ALLREIT -

I hate the "A" share system as much as anyone currently at Jones.  And when my 3 yrs are up will be out of here for that and many reasons.  And as noted above I've never even heard of this form they are talking about. 

However, your analogy apears flawed in my opion.  The disease is the customer's financial situation not the mf's.  As a doctor I am going to recommend the best way I know how to fix the problem I diagnose.  Under most circumstances I will not continue treatment in the methods prescribed by other doctors although I may consider them.  If I do that I will soon have hundreds of solutions and be responsible for them.  Sure I can look on morningstar for 10 minutes to check out a fund.  But try doing that for hundreds of funds every quarter.  That is going to take a lot of time.  You can't assume all those funds will be great indefinitely it takes constant effort and lots of it.  And the dilema at Jones is even worse if it is a no load with zero compensation. 

Even when I get to a fee based model (ASAP)  I will still try to limit the number of funds my clients hold as much as I can within the individual situations. 

Bottom line is, I am not condemning fee based at all. As I said, I would

love to do more of it. Look at it this way; in fee based, you get a client’s

portfolio to move over in kind. You don’t like their stuff, it’s not part of

your model, so you move it around and shape it how you want. No big

deal since you are just charging 1% for whatever you do. What you are

trying to tell me, is that since I get a “commission” of say, 2.5% once

upfront, and I want to rebalance to my model, that I am somehow doing

something wrong (and stop saying we also charge 150BP in expenses - I

have never used a MFD that charges close to that). In fee based, you are

making FAR more than on commission, for the SAME work. So don’t

condemn me for charging for my services, when the whole reason you are

doing it is to bash Jones. I would LOVE to get 1% on all my assets. It’s a

GREAT reason to bash Jones. I WANT TO MAKE MORE MONEY! Say it

louder!



One of the things I have not said previously is that there are plenty of

times I leave clients in what they already have. If I am happy with the

fund family choices, or with the funds they are holding, I will leave them.

Even if it means no payout. Maybe I don’t need to do anything for them,

so I am not really concerned about the payout. Do some people move

them out just to make commission? Damn straight. And it happens in

every firm, not just Jones. Just like in fee based you have plenty of 1%

accounts that you do NOTHING for. We all live in glass houses.



I can’t wait for a better fee based platform. I should be able to give

clients more choices. I have lost some prospects that do not like the

commission model. I am giving Jones 3 more years to come up with

something acceptable (that is when my book will be where I want it).

[quote=The Truth]Transferring in kind would never reduce the amount of switches.
Compliance is pretty much kept under control as long as preferred funds are
used.[/quote]

It wouldn't reduce the amount of switches but they would be visible......rather than invisible.

Compliance is pretty much kept under control as long as preferred funds are used.

I agree with Spiked on this one. Compliance reports directly to management and not the regulators so clearly a conflict is apparent even at the top level. Self regulation at least at EDJ is a farce. They are employess also and do what they are told.

Always remember that compliance works for whomever signs their check.  They are not there to protect the consumer and certainly not to protect the rep.

[quote=anonymous]Always remember that compliance works for whomever signs their check.  They are not there to protect the consumer and certainly not to protect the rep.[/quote]

They are there to protect the GP’s, but still they will also face a conflict when they say ‘no’ to a revenue-generating transaction right?

The problem is you cannot expect “compliance” to take a stance when you

are paying people $40K per year. Put yourself in their shoes. Would you

take on a big producer/GP at Jones when you are barely able to make ends

meet? No way and that is why nothing is ever done.

[quote=gad12]

I've been at Jones 2 plus years now and I've never even heard of this liquidate and transfer form.  I can tell you it's not something that anyone has ever encouraged me to use.  IT'S CALLED AN ACAT FORM, GENIUS!

Do you have a responsibility to research every mf that some prospect may have in order to keep the "best" ones?   UH, YEAH!  YOU ARE RESPONSIBLE TO "KNOW YOUR CLIENT."  IF SOMEONE HAD THE DODGE & COX STOCK FUND, YOU WOULD TELL THEM TO SELL?????  YOU ARE PERFECT FOR EDJ! 

In my opinion this sounds like a terrible idea regardless of commission or fee based. (Of which I prefer fees)  

Hey dogs why don't you read the initial post over again.  They are not talking about a normal ACAT transfer.  Who's the GENIUS?

And if you'd read my other post above you'd notice I said I occasionally will keep a fund, but as a general rule I do not.  I do not want to waste all of my time monitoring hundreds of funds that will indefinitely pile up if I keep every good fund that every client transfers in.  Keeping up with manager changes and knowing when funds are not worth holding anymore would be a huge time burden and would bog down your time from more important things.

With all due respect gad, what’s more important than your clients’ financial

well being?

[quote=The Truth]The problem is you cannot expect “compliance” to take a stance when you
are paying people $40K per year. Put yourself in their shoes. Would you
take on a big producer/GP at Jones when you are barely able to make ends
meet? No way and that is why nothing is ever done.[/quote]



It’s also a cultural matter in sales driven organizations. The top
sales people are gods, and basicly untouchable. In other companies that
care about compliance and ethics, thats not so much the case.



A good analogy is Ford with Pinto. They (Ford management) figured the
cost of wrongful death lawsuits is so much per car, and that was going
to be less than the cost of covering the gas tank with a rubber sheet.

From my memory, the "liquidate and transfer" form IS the ACAT form. You just check the "liquidate" box instead of the "in-kind" box. It's the same with my current custodian, though now I have no incentive to check "liquidate".

