Attention Indies: New Branch Rules
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[quote=BigPayDay]MB,
The settlement was a year ago. In February this year OUR client's ranked EJ number one in customer satisfaction according to JD Power. You under estimate the power of the relationship we have with our clients and it is because we treat them as we would want to be treated. Period. I do not believe it (The settlement.) has or will lead to any higher rate of arbitrations at EJ. You keep dreaming.
BPD[/quote]
You and the other GPs really have lost track of what occurs in the field. The realtionship is NOT with EJ and the client but between the client and the IR. Hence the ability for the likes of Zacko and myself to leave and take upwards of 86% of the assets (the others we either left or they didn't want to come along)
Also first you use dated ratings that incorporated data from 1997 to 2001 then you say it isn't accurate to use info from your firm's settlement from last year. Just because "you don't think" the settlement won't have any bearing on your firm's realtionship with its clients is another example of a GP's arrogance. Just like when Hill claimed it's clients don't read The WSJ. You guys don't understand that the realtionship that EJ really needs to work on is the one between the IRs and the "up-line" just like at any other wire-house. If it doesn't work for the IRs then they will vote with their feet.
[quote=BigPayDay]MB,
The settlement was a year ago. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
[/quote]
And thus isn't reflected in the arbitration numbers you mentioned.
[quote=BigPayDay]In February this year OUR client's ranked EJ number one in customer satisfaction according to JD Power. You under estimate the power of the relationship we have with our clients and it is because we treat them as we would want to be treated.
[/quote]
You'd "like" to have your investment advisor steer you to certain investments because he and his firm get paid more on them? You'd "like" to have your advisor offer you a very limited range of services because his firm only has a limited range of services? Really?
Say, did you happen to see where KIA placed on a recent JD Powers survey? Care to own a Kia?
[quote=BigPayDay]
Period. I do not believe it (The settlement.) has or will lead to any higher rate of arbitrations at EJ.
BPD[/quote]
You may be right, but I wouldn’t brag about arbitration numbers until they include the big hickey Jones took and clients learning about it. The whole point of mentioning the arbitration numbers is some sort of claim to a higher level of ethical behavior than the rest of the pack and the SEC fine should have disabused you (and many Jones customers) of that fantasy.
BTW, my theory is that Jones does well on JD Powers type surveys because they deal with the least sophisticated investors on the street. They simply don’t know what’s been done to them and they don’t mind how dated Jones’ technology is.
Mike B,
I assume you are a former Jones guy who left and is now in some way trying to get back at Jones for all of the harm they did to you when you were here. If this assumption is wrong and you were not at Jones before then what is your beef? If we have only uninformed, uneducated, low net worth clients why are you concerned about us?
Check out an SAI (You do know what an SAI is, right?)from American Funds and you will see that Edward Jones is one of many firms (something like 50 or so firms are listed) that do revenue sharing with them. Take a look and YOUR firm is probably on there to. The difference is YOUR firm does not share that revenue sharing with YOU, Jones does.
What is the industry average hold time for a mutual fund and what is Jones’? Try 4 years verses over 12 years at Jones. Clients hold their funds longer with Jones than ANY other firm. You know and I know, it is not the timing of the market that counts, but the time that you spend in the market and if we can get a client to hold a high quality diversified group of mutual funds for an average of 12 years, they are a client for life. Period. This is why Edward Jones does so well in the JD Power surveys.
BPD
P.S. As far as the settlement goes it will not impact our abritration case rate. Do you know what an arbitration is? How would a settlement impact it? It wouldn’t.
bpd a.k.a. candy bar with nuts
Spoken like a true kool-aid "mainliner".
Why do you "darkersiders" think EJ clients hold their mutual funds so long .... could it be that once they invest they loose their IRs so frequently that it takes the investor 12 years to figure out who to speak with, by that time the account is usually transferred to some GPs "green" (in otherways than what EJ think) relative.
Things have changed drastically in the past two decades and one really can't depend on passive investing for "all" of your investing.
