Questions for EJ guys
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Here’s another question for you Jones guys:
Does the BOA still keep a 3-ring binder on her desk that stores all of the new account documents? You know, the one page sheet per account that lists social, DOB, name, address, phone, account #, networth, income, etc. They did up until the time I left (mid-2006). I always thought that if a halfway decent set of identity thieves knew about that book. They could hit multiple offices in one night, and have personal data on thousands of people. jackpot for identity thieves. Just a thought.[quote=now_indy]Here’s another question for you Jones guys:
Does the BOA still keep a 3-ring binder on her desk that stores all of the new account documents? You know, the one page sheet per account that lists social, DOB, name, address, phone, account #, networth, income, etc. They did up until the time I left (mid-2006). I always thought that if a halfway decent set of identity thieves knew about that book. They could hit multiple offices in one night, and have personal data on thousands of people. jackpot for identity thieves. Just a thought.[/quote] Nope....all scanned and shredded immediately!Moraen:
I understand that is it possible to do the eavesdropping. But the thought of actually pulling it off is ridiculous. This is going to be an incredibly sexist statement, but I'm going to make it anyway: Can you imagine getting 10,000+ women to keep a secret like that? The gossip machines run pretty well at Jones anyway. Imagine getting all those BOAs to keep their mouths shut about something like that. Now, in an envirnment where there are corporate secrets (recipes, formulas, proprietary knowledge) I understand the need for something like that. But not at Jones. So, let's just do away with the BOAs are spies nonsense.No doubt, Jones preaches great service - and I believe it is followed.
I wouldn’t put anything past a large company that is trying to protect it’s assets. Scoff if you will, but I’ve been on the eavesdropping side. It isn’t hard to do and cost is minimal. As a matter of fact, part of my job was writing cost justifications for what we spent on investigations. Invariably, the savings generated from catching wrongdoing (either corporate espionage, stealing samples, etc.) FAR outweighed the costs of actually doing the investigation.
Spiff–
You take everything way too literally. What I meant was, when things got nasty, the tone and posture of the Home Office, HQ, HR, AL, RL and whoever else was very negatve. Very accusatory. Very guilty until proven innocent based on some very wild, irresponsible, and unfounded allegations. I did not receive the benefit of doubt when I was obviously due that position relative to the accuser. In other words, they took her word over mine (at first). They empowered a 5-month employee over a 5-year broker. In the blink of an eye, they had turned my BOA into their paid spy. Now, that's pathetic. P.S. I know your office is in Hoo-ville or something like that. But in real life, throughout all of these 50 states, drug abuse by employed adults is a fairly prevelant and persistent problem. Really. I swear to God. If you don't know better, or don't believe that, keep living in your own little Edward Jones/Truman Show world. I'm sure it's nice and safe in there. Just stay above that red line. P.P.S. When in the performance application, if you stare long enough and hard enough at the red line, sometimes you can see the camera inside of the computer screen. When you see it, just smile, wink, and say "CHEEEEEEEESE!"foot - I can't say that it is specifically applicable to the new program, but Jones has already hired more transfer brokers in the first quarter of 2009 than in all of 2008. Getting close to double.
Spiff-
This is exactly the kind of statement that GP's would make. You realize it would have meaning if the number was 50 in 08 and 100 in 09. But if the numbers were 5 in 08 and 10 in 09 it would mean it was disastrous (the ability of the firm to attract transfer brokers).
My guess and its only a guess, is that you really don't know because they won't tell you. So you have to assume their are accurate. Technically they are...
Every firm is down, Jones is no different. The overall revenues appear down about 8% from year to year, partner revenue was down 39%. The problem may be more severe than you and B24 care to admit to. How long can Jones continue to grow if the partnership returns drop?
The 10K reads as follows (again I am reporting Spiffy);
Operating expenses decreased due primarily to a decrease in financial advisor compensation (due to reduced trade revenue) and in variable compensation (due to reduced net income), partially offset by costs associated with the continued expansion and enhancement of the Partnership's branch office network. The Partnership added 953 financial advisors during the twelve months ended December 31, 2008, ending the year with 12,155 financial advisors, an increase of 9% from 11,202 as of December 31, 2007.
