Questions for EJ guys
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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.......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?
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.[quote=footsoldier]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. [/quote] This is getting eerie.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. IndyEDJI 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?
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.
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.
[quote=footsoldier]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. [/quote] 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??!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…
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.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.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).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.
[quote=footsoldier]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. [/quote] 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.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 the4 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.
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!B-
Any idea what Conestoga is all about? The insurance agencies take the amount they aren't willing to split with you.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.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.