Future of individual bonds
93 RepliesJump to last post
Holy crap - we are getting streaming video and DVD players!!!For what it’s worth … I’ve brought this concern to GP’s at the corporate level. The solutions they have planned really are extraordinary. I won’t suggest more because this is an open forum and I don’t know the level where I’m giving away information I shouldn’t.
But I’ll say this: I can tell you no other independent firm offers anything even vaguely like it. It represents a quantum leap in technology meeting compliance and portfolio management. Probably a year away.
[quote=Moraen]
You should never listen to Mario DeRose. He’s an idiot. Never listen to him.[/quote]
OK. I’ve been wondering about this post, so I’ll bite.
What’s so bad about Mario DeRose?
[quote=B24]That guy “Weddle Me” is a troll trying to drum up anti-Jones spew. Was that not obvious?
Anyway, has anyone actually READ the Jones guidance on bonds vs. bond funds?: "If investors don’t anticipate building over time a portfolio of 10 or more bonds totaling at least $100,000, we generally recommend considering bond funds instead of, or in addition to, individual bonds. It would be difficult to achieve sufficient diversification by maturity and industry type with fewer than 10 individual bonds if those are the only fixed income investments in a portfolio. Of course, the number of bonds that is appropriate depends on the allocation of an investor’s overall fixed-income portfolio, the credit quality of the bonds owned and an investor’s acceptable level of risk. For example, if an investor owns individual bonds and bond funds in a portfolio, fewer than 10 bonds may provide adequate diversification as long as no single bond makes up more than 5% of the overall portfolio." This was just one small excerpt. Makes sense. Problem is, most guys just go out "bond slingin' " without regard to peoples' needs. This is OK when you are just starting out selling 5K bonds at a time. But c'mon, can't Jones people open their eyes and see that even JONES has good bond guidance to follow? Sometimes I can't believe how dumb some people can be.[/quote] B24 you cannot be serious. They may have good guidance in writing but you know that's not what is taught anywhere, anytime. Take JoSchmo from his teaching gig, show him how to get names and talk to prospects on the door step. Go home and send him a thank you note (handwritten of course), follow up in two weeks with a phone call. Goes a little like this. Mr. Johnson, this is JoSchmo with Ed Jones how are you doing today? Good, well you remember me I knocked on your door and mentioned I was opening a business in the area and told you that if I saw anything you might be interested in I'd give you a call. Well, we just got some bonds issued by Lehman bros, they're one of the oldest, largest banks in the world, been around for 130 years. Well, they're paying a rate of 5.4% for 30 years. That's a very good rate in these times and with the money you have available today I'd recommend you buy 20,000 of them today. This is how you're taught to build a business at Jones and for the record pretty much everywhere. Before Advisory Solutions came in to being it was hunting for new money every month. New guys didn't have the time or knowledge to correctly build a portfolio, mostly because they're trying to survive.It's very easy to have a strong financial background before coming to the brokerage industry and then say those who do things differently than you are stupid.
