New Jones Minimum Production Levels Coming?

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Grosspayout's picture
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Weddle has hinted that the minimums need to be increased--this is in the middle of a recession--in order to boost profitability.  How high are they going? From 18k to 21k?

icebear48's picture
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Joined: 2008-08-25

 I am very suprised it has taken this long given their business model!

gethardgetraw's picture
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Joined: 2009-10-22

22k - Heard from my Regional Leader yesterday

gethardgetraw's picture
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Joined: 2009-10-22

Also there will no longer be "meeting" expectations. You will now either be "exceeding" or "below" expectations. 1 red line and you've got to be above it.

Roxie's picture
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Joined: 2009-10-19

That is interesting!!  That means old world Seg 4 Advisor would need to have a 4 month average of 8400 and that will go to 21k to stay off goals?  I must be misunderstanding....

gethardgetraw's picture
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Joined: 2009-10-22

I'm not sure how the segment expectations will work. I do know that currently, production standards level off at $18k/month and that will go to $22k/month.  With the old production standards, Segment 2 is $8k, Segment 3 is $15k, Segment 4 is $27k, Segment 5 is $40k.  The problem Weddle sees is that people were stagnating at Segment 3, and in some cases, those branches still were not profitable. If they're going to stagnate, it must be at $22k/month now rather than $18k. The levelling off occurs at Year 5 which was $18k. It will now be $22k. They're simply raising that red line, and throughout your first 5 years, your production standards have been based on the steady increasing slope of the line up to $18k. Regardless of Segments, everyone's production standards will go up during their first 5 years due to an increased slope from 0 up to $22k. 

Spaceman Spiff's picture
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You are misunderstanding.  Where did you come up with the $8400 number?  Goals has nothing to do with your segment.  It has to do with what percentage of standard you are.  And that has to do with your tenure in the biz.  For me standard is $27k a month.  If I get to down a $10,800 4 month rolling average (40% of standard), then I go on goals.  40% is the magic number.  Once you hit that mark you hit all the wrong radar screens.  We basically have one line on our chart right now.  You are either meeting or not meeting.  You get nothing special for exceeding other than a pat on the back from your RL once in a while.  If you are above the meeting line you can still go on div trips and due diligence trips, but you might not be up to your standard.  If you're not meeting, then not only do  you not get to go on the trips, but you also start to get hassled from the home office folks to get your numbers up.  The raising of the expectations bar is simply inflationary.  It costs more to run an EDJ office today than it did in 1995 or 1985.  So, they're raising expectations to get more profit from the branches.  You know what's going to happen with this deal?  Jones is going to be more profitable.  Because there are a ton of Seg 4 offices out there right now that are skating along at $19-20K a month.  They're not getting any pressure from anyone to actually do Seg 4 numbers.  Those folks were skating along at $16-17K gross a few years ago when the minimum was at $15K.  Those folks figured out a way to get up to that $18-19K figure to keep themselves in good graces with Jones.   Now, they're going to have to work just a little bit harder.  And they'll settle in at $23-25K gross in a year or so.  But Jones will be more profitable in the end for it.  Which makes my LP happy.    It shouldn't affect anyone other than that group of people who may be coasting right above the red line right now.  Now, it may affect the number of FAs we have going on Div Trips for the two cycles or so after they raise the bar.  But that will be temporary also.   

gethardgetraw's picture
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Joined: 2009-10-22

To add to what Spiff said, don't think of Segments as standards. They are simply merit badges. Your expectations come from 1 thing: commission. It's all about the numbers. If you hit your numbers, you'll progress through the segments.

squash2's picture
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Spaceman Spiff wrote:You are misunderstanding.  Where did you come up with the $8400 number?  Goals has nothing to do with your segment.  It has to do with what percentage of standard you are.  And that has to do with your tenure in the biz.  For me standard is $27k a month.  If I get to down a $10,800 4 month rolling average (40% of standard), then I go on goals.  40% is the magic number.  Once you hit that mark you hit all the wrong radar screens.  We basically have one line on our chart right now.  You are either meeting or not meeting.  You get nothing special for exceeding other than a pat on the back from your RL once in a while.  If you are above the meeting line you can still go on div trips and due diligence trips, but you might not be up to your standard.  If you're not meeting, then not only do  you not get to go on the trips, but you also start to get hassled from the home office folks to get your numbers up.  The raising of the expectations bar is simply inflationary.  It costs more to run an EDJ office today than it did in 1995 or 1985.  So, they're raising expectations to get more profit from the branches.  You know what's going to happen with this deal?  Jones is going to be more profitable.  Because there are a ton of Seg 4 offices out there right now that are skating along at $19-20K a month.  They're not getting any pressure from anyone to actually do Seg 4 numbers.  Those folks were skating along at $16-17K gross a few years ago when the minimum was at $15K.  Those folks figured out a way to get up to that $18-19K figure to keep themselves in good graces with Jones.   Now, they're going to have to work just a little bit harder.  And they'll settle in at $23-25K gross in a year or so.  But Jones will be more profitable in the end for it.  Which makes my LP happy.    It shouldn't affect anyone other than that group of people who may be coasting right above the red line right now.  Now, it may affect the number of FAs we have going on Div Trips for the two cycles or so after they raise the bar.  But that will be temporary also.   Spiff I totally disagree... I think those people will seriously consider leaving now... And now jones just gave up a $18K/month guarantee for a new guy in an industry that has a probably close to a 15% success rate..I also don't see the increase cost...technology cheaper(regardless of what they bill you), real estate(revolving) so that shouldn't be more, the only increase cost I see to edj is training and failing...LPL has to be licking there chops...One of my lpl osj friends has got numerous calls from the home office about leads they are getting from EDJ(this leaked out in my area last month)..  