My opinion...if the revenues don't recover, serious cuts have to occur if the growth objective is to continue. And that appears to be much more important to Jones GP's. Again I ask the obvious question WHY? Why grow at the expense of the successful broker (who is going without 20% of their compensation, i.e. bonuses) or at the expense of the GP?
How do costs associated with expansion partially offset expenses? Depreciation? Scratching my head on that statement. Maybe some accountant types can shed some light.
[quote=Hey Kool-Aid][quote=now_indy]Here’s another question for you Jones guys:
Does the BOA still keep a 3-ring binder on her desk that stores all of the new account documents? You know, the one page sheet per account that lists social, DOB, name, address, phone, account #, networth, income, etc. They did up until the time I left (mid-2006). I always thought that if a halfway decent set of identity thieves knew about that book. They could hit multiple offices in one night, and have personal data on thousands of people. jackpot for identity thieves. Just a thought.[/quote] Nope....all scanned and shredded immediately![/quote] You should start keeping those after you scan them so it's easier when you go Indy.[quote=now_indy][quote=Ron 14][quote=Broker Fee]
In my area there are at least 2 Jones offices that house 2 rep's. I went to the EJ web site & did a search for local offices & there are rep's on there with the same street address, I assume they are not new because they actually have a picture.
[/quote] Don't chime in if you don't know what the hell you are talking about. Those are Goodknight programs or Sunset programs, meaning the office sharing will only be temporary. [/quote] Our region has a two-man office. One guy has been with Jones since the '70s, and the other guy for about 10+ years. Neither of them were new. And, when the 10+ year veteran retired, they let another Jones guy from a town over move into his spot. So, it's STILL a two-man office. It happens.[/quote] Here's the deal...one of those guys has something on someone, and you'll never get it out of him as long as they let them keep the 2 person office and share expenses.OK, fair enough. It was in Weddle’s corner this last week. He said that we have recruited 50 veteran transfer brokers YTD (through early April) vs 36 through all of last year. I was a little high on the almost double, but still a larger amount than last year. There you go.
I think you are underestimating the power of the kool-aid over the GPs. I would guess the vast majority of them aren't even thinking about broker expansion and how it affects their GP returns. I've never heard them try to explain it to a group of GPs whose income went drastically south last year. However, we are profitable in all of the months YTD. Which is a big 180 compared to the last quarter of 2008. So, if I'm a GP, I'm not happy, but I have the faith that those returns will come back. I also know that I have one of the best jobs in the industry. And if I can just keep the firm happy, I'll get to keep it. I only took enough accounting in college to be dangerous, so I'm not even going to pretend to understand how costs are offset by expenses. Both sound like money leaving my checkbook.I thought people in my previous industry were paranoid!
The BOA is out to get me... She secretly video tapes everything I do and listens to all my calls... I just heard the phone click click...
I hope this is for entertainment purposes.
[quote=footsoldier]
The 10K reads as follows (again I am reporting Spiffy); Operating expenses decreased due primarily to a decrease in financial advisor compensation (due to reduced trade revenue) and in variable compensation (due to reduced net income), partially offset by costs associated with the continued expansion and enhancement of the Partnership's branch office network. The Partnership added 953 financial advisors during the twelve months ended December 31, 2008, ending the year with 12,155 financial advisors, an increase of 9% from 11,202 as of December 31, 2007. My opinion...if the revenues don't recover, serious cuts have to occur if the growth objective is to continue. And that appears to be much more important to Jones GP's. Again I ask the obvious question WHY? Why grow at the expense of the successful broker (who is going without 20% of their compensation, i.e. bonuses) or at the expense of the GP? How do costs associated with expansion partially offset expenses? Depreciation? Scratching my head on that statement. Maybe some accountant types can shed some light. [/quote] It's written sort of backwards, but what they are saying is that (1) Overall, FA compensation went down (commish and variable), so expenses went down, (2) Expenses were UP due to opening of new offices. So the net effect was a slight decrease in overall expenses. One doesn't really have to do with the other, they just threw them in the same sentence. But you're right, it's written by some accounting knucklehead and doesn't make sense (I used to be one of those knuckleheads that wrote this stuff, so I'll go easy on them!). Foot, to be honest, I know you love to try and pile on, but Jones is really looking at continued growth right now as an investment. They know that the economy, the market, and the firm will climb out of this hole, and then they will be much stronger for it. I think you are over-analyzing the whole thing. Most of the successful brokers I have talked to completely understand, and agree with the current strategy, because they have been through this before. Doesn't make a zero bonus bracket much easier to swallow, and I'm sure some of them are ripped about their comp going down by so much. But by and large, most of them feel OK, because they know things could be worse if they were at another firm. If the profit shortfalls were only Jones-specific, then they would be irrate, but I can tell you, most of us feel OK with things right now (I said "OK", not "great". Don't get your panties in a wad).I suspect there is some kind of accounting mechanism that every time they open an office it makes the GP pie a little bigger. Sort of like when a bank makes a loan, it counts as an assett. When an EJ office opens it counts as an asset along with the anticipated future income stream.
