Questions for EJ guys
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[quote=Mishigun][quote=footsoldier]Damn computer…
Anyway I agree with you fellas it doesn't make alot of sense to continue down this path. Suffice to say there are some who feel that all we do is spend our day coniving how we can screw with the FA's minds. For some unexplainable reason everytime I mention how much I appreciate EDJ and what I learned over 9 years, I get labled as twisted and wanting to have Jones diminished, because I report the truth...and sometimes that hurts. Jones Financial Companies has every right to make as much money from as many sources as it wants. They can tell you anything you want to believe. Nothing twisted. Just reporting as you requested Sir Spiffy... [/quote] Yeeeeaaaaaaaah...... sure, they have the right, in America. Question is, if you were just starting now, and you really understood everything (12b1s, selling agreements, the importance of being fee based and cutting out the middle men, the natural burnout curve of chasing people, the inherent design to aggregate the labor of many for the few...) - would you see the opportunity cost and take a different path. (Like, cold calling established RIAs and small b/d shops, and trying to uncover an employee situation where you could really learn the business, by servicing small accounts, and doing SOME cold marketing, and not having "ownership" of you own business, at a time in your life when you didn't even understand how you get paid.) Just asking. [/quote] I don't think this is a Jones question. This is an industry question. Virtually nobody in the markets Jones serves could have started indy, or even at an indy shop. Of course you COULD, but it's not very likely. So it comes down to where is the best place to start your career in this industry. I am not going to argue Jones vs. Indy or wire vs. indy, since those are really comparing apples to oranges. It's like asking "should you have started your career in the restaurant business by managing a restuarant or owning one?" Yes, the occassional person decides one day "hey, I'm gonna open a restaurant", but the vast majority start as chefs or general managers, and eventually realize they can own their own deal. And then there are some that are perfectly content managing a restaurant and not having the headaches of owning AND managing it. But to make that long story short - yes, I see the value of being independant. No question about it. Just not ready right now.B24 , that also makes sense. I think what angers ex-Jonesers the most is 2 things. 1. EJ sells you on the opportunity to have your own business, when in fact it is far from it. 2. EJ also claims that the FA’s are the only profit center making an FA feel that the 60% going to Jones is going for expenses and/or partnership, when in fact it is far from it. I will be the first to admit that I was making a career change and jumped in without a full understanding of the business in general and the business of EJ and that is completely on me. A good portion of any discontent from someone who has left Jones is the FA’s own fault, not EJ’s, and that is certainly true in my case.
I agree. Jones is a training firm, and it costs a lot of money, and not many firms are training the next generation of reps. It is an industry wide problem.
Jones has the right to run the model. I guess, kind of like the price of gas being the driver of energy alternatives, competition will have to drive who trains the next generation, and how good, experienced advisors get paid fairly. I just can't believe that so many smart kids bother to get a college degree (to be a professional), and then go knocking on doors. That's not immoral, just unprofessional ( I spent four years and $100,000 going to college, and now I can afford to cold call). Kids, if you want to be an FA, get your CFP and internships in college, and when you graduate try to learn the business by working on a team with an experienced advisor. If you can get "ownership" from the start, great. We're in the planning business. Don't do this job because it's the only one you could get, you owe more to yourself and your clients.Interesting that FA's at Jones are growing (according to Spiff) and revenues are 300M down comparing 08 to 07. Inconsequential to B24? Short run probably...when he gets to the point of receiving bonuses...he'll be scratching his head in bewilderment funding growth in US, Canada, and UK. Just curious, wasn't Canada operations profitable in the last few years?
I may be wrong, but I think LPL's revenues were up. To be fair, because I only report, Jones revenues are at least double LPL. Isn't it great to be positive...and not twisted or wishing to diminish the good work that EDJ reps do. Scuse me while I go puke...The thing is most Jones FA's aren't "kids". They are career changers or people sick of the corporate culture who are looking for freedom and independence with the opportunity to receive increased compensation as time goes on.
Seriously, somebody could start a business just doing education for career changers on how to get into this business. My suggestion: learn enough (start CFP study) and go work for an RIA, and bypass the whole b/d thing. If you can get ANY job like that, the economics will likely look better in the longer term. Should be easier now days, there are more RIAs. Be a smart business person!
That would be the best way to start for sure. I had taken the CFP classes, met a guy at Jones who was a CFP, talked to him and jumped in. A friend who was in training with me at Jones jumped ship after 5 months to work on a team at UBS. I ripped him at the time for doing it, telling him he will be getting coffee for 5 yrs, but he is doing very well right now.
Jones is free to switch their model at any time. This might be a good time. They could easily grow their business taking their resources, and doing what most of us to do get now clients.
