New comp/retirement structure at EJ

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CIBforeveryone's picture
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Joined: 2005-07-12

I'd be curious on what everyone's thoughts are on the new New IR base salaray/bonus program and also formalization of the IR retirement process that EJ announced today. Especially Jones-ers.
It seems they are dramatically increasing what a New IR can earn in their first 19 months? I believe. They are going to pay $2800/mo for study, with a regional figure based on COL for the first year base salary. Opportunity for bonuses of up to $17k in your first year if you are at 100% of standard.
Also they are going to allow retired IRs to buy into the Trips at 75% of firm cost.
There are other details, but this should be enough to chew on for now.
 

zacko's picture
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Joined: 2004-12-01

Forget the first year...that's chicken feed man!  What about the successful 20 year vet IR who decides to retire.  What value does he/she recieve in compensation to help ensure a comfortable retirement for his/her family?  What about better health insurance benefits?  A bonus ystem designed around the performance of the IR...rather than one that includes how much revenue the noobs grossed?  I find it hard to beleive that the greed of the GP has diminished in any way. 
75% of firm cost on div trips?  That's still more than what you or I could buy the trip for...and we all know it.
 

Guest1's picture
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Joined: 2005-01-16

Zacko, call one of your pals and get a copy of it before you comment. It is a significant change that puts the hiring wage there with the larger wirehouses (what does RJFS pay new hires? Oh yeah, they don't). There were also commission increases and the retirement plan is every bit as good as the indies cry " I can sell my book" but takes away a lot of the problems with "selling your book" You are way off on you trip costs, and you know it. Price the trip to Africa that I am going on, now do it for $3000 for two. You can't. (Good job on T.K. though)

Malcolm's picture
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Joined: 2004-12-02

The EDJ trips were nice.  I liked them because they forced me to get a nice vacation in every six months. 
With the aprox $135,000 more I am making though since I left I am pretty comfortable picking my own trips out and paying for them.   
I am glad you are getting such a great deal on the trips though Guest1.  In my opinion however, that is a very expensive trip you are taking to Africa.  Have a good time.

Guest1's picture
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Joined: 2005-01-16

Malcolm, detail for me how you will sell your book and at what value? The trips was the smallest issue with the post, but glad you commented.

Malcolm's picture
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Joined: 2004-12-02

Selling my book isnt a factor.  Making 1.5 - 2 million more "minimum", over the next ten years till my retirement is.  As far as selling my book, well what ever price I get for it will be the cream on top of a great career.  I'm sure someone wont mind taking a good sized fee based business off my hands in ten years.
But one other thing.  Probably the most critical thing to me has been that I now know I am better able to serve my clients and spend my days doing things that I prefer to do verses what I was doing at EDJ. 
I just feel better about what I am doing for my clients now.
 
 

BrokerRecruit's picture
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Joined: 2005-04-19

To throw a bone out there, average is typically 2.1x on the fee-based side and 1.1x on the transactional side. 
So...let's say we have an indy that is doing $500k with 25% fee-based ( a little low in my opinion) who wants to sell their book.  they would receive approx. $260k and change for the fee-based and $412k and change for the transactional side.  This total would be approx. $672 and change (like I said, low because I gave the EDJ a head start by only assuming 25% fee-based)
Now, let's say that EDJ ALLOWED you to sell your book.  you would get approx. $550k.
That said, EDJ is not a bad place, it's great for some and indy is great for some.  Check the stats on selling a book.  It's a nice chunk of change as opposed to walking away and saying "what a great pat on the back for my 20+ years of hard work - I get 75% off of all of my trips for life!  Yippee!"  Personally, I'd rather take the $672k. 

