Edward Jones is being sued by four investor clients who allege the firms’ advisors have “unlawfully shift[ed] their commission-based accounts to a fee-based program” over the past five years in what they refer to as “a reverse-churning scheme.”
The class-action suit was filed last week in an Eastern District of California court by plaintiffs Edward Anderson, Raymond Keith Corum, Jesse Worthington and Colleen Worthington.
It notes that Edward Jones has “substantially increased client assets managed in its Advisory Programs every year since the introduction of Bridge Builder [which includes portfolios based on proprietary funds] in 2013.”
These assets stood at $265 billion in 2017 vs. $101 billion in 2013, according to company reports. During this period, the suit points out, Edward Jones generated $17.2 billion in revenue from asset-based fees; it also paid advisors and partners $272 billion in bonuses.
Edward Jones “made misleading statements and material omissions to [its] clients … about the amount of fees they would pay after their assets were moved into one of the Advisory Programs and about Edward Jones’ preference for investing in proprietary funds,” the suit claims.