[quote=footsoldier]

Jones has added two more firms to their kickback list. Its a pay to play environment. The GP's will pay fines because they can continue this back door arrangement and make double the current fines annually from it.

Sleaze to the core. Jones brokers with any integrity would get the hell out. Except they have it drilled into them that the firm cares about them and their families. And most who stay believe.

[/quote]

They sound like smart businessmen to me.

Well, it doesn't matter to my paycheck whether I sell kickback funds or not. The payout to the individual broker is small.

However, as you Jones people know, there is NO access to Jones brokers allowed for non-kickback vendor reps. All of the sales materials we get are from kickback vendors. Every meeting, trip and event is sponsored by a kickback vendor.

So let's say I sell something from a non-kickback vendor. Do I get in trouble? No. But why would I sell non-kickback funds, when I can just turn off my brain and follow instructions from American funds and Lord Abbott?

Sleazy.

However, as you Jones people know, there is NO access to Jones brokers allowed for non-kickback vendor reps. All of the sales materials we get are from kickback vendors. Every meeting, trip and event is sponsored by a kickback vendor.

That is not true.  I am an EX Jones broker and I could alway get any sales material I wanted from any firm that Jones has a selling agreement with.  True it isn't handed to you on a silver platter.  You actually have to use some effort an initiative to contact the companies you want to do business with.  They will be more than happy to send you all the sales literature and prospectuses that you want.  A wholesaler will have no problem dialing your phone number and educating you on their products.

You can also do some research on your own.  Look up ETF Connect and use Morningstar to research funds.  

Quit being so lazy.

You took the words out of my mouth Babs.

It's really a pot calling the kettle black scenario when you start blabbing about the revenue sharing arrangements Jones has with it's 8 preferred mutual fund vendors.  I felt a little guilty about this arrangement when it first hit the big screens, but then I started doing some research on my competitors.  The only downside to working for Jones as far as revenue sharing goes is that we don't get it from enough companies.  Here are the numbers from some of the players out there: 

AG Edwards (I stopped counting in the J's) - 46,  RJ - 70+, LPL - 27, SB - 44 w/office access, UBS - 21.

I don't know if that makes Jones stupid for not asking for revenue sharing from more companies or smart for cementing some good relationships with some good fund companies. 

I get material and hear from several other companies besides the ones on our preferred list.  Calamos, Pioneer, MFS, Columbia.  I actually started getting info from iShares recently.  I get emails from them constantly. 

Funny, but I can "turn off my brain" and only use a few fund families and still build phenomenal portfolios with great diversification and track records.  Just because I don't use any outside of the preferred list doesn't mean I can't do a great job for my clients. 

 Again Spiff you do not get it.EDJ NET 360MIL-REV SHARING 140MIL. No other firm  receives that much in rev sharing of net.If you didnt use only 8 firms you would not cut such sweet deals.Open the platform and see what happens to rev sharing and edj net.Watch the fee based platform you get will be with the 8-why? Its about the money!!!The GPs do not want a pay cut. Again you do your own research and leave out the most important piece-sorta like when Hill didnt give the sec the whole truth and the Dept of Justice was called in.

[quote=FREE] Again Spiff you do not get it.EDJ NET 360MIL-REV SHARING 140MIL. [/quote]

This is the most goofball comparison I consistently see. 

You can’t compare Net to Revenues.  It just doesn’t work that way.

EJ could have made 500 million on Insurance Products, does that mean they are in the negative since their ‘Net’ was only 360.  You have to put Revenue Sharing into their entire pot of Revenue streams and then back it out.  I’ve not done the math in a couple of years, but last time I did, Revenue sharing made up about 9 percent of EJ’s Net.  (I’ve mentioned this before).  It does not make up almost 50 percent the way this quote leads you to believe.  Don’t get me wrong…9 percent is still a lot and it would hurt if it were not there, but it wouldn’t cause the world to stop spinning for Edward Jones.

