The Free market Takes care of itself. EJ loses

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JC565
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The Free market Takes care of itself. EJ loses

Post by JC565 » Tue Jan 16, 2018 10:37 am

So a week or so ago I posted some questions regarding my simple ira, and edward jones. and what a PAIN in the arse EJ is. (see post viewtopic.php?f=1&t=236678&p=3703076#p3703076 )

Fortunately I have a very business savvy boss/owner and he agreed to set me up with vanguard. He also agreed the fees are ridiculous. We are going to have a meeting regarding this giving everyone in the company an option of where they want to invest and why we are giving them the option. It's very likely that Edward Jones is about to lose 80+ accounts. pretty much everyone can figure 1+1= im losing money for nothing.

My real question is.... how does EJ even stay in business? Surely the folks on this forums aren't the only ones that can figure this out?
Last edited by JC565 on Tue Jan 16, 2018 11:04 am, edited 1 time in total.

chisey
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Re: The Free market Takes care of itself. EJ loses

Post by chisey » Tue Jan 16, 2018 10:42 am

My mom works with an EJ adviser and I tried hard to keep my sister from moving her money to the same adviser. I made the full case-- the difficulty in beating the markets, the money that would be lost to fees and commissions, etc. and let her know I'd always be there to help . . . to no avail. Some people are just afraid to make any decisions on investments and will go with whoever they think they can trust or whoever is the most convincing shark instead.

Helo80
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Re: The Free market Takes care of itself. EJ loses

Post by Helo80 » Tue Jan 16, 2018 10:45 am

JCBiggs wrote:
Tue Jan 16, 2018 10:37 am
My real question is.... how does EJ even stay in business? Surely the folks on this forums are the only ones that can figure this out?

I can't comment on EJ's exact business model nor customer composition, but from other companies I have personally witnessed or worked for, great marketing and PR teams. It's mostly smoke and mirrors, but hey, sales and marketing are very high paying professions (if you have the social skills and knack for it).

david
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Re: The Free market Takes care of itself. EJ loses

Post by david » Tue Jan 16, 2018 11:12 am

JCBiggs wrote:
Tue Jan 16, 2018 10:37 am
My real question is.... how does EJ even stay in business? Surely the folks on this forums are the only ones that can figure this out?
I really believe when people see the word advisor attached to a securities and insurance salesman they let their guard down. People, for some reason, instinctively believe that financial advisors put them into the best products for them. And a lot of people don't really think about how they are paid, how much that really is, and where it is coming from. People deal with a lot of professionals who are required to have a fiduciary duty to clients and I think naturally, but incorrectly, they extrapolate that to others. The marketing of this salesperson as a guide and personal adviser is really fantastic bunch of marketing and it is clouding people's view of what these professionals are setup to do (and how they get paid, what education they've received, etc.).

Also, people are conditioned to believe that investing is some sort of arcane dark art and they need someone to guide them through it. Talking to family members, people have no clue what they are doing and are getting by based on what their friends and family do from random conversations that they have. (It seems people are in a similar place of just following others when it comes to estate planning. People doing complicated, seemingly random, moves with no underlying reason to do it just that others do and it seems like what needs to be done.)

deltaneutral83
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Re: The Free market Takes care of itself. EJ loses

Post by deltaneutral83 » Tue Jan 16, 2018 11:19 am

JCBiggs wrote:
Tue Jan 16, 2018 10:37 am
My real question is.... how does EJ even stay in business? Surely the folks on this forums aren't the only ones that can figure this out?
$1800 suits and $300 cuff links seem to work.

fposte
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Re: The Free market Takes care of itself. EJ loses

Post by fposte » Tue Jan 16, 2018 11:20 am

I'd say market penetration and active sales. The EJ website says, "With more than 12,000 offices in all 50 states, Edward Jones has more branch offices than any other brokerage firm in the country." They mail like crazy and go door-to-door. People are scared of making a mistake with their money, and Edward Jones is always there to make them feel like they could give it to EJ and not be scared any more. Ironically.

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cinghiale
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Re: The Free market Takes care of itself. EJ loses

Post by cinghiale » Tue Jan 16, 2018 11:42 am

Explaining the Edward Jones success story requires the lens of psychology and sociology. If you look at numbers and percentages, it appears to be a straw man. But that really would not be a satisfying answer.

We all respond positively to good customer care. We like going (back) to restaurants where the owner and/or waitstaff remember us and treat us with noticeably special attention. We like upgrades, whether an upgrade of the moment— say, to the business class section of an airplane on a long-haul flight— to a more ongoing one, such as the “concierge”-type service that comes with certain credit cards, hotel stays, or high-end automobile ownership.

The Edward Jones machine knows this. Potential reps are screened for certain personality traits, and those who make the preliminary cut are then groomed to be caring, responsive, kind, unfailingly patient, and interested in every detail of a client’s life, family, and job.

Here’s the trick: The personality of the agent becomes a substitute for the performance of the portfolio. Clients feel like there’s someone in their corner. Think Daniel Kahneman here in Thinking, Fast and Slow. A complicated “System 2” question, such as “How is my portfolio doing compared to the key benchmarks?” is substituted with an easier “System 1” one: “Is my financial advisor a competent, caring guy/gal?” The hard, math-heavy question is changed out for an easy, intuitive one.

