Questions for EJ guys

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buyandhold's picture
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Joined: 2008-09-23

Looking at our region commission screen this morning -- one word, very discouraging. OK, that's two words. I see lots of guys under the red line, even those out 5 to 10 years. I see guys I respect who are struggling. Do you see any catalyst that will get this turned around? Because I don't. Economy is getting worse and investor sentiment is awful. I think a lot of guys are surviving by taking existing clients and selling them annuities. How long before HQ starts whacking guys, or struggling FAs just walk. I see the classes of 2004 to 2007 as being very vulnerable. And you get the feeling the vets are unhappy about so many new guys still being thrown out into the field.I don't talk to many people, but I wonder if the GPs will do something drastic if we stay in the negative bonus bracket. Or what if we start losing money?

FABroker1999's picture
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Joined: 2009-03-08

My two cents... you will hear unofficial talk of people being "coached out" over the next couple of months but official word will be "were supporting you" until September or so when this new Goals Program starts cutting people.
 
The one thing they don't want is a big exodus all at one time. Nobody can afford that. ARs RLs and everyone else is hoping the new Transfer Broker compensation program will help soften the blow and keep experienced people backfilling the offices as FAs wash out.
 
The other challenge is keeping the volunteer program going. I know many who have "Battened down the hatches" and focused 100% of their time on their personal health at the cost of some newbe coming in who may or may not last.
 

buyandhold's picture
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Joined: 2008-09-23

THanks, FA. Do you think they'll consolidate offices -- close the office when the guy with 10 million leaves and give those assets to the guy with 15 million so instead of having two vulnerable offices you have one FA with a good chance of succeeding? If you put a new guy into the 10 million office, you're really not getting anywhere, imo.

Soothsayer's picture
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In short, these market conditions are exposing the shortcomings of the Jones business model.  I believe there will be significant changes to that model by this time next year.  It's basically a pyramid scheme that has been outed. 

buyandhold's picture
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Soothsayer wrote:In short, these market conditions are exposing the shortcomings of the Jones business model.  I believe there will be significant changes to that model by this time next year.  It's basically a pyramid scheme that has been outed.  If that's the case, what happens then? If the GPs don't get paid, do they sell? Is there a market for EJ?

FABroker1999's picture
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I'm thinking there is a plan "B" to do just that. All depends on the cost of each office, the lease structure, etc., and the ability to leave it open based upon regulations. Without a licensed person in it, there is only a short period it can be unlocked with a BOA sitting there. In Florida, it must be closed immediately. Maybe some other states too that I am not familiar with.
 
I am betting if the market doesn't improve and the flow of recruits doesn't keep up with the attrition, forced by Jones or by personal situations, then there will be no alternative. I would think the "Plan B" would have to be initiated in 3rd TM 2009, or 1st TM 2010.
 
 

FABroker1999's picture
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"Pyramid Scheme"? "Needs to be outed"?
 
A business model, yes, pyramid scheme no. Is Enterprise Rental Car a pyramid scheme?

FABroker1999's picture
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I think a slow down of the proverbial "Twenty Mile March" will be the course of action. Maybe stopping to rest, take off the boots and dump the pebbles out, air out the socks, etc. is the likely course if  a "Plan B" is intitiated.
 
As stated earlier, only my two cents.

footsoldier's picture
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Joined: 2006-04-30

One thing is certain...if there is no bonus the GP's still make their nut.
 
If they start losing money and the GP's have to spend their own money then everything is up for grabs. Look for diversification trips to be scaled back or eliminated. That will be the first sign of change. If they can't grow, then health will be the new directive.
 
Consolidation of offices would seem obvious...no new broker needs a full time assistant. The wirehouse share 4 or 5 reps for one admin...not insinuating that Jones will consolidate that much but I wouldn't be suprised if they allow 2-3 brokers per office at some point.

Hus Bin Pharteen's picture
Joined: 2009-04-25

iceco1d wrote:
Why do some of you call EDJ a pyramid scheme? 
Either I don't truly understand the EDJ model, or you don't know what a pyramid scheme is...and I think it's the latter.
 