Spaceman Spiff's picture
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You do run your own LPL office, right?  Your rent doesn't ever increase?  Your utility bills don't increase?  You don't ever give your assistant a raise?  Your health care premiums never go up?  Must be nice to live in the perfect indy world of zero inflation.  Evidently everything Jones ever changes around here results in a mass exodus.  Seems like everytime something changes someone gets on this forum and says "People are going to be leaving and going independant." Don't kid yourself into thinking the LPL people are licking their chops.  Now, will some of those people who can't figure out how to get from $20K a month to $23K a month ($3 mil in Advisory should do the trick), decide to leave?  Probably.  But I don't expect it will be a big deal.  More than likely what will happen is that they'll just up their production a bit to make sure their name stays off the spreadsheets at home office.  And to make sure they win the trips.     

Spaceman Spiff's picture
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Oh yeah, as to the hiring costs, I've not seen any numbers that support your claim that our training costs have increased.  The volume of trainees hasn't increased, the failure rate hasn't increased, and the incremental training costs (HQ salaries, equipment, etc) have only gone up slightly.  In fact, there haven't been HQ salary increases in more than a year (stagflation).  So that's not  real valid argument either.  In fact, with the new push for every FA to start with some assets, and preferrably an office to work out of, the success rate has more than likely increased slightly.  Not enough to keep Jones from looking at the way we're growing and making some changes, but at least a small step in the right direction. 

Greenbacks2's picture
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Joined: 2010-03-03

Looks like more reps will be heading to LPL! I do not know if that is a good thing or bad.  

Advisor238's picture
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Joined: 2009-02-25

I don't think this will have much of an effect on how frequently people leave and go to LPL, or any other firm. I think the main effect will be that some FA's who are just coasting along, will now have to pickup their production a bit.

icebear48's picture
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Joined: 2008-08-25

 Independent BDs like ours will pick up a good deal of brokers in the coming few years.  The Jones business model, and many others, were designed for the markets and enviornmnet of the 80s and 90s where ever increasing numbers of clients fed a dramatically advancing (and reasonably stable) equity market accompanied by ever lower intrest rates.  The present and forseeable enviornment will witness further (we believe dramatic) shrinkage in both client base and numbers of industry professionals.  Naturally, this will mean lower incomes for those remainaing in the business, and for those who wish to maintain their lifestyle, independence is a great solution for those with the ability to run their own business.

AbovedaLine's picture
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The current minimum production level of $18k gross per month is not attainable in the current deep recession.  Makes you wonder why Edward Jones is considering increasing that minimum at this time.  With average daily production at $650 per day or $13K per month, raising the minimum production line is a  sign that the General Partners are out of answers.   This is what happens when a managment team becomes out of touch with the realities of their business model.   An increased minimum will do nothing for overall gross revenue for Edward Jones and may just have the opposite effect.  It would be interesting to know how many vets are investigating going independent at this time...my guess is that number would be far higher than anyone in St. Louis would suspect!  For what its worth, I am exploring all options at this time while the General Partners play with lines!

squash2's picture
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Spaceman Spiff wrote:You do run your own LPL office, right? Nope different b/d Your rent doesn't ever increase? Hasn't yet..  Your utility bills don't increase? Not terribly...  You don't ever give your assistant a raise?  Your health care premiums never go up?  Jones healthcare is a joke..  Also their premiums should be going down with the more younger people they add.Must be nice to live in the perfect indy world of zero inflation.  I didn't say that.... But why replace a $18K producer with a newbie who has done nothing.."bird in the hand in better than two in the bush".. or something like that.Evidently everything Jones ever changes around here results in a mass exodus.  Seems like everytime something changes someone gets on this forum and says "People are going to be leaving and going independant." Don't kid yourself into thinking the LPL people are licking their chops.  Now, will some of those people who can't figure out how to get from $20K a month to $23K a month ($3 mil in Advisory should do the trick), decide to leave?  Probably.  But I don't expect it will be a big deal.  More than likely what will happen is that they'll just up their production a bit to make sure their name stays off the spreadsheets at home office.  And to make sure they win the trips.     

squash2's picture
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AbovedaLine wrote:The current minimum production level of $18k gross per month is not attainable in the current deep recession.  Makes you wonder why Edward Jones is considering increasing that minimum at this time.  With average daily production at $650 per day or $13K per month, raising the minimum production line is a  sign that the General Partners are out of answers.   This is what happens when a managment team becomes out of touch with the realities of their business model.   An increased minimum will do nothing for overall gross revenue for Edward Jones and may just have the opposite effect.  It would be interesting to know how many vets are investigating going independent at this time...my guess is that number would be far higher than anyone in St. Louis would suspect!  For what its worth, I am exploring all options at this time while the General Partners play with lines! I have also noticed that GP returns have decreased dramatically over the last 3 years.. Some of that you can blame on the market... but Weddle when from $10 Mil in GP to $3 Mil last year... That is a huge drop..They need to look into the idea of a branch for rookies..