Don’t be too, too quick to declare that “EJ loses.” I remember John Naisbitt’s bestseller Megatrends in the 1980s. One of his key trends (#2 if memory serves) was “High Tech, High Touch.” In an age of ever-present and pervasive technology, people would still crave and value the personal, human touch. That impulse has not diminished in the ensuing decades.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell

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JC565
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Re: The Free market Takes care of itself. EJ loses

Post by JC565 » Tue Jan 16, 2018 11:50 am

I wonder if the personality trait test has something to do with submissive and non questioning nature.

rudeboy
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Re: The Free market Takes care of itself. EJ loses

Post by rudeboy » Tue Jan 16, 2018 1:02 pm

My accountant referred me to her friend at EJ when I stated an interest in setting up retirement accounts. I didn't even know the name Vanguard at the time. But in that first sit down meeting at EJ, a little voice in my head kept screaming ABORT!!! She was trying to get me to drop all my savings into their accounts that second.

At my insistence, we went over some of my financial history. She advised me not to pay off my (admittedly very small) student loan and car debts and instead to invest heavily because the market returns higher than the interest rates on my debts. Naturally, she didn't say a peep about possible market declines or past returns/future returns.

All the red flags you'd expect to see in some Nigerian Prince scam were there, except this was a "legitimate" institution. I'm glad I listened to my instincts and got the hell out of there. I found Vanguard/MMM/Bogleheads as a result of that meeting. The rep badgered me for about 6 months afterward, too.

Although I still use the same accountant, I now know she is not my friend.

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JC565
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Re: The Free market Takes care of itself. EJ loses

Post by JC565 » Wed Jan 17, 2018 10:32 am

Thats a story everyone should tell their kids.

TravelGeek
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Re: The Free market Takes care of itself. EJ loses

Post by TravelGeek » Wed Jan 17, 2018 11:37 am

deltaneutral83 wrote:
Tue Jan 16, 2018 11:19 am
JCBiggs wrote:
Tue Jan 16, 2018 10:37 am
My real question is.... how does EJ even stay in business? Surely the folks on this forums aren't the only ones that can figure this out?
$1800 suits and $300 cuff links seem to work.
The EJ lady who knocked on my door seemed to not so much rely on expensive clothing than walking the neighborhood to drum up new business.

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Re: The Free market Takes care of itself. EJ loses

Post by oldcomputerguy » Wed Jan 17, 2018 11:58 am

JCBiggs wrote:
Tue Jan 16, 2018 10:37 am
Fortunately I have a very business savvy boss/owner and he agreed to set me up with vanguard. He also agreed the fees are ridiculous. We are going to have a meeting regarding this giving everyone in the company an option of where they want to invest and why we are giving them the option.
Congratulations. Looks like you were successful in getting a very beneficial workplace change implemented.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

Engineer250
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Re: The Free market Takes care of itself. EJ loses

Post by Engineer250 » Wed Jan 17, 2018 11:59 am

I think it’s expert bias. I sent the If You Can to my sister and had a few conversations with her to make sure she was saving for retirement (I knew they were saving, but just in bank accounts). She chose to invest in Vanguard but through her current bank, Wells Fargo. They’ve had WF for banking for a while because they are used to it and don’t seem to be bothered with the fees. I sent her some BH wiki stuff and she said she was looking for a financial advisor. Her sister-in-law is a tax accountant and referred her to an EJ person. I warned her about EJ and told her I was confident she could research all this stuff herself (she is intelligent) but I don’t think she feels comfortable doing any of it herself. And because I’m an engineer not an accountant (dammit Jim) she doesn’t think I know anything either.
Where the tides of fortune take us, no man can know.

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hornet96
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Re: The Free market Takes care of itself. EJ loses

Post by hornet96 » Wed Jan 17, 2018 12:41 pm

david wrote:
Tue Jan 16, 2018 11:12 am
I really believe when people see the word advisor attached to a securities and insurance salesman they let their guard down. People, for some reason, instinctively believe that financial advisors put them into the best products for them. And a lot of people don't really think about how they are paid, how much that really is, and where it is coming from. People deal with a lot of professionals who are required to have a fiduciary duty to clients and I think naturally, but incorrectly, they extrapolate that to others. The marketing of this salesperson as a guide and personal adviser is really fantastic bunch of marketing and it is clouding people's view of what these professionals are setup to do (and how they get paid, what education they've received, etc.).
I agree, and I'm glad to report that the CFA Institute does as well:

Letter to SEC on Standards of Conduct for Investment Advisers and Broker-Dealers
CFA Institute wrote:CFA Institute strongly supports a fiduciary standard for all who provide personalized investment advice to retail investors[.....]
We believe the Commission can effectively begin to regain control of this issue by regulating the titles that those who provide personalized investment advice can use. We, like the Commission’s Investor Advisory Committee, recommend that the Commission require that anyone wishing to refer to their title and/or activities as advisory in nature (e.g. “adviser” or “advisor”) adhere to the Investment Advisers Act and the fiduciary duty implied by common law interpretation of the Act. Such control of terminology would not be new to the Advisers Act, which already expressly limits use of the term “investment counsel” to those who must adhere to the Advisers Act’s requirements.

[...]

At the same time, we believe commission-based sales activities serve important client needs and give investors options for how they wish to conduct their investment activities. Whether commissioned brokers provide investment ideas or execute trades, we support that they be permitted to pursue their business activities, so long as they are clear about their roles vis-à-vis their clients. Specifically, we recommend
that the Commission require that they refer to their roles with the title, “salespersons.”
For too long, these sales staff have blurred the line between what they do – selling investment ideas to generate commission-based transactions – and what investment advisers do – advising clients on investment strategies and tactics to achieve their financial goals.

columbia
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Re: The Free market Takes care of itself. EJ loses

Post by columbia » Wed Jan 17, 2018 12:47 pm

I’m quite thankful that my early employers (and father) steered me into working only with Vanguard and TIAA.

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