Edward Jones Advisory Solutions
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OK, yes you do have to create new paperwork. Considering the philosophy of Edward Jones ... as well you should, true?
At the end of the day, the whole concept of AS is to remove emotion from investing. A move to cash/reallocate/market-timing-momentum trading is an anathema to the underlying principle. So requiring paperwork places distance in making that decision and gives the client (advisor?) pause.Piker … like I said, the price is the price. Focus on value, the service you provide.
I've seen Ameriprise at 1.5% on a $150K portfolio, no financial planning provided (that would be extra), investments spread out over four accounts and each account had the same four or five investments - with one particular investment accounting for 20% of the portfolio. Like you, I'm not here to pick a fight ... I agree with you.It's about what you are providing for the cost, which is what the OP was ripping Jones for.
Just as an aside, one thing that I always found interesting in this industry. Clients are often told that market timing doesn’t matter, and x% of returns is from allocation, the time you get in doesn’t matter that much…yada yada yada.
But then those exact same firms scrutinize every trade by a SMA manager, constantly wanting to know about "trade rotation" and if they are getting prices consistent with what other platforms are getting. Next time we should just tell them that market timing is meaningless and the investment itself is most important.[quote=chief123]
Except you are limited on funds......[/quote] Yeah, that's a bit of a rub ... but again if you buy the philosophy to begin with, then more isn't better. It's just more noise.[quote=Wet_Blanket]Just as an aside, one thing that I always found interesting in this industry. Clients are often told that market timing doesn’t matter, and x% of returns is from allocation, the time you get in doesn’t matter that much…yada yada yada.
But then those exact same firms scrutinize every trade by a SMA manager, constantly wanting to know about "trade rotation" and if they are getting prices consistent with what other platforms are getting. Next time we should just tell them that market timing is meaningless and the investment itself is most important. [/quote] There is a particular advisor at a different firm than me that happens a daughter that goes to the same school as mine. He and I will discuss diferent platforms and ideologies from time to time. Usually at some inoportune moment like a soccer game. Where we have the more interesting discussions is the notion of timing the market or rebalancing portfolios. One theory is that by rebalancing you are DCA'ing all the time and thus can achieve higher returns, especially on a risk adjusted basis. Another theory is that by rebalancing often you miss out on quality runs and end up watering the weeds and cutting the flowers. You are pouring money into underperforming assets but are capturing gains from the outperformers. We haven't settled the disucssion and both sides have their merits.[quote=LockEDJ][quote=chief123]
Except you are limited on funds......[/quote] Yeah, that's a bit of a rub ... but again if you buy the philosophy to begin with, then more isn't better. It's just more noise. [/quote] Agree wholeheartedly with this premise. Having thousands of funds on the market hasn't improved investor performance over the years. If anything, more makes it harder to outperform and truly diversify due to overlap and the amount of due diligence needed to make smart choices.[quote=LockEDJ]
OK, yes you do have to create new paperwork. Considering the philosophy of Edward Jones ... as well you should, true? False... if my goal is "growth and income" how is that helped when the market is collapsing? Why do i have to continue to hold when nothing is going up.. If the true philosophy of edward jones is time in the market, then they should only advise buying index funds...
At the end of the day, the whole concept of AS is to remove emotion from investing(yeah but not to remove advising). A move to cash/reallocate/market-timing-momentum trading is an anathema to the underlying principle(you forgot to add "at Jones"). So requiring paperwork places distance in making that decision and gives the client (advisor?) pause.[/quote][quote=LSUAlum][quote=Wet_Blanket]Just as an aside, one thing that I always found interesting in this industry. Clients are often told that market timing doesn’t matter, and x% of returns is from allocation, the time you get in doesn’t matter that much…yada yada yada.
But then those exact same firms scrutinize every trade by a SMA manager, constantly wanting to know about "trade rotation" and if they are getting prices consistent with what other platforms are getting. Next time we should just tell them that market timing is meaningless and the investment itself is most important. [/quote] There is a particular advisor at a different firm than me that happens a daughter that goes to the same school as mine. He and I will discuss diferent platforms and ideologies from time to time. Usually at some inoportune moment like a soccer game. Where we have the more interesting discussions is the notion of timing the market or rebalancing portfolios. One theory is that by rebalancing you are DCA'ing all the time and thus can achieve higher returns, especially on a risk adjusted basis. Another theory is that by rebalancing often you miss out on quality runs and end up watering the weeds and cutting the flowers. You are pouring money into underperforming assets but are capturing gains from the outperformers. We haven't settled the disucssion and both sides have their merits.[/quote] That's crazy talk! I certainly hope you don't let your daughter associate with his.[quote=Wet_Blanket]Just as an aside, one thing that I always found interesting in this industry. Clients are often told that market timing doesn’t matter, and x% of returns is from allocation, the time you get in doesn’t matter that much…yada yada yada.