B24's picture
B24
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As usual, you guys are all WAY over-analyzing this.  They upped the minimums a few years ago....no "mass exodus".  It will not affect the guys consistently doing over 250K per year, which is at least half the advisors at the firm.  It will not affect the guys out 4 years or less (yet).  So it really only affects the longer-term FA's that can't actually produce more than 250K.  And truth be-told, if you can't do more than 250K, than a captive firm is not really economically feasible (too much overhead).  Honestly, being independant is probably the most logical thing for a lot of these 10- year, 225K producers.There is also a bigger picture going on here.  Jones is migrating towards a fee-based environment (for many reasons).  If we kept standards at 18K per month (or 15K where they used to be), you could realistically have 20mm in AUM and still be above the line.  IMHO, it's not fair to the firm or to the other advisors in the area that could be prospecting in your area if you are going to just give up at $20mm. 

Spaceman Spiff's picture
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AbovedaLine wrote:The current minimum production level of $18k gross per month is not attainable in the current deep recession.  Makes you wonder why Edward Jones is considering increasing that minimum at this time.  With average daily production at $650 per day or $13K per month, raising the minimum production line is a  sign that the General Partners are out of answers.   This is what happens when a managment team becomes out of touch with the realities of their business model.   An increased minimum will do nothing for overall gross revenue for Edward Jones and may just have the opposite effect.  It would be interesting to know how many vets are investigating going independent at this time...my guess is that number would be far higher than anyone in St. Louis would suspect!  For what its worth, I am exploring all options at this time while the General Partners play with lines!Ummm...it is in my branch.  As well as in all of the other branches in my region that have to hit that number, with the exception of 2 branches.  Just because YOU can't hit it, doesn't mean the rest of us can't.    How long have you been with Jones?  Obviously not long enough to realize that Jones has done this from time to time in the past.  You evidently weren't around when it went from $15K to $18K.  I was.  I didn't see a mass exodus to indyworld.  I think you are absolutely wrong with your comment about the GPs being out of answers.  If you'll listen, they're giving us the answers.  Advisory Solutions, FAST, MAP, new vendors on the annuity and insurance side of things, new relationships with places like Fidelity on the mutual fund front.  I could name a lot more.  All of that is designed to help you build your business so that you can hit that $18K a month figure.  Whether or not you choose to utilize them is completely up to you.  So, if you still think they're out of answers, perhaps you should start listening instead of talking.  Good luck in your search through all of the options out there.   My LP thanks you for it. 

B24's picture
B24
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"The current minimum production level of $18k gross per month is not attainable in the current deep recession.  "So if you can't I am 4 years out and hitting the minimums.  I just did a quick visual of our produciton screens.  33 FA's are over 20K in trailing 4 gross average (out of like 70 FA's).  Of the FA's that are under 20K, only 12 have more than 4 years with Jones. The depths of 2008 created some problems, but IMHO, our region appears to be performing better than pre-2008 levels.  We are a full year past that.  We have 7 FA's averaging over 40K per month.

B24's picture
B24
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Squash, one thing I will agree with - you don't replace someoen that is producing 18K a month with some newbie.....but that's assuming that the 18K producer is still continuing to grow.  Jones is less concerned about the 3-7 year guy doing 15-18K, but growing his business, and more concerned about the 12-15 year guy (or more) doing 18K but dying a slow death and living off 12b-1's and a few maturing bonds.The problem at Jones is that you have a LOT of FA's that are just asleep at the wheel.  That's fine if you are indy and can do 200K gross and walk away with 100-150K net, and nobody gets hurt.  But in the captive world (EDJ, wires, etc.) producing that little is just painful for the firm.  Right, wrong, or indifferent, that's just the nature of the beast.  The firm has to grow it's revenue like every other public firm or partnership in the world.