Malcolm's picture
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Joined: 2004-12-02

I would guess I will have 50 million in fee based assets in ten years.  I am being very reasonable and conservative with that. 
Guest1, I supposed another million at retirement for the sale of my business would be cream with a cherry on top of it.  Certainly enough to pay for a trip to Africa every year if I wanted.  Heck with that extra amount on top of all the other extra I am earning, I could probably buy a small dictatorship in Africa and make myself King.
I am glad you are happy with the scraps the GPs have thrown down to you though Guest1.  Enjoy that great trip deal you are getting while you make all the GPs richer.

zacko's picture
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Joined: 2004-12-01

All my pals for the most part have gone indy and I really don't have any too many friends left at Jones these days.  I probably could get a copy...but why not be a sport and scan and post it here?
Excuse me for being skeptical...as I haven't seen the entire agreement yet.  But i have NEVER seen Jones make any changes at all without it in some way--haircutting the broker in the long run.  I won't go into the long laundry list--but you know I am right.
I could care less about new hires since...well, I'm not one.  And your right, indy firm don't hire noobs.  I'd like to see more of what they did with the retirement plan...and the commission increase?  Did they decrease any commissions at all on any products to offset?  Still paying 30% payout on C shares? What did they increase?
Africa is still a supertrip ?  Either way, I think you should recheck your numbers as far as cost?  For 3k you will be sleeping in tents and eating hyeana for dinner.  I'm normally a rare to med-rare guy--but that's one steak I would want well done.
If I know Jones, it won't be as good as it seems once you really break it down.  I'm sure they are selling it as the second coming though if I had to guess

Guest1's picture
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Joined: 2005-01-16

I have thrown this out there before but no one answered it maybe BrokerRecruit can help us: Show me a book that was sold, cleanly in the last 12 months. You all talk about it (Malcolm is dreaming it) but I never see it. Look at the sales at FpTransitions and the time on the market. If I walk now my book is worth more than a million to me from Jones under the new plan. No sales involved. Yes, Zacko, commissions are even across the baord now. But C shares? Come on, let's not start that silly debate again. And Malcolm, 50 mill in fee based in 10 years? Why so long? I am halfway there now with a firm that all of you say it can't be done. Please.

BrokerRecruit's picture
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Joined: 2005-04-19

I have been working with an FA who just wrapped up the purchase of a book within the past six months.  No big issues to date.
That's not to say that there aren't a good number of flubs in the purchase and sale of businesses.  It happens.  However, it will depend on the seller, the buyer, the firms involved, the accounts (prop vs. non-prop), etc.  For every botched purchase, there are probably a couple of good ones.

CIBforeveryone's picture
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Joined: 2005-07-12

Guest1 wrote:
I have thrown this out there before but no one answered it maybe BrokerRecruit can help us: Show me a book that was sold, cleanly in the last 12 months. You all talk about it (Malcolm is dreaming it) but I never see it. Look at the sales at FpTransitions and the time on the market. If I walk now my book is worth more than a million to me from Jones under the new plan. No sales involved. Yes, Zacko, commissions are even across the baord now. But C shares? Come on, let's not start that silly debate again. And Malcolm, 50 mill in fee based in 10 years? Why so long? I am halfway there now with a firm that all of you say it can't be done. Please.

Guest1-
This is not meant sarcastically (you have to say that around here)...could you break down how you have come up with that value of your EJ book? When I saw the plan I didn't think it through to try and put a $ value on it...it seems like you are only getting a reduced commission on your business while you continue to work. What am I missing?
Since I got this started, I might as well feed a few more details...
It is a 4 year plan with a split of comm between the vet and the new guy.
70/30
50/50
30/70
and in year 4 I can't remember what happens. The vet is to be working a declining number of hours through the first 3 years, and in year 4 they are out of the branch, but working as a "consultant." Guest1 remind me what the pay structure is supposed to be in year 4, I forget. Another perk is that you qualify for the trips all 4 years, apparently even if you don't earn them.
As always vet keeps LP through retirement.
Thanks
 

double trouble's picture
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Joined: 2005-07-12

Guest1,
Please tell me how to calculate the Retirement Plan.
It is my understanding that when you "sell" your book it is 70% of your NET, not Gross. Is that correct?
DT

zacko's picture
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Joined: 2004-12-01

