Jones managed accounts
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I believe it will be for all accounts. I’ve heard the phrase automatic rebalancing numerous times, but I’ve never heard anyone ask if it is mandatory or not.
Before you start bashing about the taxes, there will be a tax efficient portfolio available for taxable accounts. That's the only thing I've heard.As I know little about how your program will be built, please forgive me if I am way off base, but at face value I fail to see how this will benefit your clients. They can build a C share portfolio and buy individual etf’s just as easily. You still won’t have tax harvesting ability, or individual cost basis on holdings or many other of the benefits of a true SMA. You will still have the year end capital gains issues within the funds. So the question needs to be asked, is that type of program benefiting the client or Jones? Once again, I don’t have the specifics of your program, but from what I have read on this thread, it is a legitimate question.
It is a legit question. However, it is one that we may not have the answers for as of yet.
It isn't an SMA platform. They've never touted it be that. We have an SMA platform already. This isn't designed to replace it. I would guess that we will have cost basis on individual holdings within the platform. I can't imagine the trouble Jones would get into if they launched a program and then didn't support the tax portion of it. Like I said before, there will be a tax efficient platform for NQ assets. If they have $500K or more and want all the things you just listed, we can use the SMA platform. Benefits to clients - Broader diversification than just one or two fund families. Specific reco's based on defined risk tolerance (which I know is supposed to happen now, but doesn't really happen well). Auto rebalancing on a consistent basis. This is going to happen whether the FA or client knows it is going to happen or not. There doesn't have to be a quarterly phone call and decisions made by clients or FAs in order for it to get done. Client gains flexibility. If he wants to use a custom mix of funds and ETFs, great. If he wants to go with what Jones recommends, great. It's like buying a Strategy portfolio fund from Goldman, but getting to decide that you don't want to do the R/E fund and replace it with something else. It also gives them another pricing option. I'd bet that all Jones FAs have missed some good accounts because we don't have a fee based pricing option. No matter how much we say A shares are the cheapest way, there's 10 magazines out there saying don't do anything but fee based. This one will in the long run bring more clients into Jones, therefore benefitting the client, the FA (recurring revenue), and Jones (again with the recurring revenue).hmmmm…I’ll hold my opinion on it until I see it in action, but it doesn’t seem to be that great of a platform. There are plenty of true quality SMA’s out there with minimums as low as 25-50k. There are plenty of asset allocation funds out there that reallocate all on their own. Finally their are VA’s (not that I am a proponent of VA’s) that allow for multi-fund diversification. It’s nice that they are finally including ETF’s. When I was at Jones I got an FSpend just about every time I sold one to a client. I was told that ETF’s were for short term traders and not appropriate for Jones clientele. Still I am a little skeptical about how well the whole thing will come together…
New-Indy,
First off, C shares are not a catch-all for managed money. And they are limited in amount. The Mutual Fund Advisory Program will be for 100K minimums. We have SMA’s for tax management. We have C shares for under 100K (technically you can go up to 250K). It sort of answers the advisory account issue. And on top of that, they will be adding individual securities to it down the road. They just need to be sure it gets rolled out correctly.
The way I picture advisory accounts for me in the future: C shares up to 100K, Mutual Fund Advisory for over 100K, and SMA’s for significant non-qualified money. We also have A shares and individual stocks, bonds, CD’s, annuities, etc. It’s not as complete as most brokerage firms, but it gets the job done. I don’t know of many clients that have needs beyond that. I am not running in the Ultra HNW arena (nor are 99.9% of the people on this board), so I don’t have much need or desire for other products.
Well I guess that makes sense. I think I have a total of maybe 5 clients that even own a mutual fund. Guess that’s why I left Jones, just not my focus. I prefer the programs I have access to compared to what I have read here, but if it works for you and your clients I wish you the best. Someone else can always clean up the mess if it doesn’t work out…
JUST KIDDING SO DON’T TAKE IT PERSONALLY!
Sounds good- defn out of the Jones box. Pricing will be int though. Is there any FA pricing discretion? Doubt it, but it sounds good otherwise. The ETFs will help a lot on the taxation issue, if used right. So no, it is not just like a reallocatiing fund. There will be more control than that. Nothing’s perfect–lets give Weddle some credit! (I LOVE life after Jones, but it is a good firm).