Can you imagine being handed a uniform, bullet proof vest, pistol, shotgun, AR-15, pepper spray, ASP baton, hand cuffs, police radio, a stack of reports and the keys to a patrol car and being told to go to work? It's one thing to be able to identify these items, it's another to know how to use them appropriately and safely without having been properly trained with them. I'd love to see the look on your face, B24, if you were put in the above situation. I'd imagine you'd look pretty dumb, too. And that's exactly what Jones does to its new advisors. I graduated from a top-tier school and came to Jones from law enforcement. I did not know the first thing about investing, and since I received ZERO investment training from Jones, I had to learn by trial and error on clients. I think that is reckless and negligent at best. Actually, I did receive some investment training from Jones: "You'll never hurt anyone with American Funds." (My clients would disagree.) "You'll never hurt anyone with a Jones-vetted individual bond." (More disagreement.) "Your job is not to question the quality of the bonds in inventory, your job is to sell the bonds in inventory." (Oops.) "If your client is looking for income, they need individual bonds, not bond funds." "Fee-based accounts are a rip off." (Oh well, everyone else is doing it, and look at the additional revenue it will generate with even LESS work. ALL ABOARD!)I used to believe that the training we got as EDJ guys was extraordinary. However, after my third week in the field with my the first statement on my desk, I realized that I was well trained to knock on doors and call people and ask them for money, but ill equipped to structure a portfolio. Jones does a phenomenal job of teaching us how to attract and get clients, but then there is this HUGE disconnect between that point and actually handling the client's assets. OK, so the portfolio bar chart is a great visual aid, but it does nothing to help us explain why it might not be in a clients best interest to have 100% of their money in CEF's yielding 12%. If there happen to be any GPs on here reading, here's my suggestion: Scrap PDP - it's been watered down so much with product partners presentations that it's a complete waste of time. Acceleration - really? These new folks have like 3 clients. Then you spend half of the week having the new FAs do call sessions. News flash - if they haven't figure out how to do that by PDP, then they're screwed and we're wasting partnership dollars on them. Instead - create a class called Theories - something cheesy like that - that is strictly investment focused. Go ahead, bring in the product partners and have them talk about their product (annuities, LI, funds, etc), but lunch only. If you can't understand an annuity over an hour lunch presentation, you're too stupid to offer it to your clients anyway. No call sessions. It needs to be intense asset allocation, MPT, bond laddering, diversification, etc type stuff. Show of hands from the Jones guys on here - how many of you were taught what beta or alpha is by someone in a Jones training program? (...crickets chirping...) Teach the new guys how to get a statement from their prospects and rip it apart to see how it works. Then teach them how to put it back together and make it work better. Teach them how to create a bond ladder AND a monthly check for a client. Teach them what overlap is and that if you use ONLY American Funds you'll get a ton of it. Teach them where an annuity makes sense and how to figure out how much to use. Teach them about the efficient frontier and why that top left quadrant is the best place to be. Those Morningstar reports are great, but most Jones rookies don't understand anything past the returns. Teach them why Advisory Solutions is built the way it is and why it should be a part of their business. Teach them SOMETHING about investing before you throw them to the wolves. What if we were not only the best SALES force in the business, but also the best INVESTING force in the business. All week long you need to give these folks case studies to work on. Teach them to use the FAST tools to break it down. Teach them to use the Morningstar reports. Teach them that while large cap value is a great place to be, there are other asset classes out there and they should be using them. Teach them these things so that they don't have to learn them by trial and error on their clients like I have. Teach them to use the tools we already have that can make us an investing force that can compete with anyone in the business. Now, will our folks be CFAs at the end of the week? Nope. They won't even be able to pass the AAMS yet. But, they'll be much better equipped to handle that first statement and be armed with some knowledge of what to actually do with it. If you are one of those GPs that read this, PM me. I'll give up my branch here in the shadow of the home office to build and run a program like that. And I'd be happy to do it. No GP title necessary for me (yet). OK, rant over. [/quote] I could not agree with you more. Thanks for your rant and sharing.[quote=LockEDJ] [quote=B24] … I am starting to get the impression that it is not Jones that’s the problem…[/quote]
Look at the way we are trained; consider Eval/Grad. Mr. Client, there are three things I like about this bond -
On how many different levels is that wrong? Most times, the noobie doesn’t really know the client. He’s like to be pitching a 30 year bond, which on the whole is the most volatile of fixed income placements. If he gets the sale and especially if he hits it big, it’s going to be a huge position in the clients portfolio. And from what my bass ackward FS tells me, heaven forbid if the investment is going to be in a self-directed IRA.
Do you really think it’s not Jones that’s the problem?
We’ve met the enemy, and he is us.
I feel for you borker. If you pull back from the situation, I bet you're brighter than most who are giving you advise from Corporate. I think we need to take anything we are told in this INDUSTRY, not just Jones corproate, but the industry as a whole with a grain of salt. I will never sell another non insured individual bond in my practice. The rating agencys' business plan is flawed and the future of the individual company can change on a dime.