Guys,
If all these things are in place...and there is no fine print, I will be the first to commend Jones on putting a plan in place that should have been done long ago.  Forgive me for being skeptical...but it's jones we are talking about!
What if you die?  can a buy/sell arrangement be put in place?  Is your wife guaranteed to be able to keep your LP if you pass? Can you bring in your son or daughter without getting special GP approval?  Last I checked your wife couldn't even be your assistant.
It sounds to me like the retiring IR will still have to work to receive compensation for 3-5 years?  That's not a severance package at all.  Kind of lame if you ask me.  When I'm ready to retire, I don't want to work 4-5 years. 
There are plenty of outright sales that occur at RJFS.  Usually about one every few months or so.  I know of one recently but it was a 300k producer.   They paid the money out of revenue over 3 years and the retiring advisor worked 60 days and was done.
I receive 90% on A, B & C shares.  What you are telling me then is that A, B, C shares all pay you 40%?  Bond funds are also 40% and no longer 39%?  IS your payout still reduced if you discount a stock commission?  Mine isn't. 
Where have they INCREASED payouts..please be specific.

CIBforeveryone's picture
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Joined: 2005-07-12

zacko wrote:
What if you die?  can a buy/sell arrangement be put in place?  Is your wife guaranteed to be able to keep your LP if you pass? Can you bring in your son or daughter without getting special GP approval?  Last I checked your wife couldn't even be your assistant.
It sounds to me like the retiring IR will still have to work to receive compensation for 3-5 years?  That's not a severance package at all.  Kind of lame if you ask me.  When I'm ready to retire, I don't want to work 4-5 years. 
I receive 90% on A, B & C shares.  What you are telling me then is that A, B, C shares all pay you 40%?  Bond funds are also 40% and no longer 39%?  IS your payout still reduced if you discount a stock commission?  Mine isn't. 
Where have they INCREASED payouts..please be specific.

No quantam leaps like buy/sell. No announcement on change of LP, so I doubt that has progressed at all.
To speak to your retirement comment, I might offer the thought that it seems very few people just drop off and retire one day. It seems like most want to gradually move out over a few years anyway. Most soon to be retirees are plotting their exit over the course of a few years.
The changes in payout are that they'll now pay 40% on bond funds (used to be 39). They are going to pay out net comm on anything grossing over $20 on fixed income, used to be $50 min. They are going to pay out net on A10 stock trades. They will simplify the stock commission formula for the client and remove the research bonus for Buy stocks.
Please note I am very neutral on this so far.
 
 

Indyone's picture
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Joined: 2005-05-31

I haven't heard anything yet that would make me want to go from indy to Edward Jones.

Starka's picture
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Joined: 2004-11-30

Bottom line---
If you're happy at Edward Jones, I'm happy for you.  I, for one, was very unhappy there.  I felt that there were too many things that I was paying for and would never use and had no say in.  Additionally, there were corporate practices that I perceived as wrong.  So I left, and it couldn't have worked out any better for me.  It would appear that the same is true for Zacko and others.  Clearly, there are others like IndyOne who feel the same.  maybe it's just an entrepeneureal (sp?) spirit.

exdrone's picture
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Joined: 2005-07-01

The new hire package seems like a huge improvement over the previous plan. $2800/mo, possible $17000 bonus and $125 for new accts. 
The "Retirement Plan" with the graduated split between vet and new ir seems like parsing scraps while the GP's give up nothing.
To take a step back and look at the big picture, it looks like Jones cares a whole lot more about new brokers than the vets still.  Pay the newbies a little more to keep them around a little longer.  That's way better than sharing some real profits with the vets.
I think the reason for the increase in newbie pay came from two places:
1. It will now take 2-3 hires to get an office profitable instead of 3-4. They just took the cost of hiring an extra person an split the difference with the new hire.
2. The new broker classes are way under full capacity...they had to do something.

zacko's picture
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Joined: 2004-12-01

Putting new hires aside because..as a vet..why would you care?  I only care about issues and items which would allow me to better serve my client and also about compensation naturally as that's how I provide for my family.
A payout on accomodation trades?  What on earth will the IR do with the extra $6 per year?
1% extra on bond funds?  LMAO!
And, still 30% on C shares?  (shame shame)
STILL, no fee based program outside of MAP (a joke)? 40% is a little better...but in MAP program where Jones provides nothing as the money managers are outside managers..begs the question.  What on earth does Jones do to earn the 60%?  IR's should be paid a higehr payout still.
No research recc bonus on stock trades?  Does that mean all payouts were brought UP to the former research recc bonus level or were payouts reduced on those stocks?
seems to me this was a whole lotta nothing and the song remains the same at Edward Jones.  I'm sure they will put the spin cycle on it--but again, maybe I'm missing something?  Back to work for me..later.
 