Cowboy93's picture
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B24 wrote:The problem at Jones is that you have a LOT of FA's that are just asleep at the wheel.  That's fine if you are indy and can do 200K gross and walk away with 100-150K net, and nobody gets hurt.  But in the captive world (EDJ, wires, etc.) producing that little is just painful for the firm.  Right, wrong, or indifferent, that's just the nature of the beast.  The firm has to grow it's revenue like every other public firm or partnership in the world.This is very true.  For the guy who bought into Jones's "make your number and we'll leave you alone" and was happy at $15k gross, he will reach a point when he decides it is better to make 60-75% of his $200k instead of 40% of the $275-300k he is going to be forced to now produce.  In the long run this should make Jones more profitable but you could lose some marginal people who just don't want to work any harder.  Now the pain of moving will be perhaps be less than their fear of being bugged about not meeting expectations, etc.  But he won't take every client--if he was giving that kick ass of service he would be growing just from referrals.  So you get a harder charger in there to build on what's left and he knows he has to get to $22k/month from the get go.An existing indy office with low overhead can make a nice profit on a $150-200k broker by paying out at 60% and keeping the rest...so LPL corporate doesn't stand to benefit as much as the OSJ who adds some people.  Maybe already knows EJ people around and this compels some of them to look hard at a change.

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B24
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Yeah, that's the tough aprt about marginal prodcuers at Jones.  They are usually marginal because they don't work very hard, and don't service their clients very well.  As a result, if they try to leave it will be very hard to replace all of the income, as much of it was passive  (12b-1's, maturing bonds, etc.), and many of those clients will not know them very well.  On the flipside, most bigger producers ARE bigger producers because of their service, so clients are more inclined to move with them.

squash2's picture
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You have to stop pushing the FAST software as something that is state of the art......

BigCheese's picture
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Minimums have to raise because the Jones management needs to insure profitabliity. Call it inflation, anything you want, the bottom line is their model breeds complacency regardless of the brillance of Spiff, and the good business minded reps will leave eventually. Most do.Spiff before you start and tell us how wonderful Jones is....we already know your story ad nauseum. Jones is the greatest firm in the land, blah blah blah blah.You call yourself a financial advisor, gross 240K and net 95K. If you had the moxie to go indy you net 150K. 55K a year for 15 years at 5% you have lost 1.225M.Go home and tell the wife the truth about your firm. Someday you will get it. Probably way too late to save you, but at least there is hope for others who choose to control their own destiny. I ain't got a green line at LPL, just a friggin bottom line. After all that's the only thing that matters.

AbovedaLine's picture
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Spaceman," I think you are absolutely wrong with your comment about the GPs being out of answers.  If you'll listen, they're giving us the answers.  Advisory Solutions, FAST, MAP, new vendors on the annuity and insurance side of things, new relationships with places like Fidelity on the mutual fund front."  First you forgot about include the "Five Year Plan"  and the "British Experiment" in your list of answers that the GP's have provided Edward Jones FAs, how could your forget two very helpful "answers?" All these "answers" and still daily production is at $650 per day, how can that be?  As for your LP, if I decide to go independent I can guarantee that your LP won't be happy.  From my perspective, if Edward Jones had figured out a way to cut down on its vet defections in a material way over that past 10 years we would not be having this discussion.  But they failed to meet the needs of vets and their defection has hurt the firm.  The GPs need to address defection in a serious way instead of  "redrawing lines".  If it wasn't so sad it would be funny.  Good luck with your LP, I know it could use some real help as does mine!   

xej1984's picture
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spaceman,How many decades did your SPURN nei HATE Fidelity?  How much investment was lost to that "smart choice"?UK never made a profit in HOW MANY YEARS???   Yet keep plowing money into Canada which hasn't made a profit in 15 YEARS (check the link for the 10-K) ????http://www.sec.gov/Archives/edgar/data/815917/000106880010000036/0001068800-10-000036-index.htmcheck out Section 11 and you'll appreciate the main reason for increased production levels.http://www.sec.gov/Archives/edgar/data/815917/000106880010000036/jones10k.htm#item11 

LockEDJ's picture
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B24 wrote:....  IMHO, it's not fair to the firm or to the other advisors in the area that could be prospecting in your area if you are going to just give up at $20mm.  I'm not quite sure I understand the premise here ... you mean to say that if an Edward Jones FA is producing $260000 a year, it makes a difference how he's producing it? The guy has 200 accounts. Each one has $100K, in an AdSol producing 1.35% ... and he's a bad boy??? The FA doesn't have any obligation to the rest of the firm, so long as he is running an ethical profitable business.What said slothsome FA will sooner or later find out, is that Jones is going to park another enterprising young man (and another, and another) right on his doorstep to eat his proverbial lunch ... because the company will see that sloth boy doesn't have an adequate market share.

BigCheese's picture
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one of many fallacies that the ignorant FA's choose to look the other way.  You don't see MikeeDee's or Starbucks expanding on every corner anymore? Now its about profitablitliy, Jones can't afford to think differently.I am suprised Weddle hasn't shut down Canada. That seems fairly obvious to anyone who can understand a balance sheet. Isn't he an accountant? If you haven't made money EVER even in the good economic years, why would that possibly change with all the challenges we face today?Seems to me the only reason to raise minimums in the States isn't because of complaceny as much as trying to continue the growth mode. Something has to give and it looks like its going to fall on the US advisor to increase production or leave Jones (one way or another).