 

Ice, tell me why you think it's the latter (you must've worked there, right?)?

buyandhold's picture
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Hus Bin Pharteen wrote:iceco1d wrote:
Why do some of you call EDJ a pyramid scheme? 
Either I don't truly understand the EDJ model, or you don't know what a pyramid scheme is...and I think it's the latter.
 
 

Ice, tell me why you think it's the latter (you must've worked there, right?)?He means that the previous poster doesn't know what a pyramid scheme is.

Borker Boy's picture
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A two or three person office at Jones makes total sense to me. I think one of the reasons my region of 60+ brokers has only one person producing more than $700K is the high degree of detachment and isolationism. There's almost zero competition amongst us and there's a very low sense of comraderie.
 
I believe the firm would greatly benefit from merging two or three offices and getting rid of the unnecessary BOAs. (Can you imagine what we'd save in salaries and benefits?)
 
I'm a fairly busy Seg 3 office ($25mm), and my BOA has a TON of down time. She could easily support two additional FAs.

Borker Boy's picture
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Holy cow. I just looked at my region's performance chart. What a disaster.

Mishigun's picture
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Joined: 2009-04-16

Interesting discussion. How about "pyramid", but not scheme. Real products and services are delivered.
 
As a bystander, my impression is that the structure in intended to create brand loyalty. When a new advisor leaves, the salaried assistant often has a stronger relationship with the clients ... over multiple trainee blowouts, where a book was "inherited".
 
Thus, aggregating offices would be counterproductive to the pyramid structure, there would be stronger loyalty to individual advisors. By the time an individual Jones rep has become a "brand" to the clients he inherited and found himself, the economics of staying with the firm are favorable. Plus, he goes for the Jones culture of recognition on trips with other Jones reps, junior partnership, and so on. He is a self-selected long term "fit".
 
This will be interesting to watch. Costs must be killing the bottom line in this market, but the firm and partners must have very, very deep pockets. My guess is you won't see much outward change. Big picture, you'd have to say Jones is doing more good than harm, unlike, perhaps, the likes of The Mutual Fund Store.

voltmoie's picture
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Joined: 2008-11-05

EDJ haters are funny ... The firm has made money every month this year.  Until you wrap your minds around the fact we have no shareholders you'll not understand the culture.  It was tough for me but not being forced to report quarterly earnings gives EDJ a heck of an advantage to build for the long term.  Here is my best guess on what will happen in the short term: New advisors will be forced or STRONGLY encouraged to share an office for a few extra months.  Older advisors that were living on trails and walk ins will either start picking up the phone or be moved out.  It's a VERY healthy time for Jones in my opinion.

rankstocks's picture
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I love times like these.  There are weak brokers no matter what firm you look at.  We have 7 brokers averaging over 45k/month in my region, with two over 100k.  As a new broker, If you can't open new accounts with muni's and Build America Bonds down the road, it doesn't matter which firm you're with.  I find it very encouraging when other broker's numbers are down, the industry is consolidating, and clients are very fearful and looking for advice.  The more assets you retain and bring in now, the better you will look when this whole situation is behind us.  If this was an easy profession, we'd all be making 30k.

Moraen's picture
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I've modeled my firm off of the 3-4 advisor per office.  I for one pray that Jones sticks to the one advisor, one BOA office. 
If Jones went to that type of arrangement, made one of them an OSJ, they would likely be unstoppable.
 
And I would say Jones is more ponzi than pyramid.
 
Anyway, it's a great time to be independent. 

buyandhold's picture
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Joined: 2008-09-23

The Jones profit model was explained to me like this: Let's say a Seg. 5 broker grosses 500k a year. That's $5 million over 10 years, with about half of that going to the firm. A Seg 5 is very profitable to the firm. So the math becomes: How many failed brokers can we run out there to get a Seg. 5 broker? ... And remember, every failed broker brings in some assets and makes it easier for the next guy.The problem that I see in this particular time is that 1. We have more failing brokers than we normally do, and 2. This puts enormous strain on the Seg. 5s, who will look elsewhere for options if we don't get into the profitability bonus soon.Jones FAs like their firm, but they will do what's in their best interests just like anybody else.

footsoldier's picture
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Like I said before, the GP's always win.
 