Guys, a terrible irony of this business is, real, long term success and enjoyment depend on using your instincts. Do not do what goes against your instincts. This career is serious business (helping folks with money is like helping them with their spirituality, think about it). Get the platform right and all will follow.
Mishigun-
I am of the belief that Jones doesn't care to be too profitable. They care more about growing so at some point they either get exponential revenue (when times are good 94-2000) or position the firm for sale (doubtful) or provide the engine to fund other businesses (conspiracy theory here I go). Others have modeled their business growth similarly, and look whats happening... contraction (Starbucks, etc). So I am running a company and its not growing revenue, but growing expenses (UK, Cananda, US unprofitable offices) at some point, I have to contract or I am going to be caught with experienced brokers looking for greener pastures (no bonuses) or asking fellow GP's to cough up more dough. This is why I suggest at some point, if the market doesn't provide the fuel for growth, that the GP's will have to make serious changes in their model. I doubt if the GP's would be willing to lose money.Interesting insight, soldier.
So, the market providing fuel for growth, that would be the opposite of fear (now), which is greed ( a bull market not unlikely, given ten years of sideways and the printing of 3 trillion). Yeah, so economics could get them. Probably will, because a lot of colleges are offering CFP programs (which is interesting, because, getting your CFP is easy compared with graduating college). Ripping assets from Jones or anybody is getting easier (what part about pay me 1%, pay as you go don't you understand?) What amazes me is, I'm in a position to hire someone now, (a solo office that is certainly findable within a large metro area), but not one job seeker has contacted me. That's why I say, if people who want to work in this industry ever get smart, watch out. ( Why should I recruit?).Here's the thing - Jones, from a total payout perspective over time is pretty much like a wirehouse. Our payouts and admin/office support are higher in the early years (everyone gets same payout regardless of production), and at real high production levels during good times (due to the uncapped profit sharing and bonus componants). It's in the middle to bottom for mid-level producers. We can squabble over the details, but by and large, the payouts are comparable to wirehouses.
Foot raises an interesting point about growth. I think the part about revenue growth is overblown. LPL is growing by leaps and bounds due acquisition and the industry exodus to independance. So you really can't compare the two. HOWEVER, the point about extreme growth, and what do you do when you get there - all interesting. I often wonder this. My guess is that Advisory Solutions plays a BIG part in all of this. We're all smart boys and girls, so we all get what I mean there. Grow it big then annuitize it. But I also think their long-term "vision" is to have around 17,000 FA's with well-established offices, that begin "sunsetting" and Goodknighting to newer FA's. At some point, gone will be the days of throwing 10 guys against the wall to see who sticks. I THINK there is some grander vision than business as usual. I do have to give the "current administration" for truly developing a long-term plan for something other than growth for growth's sake, and having a good roadmap for success. Whether I'm on that road long-term or not is irrelevant. I think Jones is going to be successful for a very long time. They have stuck to their guns the past few years, and made lots of positive changes, and I anticipate more of that to come.
[quote=B24]
Here's the thing - Jones, from a total payout perspective over time is pretty much like a wirehouse. Our payouts and admin/office support are higher in the early years (everyone gets same payout regardless of production), and at real high production levels during good times (due to the uncapped profit sharing and bonus componants). It's in the middle to bottom for mid-level producers. We can squabble over the details, but by and large, the payouts are comparable to wirehouses.
Foot raises an interesting point about growth. I think the part about revenue growth is overblown. LPL is growing by leaps and bounds due acquisition and the industry exodus to independance. So you really can't compare the two. HOWEVER, the point about extreme growth, and what do you do when you get there - all interesting. I often wonder this. My guess is that Advisory Solutions plays a BIG part in all of this. We're all smart boys and girls, so we all get what I mean there. Grow it big then annuitize it. But I also think their long-term "vision" is to have around 17,000 FA's with well-established offices, that begin "sunsetting" and Goodknighting to newer FA's. At some point, gone will be the days of throwing 10 guys against the wall to see who sticks. I THINK there is some grander vision than business as usual. I do have to give the "current administration" for truly developing a long-term plan for something other than growth for growth's sake, and having a good roadmap for success. Whether I'm on that road long-term or not is irrelevant. I think Jones is going to be successful for a very long time. They have stuck to their guns the past few years, and made lots of positive changes, and I anticipate more of that to come.
