Edward Jones and my remorse

[CRLLS]

After the next market meltdown and recession, check again and see how many of those EJ offices are still there.

As a matter of fact, I wouldn't be surprised if there weren't more EJ offices at that point. When I was on unemployment some years back, I had many blind inquiries with jobs of a financial something or other. I assumed it was for being FAs or insurance salesman of some sort. I guess in these days, they can be one and the same.

 

[aja8888]

As a matter of fact, I wouldn't be surprised if there weren't more EJ offices at that point. When I was on unemployment some years back, I had many blind inquiries with jobs of a financial something or other. I assumed it was for being FAs or insurance salesman of some sort. I guess in these days, they can be one and the same.

There may be more offices, but I'll bet the FA's that were there during the meltdown would have been replaced by new ones!

 

[PatrickA5]

I'm not a big fan of EJ or other advisors for all the reasons mentioned previously.

But..... I recall a relative who used an FA. The FA set things up for her to easily invest in an IRA account automatically every monthly, and held her hand through the 2008 market crash. The FA kept her from panicking and selling near the bottom. Without the FA my relative would have been of those people who in their mid 60's walks out of the SS office wondering "How in the world can I live of this pittance for the rest of my life?"

For some people they are a necessary lesser of two evils. No everybody is a LBYM investing maven like those in this esteemed group. Sad, but true.

This got me to thinking...

I have a daughter that would probably be better off with someone like Eddie. She ignores anything financial. She's just not interested at all. I'm surprised she even pays her bills. She's very smart (currently working on a Phd), but finances are pretty much evil to her. I'm not sure how she'll ever retire. I did manage to get her set up with a Fidelity Roth years back. I've been bugging her to transfer a couple of old teacher's pension plans to an IRA before she forgets they exist - but 5 years later still no movement.

 

[SecondCor521]

This got me to thinking...

I have a daughter that would probably be better off with someone like Eddie. She ignores anything financial. She's just not interested at all. I'm surprised she even pays her bills. She's very smart (currently working on a Phd), but finances are pretty much evil to her. I'm not sure how she'll ever retire. I did manage to get her set up with a Fidelity Roth years back. I've been bugging her to transfer a couple of old teacher's pension plans to an IRA before she forgets they exist - but 5 years later still no movement.

I disagree. I think benign neglect probably wins over EJ's fees and churning.

Some possible ideas:

1. You can bug her at an early age to do the right things. Eventually when she is in her 50's and wants to retire she discovers that those right things have gotten her in the ballpark.

2. You teach her to automate things - set up an automatic 401(k) contribution program, HSA program, 529 program if she ends up with children, etc. She thinks and acts once, then can ignore it for long periods of time.

3. She finds a life partner who complements her in this area and they do either or both of the above ideas.

But at some point, it is our kids' responsibility to step up to the plate and take care of themselves. If they don't, then they'll get to face the consequences, which may be some teacher pensions that end up in a state escheat office somewhere and not retiring when they might want to. It's hard to let go on this (I have three young adult offspring myself), but I think it's an inevitable conclusion. Hopefully by the time the chickens come home to roost we'll be pushing up daisies and blissfully unaware.

 

[ExFlyBoy5]

With all the negative thoughts about Fast Eddie, I did find something in their SEC 10-K (annual) report that warmed my heart:

LITIGATION AND REGULATORY INVESTIGATIONS AND PROCEEDINGS — As a financial services firm, the Partnership is subject to litigation involving civil plaintiffs seeking substantial damages and regulatory investigations and proceedings, which have increased over time and are expected to continue to increase.
​

Maybe there is hope for at least some victims.

https://www.sec.gov/Archives/edgar/data/815917/000156459021012829/ck0000815917-10k_20201231.htm

This is a catch all statement and a general "warning" due to the nature of the financial services industry. Mainly because the current administration has signaled an increase in scrutiny of this (and other large) industry. I am not saying that I am a fan...just that the statement could be taken out of context.

Pg 68-69 of the report summarizes the actual legal issues with EJ.

 

[GravitySucks]

Holy Cow. Just for fun I checked Fidelity and EJ offices near me (10 miles radius) Fidelity = 2; Edward Jones =81

10 EJs within 8 miles.
Nearest Fido or Chuck is almost 90 miles.
Telephone works fine with my Fido guy (2,099 miles away.)

 

[OldShooter]

... I have a daughter that would probably be better off with someone like Eddie. She ignores anything financial. She's just not interested at all. ...

Ack! Not Eddie, please. The robo-advisors were tailor-made for this type of saver. I have experimented with the Schwab robo and found it to be decent. Betterment and Wealthfront seem to have kind of invented the concept but both are new kids in the investment world. I'm sure that Fido has robos and probably VG does as well. Lots of more ethical companies out there.

