What’s your latest advisor headcount?
We had a good year in 2008 in terms of how we grow, which is through organic growth. We refuse to pay “front money” and don’t think it works. We attract good folks from other firms, but primarily attract those who are not yet financial advisors and who want our support to become advisors.
We were up a net 953 advisors through the end of 2008. We had targeted 8 percent to 10 percent growth and are hitting about 9 percent.
This growth is primarily in the United States, but we include the United Kingdom and Canada.
As of January 1, 2009, we had 11, 183 advisors in the United States, 634 in Canada and 338 in the United Kingdom. We’ve grown nicely in the United Kingdom and are getting to the point where the hiring pipeline is where it needs to be.
Have you recently modified your compensation or hiring?
I’d say that 2008 was not unique. We’ve just done what we’ve done in years past. In 2007, we added about 850 or so advisors. In 2006, we grew by 555.
The average age of people in our training program is 35. Most have done something else professionally for 10 to 12 years, such as being a CPA or a teacher, and they’ve been looking to get into this industry.
We have a terrific training program and are a private company, so we can invest in our trainees and their ramp- up over three to four years. We will get them to where they need to succeed in the long term.
We also continue to refine the screening process.
We’ve had great success in ’08 in the program we’ve been building for several years, starting new advisors through the “Goodknight” program, and two other variations of this program. One pairs a veteran producer who has too many clients with a new advisor, who works at the same branch for one to two years on a small percent of assets but a good number of accounts that are jointly serviced. The focus is namely on the new advisor providing stellar service.
This gives veterans more control over their accounts and new financial advisors a terrific start. We’re having an amazing success rate with this program. Some 600 of the advisors that started with us in 2008 are in the Goodknight program, which we began about seven or eight years ago. It involves lots of mentoring and support.
We also offer net advisors our partner plan, which allows them to share office space, but not clients, at a branch. And there’s a legacy plan that entails working on accounts on behalf of other advisors, who have clients that are out of their local service area or have moved away. The veteran advisor may then suggest that these client accounts be given to a new advisor via an introduction, which especially works well with our organic-growth plans.
How is Edward Jones positioning itself given all the changes in the industry?
Our culture is at the center of our firm and its growth. We position ourselves with our convenient locations and personal service. Individual investors like the local access and our calling on them. This builds face-to-face relations. It’s not always efficient, but it is effective.
In full bull markets, it’s hard to call attention to this approach. But now that we’re in a bear market, it’s easier to highlight. We are a pretty conservative place with an old-fashioned philosophy, which is buy high quality, diversify and be patient as a long-term investor.
We do not market or sell auction-rate securities or sub-prime mortgages. They didn’t fit with our quality requirements.
We work on our strengths to understand what we do well vs. what we don’t do well. I’ll take boring any day.
Our clients don’t pay us to be clever. Everyone wants quarterly earnings, dividends and increasing results.