Earlier this year, Edward Jones principal Jordy Evans (left) began hiring more recruiters and introducing shifts in the company’s hiring of veteran advisors. The firm’s 2011 goal is to add 50 veteran advisors, about the same number it added in 2010.
And the firm has other changes in store, according to Evans, such as a new Unified Managed Account program. Such steps should help it expand from its current base of about 12,616 advisors (most in the United States) with about $573 billion in assets under management, he noted in an AdvisorOne interview with Janet Levaux.
Q: What’s Edward Jones' approach to hiring veteran advisors?
A: Many people in the industry don’t realize that, in addition to hiring individuals from a variety of professions, we’ve also hired industry veterans for years, since the start of the company [in 1922].
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In 2010, we hired 50 veteran advisors with $2.2 billion in assets who met our criteria and qualified for our transaction package. They had worked with clients for three years or more, had $20 million or more in portable assets, and had substantial and sustainable yearly gross production [or fees and commissions] of $150,000 and up.
The average was $300,000, up to $50 million in assets and 13 years of experience. About 50% of veteran advisors came from wirehouses, with others coming from regional firms, independents and other channels, such as banks.
We also hired 375 individuals with licenses but without experience last year. These professionals might have worked in a back office or as an assistant, and they could have been with a group that specialized in insurance sales, for instance.
In 2009, we hired 101 veteran advisors and 400 licensed professionals.
About 15% of our 12,000 advisors today had a Series 7 before joining us — in other words, roughly 1,840 transferred over to us from other firms.
Q: What does the transition package look like?
A: Our transition package is designed to be fair for the individual advisor – and is designed to match the DNA of the firm. It has no golden handcuffs or contracts, for nine to 14 years, as is common in the industry today.
First, it includes an income guarantee for three to 12 months, depending on the business. It’s considered a floor not a ceiling. Second, there is a bonus based on assets that move over to us in the first six months, and it might be roughly $2,000 per $1 million moved.
The third element is a production bonus in the second six months. Our normal payout is 40% of anything commissionable, starting with the first dollar. There is not grid. If you meet certain criteria, say advisors are doing 85% of what they had done earlier, we may pay another 40% or double that payout.
When you add all this together, it is very attractive. Plus, on top of all this, there are our profit sharing and other plans. For instance, one gives 4%, and that is not matching; it goes to everyone with 1,000 hours or more of time with Edward Jones.
Profit sharing is vested from the first day. We also pay trimester profit bonuses, factoring in commissionable and other revenue generated for the firm … These bonuses can add significantly to advisors’ income.
Q: How did you come to be in your current position?
A: I started at Edward Jones 17 years ago as a career-changer. Before joining Edward Jones 17 years ago, I worked as a traveling salesman in the chemical industry selling plastic products.