PLP-

The only way your argument would hold up is if all LP's shared with the GP's 100% of the total profit. You and other LP's share an income stream determined by the GP's. Part of the profit, but clearly a very small part. Most of the profit is shared amongst the equity owners. You still can't see that... Wow.

[quote=proudlp] [quote=FREE] Again Spiff you do not get it.EDJ NET 360MIL-REV SHARING 140MIL. [/quote]

This is the most goofball comparison I consistently see. 

You can't compare Net to Revenues.  It just doesn't work that way.

EJ could have made 500 million on Insurance Products, does that mean they are in the negative since their 'Net' was only 360.  You have to put Revenue Sharing into their entire pot of Revenue streams and then back it out.  I've not done the math in a couple of years, but last time I did, Revenue sharing made up about 9 percent of EJ's Net.  (I've mentioned this before).  It does not make up almost 50 percent the way this quote leads you to believe.  Don't get me wrong...9 percent is still a lot and it would hurt if it were not there, but it wouldn't cause the world to stop spinning for Edward Jones.
[/quote]

Proud, actually you are wrong.  There is no cost associated with Revenue Sharing Income, so the revenue flows 100% to the bottom line.  You are assuming Revenue Sharing revenue flows through at the overall company margin.  Not so.

Gross commissions (income) have significant costs associated with it, such as broker cut (40%), FICA taxes (on the commission), etc.  A dollar in revenue sharing is FAR more profitable than a dollar in gross commissions.

We received $172mm in revenue sharing income in 2005.  NET income for same period was $330mm.  That entire $172mm in revenue sharing income was 100% profit.  If you took out that $172mm, you would also reduce Net Income by $172mm.  OTOH, reducing gross commissions by $172mm would reduce Net Income by maybe only $100mm.

It's just simple accounting.  Works this way in every business.  Some revenue streams are more profitable than others.  Revenue Sharing is a "fee" with no associated expense.  I'm not arguing right or wrong - just the facts.

Now, I have no idea how much other firms actually collect in Revenue Sharing.  But I am willing to guess (given that EDJ FA's are the "only" profit center) that our Revenue Sharing is a much larger % of total company income AND profit than compared to other firms.

Frankly, it makes me a little nervous.

[quote=Spaceman Spiff]

Funny, but I can "turn off my brain" and only use a few fund families and still build phenomenal portfolios with great diversification and track records.  Just because I don't use any outside of the preferred list doesn't mean I can't do a great job for my clients. 

[/quote]

Great quote spiff. I have been away from the mothership for 6 months. If I am not careful I will find myself doing the exact same mutual funds out of habit. Not that it is bad it just shows you the psycho baabbo stuff that Jones taught us. "The world is flat...don't go there!"  This really bothered me, but thats another story.

[quote=Spaceman Spiff]

The only downside to working for Jones as far as revenue sharing goes is that we don't get it from enough companies.  Here are the numbers from some of the players out there: 

AG Edwards (I stopped counting in the J's) - 46,  RJ - 70+, LPL - 27, SB - 44 w/office access, UBS - 21.

I don't know if that makes Jones stupid for not asking for revenue sharing from more companies or smart for cementing some good relationships with some good fund companies. 

[/quote]

Or you could open your own RIA and get NO revenue sharing, just fees for service directly from the client. 100% payout, almost no conflicts, and virtually no compliance headaches.

per the documents from the Justice Dept-just call its all public record-approx 10% went to the ir thru profit sharing contributions and p&l credits.The 90% went to the GPs.Jones drones keep spewing the same crap they hear from STL.That is why you have to send out a disclosure doc with each confirm-Other firms don’t!! why?   BECAUSE IT IS A CONFLICT OF INTEREST.If it wasn’t a major source of income why keep a limited platform?

If I were a betting man, Jones will continue to add other fund families as long as they pay. The more funds the more profits. Who is hurt by this?

The supposed most important person in the equation..i.e., the shareholder is left to pick from the payors directed by most FA's.  Seems one-sided especially if the FA listens to their management and vets who want to be in management.

More than half a million views.



My, my.

[quote=Philo Kvetch]More than half a million views.