Yes your clients are unsophisticated, and it would cost your firm TOO much much money to even offer something as simple as options (your FSDs would have to become Series 3 licensed and "pre-approve" some trades. Not to mention the compensation to them. Let's not forget the higher standards for the margin clerks etc etc.)
There is a corrolation between your unsophisticated investor and how easily they are convinced to hold their mutual funds for 12 years. Who wins in the long run ..... the client (maybe maybe not), the IR (if he/she stays 12 years then a very small share of revenue sharing), the GPs (you bet!!! they get the biggest cut of revenue sharing each and every year for the amount the firm holds at those firms)
You silly old fart you still don't get it! "Clients for life" follow the broker NOT THE DEALER hence the good ratings from JD Powers.
if you don't nuture the boker/dealer realtionship properly you see alot of IRs leave your "do what's best for the client" firm.
Block stems tide by adding prosBy Brooke Southall
November 28, 2005 SAN FRANCISCO - H&R Block Inc.'s long-beleaguered brokerage division may have turned the corner.On the strength of skyrocketing referrals from tax offices and a resolve to insist on high production from its financial advisers, the Kansas City, Mo.-based tax giant finally realized positive cash flow in the first half of its current fiscal year.
Though Block showed a loss of $7.9 million during the six months ended Oct. 31, it was only after subtracting a $9.2 million non-cash expense for amortization.
Since Block bought Detroit-based Olde Discount Corp. in 1999 for $625 million, it has sustained more than $330 million in losses from that division.
But that lengthy famine is giving way to optimism.
"We couldn't be more pleased," said Joan Cohen, president of the adviser division of Block. "There's a good feeling in our organization right now."
Part of that euphoria stems from Block's success in hiring 141 experienced brokers during the past six months. Most of them have personal track records of producing annual commission revenue of $200,000 or more at their former employers, according to the company.
Referral program
Block's ability to recruit better brokers relates directly to its improving capacity for delivering on the dream of skimming investment referrals from the employees who prepare 19.1 million tax returns a year, according to an executive and advisers at the company.
There's much skimming to do. Block expects to have about 700 company-owned and franchise offices in the coming tax season and an additional 300 kiosks in locations for Wal-Mart Stores Inc. of Bentonville, Ark., Sears Holding Corp. of Hoffman Estates, Ill., and other retailers.
It also expects that its force of "partners" - tax preparers who sign up to deliver leads in return for a fee - to leap from 5,000 this year to closer to 10,000 in 2006, Ms. Cohen said.
The 5,000 partners already on board generated 8,000 funded accounts with assets of $363 million during the six months ended Oct. 31. During that time, these newest accounts generated revenue of $5.6 million, a 57% improvement from revenues in the period a year ago.
The growth in cross-referrals is coming because tax preparers have greater faith in their company's brokers than before, Ms. Cohen said.
But lucrative incentives don't hurt matters, she allowed.
Block pays an unlicensed tax preparer $20 or $25 for a funded referral.
But to tax preparers with the proper securities licenses, it antes up 25% of the gross commission revenue generated by the account in perpetuity.
This is an eye-popping deal that has the potential to drive massive numbers of referrals, according to Charles "Chip" Roame, managing principal of Tiburon (Calif.) Strategic Advisors LLC.
"That [25%] is a huge share," he said. "I'd refer every one of my clients over. The only reason I wouldn't is because I'm afraid of losing my client [due to the adviser's incompetence]. But I'm doing the guy's taxes for 99 bucks, so one mutual fund commission of $400 and I make that."
A reasonable comparison is to look at what officers get at banks for making similar referrals, Mr. Roame added. It's likely to be closer to 5% than 25%, he said.
Attracted by model
This fertile ground of referrals attracted David Floeh, who had been among St. Louis-based Edward D. Jones & Co. LP's top 3% of producers, with annual revenues of $550,000.
"I saw a ground-floor opportunity for capitalizing on their strong market share in tax preparation," he said.
