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Family were going to a broker at a large (not national, but large) firm and it became apparent that - long story short - it wasn't about them, it was about selling. They went to a terrific financial planner at a small, independent firm and they could not be more thrilled - the difference in how involved they are, products, etc - is immense. I think you're going to see more people leave these sort of firms in the near future.
Talk about dredging up old news. Blogger refers (without citation) to a 2004 settlement for failing to adequately disclose revenue sharing agreements. The problem was disclosure, not revenue sharing per se. EJ does clearly disclose these days, despite what the blog says. And that California suit? Same bad acts - took California four years, several losses in court, to finally settle with EJ for a relatively paltry $4.8M in fines (plus recovery of their costs).
I'm happy to say that full service brokers have lot of conflicts of interest; that they rely heavily on their lesser "suitability" requirement rather than serve the client with a fiduciary commitment, etc. But I stop reading hit pieces when it's clear they won't be equally honest with me.
FWIW, here's part three of the blogger's post, which happened to have been the first part posted. Replete with more knocks like asserting that EJ's disclosure page (see above) "shouldn't even be characterized as a disclosure. It's hard to find even if you know what you're looking for." Even though it's the first google result when searching for "Edward Jones" disclosure.
Never liked them and personally not shocked but forwarded the article to family members who are not so sophisticated and could be a prey for these sort of companies.
The following part reminded me of John in this board who does business with them:
"Hey anyone at Jones, do you guys still get SPIFs (sales performance incentive funds) for selling low-rated high-yield bonds the last few days of the pay cycle?" a former EJ advisor asks, in a question that reflects one of many conflicts of interest that the firm's employees enumerate.
There is also Part I if you would like to read from the beginning.
Let me be clear - I am all in favor of holding brokers to a higher standard, and I have no doubt that there are horror stories. I'd be happy seeing it made easier for investors to file class action suits, and for more of the practices that lead to conflicts of interest banned. So it is indeed painful to read about what has happened to some individual investors.
But, as it stands now, the standards for brokers are pretty low (suitable investments, not investors' best interests), revenue sharing and other conflict of interest arrangements are allowed, cookie-cutter plans (is there a difference between these and, say, Fidelity's Portfolio Advisory Service plans?) may be promoted as "matched to an investor's needs", etc. It's all legal, and we can't even get accountability for prior bad acts, let alone tighter regulation and enforcement.
The system is designed for abuse, and is rife with it. Anecdotes (however painful), personal (ex-broker) accounts, and history do not in themselves say that one firm is any better or worse than another. That's all I'm questioning when I suggest that the blog is selective in its facts.
I just read the article posted at the top of this thread. Why am I not surprised? And why am I feeling just a bit smug right now about doing my own homework and making my own decisions and pulling my own triggers and dealing with individual fund houses myself...?
Reply to @Charles: Thanks, Charles. Quite. And at present, things are still quite simple. The number of separate fund houses I'm involved with is THREE. Holding just 7 funds among them. That will change shortly, but still not unwieldy.
Reply to @MaxBialystock: Ha. Sweet. I used to own proudly just 4 funds: RNSIX, FAAFX, SFGIX, and DODBX. Then scott came along, and I grew to 6: RNSIX, FAAFX, WBMIX, AQRIX, SFGIX, and DODBX. Unable to resist his enthusiam for Redleaf and Asness. Then David reiterated his praise of Cinnamond and the fund reopenned today, so now I own 7: RNSIX, FAAFX, WBMIX, AQRIX, ARIVX, SFGIX, and DODBX. All through the institutional side of Schwab, or direct with the fund house. I really wish the folks on this site would stop making investing so interesting.
I'm going off on a bit of a tangent on Financial Advisor scams versus poor Sales practice --- but Financial Advisory issues of all sorts happens with large firms and small firms too. Recent article in Chicago Tribune about a small independent financial advisor who scammed clients and even a client who was a very close family friend for many years.
*************************************** Elder financial abuse in Illinois on rise
Retiring baby boomers, many with high equity and savings, becoming ripe target for financial predators, officials say ***************************************
Downers Grove retiree Robert Govenat was on the computer every day, watching prices of his stocks go down.
It was November 2007, and a bear market was threatening.
"He was about to have a nervous breakdown or a heart attack," recalls his wife, Jan, a retired third-grade schoolteacher.
Over lunch at a hot dog place in Darien, a longtime friend and financial planner Algird Norkus told Govenat that he had an alternative investment for select people: It would keep the couple's principal safe and pay 13.5 percent annual interest.
Norkus pleaded guilty to one count of mail fraud. In March, he began serving 63 months in prison. He also was ordered to pay $4.6 million in restitution to nearly 70 victims, many elderly, including Robert and Jan Govenat, and Robert's mother. His plea agreement said he commingled investors' moneys, in part to make payments to other investors and in part to benefit himself.