What does everyone else have for minimums? It's kind of a rip to the client and unfortunate trade-off to the advisor that everyone that doesn't qualify for higher breakpoints CAN'T use the advisory fee system. If you build a portfolio gradually with C shares, you'll have to wait to use the advisory fees when you have a new 100k all at once. Also the way it sounds it will have to be in a separate account from existing assets.
[quote=CIBforeveryone]
What does everyone else have for minimums? It's kind of a rip to the client and unfortunate trade-off to the advisor that everyone that doesn't qualify for higher breakpoints CAN'T use the advisory fee system. If you build a portfolio gradually with C shares, you'll have to wait to use the advisory fees when you have a new 100k all at once. Also the way it sounds it will have to be in a separate account from existing assets.
[/quote] Oh-and should have said--RJ has only 25k minimum.No, I'm not that sensitive. And you are right - if you do not do much MFD business, Jones would DEFINITELY not be a good place for someone. Not that you CAN'T do stocks, bonds, SMA's, etc., but Jones is so Pro-MFD that life would just be difficult. And I am OK with that, because I actually prefer MFD's. Takes some of the monkey off my back. But as I have said before on this forum, there are a thousand different ways to get to the same answer in investing. You need to have the best platform that fits your own needs and model. Just for curiousity sake, what types of investments are you using if you don't use any funds?Well I guess that makes sense. I think I have a total of maybe 5 clients that even own a mutual fund. Guess that’s why I left Jones, just not my focus. I prefer the programs I have access to compared to what I have read here, but if it works for you and your clients I wish you the best. Someone else can always clean up the mess if it doesn’t work out…
JUST KIDDING SO DON’T TAKE IT PERSONALLY!
Well if you drank the Koolaide I won’t be much help to you, but I specialize in structured products (not the kind that are in trouble) such as revertibles. I do quite a bit in equities, real SMA’s and private placements and etf’s. There are no trails or revenue sharing but my clients have controllable downside risks and specific upside potential (in the structured arena) that makes planning much easier and therefore much happier clientele.
I'm coughing up my Koolaide as I read this....Well if you drank the Koolaide I won’t be much help to you, but I specialize in structured products (not the kind that are in trouble) such as revertibles. I do quite a bit in equities, real SMA’s and private placements and etf’s. There are no trails or revenue sharing but my clients have controllable downside risks and specific upside potential (in the structured arena) that makes planning much easier and therefore much happier clientele.
“Controllable downside risks and specific upside potential” - Kind of sounds like an EIA to me.
Please…I get along with annuities as well as I get along with Jones people. The are both necessary for certain applications but I wouldn’t make a habit of using them…
Actually annuities might be more useful…
I heard that Jones FAs will be able to consider a “switch” from Ashares to the Wrap after 4 years of a holding period for the Ashares.
ETF questions for Broker24(Please do not read any snide attitude into my questions.)…and comments on what happens when you leave:
Why are ETFs good for investors now? Jones taught A class fund investing was an everlasting principle. Why is managed money now a "good idea"? Jones taught that A class fund investing was an everlasting principle. Is jones still teaching you all to open a prospectus and show the operating expenses to a client to "prove" that the A class fund is "cheaper" than managed money? (How embarrassing it is to find out that in many cases the undisclosed costs add up to be more expensive than managed money.) These are all questions that caused many of us to make life alterring decisions to leave. Many of us did not leave because of payout. We left because we were not competitive. Now that many of us have been providing ETFs and Managed Money, jones is just getting there and the rest of us are now providing Energy Partnerships, Equipment Leasing, Real Estate Partnerships, etc. Maybe jones will add these in 5 or 6 years. The difficult part is that when you decide to leave jones for sound business reasons, jones goes into a massive assault on your character. Many "friends" at jones will suddenly stop speaking to you because they are told that anyone leaving jones is unethical. Anyone leaving should be prepared for this.I’m not B24, but I’ll answer your questions. I’m sure he’ll answer you with his own response.