"It took a lot to uproot myself from a fairly comfortable existence [at Edward Jones], but I didn't see that [referral] model anywhere else," Mr. Floeh added.
In fact, H&R Block advisers are - to some extent - drowning in an embarrassment of referral riches. The company's tax preparers passed on 105,000 referrals as of April 30. Block considers a lead a referral when a tax preparer passes on the name of a client to a specific financial adviser. These prospects get calls within a couple days of the referral.
But Block generated an additional 800,000 indirect leads, which were cases of tax clients indicating on their tax return that they would like to speak to a financial adviser.
"With 1,000 advisers, that's more than we could handle," Ms. Cohen said.
But she added that her company is no longer interested in hiring advisers simply for the sake of increasing capacity.
Block hired 141 advisers, but its total increased only to 995 from 985 because the company is weeding out low producers
And H&R Block no longer is content to be a safety net for wirehouse rejects.
"We're looking for someone running toward us and not away from someone else," Ms. Cohen said. "We turned away far more [Morgan Stanley castoffs] than we hired" after the New York-based wirehouse recently dispensed with 1,000 of its lower-producing advisers.
That's smart business, Mr. Roame said. "They're getting smarter about what makes a good H&R broker," he said. "Ameriprise [Financial Inc. of Minneapolis] or Edward Jones guys would be more synergistic with the H&R model."
Indeed, Mr. Floeh said he chose H&R Block for that reason.
"Edward Jones is a kind of mom and pop," he said. "The referrals come from the same kind of thing at H&R Block."
Irregardless of whether Jones has a great arbitration track record, I
still wonder why the NASD allows them to run branch offices without a
Series 24 principal in each branch office or at least visiting the
office at least weekly. With all the petty regulations, this
seems like a no-brainer to me. We are a small firm with one
office and are REQUIRED to have two principals. Yet a new advisor
without a track record is allowed to set up shop and run his business
without the immediate contact of a principal? Seems silly on the
NASDs part.
I’m sure Jones has a good record. This doesn’t mean they should be allowed to skirt the rules.
Beagle,
All locations with less than three registered individuals are classified as "sub-branches". All Field Supervision Directors (FSDs) are Series 7, 8 (or 9/10) and 63 licensed.
EJ is complaining about the new requirements. (hence the topic of this post)
Block pays an unlicensed tax preparer $20 or $25 for a funded referral.
I thought that was illegal. The paying for a funded referral part. It was my understanding, years ago when in a bank platform, that we could pay unlicensed people nominal amounts for referrals but that they couldn't be predicated on funding or a specific dollar amount invested.
Calling all former Jones brokers. BPD likes to talk about the hold time for funds. What did you do when Oppenheimer, Franklin, Calamos, etc, funds were transferred into your office? Sold them. Darn straight and they went to preferred funds? You bet! What was the HOLD time on these funds? Does Jones keep these stats?
False,
13 years in a row.
Jones is #1 again in Registered Rep Magazine.
Read it and weep.
Have you sold any A share annuites lately? Oh that’s right your firm doesn’t believe in annuities.
Give it up.
BPD
[quote=BigPayDay]Mike B,
I assume you are a former Jones guy who left and is now in some way trying to get back at Jones for all of the harm they did to you when you were here. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
[/quote]
Not even close. In fact, the closest I've been to a Jones office is the dry cleaner next door. OTOH, I can read and have read for years the "We care more" Jones propaganda and know the Amway trip REAL nature of Jones.
[quote=BigPayDay]
Check out an SAI (You do know what an SAI is, right?)from American Funds and you will see that Edward Jones is one of many firms (something like 50 or so firms are listed) that do revenue sharing with them.
[/quote]
Nice change of subject. The issue never was how many firms do revenue sharing, it’s how did Jones manage to get so concentrated into a handful of funds. Of course, we all know ho, Jones paid (in various ways) brokers more to sell some funds than others.
[quote=BigPayDay]Take a look and YOUR firm is probably on there to. The difference is YOUR firm does not share that revenue sharing with YOU, Jones does.