Let's not forget to add the companies that Jones Financial owns that caters to....EDJ retail. It's not a scheme at all. It's well thought out, and incredibly lucrative to the owners in a vairety of ways. Check out the Jones 10K, it gives a glimpse of the other opportunities.
 
Ponder this...Do they really need to be that profitable? Would consolidation hurt their overall revenue (not just EDJ retail)?
 
No wonder RL's out in the field stay forever. It's great to be a partner.

Soothsayer's picture
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A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula. The essential idea is that the mark, Mr. X, makes only one payment. To start earning, Mr. X has to recruit others like him who will also make one payment each. Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential benefits as the "business" expands.  --from Wikipedia
 
So, not a pyramid scheme in a pure sense like say, Primerica.  But, not too far off either.  "Recruiting" like minded people.  "Bonus Brackets" and "LP Returns" and other phony mumbo-jumbo to get you a bigger cut of the action as your tenure, success, and loyalty to the firm grow over time.  Then, there's the entire indoctrination of the spouse and family.  The continued brainwashing that goes on that only EDJ is right and just.  Others firms are somehow morally corrupt, and Jones FAs have to go out and save the bluehairs from the evil competition.  All the while, those at the top (GPs) are raking it in.  The relatively few tenured brokers are getting profitability bonuses and LP payments which are essentially other people's money getting funneled to the top.  I'm convinced the whole thing was contrived by a marvelously intelligent evil genius. 

Soothsayer's picture
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To go back to the original intent of this thread, the question is, "How many trimesters can EDJ slog through 0% bonus brackets with a slew of guys under the red line?"  Or, maybe put another way, "How long will a $350K producer in this environment settle for no bonus when UBS is waving a $500K check in front of his face, or he starts questioning what EDJ does with that $210K that he ships back to St. Louis every year?"  (Besides buying another car for BrylCreem's collection.) 
 
Going back to the pyramid scheme, I remember getting the wire from Doug Hill where he would write, "I just got off of the phone with Steve Novik, and here's where he says we are after the 3rd month.  If the Greatest Sales Force in the World will just push a little harder, we could get to X."  It was almost like he was Howie Mandell and Novik was the banker calling with the latest up to the minute numbers.  I remember the 3rd Trimester of 2002 when I had more than $100K of net profit on the board, but got $0 bonus because of the 0% bonus bracket.  Combine the bonus bracket with the ever-moving-target of LP return, and you have absolutely no control whatsoever over two fairly significant parts of your total compensation.  And you see no resemblance to a pyramid scheme?  Really?  Okay, then go recruit some other like minded people who will compete with you for the same client because EDJ has done extensive research and has found that your community is underserved in terms of number of financial advisors. 
 
I've got this really neat brigde for sale....... 

Soothsayer's picture
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More funneling of money to the top.  The individual in an office can run a highly successful and profitable operation, and yet receive back exactly none of the net profit because of some mysterious bonus bracket financial wizardry.  With the LP return, their is that and then there is "GP" return.  Check out the GP returns that conincide with 0% bonus bracket trimesters.  It's a modified pyramid scheme.  Now, stop posting on this forum and go recruit some more downliners.  It will add to your LP offering the next time you have one (if ever).  Are you starting to see it now?

footsoldier's picture
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Sooth-
 
There is significantly MORE money that goes to the top. Jones Financial Companies is a holding company that has several entities including Jones brokerage. Jones has in the past owned an additonal brokerage firm, Conestoga securities. When I first found out about it, Bachman was the head of it and key Jones GP's were officers. When Bachman retired, Hill and then Weddle became managing partners of Conestoga. I haven't checked in a long time, but I will bet that the 10K still reflects that and a whole host of insurance agencies, real estate companies, and others.
Money flows from all sources, and its apparent when one takes the time to read that Sooth is much closer to the truth. If you peel back the layers, it is really intriguing how they make their money. Imagine, just for a second, that a spouse creates a company to provide all the pictures for 10,000 offices. Extrapolate that to all facets of an office, and you may have stumbled upon the reason for the single person office. The more offices, the more pictures etc. It is brilliant and calculated and when you observe it from a holding company perspective, the FA becomes a much less important piece...because it can and is replaceable.
 