Spaceman Spiff's picture
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foot - again?  Really?  Don't you ever get tired of trying to convince me that I'm doing the wrong thing by staying at EDJ?  And you have the nerve to tell us that we've heard my story ad nauseum?  Isn't that the pot calling the kettle black?  Don't  you have anything constructive to add to this conversation?  above - The Five Year Plan?  What does that have to do with your original statement, or my rebuttal, about being able to hit minimum standards right now?  I agree with B24 that if your not hitting those numbers right now and you're out more than 4 or 5 years it's because you're not working very hard.  It has very little to do with what planning the firm as a whole does.  And the UK has/had even less to do with it.   That number is about an FAs ability to produce.  Pure and simple.  FAs have been doing it for years without fancy software or platforms.  Through all kinds of business cycles.  Some can.  Some can't.  If you can't, perhaps you shouldn't even try. What "needs" did EDJ fail to meet for the veterans?  Did they fail to provide adequate stocks, bonds, and mutual funds for them to offer their clients?  Did they fail to offer them adequate planning tools to utilize with those clients?  Did they fail to offer them competitive wages?  If you could give me some examples of these "needs" I'd be more than happy to discuss them.   exej & foot - just an update for you - Weddle has given Canada a profitability deadline.  I don't remember what it is and I don't care enough to go look it up.  But, management agrees with you that if it's not profitable, it needs to go.  exej - I'd bet we lost a lot less to Fidelity than they did to us.  I don't remember ever losing a client to Fidelity, but I sure remember taking a bunch of them. If I recall correctly, the only reason we didn't have a relationship with Fidelity all along is because they went no load many years ago.  Prior to that they were one of our preferred partners.  Of course that's not what they were called back then, but the concept is the same.  So in my way of thinking we didn't spurn them, they spurned us.  Now, I still don't like the way Fidelity runs it's business.  I think it's dangerous for the average person to have control of their own financial affairs.  Giving hundreds of thousands of people immediate access to the markets without an intermediary like you and I is one of the reasons our markets are so crazy these days.  But that opinion isn't just Fidelity specific.  The same can be said for Vanguard, Scottrade,  TDAmeritrade, and Schwab. 

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It's a little late for a deadline don't you think for Canada. Are they still hiring there? Seems like a very stupid business decision to continue to pour your profitable dollars down the drain. But at least they have you guys in the States to pay for it. 

navet's picture
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I just read Jones brutal facts, and while it's remarkable that they have the guts to openly discuss their problems, I have little confidence that they can solve them. Jones was built as a small rural brokerage. That is their culture and mindset. Their marketing plan is still door-to-door, perfect for small town mid-America but terrible for metropolitan areas(and unsafe for women). The fact that Jones is completely unable to work in a different culture(England, Canada) is indicative of their underlying problems. We don't adequately compete in fee based business(AD SOL is it???), and a new FA can't make a living selling them. The general partners are still telling Ted Jones stories when it is obvious that a new business plan is critical. And if and when(doubtful) Jones ever does gain significant market share, it will be bought out by the competition and taken either public or private. I just don't find the Jones model either sustainable or impressive.

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B24
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Navet,I'm not sure of your background with Jones, but I can give you some perspective:1. Jones is LIGHTYEARS from where it was just a few years ago.  Weddle has been making rapid-fire changes for the better, and part of that involves new blood.  However, you can't just fire Regional Leaders and veterans, so a lot of that old-school culture is going to persist for some time.2. Yes, Jones' culture is hard to shift.  The high-cost business model is what makes it very expensive to work in another country.  I don't think you can build it from scratch.  But I wouldn't sue UK and Canada as benchmarks for anything.3. The number of positive changes they have made over the past 5 years is remarkable.  And they continue to roll out new initiatives all the time.  4. Advisory Solutions is just the first iteration of their fee-based platform.  There is MUCH more to come, including a UMA account (unified account that includes multiple asset types - stocks, bonds, funds, etc.), added models, and additional flexibility.  But as is the case with Jones, they tend to lag the market in terms of new services and features.  They need to take it one step at a time.Honestly, I think their two biggest stumbling blocks are their recruiting/development/training/new FA process, and the one-man office structure.  Both of these are huge drains on resources (financial and manpower), and impediments to financial growth for the firm.  If they could lick these two, that would help them immensely.  The other stuff (products, advisory programs, technology, etc.) are all simple fixes.  The solutions are out there for them to implement.  But those first two require a complete change of mindset.I also found it interesting how much they addressed the issue of veteran FA income being too reliant on the results of the firm and the market.  IMHO, they need to reward their bigger producers better, to the detriment of the lower producers.  If you produce $1mm, your net margin could go from 55-60% in good years to 38-40% in bad years (like 2008/2009), even if your production and branch profit stayed the same.  Not much incentive there to keep working for the "man". 