[quote=footsoldier]
The 10K reads as follows (again I am reporting Spiffy); Operating expenses decreased due primarily to a decrease in financial advisor compensation (due to reduced trade revenue) and in variable compensation (due to reduced net income), partially offset by costs associated with the continued expansion and enhancement of the Partnership's branch office network. The Partnership added 953 financial advisors during the twelve months ended December 31, 2008, ending the year with 12,155 financial advisors, an increase of 9% from 11,202 as of December 31, 2007. [/quote]Kicking that around in my head: EJ expenses are DOWN because FA compensation is down. So the fact that FAs are struggling doesn't affect EJ as much as in a traditional fixed salary business because EJ doesn't have to pay the struggling broker. If a broker goes out and does zero next month, EJ's fixed costs are what, maybe 5 or 6k. 1k for the office, 3k for the BOA, maybe 1 or 2k for office support. But of course no broker does zero; even the struggling broker does 10k, of which 4k goes to the broker the other 6k means EJ breaks even.
Looking at it another way, they have to grow the total value of the partnership because for the GP, this is like another investment. If your Coca Cola stops growing, you sell it and find another investment. The GPs are in it for the returns; if they were truly 'owners' they would still be FAs. And if the GP pie shrinks, there will be enormous pressure from some GPs to sell the damn thing before the market figures out the true value. They say that right out loud: We need to grow because if we don't, we'll get bought out.
Spaceman Spiff:
I understand that is it possible to do the eavesdropping. But the thought of actually pulling it off is ridiculous. This is going to be an incredibly sexist statement, but I'm going to make it anyway: Can you imagine getting 10,000+ women to keep a secret like that? The gossip machines run pretty well at Jones anyway. Imagine getting all those BOAs to keep their mouths shut about something like that. Now, in an envirnment where there are corporate secrets (recipes, formulas, proprietary knowledge) I understand the need for something like that. But not at Jones. So, let's just do away with the BOAs are spies nonsense. [/quote] The 10,000 women trying to keep a secret is awesome... I stand corrected sir. You have outwitted me. I will say this though - Advisor has a $30million dollar branch - that is an asset to Jones that they would like to protect. Smaller offices, maybe not. Just a thought.[quote=Moraen]No doubt, Jones preaches great service - and I believe it is followed.
I wouldn’t put anything past a large company that is trying to protect it’s assets. Scoff if you will, but I’ve been on the eavesdropping side. It isn’t hard to do and cost is minimal. As a matter of fact, part of my job was writing cost justifications for what we spent on investigations. Invariably, the savings generated from catching wrongdoing (either corporate espionage, stealing samples, etc.) FAR outweighed the costs of actually doing the investigation.
[quote=buyandhold] [quote=footsoldier]
The 10K reads as follows (again I am reporting Spiffy); Operating expenses decreased due primarily to a decrease in financial advisor compensation (due to reduced trade revenue) and in variable compensation (due to reduced net income), partially offset by costs associated with the continued expansion and enhancement of the Partnership's branch office network. The Partnership added 953 financial advisors during the twelve months ended December 31, 2008, ending the year with 12,155 financial advisors, an increase of 9% from 11,202 as of December 31, 2007. [/quote]Kicking that around in my head: EJ expenses are DOWN because FA compensation is down. So the fact that FAs are struggling doesn't affect EJ as much as in a traditional fixed salary business because EJ doesn't have to pay the struggling broker. If a broker goes out and does zero next month, EJ's fixed costs are what, maybe 5 or 6k. 1k for the office, 3k for the BOA, maybe 1 or 2k for office support. But of course no broker does zero; even the struggling broker does 10k, of which 4k goes to the broker the other 6k means EJ breaks even.
