Black Edward Jones Advisors Are Set Up to Fail, Class-Action Suit Alleges

The company's salary assignment policy "sets starting salary based on the compensation FAs earned immediately prior to starting with Edward Jones — a practice that is well understood to perpetuate market discrimination," it alleges.

"As a result of these policies, Edward Jones' Black FAs receive less compensation, fewer promotions, and are terminated more frequently than their white peers," the complaint alleges.

Asset Transfers

The firm's asset transfer policy "permits senior FAs to choose which junior FAs receive their transferred assets," according to the suit. "The result of this policy is that a predominantly white FA workforce transfers their client accounts to other white FAs, and not to Black FAs. They do so with the blessing of a predominantly white Edward Jones Home Office, which tracks and approves all client transfers."

White advisors on average can receive tens of millions of dollars' worth of client accounts upon starting in the job, receiving substantial commission revenue as they start on the path to success, according to the suit.

"Black FAs on average receive far fewer assets — if any at all — and the quality of those assets is far more likely to be poorer. These disparities compound over time, with Black FAs receiving less compensation and fewer career advancement opportunities than their white peers," the complaint contends.

"Plaintiffs here are Black FAs who experienced this discrimination. Their core story is common to Black FAs across the country."

While the client transfer policy has disparate impact on Black advisors, the complaint claims, "this is not simply a disparate impact case. Edward Jones knows that Black FAs are compensated less than their white peers, but has done little to correct this discrimination."

Edward Jones for years has tracked advisor compensation and demographic data, the suit says. In 2018, in recognition of the growing pay gap between white male employees and the rest of the company, Edward Jones started providing incentive payments for advisors to make "Goodknight" transfers — transfers from senior advisors offloading clients — to women and people of color, according to the lawsuit.

"But these minimal efforts did not close the pay gap. And in 2021, Edward Jones paid $34 million to settle a case brought by a group of Black FAs who sued based on these same discriminatory asset transfer policies," the complaint alleges.

As part of this settlement, Edward Jones agreed to programmatic relief designed to address racial equity, but the firm "has still not meaningfully changed or remedied its past practices, which continue to harm Black FAs today. As a result of this intentional treatment, Edward Jones has discriminated — and continues to discriminate — against Plaintiffs and Black FAs" through the two policies cited, the suit alleges.

'Disproportionately Terminated'

"Black FAs nationwide have been disproportionately terminated and denied equal compensation and business opportunities relative to their white counterparts," violating federal civil rights law and various state and local statutes, the plaintiffs contend.

One plaintiff, shortly after starting as an advisor at Edward Jones, "received a Goodknight asset transfer of low-quality client accounts. These assets were 'bottom of the barrel' assets that generated no more than $2 per month in fees," the complaint alleges.

During training, he learned of white advisors "who walked into far better situations in other offices," it contends. Because he had low-value assets, the Black advisor "struggled to meet Edward Jones' revenue expectations." Edward Jones placed him on a performance improvement plan in January 2024 and terminated him in April 2024, according to the complaint.

Another plaintiff left Edward Jones a few months after starting last year due to discriminatory treatment, the lawsuit contends. She learned that a new white advisor on the same job level had received at least $23 million in Goodknight asset transfers and that the company had provided him with his own branch office administrator, it says.

The Black advisor, however, never received any asset transfers and a senior white advisor in her branch told her not to use that office's branch office administrator, the suit contends.

Edward Jones' corporate leaders and advisors are predominantly white, with 18% of leaders and 10% of its advisors defined as people of color, according to the lawsuit.

"Because the term 'People of Color' includes many non-white races, an even smaller percentage of both groups are Black or African American," it says.

The complaint, which also outlines alleged discrimination against the other four plaintiffs — one, who was fired, contends that two senior white advisors had poached the best clients from his Goodknight transfer — seeks injunctive, declaratory and "make-whole" relief and monetary damages.

'Fairness, Respect and Inclusion'

"Edward Jones is committed to fostering a culture of belonging for our associates and clients and to making a positive impact in the communities we serve. We strongly deny the allegations in the lawsuit, which do not reflect our values or how we operate as a firm," an Edward Jones spokesperson told ThinkAdvisor by email Wednesday.

"Edward Jones takes its responsibility to promote fairness, respect and inclusion seriously and does not tolerate discrimination or bias in any form. We intend to defend the matter and remain focused on supporting our associates, serving our clients, and acting in accordance with our purpose and values."

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