACAT it over and buy your fund with the new load" 
I THINK THIS RIGHT HERE CAUSES MORE ETHICAL PROBLEMS FOR JONES THAN ANYWHERE ELSE. Why, because " I don't have a fee based business, so the only way I'll make money is by selling this person another fund family" The problem is Oppenheimer probably had just as good a fund to replace the one they were unhappy with, which you could have exchanged for free.
Guess what the home office ok's this, but you can't do a preff to preff. It just doesn't make since. This causes me ethical problems, and many other IR's also, many of which don't make their production numbers because they won't do this, and hence get canned by the home office. Don't get me wrong, there are very crappy fund families out there and sometimes a change is justified, just saying a fee based platform alleviates this and "You Are doing what is right for the customer"
3) THE CONSTANT PUSH FOR GROWTH!!! Here's an idea let some people try to grow their business for a few years instead of shoving a new trainee into the same community every few months. It demoralizes everyone that is trying to build a business. I think this is very dependent on the area of the country you are in and the regional leader that is in charge. . Some areas like CA, New Engl, have a lot of room for growth.
4) Going back to the Fee Based alternative. I personally like the individual stock business, but at Jones it is so expense to capture a gain for your client. It all goes down to BUY AND HOLD  at Jones though, which I don't necessarily believe in stocks to be true. Besides that having a thousand accounts would not or does not make it very easy to contact all those clients that have those equities if there is a good buying or selling opportunity.  
I like Jones, they got a lot of wonderful people that work for the company. I think there trips are fantastic, and the limited partnership is a good thing. Servicing the individual investor, and setting up offices in small towns is great. I've come to point though where I just disagree fundamentally with the way the want brokers to run their business.

maybeeeeeeee's picture
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Joined: 2005-02-24

Very honest southcampus.  We have many EDJ reps who have come over to RJ.
Bottom line, you can still sell A shares if you want to and they are the best for the client.  You just have access to whatever is best for your client.
Good luck

skolbrother's picture
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Joined: 2005-07-12

Duke#1 on the $!!!! As an ex-joneser do not think could have said it better myself.

Duke#1's picture
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Joined: 2004-12-06

blarmston wrote:That is as insightful and accurate a post as any I have seen on this forum....
Thanks, Blarm.  Are you going to be as nice to me when the Blue Devils knock off UConn in the Final Four?? 

JonesIR's picture
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Joined: 2005-12-31

uconn probably won't be there...look for Gonzaga That would be a better match up

noggin's picture
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Joined: 2004-11-30

southcampus wrote:
Reasons I've thought about leaving: (I'm doing well by the way, not struggling looking for a way out)
1) EXACTLY what Duke says SHOOT & KILL , SHOOT & KILL, so on and so on. I'll add that with that philosophy when clients do call and have questions about the account or they do just want to talk to you, in the back of your head, your thinking "I really need to be talking to somebody who has money to invest" I'm not saying everyone is like this, and many times you end up having bad months because you did to many "feel good" calls, where fee based helps alleviate this or I hope so over time anyways. I just hate the fact this even comes up in my head, because I genuinely like my clients, but by continuously pushing A shares,etc what else do you expect" Shoot Kill
2) I thinkthat and combine that with what EDDJONES says "Churn and Burn" philosophy. Example, somebody has a crappy Oppenheimer fund and they come in unhappy with , you say you can help, do your Ameri, VK, Frank take your pick presentation. ACAT it over and buy your fund with the new load" 
I THINK THIS RIGHT HERE CAUSES MORE ETHICAL PROBLEMS FOR JONES THAN ANYWHERE ELSE. Why, because " I don't have a fee based business, so the only way I'll make money is by selling this person another fund family" The problem is Oppenheimer probably had just as good a fund to replace the one they were unhappy with, which you could have exchanged for free.
Guess what the home office ok's this, but you can't do a preff to preff. It just doesn't make since. This causes me ethical problems, and many other IR's also, many of which don't make their production numbers because they won't do this, and hence get canned by the home office. Don't get me wrong, there are very crappy fund families out there and sometimes a change is justified, just saying a fee based platform alleviates this and "You Are doing what is right for the customer"
3) THE CONSTANT PUSH FOR GROWTH!!! Here's an idea let some people try to grow their business for a few years instead of shoving a new trainee into the same community every few months. It demoralizes everyone that is trying to build a business. I think this is very dependent on the area of the country you are in and the regional leader that is in charge. . Some areas like CA, New Engl, have a lot of room for growth.
4) Going back to the Fee Based alternative. I personally like the individual stock business, but at Jones it is so expense to capture a gain for your client. It all goes down to BUY AND HOLD  at Jones though, which I don't necessarily believe in stocks to be true. Besides that having a thousand accounts would not or does not make it very easy to contact all those clients that have those equities if there is a good buying or selling opportunity.  
I like Jones, they got a lot of wonderful people that work for the company. I think there trips are fantastic, and the limited partnership is a good thing. Servicing the individual investor, and setting up offices in small towns is great. I've come to point though where I just disagree fundamentally with the way the want brokers to run their business.

Southcampus- Ultimately YOU decide how to run your business no matter where you are. If you don't want to churn and burn which i don't like to do myself, you merely exchange funds for an offering that better suits that client in that fund family. I also don't offer A shares exclusively, I explain all share classes and we (client and myself) make a decision that suits them best. I wish you well in your future!

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