 

Borker Boy's picture
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footsoldier wrote:Sooth-
 
There is significantly MORE money that goes to the top. Jones Financial Companies is a holding company that has several entities including Jones brokerage. Jones has in the past owned an additonal brokerage firm, Conestoga securities. When I first found out about it, Bachman was the head of it and key Jones GP's were officers. When Bachman retired, Hill and then Weddle became managing partners of Conestoga. I haven't checked in a long time, but I will bet that the 10K still reflects that and a whole host of insurance agencies, real estate companies, and others.
Money flows from all sources, and its apparent when one takes the time to read that Sooth is much closer to the truth. If you peel back the layers, it is really intriguing how they make their money. Imagine, just for a second, that a spouse creates a company to provide all the pictures for 10,000 offices. Extrapolate that to all facets of an office, and you may have stumbled upon the reason for the single person office. The more offices, the more pictures etc. It is brilliant and calculated and when you observe it from a holding company perspective, the FA becomes a much less important piece...because it can and is replaceable.
 
 
 
This is getting eerie.

IndyEDJ's picture
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buyandhold wrote:I don't talk to many people, but I wonder if the GPs will do something drastic if we stay in the negative bonus bracket. Or what if we start losing money?
 
It is basic management 101 that if a broker can pay his bills (location gain) and work through it, St Louis will keep them.  If they fall below that, that is when St Louis is contributing to the party.  Every dollar above Location gain contributes to incremental profitablity and helps the overall firm.  If they close up shop, they have a bunch of empty real estate to worry about and that is not fun. 
 
IndyEDJ 

jkl1v1n6's picture
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For all of those still at Jones, possibly struggling, wondering if they will consolidate offices in the event of massive advisor failures/departures.  Keep dreaming.  To the advisor in the field in makes sense that if someone leaves you would divide up his/her assets and dole them out to other young, struggling advisor to put them over the top and help the health of the sales force.  They've been through this before and they'll go through it again.  They will continue to throw new people in vacant offices because eventually someone sticks and they take that office to profitability and their 10,000 strong sales force hits that goal of 12,500 and then it hits 14,000 and etc...  They are a grow at all costs company because it benefits them in the long run.  Eventually this market and economy will recover and they'll go back into a bonus bracket and this job will be lucrative and cool again and new advisors will continue to come.   

Incredible Hulk's picture
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Soothsayer wrote: Check out the GP returns that conincide with 0% bonus bracket trimesters. 

GP return is tracking near 14%, so I'm told. So a $1MM INVESTMENT would be paying a return of nearly $140M at the current pace for the entire year.

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footsoldier wrote:Sooth-
 
There is significantly MORE money that goes to the top. Jones Financial Companies is a holding company that has several entities including Jones brokerage. Jones has in the past owned an additonal brokerage firm, Conestoga securities. When I first found out about it, Bachman was the head of it and key Jones GP's were officers. When Bachman retired, Hill and then Weddle became managing partners of Conestoga. I haven't checked in a long time, but I will bet that the 10K still reflects that and a whole host of insurance agencies, real estate companies, and others.
Money flows from all sources, and its apparent when one takes the time to read that Sooth is much closer to the truth. If you peel back the layers, it is really intriguing how they make their money. Imagine, just for a second, that a spouse creates a company to provide all the pictures for 10,000 offices. Extrapolate that to all facets of an office, and you may have stumbled upon the reason for the single person office. The more offices, the more pictures etc. It is brilliant and calculated and when you observe it from a holding company perspective, the FA becomes a much less important piece...because it can and is replaceable.
 
 
YES!!  That's it!  They have adopted the one-man office model so that John Bachman's wife can sell more framed prints!
 
Are you freakin' for real??!

Squash1's picture
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I find it funny rails against anything that isn't stocks,bonds and select mutual funds. However their "silent" companies are hedge funds, venture capital and other misc..

Spaceman Spiff's picture
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Sheila Timm (Dan Timm's wife) started the picture framing business a long time ago.  As far as I know, she is the only vendor that we use that does that.  Most of our stuff is done through the same corportations that a company like Enterprise would use.  That particular relationship with Sheila only benefits the Timm's.  It doesn't benefit anyone else.  Either Sheila or Dan was smart enough to see the writing on the wall and took advantage of it.
 