This is a catch all statement and a general "warning" due to the nature of the financial services industry. Mainly because the current administration has signaled an increase in scrutiny of this (and other large) industry. I am not saying that I am a fan...just that the statement could be taken out of context. ..

Agreed; the thing that struck me that I don't recall seeing in the usual boilerplate Is "... expected to increase" though you are right that it still may be a general industry statement. The idea of Fast Eddie's legal troubles still warms my heart; I had a good but financially naïve friend who was sold "four or five" annuities by one of those snakes.

 

[Chuckanut]

Ack! Not Eddie, please. The robo-advisors were tailor-made for this type of saver. I have experimented with the Schwab robo and found it to be decent.

I have referred several people to Schwab and they ended up taking the Robo Advisor route. My take on the Robo advisor is the same as the slogan I'll use when I run for political office in the future - You can do worse. And you have.

IOW, the Robo advisor is far better than doing nothing at all and/or getting talked into some speculative 'investment' and/or letting a FA charge high fees and sell you loaded funds.

I would love to see some type of analysis of how these Robo advisors are doing compared to a 60/40 AA using low cost index funds.

 

[braumeister]

the Robo advisor is far better than doing nothing at all.

From all I've read about it, "Schwab Intelligent Portfolios", aka robo advisor, is probably the best option for the person who doesn't want to manage their own money. The only real drawback is their requirement for a high cash percentage that pays only a pittance. But that's how the service pays for itself, so completely understandable. I don't think I would hesitate to recommend it myself if asked.

 

[travelover]

...........It appears to me that a large number of successful and probably not so successful people use FA services.

I think that is absolutely true, but I'm not so sure it a good thing. Many just have no idea of how much they are paying and as long as they have enough, don't care.

I don't recall Bernie Madoff's clients being particularly scrutinizing and they included many intelligent and successful people.

 

[NW-Bound]

Holy Cow. Just for fun I checked Fidelity and EJ offices near me (10 miles radius) Fidelity = 2; Edward Jones =81

For comparison, would you mind looking up the McDonald's, Burger King, and Starbucks in the same area?

 

[OldShooter]

... I would love to see some type of analysis of how these Robo advisors are doing compared to a 60/40 AA using low cost index funds.

A few years ago I ran a $100K, two year test drive of Schwab's then-new, free robo. (I like to have skin in the game when experimenting.) Search is not my friend today; I can't find my post about it but I'll report from memory. Overall I felt that is delivered pretty close to passive performance.

As @braumeister mentions, the robo likes to keep cash. I probably filled out their client questionnaire a half-dozen times until I got a proposed portfolio with about 5% cash and 95% equity. To be fair, though, the robo assumption is that it has the investors whole portfolio, so some cash is not unreasonable.


The robo split my $100K among 11 Schwab sector index funds and one VG REIT, the smallest holding. It sure did make investing look complicated. During the period IIRC it made one or two trades and, again IIRC, it let dividends go to cash.

I closed the account after two years mostly because all those tiny positions junked up my reports. My conclusion was that this particular robo would be a good choice for someone who really wanted to be hands-off. The robo world has evolved since then, though, so if I were headed that way today I would try to find a robo without so much cash drag.

(I did have an event that where Schwab earned some extra points: One day I got a call from a Schwab advisor who was asking about the 95% equity concentration considering my age. I explained that this was just a small test and part of a much larger portfolio and that Schwab's concern was appreciated but unnecessary.)

Overall the experience left me quite willing to recommend robos to some people. We talk about the option in my adult-ed investing class.

 

[CRLLS]

For comparison, would you mind looking up the McDonald's, Burger King, and Starbucks in the same area?

well according to their own websites:

McDonalds =17
Burger King = 18
Starbucks = 43 (you might subtract 5 stores marked "closing soon".)

With 81, Fast Eddie wins again.

 

[Bryan Barnfellow]

For comparison, would you mind looking up the McDonald's, Burger King, and Starbucks in the same area?

According to my "extensive" internet research:

Starbucks locations in the US in 2021: 15,251
Edward Jones locations in the US in 2021: "more than 15,000" (EJ website)

So, the old cartoon that shows a couple in a coffee shop with the caption,"Are we in this Starbucks or the one down the street?" might just as well apply to Edward Jones!

-BB

 

[NW-Bound]

well according to their own websites:

McDonalds =17
Burger King = 18
Starbucks = 43 (you might subtract 5 stores marked "closing soon".)

With 81, Fast Eddie wins again.

There ya go!

It's hard to believe, is it not?