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I don't think they should change their model(one man office) because that is who they are... Just like Walmart is the low price place(not comparing the two just using an example)... Walmart sells what their customers want, they aren't trying to compete with Whole Foods in the "new organic" wave , but will offer enough new products to retain clients. They completely destroy mom and pop grocery markets and most regionals, but they stick to their model and it works.Jones should do the same..Doorknocking works, with the DNC list and everyone and their mother joining networking and leads groups and call SBA owners, a huge market is left open.. Are they all millionaires? No, but a growing number of people have rather large 401k rollovers and doorknocking is a guaranteed way to meet that person.I enjoy ragging  on Jones as much as the next guy(as a former EDJer) but their plan isn't any better or worse than any of the wirehouses(ML owned by bank, MS bailed out by chinese, SB bailed out by gov't then by MS, Wachovia bailed out by Wells, who then was bailed by gov't, LPL owned by private equity)... Jones didn't get bailed out, didn't finance their growth with the money of others(hoping for a sweet IPO) and yet we crap on them for their business model..McDonalds sell hamburgers and fries..... Some idiot made a movie about what would happen if you ate there 3 times a day for 30 days.(He should be shot for having such a stupid idea, but he got his 15 minutes)... Media said McD's was bad, destroying kids life's etc.... Guess what they still sell hamburgers and fries and still supersize items(just not as big, however they still charge the same price)... Sure they offer salads, yogurts and some other stuff now, but they sell hamburgers...EDJ sells MFs, big name stocks and bonds.... sure they offer advisory, VAs, life insurance... But they sell MFs, big name stocks and bonds....Will it hurt a client, probably not, are there better investments(aren't there always regardless of the products), but they still keep going... Are their account smaller than wirehouse? Of Course... So to combat that they have more households. It isn't rocket science... Either you have bigger accounts with less of them or smaller account and more of them..Full Disclosure: Not at EDJ anymore (did a 3 year stint).. Now indy..

navet's picture
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Joined: 2010-02-25

Great comments Squash. I understand what you are saying, particularly with regards to McDonalds and Walmart. But I have seen both McD's and Wallyworld change significantly over the years. McD adding latte, breakfast, kids play areas, walmart adding grocery and putting in med clinics. I don't see much in the way of inovation with Jones. It added Adv Sol, but years after other wirehouses had the product. It's still a 70's based rural door to door stock and bond and mf house. I think it will continue to survive, making partners a nice income, yet stay under the radar of the big buyout firms. I don't see any chance of market domination. Now, survival is fine, but it's not something to be very proud of. And if growing the number of FA's to 12000 is required to meet it's long term GP + LP commitments, I see big trouble ahead. Jones doesn't have the management expertise to handle a large number of FA's. It doesn't have the capability to train them(and please don't try to say that the current training department full of non-licensed inexperienced wannabe's can do the job). I believe that someone is going to come up with a better mousetrap for new FA success, but I don't see any way for that to happen at Jones. And my question to newer FA's is, "is it in your best interest to stick around for an LP that may be unsustainable"?

squash2's picture
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Survival is better than what happened to the banks and wires.... none of them survived... Survival works... The whole idea of the industry is survival..All firms suck at training...There isn't a better mousetrap for FA success....ever.Sure the LP is sustainable...the more who leave, the more goes back into the pot... will the lp offering be as big as it was? No... Will it return what is has? Probably not, but still will put up better returns then the S&P 500... 

navet's picture
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Great points again Squash. I don't know if I follow your logic about LP sustainability. If LP gets stronger when new FA's quit, and LP's get stronger when FA's stay, then the brutal facts don't make much sense. The company is concerned with making the FA more profitable. As the business model gets more crowded, then a diminishing return may eventually prevail. And as the business model changes from a high churning transaction base, to a fee base, is EJ going to be capable of making an efficient change? There is already a problem of FA's leaving for greener pastures, such as yourself. I think the key to success in this(and every other business) in the future is the ability to manage change. I don't feel confident that Jones has that ability. I'm trying to face this issue rationally and objectively. Don't mean to bitch. But I need to decide in the next year wether to stay or not.

squash2's picture
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navet wrote:Great points again Squash. I don't know if I follow your logic about LP sustainability. If LP gets stronger when new FA's quit, and LP's get stronger when FA's stay, then the brutal facts don't make much sense. The company is concerned with making the FA more profitable. As the business model gets more crowded, then a diminishing return may eventually prevail. And as the business model changes from a high churning transaction base, to a fee base, is EJ going to be capable of making an efficient change? There is already a problem of FA's leaving for greener pastures, such as yourself. I think the key to success in this(and every other business) in the future is the ability to manage change. I don't feel confident that Jones has that ability. I'm trying to face this issue rationally and objectively. Don't mean to bitch. But I need to decide in the next year wether to stay or not.The more people who leave(assuming they have LP, since they have to give it back when they leave) means the returns will go that much further because the LP pool will shrink.. Also returns will do better because the offerings will be smaller(instead of 25k LP, it will be 10-15K).  I think they are set-up perfectly for switch to fee.. They push mutual funds already.. CFA managed....creating a recurring revenue stream on their biggest asset...I was a pud producer.. did like $105k i think.... DIdn't like the idea of commission only... wanted to manage accounts, so i left... still not a huge producer(<500k)  but I take home 90% so my income is decent..