[/quote] I don't think this will ever leave. It's not practical. You would have to give away a lot of assets or build a lot of teams(wirehouse).. But you still risk defection(now with the assets you gave them.. I don't think Jones minds when FAs leave, but when the leave with a $15M goodknight they have some issues).. The ideal would be to have a senior advisor take on 3 smaller advisors and divide up the book when he retires(but the issue is if a firm would be willing to pay those advisors salary to wait and if the advisors would be willing to accept and if the senior advisor would actually do it or move and take another large payout..Well, it’s a successful business model. I just wonder if the public will see through all of the costs at some point.
It seems like the middle class is dying, so you have people who have money, and those who don't - the days of "selling", vs. giving people what they ask for, are numbered. On many fronts (like, liberal do gooders reforming 12b1, commissions - like, the expense cost of health benefits for all of the people at home office, -like, the cost/benfit of managed funds) the writing has been on the wall for a number of years now. If I was just starting out, I'd try to scrape down to the bottom line and work at a place where clients with money came to me, and they could see what they were paying, and most of the money was going directly to the advisor.Jones does have a sunset program for brokers who want to slow down. The FA has to stay during the period, I have only seen one when I was with Jones, it was a new program then and it showed.
One question that never seems to be addressed is WHY do the GP's feel the one broker office is so advantageous vs 3-4 broker offices?Again, they are building equity (branding) in the office, not the advisor. And they are building equity in the career assistant. It works. Like the Mutual Fund Store, there is x % of the market that will eventually conduct business in this manner.
They will point back to service. The only thing that truly separates Jones from anyone else is service. We excell at it. It is drilled into us from day one. So, if the choice is to save a few bucks on BOA salaries vs seeing customer service scores go down, they'll choose to keep the scores up and have the BOAs. From my own point of view, I'd love to share an office with a buddy or two. He can have his BOA and I can have mine, but we'd share office space, electric bills, etc. I can see that working especially well in an area like mine where the nearest FA is literally 300 yards away.
Mish - no. Not until they are disclosed in a more concise format than a prospectus. I agree with B24 that Advisory Solutions seems to be the direction that Jones would love us to go. If I can get just $50 million into AS, I'm grossing $675K a year. Add some insurance, LTC, bonds, and misc stock and fund trades and I'm easily at $750k. The big bogey at Jones used to be $100 million AUM. I think that number, because of AS, is shrinking. It will be good for revenue and good for the FAs once we get that program up to speed. It may take a while, but I expect to see revenues from that quickly rising over the next few years.Jones excells at service, no question. Surveys say something like six contacts per year.
I'm sure the firm can change with the times. Cutting out cold calling and charging more directly for managing money is good for everyone. The only losers may be some managed fund managers, and b/d's that are inefficient or gouge. I'm sure Jones will succeed, a long-timer must be sitting pretty.[quote=B24]
…But to make that long story short - yes, I see the value of being independant. No question about it. Just not ready right now.[/quote]
Oh, boy! It’s going to be hard to keep b24 and the other 5-10 year vets once they look around and see how easy and how profitable it will be go independant or hook up with someone like Morean or someone with a chain of RIA shops.
[quote=footsoldier] Jones does have a sunset program for brokers who want to slow down. The FA has to stay during the period, I have only seen one when I was with Jones, it was a new program then and it showed.
One question that never seems to be addressed is WHY do the GP’s feel the one broker office is so advantageous vs 3-4 broker offices?[/quote]
I still wonder that myself. The only thing I can gather is that it is easier for a group of 3 or 4 to go indy versus one guy. They can see the economies of scale, and 4 guys have more ba!!s than one. And would you rather have 4 guys leave taking 200mm AUM with them, or one guy taking 50mm?
I never bought the corporate line…" we hire people that are entrepreneurs, that want to be business owners"…like they are some sort of mavericks or something (sorry to bring up the “M” word so soon after the elections!).
The only other thing I think might contribute to this is how you manage it from a pure Human Resources standpoint. How do you decide who gets to partner? How do you decide on the size of the office? What if you lease 2500 sq ft and 2 of the 3 guys leave, and you can’t replace them? What if 1 guy leaves? What if all three go indy and you’re left with a huge office and no assets? What if the partnership doesn’t work out? Can you “unpartner”?
Realistically, I think the multi-FA office ship has sailed already. It’s now too complicated in our environment. They could make it work if they REALLY wanted to, but I don’t think the economics are there. Think about it…what do you save?..rent and 1/2 a BOA? Not a huge nut. That’s why they are asking Legacy and Goodknight offices to extend their terms right now. I am hosting another FA in my conference room, and he has been there for about 6 months, and will likely be there another 6-12 months. They have really scaled back on opening new offices until we get through this. Honestly, they have positioned the Goodknight/Legacy plan pretty well. It is allowing them to scale back on office openings until FA’s really prove themselves.