ETFs are like any other investment. Some are good, some aren't. Jones has a focus list of ETFs, all Vanguard and iShares, that they track. There's even a report approved for the public that talks about the basics of ETFs. For those investors who want access to the specific indexes, they are a great option. As FAs it is our responsibility to figure out if ETFs are better or if there is a better fund option for our clients. Old habits are hard to break and Jones is deeply rooted in a mutual fund habit. I don't believe they are saying that ETFs are "suddenly" good for investors. I think as a part of the new fee based program they are giving us many options including no load funds and ETFs in addition to traditional funds. There will be a lot of old dogs at Jones who won't be able to learn the new tricks coming out. They'll stick with the A share is always better routine. If you read the other thread that I've been participating in you might get the impression that I'm one of those guys. I'm not BTW. I am excited that I can give my clients more options than I can now. I think it boils down to the Managing Partner. In the past, Bachman and Hill were unwilling to deviate from the age old A share principle. Weddle can see past the ivory tower his office sits in and recognizes that the industry is moving/has moved toward a solutions based industry vs a product based industry. He's willing to rock the boat and say that fee based isn't bad. In fact, we may get more clients because of it. And our revenue stream will go up. The famous last words of a dying church are "We've never done it that way before". Well, Jones in some ways could be compared to that dying church. Finally, someone has decided that they don't want to keep things the same for the sake of keeping things the same. And I'm happy they're doing it. I'm gonna guess that Jones won't be adding Real Estate LPs or Energy Partnerships anytime soon. They'll bend only so far.I agree with some of what you say ice. But the clients who need things like the evil non traded REITS, 1031’s and Oil & Gas programs are the ones we all want. What is wrong with putting 10% of a clients money in something like that if they are an accredited investor, which they usually have to be? Someone with $1 million plus in invested assets in addition to their IRA might want something other than funds or ETF’s. Those are the clients we all want. If you are spending all your time with people who only need funds you might want to prospect up a bit. Bear in mind I do agree that for the MAJORITY on America, funds are ok, but the competition in our industry is not for those people.
[quote=GoneIndy02]ETF questions for Broker24(Please do not read any snide attitude into my questions.)…and comments on what happens when you leave:
Why are ETFs good for investors now? Jones taught A class fund investing was an everlasting principle. Why is managed money now a "good idea"? Jones taught that A class fund investing was an everlasting principle. Is jones still teaching you all to open a prospectus and show the operating expenses to a client to "prove" that the A class fund is "cheaper" than managed money? (How embarrassing it is to find out that in many cases the undisclosed costs add up to be more expensive than managed money.) These are all questions that caused many of us to make life alterring decisions to leave. Many of us did not leave because of payout. We left because we were not competitive. Now that many of us have been providing ETFs and Managed Money, jones is just getting there and the rest of us are now providing Energy Partnerships, Equipment Leasing, Real Estate Partnerships, etc. Maybe jones will add these in 5 or 6 years. The difficult part is that when you decide to leave jones for sound business reasons, jones goes into a massive assault on your character. Many "friends" at jones will suddenly stop speaking to you because they are told that anyone leaving jones is unethical. Anyone leaving should be prepared for this. [/quote] Listen, I guess Spiff sort of answered it. But I will give my own slant. People have historically bashed Jones for many things, among them, their pro-A share stance. Now that Jones is actually adopting many of the things that bothered people, they are again bashed. The fact is that the "new" leadership at Jones is recognizing that there are issues beyond just what is "cheapest" for the client long term, such as perception (i.e. conflict of interest), choice, firm revenue diversification (all our revenue eggs are in the one proverbial basket), competitiveness with other firms' offerings, and increased income to the firm (GP's) and FA's. I think they also recognize the demographic issues at hand (we all will have more clients redeeming securities than adding over the next 10-15 years). After all, it is a business, and I admire them for recognizing that and adopting important changes. Is every choice, decision, and value that they hold, in my opinion the best? No. But I have yet to be introduced to one firm that is unanimously considered the best in all areas of the business. We cannot be all things to all people, and we certainly aren't. That's why advisors leave. But I think Jones (or at least the current leadership) deserves some credit for acknowledging their weaknesses and choosing to address them. And to be honest, I am not sure I want to be involved in Energy Partnerships, Equipment Leasing, Real Estate Partnerships, etc. Those can be effective when used properly (teaching 11,000 advisors how to use them properly is a challenge at best). But I would prefer that my firm stay out of ecclectic investment areas that can get us in trouble. We have made mistakes in the past, and I don't want to be wrapped up in the next mutual fund scandal, CDO crisis, or market timing scheme.