Sooth - marvelously intelligent evil genius?  Have you seen the old clips of Ted Jones?  Brilliant saleman - absolutely.  Evil genious - not hardly. 
 
How has tenure, success, and loyalty been turned into a bad thing?  I have clients that work for Boeing.  The longer they're employed, the more successful they are, the bigger the raises get, the bigger their pensions get, the bigger their loyalty grows.  You reach a certain level at BA - where your salaray package says your pay grid starts with an E - and you get all sorts of cool things happening.  I have one client who got a 1000 share bonus for doing his job well.  BA's carrot at the end of the stick is stock options and bonuses.  At Jones is LP and GP.  At BA, not everyone gets to the Director level with and E grade salary package.  Not everyone at Jones gets to have GP behind their name.  Those that do, at both companies, are rewarded for...dare I say it...their tenure, success, and loyalty. 
 
As for the bonus brackets and LP returns being "phony mumbo-jumbo" - that's retarded and you know it.  Any company that pays a bonus to it's employees has some sort of metric that states that if the company hits a certain level, then the bonuses will be paid.  They don't just pay the bonus whether there is the money there to do it or not.  The LP returns are based on a guarantee for a base amount and then based on whatever the firm brings in for the remainder.  It's not phony mumbo-jumbo like Novik just picks a number out of his rear end and says, hey, the LP did 16% this year.  Again, like with the bonuses, there are calculations based on the many variables involved to tell him exactly how much the LP returns are. 
 
I find it amazing that with all of the filings with FINRA and the SEC that have to be done that you guys still purport that EDJ is some sort of scheme.  Ponzi, pyramid, or otherwise.  Search for the EDGAR filing for the 10-K.  Read it, then come back to me and tell me where the big scheme is. 
 
As far as EDJ and how they're going to react to another possible trimester of no bonus...my guess is they're not.  They've already made some changes to the Div Trip - have to be meeting expectations to win.  That cut the winners down a bit.  If they ever get to 60-70% of the FAs winning, they might make it more difficult.  But, not now. 
 
They're not going to scale back on growth.  They are looking harder for transfer brokers and they've made it more attractive for them to come over.  They are focusing on new people coming in as GKN's or doing some sort of office sharing for a while.  They're not going to start combining offices.  Yes, it would save some money, but I'm going to suggest that they think the service level is better with one FA and one BOA.  These same conversations were being had in 2002 and 2003.  Not too long after that we were back in the bonus brackets and on our way to a 50% stretch.  I think the vets are sticking around because they know it's ugly everywhere right now.  A lot of them like Jones and they don't want to go indy.  Otherwise they would have already.  If I'm an area leader, I'm calling all of those vets and offering them a sweet LP deal the next time it comes out if I can convince them to stay. 
 
You guys keep throwing those theories out there.  When you come up with some facts, let me know.    
 
 

footsoldier's picture
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Spiff-
 
If you took the time to read the 10K, you will see that the GP's admit that they make money acting as an insurance agency, and a leasing corp,and a whole host of other companies. If there is only one profit center, why would this be necessary?
 
Time to wake up and smell the coffee.
 
 

Squash1's picture
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I don't think Jones is a ponzi,pyramid or anything else.. I just find it interesting... Would like to be involved up top and know how it all works(know the why already... money).
 
Kind of like the mob(or private law firms that are involved with other things(have a friend from college who gets paid a lot of money at a firm in TN and they do all sorts of stuff outside the context of a law firm).
 

ManOnTheCouch's picture
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Scaling back would be pretty easy for Jones, even with the real estate obligations.  My understanding is that almost all of the leases have a 3 months of rent liquidated damages clause for breaking the lease.

Ron 14's picture
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I thought that the FA was the only profit center ?

Spaceman Spiff's picture
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footsoldier wrote:Spiff-
 
If you took the time to read the 10K, you will see that the GP's admit that they make money acting as an insurance agency, and a leasing corp,and a whole host of other companies. If there is only one profit center, why would this be necessary?
 
Time to wake up and smell the coffee.
 
