Saturday, 23 January 2021
Edward Jones is a private asset management firm with headquarters in St. Louis and more local offices nationwide than any other investment firm. The firm’s workforce of more than 17,600 investment advisory and research employees currently oversees nearly $329 billion in assets under management (AUM).
Edward Jones’ primary focus is managing portfolios for individuals and families, as well as some wealthy investors, charitable organizations, pension plans and other businesses. The firm does not offer a la carte financial planning services, such as creating budgets or written financial plans.
All information included in this profile is accurate as of March 13, 2020. For more information, please consult Edward Jones’ website.
| Assets under management: $328,988,570,418 | |
| Minimum investment: Generally ranges from $5,000 to $500,000, depending on account type | |
| Fee structure: Percentage of AUM ranging from 0.50% to 1.54% depending on account type and size | |
| Headquarters: | 12555 Manchester Road St. Louis, MO 63131 (800) 803-3333 edwardjones.com |
Edward Jones Sr. created the eponymous firm nearly 100 years ago in St. Louis. Today, the firm has more offices than any other financial services firm in the country, with over 13,000 locations throughout the United States and parts of Canada. The firm’s parent company, The Jones Financial Company L.L.L.P, has more than 24,000 Edward Jones associates holding limited partnerships. The firm’s roots are in the brokerage industry. Edward Jones first registered with the SEC as a broker-dealer in 1941, and then as a registered investment advisor in 1993.
The firm’s philosophy is to serve clients through local offices, where advisors live and work in the area and can meet with clients face-to-face. The advisory team includes 17,661 employees who perform investment advisory or research functions. Most of the firm’s advisors are also licensed as registered representatives of broker-dealers and/or insurance agents.
Edward Jones was built to serve individual investors. Today, the vast majority of the registered investment advisor’s clients are individuals, though it also serves a number of high net worth individuals, who the SEC defines as investors with at least $750,000 under management or a net worth of at least $1.5 million. Additionally, Edward Jones works with pension and profit-sharing plans; charitable organizations; corporations and other businesses; partnerships and investment clubs.
Clients can access the advisory services with as little as $5,000 to invest, although some discretionary accounts where the advisor handles the day-to-day decisions and trades can require an investment of as much as $500,000 or even $1 million to open an account, depending on the type of account you choose.
Portfolio management is the main offering Edward Jones’ investment advisory division. Depending on how involved a client wants to be, they can choose from a range of account options.
Clients who are looking for guidance on how to invest their money but prefer to call the shots themselves will want to look at the Guided Solutions funds, which steer you to certain investments based on your objectives but leave you in charge of how you allocate your money across those funds and responsible for all buying and selling decisions. On the other end of the spectrum, clients who prefer to take more of a hands-off approach and leave much of the day-to-day management up to their advisor can consider the Advisory Solutions accounts.
The firm also offers employers assistance in managing their employer-sponsored retirement plans. Advisors do not offer standalone financial planning services, such as creating a written retirement plan.
Most Edward Jones advisors are also registered as broker-dealers, so they can place individual trades for brokerage clients and earn commissions separate from these programs. Many Edward Jones advisors are also licensed insurance agents and can sell annuities as well as life and disability insurance.
Outside of their registered investment advisor services, Edward Jones assists families with trusts and estates. Their specialized Client Consultation group provides insight to clients and their financial advisors on complex topics such as retirement income; business sale and succession; and portfolio tax management.
Here is a full list of services offered by the firm:
Clients initially fill out a questionnaire with information about their goals, time horizon and risk tolerance. Based on their answers, the firm will recommend a specific Account Portfolio Objective, such as all-equity focus with the highest growth potential, or an income focus with little growth potential. Clients also can choose an alternative objective if that’s available.
Next, clients or the advisor, depending on the account, will choose from the firm’s list of handpicked eligible investments for that objective and decide how to allocate money across them. Some accounts consist solely of mutual funds and exchange-traded funds, while others also offer specific stocks and bonds.
Edward Jones handpicks eligible investments, both affiliated and unaffiliated, that are available in the accounts. Investments that the firm has not approved are not usually allowed in your account. Certain investments available in some accounts are not available elsewhere.
For its Guided and Advisory accounts, Edward Jones charges an asset-based fee based on how much you have invested with the firm and the services provided. The flat fee is based on a tiered schedule, ranging from 1.35% for your first $250,000 invested down to 1% or less for $1.5 million or more invested. (See chart below for specific rates.)
| Value of Assets | Annual Fee Rate |
|---|---|
| First $250,000 | 1.35% |
| Next $250,000 | 1.30% |
| Next $500,000 | 1.25% |
| Next $1.5 million | 1% |
| Next $2.5 million | 0.80% |
| Next $5 million | 0.60% |
| Over $10 million | 0.50% |
For clients who choose the hands-off Advisory Solutions accounts, giving Edward Jones discretionary authority to make transaction decisions, you’ll owe an additional 0.05% to 0.59%, depending on the size and type of account. This account is a wrap account, meaning you pay one bundled fee that typically includes the advisory fee as well as transaction costs. One exception is if another broker-dealer is used for the trade, clients may owe transaction costs.
Regardless of which account type they have, clients still owe third-party fund fees, such as mutual fund fees and ETF fees, which are laid out in brochures. Fees are deducted from client accounts each month. Certain accounts, such as the Guided Solutions, have a minimum monthly fee requirement.
Keep in mind you can always buy and sell investments individually through an Edward Jones brokerage account, and pay commissions and transaction costs instead of a flat fee. Your financial advisor will typically earn more in upfront fees and commissions when you pay per transaction. Alternatively, a financial advisor will typically earn more over time when you invest in these flat fee accounts. So your advisor may have a financial incentive to recommend the flat fee account.
The Securities and Exchange Commission (SEC) requires all registered investment advisors to disclose on their Form ADV whenever the firm, an employee or an affiliate faces any disciplinary actions, such as criminal charges or civil lawsuits, that are material to a client’s evaluation of the advisory business or the integrity of the management team. Edward Jones has faced dozens of charges over the last 10 years, many of which they settled with regulators by paying fines, without admitting or denying the charges. Many of the charges are for failing to adequately supervise individual brokers and advisors.
Allegations against Edward Jones come from the Financial Industry Regulatory Authority (FINRA), the SEC or state regulators and include, among others:
To find advisors in your area, use the search tool provided at edwardjones.com. Before an advisor can begin providing services, you’ll need to sign a client agreement and fund your account with the minimum investment required. An advisor supervisor may call you to confirm that you understand the fees you’re paying.
Once you’re up and running, your advisor should have annual check-ins with you to discuss if anything has changed with your goals and objectives, as well as your appetite for risk. Some accounts include an annual rebalancing feature. For other accounts, Edward Jones will notify you when your account is out of alignment with what it deems an appropriate allocation based on your objectives.
Edward Jones may appeal to a broad swath of inexperienced, as well as sophisticated individual investors since it has multiple offerings and allows clients to choose their level of involvement with their accounts. In particular, clients looking for a local financial advisor in their community who does not require a seven-figure investment may want to take a look at Edward Jones.
Since advisors can earn commissions by recommending certain products, be sure to find out why they are suggesting certain products and how much they may earn if you sign up. When choosing a financial advisor, you want to make sure you’re making your decision as a fully informed customer, without any key information being swept under the rug.
Recommended by
Source: https://www.magnifymoney.com/blog/investing/edward-jones-review-ria/