[/quote]
That’s a cute way of describing a system that puts incentives in place to get brokers to sell more of the funds that pay the company more. Too bad the regulators laughed in your faces on that one.
[quote=BigPayDay]
What is the industry average hold time for a mutual fund and what is Jones'? Try 4 years verses over 12 years at Jones. Clients hold their funds longer with Jones than ANY other firm.
[/quote]
I couldn’t care less what the hold time is, much less do I care that the number’s skewed at Jones because they dabble with tiny accounts, bang ‘em into the fund falimy they rewarded the most to sell and never look at the account again.
[quote=BigPayDay]You know and I know, it is not the timing of the market that counts, but the time that you spend in the market…
[/quote]
What is it you figure, everyone else in the business is market timing with clients? Please don’t give me the “time in the market” speech as if there’s something going on with the average Jones account than selling what you’re paid most to sell and figuring that 3 or 4 American Funds equals real diversification.
[quote=BigPayDay]
This is why Edward Jones does so well in the JD Power surveys.
[/quote]
You do well in JD Powers surveys fr two reasons; you’re marketed that bogus “we’re more ethical and care more” stuff well AND because, like Kia, you sell to the unsophisticated.
[quote=BigPayDay]
P.S. As far as the settlement goes it will not impact our abritration case rate. Do you know what an arbitration is? How would a settlement impact it? It wouldn't. [/quote]
No, what’s an arbitration? Golly, it is big? Will my friends all have them soon?
Be serious BPD (interesting name, btw, for a guy working at a firm that looks out for clients first) when your customers find out how they’ve been had, (and they have been) and have the chance to get back at you by filing complaint that leads to arbitration, they will. Ask anyone working at a firm that’s been similarly caught out.
You know, you seem like a reasonable enough guy. I can only assume the big payday that Amway, er, Jones is paying you has cluded your judgement about what they really are.
MikeButler,
Oh great Mike Butler with all your knowledge and platforms. Here’s a scenario:
50 year old male. Married to 50 year old female. No kids. 28% tax bracket. Retiring at 65. Maxing out 401k. Not eligible for Roth IRA. House is paid for. Goal is to set aside money for income in retirement. Received inheritance of $250k. What would you recommend? Assume that all existing monies invested is properly diversified. Risk level is moderate. Investor does not like paying taxes.
I’m curious what you would recommend. Come on put your investment knowledge and your fancy smancy platforms where your mouth is.
BPD
[quote=BigPayDay]False,
13 years in a row.
Jones is #1 again in Registered Rep Magazine.
Read it and weep.
Have you sold any A share annuites lately? Oh that’s right your firm doesn’t believe in annuities.
Give it up.
BPD[/quote]
The annuities change so fast with the living riders and whatever else
they can come up with to address the wave of income desiring baby
boomers. To that end, paying an upfront load for lower internal
expenses may not make as much sense…they are not mutual funds.
The flexibility to change your portfolio without the burden of knowing
you shelled out 5% 2 years ago does have some value. Just think
about the annuities a few years back comparred to today.
BPD - the home ofc hack for edjones. You kill me w/ the annuity comment. Apparently jones isn't too fond of them either as each new application needs to be approved by a dedicated compliance dept. at jones now. You advisors outside of jones, ask your annuity wholesalers that call on jones IRs have to say about some of the new policies at jones and annuity apps. Is it wrong BPD by the way if a b/d doesn't believe in particular products? After all jones certainly has their share that they don't believe in.
And on the old A share annuity deal, do the jones clients realize that the principal guarantees they get on them are minus the loads they pay?
great scenario too bozo - it shows what dept you prostitute yourself in w/ that firm. Why not take it a step further. At jones will the advisor do a financial plan for the prospect? Will he do a detailed asset allocation analysis and compare risk adjusted returns to equivalent benchmarks?
