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Ed Jones Rolls Out New UMA Platform, Expands Veteran-FA Recruiting Efforts

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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].   

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.

I happened to know a Merrill Lynch advisor who suggested that I look into becoming an advisor. But that brokerage firm was not for me, he said, since I need to have my own work scene.

I was an advisor for more than 10 years in South St. Paul, Minn., and seven years ago I started work as a liaison for a large number of branch offices in several states – 765 branches with $43 billion in assets and $225 million in yearly sales . This year, I was tapped to work on business growth.

Q: What is Edward Jones doing to expand its results with you in your new role?

A: We feel that our space, which if for the hybrid FA — who can be in business for themselves but not by themselves – deserves some new efforts and focus. I’ve been working to revamp the recruiting team. Darin Dunlap came in from Smith, Moore & Co. in June of 2010 and is also instrumental to this work.

We have hired three more recruiters in the past two months — Vince Sullivan in Denver and Cybil Jones in Orlando, Fla. Soon, we will have a new recruiter in New York. We also have six recruiters in the home office [in St. Louis] and two transition specialists for veteran advisors.

We just changed the hiring process as of February 28, so we can bring them on much more quickly. And to add more than 50 this year, we are building out our infrastructure, though we recognize that this will take awhile.  

We want to serve and service existing clients better – in more client-focused and measurable ways.

The largest population of Edward Jones advisors is in the highest production segment of $500,000 up – that’s 23%, or about 2,800, of our FAs. We have 21%, or 2,500, in the $300,000-$500,000 category.

This is really shocking, in a good way. According to a recent Pershing study, only 4% of advisors make over $500,000, and just 8% are in the $250,000-$500,000 category.

We are very happy to have advisors in these categories join us and are looking for more like them.

Q: What plans does Edward Jones have for its advisory platforms?

A: We have added nearly $60 billion in assets to our advisory platforms since 2008, which makes us one of the four or five largest in the industry.

During the week of April 25, we will launch a new Unified Managed Account platform for a pilot group of advisors. [A firm-wide rollout will follow this summer.

Q: Would you like to share any more thoughts on recruiting?

A: The financial-advisory industry often acknowledges that recruiting and retention will play a major role for broker-dealers in the future. According to a 2010 Pershing-FA Insight study, firms will need to add 46,000 investment professionals each year just to stay even. Plus, only12% to 13% of financial advisers change firms in a typical year according to Cerulli Associates.

What are experienced financial advisors looking at when they decide they may want to change firms? More money, brand strength, independence and general dissatisfaction with the firm they are currently employed by. And, of course, the transfer package (which often includes bonuses) also helps.

We know we have a 10% chance of getting an advisor to join us when we talk to them by phone, 40% when we talk to them in the branch and 80% when they visit our home office. 

Edward Jones believes in making this process much simpler for transfers, and that's a big focus for me and my team today. 


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