But then those exact same firms scrutinize every trade by a SMA manager, constantly wanting to know about "trade rotation" and if they are getting prices consistent with what other platforms are getting. Next time we should just tell them that market timing is meaningless and the investment itself is most important. [/quote] S&P market return 9.66% If you missed best days 10 days..6.44% 20days...4.16% 30days...2.18% 40days...0.47% If you missed worst 10days...14.67% 20days...17.28% 30days...19.46% 40days....21.46% .....so timing does matter(doesn't that make EDJ a little hypoctricial(along with most fund companies that timing doesn't work) then why pay for active managed funds?)That is usually used as an arguement for “staying the course,” and I think every firm has something out there like it. For compliance reasons, I’ve never liked those pieces.
-but its been so long since one of those crossed my desk, that I don't recall my arguement.Rebalancing and market timeing are completely different concepts. Rebalancing simply takes SOME of the gain and moving it to a predetermined asset class. Timing is an attempt to predict the market. You have a greater probability of predicting red or black on the roulette table.
[quote=chief123][quote=Wet_Blanket]Just as an aside, one thing that I always found interesting in this industry. Clients are often told that market timing doesn’t matter, and x% of returns is from allocation, the time you get in doesn’t matter that much…yada yada yada.
But then those exact same firms scrutinize every trade by a SMA manager, constantly wanting to know about "trade rotation" and if they are getting prices consistent with what other platforms are getting. Next time we should just tell them that market timing is meaningless and the investment itself is most important. [/quote] S&P market return 9.66% If you missed best days 10 days..6.44% 20days...4.16% 30days...2.18% 40days...0.47% If you missed worst 10days...14.67% 20days...17.28% 30days...19.46% 40days....21.46% .....so timing does matter(doesn't that make EDJ a little hypoctricial(along with most fund companies that timing doesn't work) then why pay for active managed funds?) [/quote] I think that everyone would agree that if you could properly time the market you could out gain the market substantially. The issue isn't whether timing the market is effective but rather if it's practical. Most people agree that you can't know which 40 days are going to be the worst in advance and vice versa on the best. You rely on the active management to use it's experience and knowledge to hopefully avoid some of the worst and capture some of the best.Active management funds time the market? Since when? I thought they looked in depth at company fundamentals to determine which companies would be most profitable, thus go up in value the most. That’s not market timing.
Agreed on the level that timing the market has never been shown to be a practical option. But they are not completely different concepts. They are related in that they both try to pick which asset (or asset class) will do better in the future. If you rebalanced your gains from Small Cap Growth to Large Cap Value you are implicitly stating that you feel, for the next period of time, that Large Cap Value will outperform Small Cap Growth (or else why do it?). They are very related.Rebalancing and market timeing are completely different concepts. Rebalancing simply takes SOME of the gain and moving it to a predetermined asset class. Timing is an attempt to predict the market. You have a greater probability of predicting red or black on the roulette table.
They look at fundamentals? You're kidding right? Most of the large money managers trade in and out of stocks frequently. The fundamentals of ExxonMobil don't change daily or even monthly. But the money managers change their positions based in part on the long term view but even more on the technical analysis of the market. They time the market. Some active managers use techical analysis exclusively. Almost by definition techinical analysis is market timing.Active management funds time the market? Since when? I thought they looked in depth at company fundamentals to determine which companies would be most profitable, thus go up in value the most. That’s not market timing.
Again, that isn’t market timing. It’s diversification. The reasoning is that all asset classes trade in a cycle, and you have the greatest probability for success to be invested at certain percentage levels into the major asset classes. To maintain your position throughout the growth cycle of an asset class eventually leads to a loss of profit, since all classes trade in a cycle. And by rebalancing you maintain a determined footing accross all asset classes in order to take advantage of the next big mover. It’s solid portfolio management, not market timing.
Now its even sounding like market timing to me - you just do it on a schedule and you aren’t IN and OUT.
Full disclosure: I didn't indicate which side of the argument I was on since I can see both sides. While it may be solid portfolio management, rebalancing is indeed a form of market timing. You can say it's cyclical or whatever, but in essence it's about knowing when to pull the trigger on assets to rebalance. In fact, many advisory programs rebalance quarterly. Since the rebalancing is based on the calendar and not the business cycle, that's an even greater correlation to market timing.Again, that isn’t market timing. It’s diversification. The reasoning is that all asset classes trade in a cycle, and you have the greatest probability for success to be invested at certain percentage levels into the major asset classes. To maintain your position throughout the growth cycle of an asset class eventually leads to a loss of profit, since all classes trade in a cycle. And by rebalancing you maintain a determined footing accross all asset classes in order to take advantage of the next big mover. It’s solid portfolio management, not market timing.
If large mutual funds are in and out of the market frequently, and using market timing exclusively, then why are capital gains and losses so small?
Brilliant part of the tax code that lets you offset them. Do you really not believe me when I say they are in and out of the market frequently? Look at the turnover ratios.If large mutual funds are in and out of the market frequently, and using market timing exclusively, then why are capital gains and losses so small?