My, my.[/quote]

Most of them were done by poopachute

Is that goforbroke’s latest incarnation?

The good thing about the Focus List of kickback fund partners is that it allows me to not waste time researching funds. Rather than doing my due diligence on Putnam and Federated, I need to be selling. Perhaps the next blow up will be at American, who knows. Why should I waste time researching?

[quote=Broker24]

[quote=proudlp] [quote=FREE] Again Spiff you do not get it.EDJ NET 360MIL-REV SHARING 140MIL. [/quote]

This is the most goofball comparison I consistently see. 

You can’t compare Net to Revenues.  It just doesn’t work that way.

EJ could have made 500 million on Insurance Products, does that mean they are in the negative since their ‘Net’ was only 360.  You have to put Revenue Sharing into their entire pot of Revenue streams and then back it out.  I’ve not done the math in a couple of years, but last time I did, Revenue sharing made up about 9 percent of EJ’s Net.  (I’ve mentioned this before).  It does not make up almost 50 percent the way this quote leads you to believe.  Don’t get me wrong…9 percent is still a lot and it would hurt if it were not there, but it wouldn’t cause the world to stop spinning for Edward Jones.
[/quote]

Proud, actually you are wrong.  There is no cost associated with Revenue Sharing Income, so the revenue flows 100% to the bottom line.  You are assuming Revenue Sharing revenue flows through at the overall company margin.  Not so.

Gross commissions (income) have significant costs associated with it, such as broker cut (40%), FICA taxes (on the commission), etc.  A dollar in revenue sharing is FAR more profitable than a dollar in gross commissions.

We received $172mm in revenue sharing income in 2005.  NET income for same period was $330mm.  That entire $172mm in revenue sharing income was 100% profit.  If you took out that $172mm, you would also reduce Net Income by $172mm.  OTOH, reducing gross commissions by $172mm would reduce Net Income by maybe only $100mm.

It's just simple accounting.  Works this way in every business.  Some revenue streams are more profitable than others.  Revenue Sharing is a "fee" with no associated expense.  I'm not arguing right or wrong - just the facts.

Now, I have no idea how much other firms actually collect in Revenue Sharing.  But I am willing to guess (given that EDJ FA's are the "only" profit center) that our Revenue Sharing is a much larger % of total company income AND profit than compared to other firms.

Frankly, it makes me a little nervous.

[quote=farotech]The good thing about the Focus List of kickback fund partners is that it allows me to not waste time researching funds. Rather than doing my due diligence on Putnam and Federated, I need to be selling. Perhaps the next blow up will be at American, who knows. Why should I waste time researching?[/quote]

Why waste time working for a company you don’t believe is a benefit to you?  Find a company or occupation you believe in, your life is yours unless you give it to something you don’t support.

Great post Max.  As I mentioned in a thread a few days ago or last week…A GP came to our Spring Regional to show all the ins and outs of the money flow at Jones.  Revenue sharing was a very large part of the bottom line.  I understand business 101…and I will agree Revenue sharing isn’t 100% profit…but it’s damn close.  If it wasn’t so important to the health of the company…why don’t they say no and open the platform? We all know the reason they won’t…because the more you have flowing to a few, albeit ok funds, the more power you wield(sp) the more safe the kickbacks become. Also, the cut of profits Lp vs Gp…is more 85% GP and 15% LP.  The pure $'s grow every year…remember back when they paid no LP but paid GP. Nice!! After pressure and a brokers leaving…they ghost credited the LP…GP’s are nothing put greedy crooks.  And of course,they were all top producers before getting into the club!! RIGHT!! 

[quote=Maxstud] [quote=farotech]The good thing about the Focus List of kickback fund partners is that it allows me to not waste time researching funds. Rather than doing my due diligence on Putnam and Federated, I need to be selling. Perhaps the next blow up will be at American, who knows. Why should I waste time researching?[/quote]

Why waste time working for a company you don't believe is a benefit to you?  Find a company or occupation you believe in, your life is yours unless you give it to something you don't support.
[/quote]

Thanks, Dad! (Rumples my hair.)