 
 
We also make money as being a market maker, trading for fund companies, etc.  I have read the 10-K.  Probably more than most thanks to guys like you. 
 
I don't see the GP's admitting anything in that report.  I see Jones Financial reporting that they act in an agency capacity and therefore receive commissions on that money.  I know that EDJ gets the money before I do when I sell insurance.  They've never tried to hide it.  They also get my commission dollars before I do on funds, annuities, etc. 
 
You don't make a distinction, which I think is very telling about the way you look at EDJ, between reporting and admitting.  Admitting implies you've been doing something wrong, or hiding some action.  Reporting says you're just telling what happened.  No malicious intent or hidden agenda. 
 
I'm not looking at this with rose colored (or green) glasses on.  I'm looking at this from a buisness that has been around for 70 years, who has 40,000 employees, billions in assets, and millions of clients.  Perhaps the phrase should be the FA is the MAIN profit center.  BTW, I haven't heard that phrase in a long time.  At least not from anyone at home office.  I for one am glad that we have more ways than one to make money. 
 
There isn't any coffee to smell.  In my family I am the one profit center.  My wife happens to do a small business on the side, and I'm thankful that it brings in a little money, but if I don't make money we don't pay the bills.  I think it's the same way with Jones.  If Jones FAs don't make money, the rest doesn't matter.  So, from a practical standpoint, there is only one profit center.  Everything else is on the side.
 
 

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You don't make a distinction, which I think is very telling about the way you look at EDJ, between reporting and admitting.  Admitting implies you've been doing something wrong, or hiding some action.  Reporting says you're just telling what happened.  No malicious intent or hidden agenda. 
 
Spiff-
 
You asked for a distinction. I am reporting exactly what is in the 10K...Here goes. Again...Spiff what does Conestoga Securities do?
 

Edward Jones owns 100% of the equity of EJ Mortgage L.L.C., a Missouri limited liability company.  EJ Mortgage L.L.C. owns 49.9% of Edward Jones Mortgage, a joint venture.  Edward Jones owns 100% of the outstanding common stock of Conestoga Securities, Inc., a Missouri corporation.  Conestoga owns 100% of the outstanding stock of CIP Management, Inc., which is the managing general partner of CIP Management, L.P.  CIP Management, L.P. is the

 

4

 

PART I
Item 1. Business, continued

managing general partner of Community Investment Partners II, L.P., L.L.L.P., Community Investment Partners III, L.P., L.L.L.P., Community Investment Partners IV, L.P., L.L.L.P. and Community Investment Partners V, L.P., L.L.L.P., business development companies.  Edward Jones holds all of the limited partnership equity in EDJ Ventures, Ltd., a Missouri limited partnership.  Conestoga Securities, Inc. is the general partner of EDJ Ventures, Ltd.  Edward Jones owns, as a limited partner, 49.5% of Passport Research Ltd., a Pennsylvania limited partnership, which acts as an investment advisor to a money market mutual fund.  Edward Jones owns 7% of the Customer Account Protection Company Holdings, Inc. (“CAPCO”), a captive insurance group.

Edward Jones is the sole member of Edward Jones Insurance Agency Holding, L.L.C., a Missouri limited liability company, California Agency Holding, L.L.C., a California limited liability company and Edward Jones Insurance Agency of New Mexico, L.L.C., a New Mexico limited liability company.  Edward Jones and Edward Jones Insurance Agency Holding, L.L.C. are members of Edward Jones Insurance Agency of Massachusetts, L.L.C., a Massachusetts limited liability company.  Edward Jones Insurance Agency Holding, L.L.C. and California Agency Holding, L.L.C. are members of Edward Jones Insurance Agency of California, L.L.C., a California limited liability company.  All of the insurance agencies engage in general insurance brokerage activities.
 
 

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First of all, anyone that knows anything about real estate, risk management, etc. knows that any privately business that holds a lot of real estate has numerous LLC's and partnerships to hold the various entities.  I used to be corporate controller for a real-estate based business that was FAR smaller than Jones.  And we had upwards of 150 LLC's set up.  Why?  Because everytime another busienss or piece of real estate was added, different partners were in the deal, different partners had multiple LLC's that they wanted in the deal.  There were old entities with old business structures that were outdated.  It is complicated.  And just because Jones doesn't announce to all 40,000 employees exactly how the whole operation works, doesn't mean there's some sort of cloak-and-dagger hocus-pocus going on.  It's normal business stuff.  And they give us the LINK to their 10Q/K's every quarter.  They're not trying to hide anything.  It's all there.
 
