Weddle discusses advisor attrition

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noggin's picture
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I thought it was very interesting that Weddle only mentioned Segment 4 & 5 attrition when discussing this subject. If it is 1% of Segment 4 & 5 what is it for Segment 1-3?  

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He stated in the article.  Overall it's like 14% firm-wide, and like 1% for seg 4 & 5.  So obviously seg New-3 is high.  But the attrition naturally goes way down in each segment.  It's probably 50%+ for new, 30%+ for Seg 1, 20%+ for seg 2, and 5-10% for seg 3.  That's compeltely normal for scratch starters in the industry.  And considering that almost half of our FA's are Seg 4 and 5, it bascially says that we lose less than 50 profitable FA's per year.  And there are far more that BECOME profitable (or transfer in from other firms with enough assets to be profitable already) during the year versus the number that we lose.  Actually, we get 100+ producing transfer brokers a year, so already we are net positive without organic growth.Honestly, I think it's a non-issue.

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I thought the scarier point was that only 5,000 are doing SEG 4/SEG 5 numbers...

noggin's picture
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B24 wrote:He stated in the article.  Overall it's like 14% firm-wide, and like 1% for seg 4 & 5.  So obviously seg New-3 is high.  But the attrition naturally goes way down in each segment.  It's probably 50%+ for new, 30%+ for Seg 1, 20%+ for seg 2, and 5-10% for seg 3.  That's compeltely normal for scratch starters in the industry.  And considering that almost half of our FA's are Seg 4 and 5, it bascially says that we lose less than 50 profitable FA's per year.  And there are far more that BECOME profitable (or transfer in from other firms with enough assets to be profitable already) during the year versus the number that we lose.  Actually, we get 100+ producing transfer brokers a year, so already we are net positive without organic growth.Honestly, I think it's a non-issue. I wonder what the average industry wide is for producers above 350K as far as attrition?  I don't know that I trust the fact that Jones loses 50 profitable FA's a year as I know of 25-30 myself that were all profitable that have left. Granted they didn't all leave this year...I would think that the transferring brokers would tend to be 150K to 250K producers...

xej1984's picture
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14% attrition = 1680 new bodies needed every year 100 are transfer brokers???  yeah right

xej1984's picture
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16% attrition = 1680 new bodies to stay at 12,000  "firm wide" 100+  transfer in & producing brokers (yeah sure)only 50+ "profitable" FA's leave per year, is that "firm wide too"?The term "profitable" sounds to be almost subjective at EJ..... once the 60% covers your branch expenses isn't that "profitable" .... so how come after 16 years an entire division that hasn't shown a profitable year and "may not be profitable in the near future" allowed to remain operational? (and the person in charge be the second highest compensated at the firm according to the 10-K after Weddle).  If losses are down to $1million/month how much of drain has it been for the previous 15 years?

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OK, now Jones is lying about their numbers.  They are widely published within the firm, so it would be very difficult for them to lie to everyone in the firm.  And it didn't say 50 profitable FA's, it said 50 seg 4 and 5.  That means above $325K in production.  You can be profitable below that.XEJ, why is it hard to believe that 100 brokers transferred into Jones during the year?  Doesn't seem like a big number to me.  That's 8 per month, throughout the entire country.  We had 6 transfer brokers, just in my region last year (4 were from UBS).  I am finding that a lot of the transfers-in are old-school types that like to sell stocks and bonds on commission, and are being pressured into managed money at their current firms.  That could just be anecdotal from the few that I have talked to, but it seems sort of like a trend.  Not good or bad, just is what it is.

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xej1984 wrote:16% attrition = 1680 new bodies to stay at 12,000  "firm wide" The bulk of the attrition is among the newest advisors, as is the case at most firms.100+  transfer in & producing brokers (yeah sure)Still not sure why this sems excessive.only 50+ "profitable" FA's leave per year, is that "firm wide too"?It's 1% of seg 4 and 5, not 1% of profitable.The term "profitable" sounds to be almost subjective at EJ..... once the 60% covers your branch expenses isn't that "profitable" .... so how come after 16 years an entire division that hasn't shown a profitable year and "may not be profitable in the near future" allowed to remain operational? (and the person in charge be the second highest compensated at the firm according to the 10-K after Weddle).  If losses are down to $1million/month how much of drain has it been for the previous 15 years?No idea.  Not something that really concerns me.  But it is a blip on the financial statement in terms of the total operation.