NO - they'll print out the simple pyramid allocation models according to the general risk categories the client was labeled in. Never mind whether they're on track to meet their objectives or not, oh that's right - your technology doesn't even give the advisors the capability to list objectives and to build plans and the other things I mentioned above. BPD, realize that it's a quack operation and because its advisors rate themselves high, doesn't mean they are doing what's best. I learned more in 5 day conference at LPL than I did after my entire 5 years at Jones when it comes to providing real guidance and advice to clients. I know roughly 30 other advisors that are here at LPL that came from jones and not one would say anything different.
BPD - brainwashed, poor dummy!
You bet - can do electronic apps all day long. Why don’t you try and answer the real questions I posed home office boy.
Ok, Ok, I give.
You know what firm I work for. What firm do you clear through or are affiliated with?
This will help me do a fair comparison of our firms and answer the questions you have posed above.
Already stated LPL don’t even ask who do we clear through, as that will show your ignorance.
[quote=csmelnix]
BPD - the home ofc hack for edjones. You kill me w/ the annuity comment. Apparently jones isn’t too fond of them either as each new application needs to be approved by a dedicated compliance dept. at jones now. You advisors outside of jones, ask your annuity wholesalers that call on jones IRs have to say about some of the new policies at jones and annuity apps. Is it wrong BPD by the way if a b/d doesn’t believe in particular products? After all jones certainly has their share that they don’t believe in.
And on the old A share annuity deal, do the jones clients realize that the principal guarantees they get on them are minus the loads they pay?
great scenario too bozo - it shows what dept you prostitute yourself in w/ that firm. Why not take it a step further. At jones will the advisor do a financial plan for the prospect? Will he do a detailed asset allocation analysis and compare risk adjusted returns to equivalent benchmarks?
NO - they’ll print out the simple pyramid allocation models according to the general risk categories the client was labeled in. Never mind whether they’re on track to meet their objectives or not, oh that’s right - your technology doesn’t even give the advisors the capability to list objectives and to build plans and the other things I mentioned above. BPD, realize that it’s a quack operation and because its advisors rate themselves high, doesn’t mean they are doing what’s best. I learned more in 5 day conference at LPL than I did after my entire 5 years at Jones when it comes to providing real guidance and advice to clients. I know roughly 30 other advisors that are here at LPL that came from jones and not one would say anything different.
BPD - brainwashed, poor dummy!
[/quote]csmelnix,
Fair questions. I will try and answer.
No I don’t work in the home office.
As far as annuities go take a look at the following link which is a “white Paper” from the SEC and NASD regarding annuity compliance:
http://www.sec.gov/news/studies/secnasdvip.pdf
This memo came out in June 2004. In response to the directives in this memo most firms have begun the process of reviewing their internal policies, administrative processes, and training programs, along with their interanl auditing and monitoring to ensure they confirm to the “baseline sound practices” in the memo. Jones is staying ahead of the curb with both their A shares and special compliance officers that will oversee ALL annuity orders.
As far as the principal guarantees on A share annuities your statement is not correct. Take a look. Pages 27 - 43:
http://www.hartfordinvestor.com/common/prospectus/individual _annuities/p_ldrs_edge_hli.pdf
As far as financial plans go. Yes we have financial planning software. Be careful here. See the following intersting info on the Merril Lynch rule:
http://www.sec.gov/rules/proposed/34-50980.htm
Yes we have Mornistar Principia that will do detailed asset allocation analysis and compare risk adjusted returns verses equivalent benchmarks.
You seem to be very vindictive towards Edward Jones. What did they do to you that makes you this way?
BPD
I have seen the Jones Planning Software…mmmmmm nevermind. As
far as Morningstar goes, have you ever comparred their data to
Lipper? Why is it so different and who is right? When you
do a position detail on the funds in Morningstr the data is routinely
4-6 months delayed, so am I to assume the size and style data is the
same?
RW,
No I have not compared the data from Lipper to Morningstar. I don’t have the time nor am I willing to make time. All these systems have pros and cons.
I especially like the ability of showing an existing portfolio in Principia verses a proposed one. Very powerful.