And as Spiffy said, yes, in the retail world, the FA IS the only profit center.  But that should not preclude the firm from being opportunistic in other aspects of the firm.  So if Jones decides to lease out some of their offices to another company because we aren't filling them yet, that should be, what, "not-for-profit"?  Do it for free, because, hey, the FA is our only profit center?  C'Mon Foot.  I am fairly certain you are smarter than you lead on to be.  I THINK you know business better than you make yourself sound like, but are just having fun trying to poke holes in Jones' business model.
 
And I SERIOUSLY hope you don't think the insurance "businesses" make money.  Please Foot, tell me you're kidding.  Think real hard about why they exist.  I'm sure you'll figure it out.  I'll give you a hint.....NONE OF US COULD SELL INSURANCE IF THESE INSURANCE COMPANIES DIDN'T EXIST, YOU KNUCKLEHEAD.  THEY ARE THE GENERAL AGENTS!

footsoldier's picture
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B-
 
Any idea what Conestoga is all about? The insurance agencies take the amount they aren't willing to split with you.

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Conestoga and CIP are hedge fund/ venture capital companies.  A former director of CIP managment llc, is now at a hedge fund(medical... managing director... see link http://www.oakwoodmedical.com/AboutUs/management.aspx )..
 
I don't have a prodblem with it.. I think it makes sense for GPs to diversify their money into other things for times like these when they aren't making the numbers they would like to.

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You guys probably don't remember this, but in a previous conversation that was strangely similar to this one, I told you that CIP is a venture capitalist firm.  The basic concept is that companies like Jones, Stifel, and Enterprise - all STL based firms - started a company to invest specifically in STL based medical startup companies.  It's been around since the 90's.  Nobody has tried to hide it.  In fact, there's an explanation as to what it is on Jonesnet.  If you were trying to hide something, you wouldn't put an explanation out there for over 40,000 people to run across.
 
Squash - there were actually two EDJ GPs and at least one LP that were a part of CIP.  Ray Robbins was also a part of it.   Another woman, who's name I don't recognize were officers and directors.  Ray was actually on our IPC for years along with Dan Burkhardt.   
 
How it became a part of EDJ's family tree, I don't know.  My guess:  Stan Kroenke (of Rams ownership fame) sat on the board of the Boone County National Bank at one time.  That bank eventually turned into the EDJ Trust Company.  Maybe those guys got together and started working on it at that point.  That was almost 10 years ago, so who knows. 
 
The point is there's no conspiracy theory.     

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foot - I still don't know what Conestoga does.  They don't fine anything with Edgar.  Nothing on Google, MSN, or Yahoo about them.  Other than our conversations here.  They've been a part of the 10-k since at least 1994.  But, I've never heard any conversations about them.  It's still a mystery. 

buyandhold's picture
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Connestoga -- Company that makes covered wagons. Jones has a Hold on it. Growth and Income stock. Business was hurt by the introduction of the combustion engine, but we see the growing emphasis on alternative energy as being a positive. What could be more green than pure horse power.As for the original question, I assumed that the GPs would be under pressure in this environment and might do something drastic. I had even read that Weddle was only getting salary this year. But if they can squeeze double digit returns out of the GP this year, then they are financial geniuses and have no worries.

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Spaceman Spiff wrote:
 
Sooth - marvelously intelligent evil genius?  Have you seen the old clips of Ted Jones?  Brilliant saleman - absolutely.  Evil genious - not hardly. 
 
I always loved how they would invoke Ted Jones as if to say that he (Ted) would approve on all levels, morally and otherwise, about how the company was being run in the present.  If you know much about Ted, I think the poor bastard is rolling over in his grave about how.  He'd kick Jim Weasle right in the nuts--my opinion.
 
It's not phony mumbo-jumbo like Novik just picks a number out of his rear end and says, hey, the LP did 16% this year. 
 