"Don't trust anyone," Jan Govenat, 71, said Tuesday when asked what she learned from the experience. "I can't tell you how many times I've said that to friends since this happened." She also regretted not sharing their change in investment strategy with their two adult children.
Robert Govenat, 72, gets choked up discussing what happened with the savings of his mother, now 99 and living in a retirement community. "I'm not proud of what I've done to my mom," he said last week with a quivering voice.
"You were trying to help," his wife replied.
Govenat said he lets few people get close to him, but Norkus was one of them.
"I don't trust anyone now, except my wife," he said.
The couple's two children never bring up the ordeal.
"It's the silent death," Robert said.
The couple, who once felt secure about their retirement years, now worry constantly about finances.
"We don't sleep well," Jan said.
{...}
Robert said he had "blinders" on because Norkus was a friend; he and his wife dined with Norkus and his wife. They went to the wedding of Norkus' son. "He came to our daughter's wedding," Jan recalled. "He didn't go to our son's wedding but he sent a box of Cuban cigars."
Jan said she doesn't blame Robert for trusting Norkus. "Think of someone you've known a long time who you think is a nice person, who you'd trust with anything," Jan said. "That's how we viewed this man."
Reply to @icyone: Miss Mary Lou too ... Beyond that, your observation is sad but true - unless some of the gals are using "guy" handles. ... However, must be careful with that assumption, as many handles are non-gender specific. A few would be: Investor, msf, and Catch 22 - though I've always considered them likely guys ... And, Oh - don't overlook fundalarm. Maybe it says more about our (my?) perceptions than anything else. (Have you heard the one about the only job where you start at the top? It's called digging holes.)
Pretty sad, eh? Would be nice to give Norkus 5 minutes with Bonzo Marelli from an unnamed large U.S. city to help Mr. Norkus have a better understanding of life. Hoping Mr. Norkus is in a location where he may attract lots of "friends".
I sure hope there are a group of ladies here. Heck, I would prefer to let the ladies have a 100% go at filling the halls of government at all levels. The "gent's" sure continue to make a mess of things. Without doubt, there is more than a physical different between the women and the men.
Actually, fundalarm; I am most interested in the study of your "profile image". I have not yet determined the nature of the image; but have my home pc attempting to discover the most likely match.
Two questions: Is the object homemade; and if not, country of origin?
Reply to @catch22: Thanks Mark ... LOL - Had a conservative boss back in the 70s who called a "non-conformist" co-worker into his office one day and said something like: "If you're confused about your sexual identity, I know a good therapist." ... Too funny!
Hi fundalarm, Whew ! I feel better now. The problem arouse when I did not realize that someone else had changed the angle of the laptop screen and the image quality was not normal. I first saw only the one nose hole and what appeared to be fur........but, I had recently viewed a tv program about "lost tribes in jungle areas" and I suspect I still had thoughts about animals from the jungle and their parts that may be used to wear around one's neck or hung upon a wall as a "spirit" guide, etc. ; from age old tribal customs. 'Course, domestic animals who live with us can also be spirit guides; as far as I am concerned, and this house has taken quite comfort many times, from the animals that have become part of our household over many years. Thank you for setting me on the straight path. Take care of you and yours, Catch
Comments
Loved the illustrations ...
I'm happy to say that full service brokers have lot of conflicts of interest; that they rely heavily on their lesser "suitability" requirement rather than serve the client with a fiduciary commitment, etc. But I stop reading hit pieces when it's clear they won't be equally honest with me.
FWIW, here's part three of the blogger's post, which happened to have been the first part posted. Replete with more knocks like asserting that EJ's disclosure page (see above) "shouldn't even be characterized as a disclosure. It's hard to find even if you know what you're looking for." Even though it's the first google result when searching for "Edward Jones" disclosure.
The following part reminded me of John in this board who does business with them: There is also Part I if you would like to read from the beginning.
Hi Investor. Looks like the whole series of posts by sylvia kronstadt can be found here: http://beta.fool.com/kronstantinople/
Part 1: http://beta.fool.com/kronstantinople/2012/08/14/keeping-joneses-edward-there-help/8978/
Part 2: http://beta.fool.com/kronstantinople/2012/09/01/edward-jones-part-two-death-of-a-salesman/9197/
Part 3: http://beta.fool.com/kronstantinople/2012/08/11/you-gotta-love-em-unless-you-hate-em/9333/
Part 4: http://beta.fool.com/kronstantinople/2012/08/15/edward-jones-part-four-a-glittering-new-edwardian-/9650/
Part 5: http://beta.fool.com/kronstantinople/2012/08/18/edward-jones-part-five-our-messy-divorce-from-a-tw/9918/
I am sensitive to msf's warning about possibility of the author publishing a "hit" piece, but if it's true, it's almost too painful to read.
