Having just gone indy, I can tell you that costs are FAR less on the other side. In fact, IMO I believe Jones pads the P&L in places like Technology, because far smaller firms are able to offer their software platforms at 30-50% the cost Jones charges its advisors. Software at Jones: $1,000 a month. Comparable software at an indy firm, including my own website: $450.

Also, that $5,750 charge to the P&L for "Home Office Support" is far too high for most advisors' practices IMO. That is in addition to furniture, data services, BOA, rent, etc.. It's just added to cover the corporate overhead like the fancy automated window shades and the perky Developmental Leader who calls you every six months. 

When was the last time you got $6,000 worth of support from any firm's back office in any month? When was the last time you got $72,000 worth of support in a year? Remember, that's in ADDITION to everything you see at the branch level: rent, utilities, BOA, taxes, registrations, CE, data, furniture, direct mail, etc.

As an indy, the "Home Office Support" is the 10% of gross that I give them as my B/D. 

The last time I ran the numbers on my Jones P&L, I figured the $5,750 buffer added at the end of the profit calculation will force the FA to be near $250k in production before the profit bonuses even kick in. Not coincidentally, that is the new minimum production standard for veterans.

$250k at 38% = $95,000.   $250k at 90% = $225,000. Lets assume you have rent, utilities, ticket charges E&O, assistant, etc. that add up to $6,000 a month. You'd still clear $153,000. My estimated costs won't be anywhere near $6,000 a month at $250k in production. I won't need a full-time BOA except for my ego's sake, because so much more of that business will be fee-based. Executive suites that share a front desk receptionist run $400- $500 a month including utilities.

Ah, the fabulous Div Trip. Div trips are taxable events to the advisor, so I guess you should call them income. But bonuses and trips get the IRS's top tax rate, so they're pretty pricey awards for the FA. In the indy world, you get to deduct "executive retreats" or "management conferences' or "professional development" as a line item expense. So find a place you want to go, bring a little business to do while you are there, and it's deductible.

Finally, the last place you get income at Jones is when you are offered the chance to buy limited partnership shares in the firm. True, this is an incentive you've worked hard to be offered but you must still fully pay for it, and with after-tax dollars to boot. Wouldn't putting that $25000 in your SEP IRA (again, pre-tax) and buying a preferred stock or a REIT actually earn you just about the same return? At least with a SEP, Jones can't take the investment back when you are 55, as they start to do. By 65, that LP has to be returned to the firm. So what did you do? You lent a company some capital for a few years, they paid interest, and the LP matures just like a bond would. I don't see the value of it, certainly not enough to endure a career of expenses on my P&L that I have no control over.

Just my thoughts. On to the phones. Have a good day, everyone.

[quote=rickyrocket]

Well, what makes you think that you can make it indy when you can't make it with one of the easiest companies on the map. It's about the effort you put in, so say you have a 4 million dollar client base after being with the firm for 3 yrs in a little town where no one has money anyway and you are on goals and people don't want your coffee. The best decision is to go independent to get away from having to make numbers and never having to leave your house.

[/quote]

@ Ricky, just saw this as I was leaving my last post, and don't know who you directed it at, but you are drinking the Kool-Aid, my friend. Who said people only leave Jones because they are unsuccessful? That was the same kind of nonsense I was pumped with the whole time I was there. "Only the losers leave." Even Weddle implies this every time he's asked about the attrition numbers, which this year are significant.

 I can't speak for every ex-Jonser, but I went indy because it was the best business model for my clients and the kind of business I wanted to run. In a small town where costs are very low and the growth of a practice will simply take longer than Jones is willing to allow, why would it be a bad thing to remove the constant threat of termination? As an indy, a guy in a small town can grow it at whatever pace it will grow, and make more money doing it, because he's paid more on the top and has control over what comes out the bottom.

Even if someone struggles at Jones, it's not always their effort that causes it. There are some guys I've known who could not stand working alone, and needed a team setting. They left to find a better fit and are now thriving. Another advisor I know has a wife who does P&C insurance, and left to form a firm with his wife, and they now offer much more than a Jones rep would.

The blanket assumption that Jones people aren't competent without the protection and nurturing of the Mother Ship, and surely must be lazy, pouty prodigal children if they wander away, is fascinating.

Seems to me it is harder to make it, and certainly to get started, as an Independent than at EJ.

First, at Jones, they do so much for you. They pick out your investment recommendations, they get you an office, pay for your administrator, set up your technology, and brand the business (the name EJ).

Yes, you get a higher payout as Independent, but what about after expenses? Just doing your taxes as an independent contractor is expensive. Let alone hiring an administrator, E and O insurance, utilities, payign for technology, paying for an office, etc. If you transfer with a small book you'll have more expenses and less revenue.

If you share or rent an office you can lower your costs, and that would help.

But can you market as effectively in the early years as an Independent than you can at Jones? Can you attract new clients as easily when you no longer have the Edward Jones name to draw them in? Now it is just your name, which is not established. And the name of the game is the early years is building a client base.

Maybe I am missing something, but I think it will be hard to make it as an Independent if you could not make it at Jones. If you don't have a good size book to transfer, you're going to have to pay all the new costs and overhead out of pocket. You won't have Jones to finance your overhead for your first couple years.

I can understand your wanting to blow out of Jones, believe me. Going independent sounds great, and it can be great. But you may take another look at first building a successful and decent size business at Jones before moving. It's a tough time out there and I wish you the best, Inland.

In the first few years, yes, I think being inside an established firm is probably necessary, but not so much from the clients' perspective as it is the psychological comfort of the rep. Think about this: are you better prospecting now than you were when you started? Yes. That confidence translates to the client, believe me. It is confidence in you that matters, and in the early years, you have no confidence and rely on the parent firm to be your credibility. But slowly, that changes. You can think for yourself, you have seen some market volatility, and you've handled rejection and objections for years. You can do this business. The firm fades quickly into the background.

Jones definitely gave ME confidence in the early years. I talked a lot about the size and strength and philosophy of the firm early on.  

The name recognition isn't as good as you think, at least in my corner of the world. Hell, in my area people think my name is Edward Jones. I get people coming in to ask if we do payday loans or if I'm an attorney.

The biggest loss from leaving Jones is the availability of so much marketing material. Ad Builder, I am finding out, is the single biggest thing I've lost, because it made me lazy about thinking for myself, and making my own materials takes time.

My bottom-line decision was this: do I stay in a place where I get some easy comforts but never own my work, or do I take a little rougher path now to have full ownership of my efforts?

Indy surely won't be for everyone, and Jones isn't a bad firm - I enjoyed my time there and can't think of a better place to start and learn. But for me, independence was ultimately the only way I was going to be satisfied with the hard work this takes to succeed.

Inlandtx, am not at jones and think the koolaid sucks, but am very happy at my firm. Enjoy working out of your house, from what I understand there are not many members left from your class to invite to the coffee club anymore.   

??? Dude, try that last one again once you've sobered up. I have no clue what you are talking about.

it's ok jt

I'm not here to fight off anonymous personal attacks - the discussion was about fees and costs of indy vs. Jones. If you want to talk, PM me, and if you think you know who I am, give me a call. I'm done with Jones and on to greater things, and I wish you well, whoever you are.