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b24let's do some simple math.....let's say the operations lost on average $2Million/month or $24 million/year... over 15 years that works out to $360 million even if the average was $1million/month that works out $180 million.  Then there was the expense of the UK operations.....just to close up shop it is costing $70 million and there is no reporting of how much the 10 years over there cost.  Just for comparison why don't you look up see what the dollar amount of the last LP offering was?Not that small of a blip now is it b24?

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Spaceman Spiff's picture
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B - you're wasting your breath.  These guys will never believe anything that Weddle, or you, or I say in defense of EDJ.  They've convinced themselves that everything that is said about Jones that isn't derragatory in nature is a lie.  Or at the very least a complete spin on the truth. Kudos to your region on that many transfer brokers in a year.  At 100 total transfer brokers for the entire firm, your region had to be pretty close to #1 in that category.  Mine didn't bring in a singe transfer broker. 

xej1984's picture
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that's right spaceballs. and everything you state is the whole truth and 'nuttin but da truth.  You and Weddle share all sorts of little secrets.....take the two articles the one in RR and the one I posted a link to.  they are only days apart so why the difference in numbers yes I'm splitting hairs but why would the Managing partner be quoted on 12,600 FAs in one and a few days later 12,000 (unless the firm has either lost or gained that many in those few days). One of the biggest things I have against my one time employer is the lack of consistency.  Whether it be from HR, training, compliance, fsd  down through the channels to the RL and then to me.  And of course us "dark siders" are the only ones that put any sort of spin on the story.And then once we do decide to leave how many of us were made the target of an insuation smear?  Left under some sort of shady issue...compliance problem, we don't know where she went?  I heard he left the business.  They had money problems....etc etc then the TR tries to insinuate we've had them in some questionable produtcts, so why don't we correct that.  Yep your employer is darn perfect.  

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X,You care FAR too much on this subject.  First, I won't even get into the Int'l numbers, because (a) I don't care, and (b) I don't have the time to verify silly numbers.  Second, the article talks about TWO departing brokers.  Yes TWO (2).  Investment News has lists of departing wirehouse brokers DAILY.  Finally, are you really going to analyze whether Weddle meant 12,600 or 12,000?  We haven't had net losses in FA's in years.  Most likely, when someone says "how many FA's ya got?", there's a good chance you say "ah, about 12,000".  And maybe it depends when the interview took place.  Now, if you need to get exact, the number is exactly 12,743 as of April 30th, up from 11,988 same time last year.And I never said our employer is perfect....it's just really annoying when you nit-pick the dumbest little things.

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A few comments regarding this thread.B24 - Not 50 seg 4 & 5s, but just short of 200 (granted that includes retirement too)noggin - My concern isn't the number of 4s and 5s, it's the lack of tenure.  Less than 2 out of 10 of our brokers have been out 10 plus years. xej - Why do you care about Canada so much?  Using your numbers we lost $360MM on Canada.  How many Billions have the wires lost on CDOs?  SIVs? ARS?  My guess is that is that $360MM is a fraction of each of one these. What gets me the most excited about that article is the "unified managed account platform due to come out next year."  LPL will have to find another recruiting strategy if we get a full blown fee based platform.

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bb,a) I should be so lucky not to care about where my firm sinks $250 MILLION internationally. Instead of sharing that money back here?  10-K and 10-Q make for interesting readings (instead of losing over $8million in the first quarter last year the Canadian operation only lost around $5 million during the first quarter this year)  gee that only a spit in the bucket for you so let's keep doing that since we're loosing less this year than last........smaaart.b) for some who doesn't have time to verify silly numbers you still do find the time to post 3258 times under your current handle in less than 2 year's time  (this will be my 108th in 5.5 years)c) I never knew your firm had net losses of FAs.  the articles were posted within DAYS of each other.  I'm sure your firm would prefer to say we have close to 13,000 instead of we're over 12,000.  (and remember the FAs are are YOUR firms ONLY profit Centers)d) size matters.  those were only 2 FAs yes TWO, but their assets were HUGE.  I heard some one else state that you had a problem with reading comprehension.....the article I read was about what industry observers are saying about what might occur at your firm "Edward Jones' lack of a top-tier advisory platform for brokers and a succession plan for veteran advisers is hurting its ability to hang on to its highest-producing reps in the fiercely competitive recruiting marketplace."  e) best response when you can't answer call the question dumb or I can't beleive you're asking that sort of question (didn't a break-in at a hotel by plumbers get the same sort of response at the beginning?)