On another note, I always found the time issue to be a huge conflict of interest with Jones.

I was also in the same region as Ilovedogs in NC. The RL mentioned  had north of 3000 accounts. Let's say that's 1500 households. If you wanted to have an annual review with each HH once a year, you'd have to do 6.25 appt's each day.

Also, if you have some "core" holdings that are used accross the board and a change needed to be made, how do you decide who gets the update first? There was no system in place at Jones to make global changes to portfolios like I have in the independent world.

Just a couple of issues I had at Jones...

[quote=gad12]

Hey dogs why don't you read the initial post over again.  They are not talking about a normal ACAT transfer.  Who's the GENIUS?

And if you'd read my other post above you'd notice I said I occasionally will keep a fund, but as a general rule I do not.  I do not want to waste all of my time monitoring hundreds of funds that will indefinitely pile up if I keep every good fund that every client transfers in.  Keeping up with manager changes and knowing when funds are not worth holding anymore would be a huge time burden and would bog down your time from more important things.

[/quote]

Umm Yeah....It's all about you and your convenience.  Not about the client and whether the funds they currently own are better than the preferred funds.  Who wants to actually learn about investments.  Much easier to swallow the pablum that Jones gives you.

By the way......the reason that Jones wants you to sell the preferreds (besides the kick back, oops I mean revenue sharing) is that they send the prospectus for funds you sell to the client with the confirmation.  They don't want to have to have a huge stock of odd ball prospectuses.  It's much easier to have a large inventory of the preferreds on the shelf than to have to scrounge around for that Oppenheimer Small Cap International Fund you happened to sell.  (I already know it has a minimum so don't go there )

Just not cost effective to have you sell off the wall funds from their clerical perspective.

Babbling,

Great comment, accept Oppenheimer is now a preferred.  They are loading up on the perspectives back in St. Louis.

Just a thought,  Maybe people are clueing in on the Fortune 100 best companies to work for.  They dropped from the Top 10 to Number 29.  Maybe next year they will drop out of the top 100 altogther.  I love the turnover rate, 14%.  That must mean that the IR is 45% turnover and the back office and Sales Assistant (BOA) is 5-8%.

[quote=gad12]

Hey dogs why don't you read the initial post over again.  They are not talking about a normal ACAT transfer.  Who's the GENIUS?

And if you'd read my other post above you'd notice I said I occasionally will keep a fund, but as a general rule I do not.  I do not want to waste all of my time monitoring hundreds of funds that will indefinitely pile up if I keep every good fund that every client transfers in.  Keeping up with manager changes and knowing when funds are not worth holding anymore would be a huge time burden and would bog down your time from more important things.

[/quote]

Gad (what a name), you said there wasn't a form.  You can either ACAT and LIDUIDATE everything after TRANSFERRING which requires the ACAT form or LIQUIDATE at the holding firm.  You still have to use an ACAT to get the funds or have the firm send a check. 

Great comment, accept Oppenheimer is now a preferred.  They are loading up on the perspectives back in St. Louis.

Thats what they're called now? Funny- I thought they were called prospectuses...

Sorry Blarmston.

I was thinking about the Investment Perspective that I use to pay $250/month to send out to clients and prospects when I was at Jones.  I mistyped!

[quote=Starka]With all due respect gad, what’s more important than your clients’ financial
well being? [/quote]

Getting Paid and getting laid?

If Gad12 wants to do the right thing for clients (research their portfolio’s, do the minimum trading necessary to rebalance, place them in the lowest cost/best performing funds): At EDJ he won’t eat.

On the other hand if does what EDJ wants, (Churn the account into EDJ preferred funds, don’t waste time that isn’t earning you money, don’t do anything personal that adds value), he will do ok, and have a bright future.

Let’s face it, if spending an hour doing  portfolio analysis precludes you from making $4000 in commisions, you aren’t going to spend time doing that. Most customers trust you to make sound recomendations,

EDJ’s A share business model forces a conflict between what is best for the adviser and what is best for clients. There is no way to get around this, even if you claim to act in the best interests of clients. And just to get a sense of how much depends on kickbacks from preferred funds:

[quote]For the year ended Dec. 31, 2005, Edward
Jones received approximately $172 million in revenue sharing payments
from the preferred fund families as designated throughout 2005.
For that same period, Edward Jones’ net income was $330 million.[/quote]

http://www.edwardjones.com/cgi/getHTML.cgi?page=/USA/product s/mutualfunds_revenue_sharing.html

Say hello to Edward Jones.

[quote=EDJ to RIA]Also, if you have some “core” holdings that are used accross the board and a change needed to be made, how do you decide who gets the update first? There was no system in place at Jones to make global changes to portfolios like I have in the independent world.[/quote]

This is so important if you add value by picking stocks for people, (i.e you are adding value), After the big REIT runup this year, it was very easy to just call up a select list of clients, tell them I recommend liquidating their positions, and then doing that all in one sweep.

Another aspect which is dumb at EDJ, is the lack of an online trading platform for clients. Stoopid, because alot of people like to play the markets, and that is ok in the context of a complete plan.

AllReit-

I actually disagree with you regarding online trading for clients.  I would rather they "play" the markets at some other firm.  I really like managing their serious money.  I think Jones is correct in keeping the IR protected.

The one thing of many I disagree with is their use of the Liquidate and Transfer Form.