Looking at it another way, they have to grow the total value of the partnership because for the GP, this is like another investment. If your Coca Cola stops growing, you sell it and find another investment. The GPs are in it for the returns; if they were truly 'owners' they would still be FAs. And if the GP pie shrinks, there will be enormous pressure from some GPs to sell the damn thing before the market figures out the true value. They say that right out loud: We need to grow because if we don't, we'll get bought out.
[/quote] BH, you're sort of looking at it wrong. In the 10K quote we saw, they were strictly talking about expenses. So yes, maybe expenses were dwon, but revenues were down by more. In addition, the statement "if they were truly 'owners' they would still be FAs" is completely wrong. They are now pure owners. Their compensation, like any business owner, is directly and probably like 90%, tied to firm profits. Have you ever met the partners at a big law or CPA firm? I can tell you, they ain't practicing much law or doing tax returns. They are now reaping the benefits of their early hard work, and now the hard work of the newer attorneys adn CPA's. This is the backbone of how large professional partnerships work. Finally, the GP's are not going to sell out as long as they are still profitable. Most would much rather have a big, fat stream of income for the rest of their lives, rather than a lump sum. Because no other investment would ever consistently return what Jones GP (and LP for that matter) has returned the past 35 years (GP is somewhere around 40-50% per year, LP is around 20% - and that's for the past 35 years). When they die, the principle will get returned to their family.
buyandhold:
BH, no offense man, but I don't think you quite understand accounting. And regardless of the "accounting" for the offices, assets and cash flow is king in this business. They could open a million offices, and it wouldn't matter if they weren't profitable. And the assets the FA brings in are the assets, not the office. So it's quite different than a bank lending out their own assets. They GP's have a formula - open X offices, they will be Y profitable, it has Z effect on MY profits. It's like any business. Proctor & Gamble could produce a trillion gallons of Tide, but it doesn't matter if nobody buys it.I suspect there is some kind of accounting mechanism that every time they open an office it makes the GP pie a little bigger. Sort of like when a bank makes a loan, it counts as an assett. When an EJ office opens it counts as an asset along with the anticipated future income stream.
B24
Do you have a Tide bottle sitting in your office? Next to a Coke or Pepsi beside a box of Cheerios directly behind some Charmin.B-
Help me on the accounting. I am losing money in two countries where I have expanded and never been profitable. I am losing money on 50% of the offices (I have no idea if that is accurate or not, total guess)in the US. My partnership income is down, and I am being told its good to go out and open more offices because when times are really good it will more than offset the leaner times. It's a house of cards. The foundation is cracked due to the market and its likely things will dramatically change for the FA to protect the viability of the partnership. Partnerhips require cash, and infusions (i.e., more new GP's) from time to time. It wouldn't suprise me in the least if the partners have to dig into their pockets to continue the expansion. The model in this environment doesn't make sense. The only rosy picture you can paint is with a market recovery. What if this is a 20 year cycle, and we are only 10 years into it?Foot
Are you going to stop investing in your retirement account? What if this is a 20 year cylce and we are only 10 years into it? Here's what I think: The Jones model works for them, it is all about growth, it is a great time as a firm to be growing. Regionals and independents are benefitting from the self-destruction of the wirehouses. Sometime in the future as Jones continues to add advisors, market share, as time goes by and they get further removed from the Ted Jones ideology, and greed eventually wins out they will be bought out. To all the Jonesers, never say never![quote=jkl1v1n6]
B24
Do you have a Tide bottle sitting in your office? Next to a Coke or Pepsi beside a box of Cheerios directly behind some Charmin. [/quote] It was just the first thing that came to mind. Funny story, back after 9/11 I was a finance director in the real estate/hotel industry. We were running some high-end luxury properties in NYC for a private equity firm out of Annapolis. The CEO came to talk to our executive committee, and he went through this whole speal about pricing in the luxury tier (mind-you, he wasn't even a hotel guy). He had a bottle of Coke and a bottle of Perrier. He did the ole' "which one costs more to produce, which one os priced higher" it's-all-perception routine. Needless to say, he was not happy at the moment.