 

newejir's picture
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Joined: 2005-03-08

Heard from region meeting other night that they LP is being put on hold again due to concerns about wording of offer....as Gomer said, "surprise, surprise, surprise."

EIAdvisor's picture
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Joined: 2005-08-30

Guest1,
Wait up, hoss.....CIB has it right....everything goes to a house account with the retiree getting credited with 70/50/30% of the production....NOW, take your 38% payout from that figure to get your "generous package" from EDJ.  As a bonus, in yr 4, vet gets 15% of the branch's NET production as a "consulting fee"
$1,000,000 producing office:
Yr 1  $264k (700k @ 38%)
Yr 2  $190k
Yr 3  $114k
Yr 4  $57k (380k @ 15%)
       $625k total payout over 4 yrs
That is less than half of what indy books are selling for--even if it takes 4 yrs!  While I've never sold a book, I doubt it would require sticking around for 4 years--could be wrong, though.
I'd be curious what other vets think of this....top producers I've spoken to aren't overly impressed, but they like the fact that firm is setting up a formal policy...seems like a step in the right direction.

BullMarket's picture
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Joined: 2005-08-22

With the newir package, it is basically a win win for the newir and
Jones.  There is a lot more too it than what has been
mentioned.  New IRs that do well, will definately make more on the
new system...as they should.  Meanwhile, EJ doesn't have to pay
the new IRs that are struggling as much.  Although the pay starts
@ $2800/mo it is reduced quite drastically every 4 months.  I
don't remember the exact numbers but the salary actually is LESS than
what it was before.  However, if you stay @ 100% of standard for
the first 15 months then the bonuses you get would be more. 

Also, as far as the new account bonuses (actually shoud be new
household bonuses) go you don't get anything until you have opened your
5th household for the month, then you get $500.  Also, now, in
order for a household to qualify for a bonus, there has to be a single
deposit of $10,000 into one account or a single trade that creates a
$100 gross commission. 

Like I said before, it seems like a win win situation for new IRs and
Jones.  If you do well you will make more.  If you do poorly
(and probably end up quiting) then Jones didn't spend as much money on
you.

I will definately consider switching to the new system once it becomes eligible to me in November.

BullMarket's picture
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Joined: 2005-08-22

Oh, by the way, I also love the new Retirement program!  I think
it is a great deal!  If there is anyone that wants to retire, let
me know, I would be more than happy to participate! 

Player's picture
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Joined: 2004-12-08

Guest1 wrote:Zacko, call one of your pals and get a copy of it before you comment. It is a significant change that puts the hiring wage there with the larger warehouses (what does RJFS pay new hires? Oh yeah, they don't). There were also commission increases and the retirement plan is every bit as good as the indies cry " I can sell my book" but takes away a lot of the problems with "selling your book" You are way off on you trip costs, and you know it. Price the trip to Africa that I am going on, now do it for $3000 for two. You can't. (Good job on T.K. though)
Guest1,  as usual you are full of your self and have your head up your 277..............GP's will not give up their slave system called IR's..that do the training, supervision, recruiting, all for the promise of LP, or the big one the GP by the way how much did it cost the profitable IR to pay the SEC FINES?   But, then again Guest1 believes in a free lunch......
Do you know what GP stands for?  Greedy Prick 
If your production is 50% of what you say on here, you should go INDY, with the extra compensation I take a vacation every quarter, and my cost is a lot less then it ever was at Jones....you tell Zacko to check his facts........but you know he is right on target.
Try doing a Financial Plan for yourself and your family, if you have one?
Is it the Quality of Life or the security of Edward Jones that is most important to you?   
Is the GP's Quality of life more important than yours?
Answer those 2 questions and grasshopper you will see the light.....
Don't settle for hamburger when you can have steak....

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