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B24
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Joined: 2008-07-08

Squash,I literally just fell out my chair, and as my head hit the frozen icicles of hell, I swear I saw pigs fly by. Next thing you know, you'll be telling me we have socialized medicine.

I am legend's picture
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Joined: 2010-03-04

icebear48 wrote: Independent BDs like ours will pick up a good deal of brokers in the coming few years.  The Jones business model, and many others, were designed for the markets and enviornmnet of the 80s and 90s where ever increasing numbers of clients fed a dramatically advancing (and reasonably stable) equity market accompanied by ever lower intrest rates.  The present and forseeable enviornment will witness further (we believe dramatic) shrinkage in both client base and numbers of industry professionals.  Naturally, this will mean lower incomes for those remainaing in the business, and for those who wish to maintain their lifestyle, independence is a great solution for those with the ability to run their own business.If the number of industry professionals decrease how are incomes going to dramatically decrease?  More likely would be a scenario where you will see more clients, but lower margins and commissions resulting in having to manage more clients and assets to make the same amount of money.

I am legend's picture
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B24 wrote:Navet,I'm not sure of your background with Jones, but I can give you some perspective:1. Jones is LIGHTYEARS from where it was just a few years ago.  Weddle has been making rapid-fire changes for the better, and part of that involves new blood.  However, you can't just fire Regional Leaders and veterans, so a lot of that old-school culture is going to persist for some time.2. Yes, Jones' culture is hard to shift.  The high-cost business model is what makes it very expensive to work in another country.  I don't think you can build it from scratch.  But I wouldn't sue UK and Canada as benchmarks for anything.3. The number of positive changes they have made over the past 5 years is remarkable.  And they continue to roll out new initiatives all the time.  4. Advisory Solutions is just the first iteration of their fee-based platform.  There is MUCH more to come, including a UMA account (unified account that includes multiple asset types - stocks, bonds, funds, etc.), added models, and additional flexibility.  But as is the case with Jones, they tend to lag the market in terms of new services and features.  They need to take it one step at a time.Honestly, I think their two biggest stumbling blocks are their recruiting/development/training/new FA process, and the one-man office structure.  Both of these are huge drains on resources (financial and manpower), and impediments to financial growth for the firm.  If they could lick these two, that would help them immensely.  The other stuff (products, advisory programs, technology, etc.) are all simple fixes.  The solutions are out there for them to implement.  But those first two require a complete change of mindset.I also found it interesting how much they addressed the issue of veteran FA income being too reliant on the results of the firm and the market.  IMHO, they need to reward their bigger producers better, to the detriment of the lower producers.  If you produce $1mm, your net margin could go from 55-60% in good years to 38-40% in bad years (like 2008/2009), even if your production and branch profit stayed the same.  Not much incentive there to keep working for the "man".  Exactly!  Can you imagine the savings and the lower cost of recruiting if they put 3 FA's per office to share one assistant? 

icebear48's picture
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Joined: 2008-08-25

 Legend ,We believe the domestic client base, and the "profitable investment opportunity base" are also shrinking dramatically.  In our opinion this will dramatically reduce incomes of so called traditional brokers.  Personally I entered the business in 1973 and witnessed a flat equity market until August of 1982.  At that time a big day was thirty million shares ( like Bunker Hunt day ).  In those days few domestic households had a large Wall Street intrest, since then CNBC and the like have made a daily football game of the equity market.  Those days are gone, consider the global indebtness and take a look at recent bond market activity.  Please call me if you wish to discuss this.

xej1984's picture
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Joined: 2004-11-30

doesn't a location with 3 or more brokers have to be registered as a "branch" with one isn't it a "sub-branch"?

squash2's picture
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Joined: 2010-03-09

B24 wrote:Squash,I literally just fell out my chair, and as my head hit the frozen icicles of hell, I swear I saw pigs fly by. Next thing you know, you'll be telling me we have socialized medicine.Is this because i am defending jones? or you disagree with what I am saying...

squash2's picture
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icebear48 wrote: Legend ,We believe the domestic client base, and the "profitable investment opportunity base" are also shrinking dramatically.  In our opinion this will dramatically reduce incomes of so called traditional brokers.  Personally I entered the business in 1973 and witnessed a flat equity market until August of 1982.  At that time a big day was thirty million shares ( like Bunker Hunt day ).  In those days few domestic households had a large Wall Street intrest, since then CNBC and the like have made a daily football game of the equity market.  Those days are gone, consider the global indebtness and take a look at recent bond market activity.  Please call me if you wish to discuss this.The number of investors are increasing due specifically to 401ks... Back in your "hey day" it was all pensions and untouchable money, 40 yrs with same company... Now everything is portable, 5-8yrs til a job change... The amount of people needing advice and having a $250K portfolio is increasing...Welcome to 2010......it is nice to see you are still with us..

icebear48's picture
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Joined: 2008-08-25