xej1984's picture
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innocuous bulk,nice ploy, deflect questions about your problem and reply with what others are doing.    How much has EJ lost on  CDOs?  SIVs? ARS?  I'm sorry how much?    If I was commenting on other firm's losses I would not be commenting about them on this thread or is that your idea of fuzzy logic?I had a personal interest in the land north of the 49° parallel. is that okay with you bulkster.Your firm lost $360 MILLION and you're concerned that I show an interest and that you don't? 

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xej1984 wrote:bb,a) I should be so lucky not to care about where my firm sinks $250 MILLION internationally. Instead of sharing that money back here?  10-K and 10-Q make for interesting readings (instead of losing over $8million in the first quarter last year the Canadian operation only lost around $5 million during the first quarter this year)  gee that only a spit in the bucket for you so let's keep doing that since we're loosing less this year than last........smaaart.b) for some who doesn't have time to verify silly numbers you still do find the time to post 3258 times under your current handle in less than 2 year's time  (this will be my 108th in 5.5 years)c) I never knew your firm had net losses of FAs.  the articles were posted within DAYS of each other.  I'm sure your firm would prefer to say we have close to 13,000 instead of we're over 12,000.  (and remember the FAs are are YOUR firms ONLY profit Centers)d) size matters.  those were only 2 FAs yes TWO, but their assets were HUGE.  I heard some one else state that you had a problem with reading comprehension.....the article I read was about what industry observers are saying about what might occur at your firm "Edward Jones' lack of a top-tier advisory platform for brokers and a succession plan for veteran advisers is hurting its ability to hang on to its highest-producing reps in the fiercely competitive recruiting marketplace."  e) best response when you can't answer call the question dumb or I can't beleive you're asking that sort of question (didn't a break-in at a hotel by plumbers get the same sort of response at the beginning?)You're right, I'm wrong.

xej1984's picture
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 c'mon bb you already knew that when you woke up this morning.

navet's picture
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Attrition in segment 4's and 5's isn't the issue. Attrition in the 2's and 3's could be devastating. With the new standards being set, it may be enough to cause 2's and 3's to take a longer look at indy etc. Since they are the future 4's and 5's, the question of their retention is very important. So far, what I hear from Weddel is the the guys who've stayed look like they're staying. Big deal.

xej1984's picture
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attrition at ANY segment is bad.

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xej1984 wrote: c'mon bb you already knew that when you woke up this morning. Arguing with you is like arguing with my wife.  Even when I'm right, I'm wrong.

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And why the heII do you keep calling me BB?

xej1984's picture
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saw an old M.A.S.H. rerun (sounds redundant) where Goober from Mayberry played an Arkansas hick doctor who couldn't remember BJ Honyecut's name called him everything but BJ.  He portrayed a great surgeon but was a dimwitted social outcast at the 4077........ you're probably a great FA but otherwise .....we both have agendas and when confronted with a logical and opposing opinion to your own you revert to child like responses (I do it to just egg you on ....seems to work doesn't it?) have a great weekend BB

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That's funny. (I would put an emoticon with clapping hands here, but this forum does not have one... geeze)

I am legend's picture
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Now this is funny!  A quote from Weddle..... He also defended the firm's fee platform, saying it is “the best advisory platform in the business.” Over the past 24 months, the firm has expanded that platform to $35 billion in assets, he said. One account type makes it the best??  The kool aid is flowing from the top for sure!

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xej1984 wrote:saw an old M.A.S.H. rerun (sounds redundant) where Goober from Mayberry played an Arkansas hick doctor who couldn't remember BJ Honyecut's name called him everything but BJ.  He portrayed a great surgeon but was a dimwitted social outcast at the 4077........ you're probably a great FA but otherwise .....we both have agendas and when confronted with a logical and opposing opinion to your own you revert to child like responses (I do it to just egg you on ....seems to work doesn't it?) have a great weekend BBWell, that is....funny....I guess.