And, yes, that is what I am suggesting.  Novik pulls numbers out of his ass.  EDJ manages to a number.  If you're so naive to not see, believe, and understand that, then you're not half as smart as I was giving you credit for being 5 minutes ago. 

noggin's picture
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I love how visible LP return % is and how invisible GP return % is.

Soothsayer's picture
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noggin wrote:I love how visible LP return % is and how invisible GP return % is.
Exactly.

noggin's picture
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If it smells like blank it probably is.

footsoldier's picture
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B-
 
Your comment about the insurance agencies once again shows how naive one can be. Jones agencies takes a cut before they split your commission. In the case of annuities (even A share) the payout is 6%. Which means on every annuity ticket before the split they take 1.25%. Typically on life insurance the general agent takes at least 10% before the money falls to gross commission. From the recent 10K Jones said the following about its insurance business;
 

Insurance.   The Partnership has executed agency agreements with various national insurance companies.  Edward Jones is able to offer life insurance, long-term care insurance, fixed and variable annuities and other types of insurance to its customers through its financial advisors who hold insurance sales licenses.  As an agent for the insurance company, the Partnership receives commission on the purchase price of the policy.
 
 

footsoldier's picture
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After looking further at the risks to the firm portion I thought this was interesting to post.

International Expansion — The Partnership's foreign operations are not yet profitable; they will require significant infusions of capital and may never become profitable.

The Partnership's branch system has expanded into Canada and the United Kingdom.  Operations are at substantial deficits in these two countries, and it is anticipated that it will be a substantial number of years before the Partnership's expansion in these countries will reach a sufficient scale of operations to achieve profitability.  Additional investments will be incurred in the interim, which will be substantial.  Despite the substantial past and prospective investment in the foreign branch system, the Partnership's Canadian and U.K. operations are not yet profitable, nor is there any assurance at this time that either operation will ultimately attain profitability.
 
_________________
After all these years, one would think Canada operations would be in the black. According to the 10K, they may never be...Why would they continue to throw money down the drain (what impact do you think international expansion has had on your bonus bracket?)

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Foot - first of all, I have neither the time nor inclination to rip apart the 10K.  Frankly, I don't care what they are doing in Canada or the UK.  It's really not my problem right now.  What I care about is what I can do to improve my production.  Maybe THAT is naive, but I can only focus on so many things at one time.
 
Now, WHY someone that doesn't even WORK for Jones cares so much about it that THEY have the time and desire to rip through a private partnership's annual filing is beyond me. 
 
And yes, I am fully aware that we take a haircut on insurance.  That was never really a secret.  And as a sidenote, we aer not the onyl broker/dealer that haircuts their insurance.

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Spaceman Spiff wrote:I still don't know what Conestoga does.
 
Isn't this the kind of business relationship one would normally be asked to disclose on a RFP?

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foot has always been on the conspiracy theorist side of things when it comes to EDJ.  He, and others like him, have this sick, twisted desire to see the company they used to work for diminished in some way.  I think it burns them to no end that Jones keeps coming up as the best this or that, growing in the face of adversity, and getting stronger all the while.  Should we tell him that Jones has been in the black every month this year?  Should we tell him that we are bringing in scores of transfer brokers?  Should we tell him that NY and NJ just named Jones as one of the top 5 places to work in the state?  Nah, it'd just piss him off.   
What no comments about litigation, competititon, or the uniform net capital rule?  Those three factors could have a whole lot more negative impact on Jones and the 10-k than international expansion does.  My guess with Canada and the UK is that while both of those operations have been in existence for a long time, neither of them have attained critical mass.  They're both growing, but still relatively young.  We have some big producers in those countries, but we have a lot more smaller ones.  It takes a long time for those smaller ones to reach a point where their profitability outpaces the cash outlay for the new advisors.  We don't see that at this point in the US because we've got thousands of offices that are profitable and we can withstand the onslaught of new advisors.  I would venture to guess that it's going to take a long time to get Canada and the UK profitable like the US is.  I hope to reap those rewards before I retire.  I would be really concerned if Jones decided to scrap the whole international idea and just keep the US branches.     

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