What’s changed at Edward Jones—and what’s driving so many advisors to seek other options?
While many brokerage firms have seen noticeable advisor attrition in recent years, the velocity of moves away from Ed Jones, a firm that built its legacy on a strong culture, begs a few important questions.
What’s driving momentum?
Where are these advisors going?
What kind of transition deals did these advisors get?
What about the firm not being a member of the Broker Protocol and their tendency to be litigious?
And, for those who moved, did their clients follow?
As a firm that facilitated many of the moves, we’re well-positioned to answer those questions and shed some light on the forces at play.
What’s driving momentum?
Most Jones advisors begin conversations with us in a similar way:
“I am eternally grateful to Jones. It was a great place for me to build my business, but the culture has changed. It’s just not the same place that it was 10 years ago.”
For those advisors who’ve left the firm, it often comes down to some version of the following:
- The unique, fraternal feel that drew so many to the firm in years past is now gone, having been replaced by heavy-handed management, onerous compliance protocols, inflexibility around outside business activities, and disputes over book ownership.
- The firm’s tech stack lags considerably behind the competition.
- Plus, many advisors feel as if they have reached their growth ceiling at Jones—and the firm’s unwavering opposition to teaming and partnering does nothing to alleviate this concern.
We see it often in our industry: Movement spurs more movement. That is, Jones advisors who saw their former colleagues transition with tremendous success followed suit—prompting movement of even those who may not have considered changing firms in the past.
Gone are the days of blind loyalty to the firm.
Interestingly, it’s the largest and most productive Jones advisors who seem to be moving with the most velocity. Why might this be?
For advisors producing more than $1mm, recent management mandates and the feeling that firm leadership is catering to the “lowest common denominator” seem to have really struck a nerve. After all, why should a tenured, veteran, sophisticated advisor be treated with the same kid gloves as the newest trainee or the smallest of Ed Jones’ nearly 19,000 advisors?
Where are they going?
Where these former-Jones advisors have landed is truly fractured:
- Some have opted for traditional employment models like the wirehouses, though those firms may feel too restrictive for some.
- Others have found that regional (W-2) firms offer a culture and boutique-feel that Jones advisors are nostalgic for.
- And given that Jones advisors tend to be inherently entrepreneurial and self-motivated, many have opted to abandon the W-2 model entirely and explore independent broker dealers and RIAs. That does not necessarily mean giving up a strong brand name, which is often a concern. Firms like Raymond James, Wells Fargo and LPL all offer versions of independence.
The combination of growing advisor frustration and a greatly expanded industry landscape means that advisors are more willing than ever to strike out in search of greener pastures.
What about the Broker Protocol and client portability?
The Broker Protocol is a framework for recruiting that allows advisors moving to/from certain firms to take select client information with them and freely solicit clients upon resigning. Ed Jones is not a part of the Broker Protocol—meaning advisors who leave the firm are not afforded the protections described above.
There is no doubt that moving with Protocol protection is easier and cleaner. But for advisors who have smart legal counsel in their corners, new firms that support them, and sound transition strategies, moves are made without issue—even though Jones tends to be a litigious firm. In fact, Jones advisors whose moves we facilitated did so without any legal consequences post-resignation.
For those advisors who are particularly concerned with litigation costs, most W-2 models (and some independent firms) will cover legal expenses and potential settlements.
Most importantly, the question of Protocol typically has little to no impact on overall client portability. At the end of the day, clients respect an advisor’s need to find the best home to service them and grow their business without limitation.
What kind of deals do they get?
Competing W-2 firms (i.e., wirehouses and large regional firms) are paying top dollar to attract talent—in many cases in excess of 300% of annual production.
In the case of independent firms, though not all pay upfront money, those that do typically pay in the ballpark of 30–100% of annual production.
The reality is that there’s been a paradigm shift in wealth management over recent years. Advisors across the industry landscape are seeking ways to achieve greater freedom, flexibility and control—and the waterfall of possibilities continues to grow every day.
Even if you are perfectly content and simply curious about why so many advisors are choosing to leave the firm, it’s probably worth exploring this greatly expanded opportunity landscape. It’s an educational process that will benefit both you and your clients.
We’re available to answer any questions you might have—without agenda or expectation. Click to schedule a confidential conversation.
Updated: May 31, 2022
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