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xej1984 wrote:that's right spaceballs. and everything you state is the whole truth and 'nuttin but da truth.  You and Weddle share all sorts of little secrets.....take the two articles the one in RR and the one I posted a link to.  they are only days apart so why the difference in numbers yes I'm splitting hairs but why would the Managing partner be quoted on 12,600 FAs in one and a few days later 12,000 (unless the firm has either lost or gained that many in those few days). One of the biggest things I have against my one time employer is the lack of consistency.  Whether it be from HR, training, compliance, fsd  down through the channels to the RL and then to me.  And of course us "dark siders" are the only ones that put any sort of spin on the story.And then once we do decide to leave how many of us were made the target of an insuation smear?  Left under some sort of shady issue...compliance problem, we don't know where she went?  I heard he left the business.  They had money problems....etc etc then the TR tries to insinuate we've had them in some questionable produtcts, so why don't we correct that.  Yep your employer is darn perfect. You do realize that Weddle wasn't quoted as saying we have 12,600 FAs in that Investment News article, don't you?  See, in the English language, when someone gets quoted, they put these little "  " things around the words.  That way we, the readers, know that the words were actually spoken by the referenced person.  In the case of the Investment News article, there are no quotation marks around the sentence that referenced 12,600 FAs.   To be fair, there are no quotation marks around Jim's comments in the Reg Rep article either.  However, the entire article is written so that we the readers know that Jim's comments are his own, and not the interpretation of the author of the article.  And Jim didn't say 12,000, he said "of our over 12,000 FAs".  Of course later in the article he uses 12,000 as a the divisor to figure out an attrition percentage.  Which, in this case turned out to make us look a bit worse than necessary.  But that's just math, you can figure that out.  You can call it inconsistency if you choose, but I'd call it convenience.  I've never said Jones was a perfect place.  To my knowledge, none of us on this forum that represent Jones have said it's a perfect place.  We just believe that it's the right place for us for right now.   

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I only disagree with  a few comments. 1. that the attrition numbers are well known throughout the firm. If you really try to get this answer you will be on the phone with someone explaining that they don't make that information public.2. I personally do care about Canada because every dime we pour into that place is another dime that will be squeezed out of my !@#$!@. However there certainly are some pros to working at Jones rather than a wire or bank. Everything in life is about pros and cons.

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xej1984 wrote:innocuous bulk,nice ploy, deflect questions about your problem and reply with what others are doing.    How much has EJ lost on  CDOs?  SIVs? ARS?  I'm sorry how much?    If I was commenting on other firm's losses I would not be commenting about them on this thread or is that your idea of fuzzy logic?I had a personal interest in the land north of the 49° parallel. is that okay with you bulkster.Your firm lost $360 MILLION and you're concerned that I show an interest and that you don't?  I was not deflecting, merely pointing out that all firms make mistakes and lose money.  My point is that the "$360 MM" we lost pales in comparison to the $'s lost on CDO's, SIVS & ARS at other firms.  Would you rather management made the mistake of investing money in more advisors (that may turn a profit yet) or lost it in the previously mentioned investments?  At the very least we haven't had to settle any lawsuits with our clients in regards to Canada.  The answer to your question, to the best of my understanding, is $0 on all three counts.  And last I checked, we didn't lose "$360 MM".  We have been profitable in every quarter (trimester). Realworld - The attrition numbers are delivered monthly to every member of the regional leadership team in every region.  That represents, I don't know, 10-15% of the brokers out there.  If you don't happen to be on the list, just ask a friend on the leadership team.  I would assume those numbers are somewhat guarded outside the firm, but are very easily obtained internally.  Now what happened to the 50% bonus bracket is another story....

xej1984's picture
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hulk, Add up the "profits"  (expenses) that your firm declared on international business lines for the last 16 years and that should be in excess of $360 Million.   I could see a few years of loss on new business lines but a decade or two to reach profitablity is perhaps questionable of the manangement they are under.  Especially if you are the second highest compensation as per the 10-K?