 Time will tell (of course), but we bvelieve that the number of 401K participants (and sponsors) will continue to shrink dramatically.  After all, when you feel you may not have a job?  When you are struggleing to hang onto your life style and mortguage, do you contribute to your 401K?  Do employers who are going to pay billions in additional health care costs, and looking at declining sales and rising borrowing costs continue 401K matches.  We can easily make a case for the theory that much economic growth in say the first six yeas of the new century were fuled by home mortguage loans and leverage!   And, that's just the begenning, you need to learn to think outside the box.  You are right, times have changed.  What is going on right now is historically unprecidented, those who do not adapt will propably not survive in this industry (certainly not with the lifestyles they have enjoed in the past few years)

B24's picture
B24
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squash2 wrote:B24 wrote:Squash,I literally just fell out my chair, and as my head hit the frozen icicles of hell, I swear I saw pigs fly by. Next thing you know, you'll be telling me we have socialized medicine.Is this because i am defending jones? or you disagree with what I am saying...There's an open office in the next town over from me.  I think you have the "Jones stuff". 

squash2's picture
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Joined: 2010-03-09

icebear48 wrote: Time will tell (of course), but we bvelieve that the number of 401K participants (and sponsors) will continue to shrink dramatically.  After all, when you feel you may not have a job?  When you are struggleing to hang onto your life style and mortguage, do you contribute to your 401K?  Do employers who are going to pay billions in additional health care costs, and looking at declining sales and rising borrowing costs continue 401K matches.  We can easily make a case for the theory that much economic growth in say the first six yeas of the new century were fuled by home mortguage loans and leverage!   And, that's just the begenning, you need to learn to think outside the box.  You are right, times have changed.  What is going on right now is historically unprecidented, those who do not adapt will propably not survive in this industry (certainly not with the lifestyles they have enjoed in the past few years)Even with all the bad news... 401ks are still portable...so it creates a market place for people who never would have invested otherwise... I agree that the industry is changing....I think there is an over abundance of advisors 60+ that are going to be retiring in the next few years and create a giant gap(since firms can't figure out how to get new FA's to last)... I also think when compensation gets cut down, people in the industry are going to decide that this job isn't worth it..

squash2's picture
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Joined: 2010-03-09

B24 wrote:squash2 wrote:B24 wrote:Squash,I literally just fell out my chair, and as my head hit the frozen icicles of hell, I swear I saw pigs fly by. Next thing you know, you'll be telling me we have socialized medicine.Is this because i am defending jones? or you disagree with what I am saying...There's an open office in the next town over from me.  I think you have the "Jones stuff".  I just don't like when they get picked on for no reason... when other firms don't even exist anymore...just a different model that is hard to understand...

Spaceman Spiff's picture
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Joined: 2006-08-08

navet wrote:Great comments Squash. I understand what you are saying, particularly with regards to McDonalds and Walmart. But I have seen both McD's and Wallyworld change significantly over the years. McD adding latte, breakfast, kids play areas, walmart adding grocery and putting in med clinics. I don't see much in the way of inovation with Jones. It added Adv Sol, but years after other wirehouses had the product. It's still a 70's based rural door to door stock and bond and mf house. I think it will continue to survive, making partners a nice income, yet stay under the radar of the big buyout firms. I don't see any chance of market domination. Now, survival is fine, but it's not something to be very proud of. And if growing the number of FA's to 12000 is required to meet it's long term GP + LP commitments, I see big trouble ahead. Jones doesn't have the management expertise to handle a large number of FA's. It doesn't have the capability to train them(and please don't try to say that the current training department full of non-licensed inexperienced wannabe's can do the job). I believe that someone is going to come up with a better mousetrap for new FA success, but I don't see any way for that to happen at Jones. And my question to newer FA's is, "is it in your best interest to stick around for an LP that may be unsustainable"?You don't really know much about EDJ do you?  If you did, you'd know that those trainers probably have more licenses than you do.  ALL of them are licensed.  Many of them have some state specific licenses that you may or may not have to have.  They spend countless hours in training themselves to get you prepared to run your EDJ office.  No, most of them don't have experience in a Jones office.  Some of them do have experience in the trenches.  Just off the top of my head I know of 5 of them that were EDJ FAs at one time or who worked for other brokerage firms before they decided they wanted to go into training.  Just because you've never run an office, doesn't mean you don't have the ability to teach someone else how to do it.  Just out of curiosity, what makes you think that Jones doesn't have the management experience to handle a large number of FAs?  Spend a little time looking at the partner's bios on Joneslink and you'll find that many of the people in key areas in the firm have MBAs or other management degrees.  I'm not sure they're any less qualified to run big firms than the folks who attempt it as places like Morgan or BAC/MER.   

icebear48's picture
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Joined: 2008-08-25

 Well thought out Spiff.  However, who said that management at BAC, WFC etc. was qualified.  Most all large frim management is, in our view, incompetent (and/or greedy) in one respect or another.  This incompetence is, we believe, a hugh factor in our present delema.  As to MBA's, well, in my personal experience this more often than not creates an ego problem, which is not necessarily a good management tool.

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