Sometimes, it’s lonely at the top

Even so, Edward Jones’ success in the BRC doesn’t come without some reservations.

To those who cite “independence” as the most important aspect of their happiness, the Edward Jones model is a dream. Each of the 505 brokers in Canada has his or her own office under the forest-green banner. Each has one assistant and about one square kilometre of community turf to cover. Indeed, Gary Reamey, Edward Jones’ principal partner for Canadian operations, says the “one broker, one office” approach is the secret to the company’s success.

But the IE survey also found Edward Jones brokers have one ironic, yet consistent complaint: Many cite “isolation and loneliness” as the least desirable aspect of their firm. As one northern Ontario broker laments, “You just can’t go out for lunch with the guys here.”

Head office is trying hard to change this. Within each region, says Reamey, is a leader who is responsible for raising enthusiasm and spirit throughout the area. A regional leader is responsible for bringing together the brokers in the area at least three times a year. In the summer, diversification trips give brokers and their families a chance to meet and greet.

The sense of isolation is felt most by those new to the firm. Because of the one-person office, Edward Jones offers a large amount of independence and autonomy to its brokers, but for new people “it can be lonely,” says an Ottawa-region advisor. “Especially in a new community where there is no one to model after or mentor.”

Mentors are exactly what the firm is trying to provide for new brokers. “With experience the broker should come to appreciate the autonomy, and the lack of a branch manager looking over his or her shoulder,” says Reamey. In the meantime, he says, head office tries to make sure that new or struggling representatives are contacted at least once a week, if not daily.

Some brokers are finding, however, that daily communication is harder to maintain than head office may think. “Some forms of internal communications are pretty poor,” one Toronto broker told IE. “If someone leaves the firm you might not know for two years. It’s because we’re so independent that we lose touch with one another.”

One reason for this might be the company’s lack of a traditional e-mail system. At Edward Jones, e-mail is filtered through the company’s global head office in St. Louis, Mo., and from there bounced back to each individual advisor through the company’s intranet system, a satellite network that also carries the company’s broadcast news feeds. That’s great, says one British Columbia broker, “except in fog, and snow, and rain.”

“We’re working on that,” says Reamey. He says the situation used to be a compliance issue, though that has been solved. Now, the only impediment to brokers receiving e-mails like anyone else is bandwidth. “It would just slow everything down,” says Reamey. “And we’ve decided it’s more important to have the quotes, the research, the television being piped through. We have the e-mail abilities now, we just choose not to turn them on.”

There’s another reason Edward Jones employees sometimes feel lonely: Everyone else seems to hate them. Among other firms, sentiments run fiercely in favour of removing Edward Jones from the Brokerage Report Card altogether. For some, the firm’s practice of recruiting outside of the financial services industry is a bone of contention.

“They’re a bunch of … idiots,” says one Raymond James Ltd. broker in British Columbia. “A bunch of car salesmen and shoe salesmen, picked up and turned into brokers.” Another B.C. broker goes so far as to call them “scum-sucking lowlifes.”

Reamey doesn’t know why the competition dislikes Jones so much. It may have something to do with the firm’s conservative, buy-and-hold credo. Under Edward Jones, brokers are restricted from any high-risk ventures, including options and penny stocks. “I’m assuming Merrill Lynch would probably like to see us off the survey as well,” says Reamey.

Even so, Reamey adds that Jones actually does its competition a favour by targeting the clients it does. At a time when the trend is to remove the clutter of lower-asset clients, Edward Jones is actively seeking them. “[The trend] has had a fairly high impact,” says one Toronto broker. “Since we don’t put a minimum account size on our clients, the Nesbitt Burns’ and guys are sending them to see us.” In Vancouver, one Jones broker describes the firm’s image as “a mom ‘n’ pop organization. We get all the refugees.”

Reamey agrees. He says Jones is different because it is the only firm focused on serving the conservative individual investor, an investor the other firms have largely ignored. “It’s all we do,” says Reamey. “It not fancy, but it works.”

Some Jones brokers would like to see the firm expand what it does, however. A common complaint to IE was that the firm can be too restrictive in what it allows brokers to do. One southern Ontario broker admits that Edward Jones is always focused on what’s best for the client, but counters that the firm is “so client-focused that we sometimes turn down things that others would jump at for revenue,” such as wraps.

Some Jones brokers say one reason they would switch firms is the restricted investment choices. “I’d like to offer more to my clients,” says one Alberta broker, while another in Ontario says he envies brokers who can sell “everything under the sun.”

Reamey doubts this will change; after all, the conservative focus of the firm has been what makes Edward Jones so successful.

Overall, however, Edward Jones brokers have little to complain about. They believe in their firm, ranking its strategic focus a lofty 9.7 out of 10. The average ranking among the other firms was 6.7. Edward Jones was also one of only a handful of firms not to drop more than 0.5 points from last year’s rankings.

In terms of culture, Edward Jones’s family focus is one reason why most brokers say they will never leave. “Everybody says his or her firm is family-oriented,” says one Toronto advisor, “but Edward Jones really is.” When her father became ill, she phoned head office at 6:30 on a Thursday night. She wanted to know how she was going to maintain her work while she spent time with her father. “Within 15 minutes the phone rang,” she remembers. “It was head office saying a laptop and a cell phone were on its way. ‘Take as long as you need,’ they said.”

However, the family focus is as conservative as the firm’s investment strategy. Edward Jones doesn’t allow its advisors to bring girlfriends or boyfriends to summer regional meetings. A few brokers mentioned this when asked what would be the one thing they would like to see improved at the firm. Reamey says this rule is in place because: “Edward Jones wants these summer meetings to be for families.” He adds that “25 years ago, when I started, I wanted to bring my girlfriend to the meetings, as well. I wasn’t allowed, but now she’s my wife and she comes along every year.”

That family focus is an aspect of the corporate culture that many Edward Jones brokers consider strong. The average rating was an impressive 9.5. It prompted one Jones broker in Alberta, who gave his firm a high rating, to place his tongue firmly in cheek and say, “Remember, the first four letters of culture is c-u-l-t.” IE