The full article can also be found on her blog, under Edward Jones saga:
http://kronstantinople.blogspot.com/p/edward-jones-saga.html
But, as it stands now, the standards for brokers are pretty low (suitable investments, not investors' best interests), revenue sharing and other conflict of interest arrangements are allowed, cookie-cutter plans (is there a difference between these and, say, Fidelity's Portfolio Advisory Service plans?) may be promoted as "matched to an investor's needs", etc. It's all legal, and we can't even get accountability for prior bad acts, let alone tighter regulation and enforcement.
The system is designed for abuse, and is rife with it. Anecdotes (however painful), personal (ex-broker) accounts, and history do not in themselves say that one firm is any better or worse than another. That's all I'm questioning when I suggest that the blog is selective in its facts.
(Wasn't it Mary Lou (of FA) who always had input about EJ???) Always wondered what became of her -- one of the few ladies of FA....
Thanks, Charles. Quite. And at present, things are still quite simple. The number of separate fund houses I'm involved with is THREE. Holding just 7 funds among them. That will change shortly, but still not unwieldy.
http://articles.chicagotribune.com/2012-08-12/business/ct-biz-0812-bf-elder-abuse-20120812_1_financial-exploitation-financial-abuse-abuse-cases
***************************************
Elder financial abuse in Illinois on rise
Retiring baby boomers, many with high equity and savings, becoming ripe target for financial predators, officials say
***************************************
Downers Grove retiree Robert Govenat was on the computer every day, watching prices of his stocks go down.
It was November 2007, and a bear market was threatening.
"He was about to have a nervous breakdown or a heart attack," recalls his wife, Jan, a retired third-grade schoolteacher.
Over lunch at a hot dog place in Darien, a longtime friend and financial planner Algird Norkus told Govenat that he had an alternative investment for select people: It would keep the couple's principal safe and pay 13.5 percent annual interest.
Norkus pleaded guilty to one count of mail fraud. In March, he began serving 63 months in prison. He also was ordered to pay $4.6 million in restitution to nearly 70 victims, many elderly, including Robert and Jan Govenat, and Robert's mother. His plea agreement said he commingled investors' moneys, in part to make payments to other investors and in part to benefit himself.
"Don't trust anyone," Jan Govenat, 71, said Tuesday when asked what she learned from the experience. "I can't tell you how many times I've said that to friends since this happened." She also regretted not sharing their change in investment strategy with their two adult children.
Robert Govenat, 72, gets choked up discussing what happened with the savings of his mother, now 99 and living in a retirement community. "I'm not proud of what I've done to my mom," he said last week with a quivering voice.
"You were trying to help," his wife replied.
Govenat said he lets few people get close to him, but Norkus was one of them.
"I don't trust anyone now, except my wife," he said.
The couple's two children never bring up the ordeal.
"It's the silent death," Robert said.
The couple, who once felt secure about their retirement years, now worry constantly about finances.
"We don't sleep well," Jan said.
{...}
Robert said he had "blinders" on because Norkus was a friend; he and his wife dined with Norkus and his wife. They went to the wedding of Norkus' son. "He came to our daughter's wedding," Jan recalled. "He didn't go to our son's wedding but he sent a box of Cuban cigars."
Jan said she doesn't blame Robert for trusting Norkus. "Think of someone you've known a long time who you think is a nice person, who you'd trust with anything," Jan said. "That's how we viewed this man."
Pretty sad, eh? Would be nice to give Norkus 5 minutes with Bonzo Marelli from an unnamed large U.S. city to help Mr. Norkus have a better understanding of life.
Hoping Mr. Norkus is in a location where he may attract lots of "friends".
Take care,
Catch
Catch = Mark in Michigan.
I sure hope there are a group of ladies here. Heck, I would prefer to let the ladies have a 100% go at filling the halls of government at all levels. The "gent's" sure continue to make a mess of things. Without doubt, there is more than a physical different between the women and the men.
Take care,
Catch
Actually, fundalarm; I am most interested in the study of your "profile image". I have not yet determined the nature of the image; but have my home pc attempting to discover the most likely match.
Two questions: Is the object homemade; and if not, country of origin?
Hey, take care of you and yours in the big city.
Catch
Whew ! I feel better now.
The problem arouse when I did not realize that someone else had changed the angle of the laptop screen and the image quality was not normal. I first saw only the one nose hole and what appeared to be fur........but, I had recently viewed a tv program about "lost tribes in jungle areas" and I suspect I still had thoughts about animals from the jungle and their parts that may be used to wear around one's neck or hung upon a wall as a "spirit" guide, etc. ; from age old tribal customs.
'Course, domestic animals who live with us can also be spirit guides; as far as I am concerned, and this house has taken quite comfort many times, from the animals that have become part of our household over many years.
Thank you for setting me on the straight path.
Take care of you and yours,
Catch