The B/D's will never be early with their thoughts, always after the fact. Just like you and I can do..amazing.[quote=LockEDJ] [quote=Moraen]
You should never listen to Mario DeRose. He’s an idiot. Never listen to him.[/quote]
OK. I’ve been wondering about this post, so I’ll bite.
What’s so bad about Mario DeRose?[/quote]
Ask him why the Friday before Lehman went bankrupt he told advisors that “we’ve been keeping a close eye on Lehman, there is no problem there. If you sell your clients out of the bonds now, they are going to lose 30% of their principal”.
Then, the day after they went bankrupt said, “well, it wasn’t a liquidity problem”. First of all, he was (and is) wrong. Second, who CARES what the problem was. People were looking to the leadership of the firm (the analysts) to tell them what they should do for their clients.
So, he’s an idiot. When clients can see that there is maybe a problem with Lehman, and he misses it?
OK, well I guess I lit a firestorm. My point WAS…think for yourself. No firm can teach new FA’s everything. Ever LOOK at a portfolio that you bring over from a wirehouse?? I don’t BLAME the wirehouse. I blame the FA. WHY? Because I know many REALLY GOOD FA’s at wirehouses, and they didn’t learn what they learned from their firm. They learned it from…LEARNING! They are students of the game. And that’s why my ACAT’s are for crappy portfolios, not the good one’s. It’s not about the FIRM, it’s about the FA and their own practice. When Merrill gives you the keys to the cubicle, you think their giving them all kinds of world-class portfolio training? I think not. Does that mean nobody at Merrill is any good? I also think not. Most firms give minimal training and then you have to ease into the business, learning as you go.
And for those that commented about me coming in with all kinds of experience - I had ZERO portfolio management experience. Borker - do you seriously follow every stupid little axiom that you hear at work from other brokers and those nit-wit trainers? C'mon. And if you think that every firm other than Jones is giving top-notch investment training, think again. Just ask around. I stand by comments. And one more thing, the thing about me being given a gun and thrown into law enforcement? You're right. I'd look pretty dumb in uniform with poo-poo running down my leg.Borker - do you seriously follow every stupid little axiom that you hear at work from other brokers and those nit-wit trainers? C’mon
Hey, wasn't Spiff a trainer? Just askin...[quote=bspears]Borker - do you seriously follow every stupid little axiom that you hear at work from other brokers and those nit-wit trainers? C’mon
Hey, wasn't Spiff a trainer? Just askin...[/quote] Yep. I was a great trainer. I could train people to doorknock and call all day long. Thus my frustration when I got out here into the real world and realized that I didn't know what the heck I was really doing. Sure I could muddle through with the portfolio bar chart and show people how whatever portfolio I was building at the time was a better performer than theirs, but I didn't have a clue as to why. It wasn't until I started having a series of lunches with one of my wholesalers who was a CMFA that I realized that I needed to know a lot more than I did. Jones does a great job of telling you that you know more about the market and managing a portfolio than 90% of the people out there. Well, that's true. But that just means that you're a little bit less of a danger to them than they are to themselves. Take this whole individual bond thread. NONE of my portfolios are out of balance. But, I realized recently that I did quite a few of my client a disservice by selling them not just one individual bond, but three or four from the same inventory. That was where the best rates were being had with the best credit ratings. Heck, who was going to get hurt by a BAC or a LEH or CIT or C or...you get the point. Well, evidently about a dozen of my best clients, that's who. That's the reason for the rant before. If Jones is good enough to teach a farmer or a police officer or a school teacher how to do something like doorknock or AFTO on the phone, then why not put in a little bit of effort and teach them something that can make them even better?[quote=bspears]Borker - do you seriously follow every stupid little axiom that you hear at work from other brokers and those nit-wit trainers? C’mon
Hey, wasn't Spiff a trainer? Just askin...[/quote] Spears with the quick wit! Yeah, that was pretty good.[quote=Spaceman Spiff] [quote=bspears]Borker - do you seriously follow every stupid little axiom that you hear at work from other brokers and those nit-wit trainers? C’mon
Hey, wasn’t Spiff a trainer? Just askin…[/quote]
Yep. I was a great trainer. I could train people to doorknock and call all day long.