 

[CRLLS]

Fast Eddie has more around me than all three combined. Amazing

 

[Souschef]

Here's another one for my town:
Population 30,000
Median Family income $60,000
Starbucks: 1
EJ: 1

 

[RobbieB]

Like I said, good marketing plan. Lots of small offices. Get a coffee and start an IRA.

Right across from the bank that is offering dismal returns on savings.

 

[youbet]

Question for all you "I-don't-need-no-stinkin'-advisor-it's-all-in-ETFs" people:

I did some research and it appears that the mutual fund companies have a lock on 529 plans and mutual funds are what you get. I easily max out the contribution to my state plan (MO) for which I can get a deduction on my state taxes so I can put the rest in any state's plan. Is there any way to invest 529 funds in ETFs? I'd have more flexibility with custodial accounts, of course, but then the kids own them, they have to pay taxes along the way and when they liquidate, they may affect eligibility for financial aid and they can spend it all on hookers and blow when they turn 21.

Recommendations wlecome.

Have you looked at ESA's? The max annual contribution is low, but they are very flexible as to investments allowed if you hold them at a brokerage house such as Schwab. I used both 529b's and ESA's to fund the grand kids' college. The primary holding for all three is/was VTI.

 

[retired1]

I have referred several people to Schwab and they ended up taking the Robo Advisor route. My take on the Robo advisor is the same as the slogan I'll use when I run for political office in the future - You can do worse. And you have.

IOW, the Robo advisor is far better than doing nothing at all and/or getting talked into some speculative 'investment' and/or letting a FA charge high fees and sell you loaded funds.

I would love to see some type of analysis of how these Robo advisors are doing compared to a 60/40 AA using low cost index funds.

I have tried Schwab Robo advisor and eventually pulled funds back to my DIY account. Can't figure why but Schwab robo advisor has not been able to adjust my AA to my liking. They base AA on set of 6-7 questions and it's finicky in my experience. Instead Fidelity Go or even Ally Robo seem to provide Portfolio Options based on AA. Hopefully Schwab will improve.

 

[jazz4cash]

Like I said, good marketing plan. Lots of small offices. Get a coffee and start an IRA.

Right across from the bank that is offering dismal returns on savings.

Didn’t Capitol One turn their branches into cafes?

 

[PatrickA5]

I disagree. I think benign neglect probably wins over EJ's fees and churning.

Some possible ideas:

1. You can bug her at an early age to do the right things. Eventually when she is in her 50's and wants to retire she discovers that those right things have gotten her in the ballpark.

2. You teach her to automate things - set up an automatic 401(k) contribution program, HSA program, 529 program if she ends up with children, etc. She thinks and acts once, then can ignore it for long periods of time.

3. She finds a life partner who complements her in this area and they do either or both of the above ideas.

But at some point, it is our kids' responsibility to step up to the plate and take care of themselves. If they don't, then they'll get to face the consequences, which may be some teacher pensions that end up in a state escheat office somewhere and not retiring when they might want to. It's hard to let go on this (I have three young adult offspring myself), but I think it's an inevitable conclusion. Hopefully by the time the chickens come home to roost we'll be pushing up daisies and blissfully unaware.

1) She's 35 - probably not going to be all of a sudden develop an interest in finance - regardless of how much I try to get her to do so.

2) She was having automatic deposits into her Fidelity Roth at one point, but I think she stopped doing that when she went back to college. I tried to get her to stop by her Fidelity office to take care of the teacher's pension rollovers, but that never happened. Maybe someday.

4) Fortunately, she's engaged to a great guy that has at least an inkling of financial motivation. I pretty much told him once they get married, he REALLY needs to take over the finance part. There's hope there.

 

[F.I.R.E User]

I used to fly with a fella that went off and became a EJ advisor after he retired from the military. I think we were decent friends, enough that I would let him crash at my house and help him move. At one time, I must of offended him by making a comment about the predatory nature of EJ and he has unfriended/blocked me on Facebook. But, other friends have told me that he gets a new Porsche every couple of years. Tells me ALL I need to know about EJs.

EJ FA are sales people. I don’t blame them but we need to do our homework. He is probably not on F.I.R.E with new car every couple years. These are the same type of people that show off on SM and the average person thinks they are rich.

 

[ychuck46]

Get out!

Yes, you are being screwed. That's their business model (and that of many other firms as well). Get the money out of there ASAP. Put in back in Vanguard and manage it yourself.

Couldn't agree more. Put your money into the Vanguard S&P 500 ETF, the Total Stock Market ETF, or some other index ETFs. Edward Jones will churn your account and put you into load funds/ETFs, much worse than just standard index funds/ETFs. The OP's intuition that they were being screwed is totally correct.

 

[gooddog]

Have never heard of a 'satisfied' Edward Jones customer. Run like your name is Forrest Gump.