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There will always be people that look to justify their actions. This is so much misspent energy.There are so many inaccuracies in that article that it doesn't warrant our attention. Really? Jones doesn't offer mortgages or banking? I had clients using both when I left. They don't offer succession planning?My mentor enjoyed a nice succession plan. We're going to take at face value the competitors of Edward Jones (or people who do not benefit from a relationship with that large company), but not Jim Weddle? I left Jones and still have nothing but good things to say about that company. I sure as poop won't spend any time validating my decision by tearing up their good name. From a strictly third party perspective, you'd have to believe the goodwill endemic to the name Edward Jones requires them to act in a certain way or lose incredible value.

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All good points Lock.  It's interesting, a few years ago a friend of mine retired from Merrill (wow, actually about 5 years ago now).  He explained to me his succession plan at Merrill, and I explained ours.  As it turned out, ours was slightly better (I forget the differences, but they were very similar).  And he actually gave his busienss to his son - about $85mm AUM.  His son was about 35 at the time, and already had about $75mm.  He now has about 200mm AUM.  I have no idea how, if at all, the Merrill succession plan has changed.

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Why do you equate Gary Reamey's compensation package with the profitability of Canada?  To my knowledge, his compensation isn't directly affected by anything other than the profitability of the FIRM.  The firm, as Hulk pointed out, has been profitable even with the Canadian operation factored in.  Jones has only been there 16 years.  We've got 706 advisors up there.  How many of them have even had time to become profitable?  My guess is less than half.  And probably less than half of those are profitable enough to really matter.  In my opinion it's not indicitive of the management they are under, but rather just simply the way the business works.  It takes a lot of time to get a brand new division like that up to speed.  How many regions around the US do you think aren't profitable as a group?  I'd be suprised if mine is, and we've been in this county for 50 years.  I'd bet you could find more than 15 regions that are similar to mine.  Especially if you look up in the northeast or out west where we haven't had any offices for more than 15-20 years.  I think it's a similar approach with Canada.  The only difference is that you have to spell it out under the International line on the 10-k.  The unprofitable US regions all get lumped in with the profitable ones and nobody talks about it.   So, under your logic, we should abandon all of those regions that have been around for a significant (which is open to interpretation) amount of time and just shut them down for the sake of the profitability of the firm.   Does that sound about right to you?     

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Spiff,I think you both make good points.  However, Canada (and the UK for that matter) are more stand-alone business units that need to be able to survive completely independant of the U.S.  But you are right in the fact that Jones' business model takes a LONGGGG time to become profitable, and it currently requires large numbers of profitable offices to carry those that are unprofitable.  Typically, it is going to take an office 7-10 years (purely from scratch) to be making GOOD money for the firm.  Looking at my region, our average tenure is about 8-10 years (we have 22 FA's over 10 years, and only 7 over 15 years, and 35 are UNDER 3 years).  Our very first office (which is still the same FA) was only built 18 years ago.  So our demographics (if that's the proper term) are probably very similar to Canada.  We have a lot of guys in the 7-12 year mark really hitting their stride, but also a LOT of newbies.  So I am guessing our profit contribution to the firm is negative as a region (at least half are basically a drain on the region).  But like you said, it's not like the firm is going to abandon our region.  I think the idea is that Jones analyzes all fo the typical metrics and determines when the region/country will be profitable.  Obviously, they did not see that happening in UK anytime soon (or at all).  From what I understood, it was simply the model itself the proved unsustainable in the UK, and it it almost didn't matter how many more office we had.  In Canada, it is more like an immature region of the US that simply needs more time and some more offices.  But once we are there, it will be self-sustaining.  Jones has always professed that they KNOW it is a slow-growth model.  Organic growth can be painful.  They have made a conscious decision to not enter the bidding war for FA's.  It's a war that can't really be won, especially with our model.  But double-digit LP returns for 30 straight years means they have been doing something right.

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Spaceman & B24,Combine your last responses together and viola you get my point. "Why do you equate Gary Reamey's compensation package with the profitability of Canada?  To my knowledge, his compensation isn't directly affected by anything other than the profitability of the FIRM""I think you both make good points.  However, Canada (and the UK for that matter) are more stand-alone business units that need to be able to survive completely independant of the U.S." 

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Dr. 1994 still at it....Bitter little man.

xej1984's picture
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hey bb head,great response, lost another fight to the little woman again?Bitter probably, Little ... a long time ago.