Thus my frustration when I got out here into the real world and realized that I didn’t know what the heck I was really doing. Sure I could muddle through with the portfolio bar chart and show people how whatever portfolio I was building at the time was a better performer than theirs, but I didn’t have a clue as to why. It wasn’t until I started having a series of lunches with one of my wholesalers who was a CMFA that I realized that I needed to know a lot more than I did.
Jones does a great job of telling you that you know more about the market and managing a portfolio than 90% of the people out there. Well, that’s true. But that just means that you’re a little bit less of a danger to them than they are to themselves.
Take this whole individual bond thread. NONE of my portfolios are out of balance. But, I realized recently that I did quite a few of my client a disservice by selling them not just one individual bond, but three or four from the same inventory. That was where the best rates were being had with the best credit ratings. Heck, who was going to get hurt by a BAC or a LEH or CIT or C or…you get the point. Well, evidently about a dozen of my best clients, that’s who.
That’s the reason for the rant before. If Jones is good enough to teach a farmer or a police officer or a school teacher how to do something like doorknock or AFTO on the phone, then why not put in a little bit of effort and teach them something that can make them even better? [/quote]
Spiff - an honest answer. But what’s a CMFA?
Anyway, Jones is good enough to teach selling, but not investment management, portfolio construction. That would require hiring qualified people. Those qualified people demand higher salaries. What does the median analyst make at Jones?
You are asking them to put in too much “effort and teach them something that can make them even better”. It’s just not going to happen. Their model is working, and you know old people, “if it ain’t broke, don’t fix it”.
When I was in the security business, I lost out on this huge job (director of security for a major software firm) because some old retired sheriff’s deputy said “if it ain’t broke, don’t fix it”. The CEO and the head of global security looked as if this guy was the second coming. They had asked the different measures we would take to improve security at the campus facility.
Actually, to Spiff’s comments, I think the analyst-types at Jones know what they are doing. I think they do a poor job of translating that into training. For example, you can get all kinds of great guidance on Jones Link about developing portfolios, diversifying holdings (i.e. the bond fund vs. indiv bond guidance), etc. But I never heard about most of that during training - I found it all by digging through Joneslink. Even today, most of it just comes to you through online methodsm, which is fine, but I think they need to be more explicit about it. Make it required online training or something. He!! knows we don’t need to get this stuff by flying out to STL. There should be progressive training on portfolio development, asset allocation, etc. It’s all there, they just don’t force us to look at it. Doesn’t bother me, but it sounds like there are some people that should have it spoon fed to them.
I think what Spiff is asking is for a less salesey focus from Jones and a more mature attitude. I made a post many moons ago about being overwhelmed with LPL’s platform and choices when I move over. But when you have advisory practices managing millions and billions, you need more depth in product choices, and the training to go with it.
Actually, to Spiff’s comments, I think the analyst-types at Jones know what they are doing. I think they do a poor job of translating that into training. For example, you can get all kinds of great guidance on Jones Link about developing portfolios, diversifying holdings (i.e. the bond fund vs. indiv bond guidance), etc. But I never heard about most of that during training - I found it all by digging through Joneslink. Even today, most of it just comes to you through online methodsm, which is fine, but I think they need to be more explicit about it. Make it required online training or something. He!! knows we don’t need to get this stuff by flying out to STL. There should be progressive training on portfolio development, asset allocation, etc. It’s all there, they just don’t force us to look at it. Doesn’t bother me, but it sounds like there are some people that should have it spoon fed to them.
It bothers me B. You spoke about Merrill and MS and SB tarnishing our industry's rep. It's the same thing. This lack of education by firms (not just Jones - it's just Jones I have experience with) is making a mockery of the industry.
And I'll agree to disagree with you about analyst-types at Jones.
I noticed that a TON of our analysts are from the St. Louis area.
Should I read anything into that or just accept that the really smart people all grow up in MO? (Hey Spiff, has Dan Timm lost a ton of weight or is that his picture from '83?)