B24's picture
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Who said she was little? You take life way too seriously man.

Fooled No More's picture
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I don't know who said it but there are Lies, Dam* Lies and Statistics. 

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The articles timing seems to coincide with the increase in standards.  Don't think for a second that EDJ is not counting on some "good" attrition over the next 12 months.  But the business model requires that adding three to one lost helps with good productive growth.  Look for a step back in growth between now and Fall '11, then a big jump forward with a higher per FA production.  Cutting the bottom 10% is not "culturally" acceptable, so let them cut themselves.

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I used to work for Jones and now I work for a wirehouse. I can say that some of the statistics are misleading. Just because you are a seg 4 or seg 5 does not mean you still hit those numbers. I had several Seg4/5 guys in my region doing actual seg 3 numbers because of account attrition or they just had a really good trimester to get the numbers in the first place. I specifically left Jones because of the lack of annuitized platforms. Based on the type of client I was most comfortable attracting and prospecting Jones' model wasn't ideal for what I was trying to accomplish.That being said, Jones was a fine place to work. What they do and how they do it is ideal for most individual investors. And, Jones' payout is superior to any wire payout if you are under a 200k gross producer. The model works for the type of client they are geared for and the type of FA that works well with those clients. If you become (or strive for) a 500k+ production standard the wires have better payouts. It's all personal preference.As for the Advisory Solutions advisory platform. It's ok, but it's not better than the wire I'm at now. I have alot more options.I will say, that with the consolidation of banks/wires Jones is at a more competitive disadvantage for upper end clients than before due to the ancillary services Wires can provide now.

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Well, I'm not a Jones guy and I have no clue what the segments you are referencing are. I can tell you that in the class I started with two and a half years ago there are a handful left. I think that newbie trainees have an attrition rate of 90+%. In my short tenure I have seen quite a few come and go. I'm the only one that offers a helping hand to them without showing my fangs and most will pass. I would have latched on big time had someone offered me a hand at first. The ones that say cold calling doesn't work are all gone. I've heard that the entire industry has negative growth in its workforce for the last decade.It's one hard gig to get off the ground.

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I was amazed when I came over to a wire and heard the new guys talking about how cold calling doesn't work, seminars don't work, cold-walking doesn't work, nothing works. At the same time I would see almost all of them come in at 10 am and leave by 4pm. The bottom line is that all of it works if you do enough of it.I even called a couple of them out on the fact that I built a book at Jones by knocking on freakin' doors and it worked. Of course they had excuse after excuse. Low and behold most of them are no longer there. For some reason our industry really attacts alot of people that complain alot and have very poor work ethics. Then again, that's pretty representative of the population as a whole. In fact, it's pretty representative of many of the people on this board.

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Joined: 2008-07-08

I think you're right AND wrong.  I don't think it attracts people with a poor work ethic.  I think the problem is that most of them would work a LOT harder, if it was work they LIKED.  Most people don't like what most of us consider "demeaning" sales work.  It's hard, it's tedious, it can be degrading, and you get tons of rejection.  A lot of people (myself included) worked like dogs in previous careers.  But the work seemed more like "work"....prospecting retail clients is different than virtually any other form of work out there.  I think THAT'S the disconnect.  You just can't explain to someone what it is like to prospect retail clients.  Even prospecting business clients (institutional) is different - it seems more "professional".  Too many FA's come into the business with rose-colored glasses, thinking it is going to be about "the close" and "planning".  In reality, in the first 5-7 years, it's ALL about prospecting and selling.  And once that reality sets in (in addition to the lack of income and the constant hurdles), I think it really gets to a lot of people.

Remo Gaggi's picture
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Joined: 2010-05-22

I think you hit it on the head.  I don't think anyone LIKES the work, but it becomes a means to an end.  That end is pretty good!  Most rookies that roll in now like the IDEA of being an Advisor, but the job is mundane and when their shortcuts do not work, they actually slow their roll, work less and less and eventually "excuse" themselves out.  I have been at this over a decade and find myself recruiting fewer and fewer people to do it BECAUSE of their lack of effort.  What I find really funny are the folks who quit EDJ after two years and flock to a bank, like that is a picnic!!  As someone once told me, "If this job were easy, everyone in the world would make $150 a year!"

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